WEBVTT - What's the Smartest Way to Save in 2025?

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Maren Dings

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<v Speaker 1>Your Money, The Person Will Findance edition of Maren Talks.

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<v Speaker 2>Money and these bonus podcasts.

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<v Speaker 1>We talk about the best strategies for making the most

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<v Speaker 1>of your money and Maren's umset web and with Me

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<v Speaker 1>Senior Reporter and Money to stilled author John Steberg.

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<v Speaker 2>Hi John Hi Man.

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<v Speaker 1>Right. So, last week we answered a big pil of questions,

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<v Speaker 1>are attempted to answer a big pile of questions. We

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<v Speaker 1>get so many really interesting questions and comments coming into

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<v Speaker 1>the mailbox, which we really really appreciate. So we spoke

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<v Speaker 1>about a whole little topics last week. But this week

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<v Speaker 1>I really wanted to address the whole Isa Lisa's sip

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<v Speaker 1>thing because we did a podcast you and I got

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<v Speaker 1>I can't remember, maybe a few months ago now, where

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<v Speaker 1>we talked about the the Lisa the lifetime is sa

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<v Speaker 1>Li said Lisa, we got.

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<v Speaker 2>I think everyone ever ever agrees on.

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<v Speaker 1>That anyway, whatever it is, the Lisai Lisa Lifetime iSER

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<v Speaker 1>the one where if you're under forty you can put

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<v Speaker 1>what is it, four thousand pounds a year and government

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<v Speaker 1>tops it up by another ground. You get a twenty

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<v Speaker 1>five percent contribution, and so you can contribute until your

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<v Speaker 1>you can open it until you're forty, contribute until you're fifty,

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<v Speaker 1>I think, and then you can use it to buy

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<v Speaker 1>a house up to a value of four hundred and

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<v Speaker 1>fifty thousand pounds. And if you don't do that, you

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<v Speaker 1>can leave it in and then take it out on retirement,

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<v Speaker 1>but slightly later than the SIP, so I think it's sixty.

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<v Speaker 1>You can then take that money out and you and

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<v Speaker 1>I would be like, well, I don't know, because you

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<v Speaker 1>can't take it out until you're sixty, So why wouldn't

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<v Speaker 1>you just use an ordinary sip. And if you take

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<v Speaker 1>the money out without spending it on a house before

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<v Speaker 1>you're sixty, you lose all the contribution, and so you

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<v Speaker 1>can end up losing a reasonable amount of your own money.

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<v Speaker 1>And then of course if you don't buy the correct

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<v Speaker 1>priced house, then you also lose money. So we talked

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<v Speaker 1>about this and we're like, oh, I don't really know

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<v Speaker 1>about that. Doesn't seem doesn't seem all that, But a

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<v Speaker 1>lot of people disagree with us. So I wanted to

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<v Speaker 1>just run through some of those emails and explain why

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<v Speaker 1>some people just think that we're wrong to be sniffy

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<v Speaker 1>about it, and you know, probably we are.

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<v Speaker 2>I don't know. I just seems to need to be

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<v Speaker 2>complicated and risky. But anyway, here we go.

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<v Speaker 1>So here's one from James. He says, I really enjoy

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<v Speaker 1>the show excellent. I understand the points that you make. However,

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<v Speaker 1>anyone under forty who has bought their first house already.

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<v Speaker 2>Should still consider using one.

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<v Speaker 1>Why because you get twenty five percent return almost immediately

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<v Speaker 1>on a four thousand pounds annual basis, So it's not

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<v Speaker 1>like in most things the return is spread out over

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<v Speaker 1>the year. It comes to you in a honner, so

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<v Speaker 1>then you're effectively making the return on five grand for

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<v Speaker 1>the full year. So the contribution and the top up

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<v Speaker 1>are literally invested from day one, and on his sums,

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<v Speaker 1>the net result is an additional thirty four thousand, seven

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<v Speaker 1>hundred and nineteen thanks to the precision available in your

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<v Speaker 1>licet for use in retirement. So he's made it. He's

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<v Speaker 1>made an assumption of returns and if you have to

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<v Speaker 1>put that return up, obviously it would be further. And

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<v Speaker 1>his overall view is that you should put whatever you

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<v Speaker 1>can into a SIP first so you can reduce your

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<v Speaker 1>high additional tax rate impact and claw the tax pack, etc.

