The Moneyist: I earn $35K, have $20K in credit-card debt, and $200K in stock. I dream of turning my studio into a rental unit and building a pool

United States

Dear Quentin,

I read your column on a regular basis and feel almost out of league to be writing. Unlike most of your writers, I don’t have a huge or impressive portfolio.

I am 61 years old. I earn $ 35,000 per year. I have just over $ 40,000 in a 401(k) and just under $ 200,000 in company stock. I own my home with a mortgage of less than $ 25,000.  The current value is $ 200,000. I also have a $ 20,000 credit-card debt.

I feel as though I’m spinning my wheels. I’ve worked hard — maybe not smartly — all of my life, but still feel as though it’s hand to mouth. I’m not sure how long I have for this world, and would like to have the home I always dreamed of before I die. 

‘I’m not sure how long I have for this world, and would like to have the home I always dreamed of before I die.’

In other words, I would like a pool, a sturdy back porch rather than a flimsy aluminum lanai, and I would dearly love new appliances.

I am blessed with a 500-square-foot workshop on my property that I would like to turn into a one-bedroom rental. I could possibly rent it out for $ 500 per week. I suppose I’m justifying my pool by claiming it’s for the tenants. 

Should I withdraw $ 20,000 from my 401(k) to pay off my credit-card debt? Could I take out a second mortgage to turn my studio garage into a desirable rental with a pool?

My thoughts being that this could provide support to my Social Security while providing my dream house today. I plan to work until I’m 67. I have no dependents, so I am not worried about leaving an inheritance to anybody.


You can email The Moneyist with any financial and ethical questions related to coronavirus at, and follow Quentin Fottrell on Twitter.

Dear Dreamer,

This column is for you. As are all the letters I receive.

Some of the most important letters I have gotten from people who are struggling to make ends meet. And as fragile as your financial life might feel now, remember that there will be people reading this who are in a worse economic state.

This woman from Texas, then 36, wrote to the Moneyist in September 2018. She didn’t have a college degree, and worked full-time for $ 15 an hour, and inherited a life-changing $ 150,000. I still think of her, and hope she is living her best life. 

Your No. 1 priority: Pay off your $ 20,000 credit card. You are bleeding money with the astronomical interest rate. Replace your porch, upgrade your appliances as needed, and help ensure that your home is comfortable for the rest of your lifetime. 

Taking money out of your 401(k) should be a last resort. You have $ 200,000 in company stock. The good news: You can sell some of this stock to pay off your credit-card debt and to make necessary upgrades to  your home. 

You can sell some of this stock to pay off your credit-card debt and to make necessary upgrades to  your home. 

The No. 1 rule of investment is to diversify. If this company’s stock tanks, you’re in trouble. Consider investing in funds that comprise many different stocks. Also, look at bonds, fixed-income securities with regular interest payments.

Tread carefully before becoming a landlord. Short-term rentals are subject to local laws. You will be at the whim of renter reviews, complaints and requests. For some people, the champagne is never be the right temperature. Try a roommate first.

That said, if you sell company stock you could explore the costs of converting the studio. Check similar units in the area to see how much people are paying. If you’re up for the challenge, it could be a long-term source of income. 

Pools are expensive to install — $ 35,000 to $ 65,000 — maintain and, as nice as they are to look at, you will likely use it less frequently than you think. (Converting your studio could cost you twice that.) Test the water with an above-ground pool.

As one member of our Facebook Group said: “Having had two pools, they are like boats, a hole in the water that sucks in money. The difference is, one can sell a boat — best days are the one when he buys a boat and when he sells it. Skip the pool.”

You have more immediate responsibilities. How did you rack up $ 20,000 in credit-card debt? Don’t fall victim to the same emotional or psychological traps. Having a pool can seem like an apotheosis of the American Dream.

But a secure retirement is a more attractive, shimmering prospect.

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