NerdWallet's Smart Money Podcast

Episode: "Invest or Pay Down Debt? Plus How to Save Big This Holiday Season"

Date: October 23, 2025
Hosts: Sean Pyles, CFP®, Elizabeth Ayoola
Guest Contributors: Ana Helhoski (Personal Finance Reporter), Erin Elisa (NerdWallet Data Writer)

Episode Overview

This episode addresses two main themes critical for listeners’ financial well-being:

1. How to Navigate Holiday Spending and Rising Prices: The NerdWallet team shares data-driven insights and practical tips to prepare for pricier holidays and avoid falling into debt traps.
2. Money Question Lightning Round: The hosts answer real-life questions on whether to invest or pay down debt, demystify ETF trusts in robo-advisors, and strategize where to park large down payments before buying a home.

Listeners walk away with actionable ideas for managing their holiday budgets, adapting to rising costs, making smart investment decisions, and preparing for big future purchases—all while balancing risk and reward.

Key Discussion Points & Insights

1. Holiday Spending Stress: Tariffs, Inflation, and Debt

With Sean, Elizabeth, Ana, and Erin Elisa
[00:59–08:21]

• Tariffs and Persistent Inflation:

  • New tariffs are driving up prices on common holiday gifts, including furniture, jewelry, instruments, and vehicles.
    • "There's a much scarier thing happening right now. This year's coming with a big challenge that shoppers weren't facing last year, and that's tariffs pushing up prices on top of some persistent inflation." — Ana [01:47]
  • 2025 NerdWallet Holiday Spending Report reveals that most shoppers now expect higher costs and are adjusting behaviors accordingly.

• Changing Shopping Habits:

  • Shoppers plan to spend on average $182 more on gifts than last year, a jump of 20%.
  • Two-thirds worry about tariffs when budgeting; nearly 20% don’t know how much to budget at all due to this uncertainty.
  • More shoppers consider buying fewer gifts, for fewer people, or shopping earlier to avoid shortages.
    • "28% say they'd shop earlier than usual to avoid potential product shortages caused by those tariffs." — Erin [03:40]

• The Debt Trap & Emotional Cost:

  • 1 in 3 shoppers haven't paid off their 2024 holiday debt; 1 in 10 have debt from multiple years of holiday spending.
    • "Gift giving is a want, not a need. But depending on your traditions with your loved ones, it may feel compulsory, or you may just love giving gifts, but you're digging yourself into a hole." — Erin [04:26]
  • Over 50% say holiday spending causes them stress.
  • 2/3 wish their family traditions were less focused on gifts, but only 20% are talking about spending limits with loved ones.
  • Erin encourages proactive conversations: "If it's not fun, it's probably time to change things up." [04:53]

• New Money-Saving Methods:

  • Price-conscious shoppers still chase traditional deals (Black Friday, Cyber Monday) and, for the first time, 14% plan to use AI like ChatGPT for shopping help.
  • Some will tip service workers less or turn to 'experience' gifts to avoid product price hikes.

• Holiday Travel and Debt:

  • Americans expect to spend $300 billion on travel; 1 in 3 are still paying off 2024 travel debt.
  • 17% have travel debt from multiple years.

• Top Savings Strategies:

  • Fly on non-peak days, stay with relatives, use airline points and hotel miles before they depreciate.
    • "Some people want to kind of hoard them...but since points and miles can lose their value over time, it's probably best to use them when you can." — Erin [07:36]
  • Most important long-term solution: save year-round.
    • "I say it every year...save year-round for your holiday expenses. It happens the same time every year." — Erin [08:09]

2. Listener Lightning Round: Investment, Debt, and Smart Saving

With Sean and Elizabeth
[11:13–22:39]
Three listener questions answered with context, strategy, and clear takeaways.

A. Pay Off Mortgage or Invest?

Listener’s context: 33-year-old seasonal worker, $130K mortgage at 5.07%, $270K home value, considering investing in ETFs vs. paying down mortgage, might rent out condo seasonally.
[11:16–15:19]

• Factors to Weigh:

  • Opportunity cost: mortgage rate (5.07%) is lower than average market return (~10% S&P 500; XLK avg ~22% last decade).
    • "If your mortgage rate is less than the expected long term return of the market...the opportunity cost of paying off the mortgage and not investing is high." — Elizabeth [13:09]
  • Investing has higher potential return, but more risk; paying the mortgage offers guaranteed, but lower, return.
  • Hybrid approach is possible: split extra cash between investing and extra mortgage payments.

