← So Money with Farnoosh Torabi
So Money with Farnoosh Torabi
1986: Ask Farnoosh: AI Financial Advisors, Buying a Home With Existing Debt & Paying Off Loans Early
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this podcast is supported by MIDI Health. Are you in midlife and feeling dismissed, unheard or just plain tired of the old healthcare system? You're not alone. For too long, women's serious midlife health issues have been trivialized, ignored and met with a just deal with it attitude. Many of us have been made to feel ashamed or forgotten. In fact, even today 75% of women seeking care for menopause and perimenopause issues are left entirely untreated. It's time for a change. It's time for miti. MIDI is not just a healthcare provider, it's a women's telehealth clinic founded and supported by world class leaders in women's health. What sets MIDI apart? We are the only women's telehealth brand covered by major insurance companies, making high quality, expert care accessible and affordable for all women. Our clinicians provide one on one face to face consultations where they truly listen to your unique needs. We offer a full range of holistic, data driven solutions from hormonal therapies and weight loss protocols to lifestyle coaching and preventative health guidance. This isn't one size fits all care. This is care uniquely tailored for you. At midi, you will join our patients who feel seen, heard and prioritized. You will find that our mission is clear to help all women thrive in midlife, giving them access to the healthcare they deserve. Because we believe midlife isn't the middle at all. It's the beginning of your second act. Ready to feel your best and write your second act script? Visit joinmidi.com today to book your personalized insurance covered virtual visit. That's joinmitty.com the Care Women Deserve
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this episode is sponsored by study.com Let me ask you something. Have you ever looked at your college degree or your kid's future college bill and thought there has to be a more flexible, more affordable way to do this? That's exactly where Study.com comes in. It's an affordable platform where you can earn college credit Online. With over 220 online college courses, including the core classes like English, math and history. The big win here, it's on your schedule. You can literally study from your phone or computer whenever it works for you. And if you're thinking long term financially, this is smart. You can knock out your gen eds, get ahead on your degree and potentially save both time and money in the process. Their courses are designed to transfer to over 2,000 colleges and universities, which is huge if you're trying to stay flexible. And the cost $95 a month, which compared to traditional tuition is worth a serious look. If you go to study.com podcast to browse courses and get 10% off your first month when you sign up, that's study.com podcast. So money episode 1986 ask Farnooch. You're listening to so Money with award winning money guru Farnoosh Tarabi. Each day get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh herself. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to Sew Money. Welcome back to Sew Money everybody. Friday, May 22nd Memorial Day weekend. What are y' all doing? We are supposed to have a yard sale on Sunday along with a lemonade stand. Crossing my fingers that we don't get rained out. My daughter especially is really looking forward to that lemonade stand. A because her friends are going to be joining her and she has decided that she's going to offer in addition to chew lemonade, your $1 or $2 will go towards also a magic trick. So last weekend she used her allowance money to buy a box of tricks from the toy store. Did you know you could do this? It was like 30 bucks and it came with like 60 different hat tricks mostly. And so she is going to play magician and have a lemonade stand. My son, on the other hand, has already compiled boxes full of books and comic books, soccer jerseys. I'm telling him a we might get rained out, but B even if people come, they may not be in the market for a soccer jersey. But you know what, there's always the Internet. So that is our next move. I'm going to introduce him to the world of online resale. So much learning going on in my house, but I think the jerseys could go for a pretty penny, especially with the World cup happening soon. Today we're talking about should we give AI our bank account information, any advice for a couple that wants to buy a home next year. And then I found this incredible article, five money moves that helped a 32 year old father become a millionaire in just nine years. I mean, that headline, talk about clickbait, that was in Market Watch. But the things that he did, I'm going to share with us because I think, you know, they're worth sharing. He made some smart moves. Before we get to the mail, before we get to the news, let's talk about the episodes that you may have missed this week. On Monday, I sat down with our friend Stephanie o'. Connell. She's a financial journalist, researcher and author of the new book the Ambition Penalty, which offers so much data. Finally, the numbers, the receipts that talk about why women do not get ahead in the workplace. Like