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Speaker 1: Welcome to Had of Money. I'm Joel, I'm Matt, and

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Speaker 1: today we're answering your listener questions.

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Speaker 2: You know, a buddy, it's an ask how to money episode,

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Speaker 2: and happy New Year to everyone out there who I'm

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Speaker 2: guessing a lot of folks were turning back to work.

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Speaker 2: They took some time off last week. It's a Monday.

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Speaker 2: Time to get back at it, time to get back

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Speaker 2: to the grind. It's a holiday Monday. Most people have

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Speaker 2: today off.

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Speaker 1: A lot of people do, so, yeah, it doesn't feel

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Speaker 1: like the normal tragic Monday that we're used to.

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Speaker 3: Still kind of feels it's the new year.

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Speaker 2: So because of that, we thought there might be some

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Speaker 2: folks out there who are looking for a new episodes.

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Speaker 3: We've got a fresh one here for you.

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Speaker 2: We've got listener questions to get to and a listener

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Speaker 2: is wondering how it is he can get out of

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Speaker 2: a lease. Got another listener question about Velocity banking. But

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Speaker 2: that's all about what we think about it, and we're

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Speaker 2: also going to address when a total stock market index

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Speaker 2: fund might be a touch to risky. So we've got

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Speaker 2: that plus more to get to during our episode today.

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Speaker 1: But yeah, but of course it is New Year's Day,

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Speaker 1: and so I figure it's true.

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Speaker 3: Statement.

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Speaker 1: Yeah, it's funny. Last beginning of last year, we had

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Speaker 1: on Katie Milkman and we talked about fresh starts, and

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Speaker 1: this is this is a day Matt where people where

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Speaker 1: people are thinking about all of the progress they can

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Speaker 1: make this year, and maybe they say, ah, twenty twenty

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Speaker 1: three wasn't all I hoped it would be. Twenty twenty

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Speaker 1: four is going to be better, and it just it

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Speaker 1: also makes me think about the conversation we just had

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Speaker 1: with Elena like a week and a half ago about

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Speaker 1: organization and how the processes are going to help you

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Speaker 1: make the progress you want to see this year. So yeah,

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Speaker 1: it's great to have, you know, big lofty ideals for

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Speaker 1: what you hope to achieve this year, but just make

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Speaker 1: sure at the same time that you're putting in the processes,

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Speaker 1: whether it's paying off debt, whether it's saving up a

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Speaker 1: massive emergency fund, whether it's you know, maxing out your

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Speaker 1: your roth iray or four O one K. Make sure

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Speaker 1: you have the not your motivation, because motivation wanes, but

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Speaker 1: make sure you've actually implemented the systems to help support

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Speaker 1: that motivation.

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Speaker 2: Sure, yeah, one of the things Katie talked about was

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Speaker 2: the ability to tie change in your life to a

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Speaker 2: special date, and that is why January first, you know,

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Speaker 2: the new year, is often seen as the time for resolutions.

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Speaker 2: I think in her research for her book, they identified

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Speaker 2: that folks who were able to implement change on an

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Speaker 2: even more special date to that individual, which happened to

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Speaker 2: be their birthday, they were even more effective at maintaining

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Speaker 2: some of that change.

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Speaker 3: Because change is hard, right.

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Speaker 2: Like, there's there are things that like there is friction

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Speaker 2: in our lives that keep us from making some of

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Speaker 2: those changes. And so that being said, certainly, I don't

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Speaker 2: think it's too late, Like, if you do want to

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Speaker 2: do something great when it comes to your finances, start now.

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Speaker 2: I think it's a great time to really get after it.

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Speaker 2: But yeah, like Joel said, though, make sure that you've

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Speaker 2: got a plan to knock those massive goals into even

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Speaker 2: smaller goals that are conquerable, as opposed to feeling completely

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Speaker 2: overwhelmed because you didn't have a plan.

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Speaker 1: Yeah, and there really is when we when we step

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Speaker 1: back and think about it, there's nothing special about Monday,

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Speaker 1: January first, except for the fact that in our minds

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Speaker 1: we built it up to be something greater. So I

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Speaker 1: think that's kind of what Katie's point is is we

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Speaker 1: can do that same sort of mental gymnastics and create

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Speaker 1: that sort of same affinity for another date, like our

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Speaker 1: birthday or anniversary or the first day of spring. I mean,

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Speaker 1: there's all sorts of different ways that we can like

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Speaker 1: force ourselves into thinking about time differently.

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Speaker 2: It's all in your mind, yeah exactly. Yeah, but like

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Speaker 2: but make the most of it, as what we're saying,

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Speaker 2: and we will. That was that was last year that

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Speaker 2: we talked the last year, so we'll make sure to

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Speaker 2: link to that episode if you're thinking, if you're wanting

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Speaker 2: some of that additional motivation to get you to implement

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Speaker 2: some change, and by the way, it sticks if you

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Speaker 2: want even more additional motivation. We've created some money challenges.

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Speaker 2: We released these a couple of years ago, Matt, but

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Speaker 2: we haven't really done them in a minute, but we

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Speaker 2: challenge worksheets. Yeah, we've got PDFs that you can download

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Speaker 2: for free. We're gonna send them out, and the how

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Speaker 2: to Money newsletter, which if you're not subscribed to that

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Speaker 2: that should be a new Year's resolution, and that's a

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Speaker 2: really easy one to hit in the pop your list immediately.

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Speaker 2: But well so we'll send those out in the newsletter,

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Speaker 2: but we'll also put them in the show notes for

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Speaker 2: this episode, so make sure to download those money Challenge worksheets.

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Speaker 2: Whether it's paying off debt, whether it's saving money, whether

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Speaker 2: it's fully funding that roth, whether it's decluttering and making

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Speaker 2: some money, all.

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Speaker 1: The above, we have worksheets four. So hopefully this can

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Speaker 1: help you out in your money journey starting en off

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Speaker 1: right in twenty twenty four.

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Speaker 3: That's right, real.

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Speaker 2: Quickly, let's introduce our beer during this episode, you and

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Speaker 2: I are going to enjoy Remain Restless. This is a

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Speaker 2: beer by Hidden River Brewing. They're out of Pennsylvania, and

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Speaker 2: this is another one that was donated to the show

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Speaker 2: by Rihanna. So Rianna, thank you so much for sending

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Speaker 2: this beer.

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Speaker 3: Yeah, our away.

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Speaker 1: Look forward to trying it and share our thoughts at

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Speaker 1: the end of the episode, because Matt, I don't know

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Speaker 1: about you. My news resolution drink more good beer. Yeah, yeah,

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Speaker 1: not my resolution. That's always my resolution. So it's just

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Speaker 1: one that remains no matter of the season.

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Speaker 2: It's a at this point, it's just a habit, like

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Speaker 2: it's a healthy habit the amount that I drink. I

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Speaker 2: don't want to drink anymore than I did last year.

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Speaker 2: I also don't necessarily want to drink any less.

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Speaker 3: Maybe maybe a nice equilibrium.

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Speaker 1: I don't I don't want to drink more ounces of beer.

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Speaker 1: I just want to drink only great beers, right, the

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Speaker 1: good stuff, only the good Stuff'll shut up.

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Speaker 3: Last time you over at my house, we.

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Speaker 1: Uh, you cracked a bud light that's in your house.

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Speaker 1: I don't have that crap of mine.

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Speaker 3: But I was just like, hey, buddy, we're eating.

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Speaker 1: Some your You almost lost all credibility.

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Speaker 2: We were eating some cheat costco pizza. It was like

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Speaker 2: a pizza movie. We get we get the families together,

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Speaker 2: and it didn't seem like the kind of meal where

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Speaker 2: we're gonna pull out a fancy beer. And so I

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Speaker 2: had some bud lights left over from one of my

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Speaker 2: father in law.

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Speaker 4: Was in town.

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Speaker 1: It's like, hey, Bud, I know you didn't buy that.

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Speaker 3: You want one of these?

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Speaker 1: You definitely lost I lost a little respect.

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Speaker 2: Please you look at me, smile and you're like, oh, yeah,

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Speaker 2: that's exactly what we need.

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Speaker 5: Okay.

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Speaker 1: It's funny drinking there. If you're going to drink mass

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Speaker 1: produced beer. It is best to be drunk with pizza.

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Speaker 1: But but I'm gonna say banquet beer is better than

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Speaker 1: But like so, I thought it was perfectly adequate for

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Speaker 1: what we needed. They're all it was adequate.

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Speaker 3: All right.

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Speaker 1: Let's move on, though, Matt, let's get to the bunny questions.

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Speaker 1: If you have a money question that you'd love, Matt

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Speaker 1: and iighter tackle maybe next week on how to Money.

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Speaker 1: We'd love to hear it. Just go to how toomoney

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Speaker 1: dot com slash ask for the simple instructions, or just

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Speaker 1: record a voice memo of you introduce yourself, ask your

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Speaker 1: question and send it our way. Hopefully we'll take it soon.

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Speaker 1: Now let's get to our first one. This one's about

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Speaker 1: a funky way of thinking about money. It's been making

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Speaker 1: the rounds on YouTube for a few years, and listener

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Speaker 1: Joe wants to know whether or not we dig it.

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Speaker 6: Hey, what's up, Matt and Joel. This is Joe from Atlanta, Georgia.

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Speaker 6: So I was curious if you guys have ever heard

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Speaker 6: of the concept of velocity banking and what this strategy

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Speaker 6: promises to do is to increase the velocity of debt

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Speaker 6: payoffs such as your mortgage by using other debts like

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Speaker 6: a helock for example. So you're using debt to pay

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Speaker 6: off debt, which seems like a cardinal sin. But because

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Speaker 6: the beginning of the mortgage period is mostly going towards interest,

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Speaker 6: what you're doing is putting a lot more towards the

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Speaker 6: principle at the beginning. So apparently the mask checks out,

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Speaker 6: they say, but it seems very compli candid, and very risky.

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Speaker 3: What are your thoughts, all right, Joe?

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Speaker 2: Yes, it is a very complicated thing, and it doesn't

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Speaker 2: always make sense either. I guess when when you're talking

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Speaker 2: about I picture like a cartoon character where they like

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Speaker 2: grab themselves by their literal bootstraps and they like throw

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Speaker 2: themselves somewhere else.

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Speaker 3: It's like the physics, Actually do they make sense here? Yeah?

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Speaker 1: And I'm not I gotta say, Matt high school physics

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Speaker 1: was not my strong suit.

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Speaker 2: But there are certain truths though, right, Yeah, you can't

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Speaker 2: get around. So let's address first off, like whether it

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Speaker 2: makes sense to payoff debt using debt, And we would

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Speaker 2: say sometimes, but it could also be like rearranging the

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Speaker 2: deck chairs on the Titanic, right, So like a balance transfer,

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Speaker 2: a credit card that can make sense, but only if

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Speaker 2: you have a plan to pay off that credit card

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Speaker 2: debt within the allot of timeframe. And then you've got,

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Speaker 2: in addition to that, you've got the discipline to avoid

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Speaker 2: just increasing your overall debt load.

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Speaker 1: That's the biggest downside right of balance transfer. Don't change

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Speaker 1: your behavior exactly, doesn't change anything. The makes sense on paper,

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Speaker 1: but do they make sense with Like the way humans

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Speaker 1: world practice doesn't make sense.

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Speaker 2: And the truth is that the focus often drifts to

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Speaker 2: optimizing interest rates rather than paying off debt as quickly

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Speaker 2: as possible and then staying out of debt.

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Speaker 1: And let's talk about velocity banking in particular amount. I'm

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Speaker 1: hearing less about it these days, and I think that's

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Speaker 1: for a few different reasons. First, maybe because paying off

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Speaker 1: a mortgage quickly makes even less sense than it did

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Speaker 1: a few years ago. We have talked about this, like

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Speaker 1: your mortgage, paying it off in rapid fashion should be

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Speaker 1: a massively low priority in your life. And it's not

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Speaker 1: because we love debt and you should hugging kiss your

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Speaker 1: mortgage debt, but it's it's that there are just many, many,

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Speaker 1: many other priorities financially speaking, and so it's it's when

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Speaker 1: we talk about the money gears. If you go to

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Speaker 1: how the Money dot Com you click start here, you

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Speaker 1: can see the money gears. Money gear seven is when

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Speaker 1: you might consider paying off mortgage debt. You don't really

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Speaker 1: think about it. It doesn't it shouldn't really be crossing

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Speaker 1: your mind to pay off your mortgage sooner until you've

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Speaker 1: accomplished a whole lot of other things first. And part

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Speaker 1: of the other reason I think we're not hearing about

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Speaker 1: velocity banking these days helock rates they've climbed significantly, right,

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Speaker 1: But let's say you're making five percent on your cash,

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Speaker 1: why would you prioritize paying off three percent mortgage. It

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Speaker 1: just doesn't make sense, right, And the promise is that

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Speaker 1: you can pay off your mortgage and as little as

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Speaker 1: five to seven years with this strategy. But at least

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Speaker 1: one definition of failure would be succeeding at the wrong goal.

