Smart Money Podcast: Rethinking Credit Reporting, and Lightning Round Money Questions

Liz Weston: Welcome to the NerdWallet Smart Money podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Liz Weston.

Sean Pyles: And I'm Sean Pyles. To contact the Nerds, call or text us on the Nerd hotline at 901-730-6373. That's 901-730-NERD, or email us at [email protected].

Liz: And hit that subscribe button to get new episodes delivered to your devices every Monday. If you like what you hear, please leave us a review.

Sean: This episode, we're doing things a little bit differently. Instead of answering one listener's money question, we're actually going to be taking on a number of your questions back to back in what we're calling a lightning round of money questions. And it's just Liz and I answering your questions this time.

Liz: Yeah, we have such a backlog, we were starting to feel guilty. So we're going to try and tackle as many as we can.

Sean: But that said, please do keep sending us your questions. We read all of them. We love them. Liz and I talk about them all the time and we are here to help you, so this is how we can do it.

Liz: Absolutely.

Sean: First, though, in our This Week in Your Money segment, Liz and I are talking about the many issues plaguing the credit reporting system, how it could be improved and what we as individuals can do about it. So Liz, you actually recently wrote about this subject in one of your columns. Can you start by giving us a rundown of some of the primary issues in our credit reporting system?

Liz: Oh, there are so many. We've got to start with the idea — because it can't be said enough — this was not built for us. This system was built for lenders. We've been getting better access over the years to this information, but it's still sometimes very difficult to access, very difficult to correct. And it can have this outsize impact on your life. I mean, it's not just what credit cards you can get and what interest rate you pay on your mortgage, but it's also, in many states, what you pay for property insurance, for homeowners insurance, what you pay for car insurance.

Sean: Whether you can get a lease on an apartment.

Liz: Yeah, exactly. And employers look at your credit report when they're screening for certain jobs. Not all employers do this. And they don't look at credit scores, they look at your credit report. But the problem with that is there is no evidence that your credit has anything to do with your trustworthiness as an employee. They've never made that connection, and yet it's still being used that way. So if you run into trouble and your credit takes a hit, it just has this ripple effect throughout your life.

Sean: Right. So a system that we did not opt into, that we were signed up for unwillingly, has a massive impact on various aspects of your life beyond just the amount that you pay for money. Let's talk about some of the main issues. One of them is around the prevalence of errors on credit reports. You found a pretty interesting stat. What was that?

Liz: Consumer Reports actually recruited about 6,000 volunteers to check their credit report and report back on what they found. Basically, one out of three people found some mistake or error or account they didn't recognize. And maybe that's just the way that they phrased the account, they don't recognize it. But in any case, a lot of people found a lot of issues. I look at my credit report — there's misspellings of my name, which is not a big deal. I have a new middle name that somebody at Bank of America gave me. Seriously, Akram. It showed up on a credit card. It's like, where the hell did that come from?

Sean: Someone was bored one day.

Liz: I don't know, but getting that taken out was a pain in the butt. And normally I don't have to deal with a lot of problems because my credit is pretty good, but that was just like, this is so annoying that this error got into the system and it's so hard to get it out.

Sean: And even accessing credit reports can be a challenge for some people. Yes, there are services that you can sign up for for free, and NerdWallet's one of them, where you can get your free credit report. But if you go directly to the bureau websites, it can even be challenging to try to find that website, correct?

Liz: Well, I've been hearing from readers about this for a long time. I would say you can get your free credit report at annualcreditreport.com. And they'd come back and they said, "They asked me for a credit card." I was like, "You got on the wrong site." And it happened consistently enough, it's like, wait a minute. So I tried doing this like a normal person would do it. You Google the name "annual credit report" or "free credit report" or "free credit score" — all these ads pop up, and guess what they're selling?

Sean: Your own credit report that you can get for free.

Liz: Exactly. And credit monitoring. So if you do wind up on one of these sites by accident and sign up for this credit monitoring, all of a sudden your free credit report turns into a $20-, $30- or $40-a-month charge on your credit card, and it's really annoying.