their male counterparts, women today are more educated than ever. We are more ambitious than ever. We're more likely to be the breadwinners and the business owners and the leaders in our households and our communities. But and yet, despite decades of progress, we still have the pay gap. We still have many barriers that we hit at work. And many women still feel punished for wanting both financial success and personal fulfillment. We feel like it's either or. And Stephanie writes in her powerful new book, how Corporate Culture encourages women to strive, achieve and even lean in, but just penalizes them once they begin claiming real power, money and authority. I mean, it's true if you think about when you were younger, as a girl, a daughter growing up, what, what was the message you got? You can do anything. You deserve to have everything boys have. Don't let anyone tell you you can't do something. And then we believe that and it is true. We get to the workplace, though, and it's a different game, right? Different messages that we get. Then on Wednesday, a conversation about autism, employment and this workplace gap that we don't talk about enough. Dr. Helen Genova joined me. She's the associate director of the center for Autism Research at Kessler Foundation. And we focused on this area of her work that is having a really profound impact right now, helping autistic young adults navigate the hiring process and the workplace culture. And also what can employers do and how should they rethink what inclusion and talent recognition looks like? There's a lot of education that we still need to have on what is autism, how it's not necessarily a barrier for someone to get hired and be successful at work. So check out those episodes if you missed them this week. All right, so remember how we talked about last week how more Americans are leaning on artificial intelligence to solve their money problems? There was this huge study and turns out many people are turning to tools like ChatGPT and Claude to answer questions about budgeting and mortgage questions. Well, last week ChatGPT launched personal finance tools in its pro version. The company released a preview version of a personal finance feature for ChatGPT Pro users. Now, only select users for now will be able to connect their accounts across more than 12,000 financial institutions to the chatbot. I repeat, connecting your accounts to the chatbot to view a financial dashboard of your recent account activity and of course, ask the AI questions about your money situation. The feature includes a partnership with Intuit, which is a financial software company. Users will be able to schedule sessions with local tax Experts, all within ChatGPT. Obviously, this is raising eyebrows because some people are worried about their security. They're wary of giving out sensors sensitive financial information about themselves, especially to an AI chatbot that had already a major data leak scandal not that long ago. So you might be thinking, like, what? What in the what? Like, why would I want to do this? OpenAI, which owns ChatGPT, they claim that there is some existing appetite for it. More than 200 million people every month ask for ChatGPT's help on all the things investing, budgeting, financial planning. And the company says that with this tool, the practice will be safe, the bank accounts will be securely connected, and ChatGPT will not be able to see, quote, full account numbers or make any changes to your accounts. Well, I say let these pro users go for it, and I'm not going to be the guinea pig here. The chatbot will be able to access your balances, your transactions, your investments and your liabilities to then be able to give you better answers to your questions. Yeah, let me know how it goes, everybody. Also in the news, and this connects to a question in our mailbag. Fewer people are choosing to wait on the sidelines for mortgage rates to drop. And home buying is picking up. U.S. news World Report has come out with its annual spring Home Buying Guide. They asked over a thousand Americans questions like, are you in a wait for rates to drop to buy a home? And this year, 62% of people said, yes, but compared to last year, that is a significant decline. Last year, 80% of Americans said, nope, we're not buying. We gotta wait for these interest rates to drop. Well, interest rates have not dropped. And in fact, they may even go up in the coming months and year. And of the people who waited to buy those 80% of Americans last year, 41 say they regret doing so because they're looking now at the market. They're still not homeowners and they are having some remorse. Fannie Mae Mortgage Bankers association and Wells Fargo project that higher rates are here to stay. They believe they're going to be staying above 6% for the rest of the year well into next year. And the national association of Home Builders believes that rates will hover just below 6%. If you want to be optimistic, if you're waiting for those 3% rates, analysts say they're not coming back, unfortunately. And people have just gotten used to these 6% rates. I will tell you, the first time I bought a home in 2004, I believe, or it was like late 2003, my rate was 6.5%. Nobody blinked an eye. All right, now I want to turn my attention to