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Speaker 1: Welcome to How to Money. I'm Joel and I and Matt.

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Speaker 1: Today we're talking about the money gears ordering your money

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Speaker 1: decisions properly.

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Speaker 2: That's right, buddy, We are revisiting the money gears. This

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Speaker 2: is a topic that we've touched on before. This is

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Speaker 2: actually a term, a phrase that we've coined, so this

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Speaker 2: is proprietary information. But the money gears are so important.

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Speaker 2: They are a core philosophy essentially, and how it is

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Speaker 2: that we talk about money here on the show. It

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Speaker 2: informs how we answer listener questions. It informs what you

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Speaker 2: and I what we do even with our money. Yeah,

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Speaker 2: and so because of the importance of this, it's been

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Speaker 2: I don't know, like two three hundred episodes since we've

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Speaker 2: last dedicated in high episode to the money gears, we

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Speaker 2: felt that they were certainly worth revisiting.

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Speaker 1: They're that important. And it's it's April's Financial Literacy Month actually,

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Speaker 1: interestingly enough, that's right.

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Speaker 2: So we're like, what, it's the only special month that

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Speaker 2: we know. I take that back, there's other special months

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Speaker 2: that we care about as well.

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Speaker 1: I mean National i PA Day, that's something we care

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Speaker 1: a lot about. But I think it's important for us

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Speaker 1: to yeah, tackle this again because it's been a while,

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Speaker 1: and because, yeah, why not in the month of April

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Speaker 1: kind of talk about a subject that really, when you're

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Speaker 1: talking about like where you start from, knowing the order

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Speaker 1: of operations, when, when to do what with your money

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Speaker 1: is an important topic for us to cover.

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Speaker 2: That's true, man. But first I wanted to share a

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Speaker 2: quick little story I guess with you. So last night

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Speaker 2: was our date night. Thank you by the way for

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Speaker 2: coming over and watching the kiddos.

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Speaker 1: It was less eventful than the one before where there

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Speaker 1: was a sick.

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Speaker 2: Kid on hand. Don't you don't share that one.

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Speaker 1: I'm not going to share details. It was rough.

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Speaker 2: You don't want to spoil anybody's meal. Maybe you're eating

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Speaker 2: your lunch right now as you're to the episode.

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Speaker 1: Usually they're uneventful and I get to like listen to

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Speaker 1: a podcast or watch a movie.

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Speaker 2: Sorry about that. That one was No one was was rough.

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Speaker 2: But either way, Kate I we were last night. We

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Speaker 2: were sitting there, we were talking and we were just

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Speaker 2: Kate was actually reflecting on how our lives right now.

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Speaker 2: They look a lot different than we could have foreseen

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Speaker 2: them looking like they and this is a good thing, right,

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Speaker 2: This is a good thing. Basically, she's been spending a

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Speaker 2: lot of a lot more time recently volunteering, and she

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Speaker 2: would not have expected that she would be doing that

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Speaker 2: as to the degree that she's doing. But we were

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Speaker 2: just reflecting on how awesome it is for her to

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Speaker 2: be able to do those things right, and like, we're

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Speaker 2: just so fortunate that we are in a decent financial place.

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Speaker 2: And it got me thinking about the show and how

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Speaker 2: it is that we do talk about money here because oftentimes,

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Speaker 2: like what the world tells us essentially right is just

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Speaker 2: to live for now. There aren't things in the future

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Speaker 2: that you should be thinking about, that you should care about.

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Speaker 2: And even if you're fairly responsible with your money, there's

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Speaker 2: always the thought that, oh, I can I can always

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Speaker 2: make more money off in the future, but really do

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Speaker 2: that's not guaranteed.

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Speaker 1: It's like counting your chickens for the hatch.

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Speaker 2: Yeah, and not only that, but so like you might

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Speaker 2: not be able to earn money. Like let's say something

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Speaker 2: bad comes long and yeah, like you've counted your chickens

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Speaker 2: before they've hatched, and you no longer have those But

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Speaker 2: just even when it comes to goal setting, I'm just

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Speaker 2: constantly reminded that our goals are constantly shifting. Like you

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Speaker 2: know that just generally speaking, your goals are off in

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Speaker 2: a certain direction, and that you're striving towards just health

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Speaker 2: in these different ways, but what specific things that you're

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Speaker 2: striving after that can change fairly dramatically, and so I

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Speaker 2: guess I'm just making an argument for folks. This is

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Speaker 2: one of the big reasons why we talk about handling

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Speaker 2: your money well here on the show, is because you

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Speaker 2: never know what different goals you might have for yourself,

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Speaker 2: often to the future.

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Speaker 1: And that's where I think absorbing extra money that you

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Speaker 1: might have into your budget to spend in the here

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Speaker 1: and now when you're like it could be worth more

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Speaker 1: to you down the line at some point, depending on

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Speaker 1: what changes happen in your life. So I think it's

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Speaker 1: I think it's really it's a good point, Matt, Yeah,

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Speaker 1: and I think sometimes we are. And it looks different

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Speaker 1: for all sorts of folks, right, Like, I mean, it

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Speaker 1: could look vastly different depending on who you're talking to,

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Speaker 1: what their life you know, and what those future financial

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Speaker 1: goals might look like. But either way, the steps that

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Speaker 1: you take now to prepare for those things, those all

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Speaker 1: look similar and that actually kind of ties into what

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Speaker 1: we're talking about today, like with the money gears. Yeah,

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Speaker 1: but I too. I'm glad that I had such a

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Speaker 1: high savings rate, even though it cost me certain things

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Speaker 1: early on, because as our goals, as our lives have changed,

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Speaker 1: we just have a lot more flexibility than we otherwise

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Speaker 1: we have had. You know, if we had just kind

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Speaker 1: of spent all that money that was coming in or

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Speaker 1: most of it, and having a high saving storate really

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Speaker 1: gives you a lot more options, especially as the years progress.

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Speaker 1: So totally, man, Yeah, and having those conversations, having those

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Speaker 1: check ins is good, and it's good be reminded of

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Speaker 1: just like how are you come and the abilities that Yeah,

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Speaker 1: Like volunteering, man, that's the thing. A lot of people

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Speaker 1: wish they could do that, even when they get to

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Speaker 1: retirement age. They're like, man, I wish I could spend

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Speaker 1: more time volunteering, but I got to keep working, and

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Speaker 1: I hate that. That's a tough position to be in.

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Speaker 2: That's why it's so good to prepare in advance, even

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Speaker 2: before you have some of these bigger, loftier goals that

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Speaker 2: you might be pursuing.

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Speaker 1: Exactly, all right, So let's mention the beer or having

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Speaker 1: on this episode, This one is called Venology Simeon by

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Speaker 1: Money and I brewing very good. That's right, ry, okay, cool,

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Speaker 1: But Matt and I we drink a craft beer every

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Speaker 1: episode because it's something that we prioritize spending money on

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Speaker 1: in the here and now while we're also saving for

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Speaker 1: the future. It's kind of like the opposite of what

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Speaker 1: we just talked about. But you have to enjoy some

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Speaker 1: of the there's the fruits of your labor in the

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Speaker 1: here and now. There's a balance to strike, and that's

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Speaker 1: oftentimes what we're trying to do, which is always on the show.

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Speaker 1: There's always tension in that, yes, yeah, but it's a

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Speaker 1: good kind of tension that we all have to wrestle

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Speaker 1: with continually. But Matt, let's move on to the subject

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Speaker 1: at hand, which is the money gears. That's what we're

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Speaker 1: talking about, how to order your money decisions properly. And Matt,

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Speaker 1: I was listening to this podcast about history and this

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Speaker 1: guy listen to other podcasts, not many except for hours. Well,

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Speaker 1: I listen to ours on repeat, just you know, to

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Speaker 1: hammer everything. Okay, right, but no, this was this particular

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Speaker 1: episode of this history podcast was about the Vikings, and

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Speaker 1: they're like basically discovery of Greenland. And the cool thing

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Speaker 1: is before modern instruments of wayfinding were created, like folks

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Speaker 1: a thousand years ago, we're able to get to and

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Speaker 1: Norway and Greenland, which is just kind of mind boggling.

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Speaker 1: No Google maps or anything like that. They're able somehow

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Speaker 1: to get through this this these massive chunks of ice

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Speaker 1: and this incredibly long distance. I want to say it's

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Speaker 1: like fifteen hundred miles or something like that from pretty

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Speaker 1: Norway to great That's a long way to go in

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Speaker 1: like a rudimentary ship. And even some of them made

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Speaker 1: it all the way to North America one hundreds of

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Speaker 1: years before Columbus, who somehow gets all the credit. A.

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Speaker 1: Leif Errickson I think was the guy. Yeah you've heard

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Speaker 1: of that, that like the twelve hundreds, and there might

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Speaker 1: have even been people from from Norway before him. Yeah,

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Speaker 1: but they had incredible knowledge about wayfinding and it allowed

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Speaker 1: them to yet to navigate these treacherous waters. They were

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Speaker 1: using like Molana style ways to get around, right, which

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Speaker 1: is it, MAUI The teachers are how to navigate in

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Speaker 1: that movie? Oh yeah, I think I think so. Well,

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Speaker 1: so that be god right, and not completely without peril.

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Speaker 1: Some people got lost at sea never made it back,

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Speaker 1: but it's still impressive. And I think while some of

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Speaker 1: us might see our personal finances as like this limitless

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Speaker 1: ocean that feels completely unnavigable, too hazardous for us to

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Speaker 1: venture into, we want to help. And the thing is

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Speaker 1: knowing where you're starting from and where you're headed it

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Speaker 1: makes it a whole lot easier to find your way.

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Speaker 2: Yeah, you know, I don't even know if they had

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Speaker 2: maps back then. If so, I'm sure that they weren't

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Speaker 2: all that great. But this episode is essentially going to

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Speaker 2: be a map that is going to assist you in

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Speaker 2: reaching your financial goals. And though I don't know anything

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Speaker 2: about the Vikings, like I know that they didn't have smartphones, right, so.

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Speaker 1: They also they did some pretty bad stuff too, And

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Speaker 1: those are my people. I'm not gonna lie, so maybe

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Speaker 1: I should feel bad about it. There's a lot of

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Speaker 1: good and bad when you look back into the past.

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Speaker 1: But so, like I'm talking about technology, I'm talking about smartphones,

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Speaker 1: and so that means that there were no modern apps

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Speaker 1: that we use on our phones all the time, right,

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Speaker 1: that we all take for granted. And one of the

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Speaker 1: greatest features about using ways or maps on your phone

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Speaker 1: is the ability to hit that little triangle that that

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Speaker 1: current location button and then it immediately zooms into where

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Speaker 1: you are at that very moment. And that, in a sense,

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Speaker 1: that's what we're doing today when it comes to you

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Speaker 1: and your finances. We're gonna help you to locate your

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Speaker 1: financial situation so that you can then start moving in

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Speaker 1: the right direction.

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Speaker 2: Yeah.

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Speaker 1: Yeah, And if you don't know kind of your starting point,

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Speaker 1: it's sure it's sure hard to figure out which direction

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Speaker 1: you're going right. And we we really believe that going

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Speaker 1: in the wrong order can screw up folks, even if

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Speaker 1: they have the best intentions. So if you start investing,

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Speaker 1: let's say, before you've saved a dime, you're getting things

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Speaker 1: out of whack. And it's similar to baking a cake, right,

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Speaker 1: putting ingredients in at the wrong time, you might screw

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Speaker 1: up the recipe. And Matt, you actually kind of did

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Speaker 1: this a little bit early on in your kind of

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Speaker 1: personal finance journey.

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Speaker 2: Yeah, yeah, I mean so essentially it was so you're

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Speaker 2: talking about my roth Ira Yeah, okay, So, which we

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Speaker 2: love wroth IRA's and we want people to have a

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Speaker 2: roth Ira, but you maybe open one up too soon. Yeah,

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Speaker 2: And it's because I heard about investing and I thought, oh,

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Speaker 2: that's something I need to participate in. And I was

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Speaker 2: earning money, like from a real job for the first

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Speaker 2: time post graduating. That being said, I did not have

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Speaker 2: enough money on hand to get me through a little

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Speaker 2: like a little rough patch in my life where I

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Speaker 2: was changing locations. I was moving back to Atlanta, and

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Speaker 2: so that caused me to have to sell some funds

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Speaker 2: when otherwise I would not have wanted to do that. Yeah,

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Speaker 2: I would would have wanted to have kept that money

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Speaker 2: invested for the long Hauland so basically we're just we're

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Speaker 2: talking about this because we don't want you to become

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Speaker 2: like me, Yeah, the Faileys. We don't want to be

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Speaker 2: the poster chop for what not to do. We don't

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Speaker 2: want you to make the same mistakes. Right.

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Speaker 1: Well, I did something similar in a way. I paid

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Speaker 1: off student loans that were at basically a two percent

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Speaker 1: interest rate before I prioritize other things. So we'll talk

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Speaker 1: about that too later on. But like all the different

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Speaker 1: topics that we cover on the show, are you know,

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Speaker 1: good practices and disciplines, it's not like, we're encouraging folks

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Speaker 1: to do anything that's going to take them further from

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Speaker 1: their financial goals, unless your craft beer habit maybe is

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Speaker 1: getting a little bit out of hand. Let's hope not.

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Speaker 1: But the order that you tackle all these different strategies

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Speaker 1: and practices is vitally important. It's going to make the

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Speaker 1: difference in how financially prepared you feel and how prepared

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Speaker 1: you actually are. And so if you can see the

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Speaker 1: plot points on the way to your destination, figure out

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Speaker 1: where you are, but then also be familiar with the

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Speaker 1: route that you're going to take, it makes a journey

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Speaker 1: far less daunting. And so, you know, we kind of

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Speaker 1: want to put these pieces together and say, yeah, we

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Speaker 1: talk about all these different things all the time, but

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Speaker 1: the order that you do them in just matters a lot.

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Speaker 1: And so like, let's lay that order out today.

