Mortgage-Free Sounds Great — Is It? Plus More July Money Questions

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Each week, we answer money questions from around the web on the NerdWallet app. Here are three of the trending questions from July.

Should I pay off my mortgage early?

Paying off your mortgage early is appealing. You can lower your monthly costs, and own the roof over your head free and clear.

But putting savings toward a mortgage also comes with a downside. You no longer have those savings for other needs, like an emergency fund.

So how do you decide where to funnel your extra cash? Should you pay off your mortgage or pad your savings? Financial professionals recommend weighing the following questions:

What’s the interest rate? If you have a low interest rate, then it might make sense to carry the loan for longer. You could potentially earn more money with the savings in a high-yield savings account or invested in the market than you’d save in mortgage interest by paying it off early.

How much money do you have in savings? If you have enough saved that paying off your mortgage won’t deplete your bank accounts, then it’s easier to decide to put the money toward the mortgage. Make sure you have money left over to cover unexpected costs.

What are your financial goals? If one of your goals is to lower your monthly expenses, then paying off the mortgage could make sense. If your goal is to accumulate a large nest egg, then you might want to keep your savings handy instead.

How do you feel about your mortgage? Some people find any form of debt stressful. Others are unbothered by a regular mortgage payment. Reflect on where you fall along that spectrum.

How can I tell if AI is being used to scam me?

Scammers are leveraging AI in two primary ways to trick you.

First, they’re using AI to comb through public data to create personalized emails. They’re incorporating identifying details — such as your home address — that make you more likely to fall for an impersonation attempt.

Second, they’re using AI to create audio, video and written messages that look just like legitimate communication from financial institutions and government agencies.

If you’re trying to figure out if a message is AI-generated and intended to scam you, the bad news is that it might be difficult or nearly impossible to tell.

But consumers still have powerful tools on their side. Here are some ways to avoid AI-powered scams:

Just hang up. Any unexpected phone call, email or text message should be treated with suspicion. When in doubt, don’t respond. Instead, call a verified number so you know who is on the other end.

Get familiar with AI-generated audio and video. Check out examples of AI scams posted online to understand how they look and sound.

Freeze your credit. Contact the three main credit bureaus to freeze your credit and prevent anyone from opening new accounts in your name. If you need a new line of credit, you can temporarily unfreeze them.

Sign up for alerts. Opt into text alerts and/or mobile notifications for any activity on your financial accounts. These give you an early heads-up about any unexpected activity.

Can I still have a fun summer without overspending?

Summer can get expensive quickly. Between barbecues, pool days and weekend getaways, the longer days can translate into higher credit card bills.

To keep your budget on track even during the warmer months, trimming everyday expenses unrelated to the season is a great place to start.

Take a look at your subscriptions, streaming services and other recurring charges. Saving a few dollars each month may not seem like much, but it can add up. Review bigger bills, too — like insurance costs or cable — to see if you can negotiate a better rate or find a cheaper option.

Making some cutbacks now can free up cash for that summer fun.

Another helpful tip: Check out local events and free activities before splurging on trips.

Camping, day hikes, outdoor concerts and local parks can all make great options for weekend recreation, and they’re often free. Follow your town or Chamber of Commerce on social media so you don’t miss out.

If you have teenagers, consider encouraging them to gain work experience and pick up some extra money at the same time. A summer job is good practice in the “real world,” and it also gives them a chance to fund some of their own purchases.

Finally, try to pay for the summer fun with cash instead of accruing credit card debt. Before you know it, it will be time for Halloween pumpkins and apple cider. You don’t want to bring a scary credit card bill into spooky season.

About the author

Kimberly Palmer is a personal finance expert at NerdWallet. She is also the author of three books about money: “Smart Mom, Rich Mom,” “The Economy of You” and “Generation Earn.” Kimberly’s work also appears at NerdWallet Canada.

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