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<v Speaker 1>Of course, and then four thousand pounds straight into your

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<v Speaker 1>list and then everything else into your eyesep I'm interested

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<v Speaker 1>in that way around because you know, not everyone agrees

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<v Speaker 1>with that. Now now that the SIP is not IHT efficient,

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<v Speaker 1>a lot of people are, so how much you put

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<v Speaker 1>into your step? So that's interesting, right onto the next one,

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<v Speaker 1>and then I'm going to ask you what you think

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<v Speaker 1>about all this, John. I've been a fan of you

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<v Speaker 1>and John Stuffick since the Money week Days and rarely

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<v Speaker 1>miss a podcast.

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<v Speaker 2>Excellent, that's what I like to hear.

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<v Speaker 1>He again is asking about the same thing, and he

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<v Speaker 1>says that he thinks that we've been a little down

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<v Speaker 1>on the LISA. He said, what works for him is

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<v Speaker 1>that you can take it in time hirely tax free

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<v Speaker 1>at sixty years old, unlike with a SIP, when, of

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<v Speaker 1>course you only get twenty five percent tax free and

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<v Speaker 1>you have to you have to pay your marginal rate

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<v Speaker 1>of income tax on the rest. So in that sense

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<v Speaker 1>he reckons that the the LISA is more or tax

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<v Speaker 1>efficient for lower rate taxpayers than a pension. He also

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<v Speaker 1>says that he thinks that the tax free. Status of

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<v Speaker 1>past contributions to ALYSA looks more secure to me than

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<v Speaker 1>that of a SIP, so it's less likely to be

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<v Speaker 1>fiddled with, which I think we might agree with that

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<v Speaker 1>to you, because we've always said that we think the

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<v Speaker 1>government will come for is as lost because everyone understands ices,

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<v Speaker 1>everyone gets iOS, and everyone feels their ices are very

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<v Speaker 1>much theirs.

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<v Speaker 2>Whereas are smaller.

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<v Speaker 1>Yeah, and Simpson pencils are a little bit more distant.

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<v Speaker 1>He also says, with serious ill health, you can accept

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<v Speaker 1>your Lisa penalty free, and an extremists you can access

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<v Speaker 1>the funds anytime with that twenty.

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<v Speaker 2>Five percent penalty.

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<v Speaker 1>Yeah, so you know, to my mind, this penalty can

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<v Speaker 1>actually be a good thing for young people using ALYSA

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<v Speaker 1>for a time and saving stopsum dipping into the pot

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<v Speaker 1>for holidays, et cetera. So in that sense is better

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<v Speaker 1>than an ordinary ism. There again, okay, I'll give you that.

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<v Speaker 1>I'll give you that. And finally he says that non

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<v Speaker 1>taxpayers can only pay eight hundred and eighty pounds into

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<v Speaker 1>a SIP, but they can add a further four thousand

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<v Speaker 1>pounds into a liser. Of course, we could say, well,

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<v Speaker 1>you know, you can put twenty grand into an ordinary,

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<v Speaker 1>I said, but this does give you that tax back, so.

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<v Speaker 2>You know, yeah, okay, I get that.

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<v Speaker 1>And by the way, something that wasn't clear on the podcast,

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<v Speaker 1>although I think I did say just now, was that

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<v Speaker 1>the LISA can be opened until you were forty, and

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<v Speaker 1>once opens, you can contribute until you are fifty. So

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<v Speaker 1>I think good points, particularly for lower rate taxpayers there.

