Speaker 1: Welcome to had to Money. I'm Joel and I am Matt,
Speaker 1: and today we're going to answer some of your listener questions.
Speaker 2: We hope that you are having a great start to
Speaker 2: your week, and even better to start to your week
Speaker 2: now that you're listening to the wonderful tones of Joel's
Speaker 2: voice sitting across from me.
Speaker 1: We answered something. We released one episode a little late
Speaker 1: last week, Matt, just like a couple hours later a
Speaker 1: few weeks ago, and somebody in the Facebook group was like, no, man,
Speaker 1: Joel on my morning walk, and we're sorry. We'll try
Speaker 1: to do better. I try to do better. We like
Speaker 1: to accompany you on your marble.
Speaker 2: Well, and I don't know if anyone knows this, but
Speaker 2: the actual time that we set the episodes to publish, man,
Speaker 2: I feel like there is a high degree of accountability
Speaker 2: now that I'm actually saying all this out loud. I
Speaker 2: always set it for four am Eastern for whatever reason
Speaker 2: in my mind. That's just like that's when I wanted
Speaker 2: to show up and everyone's podcast.
Speaker 1: And even then it can show up like an hour
Speaker 1: to later or something.
Speaker 2: That, but at least it well, it depends on when
Speaker 2: your phone basically when whatever your app is reaching out
Speaker 2: for that data, right.
Speaker 1: But now we've got.
Speaker 2: Great listener questions to get to today. A listener is
Speaker 2: wondering what she should do about multiple retirement accounts. Maybe
Speaker 2: there's a way to simplify things. Another listener is wondering
Speaker 2: how to budget for a new home, specifically how to
Speaker 2: take into account the sale of their current home and managing.
Speaker 1: Your kids allowance.
Speaker 2: It's a little bit trickier than perhaps it seems on
Speaker 2: the surface. We'll get to those plus more personal finance
Speaker 2: topics during today's episode.
Speaker 1: The last one you mentioned is gonna also involve the
Speaker 1: digital versus analog divide. We'll give it to that as well,
Speaker 1: because there I think are pros and cons in both sections.
Speaker 1: But Matt, before we get to listener questions, we've got
Speaker 1: a listener email a couple of weeks ago from listener
Speaker 1: Brian and I don't know. I love getting emails from
Speaker 1: people who have not only made changes to their own
Speaker 1: personal finance life, but they're using what they've learned to
Speaker 1: help other people. And Brian, he said he's been listening
Speaker 1: for a long time, actually said, I think the first
Speaker 1: time he listened our episode was out of brewery in Atlanta.
Speaker 1: So well, that's perfect. Yeah, I know right, I must
Speaker 1: have missed the email. I didn't see it, so mad.
Speaker 1: Props to Brian slip through the cracks drinking good beer.
Speaker 1: But also one of the cool things he's done over
Speaker 1: the years is he's gotten more just interested in personal
Speaker 1: finance and his knowledge has grown. What he did was
Speaker 1: he went to his employer and he said, hey, listen,
Speaker 1: can I teach a personal finance class to the folks
Speaker 1: on my job? He's in law enforcement? And they were like, yeah,
Speaker 1: why not. I guess so and so he is like
Speaker 1: this has been like an effort wholly led by him,
Speaker 1: with now the approval of the superiors. That's so good.
Speaker 1: And he's getting emails now after leading some of these
Speaker 1: courses some of the people he's been working with who've
Speaker 1: been in that department for twenty plus years and they're saying,
Speaker 1: oh my gosh, I wish I had known this when
Speaker 1: I first started on the job. Just incredible, Like it's
Speaker 1: one thing to make a lot of change in your
Speaker 1: own personal life. It's something we applaud. It's incredile, but
Speaker 1: so nothing to pass it on, whether that's in an
Speaker 1: individual relationship to friend or family member, or to stranger
Speaker 1: sometimes I don't know, I random stranger combos about money
Speaker 1: every once in a while. And then to your coworkers,
Speaker 1: like the people you work with every day. To be
Speaker 1: able to pass out on is just beautiful. Totally.
Speaker 2: Yeah, I do think there's a big difference in feeling
Speaker 2: like that. You have to feel one hundred percent qualified
Speaker 2: to stand in front of a room of your peers
Speaker 2: and be able to explain safe withdrawal rates or something
Speaker 2: like a little more complicated like that, as opposed to
Speaker 2: having a conversation about money. And that's what we strive
Speaker 2: for here on the show is to basically make personal finances,
Speaker 2: to make money more common of a conversation, like we
Speaker 2: do not want it to remain a taboo topic and
Speaker 2: like it has so often, And even just asking a
Speaker 2: question if you're you don't have to be able to
Speaker 2: deliver all the information, but even just raising a question
Speaker 2: like that alone right there to the fact that you're
Speaker 2: showing curiosity. I think for some folks might be.
Speaker 1: One of the first times.
Speaker 2: It might be like the first time they've ever heard
Speaker 2: someone talk about money outside of like, oh, the price
Speaker 2: of gas or or something crazy superficial or a little
Speaker 2: bore shallow, right, and that in their mind stands out
Speaker 2: for you. You're listening to hot of money and so
Speaker 2: you hear this talked about all the time, but for
Speaker 2: them it might be something that has like completely been
Speaker 2: off of their radar, the fact that someone would actually
Speaker 2: want to talk about that and would have an interest
Speaker 2: in that. So, yeah, kudos was it, Brian? Brian, Brian
Speaker 2: for doing that, not to mention showing initiative like that
Speaker 2: at work.
Speaker 1: Yeah, that's how you.
Speaker 2: Get paid more seriously as well in promotion today.
Speaker 1: Oh, Brian's a very valuable member of Yeah, yes, I
Speaker 1: totally love that. The thing you mentioned, I think it's
Speaker 1: bears repeating is you don't have to be some sort
Speaker 1: of financial brainiac in order to pass on the information
Speaker 1: that you have, right, Yeah, you don't have to be like,
Speaker 1: I'm not as smart as Matt and you know what,
Speaker 1: I say that all the time, I'm not as smart
Speaker 1: as mental please, But you don't have to be that
Speaker 1: like brilliant off the chart one hundred and fifty IQ
Speaker 1: when it comes to money to be able to pass
Speaker 1: on what you know. And sometimes it's just saying like listen, wow,
Speaker 1: I heard this fact last week, or man, I didn't
Speaker 1: realize how good the HSA could be to a fellow
Speaker 1: cowork or whatever it is. It can be small, or
Speaker 1: it can be within the realm of what you know
Speaker 1: and what you know really well. You don't feel like
Speaker 1: you got to be some sort of like a trained
Speaker 1: financial professional in order to be able to tell other
Speaker 1: people some of the good stuff that you've been learning.
Speaker 2: That's right, speaking of HSA is that's actually one of
Speaker 2: the questions we're going to get to during today's episode.
Speaker 2: But first we have to introduce our first crappy beer
Speaker 2: of the episode, because we're going to enter into the
Speaker 2: what we do this for about three weeks or so
Speaker 2: of us drinking I'm I can't even call it craft beer,
Speaker 2: So it's going to be beer that isn't so great.
Speaker 1: It's called crap beer.
Speaker 2: We are today drinking a Covista, which is a Mexican
Speaker 2: style blogger courtesy of ald and So let's little background.
Speaker 2: The reason you and I are drinking these not so
Speaker 2: great craft beers is we had a friendly wager, a
Speaker 2: little friendly bet going on, and whoever raised the most
Speaker 2: money in our daffy campaigns. We had competing campaigns going
Speaker 2: where we were matching listener contributions and the loser was
Speaker 2: going to be stuck drinking the crappy stuff. And I
Speaker 2: think you beat me by like one hundred bucks or
Speaker 2: something like that. One hundred and fifty bucks, was that.
Speaker 1: Right, something something like that. But then you've got a
Speaker 1: donation like after the fact, and so you're like, you
Speaker 1: know what, neither of us hit the total we were
Speaker 1: going for. We're both gonna drink crap.
Speaker 2: Heer, Well, I was gonna throw you under the bus
Speaker 2: since you contributed to your own.
Speaker 1: Campaign, to your own campaign, I might have cheated jerk
Speaker 1: just a little bit.
Speaker 2: But that being said, the campaign pages are still up,
Speaker 2: and so if you want to hop over there, because
Speaker 2: maybe you completely miss those campaigns, there's still an opportunity
Speaker 2: for you to give to those campaigns, and we are
Speaker 2: still matching dollars and so you still have the ability
Speaker 2: to change lives and give some of your money away.
Speaker 1: So for real, seriously, thank you to everyone who did
Speaker 1: donate to those campaigns. Yeah, you still can, and we're
Speaker 1: just excited to get the match dollars that get donated
Speaker 1: some of our favorite nonprofits. So we'll just leave them
Speaker 1: live until hopefully we reach the total. You still want
Speaker 1: folks to be able to participate. It doesn't have to
Speaker 1: be to the charities that Matt and I love, but
Speaker 1: if you like those charities, we'll guess what your donation
Speaker 1: gets doubled still, so we'll link to those again in
Speaker 1: the show notes for this for this episode. But Matt,
Speaker 1: let's move on. Let's get to listener questions. If you
Speaker 1: have a money question and you're like I would love
Speaker 1: Matt and Joel to tackle this on an upcoming episode.
