Money Rehab with Nicole Lapin
How to Use Your Budget Now to Meet Your Future Financial Goals
Tue, 29 Apr 2025
How do you work towards multiple financial goals at once? The answer isn’t some money move that your future self will need to make… the answer lies within the money moves you are making now. Right now. And we’ll show you how to make those money moves, with help from Bank of America, who Nicole partnered with for this episode. Whatever goals you’re working towards, long-term or short-term, Bank of America Corporation has tools to help you get there at http://bofa.com/FinancialNextSteps.
Chapter 1: Who are the hosts and guest in this episode?
So I have written, count them, five books now. But each time I'm in the writing process, I stay at an Airbnb. I love to stay at an Airbnb. When I was actually first launching this show, I was at an Airbnb in Arizona. It was so peaceful. It was stunning. I could be productive and comfortable. The Airbnb was also surrounded by a ton of javelinas.
If you know Arizona, you know they're like wild pig creatures. But honestly, I love them too. Being away for work, for fun, or both is a perfect opportunity to host your space on Airbnb. And if you think that hosting is overwhelming, I have a solve for you. With Airbnb's co-host network, it's easier than ever before to host. It's also a great way to earn some extra cash, which I know we all love.
Now you can hire a quality local co-host to take care of your home and your guests. They can do everything from creating your listing to managing reservations to messaging guests and even providing on-site support. So if you've got a secondary property or an extended trip coming up and you need a little help hosting while you're away, you can hire a co-host to do the work for you.
Find a co-host at Airbnb.com slash host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. You have more than one financial goal. How do I know that? Because we all do. The trick is, how do you work toward multiple goals at once? The answer isn't some money move that your future self will need to make.
The answer lies within the money moves you're making right now. And I'll show you how to make one of those money moves with the help of Bank of America, whom I partnered with for this episode. First, you'll meet someone who's debating this question right now, a money rehabber named Sarah. She already has some real estate investments, but she's thinking about buying another house in a few years.
Plus, her husband wants to retire early. So how does she balance these two goals? The answer is not waiting around until she's ready to buy a house or until the eve of her husband's wannabe retirement date. She has to put in the work now. She needs to know how much she can save for these future goals and then start saving.
So in this conversation, we do a deep dive into her finances so we can figure out that number together. But like most things in finance, these long-term goals are deeply tied to emotion. So in this conversation too, you'll hear about how watching her family go through the 2008 crisis has affected Sarah's thinking and how she takes a step toward overcoming that trauma in this very conversation.
Whatever goals you're working toward, long-term or short-term, Bank of America Corporation has the tools to help get you there at bfa.com slash financial next steps. But for now, let's get into it with Sarah. Sarah, welcome to Money Rehab.
Hi, thanks for having me. I'm so excited to be here.
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Chapter 2: What financial goals does Sarah want to achieve?
So you want to buy a house in two years. You found yourself in a little bit, it sounds like, of a Goldilocks house situation. Can you tell me about what's going on?
Chapter 3: How has Sarah's real estate journey evolved over the years?
Sure. So it's a little convoluted. So back in like 2016, fresh out of college, got my first big girl adult job. One of my goals was to just buy a house instead of constantly moving apartments every couple of years. So little saving scrapping, bought a cute little town home and where I lived very, very 80s and my family's in the kind of fix and flip construction world.
So bought a little help from my parents. And then we spent about Four years, gradually renovating it, nothing major, like new tile in the shower, new cabinets in the kitchen, very minor, some new paint, better light fixtures type of thing. And then I got married and my husband moved into that house with me.
And then once COVID hit with the interest rates being super low and we're both like living at home and thousand square feet was not quite enough for us anymore. So we wanted a bigger house and we were unsure of like where our life was. Like we're newly married, unsure of like, do we want kids? We wanted to live a little bigger. And then we found this huge master plan community that was being built.
outside of the city and we're like, well, we can go there. Cause it was great deals on houses. We had like a couple of floor plans and with interest rates being so low, we just kind of like took advantage of that. Cashed out a HELOC on my first property, rented it out, moved there, lived in that for about three years. It had an unfinished basement. So then we renovated that.
So we turned this three bedroom house into a four bedroom house for two people. So it just seems like too much house, the two of us, but then he got a job opportunity that then picked us up and moved us out to California where we're currently living and we're renting out both our houses.
And we're still in this weird limbo of like, we only want to move back and we'll eventually just move back into one of our current houses first. But we're like, one's a little too small. One seems a little too big.