• On Renting Out Property:

  • Mortgage interest and property taxes can be deducted if property is rented, but not principal payments.
  • “It’s not as simple as...just saying it’s a rental”—need to check loan terms, get landlord insurance, prepare lease agreements, potentially hire a manager.
    • "I think people think they can just flip a switch and become landlords overnight...I say this not to discourage...but also because I want them to be prepared." — Sean [14:29]
  • Highly recommend consulting a tax professional.

B. Vanguard Robo-Advisor: What’s a “Trust Unit” Investment?

Listener’s context: Using Vanguard Digital Advisor, sees investments not only in ETFs but also in “Vanguard Institutional Total Stock Market Index Trust Unit C” and other “Trusts.”
[16:03–18:24]

• What is a “Trust Unit”?
  • A Collective Investment Trust (CIT); pools money to track an index, similar to ETFs and mutual funds but for institutional investors (like 401ks).
  • Benefits can include lower costs; not open to all individual investors but used by robo-advisors for efficiency.
  • "Where this Vanguard Trust differs...is that it's for institutional investors like 401k plans, banks, or trust companies." — Sean [16:25]
• Are these good investments?
  • They generally offer the same diversification as ETFs/mutual funds.
  • Key is to check overall portfolio fit, fees, and investment goals.
    • "As ever, when considering different funds...think about your overall investment goals, the fees...and whether there are better options." — Sean [17:41]

C. Where to Park a $100K House Down Payment (3-Year Timeframe)?

Listener’s context: 55-year-old, divorced, buying in ~3 years, wants to grow savings but minimize risk, idea to use high-yield savings.
[18:24–22:35]

• Not for the Stock Market:
  • Money needed in <5 years should not go in the market due to potential downturns.
    • "It's generally not advisable to invest money that you need within five years due to swings of the stock market." — Sean [19:27]
• Best Short- to Medium-Term Options:
  • High-yield savings account (liquid, safe, interest is variable).
  • Certificate of Deposit (CD) ladder for additional interest, staggered maturities for flexibility. Spread $100K across multiple CDs and high-yield savings.
• Retirement Planning:
  • Listener also wants to avoid a large mortgage in retirement; consider shoring up retirement savings at the same time.
    • "If they have extra money to put towards mortgage payments during their working years, they may consider doing that to reduce the amount that they pay in interest and pay off the loan faster." — Elizabeth [22:14]

Notable Quotes & Memorable Moments

• "If it's not fun, it's probably time to change things up." — Erin Elisa [04:53]
• "Save year-round for your holiday expenses. It happens the same time every year." — Erin Elisa [08:09]
• "If your mortgage rate is less than the expected long term return of the market...the opportunity cost of paying off the mortgage and not investing is high." — Elizabeth [13:09]
• "I think people think they can just flip a switch and become landlords overnight...I say this not to discourage...but also because I want them to be prepared." — Sean [14:29]
• "It's generally not advisable to invest money that you need within five years due to swings of the stock market." — Sean [19:27]

Timestamps for Key Segments

• 00:59–08:21 — Holiday Spending News, Data, and Strategies (Sean, Elizabeth, Ana Helhoski, Erin Elisa)
• 11:13–15:19 — Lightning Round Q1: Pay Off Mortgage vs Invest (+Renting Q&A)
• 16:03–18:24 — Lightning Round Q2: ETF vs Trust Units in Robo-Advisors
• 18:24–22:35 — Lightning Round Q3: Where to Park a Down Payment for 3 Years

Final Takeaways

• Start early: Save year-round for consistent expenses like holidays.
• Communicate: Don’t be afraid to propose new traditions or budgets to reduce financial stress.
• Opportunity cost matters: Weigh paying down low-interest debt against time in the market; consider your specific situation and risk tolerance.
• Short-term goals need safe vehicles: For purchases in <5 years, keep your cash accessible and insulated from market swings—look to high-yield savings or CDs.
• Check nuances: Rental income and tax strategy requires planning and (usually) professional advice.
• Stay informed: Ask questions and seek clarity on the financial tools and products you use (from robo-advisors to credit cards).

For more detailed resources, check the NerdWallet app, linked guides on high-yield savings and CD rates, and always reach out with your money questions for a chance to have them answered on the podcast!