Speaker 1: We'd love to hear it. Just got to have the
Speaker 1: money dot com, slash ask or basically record a voice
Speaker 1: memo on your phone send it our way. Hopefully we'll
Speaker 1: take it next week on the show. This first question, though, Matt,
Speaker 1: comes from a listener in Texas who's thinking upgrade in
Speaker 1: their house.
Speaker 3: Hi, Matt and Joel, this is Tanya from Tyler, Texas.
Speaker 3: I have a question regarding how to budget for a
Speaker 3: new home when factoring and selling a starter home. We
Speaker 3: bought our starter home back in twenty eleven and says
Speaker 3: sin and has more than double in value. We also
Speaker 3: don't owe very much on it, as we always put
Speaker 3: a little extra towards it each month. It is quite small,
Speaker 3: but hasn't felt that way until recently. My husband works
Speaker 3: from home now and we had our first baby last year.
Speaker 3: We're hoping to add another soon. We're wanting to purchase
Speaker 3: our next home, possibly our forever home, for our growing family,
Speaker 3: something a little larger and with a better office space,
Speaker 3: but I'm stuck on figuring out what we can afford
Speaker 3: after selling our starter home. What advice do you all have?
Speaker 3: Thank you for all you do. You're ever niece Texas.
Speaker 3: Check out Truebne Brewery and Tyler first round.
Speaker 2: On this Ooh, Tanya, a very generous offer. We'll have
Speaker 2: to We might actually take you up on that next
Speaker 2: time we make it down to the great state of Texas.
Speaker 2: It's been a little bit longer, Joe since you've been there.
Speaker 2: That's where there's a deal to what was it? South
Speaker 2: Padre Island is where I took my family to got
Speaker 2: that Southwest deal.
Speaker 1: I'm no Spanish expert, but I will say that probably
Speaker 1: means South Dad Island.
Speaker 2: You do no more Spanish than me, and so I
Speaker 2: will have to be further to appropriate. Let's just get
Speaker 2: to it. Tanya's question, because she mentioned several great pieces
Speaker 2: of information in here. By the way, she bought her
Speaker 2: house in twenty eleven, that's awesome because that means she
Speaker 2: bought a great time obviously before home prices shot up,
Speaker 2: but that's back when rates interest rates were low, mortgage
Speaker 2: rates specifically. But it also means because it was so
Speaker 2: long ago, it means that you have more than crossed
Speaker 2: the threshold of how long we would like to see
Speaker 2: folks commit to living in a home that they buy.
Speaker 2: And because you've owned the home for I guess thirteen
Speaker 2: years now, you have avoided one of the biggest pain
Speaker 2: points that other American homeowners who upgrade homes regularly that
Speaker 2: they face, which are over the top real estate transaction costs.
Speaker 2: This is a real wealth drainer. It doesn't get mentioned enough.
Speaker 2: And again, given the recent changes to how it does
Speaker 2: that realtors are getting paid, that might be going away
Speaker 2: and there might be a little more fluidity when it
Speaker 2: comes to the housing market, but for the longest time.
Speaker 2: That is one of the reasons we want folks to
Speaker 2: stay in their homes for at least three ideally five
Speaker 2: plus years.
Speaker 1: Yeah five to seven, really, I mean minimum three. I
Speaker 1: mean I don't even know if you're gonna If you
Speaker 1: said I'm gonna buy a home and sell it three
Speaker 1: years from now, I always say, don't do it. Interestingly enough,
Speaker 1: twenty eleven was kind of the trough matt for home prices,
Speaker 1: so sure there really wasn't a better time to buy
Speaker 1: anytime in that twenty ten twenty eleven period. You were
Speaker 1: getting just the lowest prices in a generation, I think
Speaker 1: for home prices.
Speaker 2: I remember owning for a couple of years and seeing
Speaker 2: home value is on Zillo continue to decline, and I
Speaker 2: remember thinking, ill, I don't know, did we make the
Speaker 2: right move because we jumped in back when there is
Speaker 2: a non refundable tax credit because the year in two
Speaker 2: thousand and eight you had to pay that tax credit
Speaker 2: back two thousand and nine. They said, you know what,
Speaker 2: you just hang on to that.
Speaker 1: Yeah.
Speaker 2: I think that's when both of us, prior to even
Speaker 2: knowing each other, said now's the time to buy Relic.
Speaker 2: She made an even better decision Relic from a bike
Speaker 2: on era Like, we don't know, no sort of support
Speaker 2: system in place for want to be homeowners now, But
Speaker 2: big props to you Tanya for making a good purchase
Speaker 2: and for holding onto that purchase for so long, and
Speaker 2: matt Tiny is also not alone in trying to make
Speaker 2: her current homework the golden handcuffs of a reasonable mortgage
Speaker 2: and a low rate. Plus if you were to run
Speaker 2: the numbers of buying a more expensive home, not just
Speaker 2: the increased price, but now at a seven plus percent rate,
Speaker 2: that's made a lot of people feel grateful for what
Speaker 2: they have.
Speaker 1: And it's not that Tanya isn't grateful, but you know
Speaker 1: what I mean, right Like she's She's like, I'll take
Speaker 1: the bird in the hand, and maybe I'll hold on
Speaker 1: to that because it is such a blessing to my
Speaker 1: monthly budget. It will make you want to hold off
Speaker 1: on upgrading as long as possible. But at some point,
Speaker 1: I think this is true, and I think we're going
Speaker 1: to see more people moving on from low rates in
Speaker 1: the future because at some point, no matter how good
Speaker 1: of a deal you've got, with your families growing and
Speaker 1: let's say somebody else is working from home and more
Speaker 1: space becomes a necessity, you got to bite the bullet.
Speaker 1: You gotta do something, because at some point it becomes
Speaker 1: untenable to continue to cram more people into that same
Speaker 1: small space.
Speaker 2: Yeah, So let's do our best to offer a few solutions. Antonya,
Speaker 2: I think one thing that's worth considering is outside of
Speaker 2: the realm of maybe what you're considering at the moment,
Speaker 2: which is to renovate your current home instead of buying
Speaker 2: another again with the mortgage rate that you've gotten, with
Speaker 2: the massive amount of equity that you have, I think
Speaker 2: it's worth considering whether or not it would make sense
Speaker 2: to get some plans r on up, maybe interview some contractors,
Speaker 2: try to increase the square footage of your current home.
Speaker 2: This is literally something that Kate and I are in
Speaker 2: the middle of doing right now, because when we moved
Speaker 2: up to where we're living now, we basically we saw
Speaker 2: our current home as a temporary move. We thought, all right,
Speaker 2: we'll make that happen, living it for a couple of years,
Speaker 2: possibly rent it for a few years after that before
Speaker 2: we sell it. But given where mortgage rates are, given
Speaker 2: the lack of inventory on the market. In bottom line,
Speaker 2: I think over time, we've realized that there is a
Speaker 2: lot to love about our current home. Essentially, we kind
Speaker 2: of came into it with a snobbish attitude. We're thinking,
Speaker 2: wait a minute, this home isn't at least one hundred
Speaker 2: years old, with loads of charm and character.
Speaker 1: And ten foot ceilings.
Speaker 2: And because of that, I think we were like, we're
Speaker 2: not going to be here for all that long. But
Speaker 2: now we're realizing, oh, you know what, we actually might
Speaker 2: be here for a decade plus. We could be here
Speaker 2: until we're empty nesters, which is mind blowing to think through.
Speaker 2: And so we're starting to take steps. We have been
Speaker 2: taking steps to see what it would take in order
Speaker 2: to make this particular home work for us rather than
Speaker 2: moving and man just completely being forced to pay so
Speaker 2: much more every single month, do specifically to hire mortgage rates.
Speaker 1: Yeah, and part of that has been you've actually started
Speaker 1: to enjoy your house more and you like your neighborhood.
Speaker 1: You like your neighbors. And then the other part of
Speaker 1: that is the economic, the money side of the equation.
Speaker 1: And it's like, Okay, all these plos together. If I
Speaker 1: want the slightly bigger house with a little bit more room,
Speaker 1: an extra bedroom for the next kid, you're giving up
Speaker 1: the super lowl mortgage that you have locked in. And
Speaker 1: you're in a similar position to Tanya. And it's lifestyle
Speaker 1: and financial, it's both, it's both, and you've got a
Speaker 1: factor in both, right. I guess the lifestyle part is
Speaker 1: the aspect Tanya, that it's worth thinking through. Like the
Speaker 1: way we were thinking about it is that like, well,
Speaker 1: this isn't a dream house, this isn't this isn't going
Speaker 1: to be a forever home. But I guess the question
Speaker 1: I'm posing is to think through because the home that
Speaker 1: you're in it it could be, It could be, and
Speaker 1: your priorities might change, and maybe in the past you're thinking, oh,
Speaker 1: this isn't our forever home. And let's be honest, nobody's
Speaker 1: home is actually their forever home. It's like, okay, more
Speaker 1: of a long term home than maybe you thought. But
Speaker 1: your priorities changed and the things that you care about change.
