WEBVTT - Ask HTM - Paying Off Balance Transfer Cards, Emergency Funds while House Hacking, and What to do when Inheriting a 401k #168 0:00:00.080 --> 0:00:02.639 Welcome to How the Money. I'm Joel and I am Matt, 0:00:02.880 --> 0:00:24.640 and today we are answering your listener questions. Yeah, Joel, 0:00:24.680 --> 0:00:26.680 We've got some great listener questions that we're gonna get 0:00:26.680 --> 0:00:28.600 to today. We're gonna talk about paying off a zero 0:00:28.680 --> 0:00:30.960 percent interest credit card. We're gonna discuss how much you 0:00:31.000 --> 0:00:34.080 should set aside in your emergency fund for some housing repairs. 0:00:34.479 --> 0:00:37.000 And we're also gonna cover what to do when inheriting 0:00:37.200 --> 0:00:39.879 a four oh one K. Plus. We've got two other 0:00:39.880 --> 0:00:43.120 listener questions that will just be a surprise, Yeah, surprise 0:00:43.200 --> 0:00:47.080 listener questions. Yeah, Matt, before we get into the actual questions. 0:00:47.360 --> 0:00:50.960 I'm completely fascinated by kind of something new ish happening 0:00:50.960 --> 0:00:54.400 in the housing market. And they're called virtual appraisals or 0:00:54.440 --> 0:00:58.279 desktop appraisals. I've heard of them, yeah, and like, I 0:00:58.320 --> 0:01:00.720 love it because I don't know about you. Have you 0:01:00.760 --> 0:01:03.480 ever been burned by an appraisal before where you knew 0:01:03.680 --> 0:01:06.080 or really really strongly believed that your house was worth 0:01:06.080 --> 0:01:08.039 something and then the appraiser came in and was like, yeah, 0:01:08.080 --> 0:01:10.319 it's worth seventy thousand less than that. I do feel 0:01:10.319 --> 0:01:12.880 that way, specifically when it came to a refundance that 0:01:12.920 --> 0:01:14.560 I was doing, and I thought that the house was 0:01:14.640 --> 0:01:16.680 definitely worth more than what he said it was. I 0:01:16.760 --> 0:01:18.000 think it had a lot to do with the fact 0:01:18.040 --> 0:01:22.039 that the backyard was thatched, like it was covered in Hey, okay, 0:01:22.040 --> 0:01:24.240 and so let's kind of run down. I'm like, dude, 0:01:24.360 --> 0:01:27.600 imagine if that was instead a beautiful green backyard, lush 0:01:27.640 --> 0:01:30.000 green yard. Yeah. I feel like he was letting some 0:01:30.040 --> 0:01:32.080 things that were maybe just on the surface kind of 0:01:32.120 --> 0:01:34.440 maybe influence his decision. Yeah, And I think that's the 0:01:34.440 --> 0:01:38.399 biggest downside when we're talking about humans doing appraisals, it 0:01:38.520 --> 0:01:41.600 is human bias, right, Well, there's there's human bias. Is 0:01:41.680 --> 0:01:44.479 often the person doing the appraisal, they could live forty 0:01:44.480 --> 0:01:46.360 five minutes or an hour away from where you live, 0:01:46.400 --> 0:01:48.960 that they might be unfamiliar with the neighborhood. And sometimes 0:01:48.960 --> 0:01:51.840 the way comps are done, usually that appraiser is looking 0:01:51.880 --> 0:01:55.840 at three comps in your area, and your area can 0:01:56.200 --> 0:01:58.960 very street to street, especially where we live in town. 0:01:59.160 --> 0:02:01.680 The value of our house is completely different than one 0:02:01.720 --> 0:02:04.120 neighborhood over, but the appraiser or even like one block 0:02:04.200 --> 0:02:06.400 over or even one blockover, and the appraiser might not 0:02:06.400 --> 0:02:07.960 see it that way, they might say, you know what 0:02:08.360 --> 0:02:10.360 this is, these are the comps I'm pulling, and then 0:02:10.520 --> 0:02:13.200 they might not, at least in our opinion, be accurate comps. Yeah, 0:02:13.320 --> 0:02:15.440 with the virtual or desktop appraisals, one of the ways 0:02:15.480 --> 0:02:17.040 that they're getting a way better is that they're able 0:02:17.080 --> 0:02:19.560 to look at hundreds of different houses. They're not just 0:02:19.639 --> 0:02:22.119 looking at a few select homes. They're able to cast 0:02:22.160 --> 0:02:24.440 a much wider net when it comes to finding the 0:02:24.520 --> 0:02:26.880 value of your home. Yeah, and there's this specific company 0:02:26.919 --> 0:02:29.080 called house Canary, and I'm just fascinating kind of about 0:02:29.080 --> 0:02:32.000 what they're doing because, yeah, I've just had this these 0:02:32.040 --> 0:02:34.919 run ins with the praisers where first off, they're really expensive. 