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Speaker 1: And so if you opt for the velocity banking routes

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Speaker 1: and you pay off your mortgage super fast, you're likely

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Speaker 1: avoiding your missing out on other important financial goals while

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Speaker 1: you're putting yourself in financial harm's way. And so they're

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Speaker 1: just so many other goals to supersede mortgage payoff. That

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Speaker 1: it's not a dumb goal, right, It's not like ridiculous

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Speaker 1: to think, oh, at some point, I'd love to have

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Speaker 1: a paydof mortgage, but it should be far down the

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Speaker 1: list of money goals. Saving, investing, paying off other debts.

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Speaker 1: All those things take more, much higher priority. Yeah, it

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Speaker 1: should not be a top priority financial goal. And you

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Speaker 1: mentioned helocks. We've also heard a lot of consternation from

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Speaker 1: folks who took out a helock a couple of years

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Speaker 1: back and then they've seen their interest rate increase dramatically,

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Speaker 1: and so using helock funds to prepay your mortgage when

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Speaker 1: now those helocks are like eight to nine percent, it

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Speaker 1: makes it an even worse idea. And I think one

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Speaker 1: of the other issues here too is they always they

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Speaker 1: typically focus on paying down that mortgage. And one of

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Speaker 1: the problems with this is that it overly focuses on

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Speaker 1: just the mortgage. It takes a very narrow view of

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Speaker 1: paying down that specific debt, and they're often they're not

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Speaker 1: taking into account the additional debt that you are paying.

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Speaker 1: When you take a more holistic look at your overall finance,

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Speaker 1: the amount of money that's going to interest for other forms.

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Speaker 3: It doesn't make sense.

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Speaker 2: It doesn't make sense at all, and so and sometimes

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Speaker 2: they even talent credit cards as the way to do this,

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Speaker 2: but like, that makes even less sense given the rates

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Speaker 2: on credit cards. But given what has happened with inflation,

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Speaker 2: given what's happened with savings rates over the past couple

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Speaker 2: of years, most folks should not be paying more than

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Speaker 2: the required monthly mortgage amount. Instead, they should be focusing

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Speaker 2: on ramping up their investing game. So instead of trying

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Speaker 2: to pay down your incredibly low interest rate home debt,

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Speaker 2: focused instead on growing those dollars in tax advantage accounts

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Speaker 2: for your future.

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Speaker 1: All right, So, for some reason, Matth this is making

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Speaker 1: me think of another financial product that some people tout

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Speaker 1: as being a wonderful financial product for people to consider,

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Speaker 1: and that's whole life insurance. And one of the reasons

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Speaker 1: people tout whole life insurance over term life is because, hey,

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Speaker 1: guess what you can borrow from that policy down the road, right,

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Speaker 1: and you don't have to pay any interest on the

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Speaker 1: money that you borrow. But the truth is that's a

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Speaker 1: ridiculous selling proposition, because whole life insurance is going to

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Speaker 1: cost you somewhere between ten twelve, maybe even fifteen times

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Speaker 1: in monthly premium is what that term life insurance policy

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Speaker 1: is going to cost you. So, yeah, that's a perk,

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Speaker 1: but the downside is how much more you're going to

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Speaker 1: be paying and the fact that you're probably going to

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Speaker 1: abandon that policy before you end up actually getting the

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Speaker 1: biggest benefit, which would be the death benefit. And so

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Speaker 1: it's really just a great example of over complicating something

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Speaker 1: that should be pretty simple. Keeping your debt and your

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Speaker 1: life insurance separate, keeping your investing in your life insurance separate,

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Speaker 1: makes a ton of sense in our book. It's going

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Speaker 1: to be the cheapest way to do things. It's the

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Speaker 1: most straightforward way to do things. It's incredibly easy to understand.

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Speaker 1: One of the other things you and I talk about

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Speaker 1: on this podcast regularly is if you can't explain it

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Speaker 1: to an eight year old, you have no business jumping

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Speaker 1: in and so velocity banking is this convoluted thing that

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Speaker 1: I feel like, even at times I'm like, am I

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Speaker 1: taking crazy pills? I don't really know what you're saying,

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Speaker 1: and so it does seem kind of ridiculous if I

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Speaker 1: can't quite understand it myself. After watching all these these

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Speaker 1: pitchmen and women on YouTube selling this product. Then I'm like, okay, cool,

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Speaker 1: I'm throwing my hands up, I'm backing off. I'm doing

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Speaker 1: things this straightforward way that I know and understand.

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Speaker 2: Yeah, And in both cases, the simple solution to these

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Speaker 2: problems is just having cash on hand, right, Because that's

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Speaker 2: one of the assumptions with Velocity banking is that it

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Speaker 2: assumes that, no matter what, you are borrowing money and

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Speaker 2: paying interest in order to finance your life. And the easiest,

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Speaker 2: most simple solution to that is having cash on hand.

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Speaker 2: And guess what, you completely eliminated the interest payments from

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Speaker 2: your life. And in fact, when you've got that margin

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Speaker 2: on hand with an emergency fund in io savings, you're

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Speaker 2: earning a signal amount as well. And so taking the

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Speaker 2: more simple, straightforward path is what we would recommend. And

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Speaker 2: also just taking a more holistic view of your overall

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Speaker 2: finance is not just trying to say, no matter what,

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Speaker 2: we've got to pay off the mortgage, which you know,

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Speaker 2: a few years ago, I think it was more of

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Speaker 2: a goal for folks, but now that we've seen where

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Speaker 2: rates have gone, it's like, oh wait a minute, all

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Speaker 2: those low interest rate, mortgage rates, mortgages that folks have,

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Speaker 2: they're just looking a lot more attractive, and folks should

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Speaker 2: not be in a hurry to get rid of those things.

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Speaker 1: Yeah, and it doesn't mean that you should consume the

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Speaker 1: dollars that you would have paid towards the principle on

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Speaker 1: that mortgage. It means you should save and invest those

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Speaker 1: dollars instead, allowing yourself to make further progress and thinking

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Speaker 1: of that mortgage as like just not terribly harmful financial

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Speaker 1: product to have in your life. But Matt, we've got

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Speaker 1: more to get to on this New Year's Day episode,

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Speaker 1: including we're gonna talk about index funds and is there

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Speaker 1: a certain point where you got to move beyond those

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Speaker 1: basics or not. Well, we'll get to that right after this.

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Speaker 2: Or man, we are back on the break in, let's

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Speaker 2: get a little nerdier with let's talk about acid allocation

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Speaker 2: in your retirement account.

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Speaker 5: Missus Andy from Utah, thank you so much for all

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Speaker 5: you've shared through the podcast. Joel on Matt. With Mint

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Speaker 5: going away soon, I decided I'd reactivate my Personal Capital

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Speaker 5: log in and found out that they are now Empower.

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Speaker 5: They offer calls with a fiduciary advisor to review your numbers.

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Speaker 5: I set up a call. In long story short, he says,

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Speaker 5: my net worth is too high to leave all my

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Speaker 5: money in total stock market index accounts. The advisor is

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Speaker 5: supposed to be writing up a plan and wants to

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Speaker 5: talk again in a few days to show me how

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Speaker 5: they can improve my diversification by getting out of the

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Speaker 5: total market index. I have a feeling he's going to

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Speaker 5: try to sell me I'm on an idea of complicating

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Speaker 5: my investing to chase returns. He says, I've got too

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Speaker 5: much money in tech stocks because I'm in the total

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Speaker 5: market index. What do you think? Is there a point

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Speaker 5: at which your net worth is too high to use

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Speaker 5: a simple investing approach? Or should I stick with Warren

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Speaker 5: Buffett's advice and keep the majority of my money in

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Speaker 5: a total market index. Thanks for your.

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Speaker 1: Help, any This is a great question, man. I think

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Speaker 1: it's a question that a lot of people in your

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Speaker 1: position start to kind of ask. Once you've been doing

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Speaker 1: kind of the tried and true method of setting money

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Speaker 1: aside in those tax advantaged retirement accounts, once it builds

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Speaker 1: up to feeling like it's critical mass, you're like, wait

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Speaker 1: a second, do I need to shake things up. So

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Speaker 1: we'll kind of get through our thoughts on that. But

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Speaker 1: I just want to first say that, yeah, Personal Capital

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Speaker 1: has become empower I think it's been for a little

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Speaker 1: while now, maybe even for a couple of years, and

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Speaker 1: it's a great site for keeping track of your net worth.

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Speaker 1: But if you've got a high enough net worth, the

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Speaker 1: truth is they might they might pester you for a

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Speaker 1: call in an effort to get you on board as

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Speaker 1: a client. So that is maybe one of the downsides.

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Speaker 1: I think typically they're targeting people with a net worth

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Speaker 1: or with investable assets of more than one hundred thousand dollars,

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Speaker 1: and it might make sense for some people to take

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Speaker 1: that phone call. But of course we're partial, at least

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Speaker 1: for a lot of folks to the DIY approach. It's

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Speaker 1: not that financial advisors are harmful, and let's be honest,

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Speaker 1: the DIY approach has taken you quite a long while.

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Speaker 5: You know.

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Speaker 2: What's funny is the fact that the financial advisor is

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Speaker 2: addressing the fact that, oh, hey, you've got a lot

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Speaker 2: of money here now, as opposed to like where he

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Speaker 2: is within his investment journey, because like in that makes

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Speaker 2: more sense in my mind than just like, oh, you've

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Speaker 2: got a lot of money now, And then I just

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Speaker 2: see him with like dollar signs in his eyes, thinking like,

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Speaker 2: I see some opportunity here for me in my company

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Speaker 2: as opposed to what is or isn't in your best

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Speaker 2: sen Yeah.

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Speaker 1: Before he starts recommending things, the ideal thing would be

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Speaker 1: for him to understand where you're at, like when you're

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Speaker 1: planning to retire, what your goals are, before he's like

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Speaker 1: starts recommending funds exactly.

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Speaker 3: Yeah, but should you actually switch things up now?

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Speaker 6: Right?

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Speaker 2: Should you opt for even more diversity? Is a total

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Speaker 2: stock market index fund a bad move once you've reached

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Speaker 2: a certain net worth? And I really love this question

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Speaker 2: any because there is a kernel of truth here, but

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Speaker 2: it's a pretty small one. And he mentioned Warren Buffett, right,

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Speaker 2: and he said that if he passed on that he

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Speaker 2: would be more than comfortable with maybe his current wife

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Speaker 2: or maybe a previous wife, but with her being basically

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Speaker 2: fully invested simply within the S and P five hundred

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Speaker 2: specifically VU that ETF.

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Speaker 1: I think he said ninety percent, maybe the other ten

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Speaker 1: percent is cash. I don't remember what You're.

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Speaker 3: Just like, stick with SMPF. Yeah, but a target.

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Speaker 2: Keep it a total stock market fund is an incredibly

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Speaker 2: similar funds. It's dang near the same thing. And so

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Speaker 2: that being said, the short answer, if it's good enough

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Speaker 2: for warm Buffett's he's basically the goat, it is good

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Speaker 2: enough for us, yes, but it goes beyond just the

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Speaker 2: warm Buffett endorsement, right, because yeah, he's brilliant, but we

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Speaker 2: don't want to just do what he says mindlessly without

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Speaker 2: thinking about it. The truth is, if you're in the

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Speaker 2: wealth building phase of your life, we think that you're

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Speaker 2: diversified enough andy, right, and that the two biggest things

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Speaker 2: you should be concerned with are how much you're contributing

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Speaker 2: and then keeping fees low. You're you're doing both. You've

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Speaker 2: contributed a significant amount of money to your retirement accounts

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Speaker 2: and you're also being really cautious about the amount of

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Speaker 2: money you're you're forking over and fees. But beyond that, right,

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Speaker 2: if you have questions about your investments or you want

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Speaker 2: to dive into nerder your investing conversations with the pro

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Speaker 2: that's understandable. Financial advisors aren't bad as an ILK or

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Speaker 2: anything like that.