Speaker 1: So part comes up what it is that you are
Speaker 1: valuing these days in your life. Yeah, and maybe you've
Speaker 1: got a big enough lot where you can add on,
Speaker 1: and the way the house flows and stuff, maybe your
Speaker 1: house is ripe for a renovation, and maybe that's also
Speaker 1: the best fiscal move for you as well. You might
Speaker 1: find that you can take out a helock in order
Speaker 1: to add on to the house, giving you all the
Speaker 1: room that you need, right, allowing you to hang on
Speaker 1: to the current mortgage, which is essentially like free money
Speaker 1: if you got it back in twenty eleven and then right,
Speaker 1: and then you can simultaneously pay off the helock in
Speaker 1: just a few years time. That could be the slam
Speaker 1: dunk decision. There could be a lot of other reasons
Speaker 1: maybe why you wouldn't make that choice. I mentioned a
Speaker 1: lot of size. Let's say you're on a post it's
Speaker 1: stamp sized lot, something really really small, and you're like, nah,
Speaker 1: it just doesn't work, or actually I want to home
Speaker 1: with bigger bones in general, but we at least wanted
Speaker 1: to float that idea because it can make a lot
Speaker 1: of financial sense given the current market condition. So if
Speaker 1: you like where you live and you feel like your
Speaker 1: house has the ability to it's got the potential to
Speaker 1: be something great for your family for a long time,
Speaker 1: it's just in its current state, it's not quite there.
Speaker 2: At least think through that. Yeah, and plus it sounds
Speaker 2: like that maybe everything else about the house or like
Speaker 2: the neighborhood is working out for her, because what she's
Speaker 2: specifically mentioning is the square footage, not that actually we
Speaker 2: want to be closer to in laws. Oh, there's a
Speaker 2: job relocation that's requiring us to move that sort of thing.
Speaker 2: And so truly, if it is about space, maybe you
Speaker 2: are actually in the home that you're going to be
Speaker 2: in for the next little while, but maybe there is
Speaker 2: a bunch of other information that you didn't share with us.
Speaker 2: Let's say you are going to actually purchase a different home,
Speaker 2: a new to you house that is, well, how much
Speaker 2: should you spend? Well, first of all, take what the
Speaker 2: lender says with a grain of salt, because you're going
Speaker 2: to start getting pre approved for loan amounts and you
Speaker 2: want to make sure that you keep your housing expenses reasonable.
Speaker 2: And if you go all the way up to your
Speaker 2: pre approved limit, it's going to feel way too tight
Speaker 2: when it comes to your month and month, your sort
Speaker 2: of day to day living, and what you're going to
Speaker 2: be spending. In that sense, that's why they call a
Speaker 2: house formatt that's right, and in all likelihood, you're going
Speaker 2: to want to put down most, if not all, of
Speaker 2: the proceeds of your current home towards that next house.
Speaker 2: I think if if rates were a good bit lower,
Speaker 2: that advice actually it probably would be different. But I'd
Speaker 2: rather take on as little mortgage debt as possible at
Speaker 2: seven and a half percent, and because of that big
Speaker 2: equity chunk, you might even be able to keep your
Speaker 2: mortgage payment very similar in size, which would I think
Speaker 2: probably be sort of the ultimate goal for you.
Speaker 1: But this is a crude rule of.
Speaker 2: Thumb, but bottom line, you want to make sure that
Speaker 2: your payment is less than thirty percent of your take
Speaker 2: home pay, and honestly even less than that. If you
Speaker 2: can keep it closer to twenty five percent, then that
Speaker 2: would be even better. But let's say, for instance, you're
Speaker 2: monthly after tax pay is something like six thousand dollars,
Speaker 2: Well we're talking about an eighteen hundred dollars mortgage payment,
Speaker 2: assuming that you're sticking with that thirty percent goal.
Speaker 1: Yeah, yeah, I think that's a I think it's a
Speaker 1: reasonable approach, and of course it's harder than ever to
Speaker 1: pull off, given the current housing market and how out
Speaker 1: of control costs and rates have become. But at least
Speaker 1: Tanya's got one thing in her corner, which is a
Speaker 1: ton of home equity, which I think can help maybe
Speaker 1: defray some of the costs of the upgrade.
Speaker 2: So, yeah, you just want the ability to get that
Speaker 2: loan amount down even further.
Speaker 1: That's going to be huge.
Speaker 2: Yep, because that's I will say too. This is the
Speaker 2: like what the typical average American is going to do. Right,
Speaker 2: Like you, you start off with a home, take the
Speaker 2: equity out of that home, you roll it into the
Speaker 2: next one. And there's nothing wrong with that, although we do,
Speaker 2: I guess we want to push you to consider other alternatives,
Speaker 2: like there are other options available to you than just
Speaker 2: doing the typical standard American.
Speaker 1: You think, if you want financial freedom, you're going to
Speaker 1: do some things that are out of the ordinary from
Speaker 1: what most ordinary Americans are doing. And one of those
Speaker 1: things is to hold on to a home longer. It
Speaker 1: is to upgrade and maybe less often. It is to
Speaker 1: be okay with less space. It is maybe to add
Speaker 1: on instead of purchasing the nicer house that's going to
Speaker 1: strain your budget. All those sorts of things are going
Speaker 1: to allow you to sock more into your investments, into
Speaker 1: your savings, so you have a larger amount of financial
Speaker 1: freedom in your life, which is freeing in and of itself.
Speaker 1: And if achieving financial independence more quickly is a goal
Speaker 1: that you have, by the way, you're going to want
Speaker 1: to avoid being house for that's crucial, right because if
Speaker 1: more money than you feel comfortable with. Is going to
Speaker 1: the mortgage every month, you're going to feel strained in
Speaker 1: every other area of life. One more random thought to
Speaker 1: toss your way. It's just at least worth pointing out
Speaker 1: that if you're interested in becoming a landlord and you
Speaker 1: like the idea of keeping your current home, the numbers
Speaker 1: could work on that too, and maybe quite nicely. Considering again,
Speaker 1: when you purchase the home and the financing terms that
Speaker 1: you have, there are tax consequences for this, the two
Speaker 1: and five year rule that you're going to want to
Speaker 1: become familiar with, and you'd also have to be ready
Speaker 1: for the part time job of managing a rental property.
Speaker 1: But this is another thing that can help your family
Speaker 1: build wealth and allow you to hold on to a
Speaker 1: really solid asset so you're upgrading to that next home
Speaker 1: that you want to get into. Is going to suit
Speaker 1: your family better well. If you can save up enough
Speaker 1: money for a down payment and still have a reasonable
Speaker 1: mortgage amount and simultaneously hold onto this home, rent it
Speaker 1: out and make a sweet profit every single month while
Speaker 1: that home is going up in value at the same time,
Speaker 1: that can be a best of both worlds approach.
Speaker 2: To Yeah, and that is the typical non average American
Speaker 2: thing to do, which is to hang on to that
Speaker 2: current home that you have there as an investment. And
Speaker 2: that's something Joel, that both you and I have done
Speaker 2: multiple times, the ability to hang on to that low
Speaker 2: rate while at the same time diversifying your income with
Speaker 2: a little bit of that additional rental revenue that you
Speaker 2: got coming in. But Tanya, we hope that gives you
Speaker 2: plenty to think about and gets you pointed in the
Speaker 2: right direction. But Joel, we've got more to get to
Speaker 2: during this episode. Yeah, we'll talk about simplifying your retirement
Speaker 2: accounts that more. Right after the break, fin Matt, let's
Speaker 2: keep rolling.
Speaker 1: We've got more money questions to get to. This next
Speaker 1: one is all about raising financially savvy children.
Speaker 4: Hi, Matt and Joel.
Speaker 5: My name is Megan and I live in the Dallas area.
Speaker 5: A few years ago, I listened to y'all's episode about
Speaker 5: raising financially Savvy kids with Liz Fraser, and afterwards I
Speaker 5: went and bought her book Beyond Piggybanks and Lemonade Stands.