0:02:34.960 --> 0:02:37.200 An appraisal to do a refine can be four hundred 0:02:37.240 --> 0:02:40.640 bucks maybe more or yeah, that's that's really affordable. Honestly, 0:02:40.680 --> 0:02:42.000 I think I think in a lot of areas it's 0:02:42.040 --> 0:02:44.320 closer to a thousand even. Yeah, it can be super 0:02:44.320 --> 0:02:47.080 expensive to get a human to appraise at home, and 0:02:47.120 --> 0:02:48.960 so it makes the cost of a refinance go up 0:02:48.960 --> 0:02:51.240 because of that. And so a company like house Canary 0:02:51.280 --> 0:02:53.000 who can do it for you know, a fraction of 0:02:53.040 --> 0:02:57.120 the cost, and essentially their artificial intelligence, their ability to 0:02:57.240 --> 0:03:00.760 pull a hundred comps in the area it to get 0:03:00.760 --> 0:03:03.840 a more precise value for your home. I just love 0:03:04.040 --> 0:03:06.400 that possibility, and I love that that's kind of coming about. 0:03:06.720 --> 0:03:09.800 And the federal government actually just recently raised the purchase 0:03:09.840 --> 0:03:12.600 price amount where you're allowed to use a desktop appraisal 0:03:12.600 --> 0:03:14.560 as opposed to a human appraisal. So we're going to 0:03:14.639 --> 0:03:17.120 see more and more of these things coming, and I 0:03:17.160 --> 0:03:19.560 love the direction it's going. It's not gonna work in 0:03:19.600 --> 0:03:22.320 all cases and in all circumstances, but I think these 0:03:22.320 --> 0:03:24.000 things are going to be a game changer, and hopefully 0:03:24.000 --> 0:03:27.200 more than anything, they're the lower prices for us as individuals, 0:03:27.200 --> 0:03:29.200 for us trying to buy or refinance at home, it'll 0:03:29.200 --> 0:03:32.239 lower the transaction prices that we incur. Yeah. One of 0:03:32.280 --> 0:03:34.440 the benefits as well is that it happens faster, right, 0:03:34.480 --> 0:03:36.560 You're like, you're not waiting for a week, you know, 0:03:36.600 --> 0:03:38.520 before an appraiser is able to come out, Like it 0:03:38.560 --> 0:03:41.000 happens instantly, and sometimes they want to come in the 0:03:41.040 --> 0:03:42.800 house and then you've got to like find a time 0:03:42.840 --> 0:03:45.960 that works with Yeah. And while that's great and all, like, 0:03:46.000 --> 0:03:48.560 I don't care necessarily if it happens faster. I wanted 0:03:48.600 --> 0:03:50.240 to be convenient and I want it to be cheap, 0:03:50.360 --> 0:03:53.120 and this is a way accurate hopefully inaccurate as well. Well. 0:03:53.160 --> 0:03:54.360 I mean that's one of the great things that you're 0:03:54.360 --> 0:03:57.200 talking about the AI, Like they've trained the software and 0:03:57.240 --> 0:03:59.880 programmed it to where it can recognize extra your features 0:03:59.880 --> 0:04:02.960 like lot elevation and privacy and just all these other factors. 0:04:03.120 --> 0:04:06.240 But based on good interior photos, it can see and 0:04:06.280 --> 0:04:09.440 recognize finishes as well. Like they're talking how it can 0:04:09.440 --> 0:04:13.440 recognize Grantite like grantit countertops. So guess what that desktop appraisal. Yeah, 0:04:13.480 --> 0:04:15.280 it totally knows that you've got a nice kitchen and 0:04:15.280 --> 0:04:17.000 they'll factor that in when it comes to putting together 0:04:17.080 --> 0:04:18.919 a value for you. But I'm with you, man, I 0:04:18.960 --> 0:04:21.560 love the fact that we're cutting costs and we're democratizing 0:04:21.760 --> 0:04:26.520 the home buying or refinancing process. The technology is finally there. 