I earn $ 35,000, have $ 20,000 in credit card debt and $ 200,000 in inventory. I dream of transforming my studio into rental accommodation and building a swimming pool

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Dear Quentin,

I read your column regularly and feel almost peerless at writing. Unlike most of your writers, I don’t have a huge or impressive portfolio.

I am 61 years old. I earn $ 35,000 a year. I have just over $ 40,000 in a 401 (k) and just under $ 200,000 in company stock. I own my home with a mortgage of less than $ 25,000. The current value is $ 200,000. I also have $ 20,000 credit card debt.

I feel like I’m spinning my wheels. I’ve worked hard – maybe not smart – all my life, but I still feel like it’s hand in hand. I don’t know how much time I have left for this world, and I would like to have the house I always dreamed of before I died.


“I don’t know how much time I have left for this world and I would like to have the house I always dreamed of before I died.”

In other words, I would like a pool, a sturdy back porch rather than a flimsy aluminum porch, and I would love new appliances.

I am fortunate to have a 500 square foot workshop on my property that I would like to transform into a one bedroom rental. I could possibly rent it for $ 500 per week. I guess I’m justifying my pool by claiming it’s for renters.

Do I have to withdraw $ 20,000 from my 401 (k) to pay off my credit card debt? Can I take out a second mortgage to transform my studio-garage into an attractive rental with a swimming pool?

My thoughts being that this might support my social security while providing my dream home today. I plan to work until 67 years old. I don’t have any dependents, so I don’t mind leaving a legacy to anyone.

Dreamer

You can email The Moneyist for any financial and ethical questions related to the coronavirus at [email protected], and follow Quentin Fottrell on Twitter.

Dear Dreamer,

This column is for you. Like all the letters I receive.

Some of the most important letters I have received from people who are struggling to make ends meet. And as fragile as your financial life may seem now, remember that there will be people reading this who are in a worse economic situation.

The then 36-year-old Texas woman wrote to Moneyist in September 2018. She had no college degree, worked full-time for $ 15 an hour, and inherited $ 150,000 which changed her life. I still think of her and hope she is living her best life.

Your # 1 priority: Pay off your $ 20,000 credit card. You are bleeding money with the astronomical interest rate. Replace your porch, upgrade your appliances as needed, and make sure your home is comfortable for the rest of your life.

Withdrawing money from your 401 (k) should be a last resort. You have $ 200,000 in company stock. The good news: You can sell some of that inventory to pay off your credit card debt and make necessary improvements to your home.


You can sell some of this inventory to pay off your credit card debt and make necessary improvements to your home.

The # 1 rule of investing is to diversify. If that company’s inventory is piling up, you’re in trouble. Consider investing in funds that include many different stocks. Also look at bonds, fixed income securities with regular interest payments.

Be careful before you become a homeowner. Short term rentals are subject to local laws. You will be at the discretion of the opinions, complaints and requests of tenants. For some people, champagne is never at the right temperature. Try a roommate first.

That said, if you are selling company stock, you can explore the studio’s conversion costs. Check out similar units in the area to see how much people are paying. If you’re up for the challenge, it could be a long-term source of income.

Swimming pools are expensive to install – $ 35,000 to $ 65,000 – to maintain, and as pleasant as they are to look at, you will likely use them less often than you think. (Converting your studio could cost you double.) Test the water with an above ground pool.

As one member of our Facebook group put it: “Having had two swimming pools, they are like boats, a hole in the water that sucks up money. The difference is, you can sell a boat – the best days are when you buy a boat and when you sell it. Skip the pool.

You have more immediate responsibilities. How did you accumulate $ 20,000 in credit card debt? Don’t fall victim to the same emotional or psychological traps. Having a swimming pool may seem like an apotheosis of the American dream.

But a secure retirement is a more attractive and shimmering prospect.


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