Sean: And it doesn't help that some of the credit bureaus actually will sell you products for monitoring your credit report that will charge you about that much too. So it is the bureau that you might want to be getting your information from, and they're trying to squeeze money out of you as well.

Liz: Yeah.

Sean: And on top of that, if you go to annualcreditreport.com, the website looks like it's about 10 years old. So when I see it, it doesn't seem very trustworthy to me.

Liz: You see, we've got to bash on that, and on the SEO, because if you look at the results once you do one of those searches, nothing says, "This is the official site." Nothing says, "This is the right site, the one that you're looking for." Basically, what needs to happen is that that site needs an update and it needs better SEO, and I think the search engines should just make that the top result. I mean, that's what people are going for. Don't serve them up a bunch of ads.

Sean: Well, I think that point is really important. We need some broader changes from the Googles of the world, from Congress, even from the credit bureaus, so that we aren't trying to wade through this very confusing system.

Liz: Yeah. And the other part of confusion that I don't write about as much in this column is the security questions. Oh my goodness. I mean, so many people cannot get into their own credit reports, but you know who can? The criminals that have all their information. They're looking at it, it's right in front of them. So they can answer all these silly questions. What was your car lease amount 25 years ago? Or whatever the heck it was. The two that I ran into that just made my head explode, one was what's your astrology sign? Seriously. And another one is how old will you be in exactly five years? And that made me flash back to college when I had a fake ID, and I had to think on the spot.

And I do have some sympathy because you're always trading off convenience and security, and if you make it too easy, it's too easy to break in. If you make it too hard, then people can't get their credit reports. So I have a solution for this, but it's kind of a long-term thing.

Sean: What is that?

Liz: That is stop making your Social Security number the be-all, end-all ID. It should not be. It was not built for that and it's way too valuable now. That's why the people want to break into your information is because that's an all-purpose identifier so that they can commit medical fraud, so they can open accounts in your name, so they can steal your tax refund. There's all kinds of ways they can abuse your finances because they have this number, and it shouldn't be that way.

Sean: Well, especially in a post-Equifax-hack world. Just as a reminder for folks: Equifax was hacked in 2017, and millions and millions of people's information is just out there in the world. And I think it's safe for people to assume that their own information is floating out there somewhere, which is also a good reminder to freeze your credit reports at all three bureaus. It's free to do so. But the bottom line is that we're all vulnerable to this.

Liz: Yeah. And just to add to that, I have credit freezes. I believe in credit freezes, but there have been some complaints that even credit freezes, the bad guys are breaking into those. The solution has to be that we take this information and make it less valuable. Other countries don't use Social Security numbers as all-purpose identifiers. We don't need to. We just need to have the will to change that system.

Sean: Yeah. Again, the entire system needs an overhaul, and this isn't even to touch on the fact that racism is baked into the system as well. I think that's important to know because given the history of discrimination in lending and in employment in this country, among other factors, many Black Americans and those in other marginalized communities have a harder time accomplishing the quote-unquote "good behaviors" that lead to a higher credit score compared to their white counterparts.

Liz: Yeah. This has been part of the system from the beginning, when credit scores really started taking off. There were all of these studies about the disparate impact of credit scoring, because communities of color often had lower credit scores because, as you said, it was more difficult for them to build the behaviors that would give them a good credit score. So this thing is rippling through our entire economy, and it's making a lot of people nervous because it shouldn't be as powerful as it is.

Sean: Right. So we've talked about some of the frustrating issues that are in the credit reporting system. We've touched on a couple of solutions like reworking credit reporting factors and having a separate identification number beyond your social, and maybe even just burning the entire thing down. Just kidding, just kidding. But let's also talk about what some consumers can do, with the caveat that individual behaviors cannot overhaul the entire system.

