Should You Use Cash, Debt, or Investments for a Big Purchase?

Send us Fan MailWhen Cash Feels Safer Than the Market: Funding Big Projects, Managing Risk, and Avoiding Tax TrapsHunter Kelly discusses a client case (names changed) involving Mark and Lauren, who earn just over $300,000, have nearly $1 million in retirement savings, and $100,000 cash while considering a $175,000–$180,000 pool project. They explored HELOC/pool loans but were uncomfortable with added debt, so they chose to delay until Mark’s July bonus and retention payment arrive, including temporarily reducing his 403(b) contributions to increase short-term liquidity. The episode also covers Mark moving about $700,000 of his 403(b) into a money market due to market fears, the risks of staying in cash, and using a rules-based reentry plan and more fitting allocation. Kelly explains capital loss limits ($3,000 against ordinary income with carryforwards) and a backdoor Roth IRA reporting error on Form 8606 that, once corrected, saved about $1,000, emphasizing sequencing and broader advisor value beyond investments.00:00 Welcome and Setup00:46 Meet Mark and Lauren02:23 Pool Project Costs04:31 Debt vs Peace of Mind05:42 Waiting for Bonus Cash07:33 Pause 403b for Liquidity09:10 Moved Retirement to Cash11:56 Rules Based Reentry Plan14:08 Breakeven Bias and Purpose17:00 Capital Losses Explained19:54 Backdoor Roth Reporting23:03 Sequencing and Takeaways26:02 Wrap Up and DisclaimerCheck out the Palm Valley Wealth Management WebsitePalmValleywm.comCheck us out on InstagramLinkedIn FacebookListen to the Podcast Here! AppleSpotify