0:04:26.560 --> 0:04:27.880 I mean, I think when you look at kind of 0:04:27.880 --> 0:04:31.440 the Zillos estimates, they're not quite there. They're trying to 0:04:31.440 --> 0:04:33.920 get there, but it seems like this company, House Canary 0:04:33.920 --> 0:04:36.880 and a couple other ones like it, they're pretty much 0:04:37.080 --> 0:04:39.839 there with the technology and it works for home valuation 0:04:39.880 --> 0:04:42.000 in most cases. So I'm interested to see where this goes. 0:04:42.040 --> 0:04:44.080 We'll keep our eyes out and if big changes happen 0:04:44.440 --> 0:04:47.120 or they become even more widely available, Matt will talk 0:04:47.160 --> 0:04:49.120 about it again on the show. Right all right, but 0:04:49.200 --> 0:04:51.720 let's mention the beer we're having today on this episode. 0:04:51.760 --> 0:04:54.480 We're having Blair's Breakfast out and this beer was crafted 0:04:54.520 --> 0:04:57.760 by Wilmington's Brewing Company. Yeah, this beer was actually gifted 0:04:57.800 --> 0:05:00.640 to me at Christmas by my uncle, or specifically, I 0:05:00.640 --> 0:05:03.400 should say my uncle in law. This is Kate's uncle. 0:05:03.839 --> 0:05:06.640 They live in Wilmington's and he drew my name for 0:05:06.839 --> 0:05:10.760 that extended family gift exchange secret Sannah, Yeah, exactly, and 0:05:10.760 --> 0:05:13.120 he was wise and savvy enough to know that you 0:05:13.160 --> 0:05:15.000 can't go wrong with a nice craft of beer. So 0:05:15.040 --> 0:05:17.160 I wanted to share this one with you, buddy, awesome man. 0:05:17.200 --> 0:05:19.039 Well thanks, I'm looking forward to having this one on 0:05:19.040 --> 0:05:21.240 the show with you. We'll give our tasting notes at 0:05:21.240 --> 0:05:23.600 the end of the episode. All right, but let's get 0:05:23.640 --> 0:05:26.680 to our listener questions for today, Matt. For anybody out 0:05:26.680 --> 0:05:28.560 there who's listening and they want to submit their question 0:05:28.680 --> 0:05:31.559 to potentially be featured on the show, It's really simple. 0:05:31.640 --> 0:05:33.560 Just go to how to money dot com slash ask. 0:05:33.800 --> 0:05:36.159 It'll take you a minute or two at most to 0:05:36.279 --> 0:05:39.560 submit your listener question via the simple directions there. And 0:05:39.600 --> 0:05:41.719 the first one for today is about paying off a 0:05:41.800 --> 0:05:45.320 zero present credit card. Hi man, Joel. My name is 0:05:45.400 --> 0:05:48.920 Chelsea and I'm from originally in Virginia, but I moved 0:05:48.960 --> 0:05:52.039 to Seattle about six and a half years ago. I 0:05:52.120 --> 0:05:55.400 have a question about credit cards. I've definitely gotten myself 0:05:55.400 --> 0:05:59.560 into a little bit of trouble and I am in 0:05:59.600 --> 0:06:03.320 the process us of paying them off. I definitely am 0:06:03.360 --> 0:06:07.080 a little embarrassed about how much I have accrued. Let's 0:06:07.120 --> 0:06:09.440 just say that I paid off eight thousand dollars this 0:06:09.520 --> 0:06:15.560 summer and I basically put into my credit card bills. 0:06:16.160 --> 0:06:21.760 My question is, as I've moved some balance transfers around 0:06:21.880 --> 0:06:27.520 so that I'm utilizing the zero percent introductory rate for 0:06:27.640 --> 0:06:29.560 you know, ten months or a year, what have you 0:06:29.880 --> 0:06:34.440 for my cards? Should I be trying to pay the 0:06:34.640 --> 0:06:38.560 zero percent balance down on those cards or should I 0:06:38.680 --> 0:06:42.880 be going towards the cards that have an interest rate 0:06:42.960 --> 0:06:46.240 even though there's a deadline essentially on that zero percent 0:06:46.360 --> 0:06:50.000 interest balance transfer. Love to know what you think. Love 0:06:50.040 --> 0:06:53.040 the show. Thanks so much for hearing me out. Hey, Chelsea, 0:06:53.240 --> 0:06:55.520 we are glad to hear that you are focused on 0:06:55.560 --> 0:06:58.719 paying off that debt. Paying eight thousand dollars off last summer. 