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Speaker 1: You might actually want to turn to a financial planner

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Speaker 1: in this scenario, but I would suggest turning to one

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Speaker 1: who only serves up advice. So there are a couple

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Speaker 1: places you could turn. There's xy Planning Network, We've talked

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Speaker 1: about that before. There's a cool newer site called Hello

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Speaker 1: Nectarine started by our friend Jeremy over at the Personal

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Speaker 1: Finance Club. And so this person at empowered, they might

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Speaker 1: have some great suggestions, but they might also be needlessly

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Speaker 1: trying to complicate something that's worked just fine for you.

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Speaker 1: And so what I love about that Hello Nectarine model,

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Speaker 1: by the way, is that you pay. You're paying one

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Speaker 1: hundred and fifty bucks for an hour of someone's time.

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Speaker 1: You're paying for their opinion as they look over your

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Speaker 1: financial situation. And so I guess when it comes down

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Speaker 1: to it, we would say simplicity is a feature, not

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Speaker 1: a bug.

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Speaker 5: Right.

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Speaker 1: It's massively underrated, and folks who want to come in

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Speaker 1: and complicate things, they're often trying to sell you something. Least,

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Speaker 1: if you're going to hire someone to help you assess

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Speaker 1: the situation, make sure that incentives are aligned and that

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Speaker 1: they don't benefit by complicating your situation more. You know

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Speaker 1: what I'm saying.

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Speaker 2: Okay, And so back to I kind of mentioned a

437
00:19:11,720 --> 00:19:14,919
Speaker 2: kernel of truth. Here's the thing, Like, there's no need

438
00:19:15,119 --> 00:19:16,920
Speaker 2: to shake things up, but there are two things that

439
00:19:16,920 --> 00:19:18,119
Speaker 2: you might want to keep in mind that you might

440
00:19:18,119 --> 00:19:21,720
Speaker 2: want to consider. And first, a correction or if the

441
00:19:22,160 --> 00:19:25,000
Speaker 2: market enters a bear market. Basically that's going to feel

442
00:19:25,320 --> 00:19:29,080
Speaker 2: more painful now given the size of your portfolio. So,

443
00:19:29,119 --> 00:19:31,520
Speaker 2: for instance, like twenty percent drop in the market when

444
00:19:31,560 --> 00:19:34,439
Speaker 2: you've only got twenty thousand dollars invested, that's not a

445
00:19:34,440 --> 00:19:37,000
Speaker 2: ton of money, but a twenty percent drop when you've

446
00:19:37,000 --> 00:19:39,719
Speaker 2: got three quarters of a million dollars, well, that's one

447
00:19:39,800 --> 00:19:42,320
Speaker 2: hundred and fifty thousand dollars decrease. That's what we saw

448
00:19:42,640 --> 00:19:43,880
Speaker 2: last year in twenty twenty two.

449
00:19:43,960 --> 00:19:45,440
Speaker 1: And if you're gonna be pukeing in the toilet when

450
00:19:45,440 --> 00:19:47,080
Speaker 1: that happens, then you might want to reassess things.

451
00:19:46,960 --> 00:19:49,320
Speaker 2: Right, Yeah, And so like think back to how it

452
00:19:49,359 --> 00:19:52,240
Speaker 2: is that you responded when we've seen some dramatic declines

453
00:19:52,320 --> 00:19:54,240
Speaker 2: in the market. If you were able to stay the course,

454
00:19:54,280 --> 00:19:57,159
Speaker 2: if you didn't have nightly in digestion, I think maybe

455
00:19:57,200 --> 00:19:58,840
Speaker 2: you are going to be able to handle the roller coaster.

456
00:19:59,080 --> 00:20:01,159
Speaker 2: But if you're attempted to, well, you might want to

457
00:20:01,200 --> 00:20:03,320
Speaker 2: seek some more balance. You might want to see if

458
00:20:03,440 --> 00:20:05,080
Speaker 2: there's a way that you can reduce the amount of

459
00:20:05,200 --> 00:20:08,600
Speaker 2: risk and volatility volatility that you're exposed to. The biggest

460
00:20:08,720 --> 00:20:11,520
Speaker 2: risk isn't that you're only invested in one fund, It

461
00:20:11,600 --> 00:20:14,359
Speaker 2: is your own behavior within.

462
00:20:14,320 --> 00:20:16,480
Speaker 3: A potential downturn. So that's one thing.

463
00:20:16,480 --> 00:20:19,560
Speaker 2: But then secondly, listen back to our episode with Paul Merriman,

464
00:20:19,840 --> 00:20:23,119
Speaker 2: that was episode seven thirty four. But he is a

465
00:20:23,200 --> 00:20:27,600
Speaker 2: huge advocate for adding some small cap value and he

466
00:20:27,640 --> 00:20:29,879
Speaker 2: thinks that over the years that that is going to

467
00:20:29,920 --> 00:20:32,320
Speaker 2: outperform basically, so it's a way that you're going to

468
00:20:32,320 --> 00:20:35,399
Speaker 2: be able to add some diversity. And I feel like

469
00:20:35,480 --> 00:20:38,439
Speaker 2: saying that he is looking to time the market Paul Merriman,

470
00:20:38,640 --> 00:20:41,879
Speaker 2: that that might be an inaccurate statement. It doesn't give

471
00:20:42,000 --> 00:20:43,960
Speaker 2: enough nuance to the discussion we had. So we do

472
00:20:43,960 --> 00:20:45,520
Speaker 2: recommend for you to go back and listen to that one.

473
00:20:45,560 --> 00:20:48,280
Speaker 1: But it's less about timing and more about like continual

474
00:20:48,400 --> 00:20:50,240
Speaker 1: exposure to another asset class.

475
00:20:50,440 --> 00:20:53,159
Speaker 2: Well, yeah, you know, he specifically is pointing at periods

476
00:20:53,200 --> 00:20:54,879
Speaker 2: of time, so for like, I don't know, maybe it's

477
00:20:54,920 --> 00:20:58,600
Speaker 2: the past two decades, the small cap value has not

478
00:20:58,720 --> 00:21:01,240
Speaker 2: seen outside performance compared to the S and P, but

479
00:21:01,320 --> 00:21:03,600
Speaker 2: that maybe we're due for another period what we're going

480
00:21:03,680 --> 00:21:07,560
Speaker 2: to see increase returns, And so that's worth keeping in mind.

481
00:21:07,920 --> 00:21:10,760
Speaker 2: That is still a lot different than saying than say,

482
00:21:10,800 --> 00:21:14,119
Speaker 2: going after a specific company where you're like, oh, this

483
00:21:14,160 --> 00:21:17,280
Speaker 2: company is gonna completely blow the doors off of everybody

484
00:21:17,280 --> 00:21:18,640
Speaker 2: else in twenty twenty four.

485
00:21:18,680 --> 00:21:21,359
Speaker 1: You need gold in your portfolio, and you need reads

486
00:21:21,440 --> 00:21:24,520
Speaker 1: in your portfolio, right, And it's just like overly complicating

487
00:21:24,520 --> 00:21:27,439
Speaker 1: things and slicing and dicing just because it makes the

488
00:21:27,480 --> 00:21:29,760
Speaker 1: advisor feel better. Where if you feel just find about

489
00:21:29,760 --> 00:21:33,800
Speaker 1: your asset allocation and historically you should, then as long as,

490
00:21:33,840 --> 00:21:37,240
Speaker 1: like you said, Matt, your behavior can can maintain that position,

491
00:21:37,480 --> 00:21:39,240
Speaker 1: I think that's a good choice. So I think, yeah,

492
00:21:39,280 --> 00:21:41,760
Speaker 1: you can VT sacks, you can vou, you can VTI,

493
00:21:41,880 --> 00:21:44,400
Speaker 1: you can chill right Like, there's no need to go

494
00:21:44,520 --> 00:21:47,280
Speaker 1: beyond that if you feel comfortable with your holdings. And again,

495
00:21:47,320 --> 00:21:49,359
Speaker 1: if you want the advice, just make sure you're getting

496
00:21:49,480 --> 00:21:53,280
Speaker 1: unbiased advice, not someone who stands to benefit make ridiculous

497
00:21:53,280 --> 00:21:55,760
Speaker 1: sums of money makes you paying for that advice on

498
00:21:55,800 --> 00:21:57,959
Speaker 1: an hourly basis to me, makes the most sense from

499
00:21:58,000 --> 00:22:00,919
Speaker 1: an incentive standpoint. Yeah, so find you trust in that regard.

500
00:22:01,000 --> 00:22:03,720
Speaker 2: And Andy one one other thing too, Like Joel mentioned

501
00:22:03,760 --> 00:22:06,000
Speaker 2: that if you are in the wealth building phase, then

502
00:22:06,080 --> 00:22:08,400
Speaker 2: we think that you're basically that you're set, that you're good,

503
00:22:08,440 --> 00:22:11,560
Speaker 2: you're diverse, fight enough. We're assuming that's the stage of

504
00:22:11,600 --> 00:22:13,840
Speaker 2: life that you're in as well, because if that's not

505
00:22:13,920 --> 00:22:16,040
Speaker 2: the case, if you are in more of a drawdown

506
00:22:16,320 --> 00:22:20,119
Speaker 2: phase of life, well that volatility is going to make

507
00:22:20,160 --> 00:22:22,560
Speaker 2: a pretty big impact because guess what, when there's volatility

508
00:22:22,600 --> 00:22:24,560
Speaker 2: before us, no big deal, because you're buying the market

509
00:22:24,600 --> 00:22:27,399
Speaker 2: on sale, you're going to see your network throw even more.

510
00:22:27,920 --> 00:22:31,120
Speaker 2: But as you are having to rely more on those

511
00:22:31,119 --> 00:22:33,200
Speaker 2: investments to live off of, that does change the game.

512
00:22:33,280 --> 00:22:37,160
Speaker 2: So we certainly, we certainly understand that. And so again

513
00:22:37,359 --> 00:22:39,360
Speaker 2: we don't have this information. We don't know how old

514
00:22:39,400 --> 00:22:42,480
Speaker 2: you are, we don't know at what stage of your

515
00:22:42,520 --> 00:22:45,040
Speaker 2: life that you're in. But in that case, I think

516
00:22:45,080 --> 00:22:47,760
Speaker 2: having like a little bit of additional income is a

517
00:22:47,800 --> 00:22:50,600
Speaker 2: way to reduce those sequence of returns risk where if

518
00:22:50,640 --> 00:22:54,400
Speaker 2: the market does tank immediately as you're needing to access

519
00:22:54,520 --> 00:22:57,040
Speaker 2: some of those funds, okay, well you don't maybe we

520
00:22:57,080 --> 00:22:59,520
Speaker 2: don't draw on those on that retirement portfolio quite as

521
00:22:59,600 --> 00:23:03,320
Speaker 2: much because you have the option to do a little

522
00:23:03,320 --> 00:23:06,480
Speaker 2: bit of work, maybe work that you love more than

523
00:23:06,680 --> 00:23:09,240
Speaker 2: the job that used to have, and certainly it pays less,

524
00:23:09,240 --> 00:23:11,000
Speaker 2: But guess what gives you a whole lot of flexibility

525
00:23:11,040 --> 00:23:13,000
Speaker 2: when it comes to how it is that you treat

526
00:23:13,040 --> 00:23:13,560
Speaker 2: your investments.

527
00:23:13,600 --> 00:23:17,200
Speaker 1: Yeah, one hundred percent stock exposure is different when you're

528
00:23:17,200 --> 00:23:20,400
Speaker 1: eighty versus when you're forty. But again it comes down

529
00:23:20,480 --> 00:23:23,760
Speaker 1: even less than age and more about life stage and

530
00:23:24,000 --> 00:23:26,200
Speaker 1: when you need to actually access those funds. So that's

531
00:23:26,200 --> 00:23:27,920
Speaker 1: a good point, Matt. All right, let's get to our

532
00:23:27,960 --> 00:23:30,639
Speaker 1: next question for this episode. This one comes from listener.

533
00:23:30,920 --> 00:23:32,360
Speaker 1: He just got an awesome new job.

534
00:23:32,680 --> 00:23:35,639
Speaker 4: Hi, Matt and Joel. This is Drue from Saint Charles, Illinois.

