1 00:00:00,080 --> 00:00:02,640 Speaker 1: Welcome to How the Money. I'm Joel and I and 2 00:00:02,759 --> 00:00:25,439 Speaker 1: Matt and today we are answering your listener questions. Joel, 3 00:00:25,640 --> 00:00:28,960 Speaker 1: it's a listener question Monday. We've got five great questions 4 00:00:28,960 --> 00:00:32,280 Speaker 1: from some listeners. We're gonna answer one about a wrath 5 00:00:32,360 --> 00:00:36,239 Speaker 1: for one k versus a traditional for one K. We've 6 00:00:36,280 --> 00:00:38,960 Speaker 1: got another question about how paying off some credit card debt, 7 00:00:38,960 --> 00:00:41,440 Speaker 1: how that actually lowered somebody's score. And then we're also 8 00:00:41,440 --> 00:00:44,800 Speaker 1: going to discuss just talking to your parents about their money. 9 00:00:45,159 --> 00:00:47,120 Speaker 1: That's always fun. Yeah, it's it's a it's a little 10 00:00:47,120 --> 00:00:50,519 Speaker 1: awkward at times, but it's always fun exactly, Well, you 11 00:00:50,520 --> 00:00:52,720 Speaker 1: know what, And Monday's typically not fun. I don't know 12 00:00:52,760 --> 00:00:54,720 Speaker 1: if they're more or less fun because of the pandemic, 13 00:00:54,760 --> 00:00:56,480 Speaker 1: Like does it feel just like every other day or 14 00:00:56,920 --> 00:00:58,480 Speaker 1: I don't know, maybe Mondays aren't as bad as I 15 00:00:58,560 --> 00:01:00,280 Speaker 1: used to be. Well, you know how, I've I've obviously 16 00:01:00,320 --> 00:01:02,000 Speaker 1: told you how Kate and I we watch a movie 17 00:01:02,000 --> 00:01:04,120 Speaker 1: on Friday kind of make a little more fun. Make 18 00:01:04,120 --> 00:01:06,759 Speaker 1: sure that we can tell the difference between the weekdays 19 00:01:06,800 --> 00:01:09,119 Speaker 1: and the weekends. With the kids home all summer long 20 00:01:09,160 --> 00:01:11,319 Speaker 1: and with the inability to get out and do stuff 21 00:01:11,600 --> 00:01:15,040 Speaker 1: we watched a movie. Well, on Mondays, we tend to 22 00:01:15,080 --> 00:01:18,600 Speaker 1: clean the house, and so we we try to make 23 00:01:18,640 --> 00:01:21,440 Speaker 1: Monday's worse because nobody wants to clean their house, but 24 00:01:21,520 --> 00:01:23,240 Speaker 1: it's something that we have to do. We need to 25 00:01:23,280 --> 00:01:25,479 Speaker 1: make sure that we're not living like animals. But we 26 00:01:25,480 --> 00:01:28,000 Speaker 1: we purposefully do that on Mondays. And I just kind 27 00:01:28,000 --> 00:01:30,080 Speaker 1: of chose that day randomly, like several months ago. But 28 00:01:30,200 --> 00:01:32,120 Speaker 1: every Monday, we we do a little bit of cleaning 29 00:01:32,120 --> 00:01:33,839 Speaker 1: around the house, get back into the swing of things. 30 00:01:34,200 --> 00:01:35,960 Speaker 1: It helps, you know, like like we're doing stuff on 31 00:01:36,000 --> 00:01:37,480 Speaker 1: the weekend. A lot of times we're going hiking, and 32 00:01:37,560 --> 00:01:39,760 Speaker 1: so we come home from those hikes or from bike 33 00:01:39,880 --> 00:01:42,000 Speaker 1: rides were just covered in dirt, The girls are tracking 34 00:01:42,000 --> 00:01:43,880 Speaker 1: in all sorts of debris, and we just let it 35 00:01:43,959 --> 00:01:45,800 Speaker 1: ride all week and long. But then Monday, it's kind 36 00:01:45,800 --> 00:01:47,480 Speaker 1: of like, all right, let's let's get back to business. 37 00:01:47,560 --> 00:01:50,000 Speaker 1: Let's clean the house and at the same time make 38 00:01:50,000 --> 00:01:53,240 Speaker 1: Monday's a drag. So just generally hit our lives on Mondays. 39 00:01:53,280 --> 00:01:55,320 Speaker 1: Let's do that. Yeah. Yeah, Well, first manute, before we 40 00:01:55,600 --> 00:01:58,080 Speaker 1: actually tackle these listener questions, I gotta frugal or cheap 41 00:01:58,120 --> 00:02:00,800 Speaker 1: for you? What are your thoughts on selling a gift 42 00:02:00,920 --> 00:02:04,640 Speaker 1: on eBay. I'll tell you, Kate, she received a very fancy, 43 00:02:04,800 --> 00:02:08,000 Speaker 1: high end gift that she does not have a use for, 44 00:02:08,200 --> 00:02:10,320 Speaker 1: that she does not use uh and that would be 45 00:02:10,320 --> 00:02:13,680 Speaker 1: better served as cash in her accounts. You know, we 46 00:02:13,720 --> 00:02:16,000 Speaker 1: have her own accounts, and so we took that item. 47 00:02:16,080 --> 00:02:17,680 Speaker 1: And I'm not gonna say what it is because the 48 00:02:17,720 --> 00:02:21,280 Speaker 1: person that gave her that gift, I'm pretty sure they 49 00:02:21,280 --> 00:02:23,720 Speaker 1: listened to the show, and so I don't think that 50 00:02:23,760 --> 00:02:25,440 Speaker 1: would be upset. But at the same time, we're gonna 51 00:02:25,480 --> 00:02:27,200 Speaker 1: play it safe. But we went ahead and we listed 52 00:02:27,200 --> 00:02:29,079 Speaker 1: it on eBay. I just looked it up. It is 53 00:02:29,120 --> 00:02:32,639 Speaker 1: currently at fourty six dollars. It's a really nice it's 54 00:02:32,680 --> 00:02:35,399 Speaker 1: a very nice gift, like I said, Man, and we've 55 00:02:35,400 --> 00:02:37,560 Speaker 1: got three more days ago, so I mean, we're kind 56 00:02:37,600 --> 00:02:40,040 Speaker 1: of expecting that to maybe even hit eight hondo. She's 57 00:02:40,040 --> 00:02:42,880 Speaker 1: pretty excited. But obviously we think that this is a 58 00:02:42,919 --> 00:02:45,359 Speaker 1: total frugal move and we don't have any We don't 59 00:02:45,400 --> 00:02:48,000 Speaker 1: have too many issues, I'll say about about selling it. 60 00:02:48,040 --> 00:02:50,280 Speaker 1: But what are your thoughts, man? Oh man? It is 61 00:02:50,520 --> 00:02:53,680 Speaker 1: that's a tough one. It's always hard to know whether 62 00:02:53,720 --> 00:02:56,720 Speaker 1: you can or should resell a gift that you've been given. 63 00:02:57,160 --> 00:02:59,040 Speaker 1: I think so much of it depends on who gives 64 00:02:59,080 --> 00:03:01,040 Speaker 1: it to you and what it is, like, how much 65 00:03:01,080 --> 00:03:04,360 Speaker 1: thought was put behind it, whether you're kind of expected 66 00:03:04,400 --> 00:03:07,400 Speaker 1: to use or wear that thing exactly right, that's a 67 00:03:07,440 --> 00:03:10,320 Speaker 1: big consideration. Are they gonna expect you to wear it 68 00:03:10,320 --> 00:03:13,360 Speaker 1: at the next holiday function? Whatever, whatever it might be. Um. 69 00:03:13,520 --> 00:03:15,640 Speaker 1: I would say if it's not one of those things 70 00:03:15,639 --> 00:03:19,120 Speaker 1: where it's highly visible, um, and if it's worth that 71 00:03:19,200 --> 00:03:23,080 Speaker 1: much money, I would be totally in the camp of selling. 72 00:03:23,280 --> 00:03:25,680 Speaker 1: And I think it's a frugal movement move Yeah, all right, 73 00:03:25,800 --> 00:03:27,720 Speaker 1: I'll make sure that she knows that she has your blessing. 74 00:03:28,480 --> 00:03:29,920 Speaker 1: I'd love to hear from our listeners on that too, 75 00:03:29,919 --> 00:03:32,359 Speaker 1: because I'm sure they've run into a similar conundra. Yeah, 76 00:03:32,360 --> 00:03:34,680 Speaker 1: you're always torn because you think, well, like this was 77 00:03:34,720 --> 00:03:36,520 Speaker 1: given to me, But then at the same time, what 78 00:03:36,640 --> 00:03:39,640 Speaker 1: would they rather appreciate you just keeping that thing in 79 00:03:39,680 --> 00:03:42,600 Speaker 1: your closet or your attic until you give it away, 80 00:03:43,080 --> 00:03:45,360 Speaker 1: until you donate it or throw it out on the curb, 81 00:03:45,440 --> 00:03:47,360 Speaker 1: or maybe sell it for like pennies on the dollar 82 00:03:47,680 --> 00:03:50,120 Speaker 1: at a yard sale, or go ahead and just unload 83 00:03:50,160 --> 00:03:51,440 Speaker 1: it get some money and then Kate will be able 84 00:03:51,480 --> 00:03:53,880 Speaker 1: to use that money and you know, purchase lots of 85 00:03:53,880 --> 00:03:56,440 Speaker 1: other things that she would much rather have. And to 86 00:03:56,640 --> 00:03:59,120 Speaker 1: answer you, this isn't an item that was given with 87 00:03:59,160 --> 00:04:02,360 Speaker 1: a whole lot of meaning and sentiment behind it, you 88 00:04:02,400 --> 00:04:04,480 Speaker 1: know it was. I honestly think it was kind of 89 00:04:04,560 --> 00:04:06,920 Speaker 1: a sort of like a re gift, which is I 90 00:04:06,960 --> 00:04:11,360 Speaker 1: think that person felt bad about not using that gift 91 00:04:11,400 --> 00:04:14,080 Speaker 1: as well and so kind of passed the buck along 92 00:04:14,160 --> 00:04:17,240 Speaker 1: the go. And well, if that happened, then it's definitely frugal, 93 00:04:17,320 --> 00:04:21,039 Speaker 1: like totally. So it totally reminds me to one Christmas. 94 00:04:21,320 --> 00:04:23,800 Speaker 1: I think I was like twenty one and my grandpa 95 00:04:23,839 --> 00:04:26,640 Speaker 1: got me Hardy Boys books, which, okay, I'm pretty sure 96 00:04:26,640 --> 00:04:28,800 Speaker 1: those are intended for twelve year olds or or maybe 97 00:04:28,839 --> 00:04:32,120 Speaker 1: even younger. And I remember reading Hardy Boys when I 98 00:04:32,200 --> 00:04:33,840 Speaker 1: was a kid, and I was like, yeah, pretty sure 99 00:04:33,880 --> 00:04:36,280 Speaker 1: I'm not the right demo for this. Um. Obviously you 100 00:04:36,320 --> 00:04:38,720 Speaker 1: didn't say that to my grandpa's face, but I think 101 00:04:38,720 --> 00:04:40,160 Speaker 1: I just gave him away. But if it had been 102 00:04:40,200 --> 00:04:42,360 Speaker 1: worth more, I would have been totally comfortable selling those 103 00:04:42,360 --> 00:04:44,360 Speaker 1: because obviously it just wasn't a gift I was gonna 104 00:04:44,360 --> 00:04:46,279 Speaker 1: be able to use I remember Hardy Boys Man with 105 00:04:46,440 --> 00:04:49,080 Speaker 1: the blue covers. Oh yeah, it was a great, great 106 00:04:49,080 --> 00:04:50,720 Speaker 1: series back in the day. Yeah. I read a few 107 00:04:50,720 --> 00:04:52,760 Speaker 1: of them, but I didn't get super into them. But yeah, 108 00:04:52,760 --> 00:04:54,159 Speaker 1: if you would have been able to make maybe eight 109 00:04:54,279 --> 00:04:56,120 Speaker 1: hundred bucks from him, maybe would have unloaded them. It 110 00:04:56,120 --> 00:04:58,880 Speaker 1: would have been gone immediately. Yeah, man, all right, Matt, 111 00:04:58,960 --> 00:05:00,880 Speaker 1: let's mention the beer that we're happened on the show today. 