0:06:58.760 --> 0:07:01.400 That is great, So don't beat yourself up about some 0:07:01.440 --> 0:07:03.760 of those past mistakes that you've made. You're well on 0:07:03.800 --> 0:07:06.800 your way to being rid of it now by essentially 0:07:06.839 --> 0:07:10.520 paying off of your debt in one season, that's amazing. Like, 0:07:10.560 --> 0:07:12.920 if you are able to continue at that pace, you 0:07:12.960 --> 0:07:15.400 should be completely done with his debt within the next year. 0:07:15.880 --> 0:07:19.360 That is a really good debt paid on pace. And also, 0:07:19.720 --> 0:07:22.400 Chelsea had mentioned those zero percent transfers. If you're listening 0:07:22.640 --> 0:07:24.440 and you don't know what those are all about, you 0:07:24.480 --> 0:07:26.520 can read about those over at the website. Head over 0:07:26.520 --> 0:07:29.520 to how to money dot com slash balance transfer and 0:07:29.640 --> 0:07:31.440 you can learn how those work, as well as some 0:07:31.480 --> 0:07:33.560 cards that we recommend. Yeah, Matt, you did a good job, 0:07:33.600 --> 0:07:35.520 right and now one up buddy. All right, let's get 0:07:35.520 --> 0:07:38.880 to some of the specifics of Chelsea's question, though, we 0:07:39.280 --> 0:07:43.160 really would not recommend prioritizing paying on those zero percent 0:07:43.200 --> 0:07:46.160 cards first. Instead, Chelsea, pay as much as you can 0:07:46.320 --> 0:07:49.400 towards the cards that are currently charging you interest, as 0:07:49.440 --> 0:07:51.600 this is going to cut the overall amount that's going 0:07:51.680 --> 0:07:54.320 towards your interest, and it will ensure that more of 0:07:54.320 --> 0:07:57.120 your money is tackling the principle of your debt. You 0:07:57.160 --> 0:07:59.320 are taking advantage of some of those zero percent balance 0:07:59.320 --> 0:08:01.600 transfer cards, WOUL, which is great. That means by default 0:08:01.640 --> 0:08:05.480 you're subscribing to the avalanche debt payoff method, not the snowball, 0:08:05.600 --> 0:08:07.840 which means you're focusing on the rates. And so while 0:08:07.920 --> 0:08:12.040 you have zero percent period on lockdown, prioritize funneling all 0:08:12.040 --> 0:08:14.480 of your money above the minimum payments towards the credit 0:08:14.520 --> 0:08:17.400 cards that are currently charging your interest. Yeah, most definitely 0:08:17.440 --> 0:08:20.880 continue to prioritize those interest rates above anything else. And 0:08:20.880 --> 0:08:23.040 she'll see part of your desire to want to knock 0:08:23.080 --> 0:08:25.280 out the debt on those zero percent cards that might 0:08:25.320 --> 0:08:28.560 be due to a false sense of urgency. Right, it 0:08:28.640 --> 0:08:31.640 might feel like you should since you can probably feel 0:08:31.640 --> 0:08:34.520 the clock ticking as that zero percent period is winding down. 0:08:34.960 --> 0:08:37.559 But even though there isn't a time constraint on your 0:08:37.600 --> 0:08:41.160 other cards, they have something worse, which is higher interest. 0:08:41.600 --> 0:08:43.080 And so even though it feels like you might have 0:08:43.120 --> 0:08:46.120 forever to pay on those balances. In reality, you really 0:08:46.120 --> 0:08:49.040 want to focus on those because of those increased payments 0:08:49.040 --> 0:08:51.400 that are going towards interest. But the thing is, if 0:08:51.440 --> 0:08:53.240 you do run out of time, you can still try 0:08:53.280 --> 0:08:56.160 and transfer the balance again to another zero percent card 0:08:56.320 --> 0:08:59.320 to buy yourself even more time. It's also probably a 0:08:59.320 --> 0:09:01.160 great idea to make sure you're aware of what the 0:09:01.240 --> 0:09:04.160 regular rates are going to be on those zero percent cards. 0:09:04.240 --> 0:09:06.000 That way, if you do run out of time and 0:09:06.040 --> 0:09:09.319 that and that introductory window does close and you're not 0:09:09.360 --> 0:09:11.439 able to open a new card, at least be a 0:09:11.440 --> 0:09:13.559 little more familiar of the a p R that you 0:09:13.640 --> 0:09:16.080 will be paying. That might honestly kind of light a 0:09:16.080 --> 0:09:17.959 fire under you to make sure that you knock out 0:09:18.000 --> 0:09:21.040 that debt within that limited window. Yeah, Matt, one of 0:09:21.080 --> 0:09:23.480 the things that helps people when they're attempting to do 0:09:23.480 --> 0:09:25.960 a balance transfer is having a high credit score. So 0:09:26.000 --> 0:09:29.000 hopefully