535
00:23:36,040 --> 00:23:38,240
Speaker 4: I recently accepted a new job that will increase my

536
00:23:38,359 --> 00:23:42,000
Speaker 4: salary by more than twenty percent. My annual bonus with

537
00:23:42,200 --> 00:23:46,000
Speaker 4: my current company is fifteen percent, and with my new

538
00:23:46,040 --> 00:23:48,800
Speaker 4: employer it will increase to somewhere between twenty five and

539
00:23:48,840 --> 00:23:51,800
Speaker 4: forty percent. It's my intention to pocket these uptra dollars

540
00:23:51,800 --> 00:23:53,800
Speaker 4: and put them the new investments or help payoff or

541
00:23:53,800 --> 00:23:57,159
Speaker 4: mortgage early. My wife and I are currently saving approximately

542
00:23:57,160 --> 00:24:00,320
Speaker 4: thirty three percent of our income maxing out both roth

543
00:24:00,400 --> 00:24:03,040
Speaker 4: iras and I'm on track to max out my four

544
00:24:03,080 --> 00:24:06,720
Speaker 4: O one K as well as maxing out at HSA.

545
00:24:06,840 --> 00:24:09,679
Speaker 4: Our mortgage has approximately one hundred and seventy thousand dollars

546
00:24:09,760 --> 00:24:12,160
Speaker 4: left with a two point sixty five percent interest rate.

547
00:24:12,840 --> 00:24:15,240
Speaker 4: My question is that my employer is one hundred percent

548
00:24:15,400 --> 00:24:18,480
Speaker 4: employee owned. As part of my compensation package, they do

549
00:24:18,520 --> 00:24:22,760
Speaker 4: an annual employee stock ownership payout that is equivalent to

550
00:24:22,880 --> 00:24:26,480
Speaker 4: ten to eleven percent of my base pay and bonus.

551
00:24:27,040 --> 00:24:29,280
Speaker 4: These funds are then used to purchase employee stock that

552
00:24:29,400 --> 00:24:32,200
Speaker 4: is put into an account or my name. I cannot

553
00:24:32,240 --> 00:24:35,960
Speaker 4: access these funds until I end my employment. How do

554
00:24:36,000 --> 00:24:40,000
Speaker 4: you recommend I handle these employee stock owned dollars? Do

555
00:24:40,040 --> 00:24:42,679
Speaker 4: I ignore that they exist and almost treat them like

556
00:24:42,840 --> 00:24:45,879
Speaker 4: Social Security that we're all a little uncertained is going

557
00:24:45,960 --> 00:24:48,840
Speaker 4: to come? Or do I thatcher them into my retirement plan.

558
00:24:49,200 --> 00:24:52,280
Speaker 4: Any insight you can provide would be appreciated, all.

559
00:24:52,240 --> 00:24:53,119
Speaker 3: Right, Drew.

560
00:24:53,359 --> 00:24:55,399
Speaker 2: Before we get to any insight that we might have

561
00:24:55,440 --> 00:24:58,480
Speaker 2: for you, first we want to congratulate you specifically.

562
00:24:58,040 --> 00:25:00,639
Speaker 3: On that new job, but then that kill your salary

563
00:25:00,640 --> 00:25:02,399
Speaker 3: increase man the bonus.

564
00:25:02,400 --> 00:25:05,240
Speaker 2: That you will be eligible for. On top of that,

565
00:25:05,280 --> 00:25:08,199
Speaker 2: you're maxing at your four one K, your HSA, your roths.

566
00:25:08,600 --> 00:25:09,880
Speaker 2: Obviously that's right up our.

567
00:25:09,840 --> 00:25:12,480
Speaker 1: House, like the Holy Trinity of investment accounts.

568
00:25:12,320 --> 00:25:12,960
Speaker 3: Doing it all.

569
00:25:13,040 --> 00:25:15,760
Speaker 2: And then on top of that, your mortgage really isn't

570
00:25:15,800 --> 00:25:19,240
Speaker 2: a high priority given how incredibly low the interest rate is.

571
00:25:19,280 --> 00:25:21,280
Speaker 2: I think he said he's at two point sixty five percent,

572
00:25:21,600 --> 00:25:24,080
Speaker 2: Just like we were just talking about with Joe's question,

573
00:25:24,119 --> 00:25:25,960
Speaker 2: that should not be a priority.

574
00:25:26,080 --> 00:25:27,840
Speaker 1: I feel like I get more jealous of people who

575
00:25:27,840 --> 00:25:29,520
Speaker 1: say they've got an uber low mortgage rate than almost

576
00:25:29,560 --> 00:25:31,920
Speaker 1: anything else. Like you could tell me somehow you're able

577
00:25:31,960 --> 00:25:33,399
Speaker 1: to lock that is. Yeah, Yeah, I don't get their

578
00:25:33,440 --> 00:25:35,600
Speaker 1: back and right your possessions. I care about your low

579
00:25:35,600 --> 00:25:37,480
Speaker 1: mortgage rate. That's that's I think it makes me salibate.

580
00:25:37,640 --> 00:25:41,240
Speaker 2: Yeah, And this is more of a discussion about optimizing,

581
00:25:41,600 --> 00:25:43,800
Speaker 2: Like I'm not worried about Drew just like completely blowing

582
00:25:43,800 --> 00:25:45,800
Speaker 2: that money. He's trying to figure out how best to

583
00:25:45,840 --> 00:25:48,960
Speaker 2: allocate that money. And we didn't really touch on this

584
00:25:49,000 --> 00:25:52,520
Speaker 2: when we're talking about the velocity banking and paying off

585
00:25:52,520 --> 00:25:53,200
Speaker 2: your mortgage earlier.

586
00:25:53,200 --> 00:25:55,600
Speaker 1: But Drew like that if it's a goal of yours, like.

587
00:25:55,560 --> 00:25:56,359
Speaker 3: A personal goal.

588
00:25:56,400 --> 00:25:58,720
Speaker 2: If you know, from a financial standpoint, it doesn't really

589
00:25:58,720 --> 00:26:00,680
Speaker 2: make sense to go ahead and pay off that mortgage.

590
00:26:00,680 --> 00:26:02,439
Speaker 2: But if for you personally you want to have it

591
00:26:02,480 --> 00:26:05,520
Speaker 2: paid off house, yeah, that is totally fine. But if

592
00:26:05,560 --> 00:26:07,560
Speaker 2: you're looking at it from more of a through a

593
00:26:07,680 --> 00:26:10,679
Speaker 2: financial filter and you're looking for the best way to

594
00:26:11,600 --> 00:26:13,240
Speaker 2: grow your net worth and to do smart things with

595
00:26:13,280 --> 00:26:15,719
Speaker 2: the money, we would say to not pay down that mortgage,

596
00:26:15,800 --> 00:26:18,080
Speaker 2: get that two point sixty five percent mortgage around Well.

597
00:26:17,920 --> 00:26:19,920
Speaker 1: Comes down to what you're optimizing for. If you're optimizing

598
00:26:19,920 --> 00:26:21,760
Speaker 1: for the peace of mind, pay the mortgage down, like

599
00:26:21,800 --> 00:26:25,200
Speaker 1: why not. But if you're optimizing for like net worth

600
00:26:25,280 --> 00:26:28,960
Speaker 1: over time, then leave the mortgage attack and let's get

601
00:26:29,160 --> 00:26:31,240
Speaker 1: to the specifics on the ESOP plan that you mentioned.

602
00:26:31,640 --> 00:26:35,959
Speaker 1: These are cool because they're just another way of rewarding employees, right.

603
00:26:36,000 --> 00:26:39,640
Speaker 1: It's basically like if we succeed, you succeed approach, which

604
00:26:39,680 --> 00:26:41,280
Speaker 1: I think is I think is great, and I think

605
00:26:41,280 --> 00:26:44,040
Speaker 1: it can add employee buy in and it can help

606
00:26:44,119 --> 00:26:47,240
Speaker 1: create a culture at the company that can be really,

607
00:26:47,640 --> 00:26:50,160
Speaker 1: really wonderful. So I get why a company would want

608
00:26:50,200 --> 00:26:52,240
Speaker 1: to pay their employees, at least in part right via

609
00:26:52,960 --> 00:26:55,199
Speaker 1: an esop, And it sounds like this is really just

610
00:26:55,359 --> 00:26:57,960
Speaker 1: icing on the cake, right because you're well compensated in

611
00:26:58,000 --> 00:27:00,719
Speaker 1: every other area. It's not like you're relying on this

612
00:27:00,840 --> 00:27:03,640
Speaker 1: or you're banking on this to make you financially hole

613
00:27:03,680 --> 00:27:06,000
Speaker 1: at some point in the future. So I do think

614
00:27:06,040 --> 00:27:08,240
Speaker 1: that you should think of this as just a bonus

615
00:27:08,480 --> 00:27:11,439
Speaker 1: you get to hopefully tap someday. But banking on it

616
00:27:11,480 --> 00:27:13,959
Speaker 1: being like a massive chunk of retirement income is an

617
00:27:13,960 --> 00:27:15,680
Speaker 1: approach that I wouldn't take. And it doesn't sound like

618
00:27:15,720 --> 00:27:18,359
Speaker 1: you're taking it basically based on how seriously you're taking

619
00:27:18,400 --> 00:27:20,720
Speaker 1: investing in all of those other tax advantage accounts that

620
00:27:20,720 --> 00:27:21,399
Speaker 1: you have access to.

621
00:27:21,520 --> 00:27:24,800
Speaker 2: Yeah, we're we're fairly conservative fellows by nature. We're not

622
00:27:24,840 --> 00:27:27,159
Speaker 2: trying to count our chickens before they hatch or anything.

623
00:27:27,920 --> 00:27:31,480
Speaker 2: And hopefully your company is firing on all cylinders, and

624
00:27:31,560 --> 00:27:34,439
Speaker 2: that employee stock ownership plan it turns out to be

625
00:27:34,480 --> 00:27:37,360
Speaker 2: a juggernaut, right like where it's able to add a

626
00:27:37,520 --> 00:27:39,320
Speaker 2: massive chunk of money to your.

627
00:27:39,200 --> 00:27:42,480
Speaker 3: Already robust retirement war chest. It really might.

628
00:27:42,800 --> 00:27:45,320
Speaker 2: But I also wouldn't take the foot off the pedal

629
00:27:45,440 --> 00:27:49,320
Speaker 2: where you might be tempted into projecting that that ESOP

630
00:27:49,359 --> 00:27:52,360
Speaker 2: is going to return smp I five hundred level results

631
00:27:52,560 --> 00:27:54,640
Speaker 2: where it's going to eliminate some of your need to save.

632
00:27:55,359 --> 00:27:58,560
Speaker 2: It might outperform, But I just consider that gravy as

633
00:27:58,560 --> 00:28:02,800
Speaker 2: opposed to assuming and needing those additional ESOP dollars to

634
00:28:02,800 --> 00:28:05,919
Speaker 2: pull a lot of weight within your retirement planning. And

635
00:28:05,920 --> 00:28:08,520
Speaker 2: again that's assuming too, that that your company is going

636
00:28:08,560 --> 00:28:09,440
Speaker 2: to continue doing well.

637
00:28:09,680 --> 00:28:09,960
Speaker 3: I don't.

638
00:28:10,000 --> 00:28:11,600
Speaker 2: I want to make sure that you haven't like drunk

639
00:28:11,600 --> 00:28:14,480
Speaker 2: the kool aid and where you're going all in, because

640
00:28:14,560 --> 00:28:17,240
Speaker 2: even as good of a company you think you might

641
00:28:17,320 --> 00:28:20,520
Speaker 2: be being hired by, you never know what's going to happen.

642
00:28:20,840 --> 00:28:23,280
Speaker 2: Like you've got the obvious scams with like Ron and

643
00:28:23,280 --> 00:28:23,840
Speaker 2: things like that.

644
00:28:24,080 --> 00:28:25,880
Speaker 1: But there's last year there's a whole lot of.

645
00:28:25,800 --> 00:28:29,240
Speaker 2: Companies that filed for bankruptcy, like companies that folks were thinking, oh, man,

646
00:28:29,800 --> 00:28:33,080
Speaker 2: like we work you know, or like was another one

647
00:28:33,080 --> 00:28:37,240
Speaker 2: Silicon Valley banks like Smile Smile Club Director or whatever.

648
00:28:37,280 --> 00:28:40,160
Speaker 2: Like the folks were thinking, these are going to change

649
00:28:40,160 --> 00:28:43,080
Speaker 2: the way that this industry does business. And you know what,

650
00:28:43,160 --> 00:28:44,480
Speaker 2: it turns out that they didn't, and so.