So we're trying to like maybe be able to buy another house in a couple of years when interest rates come down a little bit more and just have like our own mini like housing real estate empire is like our new joke of like, we're going to be those people and we can retire him early and he can outmanage them.
We can just kind of live off of those instead of having to deal with the uncertainty of the stock market for our retirement or have it supplemented retirement. in 20 years time when those mortgages are paid off is kind of where we're sitting. But now it's like, how do we figure out saving for a house? Cause he doesn't want to do the HELOC thing again. Like that still terrifies him of like, why?
What happened?
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Chapter 4: What are the challenges Sarah faces with managing multiple properties and debt?
Short with the numbers, but I feel better knowing that someone's in there, the bills are getting paid and I get a little extra in my pocket to cover in case something breaks. And we call that good versus gouging out the market on that. So it's over, it's been pretty good where other houses, it's a huge oil and gas industry out there.
So a lot of people are moving in and out with the influx of that. And it's just a lot of like the hospitals are nearby being built and those kind of things. So we've got a good pool to cover both ends of the market. Like we have like right now, our current one tenants, like a college student. working on like her doctorate degree. And it's a family of like four, I think.
And the husband works in the oil and gas industry and the wife's a teacher and they seem pretty happy with staying so far. So I'm like, I have no problem with keeping them on as long as they want to stay.
What are your interest rates?
You said they were really low. So for big house, we bought it right at the end, like September of 2020. So we were just under that. I think we're like right at that 2%, two and a half percent mark. And then my townhome, I've refinanced a couple times. When I first bought it, I just wanted to buy a house, so I had an adjustable rate.
Then we refinanced, and then we refinanced again for the HELOC on it. I think that's at like 3.2%. Okay.
Well, sadly, the go-go days of those low interest rates are over. It is kind of like a double-edged sword, though. Getting a good interest rate is obviously awesome, but then you end up chasing that high whenever you dip your toe back into the market, which it sounds like is what's going on with you guys.
And as we know, interest rates are coming down, but experts think it would probably take another pandemic, which we would not want, for interest rates to go that close to zero again. They were just so unnaturally low for so long that we got used to it. And weaning off, as you have been going through, is really hard to do.
So for this... My husband on that one is like, 4% is the greatest interest rate, 5% is great, and he just won't take it. I'm like, no, you're going to have to accept that. We're going to buy again, like,
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Chapter 5: How do Sarah and her husband approach saving and budgeting?
For sure.
So putting real estate aside, let's say you're keeping about 800 bucks of your paycheck per month and you put that toward retirement savings. Now, for most people, their burn rate in retirement is much lower than when they're working. The fact that you own your property means that you have minimal housing expenses when you're retired.
And of course, that would bring down your burn rate dramatically. Or I don't know, maybe you guys want to live in a Four Seasons-esque retirement community when you're older. That's something you maybe need to get on the same page about.
And it's an important thing to consider, especially an important thing to talk about with your husband, getting really clear about what you both envision for those retirement years. Is that something you've started discussing?
We have. We kind of go back and forth on like what it could be. Like he has some family property that he's supposed to inherit. He's going to share with his brother in like Sounds morbid. Like honestly, in like 10, 15 years, he'll come into another house himself that him and his brother will share ownership of.
And then my family extended for me is like an LLC where we have seven or eight rental properties that my dad manages along with other like franchise investments and stock markets that my siblings and I will also inherit from them. So I know down the line that will also increase and grow as well.
So it's hard to like really come up with a hard and fast number knowing we both have like other assets that we will end up inheriting in down the road as well. So I have a hard time being like, oh, yeah, we just need our 401ks to hire. I know I have other stuff coming in that could be up to like the million dollar plus range, depending on how inflation shakes out in like 20 years time.
That sounds awesome. I love the million dollar windfall. I would say it's important, though, to start planning, assuming that that's not going to happen.
Yeah, which is a hard part of like I have other weird things like I don't know what it's going to look like. But I think the biggest thing is like our worst case scenario is like life gets hard. We move back into my little town home because it is so small and it is so cheap. And we're doing that by weekly payments on both our houses.
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Chapter 6: What is Sarah's plan for retirement and early retirement goals?
Finances are emotional. But yeah, I mean, it's definitely emotional. Definitely makes sense that it's anxiety provoking happens to a lot of people. But you know, selling a stock is probably not as emotional as buying a house if you need the money. So let's talk about ways you could diversify some of your investments since you've already decided that you really want to buy a house another house.
Have you heard of a two one buy down? I have not. So this is something for your husband when he is missing the 2020 interest rates. This is a way to basically get the seller to give you a credit that effectively subsidizes your mortgage for the first two years of your home. So in a two one buy down.
