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Speaker 1: Welcome to How the Money, Joel, you messed it up.

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Speaker 1: That's not how we do it. Why not? We can

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Speaker 1: do it that way? Okay, today we're answering your listener questions.

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Speaker 1: I thought you made a mistake, so I was just

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Speaker 1: catching it early on. Switch things up, all right, This

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Speaker 1: is and ask how to Money episode. Uh. Listener is

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Speaker 1: considering coppying healthcare plans in order to save it's open

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Speaker 1: enrollment season after all, Joel. Another listeners wondering open season

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Speaker 1: on our wallets healthcare fronts. That's what it feels like.

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Speaker 1: Another listener, he's wondering if you and I if we

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Speaker 1: could ever love buy now, pay later, so we'll share

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Speaker 1: our thoughts there. Another listener is considering pausing her investing

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Speaker 1: for some debt payoff goals. We'll get to those plus

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Speaker 1: more during our episode today, Buddy. Okay, So, I don't

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Speaker 1: know where this quote comes from, but I think it's

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Speaker 1: a it's either a quote from an old economist, but

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Speaker 1: then Forrest Gump, you might I don't think of us

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Speaker 1: the chocolates quote. No, not thinking about that one. No,

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Speaker 1: I just so I was listening to UH that there

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Speaker 1: aren't many politicians I appreciate these days. But I was

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Speaker 1: listening to one politician that I actually like in a

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Speaker 1: sea of awful ones. And I'm not even gonna mention

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Speaker 1: his name. I'm just not. I'm just not because I

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Speaker 1: don't want to. I'm just I don't want to get

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Speaker 1: that feedback. You're like, have you heard of this guy

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Speaker 1: named Donald? I forget his last name? Yeah? Right right? So, uh,

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Speaker 1: there's like literally two politicians I think make any sense

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Speaker 1: right now. But he was talking on a very obscure podcast,

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Speaker 1: so good luck, I want to find this. But he

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Speaker 1: was talking about the high prices of beef in this country,

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Speaker 1: which we've all been confronted with. If you've tried to

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Speaker 1: buy a steake recently, you wanted to punch yourself in

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Speaker 1: the face it was that expensive, and you probably opted

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Speaker 1: for chicken instead, unless you're just a baller like Matt.

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Speaker 1: Was he talking please? Was he talking about Brazil? Evidently

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Speaker 1: the Argentina? Oh is it he's talking about? Yes, talk

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Speaker 1: about our beef import the desire to import beef right now.

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Speaker 1: And he talked about how that's actually going to prolong

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Speaker 1: the problem. And one of the things that he said was,

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Speaker 1: and I thought this was so true, it's one of

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Speaker 1: those kind of destruction, creative destruction, elements of that happened

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Speaker 1: in a free market society. He said, high prices are

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Speaker 1: the cure for high prices, And that's just a really

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Speaker 1: classic like economist talk, yes again slogan. How often you

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Speaker 1: hear smart stuff like that come out of the mouths

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Speaker 1: of a politician, But it's really true in so many

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Speaker 1: ways that when prices get too high, it's I think people,

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Speaker 1: especially politicians, are often tempted towards a non free market

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Speaker 1: solution or a way to stem the pain of their

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Speaker 1: constituents in a quick manner. And what this guy was

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Speaker 1: saying was actually what happens when prices get high is

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Speaker 1: people either a make different choices, they demand less of

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Speaker 1: that item. So in the case of beef, like people

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Speaker 1: start opting for chicken or veggies, whatever it is, and said,

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Speaker 1: chicken super affordable these days, that's right, or especially with

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Speaker 1: that five six dollars off per package a costco. Baby,

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Speaker 1: When that happens when you stock up and throw a

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Speaker 1: pack in the freezer too, heaven. Yeah. And then the

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Speaker 1: other thing that happens is it attracts more suppliers, So yeah, farmers,

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Speaker 1: the suppliers see that the prices are high, they say,

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Speaker 1: I want a piece of that action. Right, They get

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Speaker 1: in start providing more supply, which then does what lowers

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Speaker 1: the overall the problem with beef is is that it

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Speaker 1: just takes a lot longer to go from raising cattle