651
00:28:44,560 --> 00:28:46,480
Speaker 1: Or even something like Zoom, where the stock is just

652
00:28:46,640 --> 00:28:49,200
Speaker 1: like not doing nearly as well as it was during

653
00:28:49,240 --> 00:28:50,479
Speaker 1: the height of the pandemic exactly.

654
00:28:50,640 --> 00:28:53,000
Speaker 2: Yeah, So it's just important to keep that in mind.

655
00:28:53,040 --> 00:28:54,520
Speaker 2: You don't necessarily want to put all your eggs in

656
00:28:54,520 --> 00:28:57,680
Speaker 2: the same basket. Yeah, and that'nother egg metaphor. Yeah, that's

657
00:28:57,760 --> 00:29:00,840
Speaker 2: important caveat. I think for anybody who has any sort

658
00:29:00,880 --> 00:29:03,800
Speaker 2: of investment tied up in the place where they get

659
00:29:03,800 --> 00:29:07,160
Speaker 2: their paycheck, that is putting a lot of onus on

660
00:29:07,520 --> 00:29:11,080
Speaker 2: your employer to deliver results. And that's a scary place

661
00:29:11,080 --> 00:29:13,600
Speaker 2: to be in. Like you already you're dependent on that

662
00:29:13,680 --> 00:29:16,680
Speaker 2: paycheck to pay the bills, right, to pay the mortgage,

663
00:29:16,760 --> 00:29:19,920
Speaker 2: and if you're also dependent on the success of that

664
00:29:19,960 --> 00:29:23,440
Speaker 2: employer to boost your retirement account, that's a scary place

665
00:29:23,440 --> 00:29:24,760
Speaker 2: to be. So we would say, like you want to

666
00:29:24,760 --> 00:29:28,920
Speaker 2: diversify in fact away typically from having any sort of

667
00:29:28,960 --> 00:29:31,600
Speaker 2: investment in the company that you work for. That'll put

668
00:29:31,600 --> 00:29:34,320
Speaker 2: you in a much less risky position. And again it

669
00:29:34,320 --> 00:29:36,200
Speaker 2: sounds like this is how exactly how you're treating this.

670
00:29:36,320 --> 00:29:36,480
Speaker 4: Right.

671
00:29:36,720 --> 00:29:39,160
Speaker 1: You've got more money coming in every month, and you're

672
00:29:39,200 --> 00:29:41,480
Speaker 1: maxing out the most important retirement plans that you have

673
00:29:41,520 --> 00:29:43,880
Speaker 1: at your disposal. I would say this, like, you might

674
00:29:43,920 --> 00:29:46,360
Speaker 1: want to consider opening up a taxable brokerage account to

675
00:29:46,400 --> 00:29:49,160
Speaker 1: put at least some of those bigger bonuses into But really,

676
00:29:49,160 --> 00:29:51,240
Speaker 1: you're well on your way to achieving greater levels of

677
00:29:51,240 --> 00:29:55,040
Speaker 1: financial independence in your life on a pretty quick scale.

678
00:29:55,320 --> 00:29:57,160
Speaker 1: But I also just don't necessarily want to pressure you

679
00:29:57,160 --> 00:29:59,600
Speaker 1: into doing more either, because you're saving like what I

680
00:29:59,600 --> 00:30:00,840
Speaker 1: think you said, a third of his income.

681
00:30:00,920 --> 00:30:01,680
Speaker 3: Yes, he's crushing it.

682
00:30:01,760 --> 00:30:03,959
Speaker 1: Yeah he's doing any really really good't I wouldn't even

683
00:30:04,000 --> 00:30:06,360
Speaker 1: necessarily say, oh, you've got to and des more, You've

684
00:30:06,320 --> 00:30:08,040
Speaker 1: got to open up the taxable broken account, you gott

685
00:30:08,040 --> 00:30:09,280
Speaker 1: to do this. In that I don't necessarily want to

686
00:30:09,280 --> 00:30:11,080
Speaker 1: eat more on your plate because you're already doing a

687
00:30:11,080 --> 00:30:13,280
Speaker 1: lot exactly. You know, whether or not you want to

688
00:30:13,320 --> 00:30:15,200
Speaker 1: do more really should depend on the goals that you've

689
00:30:15,200 --> 00:30:17,800
Speaker 1: got for your medium and long term future. Don't feel

690
00:30:17,880 --> 00:30:21,560
Speaker 1: compelled to add even more fuel to the fire unless

691
00:30:21,560 --> 00:30:23,360
Speaker 1: like you're really keen on that because and that matches

692
00:30:23,400 --> 00:30:26,720
Speaker 1: like your your timeline for reaching full financial independence or

693
00:30:26,720 --> 00:30:28,680
Speaker 1: anything like that. But maybe you can just kind of

694
00:30:28,760 --> 00:30:29,960
Speaker 1: enjoy some of those dollars.

695
00:30:29,680 --> 00:30:32,160
Speaker 2: Too, dude, I think that that's exactly I mean, especially

696
00:30:32,200 --> 00:30:34,280
Speaker 2: being at the beginning of the year. We haven't gotten

697
00:30:34,320 --> 00:30:36,360
Speaker 2: too far into the year, so you can still sit down,

698
00:30:36,440 --> 00:30:39,680
Speaker 2: do some dreaming and figure out maybe some other ways

699
00:30:39,680 --> 00:30:41,160
Speaker 2: that you could This is going to be a more

700
00:30:41,200 --> 00:30:45,200
Speaker 2: hedonistic exercise, but maybe it's travel. Maybe you've never done

701
00:30:45,200 --> 00:30:47,880
Speaker 2: a whole lot of travel, and you've always wanted to

702
00:30:47,880 --> 00:30:49,720
Speaker 2: go to New Zealand. You've always wanted to see where

703
00:30:49,800 --> 00:30:51,920
Speaker 2: Frodo and Bilbo Baggins grew up.

704
00:30:53,480 --> 00:30:56,160
Speaker 1: And I hate to break this to you, they're not

705
00:30:56,200 --> 00:30:56,720
Speaker 1: real people.

706
00:30:57,360 --> 00:30:58,800
Speaker 2: Maybe that's a goal of yours, or maybe you just

707
00:30:58,840 --> 00:31:00,440
Speaker 2: want to go to the beach, right, it doesn't have

708
00:31:00,480 --> 00:31:04,160
Speaker 2: to be some like far across the world adventurous.

709
00:31:03,560 --> 00:31:04,240
Speaker 3: Sort of vacation.

710
00:31:04,360 --> 00:31:05,800
Speaker 1: Or maybe you want to pay a quarter million dollars

711
00:31:05,840 --> 00:31:07,480
Speaker 1: to go on a virgin galactic trip in a space

712
00:31:07,520 --> 00:31:07,920
Speaker 1: I don't know.

713
00:31:08,080 --> 00:31:10,280
Speaker 2: And if even us saying these things and you're kind

714
00:31:10,280 --> 00:31:11,920
Speaker 2: of like, yeah, guys, I don't want to do any

715
00:31:11,960 --> 00:31:13,800
Speaker 2: of that, Well, maybe it's worth thinking through some different

716
00:31:13,800 --> 00:31:15,600
Speaker 2: ways that you could potentially give that money away.

717
00:31:15,640 --> 00:31:17,360
Speaker 3: But I think dreaming big.

718
00:31:17,160 --> 00:31:19,320
Speaker 2: And trying to identify some ways that you could really

719
00:31:19,440 --> 00:31:21,880
Speaker 2: do something awesome with that money could go a really

720
00:31:21,920 --> 00:31:24,120
Speaker 2: long ways, and it sounds like you've got more of

721
00:31:24,160 --> 00:31:28,120
Speaker 2: an ability to do that given this recent higher, given

722
00:31:28,160 --> 00:31:31,040
Speaker 2: this promotion, and so Drew, good work, and let us

723
00:31:31,080 --> 00:31:32,120
Speaker 2: know what you end up doing.

724
00:31:32,920 --> 00:31:35,480
Speaker 3: But Joe, we've got more to get to. During this episode,

725
00:31:35,560 --> 00:31:36,960
Speaker 3: we're gonna talk.

726
00:31:36,920 --> 00:31:39,760
Speaker 2: Specifically what to do if you find yourself in a

727
00:31:39,840 --> 00:31:42,040
Speaker 2: car lease. We'll get to that and more right after this.

728
00:31:50,080 --> 00:31:50,400
Speaker 3: We're back.

729
00:31:50,520 --> 00:31:52,960
Speaker 1: Now we've got more listener questions to get to. And

730
00:31:53,040 --> 00:31:56,080
Speaker 1: you just mentioned Carle's and at the beginning of the episode,

731
00:31:56,160 --> 00:31:59,040
Speaker 1: Joe mentioned cardinal sins. Leasing a car might be a

732
00:31:59,040 --> 00:32:00,680
Speaker 1: cardinal sin in the person on financi World.

733
00:32:00,760 --> 00:32:02,440
Speaker 3: Yeah, pretty darn close to it. I'm a big fan

734
00:32:02,760 --> 00:32:03,840
Speaker 3: of leasing vehicles.

735
00:32:03,880 --> 00:32:06,040
Speaker 1: Well, okay, let's say someone finally realizes that and they

736
00:32:06,040 --> 00:32:07,640
Speaker 1: want to get out of it. That's just the situation

737
00:32:07,720 --> 00:32:10,680
Speaker 1: that listener Anthony finds himself in. This is our Facebook

738
00:32:10,720 --> 00:32:13,520
Speaker 1: question of the week, and he says, found this podcast

739
00:32:13,520 --> 00:32:16,240
Speaker 1: about a year ago. It's been amazing thus far, established

740
00:32:16,240 --> 00:32:19,000
Speaker 1: our budget and created a debt payoff plan with currently

741
00:32:19,040 --> 00:32:21,840
Speaker 1: fifteen thousand dollars paid off since starting. Congrats on that,

742
00:32:21,880 --> 00:32:24,160
Speaker 1: by the way, Anthony. He says, there is one financial

743
00:32:24,240 --> 00:32:27,120
Speaker 1: mistake that I have made before starting this lifestyle change

744
00:32:27,240 --> 00:32:29,160
Speaker 1: that kills me every time I look at it, and

745
00:32:29,200 --> 00:32:31,680
Speaker 1: that is my wife's vehicle that we are currently leasing.

746
00:32:31,840 --> 00:32:34,560
Speaker 1: The vehicle's great, it's safe, runs great, and the perfect

747
00:32:34,560 --> 00:32:36,960
Speaker 1: size star our family. Obviously, the least part of it

748
00:32:37,000 --> 00:32:39,440
Speaker 1: is what kills me. Does anyone have any advice on

749
00:32:39,480 --> 00:32:41,320
Speaker 1: getting out of a lease or how to reduce the

750
00:32:41,320 --> 00:32:43,320
Speaker 1: pain of a lease once it ends. We will one

751
00:32:43,360 --> 00:32:46,160
Speaker 1: hundred percent be over the allowed mileage once this lease ends,

752
00:32:46,160 --> 00:32:47,600
Speaker 1: by the way, thanks for any advice.

753
00:32:47,720 --> 00:32:50,160
Speaker 2: All right, Well, first of all, congrats on the financial

754
00:32:50,200 --> 00:32:52,920
Speaker 2: progress you've made, Anthony. That budget and that payoff plan

755
00:32:52,960 --> 00:32:54,880
Speaker 2: are helping you out in a major way. But you've

756
00:32:54,880 --> 00:32:57,880
Speaker 2: also done the hard work of actually getting after it

757
00:32:57,960 --> 00:33:01,440
Speaker 2: and like, actually doing it right is the tenets of

758
00:33:01,440 --> 00:33:04,840
Speaker 2: personal finance. They're fairly simple. That being said, there are

759
00:33:04,960 --> 00:33:08,080
Speaker 2: a lot of important supporting details and there's a lot

760
00:33:08,120 --> 00:33:12,240
Speaker 2: of behavioral and hard work of actually executing that plan.

761
00:33:12,280 --> 00:33:14,040
Speaker 2: Oh yeah, okay, so one thing that we don't talk

762
00:33:14,080 --> 00:33:15,480
Speaker 2: about here to think about it than to do it.