Speaker 5: We have since started giving our kids allowance and use
Speaker 5: this Bend Save Share Jar system. Our kids are nine,
Speaker 5: almost seven, and four, and the older two get a
Speaker 5: dollar a week for their age in years, and our
Speaker 5: youngest one doesn't get allowance yet, but she might start
Speaker 5: getting it soon because she keeps watching her brothers get
Speaker 5: money every week. So currently we have their cash in
Speaker 5: clear plastic jars, which is great because they can watch
Speaker 5: their money grow, but they never have their money on them,
Speaker 5: and so we don't know how much is in each jar,
Speaker 5: particularly the spending jar. So my question for you guys
Speaker 5: is how do you all recommend we keep track of
Speaker 5: their money in a digital way. If they want to
Speaker 5: make an impulse purchase at Target or something, I don't
Speaker 5: know whether or not to say yes because I don't
Speaker 5: know what they have in their spending jar. One of
Speaker 5: the main reasons we started giving them allowance is so
Speaker 5: that they actually have money to make mistakes with while
Speaker 5: the stakes are low, and also so that they can
Speaker 5: learn how to prioritize what they actually want to spend
Speaker 5: their money on. But I feel like I'm missing the
Speaker 5: mark because I never know what they actually have to spend.
Speaker 5: So I've heard of the green Light credit card or
Speaker 5: debit card for older kids, and I've thought about just
Speaker 5: using the split wise app or even a Google sheet.
Speaker 5: But I'm hoping y'all might have a tip for me
Speaker 5: here and of course bonus points if it is free.
Speaker 4: Thank you so much. I really appreciate you guys.
Speaker 1: Take care ooh.
Speaker 2: Meghan mentioned a bunch of the different apps and some
Speaker 2: of the technology that exists out there, but we might
Speaker 2: be bucking the trend a little bit and provide some
Speaker 2: less technologically advanced solutions to her problem.
Speaker 1: I prefer a chisel and tablet.
Speaker 2: Yeah, like, and apicus is a good way of keeping it.
Speaker 1: Like your ten commitment style with my record keeping.
Speaker 2: Meghan mentioned Liz Frasier. We actually spoke with Liz about like,
Speaker 2: like you said, you're raising financially savvy. I think that
Speaker 2: was the name of that episode, Raising Financially Savy Children
Speaker 2: that was back in episode four twenty seven.
Speaker 1: We'll link to that in the show notes.
Speaker 2: But Megan, I like, I just love the questions that
Speaker 2: you're asking because of the fact that you are being
Speaker 2: this proactive and this intentional with how it is that
Speaker 2: you're raising your kids. I mean, like you are way
Speaker 2: ahead of the curve when it comes to kids and money,
Speaker 2: and I think that means your kids are also going
Speaker 2: to be way ahead of the way ahead of the curve.
Speaker 2: And I guess one thing I want to mention is
Speaker 2: to keep in mind how it is that you handle
Speaker 2: and talk about and relate to your finances like in
Speaker 2: the day to day as opposed to the quote unquote
Speaker 2: lessons that you're teaching the kids, because I think I
Speaker 2: think one of the things I've learned, specifically with my
Speaker 2: ten year old as she's gotten older, is I'm seeing
Speaker 2: her adopt attitudes towards things that my wife and I
Speaker 2: share and have similar attitudes towards, even though we have
Speaker 2: told her maybe even the opposite, and we're like, no, no,
Speaker 2: you're supposed to do this, But what we see her
Speaker 2: doing is what we're actually living out.
Speaker 1: In our life. Those you do not as you say yes, yeah.
Speaker 2: And so not in regards to finance, has been in
Speaker 2: regards to other areas in life, and so, Megan, even
Speaker 2: though you are being incredibly intentional and proactive in this way,
Speaker 2: which I love, just keep that in mind. The way
Speaker 2: that you talk about earning money and the money that
Speaker 2: you're saving up for a big purchase and the like
Speaker 2: how much things cost. All of these things have an
Speaker 2: impact on how it is that your your kids are
Speaker 2: going to see money.
Speaker 1: Yeah, the attitudes.
Speaker 2: That they're they're going to develop towards their personal they're
Speaker 2: watching all the time, It's true, and you notice that
Speaker 2: as they get older and they're mimicking your behaviors, you're.
Speaker 1: Like, wait a second, I didn't realize I did that.
Speaker 1: Oh man, I really did not want them to adopt
Speaker 1: that same way of relating to whatever it is money
Speaker 1: or mistakes or something like that, but they really do.
Speaker 1: So it makes it certainly causes you to pay more
Speaker 1: attention as a parent. One of the things, by the way,
Speaker 1: that Megan said in her question, Matt, she said, making
Speaker 1: mistakes while the stakes are low. That's part of what
Speaker 1: she's after. And I think that was a huge That's
Speaker 1: a brilliant way of thinking about it. Because if you
Speaker 1: don't teach them young and you're not working on these things, now,
Speaker 1: guess what the first mistakes are going they're gonna make
Speaker 1: are gonna be out from under your roof. They're gonna
Speaker 1: likely be bigger mistakes, harder to remedy, and so I
Speaker 1: like that sort of approach.
Speaker 2: Okay, so that makes me think of did I tell
Speaker 2: you about again, going back to the ten year old,
Speaker 2: the purchase that she made out a volleyball game. She
Speaker 2: went and saw the Atlanta Vibe, which is like Atlanta's
Speaker 2: professional women's volleyball team or whatever, and a bunch of
Speaker 2: the girls that were going they wanted to buy hoodies
Speaker 2: like merch essentially, and we all know that merch is
Speaker 2: not cheap, and they like they basically they cost like
Speaker 2: fifty bucks, these hoodies, And when they came back, some
Speaker 2: of the parents were really upset that they weren't consulted,
Speaker 2: and rightly, so that's a lot of money. But all
Speaker 2: the kids were like, oh, well, I've got the money,
Speaker 2: and I think in most cases they did. But it
Speaker 2: was funny because it sparked a conversation between Kate and
Speaker 2: I and I thought, man, what a great way to
Speaker 2: realize whether or not this was a good purchase by
Speaker 2: making a quote unquote mistake with one zero at the
Speaker 2: end of it rather than two or three or four
Speaker 2: zeros at the end of it. Because ultimately a couple
Speaker 2: of the girls they had buyer's remorse a little bit
Speaker 2: because of how much they.
Speaker 1: Cost, but also in the moment it sounds awesome.
Speaker 2: The moment. It was fun and they were all kind
Speaker 2: of doing it, and they were thinking that they could
Speaker 2: get some bunch of the players to sign the hoodies
Speaker 2: or the jerseys or whatever, and that didn't actually and
Speaker 2: it didn't happen. There may be a couple of tears.
Speaker 1: Shed, but it was a return policy on these.
Speaker 2: We love the fact though, that this was a mistake
Speaker 2: that they were able to make, like super small stakes. Yeah,
Speaker 2: there wasn't much riding on the line, and these are
Speaker 2: all small little lessons that are going to inform the
Speaker 2: future decisions that they make for sure.
Speaker 1: And how parents respond to them matters to ye. Yes, yeah, yeah,
Speaker 1: And that's what I've had to learn too, by the way,
Speaker 1: with my kids spending money is like it's their money,
Speaker 1: and I don't I need to think I have less
Speaker 1: say because it really is their money. That's just something
Speaker 1: else I've learned as a parent too. And I love
Speaker 1: that you're using the jar method. By the way, Megan,
Speaker 1: we actually started off using a digital money money management
Speaker 1: app called go Henry in our house, Matt, you used
Speaker 1: it too, and it's a fantastic app. I'm not trying
Speaker 1: to throw shade or anything like that, but we realized
Speaker 1: pretty quickly that it just wasn't right for the age
Speaker 1: and the stage that we were at when our kids
Speaker 1: were even younger. The one thing that it did do
Speaker 1: was it helped with knowing how much money they had
Speaker 1: at any given time, which is the problem you're running into.
Speaker 1: It made it easy to send their money money their
Speaker 1: way on a recurring basis. That was nice too. But
Speaker 1: what it didn't do that the jar or the envelope
Speaker 1: method actually does is helped make money tangible, right, And
Speaker 1: so I love giving my kids real dollar bills and
Speaker 1: then funneling those dollars into the various quote unquote accounts
Speaker 1: every single week, their give, save, and spend accounts, and
Speaker 1: so I do think that's a helpful way to connect
Speaker 1: the dots for preteens and for younger kids, I think
Speaker 1: it's best to save the apps typically for when they're older.
Speaker 1: So much depends on your kids, your family, how you
Speaker 1: guys roll. But for us, I think we we went
Speaker 1: digital first, and we realized we need tangible first, analog first,
Speaker 1: we'll move to digital later on. Yep.
Speaker 2: In that way, we're taking more of the Jonathan Height approach. Well,
Speaker 2: we're delaying the use of the apps and phones for
Speaker 2: some of those those later teenage yeers. And by the way,
Speaker 2: Megan mentioned the green Light app, which is also that's
Speaker 2: very similar to Go Henry. We like what both of
Speaker 2: those are up too. But the problem that she's running
Speaker 2: into here, it's a real one. It's hard to know
Speaker 2: how much money they have in their jar or in
Speaker 2: their envelope on the fly when they want to buy something.