Liz: Obviously, the first thing to do is what we always tell you to do, which is check your credit. You really do need to have access to your credit reports. And if it's hard — and sometimes it will be, to get access to it, to follow through. If you can't get access to it online, use the mail. Get your reports that way. Just keep following up and make sure that you have the information. You want to check your credit scores, obviously, and that's why we have the service at NerdWallet, but you want to check all three credit bureaus for the reports and make sure that those things are accurate, and dispute anything that's not. There are services like Experian Boost that you can sign up for that can help improve your credit. So, that's something to look into if that's an issue.

Sean: Experian Boost can be really useful if people have had a hard time getting a higher credit score, because it counts factors like paying for your streaming service, or your phone bill, or rent toward your Experian credit score.

Liz: Yeah. I'm actually very encouraged by the fact that because the economy has been going well, a lot of companies are investing in expanding the availability of credit. So they're looking at underserved communities and figuring out ways to get them into the system. That was happening before the Great Recession, and then the wheels kind of fell off and it's been building up again since, which is really, really good.

Sean: Right. I think it's also worth continuing conversations like this with your friends and your family and people on the bus who you might be chatting with, just to spread information about the system and how it works and the fact that it could be so much better, but that it just isn't right now. And I think that if people get mad enough, that will hopefully encourage some people to make changes where they can.

Liz: There you go. Well, I think that about covers it for now. Shall we move on?

Sean: Let's do it. Here's the first question, which comes from a listener's voicemail.

Nolan: Hello, Smart Money. My name is Nolan. I live in a suburb of Cleveland, Ohio, and I have a question for you. With rates as good as they are right now, I am thinking of refinancing. I actually did it just two years ago, but now that rates are so good, I was thinking of switching my 30-year loan to a 15. Then I thought, why lock myself into higher payments? Why not just overpay on a 30-year loan and pay it off in about the same amount of time?

But then it occurred to me with the interest rates as low as they are, maybe this is not bad debt to have. Maybe I should just take the longer loan and keep the money, or maybe I should invest that money and potentially have a dedicated investment account with which I could pay off my mortgage potentially a lot sooner than 15 years with the same actual money going towards my house, with historic returns in the stock market — I know not being dependable — but likely getting me a much better rate of return than I would with a less-than-3% interest rate on a mortgage. So I hope that all makes sense and it wasn't too complicated. Thank you so much for what you guys do and for listening to this question.

Sean: OK. Liz, what do you think about that? What do you think Nolan should do? I mean, there's a lot to consider when you do want to refinance. The debate over 15-year versus 30-year mortgages can be pretty contentious. Pick something and dive into it.

Liz: Well, I've always gone for the 30-year. The reason for that is you don't know what the future brings, and locking yourself into a higher payment, that can work out fine. And yeah, the savings in interest look really great, but I've always wanted to have that flexibility where I could make the bigger payment if I had extra money or I could just let it ride. And several times we took advantage of that. There was one point where I started a new business. My husband was in feature animation, and so that's a gig-to-gig kind of thing. And we were really happy to have that low payment for a few months. So that's my experience, anyway. How about you?

Sean: I'm with you, Liz, entirely. The key line that stood out to me from Nolan's question is: why lock myself into higher payments?

Why lock yourself into higher payments? You don't need to do it. You can overpay if you want to over the course of 30 years, and there's probably no punishment for paying off your very lengthy mortgage sooner. And again, it's great to have that flexibility in case something does happen. As Nolan was thinking about, you might also be able to do other things with that money, like investing and making sure that you're saving enough for retirement.

Liz: Well, what we tell people is that before they make extra payments on any mortgage, they need to make sure that they're on track with their retirement savings, that they have paid off all other debt and that they have a substantial emergency fund. So unless those things are already set and you're on track with all those things, I wouldn't consider a 15-year mortgage. Go with the 30-year.

Sean: There's also something to be said about a middle ground. I do this with my car payment, where I actually round up to the nearest $50 amount so I have a nice clean round payment. That ends up meaning that I pay around an extra $25 each month toward my car payment. And over the course of my loan, I'm actually going to be paying it off around three months early because I'll have made all of these extra payments over the length of my loan.

Liz: That's really nice. And we probably should throw in here that rates are super low right now, and I know it can be very tempting to go for the lowest possible rate, which is what a 15-year loan gives you. But again, this is super-cheap money. You're going to be happy with your rate, whatever you decide on.