this Market Watch article that is entitled 5 Money Moves that made this 32 year old dad a millionaire in just 9 years. It's by Vanessa Wong at Market Watch. And it's pretty remarkable in many ways considering how challenging of a time it is for anyone to live live below their means. But Blake Edwards and his wife were able to do this throughout their twenties. They were very diligent with saving money and investing. They even bought a home. And guess what? Now they have three kids. And they didn't start out rich. They didn't have family money. In fact, their salaries were quite low. I'll get into it now. So he, Edwards worked in sales after college. He earned less than $60,000 in this job, which is not a little bit of money. I mean, that's like the average income that a college educated person is making now. His wife, though, made $10 an hour at her job and she had a college degree. He then switched careers and became a teacher, which was not a pay bump. His salary dropped to $19,000 per year. And even still, he and his wife combined income of less than $100,000. They remember thinking, you know what? It would be cool to be a millionaire by 30. Yeah, I'd say so. But how are you going to do it? Would be my next thought. And they just figured like, there's no way the math Won't work. But they did it. And here's how they did it. Okay? Number one, they got a degree to increase their earning potential without taking on student loans. He went to a cheap in state school where his tuition was covered thanks to a sports scholarship, which I know can't be everybody, but he specifically chose an affordable school where the scholarship would cover the rest of it. His parents were helpful. They paid 420 bucks a month for his rent and his groceries. Then in grad school though, he went to grad school, he took advantage of an employee benefit that paid for half the cost of his $12,000 program and he covered the rest himself. This education, this retraining helped him basically pivot to tech, from teaching to tech, get a higher salary. And this is it, right? This is where so many Americans go wrong and they go financially bankrupt. And for years, it takes years, decades for them to recover from this moment. This decision, it is a high stakes decision. I will say this with a lot of fervor in my voice. My husband, you know, I don't yell but when I talk like this, he goes, why are you yelling? I'm like, I'm not yelling, I'm just very passionate. It's the passion and fire in me. And I will say this until the cows come home. Louder for everybody in the back. College needs to be a return on investment. It is not a social experiment. The fact that you're going to grow as a human in college and make friends and experience cool things is important and we should all want for that and have that through our four year college experience. But the most important thing is that the money you pay will pay off pretty quickly in the workforce. And I don't mean like in 10, 20 years once your student loans are out of the picture. The idea that, and this is a lot of people's idea, they're going to go to college and finance the whole thing. With student loans, it's like shooting yourself in the foot. You are shooting yourself in the foot. It is very difficult, it is so difficult for anyone who does that to be able to make ends meet in their 20s and their 30s. Unless there's an outlier of an event. You know, they, gosh, they, they marry a wealthy person, they're, they inherit a bunch of money. They work for a startup at the startup IPOs and now they have a million dollars in the bank. I have a friend who's turning 40. She's still paying off her student loan debt from undergrad and graduate school and she has a really really important job. She's doing God's work with this job and it's just not fair. Right. No one told her when she was 18, hey, let's think of a different way to get this education, even if it means delaying it by a year because you have to go work and save up money to be able to do this. In the grand scheme of life, you will be so grateful that you took your time and were a little bit more careful about the cost and the implications of taking on debt. So the fact that this is number one of the five, five things he did, it tells us something, right? Because this is the decision that's going to pay off not just right away, but forever. So get a degree. Yes. To increase your earning potential. Yes. But not with student loans. A little bit of student loan debt, okay. But more than 30 or 50% of your college education, finance by loans. I don't, I just don't see a bright future there. Next, he invested. He automatically invested he and his wife at least 15% of their gross income, no matter where their salary sat, whether they were making $19,000 a year, $100,000 a year, $200,000 a year, 15% minimum. They also saved 10% of their take home income for emergencies and future expenses. And they tithed an additional 10% to their church because that was important to them. They also now invest most of their annual bo. Third, this is right out of the millionaire Next door book. They paid for their cars in cash, which is really difficult to do these days because a brand new car, an SUV for a family, which is what I feel like a lot of families want, starts at like 