112 00:05:01,080 --> 00:05:04,200 Speaker 1: This is called Dr fume Case sour Ale, and it's 113 00:05:04,240 --> 00:05:06,680 Speaker 1: by Wrecking Bar brew Pub. And by the way, Dr Funk. 114 00:05:07,000 --> 00:05:11,080 Speaker 1: Everybody knows that's a Arrested Development reference, right, even I 115 00:05:11,200 --> 00:05:14,320 Speaker 1: who don't watch, well, I do watch Arrested Development. I'll 116 00:05:14,320 --> 00:05:16,520 Speaker 1: watch season one. But even I, who am not the 117 00:05:16,560 --> 00:05:18,960 Speaker 1: biggest fan, yeah, I know the reference here. The fact 118 00:05:18,960 --> 00:05:21,520 Speaker 1: that you stop there massively disappoints me. On the can 119 00:05:21,600 --> 00:05:24,719 Speaker 1: I'll say it says Dr t o fun K, theorialist. 120 00:05:26,839 --> 00:05:28,920 Speaker 1: So for all the Arrested Development fans out there, I'm 121 00:05:28,920 --> 00:05:31,720 Speaker 1: guessing you'll appreciate that. Yeah for sure. And uh yeah, 122 00:05:31,760 --> 00:05:34,120 Speaker 1: I'm looking forward to drinking this sour pale ale with 123 00:05:34,160 --> 00:05:35,760 Speaker 1: you today, man, And it will say to the can 124 00:05:35,920 --> 00:05:40,359 Speaker 1: art it's very blue on the outside. Yeah, from the 125 00:05:40,360 --> 00:05:43,200 Speaker 1: Blue Man Group days. Yeah, exactly. All right, let's get 126 00:05:43,240 --> 00:05:45,160 Speaker 1: on to the questions at hand. Matt, we are taking 127 00:05:45,160 --> 00:05:48,400 Speaker 1: listener questions on today's episode. For anybody out there who 128 00:05:48,600 --> 00:05:50,840 Speaker 1: wants Matt and I at tackle your question on an 129 00:05:50,960 --> 00:05:53,680 Speaker 1: upcoming ask htm episode, just go to how to money 130 00:05:53,720 --> 00:05:56,880 Speaker 1: dot com slash ask. There are simple instructions for how 131 00:05:56,920 --> 00:05:58,960 Speaker 1: you can submit your voice question so that we can 132 00:05:59,000 --> 00:06:01,320 Speaker 1: take that question on an up coming episode. All right, Matt, 133 00:06:01,360 --> 00:06:03,640 Speaker 1: let's get to the first one. This one's about what 134 00:06:03,680 --> 00:06:06,159 Speaker 1: do you do when you've made money selling a home. 135 00:06:06,640 --> 00:06:08,880 Speaker 1: This is Kevin from Maryland to Love the show. I 136 00:06:08,920 --> 00:06:11,240 Speaker 1: wanted to ask a question for both of you. We 137 00:06:11,279 --> 00:06:13,240 Speaker 1: are currently in a three bedroom home that I bought 138 00:06:13,279 --> 00:06:16,440 Speaker 1: in two thousand twelves shortly out of college. Since then, 139 00:06:16,480 --> 00:06:18,760 Speaker 1: I've met my wife, had two kids, and now I 140 00:06:18,800 --> 00:06:21,400 Speaker 1: have to work from home jobs. As a result, we're 141 00:06:21,400 --> 00:06:24,240 Speaker 1: looking to move and spring to a larger home to 142 00:06:24,240 --> 00:06:26,240 Speaker 1: meet our needs, and I'm interested to see how you 143 00:06:26,240 --> 00:06:28,880 Speaker 1: would allocate and use the funds from the sale. Our 144 00:06:28,880 --> 00:06:32,120 Speaker 1: current mortgages around a hundred and thirty thousand, home values 145 00:06:32,160 --> 00:06:35,880 Speaker 1: around three and estimated proceeds from a sale would be 146 00:06:35,920 --> 00:06:38,480 Speaker 1: around a hundred and seventy thousand after paying the realtor. 147 00:06:39,000 --> 00:06:41,000 Speaker 1: Our next home price is probably going to be in 148 00:06:41,040 --> 00:06:43,480 Speaker 1: the four hundred and fifty thousand range. We have ten 149 00:06:43,560 --> 00:06:46,440 Speaker 1: percent saved as a down payment separate from proceeds from 150 00:06:46,440 --> 00:06:49,240 Speaker 1: the sale of our first home. Clearly I would need 151 00:06:49,279 --> 00:06:51,160 Speaker 1: to use part of the proceeds from the home sale 152 00:06:51,200 --> 00:06:53,880 Speaker 1: to at least to avoid the p m I payment. 153 00:06:54,400 --> 00:06:57,440 Speaker 1: This will lead me around a hundred thousand proceeds I 154 00:06:57,480 --> 00:06:59,960 Speaker 1: need to decide what to do with. Do I immediately 155 00:07:00,080 --> 00:07:02,080 Speaker 1: roll this over into equity on the new house, or 156 00:07:02,080 --> 00:07:04,760 Speaker 1: do I dollar cost average into the market a substantial 157 00:07:04,760 --> 00:07:06,960 Speaker 1: portion of it. I hate to sink it into my 158 00:07:07,000 --> 00:07:10,040 Speaker 1: mortgage around three interest and not have the cash easily 159 00:07:10,040 --> 00:07:13,120 Speaker 1: available if needed. My current strategy is to pay extra 160 00:07:13,160 --> 00:07:15,600 Speaker 1: into my mortgage each month, but I'm keeping it in 161 00:07:15,600 --> 00:07:18,160 Speaker 1: a separate taxbill brokerage to hopefully get the rate of 162 00:07:18,160 --> 00:07:20,760 Speaker 1: return from the market, and when that amount reaches my 163 00:07:20,800 --> 00:07:23,840 Speaker 1: outstanding mortgage ballence will pay it off. This is the 164 00:07:23,880 --> 00:07:26,120 Speaker 1: account that we'll be funding the ten percent down out 165 00:07:26,120 --> 00:07:29,880 Speaker 1: of for their second home. Any help is appreciated. I've 166 00:07:29,920 --> 00:07:31,680 Speaker 1: never sold a house before and hope we don't have 167 00:07:31,760 --> 00:07:34,840 Speaker 1: to for a long time. Love the show. Thanks Kevin, 168 00:07:34,880 --> 00:07:36,280 Speaker 1: thanks so much for that question. Man, you've got to 169 00:07:36,440 --> 00:07:38,800 Speaker 1: work from home jobs. You've also got two kids. I'm 170 00:07:38,800 --> 00:07:41,320 Speaker 1: glad to hear that you don't have two wives, but 171 00:07:41,480 --> 00:07:43,880 Speaker 1: it sounds like you are working hard. Uh. And I 172 00:07:43,960 --> 00:07:47,360 Speaker 1: love that you included the realtor the transaction fees involved 173 00:07:47,520 --> 00:07:49,720 Speaker 1: in selling your house, because that's something you definitely want 174 00:07:49,720 --> 00:07:52,880 Speaker 1: to take into account with your calculations. It also, congrats 175 00:07:52,920 --> 00:07:55,520 Speaker 1: on coming out that far ahead in eight years of 176 00:07:55,680 --> 00:07:58,840 Speaker 1: home ownership. You're obviously buttoned up, you know, in regards 177 00:07:58,880 --> 00:08:02,160 Speaker 1: to your finances in general, So kudos there. And gel Man, 178 00:08:02,160 --> 00:08:04,400 Speaker 1: I don't envy folks who are first time home buyers 179 00:08:04,480 --> 00:08:06,720 Speaker 1: right now. You know, like the housing market it's super hot. 180 00:08:07,040 --> 00:08:09,440 Speaker 1: It's making it difficult for first time home buyers to 181 00:08:09,560 --> 00:08:12,800 Speaker 1: find something because the supply it's so limited right now. 182 00:08:12,800 --> 00:08:15,040 Speaker 1: I'm driving up prices. But at least if you're selling 183 00:08:15,040 --> 00:08:16,880 Speaker 1: a home in addition to to buying what, maybe it 184 00:08:16,960 --> 00:08:18,520 Speaker 1: kind of bounces out, you know, like you might be 185 00:08:18,560 --> 00:08:20,280 Speaker 1: spending maybe a little bit more for that new house, 186 00:08:20,320 --> 00:08:22,560 Speaker 1: but you're probably also able to sell your older home 187 00:08:22,600 --> 00:08:24,440 Speaker 1: for for a pretty penny as well. Yeah, that's for sure. 188 00:08:24,440 --> 00:08:27,920 Speaker 1: Across you know, almost all the country, prices have shot 189 00:08:27,920 --> 00:08:30,960 Speaker 1: through the roof, especially as interest rates have declined. Yeah, 190 00:08:31,120 --> 00:08:34,240 Speaker 1: but yeah, Kevin, I think getting to like you mentioned, yeah, 191 00:08:34,320 --> 00:08:37,000 Speaker 1: that is really really important, right. That insures that you 192 00:08:37,040 --> 00:08:40,040 Speaker 1: don't pay pm I, saving you potentially a hundred fifty 193 00:08:40,040 --> 00:08:42,320 Speaker 1: dollars or more a month. P m I is not 194 00:08:42,440 --> 00:08:44,560 Speaker 1: the worst thing in the world. But Matt, you and 195 00:08:44,600 --> 00:08:47,880 Speaker 1: I we we really believe that people should typically save 196 00:08:47,960 --> 00:08:50,160 Speaker 1: up for a longer period of time in order to 197 00:08:50,200 --> 00:08:52,440 Speaker 1: be able to put a full down on a home. 198 00:08:52,920 --> 00:08:54,600 Speaker 1: Buying a home when you've only got three or five 199 00:08:54,640 --> 00:08:57,880 Speaker 1: percent to put down just put you in an uncomfortable position, 200 00:08:58,080 --> 00:09:00,200 Speaker 1: not to mention the increased costs that come along with that, right, 201 00:09:00,200 --> 00:09:02,559 Speaker 1: And there are some exceptions, like v A loans and 202 00:09:02,760 --> 00:09:05,439 Speaker 1: people that are house hacking. I think if you're investing 203 00:09:05,520 --> 00:09:08,680 Speaker 1: inside of that purchase, then you can change the dynamics 204 00:09:08,679 --> 00:09:10,839 Speaker 1: a little bit and you can rethink how much you're 205 00:09:10,840 --> 00:09:14,120 Speaker 1: putting down. But for the most part, yeah, getting makes 206 00:09:14,160 --> 00:09:16,400 Speaker 1: sense for for most people. Yeah, And something else to 207 00:09:16,440 --> 00:09:19,959 Speaker 1: consider as well as that, with bankers tightening lending, requirements. 208 00:09:20,240 --> 00:09:22,640 Speaker 1: There actually could be a chance, Kevin, that you'll need 209 00:09:22,679 --> 00:09:25,120 Speaker 1: to come to the table with more money than you think, 210 00:09:25,360 --> 00:09:27,960 Speaker 1: at least currently. Right, there have been some reports of 211 00:09:27,960 --> 00:09:30,480 Speaker 1: individuals needing to put more money down than they were 212 00:09:30,480 --> 00:09:32,840 Speaker 1: initially quoted in order for them to get the rate 213 00:09:32,880 --> 00:09:35,400 Speaker 1: that they want. And you mentioned that you work from home, 214 00:09:35,559 --> 00:09:37,640 Speaker 1: but you didn't specify whether or not you're self employed. 