Chelsea is maintaining a high credit score able to 0:09:29.440 --> 0:09:31.480 and she's able to transfer that balance over to another 0:09:31.520 --> 0:09:34.360 card that offers zero percent for an introductory window somewhere 0:09:34.400 --> 0:09:37.079 between probably twelve and twenty one months, and with her 0:09:37.200 --> 0:09:39.679 ability to pay it on this debt rather quickly from 0:09:39.679 --> 0:09:41.160 what it seems I mean, I know she seemed a 0:09:41.160 --> 0:09:43.280 little down on herself, but I think she can do 0:09:43.320 --> 0:09:47.040 it yea quickly and pay very little interest in the process. 0:09:47.320 --> 0:09:49.679 But I think it's another important thing to mention for 0:09:49.800 --> 0:09:51.880 Chelsea and for other listeners who are in this position. 0:09:52.200 --> 0:09:54.720 Once you've paid off all that credit card debt, it's 0:09:54.800 --> 0:09:57.160 really really important to resolve to not get into that 0:09:57.200 --> 0:10:00.440 position again. Focus on building up your emergen and see phone, 0:10:00.480 --> 0:10:03.600 and try to mend your spending habits. If that's proving 0:10:03.679 --> 0:10:05.760 to be difficult and you're having a hard time curbing 0:10:05.760 --> 0:10:08.720 your behavior, remember remember that it's good for your credit 0:10:08.720 --> 0:10:10.839 score if you don't close the account. But there's one 0:10:10.840 --> 0:10:12.800 step you can take to actually make it harder for 0:10:12.840 --> 0:10:15.080 you to spend, and that's kind of this old antiquated 0:10:15.080 --> 0:10:17.520 way Matt of literally throwing your credit card in a 0:10:17.600 --> 0:10:19.560 zip block bag full of water and tossing it in 0:10:19.559 --> 0:10:22.120 your freezer. This isn't a credit freeze. This is a 0:10:22.160 --> 0:10:25.840 credit card freeze. Very different, very different, but super necessary 0:10:25.880 --> 0:10:28.360 if you have a hard time not spending when you've 0:10:28.360 --> 0:10:31.520 got that credit card in your wallet or your purse. Right, Yeah, 0:10:31.640 --> 0:10:34.520 essentially you're setting up a guardrail. You're creating a process 0:10:34.600 --> 0:10:37.480 that essentially keeps you from spending the money that you 0:10:37.520 --> 0:10:39.439 don't want to spend. I know, for us, we've never 0:10:39.440 --> 0:10:42.200 actually put cards in the freezer before, but there have 0:10:42.360 --> 0:10:44.080 been credit cards that we didn't want to spend on, 0:10:44.120 --> 0:10:46.120 and so in that case we just cut the cards up. Right, Like, 0:10:46.200 --> 0:10:48.880 the account still exists, but we don't have the plastic 0:10:48.880 --> 0:10:50.599 in our wallet. I'm not attempted to spend on it 0:10:50.640 --> 0:10:52.480 while I'm out, but then once a year I have 0:10:52.520 --> 0:10:55.319 a reminder on my calendar to spend some money on 0:10:55.360 --> 0:10:57.559 that car, just to make sure it stays active. That way, 0:10:57.640 --> 0:11:00.160 the issuer doesn't close that account in this case, I'm 0:11:00.160 --> 0:11:02.320 a little more methodical. But if you want to have 0:11:02.400 --> 0:11:05.360 these additional lines of credit open so that it positively 0:11:05.360 --> 0:11:07.719 affects your credit score, sometimes there are steps you need 0:11:07.720 --> 0:11:09.439 to take, and for us, this is something that has 0:11:09.480 --> 0:11:12.320 definitely worked for us. Yeah, Matt, Chelsea's well on her way. 0:11:12.360 --> 0:11:14.840 I think she's got this debt handled in short order. 0:11:15.120 --> 0:11:17.120 And those ballot transfer cards, they're just a good part 0:11:17.200 --> 0:11:19.560 of that arsenal in kind of paying down your debt 0:11:19.720 --> 0:11:22.400 even more quickly by paying less interest on it. All Right, 0:11:22.440 --> 0:11:24.720 but we got a couple more questions, including one about 0:11:24.800 --> 0:11:26.360 inheriting a four oh one K, and we'll get to 0:11:26.400 --> 0:11:37.959 those right after the break. All right, Joel, we're back 0:11:37.960 --> 0:11:39.720 from the break, and let's hear from a listener who 0:11:39.880 --> 0:11:41.720 he and his wife man they are doing some amazing 0:11:41.760 --> 0:11:44.800 things with their money. Hey, Joel and Matt. My name 0:11:44.880 --> 0:11:47.240 is Joe from Minnesota, and I first wanted to thank 0:11:47.280 --> 0:11:50.079 you for creating such a fun and relatable financial podcast. 