Sean: The other thing I wanted to mention as well is that because rates are low, now actually is probably a better time to refinance than 12 months ago. Yes, rates might be slightly higher at this precise moment, or whenever this episode is airing, because there isn't that same frenzy of people looking into refinancing their loans and making it bottleneck like there was early on in the pandemic.

Liz: And speaking of the pandemic, we've got another question that has to do with the rise of remote work.

Sean: Yeah. So this is another question that came from an email from someone that signed it "California Dreaming," and I will give it a read. They said, "Hey, NerdWallet podcast team. With the rise of remote work due to the pandemic, I recently put myself out there and applied to a dream job of mine at an out-of-state company. To my surprise, this company is open to the idea of working from another state indefinitely, and I am in the final stages of negotiations for this job." That's awesome. Congratulations.

Liz: Yes.

Sean: "However, should I be concerned about tax implications of living in a different state than the company I work for? Has the rise of remote working brought to light any tax considerations for these situations? I don't want to land my dream job only to have to pay state taxes in two states. Thanks for your advice."

Liz: With the caveat that we are not investment or tax professionals and you really need to talk to a tax professional if you have tax questions, I will say that most states, where you live is what matters. I think for most people, this is going to be a nonissue. If you live in one state and work in one state, that's the state that you need to worry about. There are a couple of states that will tax people. And there's a couple of situations where if you live in two states at a time, you've got to worry about this. But if you're permanently remotely working from one state, I think that's all you need to worry about.

Sean: Yeah. It might be worth looking into residency definitions of different states and what that might mean for where you're paying taxes. I'm technically a resident of Washington now that I have my house there, and as a Washington resident, the state defines that as having pretty much any tie to the state, like being a homeowner or even having a driver's license practically. It's pretty loose. Whereas Oregon is one of the more strict states. So you have to spend 51% of your time here, I think it is. If someone spends that amount of time in the state, they would be a resident and then they would have to pay Oregon state income tax, which can be pretty high. So it's worth knowing what your state has. But I do understand our listener's concern because I actually was hit with paying income tax to two states when I moved to Oregon from California, because I spent part of the year living in California and part of the year living in Oregon.

I'm not sure exactly what happened. I definitely should have consulted a tax pro at this time, but I ended up paying a lot more in income tax for both states than I anticipated. And I had done certain allocations and did my withholdings so I wouldn't have to pay that much, or at least I thought I wouldn't have to. And then I ended up having quite the tax bill that year.

Liz: Oh, ouch. Yeah, that's why we really, really, really emphasize: have a tax pro. Have somebody you can ask these questions and check in with them. But not just at tax time when you're desperate to file your tax return, but check in with them a couple of times a year or after any major life change or even before a major life change so you understand the tax implications. Some states have reciprocal agreements to make sure that people don't wind up paying taxes in two states. Others will offer you a tax credit. But again, it's different by the state. So you really need to have somebody who understands the tax law to be able to guide you through this.

Sean: With my move to Washington this year — Washington, again, has no state income tax — I'm definitely going to be consulting a tax pro so that Oregon doesn't come after me wanting a whole year's worth of state income tax when I didn't live in that state for the entire year.

Liz: Yeah. This is a tangential issue a bit, but if you're moving from a high-tax state to a lower-tax one, you should anticipate the high-tax state isn't going to want to let you go. So you would need to understand how to establish residency and make sure there's no question that you are a resident. Again, back to the tax pro, who can guide you on this.

Sean: All right. Now I think we can get on to the third question. The third question is really just a bunch of questions that we are condensing into one because we had so many listener questions, voicemails, emails, text messages where people were asking us where they can find high-yield savings accounts. So Liz, where can people find high-yield savings accounts?

Liz: People need to understand that right now, there is no such thing as a "high-yield" high-yield savings account.

Sean: Right. They may be technically called that, but the yield is not very high relatively.