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Speaker 2: And that's right. And so let's talk about why we

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Speaker 2: call these the money gears, And the reason for that

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Speaker 2: is because biking specifically, that's one of our favorite things

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Speaker 2: to do. If you've been listening to the show for

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Speaker 2: any amount of time, you know that. And so it

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Speaker 2: just made sense for us to use bike gears as

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Speaker 2: a way to describe how we move through money decisions

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Speaker 2: within our lives. Joel, you and I we both bike

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Speaker 2: to work every single day. We encourage biking for physical

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Speaker 2: but also financial reasons. But the gears on a bike

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Speaker 2: are pivotal. Like that pivotal, It's extremely tough to bike

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Speaker 2: up a gargantuan hill just using like one of your

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Speaker 2: your big fast gears. Even honestly getting rolling to begin

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Speaker 2: with that can be extremely tough. If you're on too

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Speaker 2: high a marror. It can just be so incredibly frustrating

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Speaker 2: if you don't understand this basic concept. And so if

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Speaker 2: you properly use the gears on your bike, it's gonna

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Speaker 2: allow you to arrive at your destination a whole lot

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Speaker 2: less sweaty, and you're gonna have a whole lot more

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Speaker 2: fun in the process. And similarly, if you use your

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Speaker 2: money gears properly, we think there say, we know that

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Speaker 2: you will arrive at your financial destination with a whole

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Speaker 2: lot less financial stress along the way.

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Speaker 1: Yeah, agreed. And every individual, by the way, is going

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Speaker 1: to move through the money gears at a different pace.

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Speaker 1: Some of you are shooting for fire movement, the financial independence,

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Speaker 1: retire early. You want to retire at thirty seven with

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Speaker 1: a million or more in your investment accounts more power

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Speaker 1: to you. And you might be saving fifty plus percent

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Speaker 1: of your income something like that, which is awesome. Others,

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Speaker 1: you might have just started learning about personal finance. This

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Speaker 1: might even be your first had of money episode. Who knows.

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Speaker 1: You might not even have an emergency fund set up

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Speaker 1: at all. You might have four kids or five kids

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Speaker 1: or something like that. More mouths to feed, which means

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Speaker 1: that progress is going to happen more slowly, Like everybody

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Speaker 1: is in a different boat. And there's no shame. That

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Speaker 1: is true. That shame is not a part of kind

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Speaker 1: of how we talk about money on this show. Our

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Speaker 1: goal at How to Money is to offer helpful advice

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Speaker 1: to folks all throughout that spectrum. And so the thing is,

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Speaker 1: the money gears are accessible for everyone, no matter where

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Speaker 1: you currently are and no matter how long it's likely

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Speaker 1: going to take you to reach those money goals that

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Speaker 1: you have.

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Speaker 2: That's right, yeah, the money gears they make sense from

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Speaker 2: a like a purely rational and from a like a

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Speaker 2: numbers and monetary standpoint for sure. Right, Like what we're

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Speaker 2: going to share with you today, if you opt to

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Speaker 2: follow the order that we're laying out, they're going to

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Speaker 2: help you to build wealth over time while also reducing

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Speaker 2: how much you have to worry about money in general.

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Speaker 2: But the money gears they also help from a psychological

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Speaker 2: aspect as well. It's not that you're just making financial progress,

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Speaker 2: but that you are doing it in a way that's

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Speaker 2: emotionally satisfying. And when you're encouraged by your progress, you're

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Speaker 2: likely going to keep it up. You're going to keep

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Speaker 2: doing the thing that you're winning at, which is only

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Speaker 2: going to lead to even more financial progress. And so

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Speaker 2: it's important to point out too, that's not just the

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Speaker 2: numbers from a psychological from an emotional standpoint too, you

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Speaker 2: are going to be in a much healthier place.

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Speaker 1: So I feel like I should use an illustration here

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Speaker 1: based on biking. And so when I go for neighborhood

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Speaker 1: ride with my kids, got daughters who are nine and seven,

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Speaker 1: and so they're on their geared bicycles and they can

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Speaker 1: lose steam if they're going up a hill and if

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Speaker 1: they're in the wrong gear, and it just feels so

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Speaker 1: defeating to be going up that gear. We're like usually

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Speaker 1: heading towards one of those little free libraries in the

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Speaker 1: neighborhood to see if there's like some free books or

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Speaker 1: something that we can snag. And I always like, when

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Speaker 1: one of my girls is struggling, I say, what gear

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Speaker 1: are you in? And I'm just encouraging them to pull

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Speaker 1: it down a couple notches, right, because if you're going

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Speaker 1: gear yeah, I think they have eight eight gear bikes

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Speaker 1: maybe or seven or eight gears, I forget how many

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Speaker 1: they have. But when they're in gear six trying to

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Speaker 1: go up a steep hill, man, you're talking about like

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Speaker 1: a real slog, a lot of sweat and just a

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Speaker 1: lot of frustration. But if they can dial it back

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Speaker 1: down to gear two, yeah, maybe the going is going

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Speaker 1: to be a little bit more slow, but actually not

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Speaker 1: really because while it feels like it's going more slow,

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Speaker 1: at least you're keeping study and at least you're moving

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Speaker 1: up the hill with regularity. And so yeah, that's just

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Speaker 1: something that's always the question, what gear are you in?

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Speaker 1: Can we move it back down so that you can

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Speaker 1: continue this momentum so you can keep climbing and not

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Speaker 1: basically have to like stop and walk your bike up

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Speaker 1: the hill, which just like, man, that's a that's a

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Speaker 1: frustrating thing too.

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Speaker 2: Yeah, yes, of course. Yeah. And to extend the metaphor,

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Speaker 2: there is a place, there's a time and a place

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Speaker 2: for those taller gears. Yeah, but it's after you've it's

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Speaker 2: it's once you're going down the other side of the hill,

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Speaker 2: right like, and that's when it's fun. But oftentimes we're

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Speaker 2: trying to shortcut to what we think is going to

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Speaker 2: be the faster, funner gears, but we're not in the

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Speaker 2: position to be able to handle some of those taller gears.

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Speaker 2: And so that's just a preview that we will talk

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Speaker 2: about some of those more fun gears that hopefully everyone

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Speaker 2: listening to this episode, well we'll be able to attain

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Speaker 2: here in short order.

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Speaker 1: Yeah, agreed. Well, in these gears, I want to say also,

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Speaker 1: they stand the test at time, like we came up

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Speaker 1: with them a few years ago. But the truth is,

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Speaker 1: no matter the economic environment, we've seen some changes, some

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Speaker 1: shifts in the economic environment over the past few years.

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Speaker 1: Of course, you can still use our money Gears formula

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Speaker 1: to decipher what it is you should be doing with

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Speaker 1: your money next. The macro economic reality might sometimes cause

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Speaker 1: us to make small tweaks in our decision making, but

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Speaker 1: when it comes to these broad based money gears, it

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Speaker 1: doesn't really have an impact. That's true on kind of

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Speaker 1: the order of operations that we feel is most important

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Speaker 1: for your money. Okay, so we are going to get

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Speaker 1: into all of the seven money gears. We're going to

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Speaker 1: describe them in detail, and we'll discuss how you should

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Speaker 1: be progressing the proper order for things. We'll get to

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Speaker 1: all the fine details on that right after this.

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Speaker 2: All right, man, we are back from the break and

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Speaker 2: it is now time for us to dive into these

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Speaker 2: money gears. And so there's seven money gears, and of

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Speaker 2: course we're going to start with money gear number one,

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Speaker 2: which is the basic emergency fund. Let's kind of make

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Speaker 2: a case for having an emergency fund. There's a brand

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Speaker 2: new study from Secure Save, and they found that seventy

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Speaker 2: five percent of Americans are stressed about their finances and

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Speaker 2: then those increased levels of stress are then impacting their

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Speaker 2: productivity at work, which is not a good thing, of course,

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Speaker 2: And I mean saving up a basic emergency fund that's

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Speaker 2: not going to bring on like full on economic security

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Speaker 2: and relief to everyone out there, but it is an underrated,

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Speaker 2: massive first step to take that's going to really alleviate

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Speaker 2: a lot of money anxiety for folks out there. And

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Speaker 2: so when you've got that basic emergency fund of two thousand,

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Speaker 2: four hundred and sixty seven dollars set aside in your

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Speaker 2: savings account for any sort of emergency that could arise,

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Speaker 2: you've got the beginnings of some real financial power. And

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Speaker 2: so we don't want you to be a part of

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Speaker 2: And here's another stat of the fifty seven percent of

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Speaker 2: Americans who can't access one thousand dollars in a financial emergency. Essentially,

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Speaker 2: this is living paycheck to paycheck, which simply means you're

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Speaker 2: dependent on that next deposit showing up in your account

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Speaker 2: to you know, every two weeks. When you are living

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Speaker 2: in that kind of a state, when you're living on

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Speaker 2: the financial edge like that, it has all sorts of

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Speaker 2: cascading consequences, and we don't want you to be living

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Speaker 2: with that day to day stress.

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Speaker 1: Yeah, there was another study recently about how a lot

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Speaker 1: of people if they lost their job tomorrow, they would

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Speaker 1: have a really hard time buy groceries, and so it's

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Speaker 1: very very similar. There's a lot of people living in

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Speaker 1: this sort of state in our country. And I will

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Speaker 1: say it's not always the fault of the individual, right,

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Speaker 1: But there are still a lot of things I think

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Speaker 1: we can do as individuals to bring power back into

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Speaker 1: our lives. And this is the first step. This is

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Speaker 1: the first way. This is the first part of the

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Speaker 1: process to get some of that financial power back in

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Speaker 1: your life. And really, when you think about it, when

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Speaker 1: you boil it down, this could be a reality for

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Speaker 1: more people. Even though the stats make it seem dire

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Speaker 1: that most people are not in this position, I think

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Speaker 1: more Americans really could get into this position, Matt, And

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Speaker 1: let's talk about the reason we picked the number twenty

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Speaker 1: four hundred and sixty seven, because it's very specific, very

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Speaker 1: very specific.

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Speaker 2: It's not a random number we just decided up right.

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Speaker 1: We didn't pull it straight out of our butts or

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Speaker 1: anything like that. But basically, economists did some research a

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Speaker 1: couple of years back, and they specifically found that having

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Speaker 1: this amount of money on hand would allow people to

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Speaker 1: navigate most financial emergencies without a problem, without breaking a sweat.

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Speaker 1: And so with inflation roaring, we might need to adjust

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Speaker 1: this number at some point. It might be like twenty

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Speaker 1: seven sixty seven or something, But right now we're gonna

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Speaker 1: stick with twenty four hundred and sixty seven. I think

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Speaker 1: partly I love that it's not a round number because

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Speaker 1: it makes it easier to remember. And if you've got

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Speaker 1: that much cash on hand, you're at a low risk

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Speaker 1: of not being able to afford an emergency that comes along,

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Speaker 1: which is really just a really really crucial thing for

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Speaker 1: most people. When most people aren't able to do this,

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Speaker 1: you're already living counterculturally, just achieving money year number one.

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Speaker 2: Yes, And by the way, that money should be in

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Speaker 2: a high yield savings account, and typically you're going to

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Speaker 2: find that with an online bank because they pay the

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Speaker 2: best rates. We want you to ditch your local brick

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Speaker 2: and mortar one of the bigger banks like that because

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Speaker 2: they ain't paying jack well.

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Speaker 1: Also, they're probably feeing you, which is prohibiting you from

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Speaker 1: being able to amass that sort of emergency fund we

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Speaker 1: need you to have.

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Speaker 2: That's right, Yeah, And by the way, an emergency is

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Speaker 2: not needing Christmas presents here at the end of the year,

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Speaker 2: because that's a known expense. It happens same time every

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Speaker 2: single year. It's an expense that you should be budgeting for,

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Speaker 2: and you've got time to start saving. The emergency fund

435
00:19:02,680 --> 00:19:06,800
Speaker 2: is for bigger money and financial messes that pop up,

436
00:19:07,720 --> 00:19:11,320
Speaker 2: like a transmission failure on your car, but not the

437
00:19:11,440 --> 00:19:13,880
Speaker 2: oil change that you need, or not tires, because again,

438
00:19:13,920 --> 00:19:16,480
Speaker 2: those are things that you can plan for. It's for

439
00:19:16,600 --> 00:19:19,320
Speaker 2: something like a job loss, something that you're not expecting

440
00:19:19,359 --> 00:19:21,600
Speaker 2: to happen. Not for a regular expense.

441
00:19:22,000 --> 00:19:25,200
Speaker 1: It's not because it tickets to Hawaii on sale, right exactly,

442
00:19:25,240 --> 00:19:26,119
Speaker 1: That's not what this is for.

443
00:19:26,280 --> 00:19:27,919
Speaker 2: Yeah, And so in order to achieve this level, this

444
00:19:28,040 --> 00:19:31,119
Speaker 2: is going to involve you tracking your spending and cutting

445
00:19:31,160 --> 00:19:34,159
Speaker 2: back in some different areas and specifically, if you need

446
00:19:34,200 --> 00:19:36,760
Speaker 2: some ideas for the best places to start trimming, we'd

447
00:19:36,800 --> 00:19:39,520
Speaker 2: recommend for you to check out episode two sixty. That's

448
00:19:39,520 --> 00:19:41,919
Speaker 2: when we talked about seven specific things that you can

449
00:19:41,960 --> 00:19:44,000
Speaker 2: do this week in order to cut back and save.

450
00:19:44,320 --> 00:19:45,639
Speaker 2: And then we want you to put that money in

451
00:19:46,200 --> 00:19:48,640
Speaker 2: a special savings bucket. That's what they call them over

452
00:19:48,720 --> 00:19:52,239
Speaker 2: at ally. But essentially, we want you to put some

453
00:19:52,280 --> 00:19:55,159
Speaker 2: parameters around what it is that you can use this

454
00:19:55,320 --> 00:19:57,119
Speaker 2: money for, because we want you to use them for

455
00:19:57,200 --> 00:19:59,800
Speaker 2: actual emergencies, not just because you want to be able

456
00:19:59,800 --> 00:20:01,400
Speaker 2: to go hang out with your buds.

457
00:20:01,480 --> 00:20:03,720
Speaker 1: Yeah, ear market for sure. So that it's really only

458
00:20:03,760 --> 00:20:06,720
Speaker 1: for that intended purpose. And if it takes siphoning fifty

459
00:20:06,720 --> 00:20:08,879
Speaker 1: bucks out of your account every month and putting it

460
00:20:08,920 --> 00:20:13,560
Speaker 1: into another bank altogether to build up this emergency fund,

461
00:20:13,600 --> 00:20:16,600
Speaker 1: this twenty four hundred and sixty seven dollars, do that, like,

462
00:20:16,640 --> 00:20:18,760
Speaker 1: whatever it takes to make sure you have this achieved

463
00:20:18,840 --> 00:20:20,439
Speaker 1: and that you're not going to touch it is important.