0:11:50.760 --> 0:11:53.920 While I'm recording this listener question, it felt only fitting 0:11:53.960 --> 0:11:56.880 that I enjoy craft beer here myself. I have a 0:11:56.920 --> 0:12:00.480 couple of questions, but first some context. My wife and 0:12:00.520 --> 0:12:02.880 I recently finished paying off our mountain of student loan 0:12:02.920 --> 0:12:05.120 debt and are in the midst of house hacking after 0:12:05.160 --> 0:12:08.560 buying a duplex late last year. In our scenario, we 0:12:08.600 --> 0:12:11.640 live in one unit and rent out the other. To date, 0:12:11.720 --> 0:12:13.520 we have set aside all of our rent to build 0:12:13.559 --> 0:12:16.760 up our emergency fund. We feel fairly comfortable with the 0:12:16.760 --> 0:12:19.280 amount we have set aside, but we aren't sure how 0:12:19.360 --> 0:12:22.080 much we really need. We have set aside enough to 0:12:22.120 --> 0:12:25.320 cover any single major fix, such as if the heat 0:12:25.360 --> 0:12:28.200 goes out or we need a new roof. Because we 0:12:28.280 --> 0:12:30.920 are house hacking and have a responsibility to our tenant. 0:12:31.440 --> 0:12:33.960 How much more should we be setting aside to account 0:12:33.960 --> 0:12:36.840 for emergencies that may affect both us and our tenant. 0:12:37.440 --> 0:12:39.640 Do we put enough in our emergency fund to cover 0:12:39.679 --> 0:12:43.360 two major fixes or three? Is there some magic number 0:12:43.440 --> 0:12:45.439 we need to save to or is it simply all 0:12:45.480 --> 0:12:48.680 about mitigating whatever level of risk we're willing to take on. 0:12:49.520 --> 0:12:51.880 Thank you guys, and keep up the great work. And 0:12:51.920 --> 0:12:54.400 I hope you enjoy the beer I sent you. Cheers, 0:12:55.240 --> 0:12:57.560 Joe Man, thanks so much. And by the way, we 0:12:57.679 --> 0:13:00.960 loved the beer that was the King's that you sent along, 0:13:01.360 --> 0:13:03.640 and we found out from you as well as from 0:13:03.800 --> 0:13:06.080 a ton of other listeners. And are you idiots? How 0:13:06.080 --> 0:13:08.160 do you not know? I did not know what Kingsue? Well, 0:13:08.320 --> 0:13:10.800 Sue King Sue is, I guess the name of the beer, 0:13:10.880 --> 0:13:14.000 But Sue is the name of the biggest I think, 0:13:14.120 --> 0:13:18.200 or the largest Tyrannosaurs Rex specimen ever found. It's like 0:13:18.240 --> 0:13:21.600 the most complete set of bones from a single Toyrannosaurs Rex, 0:13:21.600 --> 0:13:23.800 which is pretty cool. And it's only sixty seven million 0:13:23.840 --> 0:13:26.360 years old I found out, so pretty young, yeah, pretty young, 0:13:26.679 --> 0:13:29.040 but yeah, it's super cool that I had no idea, 0:13:29.160 --> 0:13:31.000 but really cool to see. I saw a picture of it, 0:13:31.040 --> 0:13:33.439 I was like, this thing looks incredible. Yeah, pretty dope. 0:13:33.480 --> 0:13:35.240 We gotta make a trip to Chicago, man and check 0:13:35.280 --> 0:13:37.680 that out. It looks awesome. I was t Rex bones. Yeah. 0:13:38.200 --> 0:13:40.160 Were you ever into dinosaurs as a kid, You know. 0:13:40.160 --> 0:13:41.559 I feel like a lot of times kids go through 0:13:41.600 --> 0:13:44.120 like a massive dinosaur phase. Sure, I don't think I 0:13:44.120 --> 0:13:46.560 had a massive one, but just like every other kid, 0:13:46.640 --> 0:13:48.440 I was into them for a little bit there. I 0:13:48.440 --> 0:13:53.400 was really into like building, like connects and constructs or constructs. 0:13:53.400 --> 0:13:54.600 I don't even know how you say it. It was. 0:13:54.760 --> 0:13:56.600 It was like this building tool from the from the eighties. 