It's standard for the seller to give you a credit that covers two percentage points off the first year of your mortgage and then one percentage point off the second year of your mortgage. So if your interest rate, let's just say, is 6.5%, it would be 4.5% in the first year and then 5.5% in the second year. So then the 6.5% would only fully kick in in the third year.
So it's important to remember that the interest rate is temporary unless you finance, but it is another option for you.
Okay, yeah, I've been kind of seeing different things online about like, if someone bought their house, I think it's like an FHA versus conventional thing of like, they bought their house during COVID, you can kind of assume the loan under those lower interest rates.
I've seen mixed reviews on like that or versus and there's stuff about like, if you have a good credit score, you're gonna have to pay more points to get an interest rate. I'm like, how much is that real versus fake? And I just kind of want to like, prepare myself. or that kind of stuff too, especially the conventional versus FHA stocks.
I know if we do the townhome round, there are rules around owner occupancy versus tenant occupancy, which can prevent you from getting one of those loans. I want to say I think it prevents the FHA loan for a townhome complex and stuff like that too.
But you wouldn't be a first-time... FHA loans would be for first-time homebuyers.
Okay. I wasn't sure. I couldn't remember.
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Chapter 7: How does Sarah balance short-term spending with long-term financial planning?
yeah maybe that's the language he can i had to convince him for the life insurance when we got married and he fought that for so long like no we are young enough let's get life insurance early because he works in a tough industry like you can get in a car accident and i'll be screwed and like he bought that for months too like it's just like those insurance yeah you guys have low premiums on that
So once you get to your number, you can then reverse engineer how much you need to get there. But first we need to get to that number. What is that magic number? The V1 magic number. And once you do those calculations, I think things will be a lot more clear where you should put your money, whether it is in the third house or maybe it's in another investment vehicle that's not housing related.
How does that sound?
It sounds really good. I agree. Yeah. I still kind of struggle with just, I understand the concept of the stock market. My biggest issue is like, how do I live off my dividends and not get taxed on the capital gains of that?
Like the one thing I've not been able to understand conceptually, I've had to mildly cash out some stuff from like old employer stock options to, we had some major car issues we had to fix. I'm like, buy a couple thousand dollars. I can cash that out in investments as like an emergency fund. We were younger and like, we didn't pay taxes on it. So it was just a low amount, but like,
living off the dividends of my investments. I'm like, how do I do that? How do I know I have enough? Because I don't want to just be selling stocks. I'd rather live off the dividends of my stocks instead of having them being reinvested now. I just don't understand what that looks like or what that could look like down the road if they're going to make changes to that process.
Well, we don't know what changes might be on the horizon for capital gains, long-term capital gains, or if you hold it for longer than a year. And those could be more favorably taxed. But if we're talking about retirement savings, we're talking about tax-free income.
If you're investing in a Roth IRA, for example, or Roth 401k, because you would pay the taxes now so you don't have to pay taxes later. Do you have a Roth IRA?
I have a traditional IRA. It was from, I rolled over all of my old prior employers for one case into an IRA. If I got laid off, I didn't want them holding it. So just my bank had an IRA options. Like I can roll it in here. I can.
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Chapter 8: What advice does Nicole give Sarah about diversification and financial planning?
divvy it up onto like S&P 500 and a few other stocks that I'm personally just like curious about the companies type thing and a little art some REITs and things like that it's where it's all sitting in so it's currently more more real estate real estate investment this is what I was brought up on like I'm a product of my own upbringing is all about the real estate will you keep us posted with what that magic number that you guys come up with oh for sure I think we're gonna fight over that
Oh no. Well, I'm happy to break up about money.
I can do it like both ways. I'm like, Ooh, we can, how cheap can we live and how nice can we live? And like, I can do, my brain does both. That's my biggest issue is like, I can find a way to make both work. And it's just, and he just kind of, he goes along with a lot of my plans, which is super great. But I'm like, what do we really need and want?
Like we want to travel a lot more, but also live as inexpensively as possible. It's like our two and traveling is expensive. And it's just, those seem two very conflicting ways to do life to me.
Well, I think once you make a decision, you know, science shows us that we love the decisions that we make. So you'll probably really double down once you just make a call.
I think it's going to be more expensive than I anticipated. I'm a little scared.
Well, you don't have to be scared if you have a plan.
It's true. I like plans. I like knowing.
It sounds that way. So it just seems like this one area, it seems like you have some block around long-term planning, but not short-term planning.
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