464
00:20:20,560 --> 00:20:23,199
Speaker 1: And then totally, if you're already here, congrats. If not,

465
00:20:23,280 --> 00:20:24,200
Speaker 1: this is the number one gulp.

466
00:20:24,280 --> 00:20:25,720
Speaker 2: This is the first thing that you need to be

467
00:20:26,000 --> 00:20:26,400
Speaker 2: working on.

468
00:20:26,400 --> 00:20:28,440
Speaker 1: Gear number one. But let's move on, Matt, gear number

469
00:20:28,480 --> 00:20:32,640
Speaker 1: two stagging your company match. And we want all how

470
00:20:32,640 --> 00:20:34,560
Speaker 1: the money listeners to be investing, but we don't want

471
00:20:34,560 --> 00:20:36,719
Speaker 1: them to kind of hate to harp on your mistake,

472
00:20:36,760 --> 00:20:38,520
Speaker 1: but we don't want people to make that mistake of

473
00:20:38,880 --> 00:20:41,200
Speaker 1: opening up a retirement account before they're ready, that's right,

474
00:20:41,240 --> 00:20:42,840
Speaker 1: and because then you might need to pull that out.

475
00:20:42,880 --> 00:20:44,439
Speaker 1: You might need to pull that out, that money out

476
00:20:44,480 --> 00:20:46,520
Speaker 1: at a loss, and that's not a great position to

477
00:20:46,520 --> 00:20:49,159
Speaker 1: be and when you're getting started and so over the

478
00:20:49,160 --> 00:20:51,440
Speaker 1: long term, this is really how you grow wealth in

479
00:20:51,560 --> 00:20:55,159
Speaker 1: order to become truly financially free. Savings alone isn't going

480
00:20:55,200 --> 00:20:57,240
Speaker 1: to get you there, and so money Gear number one

481
00:20:57,240 --> 00:20:58,879
Speaker 1: gives you a taste of freedom, right, it gives you

482
00:20:58,920 --> 00:21:01,720
Speaker 1: more than you have living paycheck to paycheck. But Money

483
00:21:01,800 --> 00:21:05,040
Speaker 1: Year two is pushing you further in that direction. So

484
00:21:05,280 --> 00:21:07,840
Speaker 1: if you have a company retirement plan and if it

485
00:21:07,880 --> 00:21:11,080
Speaker 1: comes with an employer match, contributing enough to get the

486
00:21:11,119 --> 00:21:13,959
Speaker 1: full amount of free dollars is really important. That's clutch.

487
00:21:14,240 --> 00:21:16,960
Speaker 1: And so that's just the next move we want you

488
00:21:17,040 --> 00:21:19,680
Speaker 1: to make. Some companies they're going to offer a dollar

489
00:21:19,720 --> 00:21:22,360
Speaker 1: for dollar match, which I love. I think that's wonderful.

490
00:21:22,680 --> 00:21:25,879
Speaker 1: If yours does that, you're even better off. Others do

491
00:21:25,960 --> 00:21:28,440
Speaker 1: something like fifty cents on the dollar. If you contribute

492
00:21:28,440 --> 00:21:31,440
Speaker 1: something like six percent, they'll put in three. Either way, though,

493
00:21:31,680 --> 00:21:34,359
Speaker 1: it's impossible to get a better return on your money

494
00:21:34,440 --> 00:21:36,920
Speaker 1: than the company match, because even if it's just fifty

495
00:21:36,920 --> 00:21:38,399
Speaker 1: per cents on the dollar, where else are you going

496
00:21:38,440 --> 00:21:41,320
Speaker 1: to get a better return on your investment than that.

497
00:21:41,480 --> 00:21:44,000
Speaker 1: Then that's why this is such a huge financial priority,

498
00:21:44,000 --> 00:21:46,080
Speaker 1: and really it's Yeah, it's got to be number two

499
00:21:46,359 --> 00:21:47,600
Speaker 1: in the order of operations.

500
00:21:47,760 --> 00:21:49,359
Speaker 2: Yeah, and you know, it also helps to just get

501
00:21:49,400 --> 00:21:51,560
Speaker 2: the ball rolling when it comes to investing, which is

502
00:21:51,720 --> 00:21:54,800
Speaker 2: of critical importance for your future. And so more companies

503
00:21:54,840 --> 00:21:59,400
Speaker 2: are automatically enrolling you into the different workplace retirement plans

504
00:21:59,400 --> 00:22:02,360
Speaker 2: that they offer, and a lot more employers actually will

505
00:22:02,359 --> 00:22:05,400
Speaker 2: be required to do this on your behalf starting next year.

506
00:22:05,960 --> 00:22:08,320
Speaker 2: But you may not even have a clue as to

507
00:22:08,359 --> 00:22:11,040
Speaker 2: how much money that you're putting in your FRO one

508
00:22:11,119 --> 00:22:13,159
Speaker 2: K or maybe your four or three B, and so

509
00:22:13,240 --> 00:22:15,760
Speaker 2: we would recommend for you to log into your companies

510
00:22:16,359 --> 00:22:18,520
Speaker 2: the back end right like the employee portal, make sure

511
00:22:18,760 --> 00:22:21,560
Speaker 2: to check how much you've got going towards your retirement savings,

512
00:22:22,000 --> 00:22:25,359
Speaker 2: and if you have the financial ability to cut back

513
00:22:25,840 --> 00:22:29,080
Speaker 2: in some areas in order to increase your contribution to

514
00:22:29,280 --> 00:22:32,920
Speaker 2: that full match level, we would highly recommend it, because again,

515
00:22:32,960 --> 00:22:35,160
Speaker 2: this is money, like you are not going to see

516
00:22:35,160 --> 00:22:37,600
Speaker 2: a return on your investment as much as you're going

517
00:22:37,640 --> 00:22:39,040
Speaker 2: to see with an employer match.

518
00:22:39,080 --> 00:22:41,600
Speaker 1: Ye. And if it means cutting back on taco Tuesdays

519
00:22:41,600 --> 00:22:42,800
Speaker 1: where you go out to eat and you just make

520
00:22:42,840 --> 00:22:45,679
Speaker 1: tacos at home or stake Sundays, I don't know if

521
00:22:45,720 --> 00:22:47,320
Speaker 1: that's a thing, but I would like that to be

522
00:22:47,359 --> 00:22:49,560
Speaker 1: a thing. But if it means kind of cutting back

523
00:22:49,600 --> 00:22:53,240
Speaker 1: on some more expensive endeavors so that you can funnel

524
00:22:53,240 --> 00:22:55,040
Speaker 1: one or two percent more to make sure you're getting

525
00:22:55,040 --> 00:22:57,440
Speaker 1: the full match. We would say that's important, and that

526
00:22:57,600 --> 00:23:00,000
Speaker 1: is such a high financial priority, and really it's still

527
00:23:00,080 --> 00:23:02,320
Speaker 1: we're still the beginning of the money gears here, so

528
00:23:02,480 --> 00:23:06,200
Speaker 1: this is an important step that we want everyone to achieve.

529
00:23:06,520 --> 00:23:08,920
Speaker 1: We don't want you leaving, Like I said, that free

530
00:23:09,000 --> 00:23:12,000
Speaker 1: money and the best return on your money possible on

531
00:23:12,080 --> 00:23:15,000
Speaker 1: the table, And if you can't contribute enough to get

532
00:23:15,000 --> 00:23:16,639
Speaker 1: the full match right away, set a goal for when

533
00:23:16,640 --> 00:23:19,000
Speaker 1: you're going to be able to do it, like investing

534
00:23:19,000 --> 00:23:20,879
Speaker 1: two percent more every time you get a raise so

535
00:23:20,920 --> 00:23:22,640
Speaker 1: that you're able to hit this level in the next

536
00:23:22,680 --> 00:23:24,800
Speaker 1: year or so. And if you don't have a plan

537
00:23:25,080 --> 00:23:27,200
Speaker 1: for when you can achieve this, it's probably going to

538
00:23:27,240 --> 00:23:30,439
Speaker 1: fall off your radar. So making that plan to achieve

539
00:23:30,440 --> 00:23:32,879
Speaker 1: this money gear in the near future is crucial because

540
00:23:32,920 --> 00:23:35,160
Speaker 1: it means if you've got the plan and you're implementing it,

541
00:23:35,160 --> 00:23:37,520
Speaker 1: it's going to happen. As opposed to leaving it to chance,

542
00:23:37,800 --> 00:23:39,520
Speaker 1: which I don't know about you, Matt. When I leave

543
00:23:39,520 --> 00:23:41,240
Speaker 1: things a chance, they don't get done.

544
00:23:41,359 --> 00:23:43,960
Speaker 2: And it's more wishful thinking at that point, knowing that

545
00:23:44,000 --> 00:23:46,200
Speaker 2: it's something that you should do as opposed to clear

546
00:23:46,280 --> 00:23:47,520
Speaker 2: actionable steps that you can take.

547
00:23:47,640 --> 00:23:49,919
Speaker 1: Yeah, and it's important to mention a caveat here too,

548
00:23:50,040 --> 00:23:52,440
Speaker 1: because it make sure you take into consideration how long

549
00:23:52,480 --> 00:23:56,119
Speaker 1: it takes for any matching dollars that your employer contributes

550
00:23:56,280 --> 00:23:58,640
Speaker 1: to vest like how long is that vesting period? How

551
00:23:58,640 --> 00:24:00,720
Speaker 1: long have you been at that employer, because if it

552
00:24:00,760 --> 00:24:02,760
Speaker 1: takes a while, you don't plan on being with this

553
00:24:02,760 --> 00:24:04,600
Speaker 1: employer for long. If you're already shopping and looking for

554
00:24:04,680 --> 00:24:07,399
Speaker 1: jobs down the street, it doesn't necessarily make sense to

555
00:24:07,440 --> 00:24:10,800
Speaker 1: make this as high of a priority. But for most people,

556
00:24:11,200 --> 00:24:13,080
Speaker 1: this is the next money goal to be aiming for

557
00:24:13,160 --> 00:24:16,960
Speaker 1: after you've secured that basic emergency fund. And if you

558
00:24:17,000 --> 00:24:19,159
Speaker 1: don't get a company match at all, sorry, but you

559
00:24:19,160 --> 00:24:20,959
Speaker 1: can just keep pedaling and move on to money gear

560
00:24:21,040 --> 00:24:22,280
Speaker 1: number three, that's right.

561
00:24:22,160 --> 00:24:26,520
Speaker 2: Which is paying off high interest rate debt and credit cards.

562
00:24:26,560 --> 00:24:30,159
Speaker 2: They're the likeliest culprit here. That being said, we're actually

563
00:24:30,160 --> 00:24:33,399
Speaker 2: fans of credit cards specifically as a method of payment

564
00:24:33,440 --> 00:24:37,320
Speaker 2: because of the different benefits and rewards protections that they offer.

565
00:24:37,680 --> 00:24:40,480
Speaker 2: But that being said, just about fifty percent of Americans,

566
00:24:41,359 --> 00:24:43,639
Speaker 2: they're not paying off their balance on time, they're not

567
00:24:43,680 --> 00:24:46,720
Speaker 2: paying those off in full, which means they've got lingering

568
00:24:46,800 --> 00:24:50,240
Speaker 2: credit card debts. They're carrying those balances over month to month.

569
00:24:50,600 --> 00:24:53,360
Speaker 2: And considering that the average credit card interest rate is

570
00:24:53,600 --> 00:24:55,720
Speaker 2: like in the twenty percent range, at this point, your

571
00:24:55,760 --> 00:24:59,040
Speaker 2: credit card debt has become a bigger problem than ever.

572
00:24:59,400 --> 00:25:01,480
Speaker 2: And ditching that debt as soon as possible that should

573
00:25:01,520 --> 00:25:04,880
Speaker 2: be a very high priority, not a top priority, because

574
00:25:04,960 --> 00:25:07,199
Speaker 2: that would be getting your emergency fund set aside. But

575
00:25:07,320 --> 00:25:09,640
Speaker 2: third down the list, paying off that high interest rate debt.

576
00:25:09,800 --> 00:25:13,159
Speaker 2: And personal loans or other like high interest car loans,

577
00:25:13,200 --> 00:25:17,080
Speaker 2: they can actually easily fall into this money gear as well,

578
00:25:17,119 --> 00:25:19,560
Speaker 2: as they tend to have some higher interest rates. But

579
00:25:19,600 --> 00:25:21,800
Speaker 2: it's important to point out that is not the type

580
00:25:21,880 --> 00:25:24,480
Speaker 2: of loan per se that causes it to go into

581
00:25:24,480 --> 00:25:27,320
Speaker 2: money gear three. But it's the rate that is associated

582
00:25:27,600 --> 00:25:29,840
Speaker 2: with the loan, those higher rates that should cause you

583
00:25:29,880 --> 00:25:32,480
Speaker 2: to set your sights upon it. And so typically we

584
00:25:32,560 --> 00:25:36,320
Speaker 2: define that as about seven percent or higher. Anything below

585
00:25:36,400 --> 00:25:38,000
Speaker 2: that we want you to kind of kick that can

586
00:25:38,040 --> 00:25:39,560
Speaker 2: down the road a little bit. There are some other

587
00:25:39,600 --> 00:25:42,200
Speaker 2: priorities that we want you to turn your attention to first,

588
00:25:42,440 --> 00:25:45,720
Speaker 2: but certainly anything in the double digits, and we would

589
00:25:45,760 --> 00:25:48,359
Speaker 2: say even you know, once you start getting around seven percent,

590
00:25:48,359 --> 00:25:50,240
Speaker 2: that's kind of up to you whether or not that's

591
00:25:50,240 --> 00:25:52,720
Speaker 2: something you want to tackle now, but definitely anything higher

592
00:25:52,720 --> 00:25:54,600
Speaker 2: than that falls into money gear number three.