Speaker 2: And the first solution here is just to prevent that
Speaker 2: situation from happening in the first place. Because if you
Speaker 2: know that you're gonna go out somewhere and you're likely
Speaker 2: gonna or your kids are gonna are likely going to
Speaker 2: want to make a purchase, we'll just make sure that
Speaker 2: you have them bring their money along. It's not typically
Speaker 2: something they do because kids don't have typically wallets or purses.
Speaker 2: Then you know there's no need for them to do that.
Speaker 2: But if you know that, Okay, here's a store like
Speaker 2: Target where they're gonna want to spend money because they
Speaker 2: got that display right there at the entrance of the
Speaker 2: store where everything's affordable and everything looks so within reach
Speaker 2: of even the budget of a child. We'll see if
Speaker 2: he can show up with that money ready to go,
Speaker 2: but you don't always know that that's going to happen,
Speaker 2: and you might find yourself in a situation where you're
Speaker 2: having to try to remember. So to solve this problem,
Speaker 2: you can go a few different ways here.
Speaker 1: Then.
Speaker 2: The first is to put the onus on your kids,
Speaker 2: and this is especially true I think for like a
Speaker 2: ten year old. But tell them that they need to
Speaker 2: keep up with the actual dollars.
Speaker 1: It's up to.
Speaker 2: Them to bring along the money when they want to
Speaker 2: buy something, but if they don't, it's up to them
Speaker 2: to know roughly what they have on hand for the
Speaker 2: times where you just happen to be somewhere where you
Speaker 2: weren't necessarily planning to make a purchase. But there's something
Speaker 2: that is especially a track to them. And this is
Speaker 2: a great way I think to kind of transition into
Speaker 2: them being able to manage their money a little more
Speaker 2: autonomously on their own is by at the very least
Speaker 2: putting them in charge. Like they are responsible for their dollars.
Speaker 2: They are in charge of at least the dollar amount
Speaker 2: that they have back at home. They're responsible for that amount.
Speaker 1: Yeah, and that's I think that going that to that
Speaker 1: route is gonna take a little bit of parental grace
Speaker 1: because there's gonna be times whe they're like, pretty sure,
Speaker 1: I've got forty bucks, but they forgot about one purchase
Speaker 1: in between or something like that, and so they show
Speaker 1: up and there's something they want and it turns out
Speaker 1: that they got twenty five bucks. And so you get
Speaker 1: back home and you're like, oh, trying to rectify the
Speaker 1: situation and balance the account, and it turns out there
Speaker 1: wasn't enough money in there. And so this doesn't necessarily
Speaker 1: mean you taking it, taking the lumps and paying the
Speaker 1: fifteen bucks or whatever the whatever the margin of difference was.
Speaker 1: You're gonna have to find another way to deal with that,
Speaker 1: maybe debiting their next allowance something like that. I think
Speaker 1: that's a reasonable way to go, and then teaches them
Speaker 1: another elements of personal finance. When do you do that?
Speaker 4: Right?
Speaker 2: Yeah, exactly, this is how much you ho, mommy, you ow.
Speaker 1: Mommy fifteen bucks and so this is how we're gonna roll. Like,
Speaker 1: you're gonna pay me back two bucks a week over
Speaker 1: the course of the next whatever, like almost eight weeks. Yeah.
Speaker 2: I mean, I think the risk that you run there
Speaker 2: is things getting too complicated, and that's I guess. Another
Speaker 2: point I want to make here is that if they
Speaker 2: don't remember, I think it's not too difficult for you
Speaker 2: to remember. I mean, this is honestly, this is how
Speaker 2: we do it. In the moment, we roughly know about
Speaker 2: how much money each of our kids has, and before
Speaker 2: they make the purchase, we make it very clear that, like, hey,
Speaker 2: this is about how.
Speaker 1: Much we think you have.
Speaker 2: This is how much this costs. Are you sure you
Speaker 2: want to do this? I'm like, yeah, it's like okay,
Speaker 2: then we will do that.
Speaker 1: It's funny, I don't know how much my kids have.
Speaker 1: Oh really?
Speaker 2: Yeah, okay, I guess it kind of depends on the family.
Speaker 2: But the point I'm trying to make here, though, is
Speaker 2: that this isn't a perfect way of accounting, which I
Speaker 2: know probably sounds funny coming from the guy that has
Speaker 2: the Excel spreadsheets going back to two thousand and six
Speaker 2: or whatever of every single cent that he's ever spent.
Speaker 2: But we're talking about kids here, and I think what's
Speaker 2: more important here are the principles as opposed to a
Speaker 2: perfect ledger of how much money your kids have a
Speaker 2: home like this isn't true too, Yeah, Like we're not
Speaker 2: looking for a perfect balance sheet, like this isn't a
Speaker 2: publicly trade company. This is like your kid's money and
Speaker 2: how much they've gotten a jar.
Speaker 6: Yeah, that goes back to the grace factor, I think, right, yeah,
Speaker 6: exactly exactly, And so I just think it's important to
Speaker 6: focus on the principles and have that be the priority
Speaker 6: as opposed to the perfection, and which might be more
Speaker 6: difficult if for somebody that has maybe more of an
Speaker 6: accounting numbers background.
Speaker 1: I think, Okay, the other thing you can do is
Speaker 1: kind of a mix of the two, the analog and
Speaker 1: the digital. So maybe let's say you use the analog
Speaker 1: for the saving and for the giving portion of those dollars,
Speaker 1: but then you do have a digital tool like green
Speaker 1: Light or go Henry, whatever it is. I think green Light,
Speaker 1: by the way, is four ninety nine a month for
Speaker 1: up to five kids. I think go Henry is four
Speaker 1: ninety nine a month per kid. So you want to
Speaker 1: take that into account before you figure out which one
Speaker 1: you get a sign up for.
Speaker 2: Definitely a volume discount involved when it comes to green Light.
Speaker 1: Yeah, but let's say you're like cool four nine nine
Speaker 1: a month. I'm willing to spend that sixty bucks a
Speaker 1: year and that covers three kids. And guess what. Now,
Speaker 1: I have the ability to keep up with how much
Speaker 1: money they have on hand at all times. I have
Speaker 1: the ability to like funnel their allowance directly into that account,
Speaker 1: and there's an app, a handy little app that goes
Speaker 1: along with it. But then for the other things, there's
Speaker 1: a tangible reality of the actual dollars going into their hands.
Speaker 1: So maybe maybe it's the best of both worlds approach.
Speaker 1: I think this comes down to the individual family and
Speaker 1: stuff like that, but hopefully that's at least food for
Speaker 1: thought so that you can approach that allowance and those
Speaker 1: spending categories thoughtfully with them and without too much rigidity,
Speaker 1: kind of like you're alluding to MAP.
Speaker 2: Yeah, yeah, I think it's a good way to transition
Speaker 2: to that, but especially focusing on that in the teenage years,
Speaker 2: I think in the interim, and especially if you have
Speaker 2: younger kids. One step that we haven't talked about is basically,
Speaker 2: like when you are out and you make the purchase
Speaker 2: for your kid, because they don't have the money on them,
Speaker 2: making sure that you complete that transaction, so like when
Speaker 2: you get home, like immediately going to their jars, to
Speaker 2: their piggy bank to the envelopes. And I've even done
Speaker 2: this before where I say, hey, let me see that.
Speaker 1: So this happened with our first grader.
Speaker 2: We're at like a state or national park or something
Speaker 2: like that, in the gift shop, and she wanted to
Speaker 2: buy this little box you know what they sell in
Speaker 2: those little gift shops. It's got like her name on
Speaker 2: it and you stick stuff in it. It's just this
Speaker 2: little box. This wouldn't buy And so we went through it.
Speaker 2: We said, okay, let's go ahead and get it. And
Speaker 2: when we got home, though, the first thing we did
Speaker 2: was make sure that she actually paid for it. And
Speaker 2: I literally said, hey, let me hold that.
Speaker 1: Box for a second again, let me see that.
Speaker 2: Oh this is so cool. Oh you haven't paid for
Speaker 2: this yet. And so we walked over to it. She
Speaker 2: counted out the monies. That way, there's that change hammer
Speaker 2: to her piggyback. There's that tangible exchange that's taking place,
Speaker 2: and I think that is so important, like in hammering home,
Speaker 2: the fact that there was a purchase made, and to
Speaker 2: not just take care of the balance transfer like in
Speaker 2: the background to where they don't feel it at all,
Speaker 2: because that's the whole point of dealing specifically with cash,
Speaker 2: with tangible, physical money, and.
Speaker 1: It can lose its bearing in reality when it's numbers
Speaker 1: on a page.
Speaker 2: Yeah exactly, Yeah, yeah, And so I don't know, tying
Speaker 2: that actual transaction, making that happen as close to when
Speaker 2: they actually got the item as possible, I think makes
Speaker 2: it seem even more real as opposed again, as opposed
Speaker 2: to it just being like what the banks do at
Speaker 2: night in the background over the internet, where they all
Speaker 2: just like settle up that kind of thing.
