Should I use money in a mutual fund to fix my basement?

“I have some money in a mutual account that I transferred from an IRA account. I want to use some of this money to fix my basement. Should I?”

Submitted by Pauline B.

I’m going to have to make a few assumptions here to respond to your question.

It seems you transferred funds from an IRA into a mutual fund (taxable) account. To do this, you may have faced tax consequences if you weren’t at least 59½ years old (the penalty-free withdrawal age). If your mutual fund is not an IRA or other tax-advantaged account, the only decision you need to make is whether basement renovation is your financial priority.

There is no “right” answer about what you should or should not do with your money. The real question is, what is your overall plan for your resources? What impact will using the money have and what would happen if you don’t fix the basement? When my coaching clients are faced with a decision I ask them to do the following:

  • Write the pros and cons of the idea/change (in your case, fixing the basement).
  • Write the pros and cons of doing nothing (in your case, keeping the money in your account).

If your cash flow is good and you don’t have other financial concerns, which of the options is more satisfying for you? Once you make that decision, establish a budget for the repairs and decide how much you want to keep in the mutual fund.

 

Photo by Nolan Issac on Unsplash


Recommended Articles

How will filing for bankruptcy affect my retirement?

What is your perspective about filing for bankruptcy in regards to saving for retirement? Submitted by Chris C. When it comes to any financial decision, everything affects everything. Kudos for thinking about the impact of bankruptcy on retirement planning. The decision to file bankruptcy is a big one, as it will impact your financial life… Read more

What is Lifestyle Inflation?

Have you noticed that even when your income increases, it can feel like you still don’t have more money leftover at the end of the month? That’s because often, when our income increases, our expenses do too. This is a very real phenomenon called lifestyle inflation that can sneak up on us despite our best… Read more

How to Pay Down Your Debt

“The ONE aspect of our financial lives that causes the most distress” (cue Jeopardy music) “What is DEBT?” Correct! Yup, you guessed it (or maybe you’ve lived it). Debt is the number one cause of financial stress in the U.S. The “right” way to pay off that debt is a constant source of confusion. Even… Read more