215 00:09:37,760 --> 00:09:41,520 Speaker 1: But if you are self employed, the documentation that's required. Uh, 216 00:09:41,559 --> 00:09:44,360 Speaker 1: if you own your own business, it's become even more 217 00:09:44,400 --> 00:09:47,000 Speaker 1: burdensome in order to get alan And the same thing 218 00:09:47,040 --> 00:09:49,320 Speaker 1: goes as well if you are looking to refinance as well. 219 00:09:49,360 --> 00:09:52,080 Speaker 1: It's just gotten a lot harder if you work for yourself. Yeah, 220 00:09:52,080 --> 00:09:54,640 Speaker 1: banks aren't as loose when it comes to to lending 221 00:09:54,960 --> 00:09:57,320 Speaker 1: as they were even just a year ago. Right, Definitely 222 00:09:57,400 --> 00:09:59,560 Speaker 1: things are tightening up a good bit. The pre payment 223 00:09:59,600 --> 00:10:02,880 Speaker 1: also from the brokerage account proceeds. That's not a bad idea, 224 00:10:03,320 --> 00:10:05,760 Speaker 1: although it feels tough to pull money out of an 225 00:10:05,760 --> 00:10:08,720 Speaker 1: account that's lost money, and that's a distinct possibility if 226 00:10:08,720 --> 00:10:10,560 Speaker 1: you were to go in that direction. I think I 227 00:10:10,720 --> 00:10:14,120 Speaker 1: Matt would rather see Kevin take advantage of an insanely 228 00:10:14,120 --> 00:10:16,880 Speaker 1: low mortgage rate. While putting that down, he'll be in 229 00:10:16,920 --> 00:10:19,080 Speaker 1: a great spot, right, and then take the rest of 230 00:10:19,080 --> 00:10:21,800 Speaker 1: the money and put it in tax advantage retirement accounts 231 00:10:22,000 --> 00:10:24,160 Speaker 1: that you can then continue to invest in through the years. 232 00:10:24,400 --> 00:10:26,720 Speaker 1: Or you've got two jobs, so depending on what they 233 00:10:26,760 --> 00:10:29,000 Speaker 1: are and whether one is self employed or not, you 234 00:10:29,120 --> 00:10:31,680 Speaker 1: might be able to qualify for multiple accounts. Yeah, there 235 00:10:31,679 --> 00:10:33,840 Speaker 1: are all sorts of accounts out there. For example, UH 236 00:10:33,880 --> 00:10:36,160 Speaker 1: set by RAS, they allow you to suck away a 237 00:10:36,200 --> 00:10:38,680 Speaker 1: ton of money every single year. UH. This year, the 238 00:10:38,679 --> 00:10:42,000 Speaker 1: contribution limit is fifty seven dollars, so that is a 239 00:10:42,000 --> 00:10:43,920 Speaker 1: lot of money. That's a lot of proceeds from that 240 00:10:43,960 --> 00:10:46,559 Speaker 1: sale that you can put towards your retirement. It depends 241 00:10:46,559 --> 00:10:48,640 Speaker 1: on what your income is from that job and whether 242 00:10:48,679 --> 00:10:50,600 Speaker 1: it is you know, a self employment income or not. 243 00:10:50,920 --> 00:10:53,480 Speaker 1: But my preference is to see you do that instead, right. 244 00:10:53,600 --> 00:10:56,679 Speaker 1: And then ultimately, Kevin, you mentioned pre paying on a mortgage, 245 00:10:57,040 --> 00:10:59,960 Speaker 1: and especially with rates being essentially below three percent on 246 00:11:00,040 --> 00:11:02,319 Speaker 1: thirty year money right now, I don't think it should 247 00:11:02,360 --> 00:11:05,400 Speaker 1: be a major financial goal for you unless you're just 248 00:11:05,440 --> 00:11:07,360 Speaker 1: incredibly dead diverse, right, And this is kind of where 249 00:11:07,400 --> 00:11:11,480 Speaker 1: personal finances get personal. I personally would rather take advantages 250 00:11:11,520 --> 00:11:13,400 Speaker 1: of tax breaks and invest more for the long term 251 00:11:13,640 --> 00:11:16,640 Speaker 1: while letting that loan right out over over the full term. 252 00:11:17,040 --> 00:11:18,959 Speaker 1: But there are lots of different perspectives on this, and 253 00:11:19,120 --> 00:11:21,160 Speaker 1: I think Matt and I actually kind of differ on 254 00:11:21,160 --> 00:11:23,319 Speaker 1: this a little bit too. Matt, you've kind of changed 255 00:11:23,360 --> 00:11:25,679 Speaker 1: your mindset when it comes to paying down long term 256 00:11:25,679 --> 00:11:27,920 Speaker 1: low interest rate debt versus investing, right, Yeah, I mean, 257 00:11:28,000 --> 00:11:29,719 Speaker 1: you know, I don't know if I've completely jumped to 258 00:11:29,720 --> 00:11:31,880 Speaker 1: the other side of the fence, right, Maybe I'm straddling 259 00:11:31,880 --> 00:11:34,680 Speaker 1: it a little bit, but I've personally been attracted to 260 00:11:34,679 --> 00:11:37,680 Speaker 1: the idea of paying off lower interest debt for the 261 00:11:37,720 --> 00:11:41,160 Speaker 1: sake of the emotional and the psychological effects. Uh. Kate 262 00:11:41,200 --> 00:11:44,040 Speaker 1: and I we're getting close to actually completely paying off 263 00:11:44,040 --> 00:11:46,320 Speaker 1: our helock that we used to renovate our home with. 264 00:11:46,640 --> 00:11:49,000 Speaker 1: You know, it's only at three in a quarter percent. 265 00:11:49,559 --> 00:11:51,800 Speaker 1: That's not very high. And you know, sure I could 266 00:11:51,800 --> 00:11:54,520 Speaker 1: invest it and probably get more if that money was 267 00:11:54,559 --> 00:11:57,360 Speaker 1: sitting there in the market, but that money isn't guaranteed, 268 00:11:57,559 --> 00:11:59,880 Speaker 1: you know, and three in a quarter percent like that 269 00:12:00,120 --> 00:12:02,360 Speaker 1: is guaranteed. And of course, not to mention just the 270 00:12:02,360 --> 00:12:05,880 Speaker 1: emotional and the psychological benefits of being completely done with 271 00:12:05,920 --> 00:12:08,200 Speaker 1: that debt. So I'll keep you posted as I kind 272 00:12:08,200 --> 00:12:09,760 Speaker 1: of go down this path a little bit. But this 273 00:12:09,840 --> 00:12:12,480 Speaker 1: is an instance where I'm looking at, yeah, potentially ignoring 274 00:12:12,920 --> 00:12:15,960 Speaker 1: the numbers, or not ignoring, but at least not basing 275 00:12:15,960 --> 00:12:18,679 Speaker 1: my decision completely on the numbers. But I'm also looking 276 00:12:18,720 --> 00:12:21,360 Speaker 1: at some of the other components in the effects that 277 00:12:21,440 --> 00:12:23,120 Speaker 1: you know, paying off a mortgage would have. Yeah, I 278 00:12:23,160 --> 00:12:25,200 Speaker 1: feel like Kevin's in this like choose your own adventure 279 00:12:25,280 --> 00:12:28,440 Speaker 1: book scenario right where you can a party void where 280 00:12:28,480 --> 00:12:30,840 Speaker 1: he can kind of go in whatever direction he chooses. 281 00:12:30,920 --> 00:12:33,880 Speaker 1: And none of the past are are bad, right, They're 282 00:12:33,920 --> 00:12:36,760 Speaker 1: just they're just different. And and so yeah, I think 283 00:12:37,200 --> 00:12:39,079 Speaker 1: the fact that he set himself up to be able 284 00:12:39,080 --> 00:12:41,360 Speaker 1: to make a decision like this is great and and 285 00:12:41,400 --> 00:12:44,600 Speaker 1: that actually says a lot more about him and his 286 00:12:44,720 --> 00:12:48,000 Speaker 1: future ability to make smart financial moves than what he 287 00:12:48,040 --> 00:12:50,560 Speaker 1: specifically does with the proceeds of his home. As long 288 00:12:50,600 --> 00:12:53,360 Speaker 1: as I think he puts that number down, right, that's huge. 289 00:12:53,559 --> 00:12:55,160 Speaker 1: When you've got it, you don't want to avoid that. 290 00:12:55,600 --> 00:12:59,040 Speaker 1: But besides that, whether he chooses to invest, or whether 291 00:12:59,120 --> 00:13:01,200 Speaker 1: he chooses to put even more money down, let's say 292 00:13:02,240 --> 00:13:04,440 Speaker 1: down on the home initially, or even just to add 293 00:13:04,440 --> 00:13:07,439 Speaker 1: additional monthly payments. You know, whatever direction you go in, Kevin, 294 00:13:07,600 --> 00:13:09,400 Speaker 1: it's gonna be okay. And so much of it comes 295 00:13:09,400 --> 00:13:11,720 Speaker 1: down to personal preference, that's right, man. So we've got 296 00:13:11,720 --> 00:13:14,920 Speaker 1: more questions ahead pertained to credit scores as well as 297 00:13:14,960 --> 00:13:17,120 Speaker 1: retirement account options, and we'll get to all of those 298 00:13:17,240 --> 00:13:28,720 Speaker 1: right after this break. Al we're back from the break, 299 00:13:28,800 --> 00:13:31,760 Speaker 1: and now let's take a question about a health savings account. 300 00:13:32,480 --> 00:13:36,600 Speaker 1: Hi guys, I'm Corey from Charlotte, North Carolina. Longtime listener, 301 00:13:36,720 --> 00:13:40,920 Speaker 1: first time question. I wanted to ask you about h 302 00:13:41,080 --> 00:13:43,880 Speaker 1: S as I know that you've mentioned a few times 303 00:13:43,920 --> 00:13:47,720 Speaker 1: how good h S a S are as a shelter 304 00:13:48,000 --> 00:13:53,000 Speaker 1: for non taxable funds. I'm curious at this point of 305 00:13:53,000 --> 00:13:55,840 Speaker 1: the year, if I wanted to go ahead and max 306 00:13:55,880 --> 00:13:59,120 Speaker 1: out the rest of my contribution for the year, which 307 00:13:59,160 --> 00:14:02,760 Speaker 1: is about thirty five Should I go ahead and do 308 00:14:02,840 --> 00:14:07,080 Speaker 1: that from my already text funds and then just take 309 00:14:07,200 --> 00:14:09,080 Speaker 1: the refund at the end of the year so that 310 00:14:09,160 --> 00:14:13,440 Speaker 1: I don't incur any overage, or should I just let 311 00:14:13,480 --> 00:14:18,320 Speaker 1: it keep accumulating UH from my paycheck each month the 312 00:14:18,400 --> 00:14:21,360 Speaker 1: same way that it always has until it gets to 313 00:14:21,360 --> 00:14:26,560 Speaker 1: the max. Thanks in advance by Corey. Thanks for listening 314 00:14:26,600 --> 00:14:28,880 Speaker 1: for such a long time. Man, much appreciate it, and 315 00:14:29,080 --> 00:14:33,120 Speaker 1: I love your willingness to max out your h s A. Dude, 316 00:14:33,200 --> 00:14:36,680 Speaker 1: that is an awesome account. Triple tax advantage, and actually, 317 00:14:36,720 --> 00:14:38,640 Speaker 1: as we're about to get into here, it has like 318 00:14:38,680 --> 00:14:42,600 Speaker 1: another additional almost like fourth benefit. So yeah, that the 319 00:14:42,800 --> 00:14:45,280 Speaker 1: h s A is a stellar seller account. Now, we 320 00:14:45,320 --> 00:14:46,800 Speaker 1: did an episode all about the h s A that 321 00:14:46,840 --> 00:14:48,560 Speaker 1: was a while back, though. Yeah, but that doesn't mean 322 00:14:48,600 --> 00:14:51,000 Speaker 1: we love it any less, especially to as we're about 323 00:14:51,000 --> 00:14:53,000 Speaker 1: to talk about how it's not only triple tax advantage, 324 00:14:53,000 --> 00:14:55,280 Speaker 1: but it's like triple plus there's this extra little advantage 325 00:14:55,280 --> 00:14:56,840 Speaker 1: as well. Yeah, and I think the fact that Corey 326 00:14:56,920 --> 00:14:59,400 Speaker 1: wants to max it out when we're basically just over 327 00:14:59,440 --> 00:15:02,200 Speaker 1: halfway through the year, it's even more telling about how 328 00:15:02,200 --> 00:15:03,960 Speaker 1: on the ball he is with his finances. Yeah, but 329 00:15:04,040 --> 00:15:05,880 Speaker 1: we've got some savvy listeners for sure. But I think 330 00:15:05,920 --> 00:15:08,840 Speaker 1: what Corey needs to take into consideration is that maybe 331 00:15:08,840 --> 00:15:11,800 Speaker 1: it's not best to max out your hs A too 332 00:15:11,800 --> 