Podcast Summary: "Are We Okay to Build a New House?"

Podcast: Jill on Money with Jill Schlesinger
Host: Jill Schlesinger, CFP®
Episode: Are We Okay to Build a New House?
Release Date: July 1, 2025

1. Introduction

In this episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger engages in a deep dive discussion with her co-host Joe, focusing on the financial considerations and planning involved in building a new home. The conversation provides valuable insights into balancing personal finances, retirement plans, and the aspirations of constructing a dream house.

2. Setting the Stage

Jill begins by reflecting on the midpoint of the year, emphasizing the importance of reassessing financial plans and making necessary adjustments. She poses critical questions to listeners about their financial strategies for the latter half of the year, such as portfolio rebalancing and retirement account management.

• Jill Schlesinger [00:35]: "Did you rebalance your portfolio, your retirement accounts? Some people do that twice a year, mid-year and end of year."

She also introduces her premium service, Jill on Money Live, highlighting the benefits of subscribing for exclusive webinars and financial content.

3. Listener Interaction: Joe’s Inquiry

The episode transitions to a segment where Jill and Joe address a listener question from Iowa. Joe introduces Jill’s personal scenario of planning to build a new home, outlining her financial landscape.

• Jill Schlesinger [03:50]: "We are in the process of getting ready to build a new home. Now we're in the design phase and planning everything out. We're probably going to break ground next spring."

4. Financial Overview

Jill provides a comprehensive overview of her and her family's financial status:

• Pensions and Income:

  • Jill: 57 years old, retired school teacher with a state pension of approximately $4,400/month.
  • Wife: 52 years old, actively teaching, earning about $5,000/month, with an upcoming pension in four years.
  • Real Estate Income: Jill, now a realtor, projects earning around $100,000 in her first full year.

• Investments:

  • Roth IRA: $1.1 million
  • 403(b): Approximately $505,000
  • Brokerage Account: $60,000
  • High-Yield Savings: $40,000 - $50,000

• Education Funds:

  • Oldest Child: $5,000+ in a 529 plan for senior college year.
  • Youngest Child: $100,000 in a 529 plan for college.

• Debt: Debt-free, with current living expenses around $6,400/month.

5. Building the New Home: Financial Planning and Strategy

Jill and Joe delve into the specifics of constructing a new home, addressing potential financial challenges and strategies to mitigate risks.

• Current Home and Lot:

  • Existing Home Value: Estimated at $450,000
  • Lot Cost: Already paid for at $220,000

• Construction Costs:

  • Initial expectation to build the same as selling the current house, but realistic projection is double, approximately $900,000 to $1 million.

• Financing Strategy:

  • Jill plans to sell the current home to fund part of the construction.
  • Down Payment: $450,000 from the sale.
  • Additional Cash: $100,000 from real estate income.
  • Loan: Approximately $450,000 to $500,000 via a construction loan at around 8% interest, with the option to convert to a 30-year fixed mortgage upon completion.

• Projected Expenses Post-Construction:

  • Increased monthly expenses estimated between $2,500 and $3,000, totaling around $10,000/month including the new mortgage.

• Joe’s Advisory Points:

  • Emphasizes the importance of not overextending financially, especially given their substantial pensions and additional real estate income.
  • Joe [14:24]: "With the two pensions plus your real estate income, you should be comfortably covering your expenses."
  • Suggests maintaining investment accounts intact to allow for growth and using them as a buffer if unexpected expenses arise.
  • Recommends prioritizing paying off higher-interest loans to secure a guaranteed return on investment.

• Risk Mitigation:

  • Jill expresses concerns about reintegrating mortgage payments after 15 years without one.
  • Joe reassures, highlighting the stability provided by their pension incomes and real estate earnings.
  • Joe [17:00]: "If you're making $100,000 a year, you can take that extra cash and just pay this thing off."

6. Emotional and Practical Considerations

Jill shares her emotional reservations about reintroducing mortgage debt after being debt-free for 15 years. Joe reassures her by underscoring their robust financial foundation.

• Jill’s Concern [16:06]: "It's just hard, you know, in my emotions because we've haven't had a mortgage in 15 years."
• Joe’s Reassurance [16:14]: "You're going to live in your dream house and that dream house doesn't come for free... You have those pensions and that's a real critical part of the equation."

7. Personal Touch and Community Engagement

The conversation takes a lighter turn as Jill and Joe discuss local interests, such as the Iowa State Fair, and extend congratulations to Jill on her successful transition to real estate.

• Jill on Real Estate [20:32]: "I've always enjoyed like going to open houses and those kinds of things. As I got towards the end of my teaching career... I needed a new challenge."
• Audience Engagement: Encourages listeners to reach out via Jill on Money Live for personalized advice and to share their financial journeys.

8. Conclusion and Key Takeaways

Jill and Joe wrap up the episode by summarizing the key points:

• Financial Stability: With substantial pensions and a growing real estate business, Jill and her family are well-positioned to undertake the construction of a new home without jeopardizing their financial security.
• Strategic Planning: By leveraging existing assets, utilizing construction loans wisely, and maintaining a buffer through investments, they can achieve their dream home while safeguarding their financial future.
• Emotional Balance: Acknowledging the emotional challenges of taking on new debt, yet balancing it with rational financial planning and steady income streams.

Notable Quotes:

• Jill Schlesinger [04:22]: "We aren't overextending ourselves in terms of building too much house, given our incomes, retirements, different stages of life."
• Joe [14:24]: "With the two pensions plus your real estate income, you should be comfortably covering your expenses."
• Jill Schlesinger [16:06]: "It's just hard, you know, in my emotions because we've haven't had a mortgage in 15 years."
• Joe [17:00]: "You could take that money and just slap it down on that 8% loan... you're earning an 8% guaranteed return."

Final Thoughts

This episode serves as an excellent case study for listeners contemplating significant financial decisions, such as building a new home. Jill Schlesinger and Joe provide a balanced perspective, combining emotional considerations with practical financial strategies to navigate the complexities of home construction within a secure financial framework.

For more insights and personalized financial advice, visit jillonmoney.com and explore the Jill on Money Live subscription for exclusive content.