Liz: Yeah. You're not going to be impressed by a double-digit interest rate. That is just not happening right now. And to give some background, high-yield savings accounts are typically offered by, for example, online banks. They don't have the same brick-and-mortar costs so they can offer a higher rate to attract more money. But interest rates in general are controlled by the economy, and what's going on in the broader economy. And right now the Federal Reserve is keeping interest rates low. So throughout the economy, that's why we have cheap mortgages, among other things. But the downside of that is if you're a saver, you're just not getting very much on your money. I still would make the effort to get the little bit more that you can get, but you're not going to be getting 5% or even 2% or even 1% right now. I think it's still sub-1%, right?

Sean: It varies from account to account. That's very important for people to keep in mind. But mine just went from being, I think it was 0.4% last month to now it's 0.5%, which is interesting because they do change over time. But again, I think when I first got it, it was like 1.5%. So it's gone down a good amount since then.

Liz: I remember days when it was 5%. It doesn't seem like that long ago, but geez, that was.

Sean: Right. And even though we're not getting what we used to or what we would maybe want from something that's saying that it's a high-yield account, it's still significantly better than just leaving this cash sitting in your checking account or a standard savings account that traditional brick-and-mortar banks will offer you. So it's worth looking into it and getting one of these accounts if you do have a decent amount of money to save, because you can get some cash back that's basically free for parking your money in this account. With all that said, let's talk about how people can find a high-yield savings account that works for them. Obviously at NerdWallet, we have roundups of different accounts like this, so you can compare different online high-yield savings accounts.

Liz: And you need to know that these are FDIC-insured, just like the savings account at your brick-and-mortar bank. Once you park the money there, when interest rates do go up — and they will eventually — you will benefit from that. Your rate will go up. And it's nice having these accounts away from your regular checking account because it's out of sight, out of mind a little bit. So definitely come to NerdWallet. We do a really in-depth deep dive on these banks, and we talk about interest rates, and customer service, and all the important things that you need to know.

Sean: Yeah, there are too many to list right now of these banks that offer high-yield savings accounts. So check it out. Be mindful of any minimum balances that they might require, any bonuses that they might offer and what conveniences do you want out of an account. Mine is pretty bare-bones. I don't have any checking access with my savings account. If you want that, you might be looking for a different kind of bank than what I have. So there's a lot to consider, but there are plenty of options.

Liz: A lot of these have no minimum balance and no fees. So again, they're very different from your local bank.

Sean: OK. Well, I think we can get on to the fourth question now, which again is from a listener's voicemail. Here it is.

Ren: Hi, Liz and Sean. This is Ren. Recently you spoke about fee-only advisors, and you often recommend getting help from financial advisors. I'm wondering if you can explain the different kinds of financial advisors, how to go about finding the right one for you and what kind of fee structure to expect. For example, I'm a 32-year-old attorney with a lot of student loan debt. I'd love to speak with an advisor about setting up long-term financial goals that include balancing paying into retirement, paying off my student loan and eventually buying a house. How do I find someone to work with who doesn't cost a fortune? Thanks for all your help.

Sean: OK. This is something that I've been thinking about a lot myself. I think I'm getting to that point in my life where I have some financial decisions that are getting a little bit complicated, even for me, and I just want a sounding board really to help me understand whether my decisions are the right ones, if there's a way I can be having my finances set up for more success long-term. So yeah, what do you think about finding a good financial advisor and how to know which one might be good for you?

Liz: I think there's never been a better time to get one, honestly. There are so many different options. It used to be that the really good financial planners were all chasing after the same high net worth people. And on top of that, they charged 1% of your assets. So if you didn't have anything to invest, you couldn't attract one of these planners. Now it's a totally different story. You can find planners who charge by the hour, who charge by the project, who charge a monthly subscription fee — and by the way, that's very, very popular with millennial and younger generations. So there's all kinds of options. What I would say is the first thing you want is to make sure that the financial advisor is a fiduciary, and that's a $10 word that basically means they're required to put your interests first.

Sean: Legally required.

Liz: Legally required.