00:15:15,160 Speaker 1: early in the year. And and that's because of what 333 00:15:15,200 --> 00:15:18,440 Speaker 1: you said, that triple plus tax advantages that feature of 334 00:15:18,520 --> 00:15:20,880 Speaker 1: having an h s A through your employer, right, you 335 00:15:20,920 --> 00:15:22,440 Speaker 1: will want to max out the h s A over 336 00:15:22,480 --> 00:15:24,080 Speaker 1: the course of the full year, but doing it too 337 00:15:24,120 --> 00:15:27,280 Speaker 1: quickly could actually cost you some money in taxes. And 338 00:15:27,320 --> 00:15:30,760 Speaker 1: that's because hs A contributions can be payroll tax deductible, 339 00:15:30,960 --> 00:15:35,280 Speaker 1: so you eliminate additional FICA, Medicare, and Social Security taxes 340 00:15:35,640 --> 00:15:38,640 Speaker 1: on top of the income tax deduction that you're getting 341 00:15:38,640 --> 00:15:41,160 Speaker 1: from investing in an HSA. So if you make the 342 00:15:41,160 --> 00:15:44,040 Speaker 1: full contribution in let's say eight months instead of twelve, 343 00:15:44,280 --> 00:15:47,720 Speaker 1: you'll potentially be missing out on those additional tax savings 344 00:15:47,760 --> 00:15:50,720 Speaker 1: from avoiding those payroll taxes that you're able to skip 345 00:15:50,720 --> 00:15:53,360 Speaker 1: out on by taking the whole year to to essentially 346 00:15:53,440 --> 00:15:55,680 Speaker 1: max out that hs A. Yeah, by keeping those hs 347 00:15:55,680 --> 00:15:59,240 Speaker 1: A contributions deducted from your paycheck, you to maximize this 348 00:15:59,320 --> 00:16:01,760 Speaker 1: payroll tax to deductions. And Corey also, you know, by 349 00:16:01,840 --> 00:16:03,760 Speaker 1: keeping it on this sort of regular schedule of it, 350 00:16:03,920 --> 00:16:06,600 Speaker 1: you know, being deducted from your paycheck, you have the 351 00:16:06,600 --> 00:16:09,880 Speaker 1: the added benefit of automatically dollar cost averaging over the 352 00:16:09,880 --> 00:16:11,920 Speaker 1: course of the year. You know, since you already have 353 00:16:12,040 --> 00:16:14,200 Speaker 1: this system in place, right, since your employer is already 354 00:16:14,200 --> 00:16:16,280 Speaker 1: deducting it from your check and make a lot of 355 00:16:16,280 --> 00:16:18,360 Speaker 1: sense to just stick with that. You know, you might 356 00:16:18,400 --> 00:16:20,760 Speaker 1: be attempted to want to get that money in the market. 357 00:16:20,800 --> 00:16:23,120 Speaker 1: Now get it invested a sapp right, and an attempt 358 00:16:23,200 --> 00:16:26,320 Speaker 1: maybe to time the market. Maybe you you foresee the 359 00:16:26,320 --> 00:16:28,720 Speaker 1: market continuing to climb real seeply, or are you wanna 360 00:16:28,720 --> 00:16:30,720 Speaker 1: be able to take advantage of any depths. But the 361 00:16:30,720 --> 00:16:32,720 Speaker 1: problem is we have no idea what the market is 362 00:16:32,760 --> 00:16:34,320 Speaker 1: going to do. So in this case, Joel, I would 363 00:16:34,320 --> 00:16:35,680 Speaker 1: suggest that you know you kind of go with the 364 00:16:35,720 --> 00:16:39,480 Speaker 1: burden hand take full advantage of that payroll tax benefit. Yeah, 365 00:16:39,520 --> 00:16:42,560 Speaker 1: and don't overthink it. I mean, I love your eagerness 366 00:16:42,680 --> 00:16:44,680 Speaker 1: right to to invest and do it even more quickly 367 00:16:44,720 --> 00:16:47,400 Speaker 1: and optimize. Yeah, he's thinking through all these things. It's great, right, 368 00:16:47,560 --> 00:16:49,560 Speaker 1: But in this case, overthinking it could actually cost you 369 00:16:49,600 --> 00:16:51,840 Speaker 1: money in additional taxes, and we'd like for you to 370 00:16:51,960 --> 00:16:54,560 Speaker 1: avoid that and just keep spreading it out over twelve months, 371 00:16:54,560 --> 00:16:57,800 Speaker 1: but max it out like you can under that allotted period. 372 00:16:58,040 --> 00:16:59,840 Speaker 1: So Corey, best of luck, keep it up. All right, 373 00:17:00,040 --> 00:17:02,280 Speaker 1: Let's get to the next question. This one's about rath 374 00:17:02,520 --> 00:17:05,720 Speaker 1: or regular four one case, which one is better? Hey, 375 00:17:05,760 --> 00:17:08,639 Speaker 1: Matt and Joel. My name's Don and I'm from Illinois. 376 00:17:08,880 --> 00:17:10,560 Speaker 1: I'm a huge fan of the podcast, and i have 377 00:17:10,560 --> 00:17:12,959 Speaker 1: a two part question for you. So, the four oh 378 00:17:13,000 --> 00:17:15,879 Speaker 1: one K plan my employer offers allows me to contribute 379 00:17:15,880 --> 00:17:17,919 Speaker 1: to either a traditional four O one K or a 380 00:17:18,000 --> 00:17:20,760 Speaker 1: Roth four O one K. I'm currently putting seventeen percent 381 00:17:20,760 --> 00:17:22,640 Speaker 1: of my salary into my four own K, and I'm 382 00:17:22,640 --> 00:17:27,760 Speaker 1: putting six into the rath the traditional. Considering I'm in 383 00:17:27,760 --> 00:17:29,800 Speaker 1: my early twenties and i feel like my salary is 384 00:17:29,880 --> 00:17:32,520 Speaker 1: unlikely to ever reach a higher tax bracket. Do you 385 00:17:32,520 --> 00:17:34,439 Speaker 1: think this is a good balance or would you do 386 00:17:34,480 --> 00:17:39,760 Speaker 1: a different balance. Secondly, my employer does a contribution match 387 00:17:39,800 --> 00:17:41,919 Speaker 1: for up to five percent of my salary, but my 388 00:17:41,960 --> 00:17:45,399 Speaker 1: employer's contribution is only fully vested once I've worked for 389 00:17:45,440 --> 00:17:48,040 Speaker 1: the company for five years. At four years, it would 390 00:17:48,040 --> 00:17:51,640 Speaker 1: be seventy five percent invested. I'm pretty sure this means 391 00:17:51,680 --> 00:17:54,840 Speaker 1: they'll be taking back a percentage of their contribution if 392 00:17:54,840 --> 00:17:57,840 Speaker 1: I leave before or five years. I'm curious how common 393 00:17:57,840 --> 00:18:00,280 Speaker 1: this is for companies to do, and how obligated people 394 00:18:00,320 --> 00:18:02,240 Speaker 1: should feel to hit that five year mark to be 395 00:18:02,320 --> 00:18:05,320 Speaker 1: fully invested. I'm considering moving out of state in the 396 00:18:05,359 --> 00:18:07,520 Speaker 1: next couple of years, which would put me right around 397 00:18:07,520 --> 00:18:09,120 Speaker 1: that four or five year mark, which is why I'm 398 00:18:09,119 --> 00:18:13,000 Speaker 1: asking can't wait to hear your opinion. Thanks Don, Thanks 399 00:18:13,000 --> 00:18:14,240 Speaker 1: so much for being a fan. And let's go ahead 400 00:18:14,280 --> 00:18:16,800 Speaker 1: and address the fact that you are saving seventeen of 401 00:18:16,840 --> 00:18:20,919 Speaker 1: your income towards retirement. That is amazing. You were crushing it, 402 00:18:21,000 --> 00:18:23,199 Speaker 1: seriously impressive. And also you mentioned that you don't think 403 00:18:23,200 --> 00:18:25,280 Speaker 1: you're necessarily going to earn more down the road. I 404 00:18:25,320 --> 00:18:28,280 Speaker 1: would say to don't underestimate yourself. If you're the kind 405 00:18:28,280 --> 00:18:30,800 Speaker 1: of person that is already setting aside seventeen percent of 406 00:18:30,800 --> 00:18:33,000 Speaker 1: their income towards retirement, I think there's a good chance 407 00:18:33,119 --> 00:18:35,200 Speaker 1: you might actually earn more down the road and you 408 00:18:35,200 --> 00:18:37,400 Speaker 1: would be in a higer tax bracket. Although maybe you're 409 00:18:37,400 --> 00:18:39,439 Speaker 1: saving that much now because you know you're planning to 410 00:18:39,600 --> 00:18:41,760 Speaker 1: retire early or take a job that pays less like 411 00:18:41,760 --> 00:18:44,160 Speaker 1: who knows what her A lot of considerations, but there's 412 00:18:44,280 --> 00:18:46,960 Speaker 1: always a decent chance that somebody liked on who is 413 00:18:47,040 --> 00:18:50,320 Speaker 1: thoughtful about investing such a large percentage of their income 414 00:18:50,359 --> 00:18:51,680 Speaker 1: that they are going to do better in the future. 415 00:18:51,720 --> 00:18:54,879 Speaker 1: There's seriously people want to hire somebody who's who's smart. Uh. 416 00:18:55,400 --> 00:18:56,760 Speaker 1: I love that you're mixing it up, though, you know 417 00:18:56,760 --> 00:18:58,840 Speaker 1: you mentioned how you've got sixty percent of your retirement 418 00:18:58,840 --> 00:19:01,040 Speaker 1: going towards ROTH and forty sent towards the traditional For 419 00:19:01,160 --> 00:19:03,639 Speaker 1: owen K, it's always hard to predict, you know, what 420 00:19:03,680 --> 00:19:06,000 Speaker 1: your tax bracket will be further on down the road, 421 00:19:06,359 --> 00:19:08,480 Speaker 1: you know, or even what the tax situation will look 422 00:19:08,520 --> 00:19:10,680 Speaker 1: like in our country. I tend to think that taxes 423 00:19:10,800 --> 00:19:13,320 Speaker 1: like they are bound to go up over the years, 424 00:19:13,680 --> 00:19:16,919 Speaker 1: and I prefer to invest in ROTH vehicles myself. But 425 00:19:16,920 --> 00:19:19,040 Speaker 1: they'll just use my magic a paull and it tells 426 00:19:19,080 --> 00:19:21,400 Speaker 1: me what's gonna happen, which is great, super helpful, yet 427 00:19:21,440 --> 00:19:23,920 Speaker 1: to be determined. Actually, I don't even know what magic 428 00:19:23,960 --> 00:19:25,439 Speaker 1: a ball says. I never actually owned one of those, 429 00:19:25,480 --> 00:19:26,960 Speaker 1: did you know? But my cousins did I like to 430 00:19:27,000 --> 00:19:28,479 Speaker 1: play with. I feel like that was the toy that 431 00:19:28,560 --> 00:19:29,960 Speaker 1: you always had a friend that had one of those. 432 00:19:30,000 --> 00:19:31,680 Speaker 1: But I never owned that myself, but they were cool 433 00:19:31,720 --> 00:19:33,520 Speaker 1: for a couple of years. Not for sure, man, But 434 00:19:33,840 --> 00:19:35,800 Speaker 1: don's you know another factor too that you want to 435 00:19:35,840 --> 00:19:38,399 Speaker 1: consider something else that will weigh in in your decision 436 00:19:38,400 --> 00:19:41,600 Speaker 1: making are some things like state taxes. You live in Illinois, 437 00:19:41,840 --> 00:19:44,439 Speaker 1: which has a five percent state income tax. If you're 438 00:19:44,480 --> 00:19:46,879 Speaker 1: moving to to Florida or maybe a state like Tennessee 439 00:19:47,080 --> 00:19:49,320 Speaker 1: in the future, you're gonna have a zero pocent income tax, 440 00:19:49,359 --> 00:19:51,800 Speaker 1: and so investing in a traditional four one k now 441 00:19:52,040 --> 00:19:54,359 Speaker 1: would make more sense if you know you're gonna maybe 442 00:19:54,359 --> 00:19:56,159 Speaker 1: move back home to be closer to family in the 443 00:19:56,200 --> 00:19:59,000 Speaker 1: future and they happen to live in Tennessee. But let's say, 444 00:19:59,000 --> 00:20:00,840 Speaker 1: for instance, you're moving to Call for you because that's 445 00:20:00,840 --> 00:20:02,959 Speaker 1: where your family lives. Well, then a wrath would make 446 00:20:03,000 --> 00:20:05,919 Speaker 1: more sense because the income taxes there are a lot higher. 