763
00:33:15,520 --> 00:33:17,040
Speaker 2: Oh yeah, yeah, you can say that, like, oh yeah,

764
00:33:17,080 --> 00:33:19,480
Speaker 2: this is I love daydreaming, but it doesn't really do

765
00:33:19,560 --> 00:33:21,240
Speaker 2: much for me. I was going to use the overused

766
00:33:21,280 --> 00:33:23,960
Speaker 2: metaphor of health, right, like exercise.

767
00:33:24,360 --> 00:33:26,280
Speaker 3: You know that that's good for you, but it's hard

768
00:33:26,360 --> 00:33:27,240
Speaker 3: to do that thing.

769
00:33:27,320 --> 00:33:29,400
Speaker 1: Yeah, daydream about lifting weights.

770
00:33:29,520 --> 00:33:32,800
Speaker 2: Speaking of near as resolutions, But Anthony, one thing that

771
00:33:32,840 --> 00:33:35,480
Speaker 2: we don't talk about enough on the show is the

772
00:33:35,680 --> 00:33:40,200
Speaker 2: downsides of leasing a car. You're living those downsides out

773
00:33:40,280 --> 00:33:42,920
Speaker 2: right now. In our book, the only reasons someone should

774
00:33:42,960 --> 00:33:45,560
Speaker 2: ever consider leasing a car is if they have plenty

775
00:33:45,600 --> 00:33:47,920
Speaker 2: of money on hand, which basically means that they are

776
00:33:48,200 --> 00:33:52,440
Speaker 2: well into money gear number seven, and specifically, if this

777
00:33:52,560 --> 00:33:54,960
Speaker 2: is a luxury that they want to partake in, if

778
00:33:54,960 --> 00:33:57,920
Speaker 2: they want to basically always have the latest and greatest vehicle,

779
00:33:57,920 --> 00:33:59,880
Speaker 2: because that is their craft beer equivalent.

780
00:34:00,120 --> 00:34:02,320
Speaker 1: This is their avocado toast. Just going it costs a

781
00:34:02,320 --> 00:34:03,440
Speaker 1: whole lot more than avocado toast.

782
00:34:03,520 --> 00:34:04,360
Speaker 3: Yeah, just add like.

783
00:34:04,480 --> 00:34:05,720
Speaker 1: Four zeros to it or whatever.

784
00:34:06,080 --> 00:34:09,319
Speaker 2: Leasing a car it's basically never a good financial move,

785
00:34:09,680 --> 00:34:11,640
Speaker 2: but we basically put it in the category of owning

786
00:34:11,640 --> 00:34:13,960
Speaker 2: a second home. It can be a lifestyle choice that

787
00:34:14,040 --> 00:34:16,640
Speaker 2: some folks prefer. It's something that you choose, but just

788
00:34:16,719 --> 00:34:19,520
Speaker 2: know that it doesn't make sense from a financial standpoint, Yeah.

789
00:34:19,360 --> 00:34:21,359
Speaker 1: And it just takes a long long time to get there.

790
00:34:21,400 --> 00:34:23,400
Speaker 1: And leasing a car is actually even probably worse than

791
00:34:23,440 --> 00:34:24,880
Speaker 1: owning a second home, because that second home is likely

792
00:34:24,920 --> 00:34:27,080
Speaker 1: going to appreciate it with the leasing a car that

793
00:34:27,080 --> 00:34:29,440
Speaker 1: car's got, for example, Sorry, I appreciating that. Yeah, No,

794
00:34:29,480 --> 00:34:31,480
Speaker 1: I think it's I see why you put them in

795
00:34:31,520 --> 00:34:33,560
Speaker 1: the same camp. But I also think they even those

796
00:34:33,640 --> 00:34:36,760
Speaker 1: are different, and leasing a car is probably worse. Although

797
00:34:36,760 --> 00:34:38,239
Speaker 1: I want, I want to point out some folks who

798
00:34:38,280 --> 00:34:41,080
Speaker 1: had their leases come up as car prices were rising rapidly,

799
00:34:41,239 --> 00:34:42,960
Speaker 1: they actually found that they were in a decent position

800
00:34:43,120 --> 00:34:45,000
Speaker 1: right to buy that car for far less than it

801
00:34:45,040 --> 00:34:47,640
Speaker 1: was worth. That was kind of an interesting anomaly of

802
00:34:47,680 --> 00:34:50,760
Speaker 1: like rapidly rising car prices, Matt. But that was the exception,

803
00:34:50,880 --> 00:34:52,520
Speaker 1: not the rule, right that that is, don't expect that

804
00:34:52,560 --> 00:34:54,640
Speaker 1: to happen again. No, We're already that started a couple

805
00:34:54,600 --> 00:34:55,120
Speaker 1: of years ago.

806
00:34:55,200 --> 00:34:56,000
Speaker 3: Yes, that is over.

807
00:34:56,160 --> 00:34:58,680
Speaker 1: Yes, car prices both new and used are coming down,

808
00:34:58,719 --> 00:35:00,920
Speaker 1: and so people are unlike likely to find themselves in

809
00:35:00,920 --> 00:35:03,880
Speaker 1: that same situation year after year on end. And so

810
00:35:04,080 --> 00:35:06,000
Speaker 1: should you try and get out of this lease, We

811
00:35:06,040 --> 00:35:07,920
Speaker 1: would say that depends on how much time you have

812
00:35:08,000 --> 00:35:10,360
Speaker 1: left on the lease itself, and whether or not you

813
00:35:10,360 --> 00:35:13,440
Speaker 1: can find someone who's willing to assume the payments to

814
00:35:13,480 --> 00:35:15,720
Speaker 1: kind of basically take over that lease. And the truth

815
00:35:15,760 --> 00:35:17,560
Speaker 1: is you might not be able to, but it's worth

816
00:35:17,760 --> 00:35:20,400
Speaker 1: checking on a site like Swap a Lease or lease Trader.

817
00:35:20,440 --> 00:35:23,279
Speaker 1: Those are the two biggest sits in that industry. And

818
00:35:23,360 --> 00:35:24,759
Speaker 1: if you were, if you were to take it back

819
00:35:24,760 --> 00:35:26,960
Speaker 1: to the dealership, let's say you know an early least

820
00:35:27,040 --> 00:35:29,879
Speaker 1: termination fee, I would check and see check it, look

821
00:35:29,880 --> 00:35:32,480
Speaker 1: at the details of the contract, but in all likely

822
00:35:32,480 --> 00:35:35,040
Speaker 1: it's going to be prohibitively expensive. The only real way

823
00:35:35,480 --> 00:35:37,759
Speaker 1: to get rid of a lease is to find a

824
00:35:37,800 --> 00:35:40,359
Speaker 1: third party, a normal human being who says, hey, guess what,

825
00:35:40,440 --> 00:35:42,000
Speaker 1: I want a lease on that car. I'll take over

826
00:35:42,040 --> 00:35:43,960
Speaker 1: your payments. I didn't want to go to the dealership

827
00:35:43,960 --> 00:35:45,600
Speaker 1: and get a three year lease myself, but the last

828
00:35:45,680 --> 00:35:48,080
Speaker 1: fifteen months of yours, Yeah, I'll take it. That's really

829
00:35:48,160 --> 00:35:50,080
Speaker 1: the only way that we know of that you can

830
00:35:50,080 --> 00:35:52,680
Speaker 1: successfully get out of a lease that you've signed up for.

831
00:35:52,680 --> 00:35:55,680
Speaker 2: From a financial standpoint, it seems like the clearest best

832
00:35:55,680 --> 00:35:57,520
Speaker 2: way of doing it. But even then you can still

833
00:35:57,520 --> 00:35:59,200
Speaker 2: be on the hook for the payments if that person

834
00:35:59,200 --> 00:36:02,239
Speaker 2: doesn't make that pay Sometimes you're required to be a

835
00:36:02,239 --> 00:36:05,200
Speaker 2: co signer on the insurance payments for that lease in

836
00:36:05,280 --> 00:36:08,120
Speaker 2: case they don't make their insurance payments. There are a

837
00:36:08,120 --> 00:36:10,600
Speaker 2: lot of downsides to make sure that you're wearing all

838
00:36:10,640 --> 00:36:13,080
Speaker 2: the fine print there. Yeah, I hate the idea of

839
00:36:13,080 --> 00:36:14,880
Speaker 2: tying myself to somebody else financially who.

840
00:36:14,840 --> 00:36:18,759
Speaker 3: You I basically don't know at all, But yeah, you

841
00:36:18,760 --> 00:36:19,080
Speaker 3: know that.

842
00:36:19,040 --> 00:36:21,840
Speaker 2: Person does legally become responsible for making the rest of

843
00:36:21,840 --> 00:36:22,360
Speaker 2: those payments.

844
00:36:22,360 --> 00:36:23,440
Speaker 3: It could be a win win.

845
00:36:23,880 --> 00:36:26,439
Speaker 2: But I think the other smart move, given more things

846
00:36:26,480 --> 00:36:28,880
Speaker 2: currently stand, would be to continue driving that car.

847
00:36:29,360 --> 00:36:31,799
Speaker 3: You did say that it's a good vehicle.

848
00:36:31,480 --> 00:36:33,560
Speaker 2: For your family, right, Like that matters a lot, and

849
00:36:33,800 --> 00:36:35,799
Speaker 2: you might even want to buy it as your lease

850
00:36:35,840 --> 00:36:37,759
Speaker 2: comes to an end. But at that point it's going

851
00:36:37,840 --> 00:36:38,920
Speaker 2: to be all about the math.

852
00:36:39,520 --> 00:36:40,480
Speaker 3: Specifically, is the.

853
00:36:40,400 --> 00:36:44,680
Speaker 2: Residual value of the car reasonable or can you buy

854
00:36:44,719 --> 00:36:47,319
Speaker 2: a similar ride for much much less money, Like if

855
00:36:47,320 --> 00:36:49,799
Speaker 2: you're able to say, thousands of dollars by going with

856
00:36:49,840 --> 00:36:51,880
Speaker 2: something else, well that's probably the direction you.

857
00:36:51,880 --> 00:36:52,200
Speaker 3: Want to go.

858
00:36:52,480 --> 00:36:55,560
Speaker 2: The fact that you're gonna owe money for that excess mileage,

859
00:36:55,560 --> 00:36:57,600
Speaker 2: it sounds like that. You know, maybe you've already gone

860
00:36:57,640 --> 00:37:00,000
Speaker 2: over the allotted amount already. Well, that makes it even

861
00:37:00,120 --> 00:37:02,120
Speaker 2: more likely that buying the car will.

862
00:37:02,000 --> 00:37:02,720
Speaker 3: Be the top option.

863
00:37:03,120 --> 00:37:04,759
Speaker 2: But if the car is in solid shape, if it's

864
00:37:04,760 --> 00:37:08,200
Speaker 2: got few mechanical issues, and it's a solid deal given

865
00:37:08,239 --> 00:37:10,239
Speaker 2: the market, then you know you might be able to

866
00:37:10,239 --> 00:37:13,280
Speaker 2: make some lemonade out of lemons out of that previous

867
00:37:13,320 --> 00:37:17,600
Speaker 2: decision that you've made. But then here's what's key. Continue

868
00:37:17,640 --> 00:37:20,480
Speaker 2: to drive that car for years to come. Don't be

869
00:37:20,680 --> 00:37:25,200
Speaker 2: tempted into rolling that lease into another lease. Don't look

870
00:37:25,200 --> 00:37:26,880
Speaker 2: at the latest and greatest models. We want you to

871
00:37:26,960 --> 00:37:28,480
Speaker 2: hang on to that thing because you have now seen

872
00:37:28,520 --> 00:37:31,359
Speaker 2: the light and leasing is no longer an option.