38,000, 40,000. That's on the cheap end. It goes all the way up to ninety, a hundred thousand dollars depending on the kind of car you want. He had the advantage of receiving his first car from his parents, which was the 2013 Kia Optima. But then he said his wife bought a used 2016 Toyota Highlander a few years ago without borrowing. She took advantage of the high trade in price offered for her previous vehicle when used car prices were soaring after the pandemic and covered the rest with savings. They buy quality cars, he said, using good old consumer reports as a guide for reliability. Fourth, they kept their total housing costs below 25% of take home payments. This is a big one too, because a lot of Americans, we say it all the time, don't spend more than 30% of your gross income on housing. And if you can stick in your taxes and your insurance and your maintenance costs into that 30%. Even better. That's really difficult today, right? Because now average home prices are about $400,000 and incomes have not kept pace with home prices. He bought his home in 2020 in the Atlanta suburbs for $250,000. So low price, low interest rate. He pays about 1400 bucks a month for the mortgage. Okay, so that I don't know if that can be replicated today, but it's not the only thing that he did right. And number five, this is cool. I feel like this should have been the headline. I'll be honest, nothing tests my patience quite like sitting on hold listening to the same four bars of music on repeat. Turns out all that time adds up. The average person spends over 40 days listening to that dreaded hold music. 40 days. This episode is sponsored by Parloa, the agentic CX platform built to turn customer conversations into lasting loyalty. Parloa's AI agents run 24. 7 across voice, chat and email in any language with ultra low latency enterprise grade security and seamless integrations into your existing systems. Cross turn memory means every customer is recognized across every interaction. No repeating, no restarting. The world's biggest brands trust Parloa because they know that at enterprise scale, exceptional customer service can't be a goal. It has to be a given. See Parloa's AI agents in action at parloa.com that's P A R L O A dot com. I know a lot of you listening are small business owners and you can probably relate to this. Juggling multiple disconnected apps to manage your financ, feeling anxious about taxes or behind on your books, keeping up with invoices and honestly just wondering some months where all the money's going. That's why I want to tell you about Found. 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this podcast is supported by MIDI Health Are you in midlife and feeling dismissed, unheard or just plain tired of the old healthcare system? You're not alone. For too, women's serious midlife health issues have been trivialized, ignored and met with a just deal with it attitude. Many of us have been made to feel ashamed or forgotten. In fact, even today 75% of women seeking care for menopause and perimenopause issues are left entirely untreated. It's time for a change. It's time for miti. MITI is not just a healthcare provider, it's a women's telehealth clinic founded and supported by world class leaders in women's health. What sets MIDI apart? We are the only women's telehealth brand covered by major insurance companies. Making high quality, expert care accessible and affordable for all women. Our clinicians provide one on one face to face consultations where they truly listen to your unique needs. We offer a full range of holistic data driven solutions from hormonal therapies and weight loss protocols to lifestyle coaching and preventative health guidance. This isn't one size fits all care, this is care uniquely tailored for you. At midi, you will join our patients who feel seen, heard and prioritized. You will find that our mission is to help all women thrive in Midlife, giving them access to the healthcare they deserve. Because we believe midlife isn't the middle at all. It's the beginning of your second act. Ready to feel your best and write your second act script? Visit joinmiddie.com today to book your personalized insurance covered virtual visit. That's joinmitty.com the Care Women Deserve.
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There need to be more stories about this. He set aside money to take advantage when opportunities came up. So we all save for specific goals, and that is very important. We need to know where our money is going. But if you have extra and you're not sure what to do with it, don't just spend it. Continue to invest it if you can. If you don't know what you need it for today. And Edwards and his wife began saving in a money market account. Uh, they wanted to initially pay off their mortgage early, which I would have said maybe you could hold off on that. In any case, the market dipped a lot, fell a lot in April 2025 when the Trump administration announced their proposed tariffs, if you recall. And at that point, they had amassed about a hundred grand in the account. Well, rather than pay off their mortgage early, they decided to buy shares of the total stock market ETF from Vanguard. It was not a planned move, but they realize stocks are down and they're in this for the long