Sean: Which it's worth pointing out that most financial advisors are not legally required to look after your best financial interest. Think about that. It's pretty mind-blowing. So it's really important that you find one that is, because isn't that what you're paying them for, or what you think you're paying them for?

Liz: Exactly. So you want to be 100% sure that's what you've got. Now, if you've got somebody who's a certified financial planner — that's the credential I have — they're required to be a fiduciary in most cases, almost all cases. A CPA-PFS — CPA personal financial specialist — those are also fiduciaries. And there are a few other designations: accredited financial coach, accredited financial counselor. Those folks as well will be fiduciaries. But again, make sure that they are legally required to put your best interests first.

Sean: One challenge that it seems like our listener's having is just knowing where to find one. One source that I've actually used a lot to find people to talk with for articles I've written is XY Planning Network. There is a huge range of financial advisors on this platform, and you can basically find one that fits your needs. There are a lot of millennial-oriented financial advisors. There are people that are more focused on retirement and how to spend what you've saved in retirement. You can get pretty specific as to what you need them to help you with, and you can find someone that has that specialty.

Liz: Yeah. And you could search on the phrase “advice-only advisor.” I wrote a column a while back that included links to XY Planning Network, to Garrett Planning Network, where the financial advisors charge by the hour, to the association that accredits counselors and coaches. Two other places to check are the National Association of Personal Financial Advisors — that's NAPFA.org — and the Alliance of Comprehensive Planners. So all of those folks are representing financial planners who are fiduciary, and they charge in different ways, but you'll find somebody out there that can help you with this.

Sean: I also want to talk about the other end of the spectrum, which are nonprofit credit counselors. They tend to offer free budgeting advice, typically. You can call them. And if you don't really know where to get started building your budget or understanding how to manage debt that you have, or even just improving your credit, people see pretty good results talking with these counselors. Sometimes they might try to usher you into a debt management plan to help you resolve your debt. You might not need to do that. But it's worth, again, getting another perspective on your finances so you know whether the choices that you're making are best for you.

Liz: Similarly, accredited financial coaches and counselors tend to focus on middle-income, lower-middle-income issues. So if that describes where you're at, they can be very, very helpful. And a lot of credit unions, military organizations — there's a few other places that provide these folks for free, or they might charge by the hour. A lot of times they're on a sliding scale. So getting financial advice has never been easier. Getting fiduciary financial advice has never been easier. And we haven't even gotten into robo-advisors. There's a whole 'nother category of people who can help you out.

Sean: Yeah, there's a whole spectrum of advice from the free nonprofit credit counselors to the maybe-charging-you accredited financial coaches, all the way to the more expensive financial advisors. And then there is a whole class that is not even human, robo-advisors, that can help you manage your money.

Liz: Well, they actually do have humans. I'm sorry, I wasn't clear on that. The robo-advisors are the ones that use computer algorithms to invest your money, but a lot of these companies have realized people want that human touch. They want somebody to talk to. So they do the hybrid thing. You can get access to financial planners, but you also have the benefit of the inexpensive and computerized algorithm doing the investing part. I've kind of graduated through all these. I started with a robo-advisor and then we got our own financial planner that we paid by the hour, and now we have one of the full-service ones that does the assets under management. I'm not super happy about paying an AUM fee, but I have to say that the service we get is definitely top notch. So depending on where you are in your life, any of these things can work out for you.

Sean: I am at that place where I do think I want to set up a meeting and just have a conversation around where I am with my finances, now that my partner and I both have our own houses, we're saving for retirement, we have all these longer-term plans. I want to make sure that I'm doing it the right way. So I think it might start as one one-hour meeting, here where I am, get their perspective. And then if I feel comfortable with that person I might have an ongoing relationship with them, seeing them quarterly, something like that. But also I want to shop around a little bit. I want to be able to work with someone that I can trust and really build an ongoing, multiyear-long financial relationship with.

Liz: Yeah. Listeners, think about this: I've got a financial planning credential. Sean does credit and debt and money, 24/7. We're still looking for advice. Nobody can know all of this stuff, and it really helps to have that objective second opinion to make sure that you're on the right track.