873
00:37:31,600 --> 00:37:33,480
Speaker 1: Or you don't want to buy the lease out, have

874
00:37:33,560 --> 00:37:35,560
Speaker 1: that car, drive it for another year and then be like,

875
00:37:35,680 --> 00:37:37,680
Speaker 1: wait a second, we should upgrade, we should get some

876
00:37:38,160 --> 00:37:41,120
Speaker 1: like don't buy into that cycle that says at fifty

877
00:37:41,200 --> 00:37:45,120
Speaker 1: thousand miles your car is undriveable or something like that, Like, my,

878
00:37:45,840 --> 00:37:47,839
Speaker 1: it's just it's ludicrous, Like try to get two hundred

879
00:37:47,880 --> 00:37:50,080
Speaker 1: K out of that thing. Man. Yeah, whatever you can

880
00:37:50,080 --> 00:37:52,080
Speaker 1: do to extend a life. Whatever car you're driving is

881
00:37:52,120 --> 00:37:54,279
Speaker 1: going to make a massive difference. And also, I think

882
00:37:54,280 --> 00:37:55,799
Speaker 1: the other thing Matt, I just want to stress to

883
00:37:55,880 --> 00:37:58,640
Speaker 1: Anthony here is to not beat yourself up. He is learning,

884
00:37:58,680 --> 00:38:01,320
Speaker 1: he is making changes, he is moving in the right direction,

885
00:38:01,600 --> 00:38:03,359
Speaker 1: and so it's really easy to look back and say,

886
00:38:03,360 --> 00:38:05,480
Speaker 1: I'm such an idiot, like three years ago before I

887
00:38:05,520 --> 00:38:08,520
Speaker 1: was into personal finance, like, I can't believe I would

888
00:38:08,520 --> 00:38:10,480
Speaker 1: do something like that, But now you know better, and

889
00:38:10,520 --> 00:38:12,080
Speaker 1: now you're not gonna do that again, And so I

890
00:38:12,080 --> 00:38:14,839
Speaker 1: guess I just wouldn't beat up pre redeemed Anthony for

891
00:38:14,840 --> 00:38:17,560
Speaker 1: now Redeemed Anthony like you, you're going in the right direction, man,

892
00:38:17,560 --> 00:38:19,800
Speaker 1: You're asking the right questions, you're making the right moves,

893
00:38:19,960 --> 00:38:21,919
Speaker 1: and like you said, Matt, you're making lemonade of lemons.

894
00:38:21,960 --> 00:38:24,360
Speaker 1: I think on this one, if you just handle it

895
00:38:24,440 --> 00:38:25,200
Speaker 1: right from here on out.

896
00:38:25,280 --> 00:38:28,400
Speaker 2: Yeah, and a potential like relational angle as well, you

897
00:38:28,480 --> 00:38:30,440
Speaker 2: might maybe I'm reading between the lines a little too

898
00:38:30,520 --> 00:38:32,560
Speaker 2: much here. But he's kind of mentioned too that it's

899
00:38:32,560 --> 00:38:34,920
Speaker 2: his wife's car. I'm curious if you would feel the

900
00:38:34,920 --> 00:38:37,839
Speaker 2: same way if it was his car, his daily driver,

901
00:38:37,880 --> 00:38:39,960
Speaker 2: and he's just like, no, no, no, this thing is awesome. Instead,

902
00:38:39,960 --> 00:38:43,680
Speaker 2: he's just like, man, wife's driving this, so that's just

903
00:38:43,719 --> 00:38:45,200
Speaker 2: something you need to keep in mind as well, the

904
00:38:45,239 --> 00:38:49,319
Speaker 2: relational dynamics. But behind the decisions that we make. Let's

905
00:38:49,320 --> 00:38:52,440
Speaker 2: get to one more. This one's from Paula. She says, hey, everyone,

906
00:38:52,640 --> 00:38:55,880
Speaker 2: does anyone use go Henry or similar apps with their kids?

907
00:38:56,000 --> 00:38:58,520
Speaker 2: Would love to hear some thoughts before setting up an account.

908
00:38:58,760 --> 00:39:00,799
Speaker 2: We have a ten year old who has a small

909
00:39:00,840 --> 00:39:02,920
Speaker 2: amount of cash and some money and savings at our

910
00:39:02,960 --> 00:39:05,319
Speaker 2: local credit union. We would love to start having him

911
00:39:05,360 --> 00:39:09,239
Speaker 2: learn some good money habits early. All right, Paula is

912
00:39:09,239 --> 00:39:12,400
Speaker 2: all about teaching that next generation how to handle the

913
00:39:12,560 --> 00:39:13,200
Speaker 2: handle their money.

914
00:39:13,200 --> 00:39:15,600
Speaker 1: I guess she's already taught her son about money and

915
00:39:15,760 --> 00:39:18,600
Speaker 1: that this app can maybe help reinforce like some of

916
00:39:18,600 --> 00:39:20,120
Speaker 1: the things are already talking about, some of the habits

917
00:39:20,160 --> 00:39:22,360
Speaker 1: that she's already instituted. He's got to save these account

918
00:39:22,360 --> 00:39:24,560
Speaker 1: at the credit union, so I know this ten year.

919
00:39:24,480 --> 00:39:26,359
Speaker 3: Old is she's already on the right path.

920
00:39:26,440 --> 00:39:29,359
Speaker 1: Yeah, his personal finance education is beyond what most ten

921
00:39:29,440 --> 00:39:31,360
Speaker 1: year olds out there have already received. It's true. But

922
00:39:31,400 --> 00:39:33,319
Speaker 1: what about these digital products, like are they are they

923
00:39:33,360 --> 00:39:34,799
Speaker 1: the best? Are they going to be helpful? Are they

924
00:39:34,800 --> 00:39:36,720
Speaker 1: going to reinforce some of the things you've been teaching

925
00:39:36,960 --> 00:39:39,480
Speaker 1: or maybe up end them. I guess I would. I

926
00:39:39,480 --> 00:39:41,680
Speaker 1: would say Matt that the digital products like go Henry

927
00:39:41,719 --> 00:39:43,560
Speaker 1: and green Light is another one that's kind of in

928
00:39:43,600 --> 00:39:46,000
Speaker 1: the same vein. They're pretty cool. We love what they're doing,

929
00:39:46,280 --> 00:39:49,799
Speaker 1: and we've used go Henry ourselves, right, but gave it

930
00:39:49,800 --> 00:39:52,360
Speaker 1: a shot, but we're not actually using them currently. That's true,

931
00:39:52,400 --> 00:39:55,359
Speaker 1: and that's largely because, I would say, and I'm about you,

932
00:39:55,400 --> 00:39:57,600
Speaker 1: because the age of our kids, the age of my kids,

933
00:39:57,920 --> 00:40:00,359
Speaker 1: and we tried the debit card thing, but we I

934
00:40:00,400 --> 00:40:04,160
Speaker 1: realized pretty quickly the tangible need for physical dollars to

935
00:40:04,160 --> 00:40:06,160
Speaker 1: actually really drive home some of the points that we

936
00:40:06,160 --> 00:40:08,640
Speaker 1: were discussing. And I think that's going to change right

937
00:40:08,640 --> 00:40:10,920
Speaker 1: as they get older, Like this makes more and more

938
00:40:11,000 --> 00:40:14,160
Speaker 1: sense when kids become teenagers. But at the time when

939
00:40:14,200 --> 00:40:15,680
Speaker 1: we were doing this, they were like eight and six,

940
00:40:15,719 --> 00:40:18,000
Speaker 1: and it was just too the dots weren't connecting in

941
00:40:18,040 --> 00:40:20,920
Speaker 1: the same way as when we started putting physical dollars

942
00:40:20,920 --> 00:40:22,960
Speaker 1: in their hands. So we've gone to the cash envelope method,

943
00:40:23,120 --> 00:40:26,400
Speaker 1: three different categories spending, saving, and giving. It's old school,

944
00:40:26,400 --> 00:40:28,080
Speaker 1: but it works, and I think especially when you're trying

945
00:40:28,120 --> 00:40:30,719
Speaker 1: to reinforce lessons. If it's like, oh, these lessons they've

946
00:40:30,760 --> 00:40:33,759
Speaker 1: already taken, and my kid is like firmly planted in

947
00:40:33,760 --> 00:40:36,640
Speaker 1: the digital space, he's you know, I don't know, buying

948
00:40:36,880 --> 00:40:40,440
Speaker 1: video game stuff on his debit card or whatever. Maybe

949
00:40:40,440 --> 00:40:42,680
Speaker 1: it makes sense if they're ready to handle that and

950
00:40:42,719 --> 00:40:46,040
Speaker 1: then you have oversight. But for younger kids in particular,

951
00:40:46,280 --> 00:40:48,440
Speaker 1: I think cash is just the easiest form to help

952
00:40:48,520 --> 00:40:51,000
Speaker 1: kind of connect the dots and help them understand the

953
00:40:51,040 --> 00:40:51,640
Speaker 1: value of a dollar.

954
00:40:51,680 --> 00:40:54,480
Speaker 2: Yeah, especially when kids are younger, you don't need digital tools,

955
00:40:54,520 --> 00:40:58,000
Speaker 2: I think to hammer home the most important financial lessons,

956
00:40:58,040 --> 00:41:01,479
Speaker 2: and the biggest one being is making that connection between Hey,

957
00:41:01,600 --> 00:41:03,080
Speaker 2: if you want to have some spending money, if you

958
00:41:03,120 --> 00:41:04,879
Speaker 2: want some cash, you gotta work for It's not something

959
00:41:04,920 --> 00:41:06,680
Speaker 2: that comes to you automatically just.

960
00:41:06,600 --> 00:41:09,360
Speaker 1: Because you exist. Got to get those chores done exactly,

961
00:41:09,440 --> 00:41:10,520
Speaker 1: full laundry or else.

962
00:41:10,560 --> 00:41:13,320
Speaker 2: I'm not interested in putting my kids on universal basic income,

963
00:41:13,760 --> 00:41:16,520
Speaker 2: because that's not how the world works. Now that being said,

964
00:41:16,560 --> 00:41:19,440
Speaker 2: if that's something our country implements, maybe a decent political position,

965
00:41:20,440 --> 00:41:23,440
Speaker 2: maybe I will start implementing that because it mirrors the

966
00:41:23,440 --> 00:41:25,279
Speaker 2: real world and That's what I'm trying to do, is

967
00:41:25,600 --> 00:41:26,239
Speaker 2: make sure that they.

968
00:41:26,200 --> 00:41:27,680
Speaker 3: Are prepared for the real world.

969
00:41:27,880 --> 00:41:29,920
Speaker 2: But those as the kids get older, I think they

970
00:41:29,960 --> 00:41:32,000
Speaker 2: could make a lot of sense, like you said, Jill,

971
00:41:32,040 --> 00:41:35,200
Speaker 2: as they are aging up into those teen years, as

972
00:41:35,200 --> 00:41:37,319
Speaker 2: they're off kind of on their own, maybe making some

973
00:41:37,400 --> 00:41:40,200
Speaker 2: purchases on their own. But just know that they're going

974
00:41:40,280 --> 00:41:42,120
Speaker 2: to cost you some money that they're not free. I

975
00:41:42,120 --> 00:41:44,800
Speaker 2: think green Lights five bucks. You can have multiple kids,

976
00:41:45,640 --> 00:41:48,879
Speaker 2: go Henry. They've got a slightly slicker interface. I think

977
00:41:49,000 --> 00:41:51,720
Speaker 2: some different options, but I think it's like five dollars

978
00:41:51,800 --> 00:41:55,120
Speaker 2: per kid. But if you want a free digital option

979
00:41:55,480 --> 00:42:00,640
Speaker 2: that has fewer features, however, but it's free check out Missoula. Uh,

980
00:42:00,680 --> 00:42:03,200
Speaker 2: it's a more of like a digital wallet type. They

981
00:42:03,239 --> 00:42:05,640
Speaker 2: don't go the debit card route. But we like what

982
00:42:05,640 --> 00:42:06,319
Speaker 2: they've done as well.

983
00:42:06,360 --> 00:42:08,200
Speaker 3: It's a it's a good option. I'm glad they exist.

984
00:42:08,440 --> 00:42:10,360
Speaker 2: Glad there's multiple options out there for folks and if

985
00:42:10,360 --> 00:42:11,799
Speaker 2: they're trying to figure out what's going to work best

986
00:42:11,800 --> 00:42:12,440
Speaker 2: for their family.

987
00:42:12,600 --> 00:42:14,560
Speaker 3: But Paula, I love what your heart is that you're.

988
00:42:14,520 --> 00:42:16,280
Speaker 2: Teaching your son how it is that he can handle

989
00:42:16,320 --> 00:42:18,879
Speaker 2: his money well. And honestly, I was going to ask

990
00:42:18,880 --> 00:42:22,040
Speaker 2: you earlier on but you kept going. But do you

991
00:42:22,120 --> 00:42:25,440
Speaker 2: have have you opened any like savings accounts.

992
00:42:25,000 --> 00:42:27,920
Speaker 1: For for your oldest No, I haven't yet. Yeah, we're

993
00:42:27,920 --> 00:42:30,200
Speaker 1: doing it all straight up with the.

994
00:42:29,520 --> 00:42:31,120
Speaker 3: The same thing. Yeah, we've just got all the cash.