447 00:20:06,160 --> 00:20:08,720 Speaker 1: It's amazing how nuanced it gets, Matt, and how something 448 00:20:09,080 --> 00:20:11,240 Speaker 1: like state and income taxes can play a role in 449 00:20:11,240 --> 00:20:14,280 Speaker 1: your decision. Here. One cool thing about favoring a traditional 450 00:20:14,320 --> 00:20:16,800 Speaker 1: four oh one k is kind of the optionality that 451 00:20:16,840 --> 00:20:19,520 Speaker 1: you gain by going the traditional route. Right first, you 452 00:20:19,520 --> 00:20:22,000 Speaker 1: say him on taxes now, which is great, means more 453 00:20:22,040 --> 00:20:24,639 Speaker 1: money in your pocket while you're investing for the future. 454 00:20:24,840 --> 00:20:26,840 Speaker 1: And then you can convert that traditional four oh one 455 00:20:26,880 --> 00:20:28,560 Speaker 1: k to a roth ira at some point in the 456 00:20:28,600 --> 00:20:31,000 Speaker 1: future when your income is lower. So let's say Don 457 00:20:31,359 --> 00:20:33,280 Speaker 1: knows that her income is gonna be lower, Right, She's like, 458 00:20:33,359 --> 00:20:35,640 Speaker 1: I'm gonna go work for a nonprofit after these two 459 00:20:35,720 --> 00:20:38,440 Speaker 1: years at this company where I will earn a substantial 460 00:20:38,440 --> 00:20:40,919 Speaker 1: amount of less. Well, then contributing to that traditional four 461 00:20:40,960 --> 00:20:43,640 Speaker 1: oh one K now and then converting to a roth 462 00:20:43,680 --> 00:20:46,520 Speaker 1: ira down the road can actually be a bigger tax 463 00:20:46,560 --> 00:20:48,720 Speaker 1: savings overall. Right, And a lot of people do this, 464 00:20:48,800 --> 00:20:50,720 Speaker 1: especially if they're gonna take a year off, if they're 465 00:20:50,720 --> 00:20:53,240 Speaker 1: gonna take a sabbatical year and do some traveling or whatever, 466 00:20:53,440 --> 00:20:55,360 Speaker 1: and you know for sure that your income is gonna 467 00:20:55,400 --> 00:20:57,719 Speaker 1: be lower, then you can plan ahead and strategize when 468 00:20:57,720 --> 00:21:00,200 Speaker 1: it comes to taxes like that. Uh. And this also 469 00:21:00,280 --> 00:21:01,800 Speaker 1: means that there might be a little bit of added 470 00:21:01,840 --> 00:21:04,240 Speaker 1: complexity in your life, but it might be worth doing 471 00:21:04,280 --> 00:21:06,960 Speaker 1: if you're like a total optimizer. Yeah. Plus the seventeen 472 00:21:06,960 --> 00:21:09,639 Speaker 1: percent saver, they can handle that. Joel. On the flip side, 473 00:21:09,880 --> 00:21:11,399 Speaker 1: you know, one of the great benefits of a wrath 474 00:21:11,600 --> 00:21:14,080 Speaker 1: four one K is that you're able to essentially force 475 00:21:14,119 --> 00:21:17,200 Speaker 1: yourself to be disciplined and you do the unappealing work 476 00:21:17,200 --> 00:21:20,080 Speaker 1: of paying taxes on your contributions. Now, you know, you 477 00:21:20,160 --> 00:21:22,760 Speaker 1: front load that pain a little bit. You pay those 478 00:21:22,760 --> 00:21:25,520 Speaker 1: taxes and then you'll never have to worry about it again. 479 00:21:25,680 --> 00:21:27,680 Speaker 1: You know, it could even kind of feel like you're 480 00:21:27,720 --> 00:21:30,520 Speaker 1: able to save and invest more over time due to 481 00:21:30,520 --> 00:21:32,760 Speaker 1: the fact that you're not stuck paying a massive tax 482 00:21:32,800 --> 00:21:34,960 Speaker 1: bill once you're fifty nine and a half. Yeah, once 483 00:21:34,960 --> 00:21:37,360 Speaker 1: that money's in there with a wrath, it's never taxed again. 484 00:21:37,400 --> 00:21:39,400 Speaker 1: And that's nice to see that and know that it's 485 00:21:39,400 --> 00:21:42,040 Speaker 1: the actual number that you're gonna have to spend once 486 00:21:42,080 --> 00:21:44,840 Speaker 1: you hit retirement age for sure. Uh. And then let's 487 00:21:44,840 --> 00:21:47,080 Speaker 1: talk about vesting period. Don asked about that as well. 488 00:21:47,800 --> 00:21:49,800 Speaker 1: That's an awesome employer match you've got, which is great. 489 00:21:49,840 --> 00:21:51,919 Speaker 1: You should be thankful for that, right, any sort of 490 00:21:52,119 --> 00:21:54,199 Speaker 1: decent employer match is always something to be happy with, 491 00:21:54,480 --> 00:21:56,200 Speaker 1: and you gotta do your best to to make sure 492 00:21:56,200 --> 00:21:59,640 Speaker 1: you take full advantage. But yes, they will take some 493 00:21:59,840 --> 00:22:01,560 Speaker 1: or all of that money back if you don't stay 494 00:22:01,560 --> 00:22:03,960 Speaker 1: employed with them for the full vesting period. We talked 495 00:22:03,960 --> 00:22:06,600 Speaker 1: about investing periods recently, actually, mad I think on another episode. 496 00:22:06,600 --> 00:22:09,320 Speaker 1: I think it was another listener question, But they're incredibly 497 00:22:09,359 --> 00:22:12,600 Speaker 1: common and some do stretch for as long as five years. 498 00:22:12,640 --> 00:22:15,199 Speaker 1: Other employers have more like three year time periods. Some 499 00:22:15,240 --> 00:22:18,720 Speaker 1: employers let their contributions vest immediately, which is always nice, 500 00:22:18,760 --> 00:22:20,959 Speaker 1: but it's kind of a way to to retain talent. 501 00:22:21,320 --> 00:22:24,680 Speaker 1: And so it is important to take into consideration because yeah, 502 00:22:24,720 --> 00:22:27,239 Speaker 1: you could be costing yourself thousands of dollars if you 503 00:22:27,320 --> 00:22:30,600 Speaker 1: don't meet those requirements of how long you're employed there 504 00:22:30,640 --> 00:22:32,960 Speaker 1: in order to keep that money in your account and 505 00:22:33,000 --> 00:22:34,960 Speaker 1: not have a cloud back. And just aside, note I 506 00:22:35,000 --> 00:22:37,800 Speaker 1: just like the term vested. There's something about that phrase, 507 00:22:37,880 --> 00:22:40,400 Speaker 1: like I'm fully vested, makes you sound pretty hardcore. Done. 508 00:22:40,440 --> 00:22:41,680 Speaker 1: It makes me want to wear a three pe suit 509 00:22:41,680 --> 00:22:44,640 Speaker 1: because they come with bests. It's a done for you. 510 00:22:45,000 --> 00:22:46,880 Speaker 1: Basically we need to do here is to do the math. 511 00:22:46,920 --> 00:22:48,280 Speaker 1: You know you're asking if it makes sense for you 512 00:22:48,320 --> 00:22:50,639 Speaker 1: to maybe stick around for that full five years. We 513 00:22:50,640 --> 00:22:51,919 Speaker 1: don't know how much you make, but let's say you 514 00:22:51,920 --> 00:22:54,400 Speaker 1: make eighty thousand dollars a year. That means your employer 515 00:22:54,480 --> 00:22:57,440 Speaker 1: is contributing four thousand dollars annually, and so that's twenty 516 00:22:57,800 --> 00:23:00,320 Speaker 1: dollars over a five year period, and so you would 517 00:23:00,320 --> 00:23:03,200 Speaker 1: receive twelve thousand dollars in an employer match after hitting 518 00:23:03,240 --> 00:23:05,879 Speaker 1: that four year mark. If you're gonna get so what 519 00:23:05,920 --> 00:23:07,560 Speaker 1: you need to do next is essentially just run a 520 00:23:07,560 --> 00:23:10,640 Speaker 1: cost benefit analysis. You know, is it worth an additional 521 00:23:10,680 --> 00:23:13,040 Speaker 1: eight thousand dollars to stay an extra year there with 522 00:23:13,040 --> 00:23:15,520 Speaker 1: that company? You know, maybe your next job pays that 523 00:23:15,600 --> 00:23:18,240 Speaker 1: much more just right off the bat. If that's the case, 524 00:23:18,280 --> 00:23:19,680 Speaker 1: then you can just move on for sure if you 525 00:23:19,720 --> 00:23:22,080 Speaker 1: want to move or you know, maybe in your case, 526 00:23:22,240 --> 00:23:24,040 Speaker 1: maybe it's not about the money, Like would you give 527 00:23:24,119 --> 00:23:25,920 Speaker 1: up eight thousand dollars just to be able to move 528 00:23:25,960 --> 00:23:28,080 Speaker 1: on and get on with the next phase of your life. 529 00:23:28,320 --> 00:23:30,640 Speaker 1: It all depends where you're at years down the road 530 00:23:30,680 --> 00:23:32,919 Speaker 1: and what you want to be doing next. We can 531 00:23:32,960 --> 00:23:35,199 Speaker 1: answer that question for you, but hopefully that gives you 532 00:23:35,440 --> 00:23:37,679 Speaker 1: a decent framework to kind of think about this question. 533 00:23:37,880 --> 00:23:39,880 Speaker 1: I know that I wouldn't necessarily put my my life 534 00:23:39,880 --> 00:23:41,680 Speaker 1: on hold, you know, for a whole year or two 535 00:23:41,960 --> 00:23:44,480 Speaker 1: in order to meet that vesting period, but I would 536 00:23:44,560 --> 00:23:46,480 Speaker 1: certainly be willing to maybe wait an extra month or two, 537 00:23:46,680 --> 00:23:50,360 Speaker 1: maybe even six to hit a payout benchmark. Don That's 538 00:23:50,359 --> 00:23:52,239 Speaker 1: a great question, and hopefully you'll be able to, you know, 539 00:23:52,280 --> 00:23:54,119 Speaker 1: make the best decision for you and in the meantime, 540 00:23:54,200 --> 00:23:56,320 Speaker 1: just keep saving like a like a crazy person. You're 541 00:23:56,359 --> 00:23:58,920 Speaker 1: doing a great job for sure, And yeah, mat I agree. 