run, right? Maybe they're 30 at this point. They invested in the US stock market at a cheap price, a cheaper price, and since then, we know the market has had a pretty good run. That move turned into a net worth increase of about $45,000, an extra 45 grand from that one move. They had the money saved. It was earning nothing percent in a money market account. They shifted gears and put it in the stock market rather than paying off their 3% interest mortgage. I'm guessing it's 3%. They bought it in 2020, maybe even less. Brilliant. Brilliant. I think that there is more to say, more that we need to talk about this idea of just investing. To invest, you don't need to know what the goal is going to be. There will be opportunities in life that will beg you for this money, whether that's, you know, investing more or it's starting a business, leaving your job because you're burned out and you need Runway to regroup and figure out your next step. Your rainy day account doesn't usually cover for that kind of stuff. Right. That's just in case, like, your car breaks down, you get a medical bill, your roof needs some work, whatever. But this, these Five figure amounts that only the stock market can really deliver with. Compounding that money, in addition to having a retirement account, have something else for yourself. I say this especially to all my female audience members. I started doing this myself in my 30s, quietly tucking away a little bit into a US stock market fund. And when I hit 44, which Stanford University medical experts say is like an age in your life when you age in a burst. That happened to me and suddenly I felt like life went in slow motion and I was really having to pay more attention to my body and things got slower for me for a little bit. I couldn't go at the thousand miles per hour that I had been for my entire adult. I needed a timeout card a little bit. I didn't take a sabbatical. I just needed to do a little bit less and realized that making more money and making more money and making more money for me had always been the goal. But what if it didn't have to be this year? And that year I had this investment account that had been growing and growing, growing, finally giving me permission to do that, to say, okay, there's enough in here where I can say no to this opportunity, say no to that opportunity. Not have to do this, not have to do that, because I'm protected and I can prioritize myself now in a way that I hadn't been able to do before. So this article, it brought that up for me and I now share that with you as hopefully inspiration to see why there is so much of a gift in setting aside money for yourself. And you don't have to know why it's there or what it'll be for, but trust me, your life will decide for you soon enough. All right, let's go to the mailbag. We have a question from Ruby in the audience, a listener who says Farnoosh, my husband and I recently got married last week. Well, congratulations. She says my apartment lease will be ending soon. I'm going to be moving into my husband's house later this year. His house is on the smaller side. So we're looking to buy a home for the two of us in December 2027. So about a year and a half from now, at that time, we should have a down payment of $60,000. He doesn't want to sell his current home, just wants to rent it out. So what will this mean for us? What does the home buying process look for us since he, one, won't be a first time home buyer and two, he's going to have about $130,000 left on his current mortgage. Well, Ruby, once again, congratulations on your marriage. This is very exciting. I love that you two are taking time to save up. A few things to understand because this is not your husband's first time buying a home. When you go to do it in 2027, and assuming you're going to be doing this jointly just means that you won't qualify for first time buyer perks or any sort of special loan programs. But from a mortgage approval standpoint, owning another property is not a deal breaker. What the lender cares most about is the financial picture that you both present. Your combined income, your credit scores, your down payment and the monthly payment on his current mortgage will be taken into account as part of the overall debt to income ratio. When the banks look at your application, they do count the current mortgage, the mortgage of his first home against you unless you are already renting it out. And that rental income can show that it's offsetting the monthly payment for that mortgage. So one thing to consider is maybe renting it out before you apply for a loan so that you can show the bank that this mortgage, while it is debt, the home is producing income. And so at the end of the month, at the end of the year, the home is actually net, sending you positive income. It would mean that you would probably have to move out. And it's one more move, right, Moving into a rental property. In the meantime, if you're worried that this debt, this outstanding, what did you say, $130,000 could work against your debt to income ratio. Now, the debt to income ratio, typically most conventional lenders want to see a debt to income ratio that's below 43%, though many prefer it closer to 36% for the strongest borrowers. So that means you're going to take all your