Sean: But that said, it's also worth knowing when a financial advisor does not have your best interest in mind, and is maybe just trying to shill some products, because this is a whole other section of the financial advisor spectrum that you want to stay away from. Our next listener question touches on this. Let's give it a listen:

"Hi, good morning. I do have a question. My financial advisor is trying to have me invest in the VUL, variable universal life insurance. I do want to make sure that this is the right move, or if there is any other type of investment I can do out there that will give me the same benefits as in variable universal life insurance? I just want to make sure I'm making the right decision. Thank you."

Liz: Just a stab in the dark, does your advisor sell life insurance?

Sean: Why is that something that you might not want to get from a financial advisor? Why are some life insurance policies not a good idea? People might not know about this.

Liz: There are cases where variable life insurance is a great fit. The problem is it's often sold to people who have no business buying it. So just to give context, variable life insurance is permanent life insurance. It's meant to cover you for your entire life. Most people don't need permanent life insurance. For most people, their life insurance need is going to be for a finite period of time — a term, if you will. So they need term insurance to cover them for 20 or 30 years while their kids are growing up or they have to pay a mortgage or whatever. They don't have a lifetime need for it. The other thing you need to know is permanent life insurance is very, very expensive. It's 10 times or more what term insurance costs.

Sean: Sheesh.

Liz: Yeah. Well, you're taking the term insurance and you're putting an investment around it, and also you're being covered for life. So the insurance company has got to cover that risk. What we normally tell people is that before you look at any kind of permanent life insurance product, you make sure you have a need for life insurance, because not everybody does; that you need permanent life insurance, again because most people don't; and that you've maxed out every retirement savings opportunity that comes your way, because a lot of these are being pushed for the tax deferral, and until you take advantage of all your other tax deferral options, it really doesn't make sense to pay for this.

So if you're a person like a physician and you've maxed out all your retirement opportunities and you still have money to invest, maybe the variable policy is the way to go. Even then, I would run it past a fee-only fiduciary financial planner before I bought something this expensive.

Sean: Part of why I wanted to include this question in this episode is because it is so indicative of this other section of financial advisors, where they will maybe even have some sort of seminar where they're bringing you in and they're talking about financial empowerment and taking control of your finances and doing what's right for you. And then at the end of the presentation, they're trying to get you to sign up for a product that gives them money. This is not uncommon and something that people should be aware of. And as you mentioned, get a second opinion before you sign up for something like this.

Liz: Yeah. If it's a good fit for you, it will be a good fit for you. It will withstand scrutiny. And honestly, some of these products are pretty cool, and they've got some great features to them, but that doesn't mean you're the right person to invest in them or buy them. They're typically suitable for a fairly narrow slice of the population that you probably don't belong to. So again, if you're curious, if you're interested, run it past a fee-only financial advisor before you invest in something that somebody is making a commission off of.

Well, Sean, that was fun. I would love to do this again. How about you?

Sean: Oh, me too. And that is why we need you, our dear listeners, to please send us your money questions. You know you have them. We're here to help. So again, call or text us on the Nerd hotline. Our number is 901-730-6373. That's 901-730-NERD. You can save us in your phone if you like. Also email us at [email protected], and hopefully we'll answer your question on a future episode.

Liz: So, get in touch.

Sean: OK. And with that, let's get on to our takeaway tips. I can kick us off this time. First up, keep your money flexible. Weigh the pros and cons when deciding between a 15- or a 30-year mortgage, and make sure that you have your other financial bases like emergency and retirement savings covered too.

Liz: Next, high-yield accounts aren't necessarily high yield right now, but you can get a slightly better return and avoid fees. Shop around online to find an account that meets your needs.

Sean: And lastly, know when to get help. Financial advisors can help you navigate complicated financial decisions, but make sure they are required to put your best interests first.

And that is all we have for this episode. For more info, visit nerdwallet.com/podcast, and remember to subscribe, rate and review us wherever you're getting this podcast.

Liz: And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team: Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.