542 00:23:58,920 --> 00:24:00,800 Speaker 1: If I was like three years ten months, I'll wait 543 00:24:00,840 --> 00:24:02,600 Speaker 1: that extra two two months in order to hit that 544 00:24:03,680 --> 00:24:05,880 Speaker 1: it's zero versus seventy five. Like, yeah, I'll totally wait, 545 00:24:06,080 --> 00:24:07,439 Speaker 1: But then I might get the heck out of there 546 00:24:07,480 --> 00:24:09,359 Speaker 1: another year in order to get the extra eight k. 547 00:24:09,600 --> 00:24:11,280 Speaker 1: It just depends on where you want to go with 548 00:24:11,320 --> 00:24:12,960 Speaker 1: you and so what you got going on in Yeah, 549 00:24:13,000 --> 00:24:14,639 Speaker 1: but all right, don best of luck to you. All right. Now, 550 00:24:14,640 --> 00:24:16,920 Speaker 1: we got a couple more questions to get to, including 551 00:24:16,960 --> 00:24:19,359 Speaker 1: how in the world does a credit score go down 552 00:24:19,440 --> 00:24:21,600 Speaker 1: when you've paid off credit card debt? And we'll get 553 00:24:21,600 --> 00:24:32,920 Speaker 1: to that right after this break. All right, so we're 554 00:24:32,920 --> 00:24:34,600 Speaker 1: back from the break. Now we're taking listener questions, and 555 00:24:34,640 --> 00:24:36,640 Speaker 1: let's hear now from a listener who has knocked out 556 00:24:36,680 --> 00:24:40,720 Speaker 1: some consumer debt. Hello, this is Mindy from Denver. I 557 00:24:40,800 --> 00:24:45,600 Speaker 1: recently removed all of my consumer credit card debt and 558 00:24:45,720 --> 00:24:49,280 Speaker 1: within thirty days I tracked my credit score that dropped 559 00:24:49,320 --> 00:24:54,040 Speaker 1: from seven seventy five to seven. So I guess i'd 560 00:24:54,040 --> 00:24:57,480 Speaker 1: like some insights as to how it is that we 561 00:24:57,600 --> 00:25:01,840 Speaker 1: prevent our credit score from se dramatic dips when we're 562 00:25:01,880 --> 00:25:03,879 Speaker 1: doing what we think is the right thing, which is 563 00:25:03,920 --> 00:25:08,320 Speaker 1: reducing debt. Thank you, Mandy, thanks for your question. And yeah, 564 00:25:08,359 --> 00:25:11,520 Speaker 1: this is an interesting one because a fifty point drop 565 00:25:11,800 --> 00:25:13,680 Speaker 1: in your credit score is not a lot of fun 566 00:25:13,720 --> 00:25:16,400 Speaker 1: to see, and it can be disconcerting depending on kind 567 00:25:16,400 --> 00:25:18,880 Speaker 1: of where you're at. If you are about to buy 568 00:25:18,880 --> 00:25:21,040 Speaker 1: a house or take out a car loan, I mean, 569 00:25:21,040 --> 00:25:23,080 Speaker 1: that can drastically affect the rate you're going to get, 570 00:25:23,119 --> 00:25:25,960 Speaker 1: So I would be a little upset as well, especially 571 00:25:26,000 --> 00:25:28,119 Speaker 1: when you've done something good at like paying on credit 572 00:25:28,119 --> 00:25:29,440 Speaker 1: card debt. It's like, how does that? That would be 573 00:25:29,480 --> 00:25:31,000 Speaker 1: The frustrating part for me is like this does that 574 00:25:31,040 --> 00:25:35,280 Speaker 1: compute exactly? And credit scores sometimes don't compute, right. I 575 00:25:35,280 --> 00:25:37,240 Speaker 1: would say that they're kind of like a riddle wrapped 576 00:25:37,320 --> 00:25:39,000 Speaker 1: up in an enigma, and you and I'm out. We 577 00:25:39,080 --> 00:25:41,280 Speaker 1: tried to do our best to kind of explain how 578 00:25:41,320 --> 00:25:44,840 Speaker 1: credit scores work, and ultimately, when you get down to it, 579 00:25:45,080 --> 00:25:46,760 Speaker 1: a lot of it does make sense, but it's not 580 00:25:46,800 --> 00:25:49,880 Speaker 1: necessarily intuitive, right. There are hundreds of factors that way 581 00:25:49,960 --> 00:25:52,280 Speaker 1: into like the makeup of a credit score. Like we 582 00:25:52,359 --> 00:25:54,000 Speaker 1: know the main things that move the needle, but that 583 00:25:54,160 --> 00:25:57,320 Speaker 1: like they take lots of things into account, right, yeah, exactly. 584 00:25:57,600 --> 00:25:59,560 Speaker 1: And so it's a shame that the credit scoring model 585 00:25:59,680 --> 00:26:01,520 Speaker 1: is so complex and that people have to put so 586 00:26:01,640 --> 00:26:03,880 Speaker 1: much thought into it in order to, you know, raise 587 00:26:03,920 --> 00:26:05,680 Speaker 1: your credit score and figure out how to to work 588 00:26:05,720 --> 00:26:07,679 Speaker 1: the system. But it is a part of our modern 589 00:26:07,720 --> 00:26:09,800 Speaker 1: financial system, and we gotta play the game to kind 590 00:26:09,840 --> 00:26:14,800 Speaker 1: of avoid the adverse consequences of not having a good score. Right, yeah, 591 00:26:14,800 --> 00:26:16,240 Speaker 1: that's right man, And and and many two. I want to 592 00:26:16,240 --> 00:26:17,560 Speaker 1: give you a little bit more credit because I know 593 00:26:17,680 --> 00:26:20,200 Speaker 1: in your question you said that you removed, uh, your 594 00:26:20,280 --> 00:26:22,080 Speaker 1: your consumer debt or your credit card debt. You make 595 00:26:22,119 --> 00:26:23,720 Speaker 1: it sound like you kind of like deleted an app 596 00:26:23,720 --> 00:26:26,720 Speaker 1: from your phone, and like getting rid of debt is 597 00:26:26,720 --> 00:26:28,359 Speaker 1: a huge thing, especially if you have a lot of it. 598 00:26:28,400 --> 00:26:30,000 Speaker 1: So instead, let's use like the language of like you 599 00:26:30,040 --> 00:26:32,760 Speaker 1: annihilating your your credit card debt. You didn't just remove it. 600 00:26:32,800 --> 00:26:34,440 Speaker 1: You attacked it, and you got rid of it. Took 601 00:26:34,440 --> 00:26:35,959 Speaker 1: an axe to it, like a big tree. It's no 602 00:26:36,000 --> 00:26:39,119 Speaker 1: longer in your life. You failed. It felt like like 603 00:26:39,160 --> 00:26:42,560 Speaker 1: a tree, not failed. But many days of your question, 604 00:26:43,000 --> 00:26:45,320 Speaker 1: why did your credit cord drop? And one possibility is 605 00:26:45,359 --> 00:26:48,800 Speaker 1: that you close that account after payoff. You know, if 606 00:26:48,840 --> 00:26:50,640 Speaker 1: you close an account, which by the way, this happens 607 00:26:50,680 --> 00:26:52,919 Speaker 1: automatically when you know, let's say you pay off a 608 00:26:52,960 --> 00:26:56,280 Speaker 1: car loan or student loan, those installment loans closed, and 609 00:26:56,320 --> 00:26:57,920 Speaker 1: if that were to be the case, then your score 610 00:26:57,960 --> 00:27:00,679 Speaker 1: will go down if the account closes again. This is 611 00:27:00,720 --> 00:27:03,120 Speaker 1: kind of counterintuitive because you know, when you pay off debt, 612 00:27:03,480 --> 00:27:06,480 Speaker 1: that should have the opposite effect, and that can be 613 00:27:06,520 --> 00:27:09,200 Speaker 1: really frustrating for consumers to see their credit score drop 614 00:27:09,440 --> 00:27:12,879 Speaker 1: after they've completely eliminated not just the debt, but also 615 00:27:12,880 --> 00:27:15,240 Speaker 1: when that account gets removed from their file as well. Yeah, 616 00:27:15,240 --> 00:27:16,600 Speaker 1: it doesn't seem to make sense, and I think that's 617 00:27:16,600 --> 00:27:18,720 Speaker 1: why a lot of people do close a credit card 618 00:27:18,840 --> 00:27:21,160 Speaker 1: once they paid it off, like look, see, I'm closing 619 00:27:21,200 --> 00:27:22,919 Speaker 1: it off. No more temptation. I'm not going to do 620 00:27:22,960 --> 00:27:24,439 Speaker 1: that again. And that can be good from like a 621 00:27:24,440 --> 00:27:26,800 Speaker 1: personal temptation standpoint. If that's what you need, then do 622 00:27:26,840 --> 00:27:28,479 Speaker 1: it by all means. But I think this is this 623 00:27:28,520 --> 00:27:31,400 Speaker 1: is something that like the Dave Ramsey adherents, they're like, 624 00:27:31,520 --> 00:27:33,360 Speaker 1: why is my credit score going down? That's not something 625 00:27:33,359 --> 00:27:35,320 Speaker 1: that Dave talks about about your credit score dropping because 626 00:27:35,320 --> 00:27:37,560 Speaker 1: he's all about removing credit from your life. But we 627 00:27:37,680 --> 00:27:39,840 Speaker 1: know that that your credit score is important in lots 628 00:27:39,880 --> 00:27:41,720 Speaker 1: of areas of your life. Right, But let's say to 629 00:27:41,960 --> 00:27:44,080 Speaker 1: maybe Mindy didn't close the credit card. You know, maybe 630 00:27:44,080 --> 00:27:46,160 Speaker 1: it's still open that that is one explanation that she did. 631 00:27:46,440 --> 00:27:48,200 Speaker 1: But let's say that you didn't close it and you 632 00:27:48,280 --> 00:27:50,960 Speaker 1: paid it off. The only other thing that I've seen 633 00:27:51,359 --> 00:27:53,719 Speaker 1: that can truly affect your credit score in a negative 634 00:27:53,760 --> 00:27:56,160 Speaker 1: way after paying off debt like that, is it going 635 00:27:56,200 --> 00:27:59,720 Speaker 1: from a low utilization to something like no utilization. Can 636 00:27:59,720 --> 00:28:01,480 Speaker 1: you to have a weird effect on your score too. 637 00:28:02,000 --> 00:28:04,440 Speaker 1: Some scoring models depending on what when you're looking at, Matt, 638 00:28:04,440 --> 00:28:06,679 Speaker 1: And that's another wrench in the game. There are just 639 00:28:06,760 --> 00:28:09,320 Speaker 1: so many different scoring models that, well, which one are 640 00:28:09,320 --> 00:28:11,640 Speaker 1: you looking at? It depends and they all look at 641 00:28:11,640 --> 00:28:14,720 Speaker 1: things differently and they take different factors into consideration. But 642 00:28:14,920 --> 00:28:17,679 Speaker 1: some might view that as an inactive account, and if 643 00:28:17,680 --> 00:28:20,000 Speaker 1: they do that, then your score is gonna drop. But 644 00:28:20,040 --> 00:28:22,560 Speaker 1: in the end, your your credit should rebound quickly. Right, 645 00:28:22,600 --> 00:28:24,600 Speaker 1: This isn't a move that's gonna hurt your score over 646 00:28:24,640 --> 00:28:26,919 Speaker 1: the long haul. Many this should be a dip for 647 00:28:27,119 --> 00:28:29,159 Speaker 1: a few months, and I think that your score is 648 00:28:29,160 --> 00:28:32,159 Speaker 1: gonna bounce right back up to where it was pretty quickly. 649 00:28:32,240 --> 00:28:34,600 Speaker 1: So it's an annoyance, right, It's tough to see. It's 650 00:28:34,600 --> 00:28:37,720 Speaker 1: frustrating to endure something like that when you've made all 651 00:28:37,720 --> 00:28:39,560 Speaker 1: the right moves. But it's kind of one of those 652 00:28:39,560 --> 00:28:42,840 Speaker 1: weird things that happens in like the current flawed system. Yeah, 653 00:28:42,920 --> 00:28:44,560 Speaker 1: and and many In the end, it's just better to 654 00:28:44,600 --> 00:28:47,240 Speaker 1: be done paying interest to the credit card companies, and so, 655 00:28:47,440 --> 00:28:49,000 Speaker 1: you know, just have that short term being to your 656 00:28:49,040 --> 00:28:51,760 Speaker 1: credit score. And by the way, you know, you mentioned 657 00:28:51,760 --> 00:28:54,040 Speaker 1: that that's your score, Like that's a solid score, and 658 00:28:54,080 --> 00:28:56,200 Speaker 1: my guess is that you'll be back above seven forty 659 00:28:56,280 --> 00:28:58,920 Speaker 1: quickly and that will put you back in top tier status. 