Speaker 1: I think more than anything, Megan's crushing it. And hopefully, yes,
Speaker 1: few suggestions will help you figure out the exact right
Speaker 1: path forward that makes sense for you and your fam.
Speaker 1: All right, Matt, let's get to the next question. This
Speaker 1: one comes from a lister who wants to simplify things
Speaker 1: a little bit.
Speaker 4: Hi, Joel and Matt. Wow, that sounds backwards. Hi, Matt
Speaker 4: and Joel. My name is Kirby. I'm from Northern Montana.
Speaker 4: I'd love to get your feedback on simplifying my retirement
Speaker 4: and savings accounts. So I currently have three four one
Speaker 4: ks and two hsas it's getting a little busy, so
Speaker 4: I just started a new career with a great company
Speaker 4: I plan on staying with for a very long time.
Speaker 4: That came with a new HSA and a new four
Speaker 4: O one K with a six percent match, I might add,
Speaker 4: and it is with Vanguard. Aside from that, I have
Speaker 4: an old four O one K with Vanguard from a
Speaker 4: previous employer. I can't contribute to it, but it has
Speaker 4: good investments and it continues to grow. My other FORUMK
Speaker 4: is a little under a thousand with Boya. Some of
Speaker 4: it's company stock that I wouldn't have to pay taxes on.
Speaker 4: I can roll over the full amount to Vanguard or
Speaker 4: cash out and put the entirety of that amount to
Speaker 4: a high interest credit card debt. And aside from all that,
Speaker 4: I have another HSA with a previous employer. From what
Speaker 4: I understand, I can keep this account and contribute to
Speaker 4: it as long as I have a high deductible healthcare plan,
Speaker 4: which I do through my employer. Please correct me if
Speaker 4: I'm wrong. I'm not an HSA expert like you guys are,
Speaker 4: So what would your advice be to simplify this mess?
Speaker 4: Which accounts can and should I keep? And then after that,
Speaker 4: what order should I contribute to these accounts? To maximize
Speaker 4: my future. Thank you for your help.
Speaker 1: Oh, matthe this begs a question, is Matt and Joel
Speaker 1: and Matt?
Speaker 2: Does one sound better because of the consonants?
Speaker 1: I think that's it.
Speaker 2: Yeah, I don't know, that's a good question. I think
Speaker 2: you can flip. Literally have never thought about that before.
Speaker 2: But Kirby, thank you so much for reaching out. And
Speaker 2: actually I want to she mentioned something too about this mess,
Speaker 2: and I'm going to highlight the fact a she feels
Speaker 2: that this is a mess. That's why she's asking us
Speaker 2: how it is that she can simplify. But having multiple
Speaker 2: accounts it doesn't necessarily mean that your finances are a
Speaker 2: wreck or that it is a mess. I think it
Speaker 2: kind of depends on the individual. And if you can
Speaker 2: keep up with multiple accounts, I think there's nothing wrong
Speaker 2: with that if it makes financial sense. But like Kirby
Speaker 2: pointed out, there are some things kind of going against
Speaker 2: her on that front, and there.
Speaker 1: Are ways to clean it up. But it also means, hey,
Speaker 1: I've been investing consistently every time it's been offered to
Speaker 1: me and that should be congratulated.
Speaker 2: That's kind of a good sign. And congrats on the
Speaker 2: new job.
Speaker 1: By the way.
Speaker 2: I think she mentioned she's going to be with or
Speaker 2: she is now with a company that she's happy to
Speaker 2: be with for a long time. I feel like it's
Speaker 2: seems like a great feeling to know that you're going
Speaker 2: to be somewhere where you can kind of put on
Speaker 2: your roots. Or maybe it's just like an aspirational dream
Speaker 2: company that you've been working towards for a long time.
Speaker 1: Especially if they which is awesome, a six percent match,
Speaker 1: I mean alongside an HSA, which is killer. I'd hold
Speaker 1: tightly to that company.
Speaker 2: Uh yeah, So what should she do with those old
Speaker 2: four win ks as that's her question, because we could
Speaker 2: leave them or she could roll them over in which
Speaker 2: one she chooses depends on a few different factors.
Speaker 1: Yeah, it really does. And so one of the things
Speaker 1: she mentioned was that her old four to one K
Speaker 1: was with an insurance company called Voya, and I would say,
Speaker 1: at least on that front, move that over to a
Speaker 1: low cost brokerage. Stat that's because Voya charges and this
Speaker 1: is true for many insurance companies. If you find that
Speaker 1: your retirement account is with an insurance company, you want
Speaker 1: to dig in and see, well, what are the fees
Speaker 1: that they charge for doing business at the company. And
Speaker 1: if you can avoid doing business with one of the
Speaker 1: insurance companies, you're gonna want to because there are much
Speaker 1: better options, much lower cost options for your investments, and
Speaker 1: Voye charges an additional fee. They offer Vanguard funds, but
Speaker 1: if you want to invest in those Vanguard funds, it's
Speaker 1: gonna cost you more to do so through Voya. Basically,
Speaker 1: what they do is they charge a third of a
Speaker 1: point for using those Vanguard funds. So what a Vanguard
Speaker 1: fund that would be pointzh three now cost point three
Speaker 1: to three or something like that. It's ridiculous. It could
Speaker 1: be ten or eleven times what it would normally cost
Speaker 1: just because you're buying it through the wrong brokerage firm,
Speaker 1: which is silly. Right, there's no need to keep paying
Speaker 1: that fee now that you're no longer working for that
Speaker 1: old employer. Basically you could do a few things. You
Speaker 1: could roll that old account into an IRA, or you
Speaker 1: could roll the funds into your current four oh one
Speaker 1: K with your the employer with right now, there are
Speaker 1: potential benefits to both and potential downsides for both. But
Speaker 1: I would say, because your new four one K is
Speaker 1: with Vanguard, I'd lean hard in going in that direction
Speaker 1: to a direct rollover by contacting your new plan administrator,
Speaker 1: let them help with the transfer. You do not want
Speaker 1: to check in your hands. That's the main thing to say. Uh,
Speaker 1: tell boya, listen, I'm leaving. And then they send you
Speaker 1: a check and you're like, now I've got to get
Speaker 1: this over to Vanguard. Contact Vanguard and allow them to
Speaker 1: help you with the rollover so that you're not having
Speaker 1: to be the custodian meeting a deadline to get that
Speaker 1: money into the new account you wanted to roll over
Speaker 1: directly if at all possible.
Speaker 2: Yeah, and in the spirit of simplification, I mean it
Speaker 2: sounds like you are already going to be with Vanguard
Speaker 2: and Joel, you've even got you've got multiple accounts on
Speaker 2: a single log in as well.
Speaker 1: So that's my company, and at one point changed ownership
Speaker 1: and so then they had to change the new company
Speaker 1: essentially had a new Vanguard plan. So I've got two
Speaker 1: different Vanguard plans but under one login, so for me,
Speaker 1: I don't need to consolidate them, which is pretty nice.
Speaker 1: They're both there when I log in.
Speaker 2: Yeah, okay, let's talk about HSA's and Kirby. If I
Speaker 2: were you, My goal would be to have all of
Speaker 2: my HSA dollars with just one of two providers, either
Speaker 2: Lively or Fidelity. They offer the lowest calls in the industry,
Speaker 2: and to me, consolidating those makes a whole lot of sense.
Speaker 2: You could contribute to your old HSA if you still
Speaker 2: have that high deductible health care plan, but you probably
Speaker 2: don't want to. You likely want to contribute to the
Speaker 2: one that your employer offers, and that's because you'll likely
Speaker 2: get a tax break for doing so.
Speaker 1: We always talk about triple tax advantagement. This is where
Speaker 1: the potential quadruple yes comes in.
Speaker 2: So you avoid FIKA. That money goes in tax free,
Speaker 2: it grows tax free, and then you get to withdraw
Speaker 2: it tax free as well. Quadruple Those are four instances
Speaker 2: that you get to avoid the taxman.
Speaker 1: You withdraw a tax free when spent on qualifying medical expenses,
Speaker 1: right exactly. You got to jump through the hoops. But man,
Speaker 1: this is the ripest account.
Speaker 2: If you do it is technically the most correct account.
Speaker 2: It's certainly the most tax advantageous. Some employers that they'll
Speaker 2: even contribute to your HSA in addition to your four
Speaker 2: O one K, which would be awesome. And hopefully your
Speaker 2: employer's HSA is as low cost as it's four to
Speaker 2: oh one k, but if not, you can always contribute
Speaker 2: and just roll those funds into a lower cost HSA
Speaker 2: down the road as well. And so I think you've
Speaker 2: got you've got some great options laid out before you.
Speaker 1: Yeah, you might find oh wait, this HSA provider isn't
Speaker 1: as low cost as the ones Matt and Joel mentioned.
