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161 Past Due – Downsize or Refinance to Boost Nest Egg?

by Derek Sisterhen on June 12, 2011


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Past Due: Radio 161 – Downsize or Refinance to Boost Nest Egg?

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Tom and Denise are dealing with a conundrum: Should they refinance their house to a great, low interest rate and pay it off in 15 years, or should they sell it, downsize, and use the freed up cash flow to fund other retirement savings? They’re in their mid-fifties and are beginning to feel the pressure of retirement.

The situation they find themselves in is very common among American couples in this age group. We’ve believed for a long time that having a house – especially a paid-for house – at retirement is a crucial component of our retirement nest egg. However, given the recent upheaval in the real estate market, many have found themselves staring at a cracked and scrambled nest egg.

Today we addressed:

1) Whether real estate should play as significant a role in our retirement portfolio as previous generations believed.

2) What the net gain in value to their overall retirement portfolio would be if they refinanced.

3) What the potential for gains would be if they chose to downsize.

Sometimes we have to be reminded of simple investing concepts like diversification in order to make the best decisions for our long-term financial plan.

Kids & Money Contest: I’m looking for stories of parents teaching their kids about managing money and understanding how money works. If you have a great story (humorous, big life lesson, etc) of what to do – even what not to do – please send it to by Sunday, June 19th with “Kids Money Content” in the subject line. Entries will be gathered for the next few weeks and the winner will receive Junior’s Adventures, the boxed set of money lessons for children by Dave Ramsey, and a copy of my book, Get Naked: Stripping Down to Money & Marriage.

If you have a specific question, I’d be happy to answer it and further cultivate the wisdom of the Past Due Radio masses. The experiences of our listener base provide plenty of insight we all can learn from; don’t hesitate to ask – I’m happy to help!

Today’s Mentionables:

Episode 154 – Robert Kiyosaki’s Dad & Credit Scores Banks Like – In this episode, we discussed all the expenses that go into owning a home that we typically ignore when considering our “return on investment”

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