593
00:25:54,800 --> 00:25:56,040
Speaker 1: Yeah. I like how you said. It's not the type

594
00:25:56,040 --> 00:25:57,520
Speaker 1: of loan some people might say, Okay, what about my

595
00:25:57,560 --> 00:25:59,720
Speaker 1: auto loan? Well, it depends what the interest rate is

596
00:25:59,760 --> 00:26:01,320
Speaker 1: right now and whether or not that should be a

597
00:26:01,320 --> 00:26:02,680
Speaker 1: top priority or not. If you've got one of those

598
00:26:03,240 --> 00:26:06,360
Speaker 1: one point nine percent aprs on that car for four

599
00:26:06,440 --> 00:26:09,080
Speaker 1: years ago and you're almost done paying it off, well,

600
00:26:09,240 --> 00:26:11,959
Speaker 1: just paid off, as agreed, because that's actually that's not

601
00:26:11,960 --> 00:26:13,880
Speaker 1: bad at all. That's not a bad form of debt

602
00:26:13,960 --> 00:26:16,199
Speaker 1: necessarily at this point in time. But if you're like

603
00:26:16,359 --> 00:26:20,000
Speaker 1: I had bad credit I got that eighteen percent car loan,

604
00:26:20,280 --> 00:26:22,920
Speaker 1: that's a very very different ballgame that we're talking about.

605
00:26:22,960 --> 00:26:25,960
Speaker 1: And so it's really important to assess not the kind

606
00:26:25,960 --> 00:26:28,440
Speaker 1: of loan that it is necessarily, but more than anything,

607
00:26:28,640 --> 00:26:30,639
Speaker 1: the interest rate in the terms associated within.

608
00:26:30,520 --> 00:26:31,600
Speaker 2: Us, right, it's about the numbers.

609
00:26:31,680 --> 00:26:33,280
Speaker 1: Yeah, And I think this is also a time to

610
00:26:33,840 --> 00:26:35,880
Speaker 1: kind of tell people, Hey, we prefer you to stop

611
00:26:35,960 --> 00:26:38,199
Speaker 1: using these forms of debt altogether. And then if you

612
00:26:38,200 --> 00:26:41,560
Speaker 1: can't actually afford the vehicle without taking on some sort

613
00:26:41,560 --> 00:26:44,159
Speaker 1: of high priced loan, it's probably not worth it, and

614
00:26:44,200 --> 00:26:46,640
Speaker 1: it would behoove you to look towards a lower cost

615
00:26:46,680 --> 00:26:48,879
Speaker 1: form of transportation. And so we want all how to

616
00:26:48,920 --> 00:26:51,840
Speaker 1: Money listeners to hopefully avoid this kind of debt moving forward.

617
00:26:52,119 --> 00:26:54,640
Speaker 1: The best possible thing once you get out of money

618
00:26:54,640 --> 00:26:56,680
Speaker 1: Gear three paying off this high interest rate debt would

619
00:26:56,720 --> 00:26:59,119
Speaker 1: be to ensure that you never fall back into that

620
00:26:59,359 --> 00:27:01,560
Speaker 1: by avoiding all these kinds of the worst kinds of

621
00:27:01,640 --> 00:27:04,840
Speaker 1: loans really in the future. And so to really tackle

622
00:27:04,840 --> 00:27:07,359
Speaker 1: money Year number three, it's important to create a debt

623
00:27:07,359 --> 00:27:10,520
Speaker 1: payoff plan. We just talked about Matt how important these

624
00:27:10,520 --> 00:27:13,119
Speaker 1: plans are. And writing down all your debts on a

625
00:27:13,119 --> 00:27:15,240
Speaker 1: piece of paper or in like a Google sheets or

626
00:27:15,320 --> 00:27:18,000
Speaker 1: Excel file that's going to go a long way, documenting

627
00:27:18,000 --> 00:27:20,000
Speaker 1: all those debts, listing out how much you owe, what

628
00:27:20,040 --> 00:27:21,960
Speaker 1: the interest rates are, so you can look up smack

629
00:27:22,000 --> 00:27:23,480
Speaker 1: dab in the face and see kind of what you're

630
00:27:23,520 --> 00:27:25,720
Speaker 1: dealing with. And if you want to go digital, that's

631
00:27:25,760 --> 00:27:28,720
Speaker 1: fine too. A site like ondebt dot it and that

632
00:27:28,760 --> 00:27:30,520
Speaker 1: can help you kind of come up with this plan

633
00:27:30,880 --> 00:27:33,600
Speaker 1: for the order and the approach for paying paying that

634
00:27:34,080 --> 00:27:37,320
Speaker 1: debt off. Facing the facts though, is just a necessity here,

635
00:27:37,600 --> 00:27:39,600
Speaker 1: and so whether you want to take the avalanche or

636
00:27:39,640 --> 00:27:42,200
Speaker 1: a snowball approach that can be really up to you. We've

637
00:27:42,200 --> 00:27:44,560
Speaker 1: got an article we'll linked to in the show notes

638
00:27:44,600 --> 00:27:47,080
Speaker 1: about kind of how to make that decision. The snowball

639
00:27:47,080 --> 00:27:51,520
Speaker 1: approach kind of prioritizes psychology. The avalanche approach prioritizes math,

640
00:27:51,840 --> 00:27:54,000
Speaker 1: and depending on kind of you know what debts you have,

641
00:27:54,119 --> 00:27:56,320
Speaker 1: what you owe, and what the interest rates are, it

642
00:27:56,400 --> 00:27:59,679
Speaker 1: is going to determine probably which route you choose to take.

643
00:27:59,760 --> 00:28:01,800
Speaker 2: Yeah, well, I want to mention too that back in

644
00:28:01,840 --> 00:28:04,360
Speaker 2: the day, you and I would say one hundred percent

645
00:28:04,400 --> 00:28:06,560
Speaker 2: you should be taking the avalanche approach. You should be

646
00:28:06,600 --> 00:28:08,800
Speaker 2: focusing on the debts in your life that have the

647
00:28:08,840 --> 00:28:12,040
Speaker 2: absolute highest rates. But what we were discounting is the

648
00:28:12,080 --> 00:28:15,680
Speaker 2: psychology involved and the fact that if you were so

649
00:28:15,760 --> 00:28:19,360
Speaker 2: convinced by the different interest rates in the numbers, that

650
00:28:19,760 --> 00:28:22,160
Speaker 2: likely you wouldn't have gotten into debt in the first one. Yes,

651
00:28:22,359 --> 00:28:24,520
Speaker 2: a lot of times, just like with the money gears.

652
00:28:24,920 --> 00:28:27,600
Speaker 2: There are psychological wins that come along with kind of

653
00:28:27,600 --> 00:28:30,560
Speaker 2: taken getting some of those wins and then using the

654
00:28:30,640 --> 00:28:33,960
Speaker 2: momentum to build upon some of the bigger, more audacious

655
00:28:34,000 --> 00:28:35,639
Speaker 2: goals that you're striving after. The same thing can be

656
00:28:35,680 --> 00:28:38,560
Speaker 2: true when it comes to paying off your debts. A

657
00:28:38,640 --> 00:28:42,440
Speaker 2: lot of times by eliminating the smallest balances that can

658
00:28:42,480 --> 00:28:44,160
Speaker 2: add fuel to the fire and can give you the

659
00:28:45,160 --> 00:28:48,239
Speaker 2: kind of encouragement that you need to continue on with

660
00:28:48,280 --> 00:28:51,000
Speaker 2: that plan. And so math's great.

661
00:28:51,040 --> 00:28:53,960
Speaker 1: But if math doesn't actually get the job done, because

662
00:28:54,080 --> 00:28:56,080
Speaker 1: it's not getting you to actually follow through and take

663
00:28:56,080 --> 00:28:58,000
Speaker 1: the action, then the math isn't enough.

664
00:28:58,040 --> 00:28:58,600
Speaker 2: Absolutely.

665
00:28:58,680 --> 00:29:01,320
Speaker 1: Yeah, So yeah, I think that's that's really important thing

666
00:29:01,360 --> 00:29:03,440
Speaker 1: to mention, and so I'm glad you brought that up.

667
00:29:03,600 --> 00:29:05,600
Speaker 1: And it's also important to mention that if you encounter

668
00:29:05,680 --> 00:29:07,719
Speaker 1: a setback, don't let that get you down. Don't let

669
00:29:07,760 --> 00:29:11,200
Speaker 1: that like push off money. Gear three. It's important to

670
00:29:11,280 --> 00:29:13,440
Speaker 1: keep pushing through because it took you a while to

671
00:29:13,480 --> 00:29:15,520
Speaker 1: get into this debt, it's gonna take a little a

672
00:29:15,520 --> 00:29:17,760
Speaker 1: little time to climb out of it. If let's say

673
00:29:18,480 --> 00:29:21,240
Speaker 1: a transmission goes bad in your car and you're working

674
00:29:21,240 --> 00:29:23,240
Speaker 1: diligently on money gear three, and it feels like you

675
00:29:23,240 --> 00:29:24,880
Speaker 1: got to go back to money gear number one for

676
00:29:24,880 --> 00:29:26,920
Speaker 1: a second because you got to re re up that

677
00:29:26,960 --> 00:29:30,760
Speaker 1: emergency fund. That happens, but just remember that's what the

678
00:29:30,800 --> 00:29:33,440
Speaker 1: emergency fund is there for. And boy, isn't it a

679
00:29:33,440 --> 00:29:36,960
Speaker 1: good thing you took that step before that emergency came

680
00:29:37,000 --> 00:29:39,840
Speaker 1: down the pike. We're all going to have financial setbacks

681
00:29:39,880 --> 00:29:42,440
Speaker 1: along the way, but that doesn't mean that we abandon

682
00:29:42,480 --> 00:29:45,040
Speaker 1: the gears and just throwing the towel. What we do

683
00:29:45,160 --> 00:29:46,320
Speaker 1: is we kind of go back at it and we

684
00:29:46,680 --> 00:29:49,680
Speaker 1: might have to dial back a gear in order to

685
00:29:50,440 --> 00:29:54,000
Speaker 1: continue making progress. But that doesn't mean we've lost. It

686
00:29:54,240 --> 00:29:56,720
Speaker 1: means we're just delayed in our effort to win, which

687
00:29:56,720 --> 00:29:58,600
Speaker 1: I feel like actually kind of sounds like a high

688
00:29:58,640 --> 00:30:01,840
Speaker 1: school Friday Night Lights coach that speech, But really that's

689
00:30:02,080 --> 00:30:05,320
Speaker 1: what's happening. It's really give us that pep talk drum. Yeah, well,

690
00:30:05,320 --> 00:30:07,440
Speaker 1: and we're we are going to be delayed. We're not

691
00:30:07,480 --> 00:30:09,080
Speaker 1: going to get there maybe as quickly as we thought.

692
00:30:09,360 --> 00:30:11,120
Speaker 1: But hey, that kind of stuff happens to like all

693
00:30:11,160 --> 00:30:13,640
Speaker 1: of this, Matt, you and I included like stuff, stuff

694
00:30:13,640 --> 00:30:15,960
Speaker 1: happens that we didn't expect, and it might push back

695
00:30:16,000 --> 00:30:18,560
Speaker 1: the timeline just a little bit, but it doesn't erase

696
00:30:18,680 --> 00:30:21,040
Speaker 1: the fact that we're still going hard for that same goal.

697
00:30:21,120 --> 00:30:22,959
Speaker 2: That's right. Yeah, it doesn't erase the progress that we've

698
00:30:23,000 --> 00:30:25,200
Speaker 2: already made and so so far. The money gears we've

699
00:30:25,200 --> 00:30:27,440
Speaker 2: discussed are money gear number one, which is the basic

700
00:30:27,480 --> 00:30:31,240
Speaker 2: emergency fund, money year two, which is snagging that company match,

701
00:30:31,280 --> 00:30:34,360
Speaker 2: and the number money gear number three paying off high

702
00:30:34,360 --> 00:30:36,760
Speaker 2: interest rate debt. And no matter what, you need to

703
00:30:36,800 --> 00:30:38,920
Speaker 2: go in that order. But what do you do once

704
00:30:39,040 --> 00:30:42,440
Speaker 2: you have graduated from money year number three, once you've

705
00:30:42,440 --> 00:30:45,360
Speaker 2: paid off that last high interest rate debt? And that's

706
00:30:45,360 --> 00:30:47,680
Speaker 2: when things get maybe a little more fun. We'll talk

707
00:30:47,720 --> 00:30:50,080
Speaker 2: you through those gears right after this.

708
00:31:00,240 --> 00:31:03,520
Speaker 1: Let's keep going with the money gears episode we talked

709
00:31:03,520 --> 00:31:05,200
Speaker 1: to the first three. I feel like the first three

710
00:31:05,560 --> 00:31:07,880
Speaker 1: it is kind of that uphill climb, right, you're kind

711
00:31:07,920 --> 00:31:10,160
Speaker 1: of getting and now we're starting to crest the hill

712
00:31:10,200 --> 00:31:12,320
Speaker 1: here as we get into four through seven, let's say four,

713
00:31:12,760 --> 00:31:15,040
Speaker 1: we're kind of at the top of the hill. That's

714
00:31:15,080 --> 00:31:18,080
Speaker 1: like kind of where we've reached equilibrium, and then five, six,

715
00:31:18,120 --> 00:31:20,120
Speaker 1: and seven is where we start kind of going downhill,

716
00:31:20,520 --> 00:31:22,680
Speaker 1: and that is just such a good feeling to have

717
00:31:22,800 --> 00:31:26,000
Speaker 1: kind of the wind flying in your face. You're it's

718
00:31:26,280 --> 00:31:28,480
Speaker 1: momentum is on your side when it starts getting.

719
00:31:28,200 --> 00:31:30,200
Speaker 2: More fund us right, well, mostly because you're not. You're

720
00:31:30,240 --> 00:31:32,920
Speaker 2: you're paying much less of your money towards other people,

721
00:31:33,040 --> 00:31:35,280
Speaker 2: which is right, and that's the that's what.

