So Money with Farnoosh Torabi

Episode 1908: Ask Farnoosh: HELOCs, FSAs, Early 401(k) Withdrawals & Helping Aging Parents
Date: November 22, 2025

EPISODE OVERVIEW

This Friday “Ask Farnoosh” episode dives into timely financial topics on homeownership, savings strategies, and caring for loved ones across generations. Farnoosh shares a thoughtful “financial weather report,” responding to major headlines and then jumps into audience questions about home equity loans, maximizing health savings, early retirement withdrawals, and supporting parents without sabotaging your own future. She balances expert insight with empathy and practical advice—all with her signature warmth.

KEY DISCUSSION POINTS & INSIGHTS

1. Financial Weather Report: Housing Regret, Delayed Milestones, and Lending Law Rollbacks

• Pandemic-Era Mortgage Regrets

  • Many who bought homes with ultra-low rates (<3%) now feel stuck because rates have risen to 7%+.
  • “It became the golden mortgage—and now it's become the golden mortgage with the golden handcuffs.” (Farnoosh, 03:40)
  • 1 in 4 regret buying, and 40% say homeownership is holding them back from other life goals due to underestimated costs or changing needs.
  • Homebuying during crisis shaped lives in unforeseen ways; stability can feel like confinement.

• Homeownership and Delayed Life Milestones

  • Over 70% of aspiring homeowners are postponing marriage, kids, and career moves until buying homes.
  • For Gen Z, 84% report putting off major milestones, believing homeownership is a prerequisite for “moving forward” in life.
  • Farnoosh’s take: “Can we just move on? You can actually grow wealth in the stock market... You can rent, you can have mobility. I get it. Homeownership—I own a home—but I always have said: I’ve rented in between homes.” (Farnoosh, 06:36)

• Consumer Protection Rollbacks

  • The Consumer Financial Protection Bureau (CFPB) is considering weakening anti-discrimination lending protections (disparate impact doctrine).
  • Farnoosh warns this could negatively affect fairness in mortgages, auto loans, credit cards, and small business financing.
  • “These guardrails are part of the structure of the financial game that we're all playing. The CFPB changing the rules, that's something we should all be watching.” (Farnoosh, 08:54)

2. Mailbag: Listener Financial Dilemmas

a. Should I Take a Bigger Home Equity Loan to Replenish My Emergency Fund?

(Abby’s question, 18:21)

• Abby used savings for renovations; her emergency fund is down to $10k. She considers borrowing $30k instead of $20k on her home equity loan to restore savings, given a much better rate (6.75%) than on credit cards.
• Farnoosh’s advice:
  • Yes, it's smart to borrow extra now to protect your emergency fund—depleting it puts you at risk.
  • “Protecting your emergency fund should be a priority...Once your fund dips below two months of basic expenses, you're in risky territory—you're playing defense with no goalie.” (Farnoosh, 18:50)
  • Home equity loan gives you flexibility to repay faster if possible, and it’s vastly better than 25%+ credit card rates.

b. How Can I Maximize My Husband’s FSA If I’m Self-Employed?

(Holly’s question, 21:10)

• Holly’s husband just got a new job with FSA benefits; Holly is self-employed and wonders if she can benefit.
• Farnoosh confirms:
  • You can use FSA funds as his spouse, regardless of your insurance situation.
  • FSAs cover a wide range of healthcare costs (prescriptions, dental, eye care, therapy, feminine products, etc.)
  • Be careful not to over-contribute—FSAs are “use it or lose it.”
  • If there’s a Dependent Care FSA, that's even more valuable (covers daycare, camps, after-school, up to $5,000).

c. What’s the IRS Rule for Withdrawing Retirement Funds Early Without Penalty?

(Carolyn’s question, 24:35)

• Carolyn heard about early retirement withdrawals and wants clarification.
• Farnoosh explains:
  • The “Rule of 55” lets you tap your current 401(k) penalty-free if you leave your job during or after the year you turn 55.
  • The other option is IRS Section 72(t) (SEPP): a strict plan, often called a “financial prenup with the IRS” (Farnoosh, 26:03), where you must withdraw a calculated amount every year for at least 5 years or until you’re 59.5 (whichever is longer). No flexibility once you start.|
  • Be extremely careful—once you start, you can’t change the plan, add money, or stop.

d. Is Buying My Parents a Home Jeopardizing My Own Retirement?

(Megan’s question, 27:45)

• Megan bought a home for her parents (and disabled sister), pays the entire mortgage, can only max her IRA, and worries about her retirement at age 33.
• Farnoosh’s perspective:
  • “What you’re doing is absolutely profound...But I do worry about you. I want you to have scaffolding, structure to support you and your financial goals.” (Farnoosh, 28:00)
  • You’re not ruining your retirement, but need a strategy. Consistently maxing your IRA is great; $40k by 33 is strong.
  • Explore if parents can contribute, seek assistance, and create backup plans (e.g., renting a room if needed).
  • Build a robust emergency fund—for yourself first; “put your own oxygen mask on before helping others.”
  • Consider opening a simple taxable brokerage account to supplement future retirement savings, even if starting small.

NOTABLE QUOTES & MEMORABLE MOMENTS

• On “Mortgage Golden Handcuffs”:
  “Many homeowners now feel grateful for their low mortgage and trapped by it at the same time, as if the home is the one making their life decisions.” (Farnoosh, 05:20)
• On Homeownership Pressure:
  “We have this ginormous cohort of Americans saying homeownership—even with a 3% interest rate—is challenging, while another cohort says: homeownership or bust. We will give up on marriage, kids, career until we can buy a home. Wow, that's crazy. I think that's crazy.” (Farnoosh, 07:02)
• On Lending Regulations:
  “These guardrails are part of the structure of the financial game that we're all playing. The CFPB changing the rules, that's something we should all be watching.” (Farnoosh, 08:54)
• Emergency Fund Logic:
  “Once your emergency fund dips below two months of basic expenses, I think here you're in risky territory. You're playing defense with no goalie. Ideally, you want five, six months of expenses shored up. So replenishing it now is wise.” (Farnoosh, 18:50)
• On Caregiving and Financial Self-Preservation:
  “You have to put your oxygen mask on first. Caregiving is unpredictable, it's expensive, and you're a generous person—I can tell. So your inclination is probably always to give to others before you take care of yourself. So I want you to prioritize yourself.” (Farnoosh, 29:20)

TIMESTAMPS FOR IMPORTANT SEGMENTS

• Financial Weather Report & Housing “Handcuffs” – 02:43–08:30
• Millennials & Gen Z Delaying Major Milestones – 06:14–08:30
• CFPB Rollbacks Explained – 08:30–10:48
• Listener Mailbag Begins – 18:21
  • Home Equity Loan Emergency Fund Advice – 18:21–20:45
  • FSA Maximization for Self-Employed Spouse – 21:10–23:28
  • Early 401(k) Withdrawal Rules Explained – 24:35–27:19
  • Supporting Parents Without Harming Your Future – 27:45–30:06

SUMMARY

Farnoosh unpacks the emotional and financial consequences of pandemic-era housing decisions, rising rates, and shifting protections around equitable lending. She challenges the cultural fixation on homeownership, urging listeners to find flexibility in building wealth and life satisfaction. In the mailbag, she blends tactical guidance with deep compassion, reminding listeners that financial resilience means protecting themselves first—even when caring for loved ones. This episode is a guide for anyone balancing immediate generosity with long-term self-care, navigating America’s evolving financial landscape.

For more advice or to submit your own question:
Email Farnoosh at farnoosh@somoneypodcast.com or DM on Instagram @farnooshtorabi.