Speaker 1: I should avoid this and contribute directly one of those. Well,
Speaker 1: then you'd miss out on that potential tax benefit. And
Speaker 1: so what you do is you contribute to the one
Speaker 1: that you have access to through work, and then, like
Speaker 1: you said, Matt, you can roll that into another one
Speaker 1: that you like better and that has lower fees in
Speaker 1: the future. And then last thing that's worth mentioning here
Speaker 1: on this one, Matt Kirby mentioned having some high interest
Speaker 1: credit card debt. I would hate to see you Kirby
Speaker 1: sell your investments in order to pay that debt off.
Speaker 1: That's not ideal in most scenarios, but I'd also love
Speaker 1: to see you get rid of that debt quickly. Right.
Speaker 1: Credit Card debt, of course, is a wealth killer, especially
Speaker 1: when we're talking about today's interest rates. It's worse than
Speaker 1: it was a few years ago by a lot. It's
Speaker 1: moving you in the wrong direction. It's not taking you
Speaker 1: where you want to go. So I would say make
Speaker 1: that a massive priority instead of selling investments, though, maybe
Speaker 1: just dial back what you're contributing for a short period
Speaker 1: of time until you eradicate it completely.
Speaker 2: Yeah, rather than taking that ten percent penalty taken. So
Speaker 2: she mentioned this is the Hoya one right, Barvoya that
Speaker 2: she was thinking, not.
Speaker 1: Hoya, not Georgetown.
Speaker 2: See, if you're talking ten percent on roughly eight thousand dollars,
Speaker 2: so you're looking at eight hundred dollars, eight hundred dollar
Speaker 2: haircut that we're talking about.
Speaker 1: Yeah, so you want to avoid that at all costs.
Speaker 1: And so the best thing to do is not to,
Speaker 1: you know, you know, break that piggy bank we were
Speaker 1: talking about earlier of your retirement account and instead leave
Speaker 1: that money there lingering and just dial back on it
Speaker 1: and do whatever you can to create a debt payoff
Speaker 1: plan so that that has gone in no time, hopefully
Speaker 1: half a dozen months at most, but whatever it is,
Speaker 1: like dial back for the time being, and then you
Speaker 1: can fully ramp up those investments again. And I got
Speaker 1: to say one other thing I like about what Kirby's question.
Speaker 1: We love the goal of simplification what you're trying to
Speaker 1: achieve here. Having fewer log ins, more of your money,
Speaker 1: and fewer accounts and hopefully prioritizing the best low cost
Speaker 1: accounts makes it easier to track. And the truth is, Matt,
Speaker 1: you say this all the time, what gets measured gets manned.
Speaker 1: And I think it's true that for a lot of people,
Speaker 1: you're gonna see better results when you're more easily able
Speaker 1: to track investment growth and net worth in a simple way.
Speaker 1: That doesn't necessarily have to be through the Vanguard log in, right.
Speaker 1: It could be, Oh, I've got a win NAB or
Speaker 1: a monarch money account, and I've got all my accounts
Speaker 1: at least in one place. But I think the easier
Speaker 1: it is to track what's happening with your investments and
Speaker 1: with the growth of your investments and the growth of
Speaker 1: your net worth as you pay down debt and you
Speaker 1: increase the value of your assets, that's a heartening thing.
Speaker 1: And I think it's kind of like success begets success,
Speaker 1: like it's gonna keep you coasting in the proper direction.
Speaker 1: And the more you lose touch with that, the more
Speaker 1: you're likely to start taking some left turns, and it's
Speaker 1: gonna take you longer to get to where you want
Speaker 1: to go. True.
Speaker 2: Yeah, and again in the spirit of simplicity. So one
Speaker 2: of the things Kirby was asking too is which accounts
Speaker 2: or what order should she be investing in. And even
Speaker 2: though technically speaking, the HSA is the most optimized account,
Speaker 2: it does take a little bit of legwork. It takes
Speaker 2: keeping up with the expenses, is tracking those receipts, storing
Speaker 2: those away so that you are able to make qualified
Speaker 2: withdrawals down the road as opposed to your four one
Speaker 2: K one.
Speaker 1: That four one K comes with a sweet match. You
Speaker 1: want to do that before you think about the HSA too.
Speaker 2: But we mentioned some employers do provide that HSA match
Speaker 2: as well. So basically, I guess what I'm saying is,
Speaker 2: let's say you've got an HSA with a match, and
Speaker 2: you've got a four to one K with a match.
Speaker 1: I would for you in this.
Speaker 2: Situation, Kirby, if you're looking to simplify things, maybe that
Speaker 2: means steering clear of the HSA and instead just simply
Speaker 2: focusing on the four to one K, because, yeah, the
Speaker 2: match is the top priority, whether it's a fifty percent
Speaker 2: match or one hundred percent match. The ability you're not
Speaker 2: going to see those You're not going to get that
Speaker 2: kind of a yield anywhere else. So that is the
Speaker 2: absolute first thing that you want to do. But if
Speaker 2: you're choosing between the HSA and the four to one K,
Speaker 2: even though it's like mathematically not the correct answer, it
Speaker 2: might make more sense for you to go with the
Speaker 2: four one K.
Speaker 1: And then once you're free of the worst kinds of
Speaker 1: death in your life, maybe you can do both. But
Speaker 1: for now, man, yeah, laser focus on the four O
Speaker 1: one K and the credit card debt payoff, and then
Speaker 1: you can move on to bigger and better things as
Speaker 1: you continue in your wealth building journey.
Speaker 2: All right, we've got more to get to. We got
Speaker 2: some advice for renters out there. How can you score
Speaker 2: a great apartment for a whole lot less? We'll get
Speaker 2: to that right after this.
Speaker 1: All right, we're back. We got more money questions to
Speaker 1: get to. Let's get to the Facebook question of the week.
Speaker 1: This one comes from Andrew. He says, I'm curious for
Speaker 1: those still renting or looking to rent a bigger place
Speaker 1: when buying is still way too expensive. Talked about that
Speaker 1: just a little bit earlier, didn't we? He says, are
Speaker 1: you experiencing rental bidding wars? We live in a very
Speaker 1: competitive and expensive city, and I have a feeling that
Speaker 1: everyone is competing for the same apartments. Can anyone tell
Speaker 1: me their experience and maybe some lessons learned in the process.
Speaker 2: Well, I'll say, assassinating that in Andrew's market there are
Speaker 2: still rental bidding wars happening. Because so we can't tell
Speaker 2: where he's from, but in a lot of the country,
Speaker 2: demand is actually down. Rents are declining, and instead of
Speaker 2: getting like ten applicants, landlords are getting just like two.
Speaker 2: Specifically Austin, Atlanta, Miami, Phoenix, Memphis, they are all seeing
Speaker 2: declines of three to four percent year over year. And
Speaker 2: I'm guessing Andrew that he might be somewhere out west
Speaker 2: or maybe in the northeast, because.
Speaker 1: They's in Salt Lake City, I know that's yea.
Speaker 2: They seem to be the only places where rents are
Speaker 2: still climbing, where in much of the country things are
Speaker 2: actually cooling off.
Speaker 1: That's true, which is like welcomed news for renters because
Speaker 1: what happened. And I remember getting those questions during the
Speaker 1: heart of the pandemic, Matt, when prices were escalating rapidly
Speaker 1: on apartments and single family homes for rent across the country,
Speaker 1: and people were shocked when their lease was up how
Speaker 1: much their landlord was asking for next year's rent. It
Speaker 1: left people a lot of people in a tough spot.
Speaker 1: But even in some of those areas that you mentioned, Matt,
Speaker 1: the rate at which rents are rising is slowing. So
Speaker 1: even in the cities where rents are still going up,
Speaker 1: they're not going up as fast as they were. A
Speaker 1: close friend of ours actually had twenty showings in an
Speaker 1: awesome neighborhood in Los Angeles. I think two years ago
Speaker 1: that listing would have been gone on a weekend. He
Speaker 1: had a bunch of showings, but he had no takers,
Speaker 1: and like, this is great news, I think for renters
Speaker 1: everywhere where. Yeah, maybe a lot of people are looking,
Speaker 1: but not as many people are pouncing. Most folks are
Speaker 1: not going through what Andrew is. But let's talk directly
Speaker 1: to Andrew, because it's his question that we're answering. At
Speaker 1: the end of the day, how can you compete? Andrew?
Speaker 1: We've got a couple ideas. One is to look for
Speaker 1: new builds, especially if you live in a big city.
Speaker 1: This is easier done than it is in like smaller towns.
Speaker 1: Those new builds often have to offer free rent for
Speaker 1: a month or two in order to get their building full.
Speaker 1: So drive around look for new complexes that have sprung up.
Speaker 1: That can help in a big way. I would be
Speaker 1: looking to see when apartments are almost finished. If you
Speaker 1: live in a midtown or downtown area of a city,
Speaker 1: you might find that these are being completed, like one
Speaker 1: every couple of months, and so you might have more
Speaker 1: opportunity at least, Yeah, might have more opportunity looking for
Speaker 1: something new. And again they're trying to get that building full,
Speaker 1: they're going to offer you a discount to movement. Yeah.