722
00:31:35,240 --> 00:31:37,600
Speaker 1: Feels like the up uphill slog right overcoming kind of

723
00:31:37,600 --> 00:31:41,000
Speaker 1: passed indiscretions typically in those first few money gears, and

724
00:31:41,040 --> 00:31:43,920
Speaker 1: now it's like boom, I'm proactively funding my future, which

725
00:31:43,960 --> 00:31:46,960
Speaker 1: is a completely different way of thinking about things. So yeah,

726
00:31:47,240 --> 00:31:50,440
Speaker 1: I agree, that's really that's a really important way way

727
00:31:50,480 --> 00:31:53,840
Speaker 1: to distinguish it. But money gear number four is when

728
00:31:53,920 --> 00:31:56,880
Speaker 1: you're able to fully fund your emergency fund with three

729
00:31:56,920 --> 00:32:00,440
Speaker 1: to six months worth of monthly expenses and say, and

730
00:32:00,440 --> 00:32:02,600
Speaker 1: there's kind of a bunch of little nuance we got

731
00:32:02,600 --> 00:32:04,480
Speaker 1: to talk about in this one too, But we're going

732
00:32:04,480 --> 00:32:06,760
Speaker 1: back to the savings well for money gear number four.

733
00:32:07,000 --> 00:32:08,640
Speaker 1: You know, that was kind of where we started at

734
00:32:08,680 --> 00:32:11,240
Speaker 1: money gear number one. But now it's like, okay, cool,

735
00:32:11,320 --> 00:32:14,920
Speaker 1: you saved a little, then you invested a little, then

736
00:32:15,280 --> 00:32:17,680
Speaker 1: you paid off the worst kinds of debt. Now it's

737
00:32:17,760 --> 00:32:19,120
Speaker 1: time to go back to saving a little bit, and

738
00:32:19,440 --> 00:32:23,080
Speaker 1: some might find our prioritization of savings before investing more

739
00:32:23,360 --> 00:32:26,240
Speaker 1: a bit controversial. I don't think so though, and like

740
00:32:26,440 --> 00:32:28,360
Speaker 1: we realize that there can be a degree of fomo

741
00:32:28,440 --> 00:32:30,960
Speaker 1: fear of missing out as you're seeing the market's climb

742
00:32:31,040 --> 00:32:33,200
Speaker 1: and you're just padding your bank account, But it makes

743
00:32:33,200 --> 00:32:36,120
Speaker 1: the most sense for you to have a solid savings

744
00:32:36,160 --> 00:32:39,080
Speaker 1: backup before you start to ramp up your investing efforts.

745
00:32:39,400 --> 00:32:41,719
Speaker 1: It's great that you kicked off your journey to financial

746
00:32:41,720 --> 00:32:45,040
Speaker 1: freedom with a basic efund, but two four hundred and

747
00:32:45,120 --> 00:32:48,239
Speaker 1: sixty seven dollars. While that will insulate you from some

748
00:32:48,320 --> 00:32:51,680
Speaker 1: of the worst possible financial emergencies, it's only going to

749
00:32:51,720 --> 00:32:53,520
Speaker 1: be able to get you so far right, and so

750
00:32:53,920 --> 00:32:56,640
Speaker 1: having that three to six months worth of backstop worth

751
00:32:56,640 --> 00:32:58,920
Speaker 1: of expenses set aside is going to be able to

752
00:32:59,400 --> 00:33:01,880
Speaker 1: provide you with it a lot of stability that would

753
00:33:01,880 --> 00:33:04,280
Speaker 1: allow you to weather most financial storms, like a lot

754
00:33:04,320 --> 00:33:06,600
Speaker 1: more than just two thousand bucks in the bank is

755
00:33:06,600 --> 00:33:07,920
Speaker 1: really really gonna do for you.

756
00:33:08,120 --> 00:33:10,600
Speaker 2: But that being said, if you find yourself in a

757
00:33:10,640 --> 00:33:13,440
Speaker 2: financial situation where things are looking a little difficult, you

758
00:33:13,520 --> 00:33:17,960
Speaker 2: might find yourself reverting, like pairing back on your expenses

759
00:33:18,000 --> 00:33:20,280
Speaker 2: a little bit. And that's where it pays to have

760
00:33:20,320 --> 00:33:22,400
Speaker 2: a bare bones budget. We talked about that back in

761
00:33:22,440 --> 00:33:25,880
Speaker 2: episode three sixty two. But it's great knowing that you've

762
00:33:25,880 --> 00:33:28,560
Speaker 2: got a solved three to six months, but by knowing

763
00:33:28,840 --> 00:33:30,560
Speaker 2: that you can pair back a little bit, there's a

764
00:33:30,640 --> 00:33:32,720
Speaker 2: there's a chance you can even extend that to six

765
00:33:32,800 --> 00:33:36,160
Speaker 2: to nine months, yea even further. Yeah, of bare bones living,

766
00:33:36,400 --> 00:33:39,560
Speaker 2: but let's talk about whether you need three or whether

767
00:33:39,600 --> 00:33:41,240
Speaker 2: you need six months worth of saving it?

768
00:33:41,360 --> 00:33:42,760
Speaker 1: Like, how do you That's a big gap. So people

769
00:33:42,760 --> 00:33:44,280
Speaker 1: are like, yeah, how do you decide? Which one? Do

770
00:33:44,280 --> 00:33:45,080
Speaker 1: I choose for myself?

771
00:33:45,120 --> 00:33:48,000
Speaker 2: Guys? Well, some of it depends on your job. Some

772
00:33:48,080 --> 00:33:50,200
Speaker 2: of it depends on like it depends on the stability

773
00:33:50,200 --> 00:33:53,320
Speaker 2: of your income. For instance, are you a tenured professor

774
00:33:53,400 --> 00:33:57,840
Speaker 2: at a well respected university or are you like a

775
00:33:57,960 --> 00:34:03,440
Speaker 2: like a crypto TikTok influencer. The complexities of your specific

776
00:34:03,440 --> 00:34:07,160
Speaker 2: situation that should inform just how much you are socking

777
00:34:07,200 --> 00:34:09,960
Speaker 2: away within money year number four. Yeah, but there are

778
00:34:10,000 --> 00:34:12,800
Speaker 2: so many different factors that you need to take into account,

779
00:34:12,840 --> 00:34:15,319
Speaker 2: Like when it comes to income, does your spouse work right? Like,

780
00:34:15,320 --> 00:34:17,800
Speaker 2: do you have a partner or significant other and they're

781
00:34:17,840 --> 00:34:20,640
Speaker 2: also bringing an income, Well, guess what, you now have

782
00:34:20,719 --> 00:34:23,920
Speaker 2: diversified multiple streams of income. Or on top of that,

783
00:34:23,960 --> 00:34:25,680
Speaker 2: let's say you have an investment property and that also

784
00:34:25,719 --> 00:34:29,000
Speaker 2: generates some income as well. Well, maybe there's a I

785
00:34:29,040 --> 00:34:30,680
Speaker 2: don't know, maybe that's a bad example because there are

786
00:34:30,760 --> 00:34:34,160
Speaker 2: emergencies that pop up with the investment property capital laying

787
00:34:34,160 --> 00:34:36,880
Speaker 2: around for that that also Yeah, but like so like

788
00:34:36,880 --> 00:34:38,359
Speaker 2: the number of kids you have, the number of folks

789
00:34:38,360 --> 00:34:41,239
Speaker 2: who are dependent upon you earning an income. But it

790
00:34:41,280 --> 00:34:43,680
Speaker 2: also just comes down to how much appetite you have

791
00:34:43,760 --> 00:34:46,360
Speaker 2: for risk, because you could it could just be you

792
00:34:46,400 --> 00:34:49,120
Speaker 2: maybe you don't have a partner or a family, and

793
00:34:49,200 --> 00:34:51,880
Speaker 2: maybe you do have a job that is highly stable

794
00:34:51,920 --> 00:34:54,120
Speaker 2: and you've got a great income. Well that doesn't mean

795
00:34:54,120 --> 00:34:57,600
Speaker 2: that you should automatically only have three months worth of

796
00:34:57,600 --> 00:35:00,400
Speaker 2: living expenses. Depending on your personality, you I want to

797
00:35:00,440 --> 00:35:02,400
Speaker 2: have a side just no matter what. I want to

798
00:35:02,440 --> 00:35:05,960
Speaker 2: have a healthy six six months worth of expenses set aside.

799
00:35:06,040 --> 00:35:07,360
Speaker 1: Or you might have a friend that you could always

800
00:35:07,400 --> 00:35:09,760
Speaker 1: move in with who's like, hey, I've got this pool

801
00:35:09,760 --> 00:35:12,359
Speaker 1: house or something like that, You're always welcome to hang. Yeah,

802
00:35:12,400 --> 00:35:14,640
Speaker 1: and that might give you more confidence to have a

803
00:35:14,640 --> 00:35:15,520
Speaker 1: little bit less cash.

804
00:35:15,600 --> 00:35:17,399
Speaker 2: Or family, like if you have family in the area

805
00:35:17,400 --> 00:35:18,799
Speaker 2: who are there to support you as well.

806
00:35:18,800 --> 00:35:20,200
Speaker 1: That like all of that, I know, I can always

807
00:35:20,200 --> 00:35:23,040
Speaker 1: pitch your tent in your backyard, and that means I

808
00:35:23,080 --> 00:35:24,040
Speaker 1: need less cash on hand.

809
00:35:24,080 --> 00:35:26,040
Speaker 2: Right, you can write, Matt camp out in the little

810
00:35:26,040 --> 00:35:28,439
Speaker 2: playhouse there and you're more than welcome to stay.

811
00:35:28,520 --> 00:35:33,200
Speaker 1: Yeah. See that gives me family tosses you out hopefully. Yeah,

812
00:35:33,320 --> 00:35:34,879
Speaker 1: if it was all of us, we need a bigger tent,

813
00:35:34,920 --> 00:35:37,399
Speaker 1: I think. But but yeah, so that's money. Gear number

814
00:35:37,440 --> 00:35:40,720
Speaker 1: four is that that fully funded emergency fund going beyond

815
00:35:40,840 --> 00:35:43,319
Speaker 1: just the basic two four sixty seven number, which we

816
00:35:43,400 --> 00:35:45,719
Speaker 1: outline as kind of the bare minimum. And I think

817
00:35:45,719 --> 00:35:47,880
Speaker 1: that's going to give you even more confidence moving forward

818
00:35:48,080 --> 00:35:50,560
Speaker 1: when it comes to changing jobs or maybe even going

819
00:35:50,600 --> 00:35:53,279
Speaker 1: out to pursue your own work, saying, you know what,

820
00:35:53,320 --> 00:35:56,040
Speaker 1: I'm ready to leave my job start my own business. Well,

821
00:35:56,040 --> 00:35:58,480
Speaker 1: if you the more cash you have on hand, the better, Right,

822
00:35:58,520 --> 00:36:02,360
Speaker 1: it gives you runway and time to maybe make income

823
00:36:02,400 --> 00:36:04,759
Speaker 1: that's not quite as robust. And I mean ideally, if

824
00:36:04,800 --> 00:36:06,120
Speaker 1: you're going out there to start your own thing, you

825
00:36:06,239 --> 00:36:08,160
Speaker 1: probably save even more than that, because this is really

826
00:36:08,200 --> 00:36:10,000
Speaker 1: just an emergency fund. You're going to want to plan

827
00:36:10,040 --> 00:36:12,279
Speaker 1: on top of that. But that's money gear number four

828
00:36:12,360 --> 00:36:17,040
Speaker 1: is having more money in savings, in liquid savings in

829
00:36:17,080 --> 00:36:19,239
Speaker 1: a bank account, and Matt, you mentioned the online bank

830
00:36:19,239 --> 00:36:21,839
Speaker 1: accounts being the best. Well, money gear number five, that's

831
00:36:21,880 --> 00:36:23,640
Speaker 1: what you're moving into next once you kind of got

832
00:36:23,640 --> 00:36:25,719
Speaker 1: that one taken care of, and that's to invest more

833
00:36:25,800 --> 00:36:28,759
Speaker 1: intact sheltered retirement accounts. And then now we're getting back

834
00:36:28,760 --> 00:36:30,279
Speaker 1: to investing. So you can see how it's kind of

835
00:36:30,320 --> 00:36:32,680
Speaker 1: like we're running the gamut up and then we go

836
00:36:32,760 --> 00:36:35,000
Speaker 1: back to kind of square one to a certain extent,

837
00:36:35,040 --> 00:36:38,359
Speaker 1: but just like a heightened version of that thing. So yeah,

838
00:36:38,480 --> 00:36:41,200
Speaker 1: going to now investing step number two, which is money

839
00:36:41,239 --> 00:36:41,640
Speaker 1: year five.

840
00:36:41,800 --> 00:36:43,120
Speaker 2: It kind of makes me think of like moving a

841
00:36:43,120 --> 00:36:45,480
Speaker 2: piece of furniture, Like you move one side up a

842
00:36:45,480 --> 00:36:46,920
Speaker 2: little bit and then you move the other side a

843
00:36:46,920 --> 00:36:48,440
Speaker 2: little bit, Like if you're trying to fit into a

844
00:36:48,440 --> 00:36:50,080
Speaker 2: tight corn. Yeah, like if you're trying to move addresser

845
00:36:50,120 --> 00:36:51,680
Speaker 2: in or something like that, you don't just like slam

846
00:36:51,680 --> 00:36:53,640
Speaker 2: it in like all one side and then do the

847
00:36:53,640 --> 00:36:54,960
Speaker 2: other like you kind of like ease it in and

848
00:36:54,960 --> 00:36:56,360
Speaker 2: you go back and forth. I feel like that's what

849
00:36:56,360 --> 00:36:57,160
Speaker 2: we're doing with our money here.

850
00:36:57,200 --> 00:37:00,680
Speaker 1: Yeah, exactly. And when you do it incrementally and kind

851
00:37:00,680 --> 00:37:04,240
Speaker 1: of go back and forth between saving, investing and debt payoff,

852
00:37:04,480 --> 00:37:07,400
Speaker 1: it's going to ensure that you're not going too hard

853
00:37:07,480 --> 00:37:10,520
Speaker 1: on one. Leaving yourself exposed in another area of your

854
00:37:10,560 --> 00:37:14,120
Speaker 1: finances keeps you from scuffing up your financial walls, yes,

855
00:37:14,360 --> 00:37:16,320
Speaker 1: or breaking off a leg of that mid century dresser,

856
00:37:16,520 --> 00:37:19,319
Speaker 1: which we've all done if you've move it inappropriately, right.

857
00:37:19,480 --> 00:37:21,200
Speaker 1: But yeah, I think one of the biggest mistakes that

858
00:37:21,280 --> 00:37:23,239
Speaker 1: folks make is that they often go straight to money

859
00:37:23,239 --> 00:37:26,719
Speaker 1: gear number five because once they learn about investing, they

860
00:37:26,800 --> 00:37:29,000
Speaker 1: immediately think this is what they should be doing, but

861
00:37:29,040 --> 00:37:32,360
Speaker 1: they haven't laid really that financial foundation that's required to

862
00:37:32,480 --> 00:37:34,000
Speaker 1: dedicate more dollars in this direction.