660 00:28:58,960 --> 00:29:00,640 Speaker 1: The best of luck to you. Yeah, don't spend it 661 00:29:00,680 --> 00:29:02,880 Speaker 1: much more time thinking about it. You're basically beating your 662 00:29:02,920 --> 00:29:04,920 Speaker 1: head against the wall trying to figure out what happened 663 00:29:05,200 --> 00:29:08,480 Speaker 1: in in something that's almost inexplicable. All right, let's get 664 00:29:08,480 --> 00:29:11,240 Speaker 1: to our next question. This one is from a listener 665 00:29:11,320 --> 00:29:14,560 Speaker 1: is trying to help his parents think about their retirement. Hey, 666 00:29:14,560 --> 00:29:17,400 Speaker 1: Matt and Joel Josh from Chicago here, I need some 667 00:29:17,480 --> 00:29:20,000 Speaker 1: advice from my parents. They're in their late fifties and 668 00:29:20,040 --> 00:29:22,240 Speaker 1: are looking to retire within the next eight to ten years. 669 00:29:23,120 --> 00:29:26,239 Speaker 1: Where should I point them to invest their money for 670 00:29:26,280 --> 00:29:28,120 Speaker 1: these next few years to try and build up as 671 00:29:28,200 --> 00:29:32,440 Speaker 1: much as possible. They probably don't have any thing in 672 00:29:32,520 --> 00:29:37,280 Speaker 1: four one ks or roth IRA's and so they're starting 673 00:29:37,280 --> 00:29:41,040 Speaker 1: from scratch pretty late in the game. But any advice 674 00:29:41,120 --> 00:29:43,400 Speaker 1: you have how to talk to them, how to have 675 00:29:43,440 --> 00:29:46,520 Speaker 1: that conversation, and then also where they can put their 676 00:29:46,520 --> 00:29:52,320 Speaker 1: money specifically, would be helpful. Thanks. Hey, Josh, I love 677 00:29:52,400 --> 00:29:54,120 Speaker 1: that you are trying to help your parents. You know, 678 00:29:54,240 --> 00:29:57,520 Speaker 1: especially as our parents age, their financial decisions will likely 679 00:29:57,520 --> 00:30:00,959 Speaker 1: have major ramifications on our own finances, and so this 680 00:30:01,000 --> 00:30:02,440 Speaker 1: is you know, this is great for them, but it's 681 00:30:02,440 --> 00:30:04,800 Speaker 1: also it's good for you to do too. And so 682 00:30:04,800 --> 00:30:08,160 Speaker 1: starting the conversation with him now it's really important, even 683 00:30:08,280 --> 00:30:10,320 Speaker 1: when it's not something that they've discussed with you before. 684 00:30:10,680 --> 00:30:11,960 Speaker 1: So you know, let's go ahead and talk about that. 685 00:30:12,000 --> 00:30:14,960 Speaker 1: It's important to broach the subject in a non threatening way. 686 00:30:15,400 --> 00:30:16,960 Speaker 1: We would prefer to put the finger in the face 687 00:30:17,360 --> 00:30:20,000 Speaker 1: Mom and dad, what's wrong with you? Yeah, rub their 688 00:30:20,040 --> 00:30:21,479 Speaker 1: noses in it a little bit. You know, I've got 689 00:30:21,480 --> 00:30:25,080 Speaker 1: the compative style though that is your style. Um, Josh, 690 00:30:25,120 --> 00:30:27,680 Speaker 1: we would recommend for you to check out episode one fourteen. 691 00:30:27,800 --> 00:30:30,920 Speaker 1: We we went into great detail with Cameron Huddleston's about this. 692 00:30:31,440 --> 00:30:34,880 Speaker 1: She has some great thoughts on getting that conversation started 693 00:30:34,880 --> 00:30:37,200 Speaker 1: and has even written a book about talking with your 694 00:30:37,240 --> 00:30:40,680 Speaker 1: parents about their money and so, depending on your relationship, 695 00:30:40,880 --> 00:30:44,320 Speaker 1: even a third party might be helpful to facilitate that discussion. 696 00:30:44,520 --> 00:30:46,040 Speaker 1: You know, it might be weird for your parents to 697 00:30:46,160 --> 00:30:49,760 Speaker 1: hear financial advice from you, you know, like your their 698 00:30:49,840 --> 00:30:51,960 Speaker 1: kid is that that might be awkward for them, or 699 00:30:52,000 --> 00:30:53,880 Speaker 1: they may not be comfortable hearing that from you, and 700 00:30:53,920 --> 00:30:56,240 Speaker 1: so maybe having somebody else there to kind of help 701 00:30:56,280 --> 00:30:58,440 Speaker 1: them walk through that might be helpful. Just depends on 702 00:30:58,440 --> 00:31:01,480 Speaker 1: your situation. Yeah, trusted third party to help break some 703 00:31:01,520 --> 00:31:03,720 Speaker 1: of the ice and make the conversation a little smoother 704 00:31:03,800 --> 00:31:06,200 Speaker 1: can can be really helpful. I think part two, Matt 705 00:31:06,280 --> 00:31:09,200 Speaker 1: of that involves helping your parents see the need to 706 00:31:09,400 --> 00:31:12,360 Speaker 1: save and invest more. Right and people are living longer, 707 00:31:12,640 --> 00:31:15,160 Speaker 1: social Security likely won't be able to cover all of 708 00:31:15,200 --> 00:31:17,880 Speaker 1: their living expenses, and so even if they think they 709 00:31:17,880 --> 00:31:21,720 Speaker 1: can continue working well, the workforce isn't always kind of people, 710 00:31:22,000 --> 00:31:25,080 Speaker 1: especially as they get older and get into their later sixties. Right, 711 00:31:25,240 --> 00:31:27,600 Speaker 1: so it's important for them to be prepared, and that 712 00:31:27,680 --> 00:31:29,440 Speaker 1: has to start now. I mean, there's just no other 713 00:31:29,480 --> 00:31:31,280 Speaker 1: time that it can start. And yes, so I think 714 00:31:31,280 --> 00:31:33,600 Speaker 1: a large part of that conversation is actually maybe helping 715 00:31:33,640 --> 00:31:37,160 Speaker 1: them realize their need to to be saving and investing, 716 00:31:37,240 --> 00:31:39,880 Speaker 1: you know, starting now. Yeah, and Josh, you know some 717 00:31:39,960 --> 00:31:42,120 Speaker 1: good news here. It's great that your parents that they'll 718 00:31:42,160 --> 00:31:44,680 Speaker 1: be working for close to another decade. You know, that 719 00:31:44,720 --> 00:31:48,080 Speaker 1: means they won't be retiring until they're late sixties. And 720 00:31:48,120 --> 00:31:50,360 Speaker 1: this is great for two reasons. Right, First, they have 721 00:31:50,520 --> 00:31:53,000 Speaker 1: more time to invest in the market, which is crucial 722 00:31:53,040 --> 00:31:55,720 Speaker 1: for them to not only earn money, but to grow 723 00:31:55,760 --> 00:31:58,400 Speaker 1: that money. And then second, they'll be able to delay 724 00:31:58,440 --> 00:32:02,920 Speaker 1: taking Social Security until closer to or preferably at age 725 00:32:02,960 --> 00:32:06,000 Speaker 1: seventy the full retirement age of sixty six or sixty seven, 726 00:32:06,000 --> 00:32:08,480 Speaker 1: depending on what year they were born in. But their 727 00:32:08,520 --> 00:32:12,600 Speaker 1: ability to delay taking Social Security benefits until they're seventy 728 00:32:12,680 --> 00:32:14,080 Speaker 1: that that will mean that they will be able to 729 00:32:14,080 --> 00:32:18,440 Speaker 1: receive a benefit that is higher than the benefit that 730 00:32:18,480 --> 00:32:22,040 Speaker 1: they would receive just a few years earlier. It's pretty amazing. Yeah, Basically, 731 00:32:22,040 --> 00:32:24,800 Speaker 1: every year you wait after full retirement age up to 732 00:32:24,840 --> 00:32:27,800 Speaker 1: four years, you're gonna see that increased benefit. And there's 733 00:32:27,800 --> 00:32:30,080 Speaker 1: no other place that you can get a guaranteed return, 734 00:32:30,560 --> 00:32:33,320 Speaker 1: especially at that age when you're investing, you're looking towards 735 00:32:33,520 --> 00:32:37,840 Speaker 1: more conservative investments oftentimes, well, delaying social Security is the 736 00:32:37,880 --> 00:32:41,160 Speaker 1: best sure thing for people as they get older. Taking 737 00:32:41,280 --> 00:32:44,120 Speaker 1: social Security early, especially before full retirement ages, is going 738 00:32:44,160 --> 00:32:47,640 Speaker 1: to have a massive impact on your overall earnings from 739 00:32:47,800 --> 00:32:50,560 Speaker 1: Social Security. Uh And Josh, you said they don't have 740 00:32:50,600 --> 00:32:52,600 Speaker 1: anything in four oh one case, but the question is 741 00:32:52,600 --> 00:32:55,160 Speaker 1: do they have access to one? And if so, in particular, 742 00:32:55,240 --> 00:32:57,600 Speaker 1: if their company offers a match, then that's a no brainer. 743 00:32:57,640 --> 00:32:59,480 Speaker 1: That's really where they need to start. And I would 744 00:32:59,480 --> 00:33:01,920 Speaker 1: explain that as well, that you know, basically they're entitled 745 00:33:01,960 --> 00:33:05,040 Speaker 1: to free money from their employer. If not, this is 746 00:33:05,080 --> 00:33:08,240 Speaker 1: a case where probably a traditional IRA makes the most sense. 747 00:33:08,440 --> 00:33:11,160 Speaker 1: Assuming they're at or close to their peak earning years 748 00:33:11,400 --> 00:33:13,480 Speaker 1: and they're also likely in a higher tax bracket. Take 749 00:33:13,520 --> 00:33:16,000 Speaker 1: the tax break now and then when they retire and 750 00:33:16,000 --> 00:33:20,560 Speaker 1: their income likely drops significantly, lowering their tax bracket, then 751 00:33:20,600 --> 00:33:23,120 Speaker 1: they'll be paying lesson taxes in those years. So yeah, 752 00:33:23,160 --> 00:33:25,360 Speaker 1: when you're at your peak earning years, especially if you're 753 00:33:25,360 --> 00:33:28,680 Speaker 1: closer to retirement. I think traditional iras do make more sense. 