How Much Should You Borrow?

October 28, 2019
Carrie Schwab-Pomerantz discusses good debt versus bad debt and some of the common mistakes people make with borrowing.

Listen on Apple Podcasts, Google Podcasts, Spotify or copy to your RSS reader.

Transcript Open new window

After you listen

  • If you'd like to learn more about managing your own debt, there are dozens of useful articles from Carrie Schwab-Pomerantz at schwab.com/AskCarrie.
  • As Carrie mentioned, we often classify mortgages as "good debt." If you're a Schwab client, you may qualify for Schwab Bank's Investor Advantage Pricing on a home purchase or refinance loan through Rocket Mortgage®, home loan provider for Schwab Bank. You can learn more about Schwab Bank's home loan rates at schwab.com/mortgagerates.
  • If you'd like to learn more about managing your own debt, there are dozens of useful articles from Carrie Schwab-Pomerantz at schwab.com/AskCarrie.
  • As Carrie mentioned, we often classify mortgages as "good debt." If you're a Schwab client, you may qualify for Schwab Bank's Investor Advantage Pricing on a home purchase or refinance loan through Rocket Mortgage®, home loan provider for Schwab Bank. You can learn more about Schwab Bank's home loan rates at schwab.com/mortgagerates.

In today's world virtually everyone participates in the economy as either a borrower or a lender, and most people are both. If you've ever put money in a bank, then you're a lender. If you've ever used a credit card, then you're a borrower. In this episode, Mark Riepe talks with Carrie Schwab-Pomerantz about the liability side of your personal balance sheet—debt. Of course, not all debts are the same. Among the topics Mark and Carrie discuss are "good" debt versus "bad" debt, paying off debt before you retire, and a handy rule of thumb for managing your personal debt level.

You can read more about the exponential growth bias and personal finance in this study.

Subscribe to Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab.

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Are you on track to reach your goals?

Are You Ready to Buy Your First Home?

There's more to timing your first home purchase than interest rates and prices. Consider these guidelines.

Are You Financially Ready to Weather a Storm?

Can you financially weather a storm—or flood or fire? Here's how to prepare, including packing a financial "go bag."

Should You Pay Off a Mortgage Before You Retire?

Whether it makes financial sense to pay off your mortgage depends on your individual situation. Here are some things to consider.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

Examples are hypothetical and provided for illustrative purposes only. They are not intended to represent a specific investment product.

Investing involves risk, including loss of principal.

This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager. Please consult with your tax advisor on the deductibility of home equity line of credit interest payments for your specific tax situation.

For Schwab Bank Investor Advantage Pricing: Loans are eligible for only one Investor Advantage Pricing discount per loan. Select mortgage loans are eligible for an interest rate discount of 0.250% - 1.000% based on qualifying assets of $250,000 or greater. Discount applies to ARMs, Jumbo 15-yr and Jumbo 30-yr fixed (excludes HELOCs, VA loans, and FHA loans). Discount for ARMs applies to initial fixed-rate period only.

Qualifying assets are based on Schwab brokerage and Schwab Bank combined account balances, including:

a) Brokerage accounts in which the borrower(s) is an owner, trustee or custodian;

b) Traditional, Roth, and Rollover Individual Retirement accounts (IRA)* - individually owned or inherited (excludes Educational & Custodial IRAs);

c) Bank accounts in which the borrower(s) is an owner or trustee: checking & savings;

d) Non-Retirement Business Corporation, LLC, Partnership and Sole Proprietorship accounts may be eligible depending on the borrower’s ownership and role (excludes business retirement accounts such as Simple IRA, SEP IRA & Pension Trust).

*Clients of Independent Investment Advisors: Qualifying assets are based on non-retirement Schwab brokerage and Schwab Bank combined account balances. Retirement accounts, including all IRAs, are excluded from this offer. For additional details please visit and log into www.schwaballiance.com.

Schwab Bank makes its best effort to identify all qualifying assets based on your Social Security Number. If you have questions regarding your specific assets or account eligibility, please call your Schwab Bank representative for assistance. Clients that utilize an eligible IRA account balance to qualify for certain discounts may qualify for one special IRA benefit package per loan. This includes an in-depth personal financial plan analysis to include a detailed review of your IRA by a Certified Financial Planner. This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab Bank recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

Clients must notify Schwab and Rocket Mortgage of any new assets brought to firm during processing. Qualifying new assets should be deposited and verified 15 days prior to the anticipated closing date to avoid closing delays. If the qualifying assets are deposited with less than 15 days remaining before closing, the closing date may be delayed, and eligibility to receive the interest rate discount may be affected. For the $10MM tier, you must apply and lock your interest rate on or after 7/30/21 to qualify for the discount offer. 

Affiliate: Charles Schwab Bank, SSB and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Brokerage products offered by Charles Schwab & Co., Inc. (Member SIPC) are not insured by the FDIC, are not deposits or obligations of Charles Schwab Bank, SSB and are subject to investment risk, including the possible loss of principal invested. Charles Schwab & Co., Inc. does not solicit, offer, endorse, negotiate or originate any mortgage loan products and is neither a licensed mortgage broker nor a licensed mortgage lender. Home lending is offered and provided by Rocket Mortgage, LLC. Rocket Mortgage LLC., is not affiliated with The Charles Schwab Corporation, Charles Schwab & Co., Inc. or Charles Schwab Bank, SSB. Deposit and other lending products are offered by Charles Schwab Bank, SSB, Member FDIC and Equal Housing Lender.

Rocket Mortgage, LLC; NMLS #3030; www.nmlsconsumeraccess.org. Equal Housing Lender. Licensed in 50 states. AL License No. MC 20979, Control No. 100152352. AR, TX: 1050 Woodward Ave., Detroit, MI 48226-1906, (888) 474-0404; AZ: 1 N. Central Ave., Ste. 2000, Phoenix, AZ 85004, Mortgage Banker License #BK-0902939; CA: Licensed by Dept. of Business Oversight, under the CA Residential Mortgage Lending Act and Finance Lenders Law; CO: Regulated by the Division of Real Estate; GA: Residential Mortgage Licensee #11704; IL: Residential Mortgage Licensee #4127 – Dept. of Financial and Professional Regulation; KS: Licensed Mortgage Company MC.0025309; MA: Mortgage Lender License #ML 3030; ME: Supervised Lender License; MN: Not an offer for a rate lock agreement; MS: Licensed by the MS Dept. of Banking and Consumer Finance; NH: Licensed by the NH Banking Dept., #6743MB; NV: License #626; NJ: New Jersey – Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226, (888) 474-0404, Licensed by the N.J. Department of Banking and Insurance.; NY: Licensed Mortgage Banker – NYS Banking Dept.; OH: MB 850076; OR: License #ML-1387; PA: Licensed by the Dept. of Banking – License #21430; RI: Licensed Lender; WA: Consumer Loan Company License CL-3030. Conditions may apply. Lending services provided by ©2000 – 2021 Rocket Mortgage LLC, a subsidiary of Rock Holdings Inc. “Rocket Mortgage” is a registered service mark of Intuit Inc., used under license.

Lending services provided by Quicken Loans Inc., a subsidiary of Rock Holdings Inc. “Quicken Loans” is a registered service mark of Intuit Inc., used under license.

©2021 Charles Schwab Bank, SSB. All rights reserved. Member FDIC. Equal Housing Lender.

Apple Podcasts and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries.

Google Podcasts and the Google Podcasts logo are trademarks of Google LLC.

Spotify and the Spotify logo are registered trademarks of Spotify AB.

0721-1Y84