863
00:37:34,200 --> 00:37:36,640
Speaker 2: You keep beating that Matt invested into roth Iry too

864
00:37:36,680 --> 00:37:38,480
Speaker 2: soon for a bunch it. I just want to make

865
00:37:38,520 --> 00:37:39,960
Speaker 2: you look as bad as possible in this episode. That's

866
00:37:39,960 --> 00:37:40,480
Speaker 2: what I'm going for.

867
00:37:40,840 --> 00:37:43,279
Speaker 1: But like they always talk about putting the KRT before

868
00:37:43,280 --> 00:37:46,880
Speaker 1: the horse, and I don't think we all know instinctually

869
00:37:46,920 --> 00:37:49,680
Speaker 1: what that means, even though I've never actually in person

870
00:37:49,719 --> 00:37:51,200
Speaker 1: seen a horse pulling a cart.

871
00:37:51,480 --> 00:37:54,200
Speaker 2: But like we need some new modern day examples.

872
00:37:54,239 --> 00:37:57,680
Speaker 1: I think we do. But if we start investing before

873
00:37:57,920 --> 00:38:01,520
Speaker 1: we have the proper cash reserves in the bank, we

874
00:38:01,600 --> 00:38:03,759
Speaker 1: could be leaving ourselves, like I said, exposed. And so

875
00:38:04,040 --> 00:38:06,359
Speaker 1: which tax sheltered accounts are we talking about here? We're

876
00:38:06,360 --> 00:38:09,720
Speaker 1: talking about hsas, iras and four oh one k's in particular.

877
00:38:09,760 --> 00:38:11,840
Speaker 1: We have an article all about hsa is up on

878
00:38:11,880 --> 00:38:14,280
Speaker 1: the website, which are one of our top favorite retirement

879
00:38:14,280 --> 00:38:16,760
Speaker 1: accounts that most people don't think of as a retirement account.

880
00:38:16,920 --> 00:38:18,920
Speaker 1: And if you're in the military, we're talking about funneling

881
00:38:18,920 --> 00:38:21,920
Speaker 1: money into your TSP, your thrift savings plan, and so

882
00:38:22,080 --> 00:38:26,719
Speaker 1: pumping more dollars into these accounts, these tax advantished retirement accounts,

883
00:38:27,120 --> 00:38:30,160
Speaker 1: increasing your contribution level is going to over the years,

884
00:38:30,400 --> 00:38:33,360
Speaker 1: pay huge dividends in your pursuit of financial independence. But

885
00:38:33,520 --> 00:38:35,759
Speaker 1: it's money gear number five for a reason. You really

886
00:38:35,760 --> 00:38:37,040
Speaker 1: got to do those first four first.

887
00:38:37,600 --> 00:38:40,120
Speaker 2: That's right, man. Yeah, So let's talk now about how

888
00:38:40,200 --> 00:38:44,040
Speaker 2: much money to invest within these tax sheltered retirement accounts

889
00:38:44,239 --> 00:38:45,880
Speaker 2: Because a lot of money experts out there, they're going

890
00:38:45,960 --> 00:38:48,120
Speaker 2: to say that ten percent that that is the number

891
00:38:48,200 --> 00:38:50,040
Speaker 2: to strive for. I was going to go on doctor

892
00:38:50,080 --> 00:38:54,040
Speaker 2: Evil and say one million. Wells, maybe for you, depending

893
00:38:54,080 --> 00:38:56,719
Speaker 2: on what your what your five number is, But when

894
00:38:56,760 --> 00:38:58,879
Speaker 2: it comes to how much you should be socking away

895
00:38:58,880 --> 00:39:01,640
Speaker 2: towards retirement, we think fifteen percent, that that is a

896
00:39:01,719 --> 00:39:03,440
Speaker 2: much better goal to have. It's going to allow you

897
00:39:03,480 --> 00:39:08,080
Speaker 2: to achieve your destination of financial freedom much sooner, Like

898
00:39:08,120 --> 00:39:12,320
Speaker 2: we're talking about years, like even decades. By being able

899
00:39:12,360 --> 00:39:14,960
Speaker 2: to increase the amount that you're putting towards retirement.

900
00:39:14,600 --> 00:39:16,719
Speaker 1: You can shave somewhere close to ten years off of

901
00:39:16,760 --> 00:39:20,799
Speaker 1: your kind of retirement goals by investing just five percent more.

902
00:39:20,760 --> 00:39:23,480
Speaker 2: That's right, Yeah, so fifteen percent of your income. And

903
00:39:23,520 --> 00:39:25,680
Speaker 2: for some higher earning folks out there, this is going

904
00:39:25,760 --> 00:39:29,560
Speaker 2: to mean that they will quickly max out their contributions

905
00:39:29,600 --> 00:39:32,960
Speaker 2: to these different tax advantaged accounts fairly quickly, assuming that

906
00:39:33,000 --> 00:39:36,000
Speaker 2: you have a much higher income. But others out there

907
00:39:36,160 --> 00:39:38,960
Speaker 2: might find that they hit that fifteen percent of their

908
00:39:39,000 --> 00:39:42,399
Speaker 2: income invested mark and they still have some room left

909
00:39:42,400 --> 00:39:45,520
Speaker 2: in those accounts to contribute, and that's okay, right, Like,

910
00:39:45,560 --> 00:39:48,680
Speaker 2: if that's you, we actually don't want you investing any

911
00:39:48,719 --> 00:39:52,680
Speaker 2: more than that because there are some other financial priorities

912
00:39:52,880 --> 00:39:55,839
Speaker 2: that we think that you should get to before an

913
00:39:55,840 --> 00:39:58,680
Speaker 2: even higher percentage of your income is going towards retirement.

914
00:39:59,000 --> 00:40:01,200
Speaker 2: We don't want you again, like you're moving that dresser

915
00:40:01,200 --> 00:40:02,719
Speaker 2: into the corner. We don't want you to get too

916
00:40:02,719 --> 00:40:04,759
Speaker 2: far ahead of things with one side before you kind

917
00:40:04,760 --> 00:40:06,040
Speaker 2: of make a small correction on the other.

918
00:40:06,080 --> 00:40:08,200
Speaker 1: You don't want to snap that hairpin leg, those beautiful

919
00:40:08,200 --> 00:40:10,160
Speaker 1: mid century hairpin legs. Don't want to do that. And

920
00:40:10,520 --> 00:40:12,839
Speaker 1: it's important too to give a quick word of warning here, Matt,

921
00:40:12,840 --> 00:40:14,880
Speaker 1: because a lot of people think of investing as socking

922
00:40:14,920 --> 00:40:16,799
Speaker 1: money into that account, and that is part of it.

923
00:40:17,120 --> 00:40:19,880
Speaker 1: But it turns out that fifty three percent of Americans

924
00:40:20,040 --> 00:40:22,520
Speaker 1: have at least some of their retirement dollars in straight

925
00:40:22,600 --> 00:40:27,359
Speaker 1: up savings account vehicles savings like vehicles inside of that

926
00:40:27,440 --> 00:40:29,680
Speaker 1: tax advantaged account, like a roth IRA or a four

927
00:40:29,719 --> 00:40:31,759
Speaker 1: to oh one K. And that's not good. Like, we

928
00:40:31,800 --> 00:40:35,080
Speaker 1: want to make sure that your retirement money isn't just

929
00:40:35,120 --> 00:40:37,040
Speaker 1: put into the right vehicle and then left to sit

930
00:40:37,520 --> 00:40:40,040
Speaker 1: in a money market account, although some of those are

931
00:40:40,040 --> 00:40:41,640
Speaker 1: earning a little more than they used to. I think

932
00:40:41,680 --> 00:40:44,000
Speaker 1: Fidelity is paying a suitet rate to return, but it's

933
00:40:44,040 --> 00:40:46,120
Speaker 1: still not as high over the years as you're going

934
00:40:46,200 --> 00:40:48,480
Speaker 1: to get investing in the stock market as a whole.

935
00:40:48,680 --> 00:40:50,800
Speaker 1: And this is not an investing episode, so we're not

936
00:40:50,840 --> 00:40:52,360
Speaker 1: going to go into a bunch of details, but we

937
00:40:52,400 --> 00:40:55,360
Speaker 1: have an article about investing for beginners up on the

938
00:40:55,360 --> 00:40:57,360
Speaker 1: site at how to money dot com. We'll link to

939
00:40:57,400 --> 00:40:59,919
Speaker 1: that article in the show notes. But make sure that, yeah,

940
00:41:00,040 --> 00:41:02,080
Speaker 1: you're not just like throwing some money in that account

941
00:41:02,120 --> 00:41:05,720
Speaker 1: and calling it a day. You're actually buying funds, preferably

942
00:41:05,719 --> 00:41:08,720
Speaker 1: low cost index funds inside of those retirement accounts.

943
00:41:08,800 --> 00:41:10,839
Speaker 2: That's right. So after that, you're going to be moving

944
00:41:10,840 --> 00:41:13,200
Speaker 2: on to money your number six, which is knocking out

945
00:41:13,239 --> 00:41:16,480
Speaker 2: some of that lower interest rate debt and specifically, like

946
00:41:16,520 --> 00:41:19,879
Speaker 2: we're talking about student loans, maybe some of those more

947
00:41:19,920 --> 00:41:22,759
Speaker 2: attractive car loans, basically any of the debts that you

948
00:41:22,760 --> 00:41:24,640
Speaker 2: have in your life that you did not address back

949
00:41:24,640 --> 00:41:26,759
Speaker 2: in money of your number three. It's important to note

950
00:41:26,800 --> 00:41:29,320
Speaker 2: here that you could put your mortgage in this category,

951
00:41:29,360 --> 00:41:32,799
Speaker 2: but they are typically the least important debt to pay

952
00:41:32,800 --> 00:41:36,040
Speaker 2: off early, especially because you can you can probably earn

953
00:41:36,120 --> 00:41:39,319
Speaker 2: more even just in a basic savings account than what

954
00:41:39,360 --> 00:41:41,040
Speaker 2: your current mortgage interest rate.

955
00:41:40,920 --> 00:41:43,160
Speaker 1: Is most people have a mortgage rate of less than

956
00:41:43,200 --> 00:41:44,960
Speaker 1: four percent, A lot of people have it in the

957
00:41:45,000 --> 00:41:47,880
Speaker 1: low threes, and you can straight up easy in savings

958
00:41:47,920 --> 00:41:49,160
Speaker 1: earn four plus percent.

959
00:41:49,000 --> 00:41:51,760
Speaker 2: Ninety I think ninety nine percent of all outstanding mortgages.

960
00:41:51,880 --> 00:41:55,439
Speaker 2: Mortgages right now are currently less than what the thirty

961
00:41:55,480 --> 00:41:57,879
Speaker 2: year rate is at the moment. Makes sense, that being said,

962
00:41:57,960 --> 00:41:59,600
Speaker 2: like at this point, you've already got the worst debts

963
00:41:59,600 --> 00:42:01,719
Speaker 2: paid off, but now you can focus on some of

964
00:42:01,719 --> 00:42:04,880
Speaker 2: these lower priorities, some of these low hanging debts, some

965
00:42:04,920 --> 00:42:07,160
Speaker 2: of this low hanging debt fruit and student loans, they

966
00:42:07,160 --> 00:42:10,359
Speaker 2: would typically be included here. But that being said, we've

967
00:42:10,360 --> 00:42:12,560
Speaker 2: got all these caveats. You don't want to be paying

968
00:42:12,600 --> 00:42:14,840
Speaker 2: off your student loans now because of course the payment

969
00:42:14,880 --> 00:42:18,600
Speaker 2: pause and the potential for forgiveness, but even still, we

970
00:42:18,640 --> 00:42:20,920
Speaker 2: want you to save up in case that doesn't actually

971
00:42:20,960 --> 00:42:23,719
Speaker 2: go through. It's helpful for you to sort of, like

972
00:42:23,760 --> 00:42:26,520
Speaker 2: we talked about setting up that initial emergency fund where

973
00:42:26,600 --> 00:42:29,200
Speaker 2: you are making small withdrawals or making a payment to

974
00:42:29,239 --> 00:42:31,880
Speaker 2: yourself into another account, you also want to do something

975
00:42:31,920 --> 00:42:35,759
Speaker 2: similar with the payment the amount that might resume once

976
00:42:35,880 --> 00:42:38,200
Speaker 2: student loans fire. Back up. We want you to be

977
00:42:38,280 --> 00:42:42,640
Speaker 2: prepared for those student loans resuming, but car loans he locks.

978
00:42:42,640 --> 00:42:45,160
Speaker 2: These are all good examples of some of that low

979
00:42:45,200 --> 00:42:48,319
Speaker 2: hanging debt that is not so ridiculous that you knocked

980
00:42:48,360 --> 00:42:48,799
Speaker 2: it out earlier.

981
00:42:48,880 --> 00:42:50,520
Speaker 1: Ya, your he lock rate might have gone from three

982
00:42:50,600 --> 00:42:52,480
Speaker 1: and a half to six and a half percent or

983
00:42:52,560 --> 00:42:54,719
Speaker 1: maybe even a little bit higher, and so it might

984
00:42:55,040 --> 00:42:57,319
Speaker 1: have been a lower priority a couple of years ago,

985
00:42:57,560 --> 00:42:59,360
Speaker 1: and now it's becoming a higher priority. And so you

986
00:42:59,400 --> 00:43:02,040
Speaker 1: find yourself money year six and you say, great, now

987
00:43:02,040 --> 00:43:04,000
Speaker 1: it's time for me to knock this thing off because

988
00:43:04,600 --> 00:43:07,720
Speaker 1: I've got that money money saved, I've got I'm investing

989
00:43:07,719 --> 00:43:09,880
Speaker 1: a decent chunk fifteen percent of my pay now, so

990
00:43:10,520 --> 00:43:12,480
Speaker 1: that he lock now, I got my eyes sat on

991
00:43:12,480 --> 00:43:14,480
Speaker 1: that joker or same thing with a with a car

992
00:43:14,560 --> 00:43:16,640
Speaker 1: loan and let's say it's four or five percent money

993
00:43:16,680 --> 00:43:18,640
Speaker 1: gear number six is the time to kind of knock

994
00:43:18,680 --> 00:43:21,480
Speaker 1: that thing out, get rid of it, because being debt

995
00:43:21,480 --> 00:43:24,200
Speaker 1: free other than mortgages is a great goal to have

996
00:43:24,520 --> 00:43:26,680
Speaker 1: kind of at this point in when it comes to

997
00:43:26,719 --> 00:43:27,839
Speaker 1: your financial progress.