754 00:33:28,920 --> 00:33:31,200 Speaker 1: And so yeah, if your parents don't have access to 755 00:33:31,360 --> 00:33:33,520 Speaker 1: a four oh one K through work, then a traditional 756 00:33:33,560 --> 00:33:36,520 Speaker 1: IRA is probably their best vehicle to start investing. Yeah, 757 00:33:36,520 --> 00:33:39,160 Speaker 1: and so hopefully your parents are pretty open to the discussion, Josh. 758 00:33:39,480 --> 00:33:40,800 Speaker 1: And here's the thing too, is that you can even 759 00:33:40,840 --> 00:33:43,280 Speaker 1: help them to open one of these accounts, right. Sometimes 760 00:33:43,320 --> 00:33:45,600 Speaker 1: it's just the step of going online. You know, that 761 00:33:45,640 --> 00:33:48,760 Speaker 1: can be enough of a barrier. You know, we have 762 00:33:48,800 --> 00:33:50,960 Speaker 1: to go to the website to set up the account, 763 00:33:50,960 --> 00:33:53,400 Speaker 1: transfer the money, choosing the funds, like all that can 764 00:33:53,440 --> 00:33:57,120 Speaker 1: feel pretty overwhelming for maybe our parents generation. So you know, 765 00:33:57,160 --> 00:33:59,640 Speaker 1: the ability to help them through the steps that they 766 00:33:59,720 --> 00:34:02,600 Speaker 1: might otherwise avoid, I think that could also go a 767 00:34:02,600 --> 00:34:04,719 Speaker 1: long way, if you're able to kind of walk alongside 768 00:34:04,720 --> 00:34:06,600 Speaker 1: them as they kind of set these up. Yeah. I 769 00:34:06,600 --> 00:34:08,760 Speaker 1: had to help my dad with that. In regards to podcast, 770 00:34:08,840 --> 00:34:10,359 Speaker 1: He's like, where do you go, what do you do? 771 00:34:10,400 --> 00:34:12,520 Speaker 1: How do you listen? And I'm like, oh, it's so 772 00:34:12,600 --> 00:34:15,000 Speaker 1: much better, dad, than than regular radio that you're used 773 00:34:15,040 --> 00:34:17,000 Speaker 1: to listening to. And there's such a larger variety of 774 00:34:17,000 --> 00:34:19,759 Speaker 1: stuff you can tap into. Uh and and so yeah, 775 00:34:19,880 --> 00:34:21,480 Speaker 1: so what app did you download for him? Well, so 776 00:34:21,560 --> 00:34:23,880 Speaker 1: he he has an iPhone and and he just already 777 00:34:23,920 --> 00:34:25,880 Speaker 1: has the Apple podcast. I didn't want to make it 778 00:34:25,920 --> 00:34:28,560 Speaker 1: too complex and like here learned this new app and 779 00:34:28,560 --> 00:34:30,800 Speaker 1: new system. I just figured he was used to Apple stuff, 780 00:34:30,800 --> 00:34:33,280 Speaker 1: So I did that. But I've been listening on Google's 781 00:34:33,280 --> 00:34:36,640 Speaker 1: podcast player and it's excellent, so good. Nice. I actually 782 00:34:36,640 --> 00:34:39,200 Speaker 1: recently switched over to Spotify, like a few months ago. 783 00:34:39,800 --> 00:34:41,640 Speaker 1: I've actually been a pretty big fan of that. Back 784 00:34:41,680 --> 00:34:43,120 Speaker 1: in the day. You and I we still always talk 785 00:34:43,120 --> 00:34:46,320 Speaker 1: about cast Box. You remember them still a solid and 786 00:34:46,400 --> 00:34:48,319 Speaker 1: it's still it's still really is a really good one, 787 00:34:48,360 --> 00:34:50,200 Speaker 1: but you and I both have kind of moved on 788 00:34:50,239 --> 00:34:52,840 Speaker 1: a little bit. But Spotify. What I love about Spotify, 789 00:34:52,920 --> 00:34:54,840 Speaker 1: and I feel like I've mentioned this before, but the 790 00:34:54,880 --> 00:34:58,439 Speaker 1: handoff between the computer and the phone, it's almost seamless. 791 00:34:58,800 --> 00:35:01,400 Speaker 1: It's so good, like you just opened the program on 792 00:35:01,440 --> 00:35:03,920 Speaker 1: your computer once you sit down at your desk and 793 00:35:04,480 --> 00:35:06,200 Speaker 1: pull it up and just make the switch, and it'll 794 00:35:06,200 --> 00:35:08,160 Speaker 1: almost pick it up to the word like it'll repeat 795 00:35:08,200 --> 00:35:10,160 Speaker 1: like two words, but like it's right where you wanted. 796 00:35:10,239 --> 00:35:12,480 Speaker 1: I love it. It's so good, yeah, said Josh. I 797 00:35:12,520 --> 00:35:14,600 Speaker 1: hope that gets you pointed in the right directions, so 798 00:35:14,719 --> 00:35:17,319 Speaker 1: that allows you to point your parents in the right 799 00:35:17,360 --> 00:35:20,239 Speaker 1: direction as well. Yeah. That helping hand from a kid 800 00:35:20,280 --> 00:35:22,680 Speaker 1: as opposed to the finger in the face. It's it's 801 00:35:22,680 --> 00:35:24,719 Speaker 1: so good. Don't be like me. Yeah, I would have 802 00:35:24,719 --> 00:35:25,960 Speaker 1: loved to have been there to see you younging at 803 00:35:26,000 --> 00:35:28,240 Speaker 1: your dad about you know, not getting on podcast sooner. 804 00:35:29,520 --> 00:35:32,239 Speaker 1: That was a fun conversation. All right, Matt, Let's get 805 00:35:32,239 --> 00:35:33,520 Speaker 1: back to the beer that we had on the show. 806 00:35:33,800 --> 00:35:36,359 Speaker 1: This one was called Dr Fewks Sour Pale Ale by 807 00:35:36,360 --> 00:35:38,239 Speaker 1: Wrecking Bar brew Pub right down the street from us, 808 00:35:38,480 --> 00:35:40,439 Speaker 1: and yeah, what were thoughts on this, Speer Man, Yeah, 809 00:35:40,520 --> 00:35:42,160 Speaker 1: this is a good one, man. It poured a kind 810 00:35:42,160 --> 00:35:44,480 Speaker 1: of a nice amber, you know, I think for a pale, 811 00:35:44,480 --> 00:35:46,719 Speaker 1: maybe I was expecting something a little bit lighter, but 812 00:35:46,800 --> 00:35:48,880 Speaker 1: this was a sour pale, so it had some of 813 00:35:48,880 --> 00:35:51,719 Speaker 1: those tart notes, maybe even like a little bit of bitterness. 814 00:35:51,920 --> 00:35:53,799 Speaker 1: It kind of had a similar bitterness that reminded me 815 00:35:53,880 --> 00:35:55,839 Speaker 1: of tonic water. You know, you crack open a little 816 00:35:55,840 --> 00:35:57,880 Speaker 1: bottle of that tonic water with some gin and you 817 00:35:57,960 --> 00:35:59,920 Speaker 1: kind of there's there's some of that bitterness that you 818 00:36:00,120 --> 00:36:02,640 Speaker 1: get from that tonic water. I feel like that this 819 00:36:02,800 --> 00:36:04,640 Speaker 1: was that kind of bitterness. It didn't bash you over 820 00:36:04,680 --> 00:36:06,200 Speaker 1: the head, but it was kind of just subtle from 821 00:36:06,200 --> 00:36:09,640 Speaker 1: those hops. That plus the addition of the sour elements, 822 00:36:09,640 --> 00:36:11,880 Speaker 1: made this a really nice beer. Man. I really enjoyed it, 823 00:36:11,880 --> 00:36:14,239 Speaker 1: how about you. Yeah, subtle, like a conversation with your 824 00:36:14,239 --> 00:36:17,600 Speaker 1: parents about money, and like it should be. Uh No, 825 00:36:17,719 --> 00:36:19,960 Speaker 1: I really dug this one, man. I love the combo 826 00:36:20,000 --> 00:36:22,239 Speaker 1: of sour and hoppy. I think those two elements go 827 00:36:22,280 --> 00:36:25,080 Speaker 1: well together. Yet almost nobody bruised beers that are both 828 00:36:25,080 --> 00:36:26,920 Speaker 1: sour and hoppy. Yeah, there aren't a ton of them, 829 00:36:26,960 --> 00:36:28,480 Speaker 1: and we recently talked about how we need to drink 830 00:36:28,480 --> 00:36:30,680 Speaker 1: more beers that are the style, and I'm glad to 831 00:36:30,680 --> 00:36:32,839 Speaker 1: see that we're following through and actually doing it. Yeah, 832 00:36:32,840 --> 00:36:35,160 Speaker 1: So this one's definitely worth getting. And I'm gonna buy 833 00:36:35,160 --> 00:36:38,040 Speaker 1: pretty much almost any beer that's got an arrested development 834 00:36:38,080 --> 00:36:40,279 Speaker 1: theme going on to way to your heart. It's it's 835 00:36:40,280 --> 00:36:42,360 Speaker 1: pretty easy. Yeah. I think Tobias Puka one of the 836 00:36:42,440 --> 00:36:45,399 Speaker 1: best characters in television history, and I'm definitely gonna look 837 00:36:45,400 --> 00:36:47,600 Speaker 1: for more sour hoppy beers on the shelves. I wanted 838 00:36:47,600 --> 00:36:49,560 Speaker 1: to comment on the label as well. I can't not 839 00:36:49,600 --> 00:36:51,680 Speaker 1: mention the fact that the label it's it's got like 840 00:36:51,760 --> 00:36:53,920 Speaker 1: his eyes or a set of eyes, you know, kind 841 00:36:53,960 --> 00:36:56,719 Speaker 1: of floating there with his background of blue, and it 842 00:36:57,080 --> 00:37:01,799 Speaker 1: automatically conjures up visions of the great Gasby cover, you know, 843 00:37:01,840 --> 00:37:03,719 Speaker 1: I'm talking about like there, like it's it's a it's 844 00:37:03,719 --> 00:37:05,520 Speaker 1: a running theme in the book, you know, like when 845 00:37:05,560 --> 00:37:07,279 Speaker 1: they're driving down the road and like the eyes are 846 00:37:07,320 --> 00:37:09,440 Speaker 1: always there, kind of watching and and I feel like 847 00:37:09,440 --> 00:37:11,040 Speaker 1: they kind of designed and styled the label that way 848 00:37:11,080 --> 00:37:13,080 Speaker 1: a little bit. You know, it's kind of gilded. There's gold, 849 00:37:13,160 --> 00:37:15,000 Speaker 1: and there's like a city there in the background, and 850 00:37:15,040 --> 00:37:16,640 Speaker 1: the eyes are kind of floating up there in space. 851 00:37:16,960 --> 00:37:19,600 Speaker 1: It's interesting that they kind of combined this arrested development, 852 00:37:19,640 --> 00:37:21,440 Speaker 1: which with what I would say, is like kind of 853 00:37:21,480 --> 00:37:23,880 Speaker 1: a great Gasby theme. But uh, but either way, I 854 00:37:23,920 --> 00:37:25,360 Speaker 1: dig it. It's a good beer and kind of a 855 00:37:25,360 --> 00:37:27,439 Speaker 1: fun label. Yeah for sure. All right, man, that's gonna 856 00:37:27,480 --> 00:37:29,200 Speaker 1: do it for this episode. For anybody who wants to 857 00:37:29,239 --> 00:37:31,880 Speaker 1: submit a question to to be featured on a future 858 00:37:31,920 --> 00:37:34,560 Speaker 1: ask htm episode, we we would love to hear from you, 859 00:37:34,840 --> 00:37:37,400 Speaker 1: Just go to how the Money dot com slash ask again, 860 00:37:37,680 --> 00:37:40,120 Speaker 1: simple directions there for you to submit your voice question 861 00:37:40,360 --> 00:37:43,279 Speaker 1: to be on a future episode. Yeah, and if you 862 00:37:43,320 --> 00:37:47,400 Speaker 1: haven't already left us a review on the aforementioned Apple podcast, 863 00:37:47,480 --> 00:37:49,480 Speaker 1: Like like like Joel was talking about, we would be incredibly 864 00:37:49,480 --> 00:37:51,719 Speaker 1: thankful if you did have an Apple device, if you 865 00:37:51,719 --> 00:37:53,560 Speaker 1: would over there and did that. And you know what, 866 00:37:53,640 --> 00:37:55,239 Speaker 1: if you don't have an Apple device, if you're like 867 00:37:55,280 --> 00:37:57,200 Speaker 1: Joel and you're rocking that droid, you can leave a 868 00:37:57,200 --> 00:37:59,360 Speaker 1: review wherever it is that you listen to your podcasts, 869 00:37:59,480 --> 00:38:01,160 Speaker 1: or you can go in your parents iPhone and leave 870 00:38:01,160 --> 00:38:03,200 Speaker 1: a review there. I bet did you actually match the 871 00:38:03,280 --> 00:38:07,839 Speaker 1: five stars on your taste as you subscribed him to us. 872 00:38:07,840 --> 00:38:09,400 Speaker 1: I'll take whatever i can get, man, No shame in 873 00:38:09,400 --> 00:38:11,600 Speaker 1: that game. I love it. That's perfect. This is the 874 00:38:11,640 --> 00:38:14,200 Speaker 1: best podcast ever. I didn't write when I just clicked 875 00:38:14,200 --> 00:38:15,719 Speaker 1: the five stars. I'm not gonna do that. Be like. 876 00:38:15,960 --> 00:38:18,239 Speaker 1: I love Truel. He's my favorite host of Out of Money. 877 00:38:18,400 --> 00:38:22,240 Speaker 1: Forgetting that, he's alright, buddy, Well that's hit man. Until 878 00:38:22,280 --> 00:38:24,520 Speaker 1: next time. Best Friends Out, Best Friends Out,