995
00:42:31,239 --> 00:42:32,799
Speaker 3: I mean, we just got it. Like jars, we just

996
00:42:32,800 --> 00:42:34,760
Speaker 3: got We've got you've got three jars. We got two jars.

997
00:42:34,800 --> 00:42:38,719
Speaker 2: Saving and spending because all saving in is deferred spending. Yeah, right,

998
00:42:38,719 --> 00:42:40,719
Speaker 2: well we have giving too, but yeah, we've got saving

999
00:42:40,760 --> 00:42:43,439
Speaker 2: and spending one jar. It's the same thing in my mind,

1000
00:42:43,480 --> 00:42:45,880
Speaker 2: and then giving, which is you know, it's kind of

1001
00:42:45,880 --> 00:42:47,520
Speaker 2: like not your money, it's it's somebody else's.

1002
00:42:47,600 --> 00:42:48,400
Speaker 3: Yeah.

1003
00:42:48,480 --> 00:42:51,200
Speaker 2: I do see a need though, to start implementing some

1004
00:42:51,239 --> 00:42:54,719
Speaker 2: of these tools, and especially because like identifying the value

1005
00:42:54,719 --> 00:42:56,319
Speaker 2: of a dollar, like that's the first lesson, and I

1006
00:42:56,320 --> 00:42:58,560
Speaker 2: think the next one is to teach them that basically

1007
00:42:58,600 --> 00:43:01,239
Speaker 2: the longer that they save and best, the more their

1008
00:43:01,239 --> 00:43:04,359
Speaker 2: money grows. And that's a difficult lesson to teach because

1009
00:43:04,400 --> 00:43:06,399
Speaker 2: I was doing that myself. I think we talked about

1010
00:43:06,440 --> 00:43:07,160
Speaker 2: it maybe a couple of weeks.

1011
00:43:07,160 --> 00:43:08,839
Speaker 1: I think it's actually easier to do it manually, though,

1012
00:43:08,840 --> 00:43:10,040
Speaker 1: Like you were doing because.

1013
00:43:09,719 --> 00:43:12,560
Speaker 2: That's no, that's the thing. Yes, they get to see,

1014
00:43:12,640 --> 00:43:15,359
Speaker 2: oh it's growing, right, so there's more money. But who

1015
00:43:15,440 --> 00:43:18,040
Speaker 2: is it coming from. It's coming from you, as opposed

1016
00:43:18,040 --> 00:43:20,160
Speaker 2: to it coming from the market. And so I've thought

1017
00:43:20,160 --> 00:43:22,160
Speaker 2: about that too, how I wanted. I want them to

1018
00:43:22,160 --> 00:43:26,280
Speaker 2: see it coming from some place magical, which is essentially

1019
00:43:26,360 --> 00:43:27,759
Speaker 2: almost you know what compounding interest is.

1020
00:43:27,760 --> 00:43:29,440
Speaker 1: It's just that what they're limited funds even when they

1021
00:43:31,120 --> 00:43:34,440
Speaker 1: yield like yeah, yeah, so that's the downside.

1022
00:43:34,480 --> 00:43:37,200
Speaker 2: So I'm still kind of conflicted between what I what

1023
00:43:37,239 --> 00:43:39,040
Speaker 2: I should do, whether I should juice those returns and

1024
00:43:39,040 --> 00:43:41,040
Speaker 2: pay it myself. But then I don't like the fact

1025
00:43:41,080 --> 00:43:42,720
Speaker 2: that they see it coming from me, and it feels

1026
00:43:42,760 --> 00:43:44,040
Speaker 2: like that they're.

1027
00:43:43,880 --> 00:43:46,160
Speaker 3: On daddy's dole all right, as opposed to it coming

1028
00:43:46,200 --> 00:43:47,240
Speaker 3: from coming from the market.

1029
00:43:47,360 --> 00:43:49,400
Speaker 1: You can always change change that later, But as long

1030
00:43:49,440 --> 00:43:51,560
Speaker 1: as you're connecting that that their money can make money

1031
00:43:51,600 --> 00:43:53,640
Speaker 1: when it's sits there, I think that's that's the biggest

1032
00:43:53,960 --> 00:43:57,560
Speaker 1: overarching sort of theme that you want them to comprehend, right, Yeah.

1033
00:43:56,920 --> 00:44:00,160
Speaker 2: Who it comes from is possibly a small detail. There's

1034
00:44:00,200 --> 00:44:02,200
Speaker 2: a mole hill that I'm making into it.

1035
00:44:03,000 --> 00:44:05,799
Speaker 1: Well, I like it and Paula. So hopefully, Yeah, maybe

1036
00:44:05,840 --> 00:44:07,560
Speaker 1: one of these digitalapses right for you. Maybe it's worth

1037
00:44:07,600 --> 00:44:09,440
Speaker 1: the five dollars a month because of the way your

1038
00:44:09,440 --> 00:44:11,880
Speaker 1: son interacts with money, and it gives you some oversight

1039
00:44:11,920 --> 00:44:14,399
Speaker 1: without having to kind of bedulding out that cash every

1040
00:44:14,400 --> 00:44:15,960
Speaker 1: Sunday night at dinner table, kind of like we do

1041
00:44:16,000 --> 00:44:17,920
Speaker 1: in our house. But maybe it's not. Maybe you're not

1042
00:44:18,000 --> 00:44:19,640
Speaker 1: quite ready for that, and maybe you can save yourself

1043
00:44:19,640 --> 00:44:21,520
Speaker 1: sixty bucks a year at the same time. But best

1044
00:44:21,520 --> 00:44:24,759
Speaker 1: of luck as you continue to teach your son about finances.

1045
00:44:24,800 --> 00:44:26,560
Speaker 1: And Matt, let's get back to the beer we had

1046
00:44:26,560 --> 00:44:28,480
Speaker 1: on this episode, by the way, For folks who are

1047
00:44:28,520 --> 00:44:31,200
Speaker 1: new to this podcast, Matt and I drink a beer

1048
00:44:31,320 --> 00:44:33,560
Speaker 1: on and I'm just saying it because like it's January first,

1049
00:44:33,560 --> 00:44:34,640
Speaker 1: there's a lot of people who are like, I want

1050
00:44:34,640 --> 00:44:35,279
Speaker 1: to get my money right.

1051
00:44:35,320 --> 00:44:35,640
Speaker 3: That's true.

1052
00:44:35,640 --> 00:44:37,160
Speaker 1: There might be some nubes out there, yeah, trying to

1053
00:44:37,160 --> 00:44:38,920
Speaker 1: find a new personal finance podcast. Well, we hope you

1054
00:44:38,920 --> 00:44:40,680
Speaker 1: stick around. We'd love to have you this year kind

1055
00:44:40,719 --> 00:44:42,080
Speaker 1: of in the how to Money community, and you should

1056
00:44:42,120 --> 00:44:43,640
Speaker 1: join the how of Money Facebook group, by the way,

1057
00:44:43,640 --> 00:44:45,279
Speaker 1: because there's a lot of great folks hanging out in there,

1058
00:44:45,480 --> 00:44:47,520
Speaker 1: but Matt and I we drink at craft beer every

1059
00:44:47,520 --> 00:44:50,560
Speaker 1: episode because we're all about spending money intentionally on things

1060
00:44:50,600 --> 00:44:53,840
Speaker 1: that matter to us while we're saving and investing for

1061
00:44:53,880 --> 00:44:55,439
Speaker 1: the future. And so the beer we had on this

1062
00:44:55,560 --> 00:44:58,840
Speaker 1: episode is called Remain Restless. It's a double IPA donated

1063
00:44:58,840 --> 00:45:01,720
Speaker 1: to the show actually by listener Rhianna. Matt Warrior thoughts

1064
00:45:01,800 --> 00:45:02,359
Speaker 1: on this one.

1065
00:45:02,480 --> 00:45:05,760
Speaker 2: It was super solid man, so good, so well balanced.

1066
00:45:05,960 --> 00:45:08,640
Speaker 2: It's got everything you would expect out of a hazy

1067
00:45:08,719 --> 00:45:11,799
Speaker 2: New England style IPA. This is another one out of Pennsylvania.

1068
00:45:11,840 --> 00:45:14,160
Speaker 2: I didn't know there's so many great breweries, so either

1069
00:45:14,200 --> 00:45:16,120
Speaker 2: the other one that she had donated to the show.

1070
00:45:16,160 --> 00:45:19,320
Speaker 2: So the Evergrain beers Evergrain Brewery, they're out of Pensylvania

1071
00:45:19,320 --> 00:45:21,840
Speaker 2: as well, and it makes sense that's in the northeast,

1072
00:45:22,080 --> 00:45:24,279
Speaker 2: so I guess naturally it makes sense that they would

1073
00:45:24,280 --> 00:45:25,640
Speaker 2: be crushing it when it comes to the style.

1074
00:45:25,719 --> 00:45:27,040
Speaker 3: But YE really liked it.

1075
00:45:27,760 --> 00:45:30,200
Speaker 1: Yeah, So I feel like the initial vibe you get

1076
00:45:30,320 --> 00:45:32,440
Speaker 1: with the with the sip is just kind of like

1077
00:45:32,440 --> 00:45:35,239
Speaker 1: a soft, a softness on the tongue, but then nice

1078
00:45:35,280 --> 00:45:37,600
Speaker 1: and pillowy. Yeah, but then on the back it's like

1079
00:45:37,840 --> 00:45:40,919
Speaker 1: blooming for days, like it's just like this continual hot

1080
00:45:40,920 --> 00:45:43,440
Speaker 1: punch to the back of my mouth, which was just welcomed.

1081
00:45:43,520 --> 00:45:44,080
Speaker 3: I loved it.

1082
00:45:44,239 --> 00:45:46,279
Speaker 1: So this this is one of the best so I've

1083
00:45:46,280 --> 00:45:46,799
Speaker 1: had in a while.

1084
00:45:46,880 --> 00:45:48,719
Speaker 2: It's what you get with like a high quality New

1085
00:45:48,760 --> 00:45:52,160
Speaker 2: England style IPA as opposed to an older one. That's said, dude,

1086
00:45:52,160 --> 00:45:53,719
Speaker 2: that's one of the things I hate about some of

1087
00:45:53,719 --> 00:45:55,319
Speaker 2: the beers that sit on the shelves for months and

1088
00:45:55,360 --> 00:45:58,480
Speaker 2: months is that they just they go bad maybe essentially,

1089
00:45:58,520 --> 00:46:00,319
Speaker 2: and they've got some of that flavor there, but it

1090
00:46:00,360 --> 00:46:03,040
Speaker 2: does not have the depth. And this one certainly had

1091
00:46:03,080 --> 00:46:05,640
Speaker 2: the complexity those deep waters man.

1092
00:46:05,760 --> 00:46:08,799
Speaker 1: Yeah, for sure, most have. Yeah. No, freshness is key,

1093
00:46:08,800 --> 00:46:10,520
Speaker 1: by the way, if you're looking for for craft beer,

1094
00:46:10,560 --> 00:46:13,000
Speaker 1: especially on the ip A front, if you're looking for

1095
00:46:13,000 --> 00:46:15,640
Speaker 1: a great IPA, even if it's like an awesome, well

1096
00:46:15,680 --> 00:46:18,319
Speaker 1: reviewed beer on untapped, it doesn't matter, like it could

1097
00:46:18,360 --> 00:46:20,279
Speaker 1: turn into trash if it's been on the show for

1098
00:46:20,320 --> 00:46:22,000
Speaker 1: like five six months. That's true.

1099
00:46:22,040 --> 00:46:24,160
Speaker 2: But uh Rihanna, thank you so much again for sending

1100
00:46:24,200 --> 00:46:26,160
Speaker 2: this one hour away, Joe. That's gonna be it for

1101
00:46:26,200 --> 00:46:28,600
Speaker 2: this episode. We'll make sure to link to different resources

1102
00:46:28,960 --> 00:46:31,600
Speaker 2: that we mentioned during this episode of the website money

1103
00:46:31,640 --> 00:46:33,840
Speaker 2: challenges that we talked about, and you can find that

1104
00:46:33,920 --> 00:46:36,560
Speaker 2: at how toomoney dot com. That's our home on the web.

1105
00:46:36,640 --> 00:46:38,840
Speaker 2: But buddy, that's going to be it for now until

1106
00:46:38,840 --> 00:46:41,799
Speaker 2: next time. Best Friends Out, Best Friends Out,