998
00:43:27,920 --> 00:43:29,759
Speaker 2: Right. Yeah, I want to mention too that there is

999
00:43:29,800 --> 00:43:32,520
Speaker 2: a chance that you stall out here in money gear

1000
00:43:32,560 --> 00:43:35,200
Speaker 2: number six, or honestly even like money gear number five,

1001
00:43:35,200 --> 00:43:37,560
Speaker 2: where you're investing more in those retirement accounts. It takes

1002
00:43:37,600 --> 00:43:39,920
Speaker 2: a lot of work to invest up to fifteen percent

1003
00:43:40,000 --> 00:43:42,640
Speaker 2: of your income and even fully funding and overnight, yeah,

1004
00:43:42,680 --> 00:43:44,600
Speaker 2: even fully funding your emergency fund. We've got three to

1005
00:43:44,600 --> 00:43:47,160
Speaker 2: six months worth of expenses. I mean, there's a chance

1006
00:43:47,200 --> 00:43:49,360
Speaker 2: that you could be in these money gears for years,

1007
00:43:49,600 --> 00:43:52,719
Speaker 2: depending on your your financial situation. And so whereas the

1008
00:43:52,760 --> 00:43:55,799
Speaker 2: first three money gears are designed for you to get

1009
00:43:55,800 --> 00:43:57,640
Speaker 2: some of those quick wins and you're able to build

1010
00:43:57,640 --> 00:43:59,920
Speaker 2: off of that momentum, some of these later money gears

1011
00:44:00,200 --> 00:44:04,400
Speaker 2: might be yeah, years where you're slogging away where it

1012
00:44:04,480 --> 00:44:07,080
Speaker 2: doesn't feel like that you're making much financial.

1013
00:44:06,680 --> 00:44:08,880
Speaker 1: Progress, but you are making progress, and that's so important.

1014
00:44:09,280 --> 00:44:10,920
Speaker 1: But you're right, it feels like it if you're like, man,

1015
00:44:11,680 --> 00:44:14,239
Speaker 1: it's month number fifteen of me trying to get to

1016
00:44:14,239 --> 00:44:18,200
Speaker 1: that three month worth of expenses in my savings account.

1017
00:44:18,440 --> 00:44:20,359
Speaker 1: That makes sense, Like it makes sense that it takes

1018
00:44:20,360 --> 00:44:22,239
Speaker 1: a while to get there. And again, I think it's

1019
00:44:22,239 --> 00:44:24,120
Speaker 1: important to come up with like a plan of attack

1020
00:44:24,200 --> 00:44:27,200
Speaker 1: when it comes to paying off these lower interest rate

1021
00:44:27,239 --> 00:44:30,320
Speaker 1: debts too. Pay the minimums on all of them except

1022
00:44:30,360 --> 00:44:32,719
Speaker 1: for one that you're prioritizing the most. That gives you

1023
00:44:32,760 --> 00:44:35,480
Speaker 1: more focus when you're just kind of assailing one at

1024
00:44:35,480 --> 00:44:38,400
Speaker 1: a time as opposed to kind of spreading your resources

1025
00:44:39,120 --> 00:44:41,359
Speaker 1: thin trying to pay a little bit more on every

1026
00:44:41,360 --> 00:44:44,160
Speaker 1: single debt. And then once you get one paid off,

1027
00:44:44,239 --> 00:44:47,560
Speaker 1: you set your sights solely on another one, and oftentimes

1028
00:44:47,560 --> 00:44:50,200
Speaker 1: that's going to give you the most success and it's

1029
00:44:50,239 --> 00:44:52,920
Speaker 1: going to help you advance more rapidly when it comes

1030
00:44:52,960 --> 00:44:53,879
Speaker 1: to paying off those debts.

1031
00:44:54,000 --> 00:44:56,160
Speaker 2: That's right, man. Yeah, So after money gear number six,

1032
00:44:56,200 --> 00:44:58,120
Speaker 2: where you're knocking out that lower interest rate debt, you

1033
00:44:58,160 --> 00:45:00,399
Speaker 2: are then moving on to money gear number seven, where

1034
00:45:00,560 --> 00:45:03,760
Speaker 2: you were going after some of those bigger financial goals

1035
00:45:04,239 --> 00:45:06,000
Speaker 2: like you just mentioned, j all, like, this is an

1036
00:45:06,040 --> 00:45:06,960
Speaker 2: awesome place to be.

1037
00:45:07,360 --> 00:45:08,879
Speaker 1: This is when you're going downhill on your bike at

1038
00:45:08,880 --> 00:45:12,040
Speaker 1: like thirty miles an hour full on. Like especially you met.

1039
00:45:12,040 --> 00:45:14,800
Speaker 2: With your long hair just blowing in the wind, blowing

1040
00:45:14,840 --> 00:45:16,840
Speaker 2: in the wind. Man, you've paid off all the debts

1041
00:45:16,880 --> 00:45:19,480
Speaker 2: in your life except for maybe that mortgage. If you

1042
00:45:19,520 --> 00:45:23,640
Speaker 2: own a home, you're also investing quite a bit already too. Basically,

1043
00:45:23,880 --> 00:45:26,880
Speaker 2: the world is your oyster. You can look to funnel

1044
00:45:26,920 --> 00:45:29,120
Speaker 2: maybe some money towards starting your own business, if that's

1045
00:45:29,160 --> 00:45:31,600
Speaker 2: something you've always wanted to do, changing how it is

1046
00:45:31,600 --> 00:45:33,359
Speaker 2: that you get to spend your time and the folks

1047
00:45:33,440 --> 00:45:36,680
Speaker 2: you get to help. Maybe that mean just a sweet

1048
00:45:37,200 --> 00:45:39,680
Speaker 2: renovation there at your home because that's something that you've

1049
00:45:39,920 --> 00:45:42,759
Speaker 2: always wanted to do. It could mean going on in

1050
00:45:42,760 --> 00:45:46,200
Speaker 2: international vacation doing that if that's something that you want

1051
00:45:46,200 --> 00:45:49,120
Speaker 2: to prioritize in your life. Or even honestly, just having

1052
00:45:49,160 --> 00:45:52,680
Speaker 2: a larger cash cushion where you are removing some of

1053
00:45:52,719 --> 00:45:56,160
Speaker 2: the potential for financial insecurity in the future, right, just

1054
00:45:56,280 --> 00:45:57,919
Speaker 2: having some more of that money on hand that gives

1055
00:45:57,920 --> 00:46:01,040
Speaker 2: you the options to participate in an opportunity that might

1056
00:46:01,080 --> 00:46:03,200
Speaker 2: come up that you're not even aware of, sort of

1057
00:46:03,239 --> 00:46:05,840
Speaker 2: like we were talking about there at the beginning of

1058
00:46:05,880 --> 00:46:06,320
Speaker 2: the episode.

1059
00:46:06,320 --> 00:46:08,360
Speaker 1: But yeah, money Gears number seven opens up just the

1060
00:46:08,400 --> 00:46:11,479
Speaker 1: whole world of possibilities. It can mean giving more money away,

1061
00:46:11,520 --> 00:46:15,000
Speaker 1: which is awesome absolutely, Like what's your favorite nonprofit You're like,

1062
00:46:15,160 --> 00:46:17,000
Speaker 1: wish I could give them five grand a year. Maybe

1063
00:46:17,000 --> 00:46:19,799
Speaker 1: now you can. Or maybe it could say you could

1064
00:46:19,800 --> 00:46:21,399
Speaker 1: say I've always wanted to work thirty hours a week,

1065
00:46:21,440 --> 00:46:23,399
Speaker 1: But man, I just have not been able to. But

1066
00:46:23,440 --> 00:46:25,840
Speaker 1: once you get to this place of financial security, you

1067
00:46:25,840 --> 00:46:28,280
Speaker 1: don't have nearly as many deaths in your life, except

1068
00:46:28,280 --> 00:46:30,680
Speaker 1: maybe that mortgage still hangs around. But you've been contributing

1069
00:46:30,680 --> 00:46:32,640
Speaker 1: to retirement accounts for quite a while, You've got a

1070
00:46:32,680 --> 00:46:35,120
Speaker 1: lot of cash in the bank, and you say, great,

1071
00:46:35,200 --> 00:46:37,800
Speaker 1: now does the time I can live now on a

1072
00:46:37,840 --> 00:46:40,200
Speaker 1: smaller salary, Like, there are all sorts of just options

1073
00:46:40,239 --> 00:46:42,279
Speaker 1: that open up to you when you hit money gear

1074
00:46:42,360 --> 00:46:44,680
Speaker 1: number seven, which is a beautiful thing to see and

1075
00:46:44,800 --> 00:46:46,239
Speaker 1: a beautiful thing to be able to enjoy.

1076
00:46:46,320 --> 00:46:47,839
Speaker 2: Yeah, and by the way you mentioned giving, I want

1077
00:46:47,880 --> 00:46:50,239
Speaker 2: to mention too, I mean personally, you and I like

1078
00:46:50,239 --> 00:46:53,200
Speaker 2: we've given money throughout all the different money gears. I

1079
00:46:53,200 --> 00:46:55,840
Speaker 2: wanted to point out that it's probably a good idea

1080
00:46:55,920 --> 00:46:58,399
Speaker 2: to not wait until money gear seven where you feel

1081
00:46:58,440 --> 00:47:01,120
Speaker 2: like that you are in a position of financial security

1082
00:47:01,120 --> 00:47:03,759
Speaker 2: in order to give out of abundance, as opposed to

1083
00:47:03,800 --> 00:47:06,320
Speaker 2: that being a discipline and a practice that you participate

1084
00:47:06,360 --> 00:47:09,120
Speaker 2: in throughout your personal finance struments.

1085
00:47:09,239 --> 00:47:10,920
Speaker 1: This just allows you to do it, maybe in a

1086
00:47:10,920 --> 00:47:12,320
Speaker 1: bigger way than you've been able to do up in

1087
00:47:12,400 --> 00:47:14,600
Speaker 1: exactly right and this could be a great time too

1088
00:47:14,640 --> 00:47:17,520
Speaker 1: to start saving up for your kids because up until now,

1089
00:47:17,920 --> 00:47:20,839
Speaker 1: really the priority, the priority should be funding your own

1090
00:47:20,880 --> 00:47:23,439
Speaker 1: retirement and should be kind of making sure that your

1091
00:47:23,520 --> 00:47:27,560
Speaker 1: home is financially a financially secure place that you're not

1092
00:47:27,600 --> 00:47:29,279
Speaker 1: going to have to be dependent on your kids when

1093
00:47:29,320 --> 00:47:32,239
Speaker 1: you kind of do reach retirement age when your work

1094
00:47:32,280 --> 00:47:35,160
Speaker 1: life is over. But the next thing, and some people

1095
00:47:35,200 --> 00:47:36,480
Speaker 1: want to get the cart before the horse on this

1096
00:47:36,520 --> 00:47:37,880
Speaker 1: one too, Matt, and they want to start saving for

1097
00:47:37,920 --> 00:47:39,920
Speaker 1: their kids when they're in money Gear two, three or

1098
00:47:39,960 --> 00:47:41,120
Speaker 1: four when it's.

1099
00:47:41,000 --> 00:47:43,280
Speaker 2: Is the time yet because it feels like the selfless things.

1100
00:47:43,239 --> 00:47:46,399
Speaker 1: Right right, But the reality is it's the oxygen mask

1101
00:47:46,480 --> 00:47:48,080
Speaker 1: that we always talk about on the airplane. You got

1102
00:47:48,120 --> 00:47:50,399
Speaker 1: to do put the oxygen mask on yourself first before

1103
00:47:50,400 --> 00:47:52,200
Speaker 1: you put it on the child next to you. I mean,

1104
00:47:52,200 --> 00:47:53,920
Speaker 1: that's what they recommend on the airplane videos. And so

1105
00:47:53,920 --> 00:47:55,200
Speaker 1: I'm just going to trust that they know what they're

1106
00:47:55,239 --> 00:47:57,359
Speaker 1: talking about. And I think the same thing is true

1107
00:47:57,360 --> 00:47:59,399
Speaker 1: when it comes to your money. So money Gear number

1108
00:47:59,440 --> 00:48:02,080
Speaker 1: seven is a right time to start prioritizing a five

1109
00:48:02,080 --> 00:48:05,200
Speaker 1: point twenty nine plan for your kid if you expect

1110
00:48:05,200 --> 00:48:06,920
Speaker 1: them to go to college, or if you want to

1111
00:48:07,000 --> 00:48:09,880
Speaker 1: kind of get the ball rolling to put money into

1112
00:48:10,800 --> 00:48:13,640
Speaker 1: an IRA for them or roth ira. So just to

1113
00:48:13,680 --> 00:48:15,279
Speaker 1: note that's where this fits in. If you're planning on

1114
00:48:15,320 --> 00:48:18,040
Speaker 1: saving money for your kids, it kind of falls under

1115
00:48:18,120 --> 00:48:19,640
Speaker 1: money gear seven as well, that's right.

