Cheryl Winokur Munk

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643 appearances 14 recordings 1 series first heard Mar 2018 last heard Nov 2024

Cheryl Winokur Munk’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Which Debt Is Actually Good to Hold Onto? · 3 Jan 2023 podcast

And those credit lines on securities accounts allow people to borrow funds using assets in their investment portfolio as collateral. matched

They don't have to liquidate the securities, and that's a bonus for people who want this type of flexibility. matched

So I want to distinguish here between good and bad debt. matched

With good debt, like a fixed mortgage loan, inflation can be a good thing because your monthly payment is going to be the same while your house theoretically increases in value. matched

When we're talking about good and bad debt, I would put credit card debt in the category of bad debt. matched

So they're usually variable rate interest rates and they can be very high, 20s, 30s in some cases. matched

And so that's the kind of debt, especially in a rising rate environment, you're not going to want to hold on to. matched

And because people hold on to all kinds of debt, it's really best to talk to a financial advisor when you're considering what to pay off and when and what to hold on to. matched

So look, many people saw their parents pay down their debts as they got closer to retirement. matched

And some of that's due to the fear they won't have steady income coming in. matched

But if you're in solid financial shape and you're young or you're getting into your retirement years, you might still be better off holding on to a low interest fixed rate debt like a mortgage. matched

So let's say you have a rate for your mortgage in the 2% to 3% range, which wasn't uncommon a few years ago. matched

So you may be able to earn more by investing the amount it would take to pay off the loan in a higher yielding account. matched

So I spoke to a certified financial planner who had met with a couple in their 40s, and they had extra cash flow of $2,000 a month and had been using it to pay down their 3% fixed rate mortgage. matched

The couple also had student loans with a higher interest rate of about 3.875%. matched

So the advisor advised them to pay the minimum on both debts and then invest their extra $2,000 per month into their investment account. matched

Now, these are things that people can do on their own, but it may not occur to them. matched

And sometimes just when a professional has the entire picture in front of them, it can be really helpful. matched

Well, debt can really add up over time. matched

And if you allow high paying debt to accumulate, it could really add up and affect you later on. matched

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