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Speaker 1: to that being a steak in the supermarket. As long

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Speaker 1: as it take, I think it's like multiple years, right,

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Speaker 1: whereas like with chickens or pigs, like it's so much

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Speaker 1: quicker turnaround months, right, yeah, chickens it's literally like like

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Speaker 1: eight weeks or something, six weeks three months before the Yeah,

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Speaker 1: you go from hatching to like these chickens are ready

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Speaker 1: to go. So the pain is felt a lot longer,

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Speaker 1: which makes people want to get involved in the system

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Speaker 1: to lower the prices. When ultimate, as that politician said,

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Speaker 1: as a commists before them have said, high prices are

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Speaker 1: the cure for prices, let it go. So he would

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Speaker 1: see advocating for more of a free market. So he was, dude,

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Speaker 1: I'm all about that, because what's true is also the

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Speaker 1: opposite of that too, right, So low prices are also

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Speaker 1: the cure for low prices. Yeah, right, So it's a

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Speaker 1: self it's like an autocorrecting mechanism. This also makes me

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Speaker 1: think through it's like okay, beef is it's kind of

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Speaker 1: a really long runway, like years. But it makes me

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Speaker 1: think about other industries a that have really short lifespans

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Speaker 1: or short cycles that allow for there to be a

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Speaker 1: whole lot of adjustments where you see prices in a

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Speaker 1: much more dynamic way, and then different industries where it's

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Speaker 1: really stretched out. And when that comes to mind as

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Speaker 1: far as it being really stretched out, is higher ED

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Speaker 1: because ye like as opposed to eating a steak, which

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Speaker 1: is something you do in one sitting. When it comes

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Speaker 1: to higher ED, it literally takes most people at least

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Speaker 1: four years to consume that product, and then years, if

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Speaker 1: not decades beyond that to decide was that purchase it's

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Speaker 1: worth my money? Right, because a lot of it depends

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Speaker 1: on job satisfaction, career, how much money they're able to make.

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Speaker 1: But it makes Yeah, it makes me think that like

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Speaker 1: he's I guess he was talking about how painful it

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Speaker 1: is during during those sort of down periods where you're

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Speaker 1: trying to figure out the best decision, and I think

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Speaker 1: that's where folks could be potentially when it comes to

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Speaker 1: higher ED because they're saying, well, was that worth it? Ah,

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Speaker 1: I don't know. It's tough to tell. It's not something

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Speaker 1: you're gonna know, maybe even for a decade out because

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Speaker 1: I think about like when I was right out of school,

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Speaker 1: I remember thinking, man, what a waste of time. It's

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Speaker 1: even your perception. Your perception of it changes. But is

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Speaker 1: the solution what you're saying then, is a solution for

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Speaker 1: the government to get involved into distort prices? I would

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Speaker 1: say no, and that's just not the solution. Let's just

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Speaker 1: be honest that a lot of price distortment that currently happens,

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Speaker 1: like let's say we're talking about prescription drugs or healthcare,

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Speaker 1: there already is a lot of like it's not really

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Speaker 1: a free market system, and so, which is awesome. Why

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Speaker 1: it's so broken. We have a ton of distortment, and

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Speaker 1: so a lot of people are like, I prefer distortion.

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Speaker 1: How the free market's working on that. It's like, yeah,

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Speaker 1: it's it's not because it's not a free market really,

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Speaker 1: and that is a problem too. So all right, sorry,

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Speaker 1: random wonky economists. Not No, I think it's fun. All right,

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Speaker 1: should we mention the beer we're having? You and I

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Speaker 1: are enjoying an athletic brewing company beer that happens to

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Speaker 1: be called Upside Dawn, which is a golden And I

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Speaker 1: wanted to have this one on specifically because I told

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Speaker 1: you about our friend Jimmy who gave me a beer,

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Speaker 1: and I think maybe he was thinking we would have

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Speaker 1: it on the show, but then I just drank it,

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Speaker 1: and then anyway, he cried himself to sleep. Then I know,

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Speaker 1: I haven't talked to him about it, but I should soon.