0:13:56.640 --> 0:13:59.080 It was different than like legos because like they had 0:13:59.360 --> 0:14:02.560 like being aimes, but then also like pieces that attached 0:14:03.320 --> 0:14:05.520 is way more like construction. Oh yeah, I know what 0:14:05.559 --> 0:14:08.280 you're talking about, like gray little connectors and then like 0:14:08.320 --> 0:14:10.679 the in between pieces were blue. I was rolling with 0:14:10.720 --> 0:14:13.240 Lincoln logs, man, Lincoln loungs are fun. Yeah, they were cool, 0:14:13.679 --> 0:14:16.600 not quite as advanced. Well, it's constructs and connects, man. 0:14:16.640 --> 0:14:19.240 I just used to spend hours doing that and not 0:14:19.280 --> 0:14:21.760 playing with dinosaurs. Yeah, well, all right, to each their own, 0:14:21.880 --> 0:14:23.920 but big props to to Joe by the way, awesome 0:14:24.000 --> 0:14:26.680 job paying off your student loans and your your house hacking. 0:14:26.720 --> 0:14:29.080 I mean, he's crushing it. Yeah, what an amazing place 0:14:29.120 --> 0:14:31.040 to be in. I mean this really in your marriage, 0:14:31.160 --> 0:14:33.000 and I assume you're not, you know, in your fifties 0:14:33.040 --> 0:14:34.920 and sixties. It sounds like you guys, you know, just 0:14:34.920 --> 0:14:36.680 got married. Sounds like y'all just got the house. It 0:14:36.720 --> 0:14:38.800 sounds like you're pretty early on your financial path. But 0:14:38.840 --> 0:14:41.120 what a way to start, man, especially house hacking, to 0:14:41.160 --> 0:14:43.480 be able to reduce their expenses that's going towards their 0:14:43.480 --> 0:14:46.520 own housing by a significant amount. They may not even 0:14:46.520 --> 0:14:48.560 be spending any money towards our housing. Dude. Yeah, that's 0:14:48.560 --> 0:14:50.760 what house hacking can do, and it's amazing. That's why 0:14:50.840 --> 0:14:52.680 we love it. But I think Joe brings up a 0:14:52.760 --> 0:14:54.480 really good point here, man. It's not something we've talked 0:14:54.480 --> 0:14:58.400 about very much. You know. We advocate for folks having 0:14:58.520 --> 0:15:02.560 roughly a basic emergency fund. That's a good start for 0:15:02.600 --> 0:15:04.480 most folks. It's a good it's a good number to 0:15:04.480 --> 0:15:06.400 aim for if you don't have much money in your 0:15:06.440 --> 0:15:09.200 bank account right now, and having a total of three 0:15:09.200 --> 0:15:11.160 months of savings of the bank. Well, that's killer if 0:15:11.160 --> 0:15:14.359 you're able to achieve that. But there are some circumstances 0:15:14.360 --> 0:15:17.040 where you'll want even more money on hand. If you're 0:15:17.080 --> 0:15:19.920 a landlord with aging properties, for instance, or have a 0:15:19.960 --> 0:15:22.120 tenuous job position, or maybe if you have to like 0:15:22.160 --> 0:15:24.200 some special health issues. Yeah, you want more cash on 0:15:24.240 --> 0:15:26.280 hand to deal with the things that pop up in 0:15:26.280 --> 0:15:29.520 those cases. But you can't really plan for everything, right, 0:15:29.720 --> 0:15:32.760 and that's where insurance comes in, and so being properly 0:15:32.800 --> 0:15:36.760 insured is crucial, especially as a landlord, and that insurance 0:15:36.880 --> 0:15:38.600 is something that you really only want to use in 0:15:38.680 --> 0:15:41.280 catastrophic scenarios. Like we're not fans of actually using the 0:15:41.280 --> 0:15:45.120 insurance you have just having the insurance until it's actually needed. 0:15:45.440 --> 0:15:47.480 But you really do need to have the money on 0:15:47.520 --> 0:15:50.120 hand to cover a potential deductible. And you also want 0:15:50.120 --> 0:15:51.800 to have the money on hand to fix the things 0:15:51.800 --> 0:15:54.440 that pop up in your unit or your tenants unit. 0:15:54.560 --> 0:15:56.640 And that's best done with money that is in a 0:15:56.680 --> 0:15:59.320 savings account, and not just any old savings accountul a 0:15:59.400 --> 0:16:02.640 high interest savings account, of course, And so it's helpful 0:16:02.680 --> 0:16:05.640 to to take your specific property into account. Right. You 0:16:05.640 --> 0:16:07.960 can ask yourself, is the roof old well if not, 0:16:08.120 --> 0:16:10.600 you probably don't need to set aside, you know, seven 0:16:10.600 --> 0:16:13.920 thousand