Speaker 2: I think one of the other advantages of driving around
Speaker 2: as well is that you've got more or even walking
Speaker 2: around if you like let's say you're in New York,
Speaker 2: is that you have the ability to potentially find a
Speaker 2: diamond in the rough because everybody is what are they doing.
Speaker 2: They're sitting down, they're on their computer, they're looking for
Speaker 2: everything for rent. But like you said, Joel, if you
Speaker 2: see a new building that's being built and they've got
Speaker 2: a sign that says now leasing, right. Or if you
Speaker 2: come across a non traditional apartment or house or carriage
Speaker 2: house or granny flat, whatever it is. If you live
Speaker 2: out in the country, they call it grany flats. But
Speaker 2: there just might be a sign in the front yard,
Speaker 2: and that kind of listing isn't going to make it
Speaker 2: on some of the different listing websites. So basically, go
Speaker 2: where others aren't going, where others aren't looking, and that's
Speaker 2: going to present you inventory that others aren't necessarily privy to.
Speaker 1: Yeah, sometimes it's that adu, it is that carriage house
Speaker 1: or whatever, Matt that because it's an individual landlord, the
Speaker 1: price might be a whole lot better, And you're right,
Speaker 1: you might find it's a scow. Maybe it's only listed
Speaker 1: on a sign in the front.
Speaker 2: Yard, and even it's not even a price. But for Angel,
Speaker 2: it's about just the competition and so like he might
Speaker 2: be more than willing to pay the top dollar, but
Speaker 2: it sounds like for him it's about getting chosen out
Speaker 2: of all the applicants, and there are just going to
Speaker 2: be fewer applicants for someplace that you have to like
Speaker 2: show up in person and ring the doorbell. People don't
Speaker 2: want to do that.
Speaker 1: Yeah, well I guess okay. One thing on that front.
Speaker 1: If you want to be chosen, you need to stand out.
Speaker 1: And part of what it means to stand out is
Speaker 1: to have a great credit score, is to be prompt
Speaker 1: when your meeting with the landlord is to follow up.
Speaker 1: Makes me think of somebody who wants to get hired
Speaker 1: for a job oftentimes, Matt, what that takes. It is
Speaker 1: not just submitting a resume and then hoping that someone
Speaker 1: calls you back. It's being proactive, it's reaching back out. Hey,
Speaker 1: I'm super excited about this position, but I haven't heard
Speaker 1: anything in a week or two. I was just checking
Speaker 1: to see if there was any chance I could set
Speaker 1: up an interview. Those are the kind of things that
Speaker 1: help get people a job or otherwise they might be
Speaker 1: forgotten about. And I think if you're in a hot
Speaker 1: rental market where you live, that's a route that you
Speaker 1: can take too that puts you in a good light
Speaker 1: in front of a potential landlord.
Speaker 2: Yeah, and something else that you can do. And this
Speaker 2: is only ever happened to me as a landlord, maybe
Speaker 2: like once or twice I've had applicants show up and
Speaker 2: they had letters of recommendation from their current landlord, the
Speaker 2: fact that they've paid on time, the fact that they've
Speaker 2: taken care of the property like it was their own. Basically,
Speaker 2: these are like professional renters, and they.
Speaker 1: Made it easy on you.
Speaker 2: They made it easy, and yeah, of course I'm gonna
Speaker 2: want to rent to them, as opposed to somebody who
Speaker 2: may not take care of the property nearly as well
Speaker 2: as they, yeah.
Speaker 1: Or or at least doesn't go through the same lengths
Speaker 1: to say, none of your property is the one I want,
Speaker 1: and I'm gonna try to make it easy on you
Speaker 1: and try to give you all the proper information that
Speaker 1: you need up front. I think another tip for Andrew
Speaker 1: is to wait tilly chiller time of year, because we've
Speaker 1: talked about this in the past. Met the rental market
Speaker 1: is typically the hottest in spring. Talked about April and
Speaker 1: May being the time when everyone's competing for all the
Speaker 1: same units. And granted they're typically more units available that
Speaker 1: time of year, but you might find than in November
Speaker 1: and December there's less competition. So can you sign a
Speaker 1: six month lease and then try to find something in
Speaker 1: the late fall early winter, you're gonna find that a
Speaker 1: lot of your competition is gone. I have quite as
Speaker 1: much choice from a rental unit perspective. But the landlord
Speaker 1: also might be begging for you to sign because you're
Speaker 1: the only person applying.
Speaker 2: I think just asking around as well, like going back
Speaker 2: to finding the inventory, because it sounds like he is
Speaker 2: thinking that everyone is competing for the same apartments. But
Speaker 2: like the ability to expand the pie essentially and not
Speaker 2: thinking in sort of a scarcity sort of mindset, but
Speaker 2: like talking about it with your cowork is sort of
Speaker 2: like we're talking about at the beginning of the episode.
Speaker 2: But the ability to have these conversations about money in
Speaker 2: this case, talk about your housing and how you can't
Speaker 2: find something, talk to the barista at the coffee shop
Speaker 2: that you go to. The ability for units to magically
Speaker 2: appear because it's something that you're looking for. I think
Speaker 2: that is the kind of out of the box thinking
Speaker 2: that is going to allow you to find something that
Speaker 2: a thousand other people aren't also buying for.
Speaker 1: That's right. Yeah, the barista might say, Oh, actually, my
Speaker 1: nixt door neighbor's moving out. That's funny. I'll put you
Speaker 1: in touch with my landlord.
Speaker 2: Like, there's a guy that comes in here every morning
Speaker 2: at eight o'clock, and I'm pretty sure he manages like
Speaker 2: a bunch of different properties. Stick around or show up
Speaker 2: a little bit early. Maybe you can be the guy
Speaker 2: you never know putting out the vibes matters. Vibes matter,
Speaker 2: But Angel, we wish you the best of luck.
Speaker 1: Joe.
Speaker 2: Let's get back to the beer real quick that you
Speaker 2: and I enjoyed during this episode. This is an Aldi
Speaker 2: beer you say enjoyed. It might be an over statement, Well,
Speaker 2: yours is gone. Actually I noticed at the beginning you
Speaker 2: didn't touch it at all, but then you just like
Speaker 2: snuck it down chug.
Speaker 1: I promise this one was you know meh. It's honestly
Speaker 1: not as bad as I thought it would be.
Speaker 2: Same still not a joyful beer. Though not a joyful beer.
Speaker 1: It had like a little bit of a sour element,
Speaker 1: which this is a lagger, and laggers are not supposed
Speaker 1: to be sour, which is did you notice much? It
Speaker 1: might be a sign that it's a little old. It
Speaker 1: could be yeah, or just bad, just not great. It's
Speaker 1: not as horrific as I was thinking I might have
Speaker 1: to stomach, but also not a beer i'd pick up again.
Speaker 1: I think I would give it.
Speaker 2: Did we ever say how many stars we would give
Speaker 2: it on untapped because chap they rate out of five,
Speaker 2: and typically the craft beers that we have on the
Speaker 2: show are like four.
Speaker 1: Plus star beers, right Like, they're.
Speaker 2: Like four, four and a quarter four half. You know,
Speaker 2: I'd give this one like a solid solid two and
Speaker 2: a half.
Speaker 1: Hey, maybe three, I think I'm right there with you.
Speaker 1: Two and a half. That's not terrible, because there are
Speaker 1: worst beers I've had. That being said, this is a
Speaker 1: crazy affordable beer.
Speaker 2: I think this is like eight bucks for a.
Speaker 1: Six pack at Aldi, so much cheaper boom than craft
Speaker 1: beer these days, hard to beat. So if you're an
Speaker 1: Aldi and you want to pick up a Cobista surveysa this,
Speaker 1: we don't recommend it. But it's also if you're looking
Speaker 1: for some cheap, not terrible, yeah, do your thing. So
Speaker 1: our man that's going to do it for this episode
Speaker 1: will put links to some of the references that we
Speaker 1: made up in the show notes on the website at
Speaker 1: howtomoney dot com.
Speaker 2: That's right, And by the way, if you haven't left
Speaker 2: us a review over at Apple Podcasts or orherever it.
Speaker 1: Is that you listen to podcast.
Speaker 2: It's been a minute since we've asked for reviews, and
Speaker 2: it's helpful obviously. It tells the algorithm, it tells the
Speaker 2: podcatchers where the good stuff is, and so we want
Speaker 2: folks to know that the good stuff is over at
Speaker 2: how to Money, So thank you in advance.
Speaker 1: Maybe not the good beer today, but the good show.
Speaker 1: I hope that's true.
Speaker 2: But this maybe it's a more relatable beer for most
Speaker 2: folks who aren't looking to drop twenty bucks on a
Speaker 2: single bottle like we do sometimes. But buddy, that's gonna
Speaker 2: be it for this episode until next time. Best Friends album,
Speaker 2: best Friends Out Little was that?
Speaker 1: Yeah, it's not. It did sound sour, yeah,