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<v Speaker 3>I wouldn't disagree with any of those. And I think

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<v Speaker 3>there was a that's a particularly good point about the

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<v Speaker 3>the political risk, the lyser and also the fact that

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<v Speaker 3>you can take the whole thing tax free whenever you're sexty,

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<v Speaker 3>only get the twenty five percent lump someone the SIP.

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<v Speaker 3>So yes, we were probably a little bit harsh, and

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<v Speaker 3>I actually thought the other point that the latter podcast

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<v Speaker 3>listener made was that if you're paying into a kind

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<v Speaker 3>of pot for your spouse who's a non taxpayer, on

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<v Speaker 3>your kids, even you can only put two eight hundred

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<v Speaker 3>equidity SIP, which then growsed up to three six, but

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<v Speaker 3>you could put the full four k and Eliza, and

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<v Speaker 3>again that's effectively a pension contribution with a different kind

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<v Speaker 3>of like tax status at the end. If you're talking

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<v Speaker 3>about for a non working person. So that's something I

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<v Speaker 3>hadn't thought of, and actually I think makes quite a

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<v Speaker 3>lot of sense. And yeah, and obviously if you've got

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<v Speaker 3>these allowances and you've used them all up already, then

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<v Speaker 3>it is worth using up. This is an extra chunk,

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<v Speaker 3>A lot comes off your eyes.

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<v Speaker 2>Allowance if Yeah, okay, so we were a little harsh.

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<v Speaker 2>We were a little harsh.

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<v Speaker 1>I'm not one hundred percent convinced, but I do take

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<v Speaker 1>all those points. I do take them. We were a

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<v Speaker 1>little harsh.

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<v Speaker 3>Yeah, I suppose the other issue is dislike a fiddliness.

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<v Speaker 1>Yeah, we hate field, hate fudge, hate admin.

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<v Speaker 3>There's a slight and sorry for teen his name and

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<v Speaker 3>being the Martin Lewis noess about the whole thing of Okay,

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<v Speaker 3>you need to do it in this or order and

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<v Speaker 3>you need to can I fill this one up, but

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<v Speaker 3>don't put too much in this one and then compare

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<v Speaker 3>the you know, et cetera, et cetera, and the element

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<v Speaker 3>you can I spend in an awful lot of time

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<v Speaker 3>to say something it's terrible says, but as to whether

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<v Speaker 3>you can be bothered, there's something they take out their

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<v Speaker 3>account here by doing those are all reasonable points. And

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<v Speaker 3>these are bigger sums than just you know, switching bank account.

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<v Speaker 1>Regularly, just switching energy providertly. If the numbers were here correct,

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<v Speaker 1>which I'm sure they are because our readers are very,

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<v Speaker 1>very literate.

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<v Speaker 2>Thirty four pounds.

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<v Speaker 1>It's a cruise, Joe, many cruises. It's three months on

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<v Speaker 1>a Disney cruise ship. Again, adult Disney is a thing.

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<v Speaker 3>It's really you just put me right off.

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<v Speaker 2>It's the norlwedge of fuels for us, John, Thanks for that.

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<v Speaker 1>Everybody, any more comments on licens and isis do send

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<v Speaker 1>them in because you know, obviously this is a naughty issue.

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<v Speaker 1>But thanks for all those emails.

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<v Speaker 2>Thank you, John.

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<v Speaker 1>Thanks thanks for listening to this week's Marrion Dogs your Money.

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<v Speaker 1>If you like, I'll show, rate, review and subscribe wherever

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<v Speaker 1>you listen to podcasts. Also, be sure to follow me

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<v Speaker 1>in John on x or Twitter at marins w and

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<v Speaker 1>John and the Score step back. This episode was produced

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<v Speaker 1>by some Sidy and Moses and questions and comments on

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<v Speaker 1>this show and all our shows are always welcome. Our

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<v Speaker 1>show email is Marin Money at Bloomberg dot net.