monthly debt payments divided by gross monthly income. That's DTI debt to income ratio. And those debts include the mortgage as well as property taxes and homeowners insurance and car loans and student loans and any minimum credit card payments that you have, personal loans. So adding all that together, does that equal less than, to be safe, 36% of your gross monthly income, combined gross monthly income. If the answer is yes, then there's probably no risk in showing that you own this property even though you haven't rented it out and you want to buy another property. One thing you could say is to the bank, look, we have an intention to rent out this initial home. Underwriters typically won't count future hypothetical rental unless you can document it. And there Are some ways lenders sometimes work with this. If they see a signed future lease agreement, if they see a proof of security deposit from incoming tenants, you could show them an appraiser's market rent estimate. So you could say, I haven't rented this out yet, but here's what the forecast is. If I do rent it out, or if he's rented out in the past, which it doesn't sound like he has, what did he earn for it? And all this you could present to the bank. Some lenders will allow anticipated rental income to offset the old mortgage and knock down your debt to income ratio. But it really just depends on the lender. So my advice is you say you want to purchase the home at the end of 2027, about six to nine months before you plan to buy. I would sit down with a mortgage broker, possibly an accountant, and maybe even a local real estate agent, run the numbers as a keep and rent scenario and see where you land for your debt to income ratio. Maybe the mortgage broker could recommend lenders where this would not be an issue. The other thing you might want to consider, and you probably already have, but I'm just going to throw this out there again, is selling the home and shoring up that cash and buying a slightly larger home, or just having that money in the bank and investing it. So, you know, owning a home, it's not just paying the mortgage, right? There are repairs, there are going to be vacancy periods, there's property taxes, maintenance, and there might be overlap periods when tenants are leaving and new tenants are coming in. Think about, really reflect on what it would mean to cash out and have that money at the beginning of your marriage. Real estate, yes, can be a wealth building asset, but it's really important that you do the math. And even if you can get rent for this home that exceeds the monthly mortgage, have you looked at all of the other carrying costs to see if it's really worth it to keep the home? Is it appreciating at all where in the future you could sell it and still make a profit after all the expenses that have gone into it? Or simply would it be better to cash out, sell the home, cash out, and park that money in a diversified portfolio, investing for the long run using the market as a tool as opposed to real estate? Something to think about. Thanks for your question and congrats again. Really appreciate you reaching out. And by the way, everybody can reach out to me on Instagram, arnooshtrabi. My DMs are open. All right, the next question from Carla, who writes, hey farnooge. I am fortunate to have no debt other than my auto loan that I took out a few months ago for a new car. This is my first time having a car that's all mine and not shared with my relatives, which is really exciting. And believe it or not, the dealer's interest rate was four and a quarter percent and that was way better than what my credit union was offering at the time. It's a 60 month loan, but as someone who doesn't like debt, I want to pay it off as soon as possible. I'm finally down to about $1,000 left on the $15,000 loan. And my question is, now that I'm at this finish line almost, would there be any negative consequence to paying this loan off early? I asked about a prepayment penalty when I signed the loan. I got a document saying that there is none. But would this affect my credit like closing a credit card would? And if so, would it be that bad? Especially considering that I'm not planning any big purchases anytime soon. I know many folks in the financial space might say, well, it would be better to just pay off the loan down more slowly and invest the money instead. But I just don't like debt. And unless there's a major consequence for getting this done, I like the peace of mind that comes with not owing any money. All right, Carla, great question. You know, given that we just finished talking about how you don't want to ever have a car loan if you can afford it. You had a car loan, you want to get rid of it. I'm not going to tell you you're right or wrong here. Look, you're almost at the finish line. If you had asked me at the beginning, I might have said, hey, there's other things you can do with this money. But look, you're happy. It didn't burn your financial life. And it's a great feeling, right, to be debt free. That is not a small thing. And our emotions matter. If you've ever listened to this podcast, you know, Asia Evans is a financial therapist. She's been on many times and she's got this book out called Feel Good Finance. It's all about how to bridge the