dollars to replace it. Yet, even though you can't 0:16:13.920 --> 0:16:16.800 predict the future, knowing the age of your systems and 0:16:16.840 --> 0:16:20.680 different appliances that can help you assess your savings needs. Obviously, 0:16:20.720 --> 0:16:24.040 newer systems means there's probably a less likelihood of them 0:16:24.040 --> 0:16:26.800 breaking down, but creating a fund that you can contribute 0:16:26.840 --> 0:16:28.760 to monthly that will help you to have a cash 0:16:28.800 --> 0:16:31.680 on hand for when those systems do need repairs or 0:16:31.760 --> 0:16:33.880 when they do need to be replaced. With you guys 0:16:33.920 --> 0:16:36.160 banking all the rent from your tenant next door, I 0:16:36.160 --> 0:16:37.760 don't think it's gonna take very long for you guys 0:16:37.800 --> 0:16:40.400 to quickly arrive at a dollar amount that you do 0:16:40.440 --> 0:16:42.520 feel comfortable with. And one thing I did want to 0:16:42.560 --> 0:16:45.320 mention as well, Joe, is that let's assume you go 0:16:45.400 --> 0:16:47.360 down the path of real estate, and maybe you do 0:16:47.400 --> 0:16:49.880 acquire more properties. I think it's helpful if you set 0:16:49.920 --> 0:16:53.320 aside an emergency fund for each specific property, because let's 0:16:53.320 --> 0:16:55.520 assume maybe you have three properties down the road. You 0:16:55.600 --> 0:16:57.920 might have a single pot of money and it could 0:16:57.960 --> 0:17:00.840 seem like a lot of money. But let's let's say 0:17:00.840 --> 0:17:04.160 in one year you replace three rous, well, that could 0:17:04.160 --> 0:17:06.920 be twenty dollars right there, and your emergency fund is 0:17:06.960 --> 0:17:10.160 completely wiped out. And so having you know, some separate 0:17:10.240 --> 0:17:13.520 emergency fund accounts within your high interest savings can allow 0:17:13.560 --> 0:17:15.480 you to kind of stay more organized and on top 0:17:15.520 --> 0:17:17.760 of things. Yeah, and I think one helpful kind of 0:17:17.840 --> 0:17:20.679 rule of thumb that it's not always you spot on, 0:17:20.840 --> 0:17:23.840 but it can be helpful is estimate that you're going 0:17:23.880 --> 0:17:26.800 to spend roughly one of the purchase price of your 0:17:26.800 --> 0:17:30.480 home every year in repair costs. So if your home 0:17:30.520 --> 0:17:34.159 costs two thousand, you'll likely spend roughly two thousand dollars 0:17:34.240 --> 0:17:36.959 annually in repair costs on that home. Yeah, it might 0:17:36.960 --> 0:17:39.040 be zero dollars this year and next year, but in 0:17:39.240 --> 0:17:41.320 three years you might be dropping six grand. Yeah, it 0:17:41.440 --> 0:17:43.680 just completely depends. But that's a nice rule of thumb 0:17:43.720 --> 0:17:45.800 in most cases. If I were you, Joe, I'd also 0:17:45.840 --> 0:17:48.840 consider opening up a helock, a home equity line of credit. 0:17:49.080 --> 0:17:51.480 It's really the perfect fit for you because you might 0:17:51.760 --> 0:17:54.639 need quick access to money, but it stinks to have 0:17:54.840 --> 0:17:58.280 a heap of unnecessary cash around that you could be 0:17:58.320 --> 0:18:01.800 funneling towards more investments. The helock can kind of split 0:18:01.800 --> 0:18:04.280 the difference for you, and you won't pay interest unless 0:18:04.320 --> 0:18:07.480 you actually draw down on it. I like these as 0:18:07.520 --> 0:18:10.320 kind of a secondary reserve e fund that you try 0:18:10.359 --> 0:18:12.600 not to tap, but it's better to be safe than sorry. 0:18:12.840 --> 0:18:15.679 It's important that you have enough cash on hand to 0:18:15.800 --> 0:18:18.879 easily cover likely maintenance needs, but a helock is kind 0:18:18.880 --> 0:18:21.240 of this awesome backup to provide some peace of mind 0:18:21.600 --> 0:18:23.960 in the unlikely case that let's say a hot water 0:18:24.040 --> 0:18:26.520 heater and a furnace and a roof are all just 0:18:26.600 --> 0:18:29.119 needing to be replaced in short order. That's when the 0:18:29.160 --> 0:18:31.160 helock kicks in and it's really nice to happen. That's 0:18:31.160 --> 0:18:34.600