1116
00:48:19,719 --> 00:48:21,800
Speaker 2: Yeah, and just we hope that you get to enjoy

1117
00:48:22,000 --> 00:48:24,200
Speaker 2: the ride down that mountain because this is where you

1118
00:48:24,200 --> 00:48:26,200
Speaker 2: shouldn't be stressed about this stuff. No, yeah, it should

1119
00:48:26,200 --> 00:48:28,320
Speaker 2: be fun decisions. This is a part of the ride

1120
00:48:28,400 --> 00:48:31,919
Speaker 2: where we're almost where gravity is almost working more for

1121
00:48:32,000 --> 00:48:34,759
Speaker 2: you than what you can actually accomplish by pumping your

1122
00:48:34,800 --> 00:48:36,480
Speaker 2: legs as hard as you possibly can. Yeah, this is

1123
00:48:36,480 --> 00:48:38,600
Speaker 2: almost at the point to where you're financially independent, which

1124
00:48:38,640 --> 00:48:41,560
Speaker 2: is where your money is actually working harder for you

1125
00:48:41,960 --> 00:48:43,759
Speaker 2: than what it is that you can actually accomplish with

1126
00:48:43,760 --> 00:48:46,719
Speaker 2: the hours that you've got that are allotted to you

1127
00:48:46,800 --> 00:48:49,600
Speaker 2: during the day. And so you know, with the money gears,

1128
00:48:49,640 --> 00:48:52,399
Speaker 2: it's just important to note that going out of order,

1129
00:48:52,480 --> 00:48:54,480
Speaker 2: it can honestly, it can be like throwing a wrench

1130
00:48:54,480 --> 00:48:57,880
Speaker 2: into your personal fundance situation. But smoothly shifting through the

1131
00:48:57,920 --> 00:49:00,200
Speaker 2: money gears that can help you to make progress more

1132
00:49:00,239 --> 00:49:03,120
Speaker 2: swiftly and so no matter where you are, there's always

1133
00:49:03,120 --> 00:49:05,319
Speaker 2: going to be room for progress. And Jill, you know

1134
00:49:05,760 --> 00:49:07,960
Speaker 2: you were talking about going out of order. You mentioned

1135
00:49:08,000 --> 00:49:10,320
Speaker 2: baking or what do you say something about cooking.

1136
00:49:10,400 --> 00:49:12,480
Speaker 1: Yeah, if you put the ingredients in at the wrong time, wrong,

1137
00:49:12,719 --> 00:49:15,520
Speaker 1: especially when you're mixing wet and dry. Apparently I'm not

1138
00:49:15,560 --> 00:49:17,080
Speaker 1: like a hardcore baker, but I know that that can

1139
00:49:17,160 --> 00:49:17,799
Speaker 1: kind of throw things off.

1140
00:49:18,120 --> 00:49:19,840
Speaker 2: Kate, is your cake like when it comes to like

1141
00:49:19,880 --> 00:49:22,600
Speaker 2: making sauces, that you can like break the sauce. I

1142
00:49:22,600 --> 00:49:26,239
Speaker 2: think that's the term, okay, like, but essentially what we're

1143
00:49:26,239 --> 00:49:30,080
Speaker 2: talking about here is this mathematical term, which is commutativity.

1144
00:49:30,880 --> 00:49:34,399
Speaker 2: And that's this concept where the order where it doesn't matter,

1145
00:49:34,560 --> 00:49:37,000
Speaker 2: right Like, that's like three plus two and two plus

1146
00:49:37,000 --> 00:49:39,239
Speaker 2: three that's going to give you the same result. But

1147
00:49:39,440 --> 00:49:43,319
Speaker 2: this doesn't work as the complexity ramps up. But when

1148
00:49:43,320 --> 00:49:46,000
Speaker 2: it comes to your personal finances, the order it matters

1149
00:49:46,000 --> 00:49:47,759
Speaker 2: in a major way, right Like, we're not talking about

1150
00:49:47,760 --> 00:49:50,239
Speaker 2: something as simple as was one plus one, and we

1151
00:49:50,280 --> 00:49:52,120
Speaker 2: want to make sure that you are on the right track,

1152
00:49:52,200 --> 00:49:54,080
Speaker 2: that you are doing things in the right order. There

1153
00:49:54,080 --> 00:49:57,279
Speaker 2: truly is an optimal way to go about achieving your

1154
00:49:57,320 --> 00:49:58,319
Speaker 2: different financial goals.

1155
00:49:58,400 --> 00:50:00,200
Speaker 1: Yeah, if you're looking for a visual by the way, this,

1156
00:50:00,280 --> 00:50:02,720
Speaker 1: you can go to howdmoney dot com. You can click

1157
00:50:02,760 --> 00:50:04,839
Speaker 1: start here and you can kind of we list out

1158
00:50:04,880 --> 00:50:07,320
Speaker 1: the money gears. So if you're saying, hey, I appreciate

1159
00:50:07,400 --> 00:50:10,200
Speaker 1: the audio, guys, I'd like to see a visual setup

1160
00:50:10,280 --> 00:50:12,759
Speaker 1: of what this looks like. Well you can kind of

1161
00:50:12,800 --> 00:50:14,120
Speaker 1: run through them all. You can even print it out

1162
00:50:14,200 --> 00:50:16,359
Speaker 1: or whatever, keep it on hand. But I think it's

1163
00:50:16,600 --> 00:50:18,080
Speaker 1: going to be helpful for a lot of people met

1164
00:50:18,120 --> 00:50:20,279
Speaker 1: to hear this and then to actually visually see it,

1165
00:50:20,520 --> 00:50:24,680
Speaker 1: and then to identify again where they're at inside of

1166
00:50:24,719 --> 00:50:27,120
Speaker 1: this order of operation, so they can know kind of

1167
00:50:27,160 --> 00:50:30,000
Speaker 1: what they're tackling. And just like we're talking about when

1168
00:50:30,000 --> 00:50:31,440
Speaker 1: you coming up with a debt payoff plan, well, if

1169
00:50:31,480 --> 00:50:34,279
Speaker 1: you know where you're at in this money order of operations,

1170
00:50:34,320 --> 00:50:36,520
Speaker 1: inside of these money gears, it basically tells you what

1171
00:50:36,560 --> 00:50:38,400
Speaker 1: to work on, It tells you what's next, gives you

1172
00:50:38,440 --> 00:50:40,120
Speaker 1: insight into where you are, which I think can be

1173
00:50:40,200 --> 00:50:42,239
Speaker 1: like so helpful, so profound if you're kind of like

1174
00:50:42,360 --> 00:50:44,640
Speaker 1: I don't know where to go from here, which a

1175
00:50:44,640 --> 00:50:47,120
Speaker 1: lot of people find themselves even if no matter which

1176
00:50:47,160 --> 00:50:50,160
Speaker 1: money gear they're in that sometimes you can feel stymied

1177
00:50:50,160 --> 00:50:52,719
Speaker 1: because you're just not sure what the next step to

1178
00:50:52,760 --> 00:50:54,719
Speaker 1: take is. And if you start going in the wrong direction.

1179
00:50:54,680 --> 00:50:56,480
Speaker 2: It feels like there's a thousand things that you could

1180
00:50:56,600 --> 00:50:59,520
Speaker 2: possibly do, but really there's just the truly is one

1181
00:50:59,600 --> 00:51:01,160
Speaker 2: thing that you should be doing right.

1182
00:51:01,239 --> 00:51:04,680
Speaker 1: So, yeah, I think that this is just hopefully helpful

1183
00:51:04,680 --> 00:51:06,680
Speaker 1: as people are trying to figure out, based on their

1184
00:51:06,719 --> 00:51:10,359
Speaker 1: own specific personal finance scenario, where they are and kind

1185
00:51:10,360 --> 00:51:13,000
Speaker 1: of what they should be tackling immediately when it comes

1186
00:51:13,000 --> 00:51:14,959
Speaker 1: to their money. But let's get back to the beer

1187
00:51:15,000 --> 00:51:17,800
Speaker 1: mat that we had on this episode. This was a

1188
00:51:18,000 --> 00:51:21,560
Speaker 1: venology semyon by Monday Night Brewing, like a kind of

1189
00:51:21,600 --> 00:51:23,880
Speaker 1: a beer wine hybrid. Yeah, what was your take on

1190
00:51:23,920 --> 00:51:24,160
Speaker 1: this one?

1191
00:51:24,239 --> 00:51:28,120
Speaker 2: Yeah, it's a hybridized American wild flavored ale and I'm

1192
00:51:28,120 --> 00:51:31,080
Speaker 2: not sure about that whole flavored part, but as opposed

1193
00:51:31,120 --> 00:51:32,840
Speaker 2: to like an actual ale.

1194
00:51:32,920 --> 00:51:34,840
Speaker 1: But I guess flavors in this beer are solid.

1195
00:51:34,880 --> 00:51:36,960
Speaker 2: I think there are different requirements as to what you

1196
00:51:36,960 --> 00:51:39,279
Speaker 2: can call an ale, and so if they're actually taking

1197
00:51:39,280 --> 00:51:41,200
Speaker 2: it and then like maybe mixing it, I think maybe

1198
00:51:41,239 --> 00:51:43,840
Speaker 2: they actually have to say it's flavored as opposed to

1199
00:51:43,960 --> 00:51:47,840
Speaker 2: brood gotcha. But yeah, man, this had some serious I

1200
00:51:47,840 --> 00:51:51,560
Speaker 2: don't know what kind of grapes are semione, but I

1201
00:51:51,600 --> 00:51:56,040
Speaker 2: would say white wine grapes. It definitely drank like, OK, yeah,

1202
00:51:56,120 --> 00:51:58,120
Speaker 2: some of the I don't I know, like very little

1203
00:51:58,160 --> 00:51:59,160
Speaker 2: about white wine.

1204
00:51:59,200 --> 00:52:02,520
Speaker 1: Same but there are more beers coming out there trying

1205
00:52:02,520 --> 00:52:04,480
Speaker 1: to be like wine beer hybrids, and I kind of

1206
00:52:04,520 --> 00:52:07,160
Speaker 1: appreciate that the direction this is going, and I guess

1207
00:52:07,280 --> 00:52:09,000
Speaker 1: it doesn't make me actually kind of want to try

1208
00:52:09,160 --> 00:52:12,960
Speaker 1: more funky wines because I've had a couple and I'm like, man,

1209
00:52:13,000 --> 00:52:15,640
Speaker 1: these actually some of the funkier wines I've had lean

1210
00:52:15,760 --> 00:52:18,239
Speaker 1: more in the craft beer direction, and this almost leads

1211
00:52:18,239 --> 00:52:21,480
Speaker 1: more in the wine direction. So there's almost like some overlapmans.

1212
00:52:20,719 --> 00:52:21,640
Speaker 2: Like you're meeting in the middle.

1213
00:52:21,719 --> 00:52:23,680
Speaker 1: Yeah, yeah, which is fascinating, and this one is like

1214
00:52:23,880 --> 00:52:28,360
Speaker 1: super tart, but yeah, also a little oaki, so oh definitely.

1215
00:52:28,440 --> 00:52:30,120
Speaker 2: Yeah, I had a lot of OA going on. It

1216
00:52:30,120 --> 00:52:32,719
Speaker 2: reminded me of some of the different So a lot

1217
00:52:32,719 --> 00:52:35,319
Speaker 2: of beers they'll age them in footers, which are these

1218
00:52:35,440 --> 00:52:38,719
Speaker 2: basically like giant giant wine barrels, and so if you

1219
00:52:38,760 --> 00:52:40,920
Speaker 2: happen maybe you're listening and you're just laughing at us

1220
00:52:40,960 --> 00:52:44,080
Speaker 2: because we know nothing about wine. Look for some of

1221
00:52:44,080 --> 00:52:46,759
Speaker 2: those different ales that are food or age, because they're

1222
00:52:46,800 --> 00:52:49,520
Speaker 2: gonna have a lot of those oaky characteristics that are

1223
00:52:49,600 --> 00:52:53,720
Speaker 2: oftentimes associated with wines. You're gonna then find those similar

1224
00:52:53,840 --> 00:52:55,320
Speaker 2: notes within those beers.

1225
00:52:55,400 --> 00:52:57,560
Speaker 1: Yeah, I think a lot of wine lovers can get

1226
00:52:57,600 --> 00:52:59,200
Speaker 1: into some kinds of beer. A lot of beer lovers

1227
00:52:59,239 --> 00:53:00,919
Speaker 1: can get into some kind of wine. I think there's

1228
00:53:00,920 --> 00:53:02,719
Speaker 1: more overlapp than maybe we give it credit for. And

1229
00:53:02,800 --> 00:53:05,400
Speaker 1: sure I just made very it's a very maybe still

1230
00:53:05,480 --> 00:53:07,600
Speaker 1: like a space in my brain culture for it.

1231
00:53:07,640 --> 00:53:09,960
Speaker 2: I think that's the biggest thing is the like in

1232
00:53:09,960 --> 00:53:11,759
Speaker 2: my mind, you know, what do you picture when you

1233
00:53:11,840 --> 00:53:14,239
Speaker 2: think of a vineyard, It's like, you know, it's kind

1234
00:53:14,239 --> 00:53:16,080
Speaker 2: of uppercrust, it's kind of fancy wrass.

1235
00:53:16,080 --> 00:53:17,960
Speaker 1: Craft beer it feels it feels more like I take

1236
00:53:18,040 --> 00:53:20,319
Speaker 1: a lot of like beards and plaid. So that's when

1237
00:53:20,360 --> 00:53:22,000
Speaker 1: I think of when I think about the craft beer culture.

1238
00:53:22,200 --> 00:53:24,759
Speaker 1: But yes, that's gonna do it for this episode. If

1239
00:53:24,800 --> 00:53:26,160
Speaker 1: you want, show notes with links to some of the

1240
00:53:26,160 --> 00:53:28,880
Speaker 1: stuff we mentioned, including kind of seeing the money gears

1241
00:53:28,960 --> 00:53:31,000
Speaker 1: like written out so that you can consume them that way.

1242
00:53:31,200 --> 00:53:34,040
Speaker 1: We'll have those at your disposal on our website at

1243
00:53:34,040 --> 00:53:35,160
Speaker 1: howtomoney dot com.

1244
00:53:35,200 --> 00:53:37,200
Speaker 2: That's right, and we'll see you back here on Friday

1245
00:53:37,280 --> 00:53:40,080
Speaker 2: with our Friday Flight episode, where we're gonna tackle some

1246
00:53:40,160 --> 00:53:42,440
Speaker 2: of the biggest stories that we've come across this week

1247
00:53:42,960 --> 00:53:45,640
Speaker 2: how those stories impact your money. So don't forget to

1248
00:53:45,719 --> 00:53:48,440
Speaker 2: hit the subscribe button if you are not already subscribed

1249
00:53:48,440 --> 00:53:51,000
Speaker 2: to the podcast. But buddy, that's gonna be it for

1250
00:53:51,040 --> 00:54:00,640
Speaker 2: this one until next time. Best Friends Out, best Friends Out,

1251
00:54:00,200 --> 00:54:04,960
Speaker 2: the Open, the upp