gap that we often have between how we feel and how we're managing our money. And it's important to build that healthy bridge. If for you, Carla, that means that you're going to focus on your debt sooner than later, even if the interest rate is not too, too high, then so be it. And be proud of that. That you're tackling this loan and you're almost at the finish line. Just a thousand dollars left. So let's break down this step by step. Yep, these are really good questions that you ask. There is no prepayment penalty. Great that you checked on that. If you are going to prepay any loan, everybody listening. Any loan, any student loan, personal loan, car loan, your mortgage, you must read the fine print, because not all financial institutions work the same. They don't all want you to necessarily pay it off early because they were planning to hold onto your money a little bit longer because they've got investments on their end that they're using your money for and they're getting a return on those investments. So if you pay off the debt early, it's not always guaranteed that you can do this without some sort of payment penalty. So very important to check that before you sign anything. And sometimes even when we sign things we think we know, but we don't. And so check before you pay it off entirely, because it may not be worth it. Now, the real question you have is about the credit score impact of closing this account effectively and not having this loan any longer. On your credit profile, paying off the loan early, it may have a small temporary impact on your credit score, but I wouldn't lose sleep over it. Why would it even impact your credit score? You might be wondering, well, when we're looking at what is the makeup of a credit score, FICO credit score, the ingredients that go into it, one of them is your credit mix. The variety of credit that you have in your name, student loan, credit card, car loan companies like FICO again, and other credit score calculators, they like seeing a range of credit, a variety of credit. They like the mix because it suggests in theory that you do have the ability to work through different types of debt. You have a credit card, which is different from a student loan, which is different from a car loan. And if you've got all those credits in the mix, they give you extra points for that. They like to see the variety, but it's a small variable within your credit score calculation. It's typically just 10% of your credit score, so the impact is minimal. The impact of removing this car loan from your credit profile, which you might have other types of credit, is minimal. The other ingredient that's baked into your credit score is your payment history. This is the biggest factor that totals your score. And paying off the loan is not going to erase all of your positive on time payments. It won't remove that history right away. In fact, it'll stay on your credit report for up to 10 years and they'll continue to work in your favor. You know, there's this myth that if I close a credit account, all the good work of paying it off, all the history behind that account is going to get wiped. And the reality is, is it will not. It won't for 10 years. Up to 10 years, it will stay on your credit report. It will continue working for you. Closing a term loan, like a, like a car loan or a student loan is different from a credit card, which is revolving credit. There's no deadline or term on credit cards. Right. So it just revolves. Credit cards tend to weigh more in the credit score algorithm. Car loans, like other term loans, they don't contribute to the credit utilization ratio. That's the other important ingredient in your credit score that is equal to the amount of debt that you're carrying versus the credit that's available to you. And that's mainly applied to just credit cards, not your student loans or your mortgage or your car loan, because these aren't lines of credit. This is a fixed term loan. So paying it off early is not going to impact this particular ratio, which does have a big impact on your score. So all said, this is going to have a minimal impact on your credit score. The only real impact is that you might lose a little bit off the top for losing that variety in your credit mix. But again, that's just 10% of your score and that's it. I think you should pay this off if you want, feel good about it, pat yourself on the back. And one parting tip, now that this debt is out of the picture, don't lose total sight of it. Like actually, if you can take that same payment that you were putting towards the credit card every month and put it towards something else valuable, what else can you do with this payment? Maybe it's putting it into a retirement account. Maybe it's just investing it right if you don't need it. Or maybe it is to improve your lifestyle. Be deliberate, be precise about what to do with this extra money that you no longer have to use to pay off debt. Could it mean again, putting more money in a 401k? So now just shift it to somewhere else in your financial life that could be meaningful to you. That's my, my last bit of advice. And that's our show wrapping up here, getting ready for Memorial Day weekend. Thanks for tuning in everybody. 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