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Speaker 1: He's not talking to you anymore. Last time I was

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Speaker 1: out I saw it. I was also athletic, and I thought, oh,

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Speaker 1: I should get that mentioned Jimmy. So the one he

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Speaker 1: gave me was an october Fest, which evidently you can't

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Speaker 1: get where we are. You have to order it. And

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Speaker 1: even still they don't you have to order it to

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Speaker 1: a different state. Maybe I don't know if i'd recommend

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Speaker 1: that there's somebody from to us at one point, maybe

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Speaker 1: we should holler at them and see if they can

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Speaker 1: send us some October but they would. I like the

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Speaker 1: way you're like, where your head's out? Good folks. Anyway,

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Speaker 1: Free beers the best kind of beer to you, by

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Speaker 1: the way. Yeah, so this is an NA we'll share

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Speaker 1: our thoughts. Have we had an NA on the show before,

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Speaker 1: I want to say we've had one or two? Really? Yeah,

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Speaker 1: it might have been an athletic back in the day.

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Speaker 1: Oh no way, Yeah, I just swear like the heat

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Speaker 1: reached out and brought us some beers and we try them.

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Speaker 1: But yeah, But let's let's get onto money questions. Matt

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Speaker 1: the if you're listening right now and you're like, I

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Speaker 1: have a money question on the tip of my brain

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Speaker 1: and I would love for Matt and Joel to tackle

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Speaker 1: it in maybe next week on the show. Even well,

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Speaker 1: you can go to have to money dot com, slash ask,

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Speaker 1: or literally just record a voice memo on that voice

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Speaker 1: recorder app on your phone. Email it over to us

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Speaker 1: at how to money pot at gmail dot com. We

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Speaker 1: look forward to hearing from you. Matt. Let's get to

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Speaker 1: man speaking of not real free markets. Well, let's get

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Speaker 1: to a question now, specifically about open enrollment.

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Speaker 2: Hey, Matt and Joel, I've got a question about health insurance.

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Speaker 2: It's open enrollment season at my employer, and they're offering

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Speaker 2: us a couple of different options for health insurance this

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Speaker 2: year with a major provider right now, and it looks

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Speaker 2: like they're about twelve hundred dollars more expensive than one

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Speaker 2: of the other major providers that's being offered. I'm interested

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Speaker 2: in taking those savings, but I'm also weighing the cost

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Speaker 2: of confirming that all of our doctors accept the other ensure,

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Speaker 2: making sure that all of our prescriptions are covered for

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Speaker 2: my whole family of five. So any advice about how

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Speaker 2: to weigh the cost some benefits of switching from one

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Speaker 2: insurer to another.

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Speaker 1: All right, Jil And that was Brian from Chicago, by

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Speaker 1: the way, And open enrollment, Man, this can be a

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Speaker 1: trying time for a lot of folks who they've got

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Speaker 1: all these options laid out before them. So we'll offer

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Speaker 1: a few thoughts that will hopefully make this process a

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Speaker 1: little less difficult. And yeah, I don't think Brian is

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Speaker 1: the only person to find himself in this situation as well,

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Speaker 1: because healthcare costs have risen significantly and they're yeah, obviously

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Speaker 1: trying to find different ways to say so, here's some numbers.

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Speaker 1: The average annual cost now is twenty seven thousand dollars

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Speaker 1: dollars for the average family in the US, and the

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Speaker 1: average employer covers most of that twenty thousand dollars, But

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Speaker 1: that still leaves a ton of money for you to

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Speaker 1: cover as the employee, a little over six thousand dollars,

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Speaker 1: and that's just the premiums like that, that doesn't include

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Speaker 1: the other costs. And so even with great workplace coverage

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Speaker 1: here we're talking that man like you could easily spend

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Speaker 1: over ten thousand, maybe closer to fifteen on healthcare costs

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Speaker 1: in a given year between just like themistons and then

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Speaker 1: just some of the other costs that go into it.

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Speaker 1: Paying those premiums gets you the coverage right in case

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Speaker 1: of catastrophic some catastrophic happens to you, but it also

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Speaker 1: gives you the ability to pay less to go see

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Speaker 1: the doctor when we're talking about cope's and stuff like that.

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Speaker 1: But just to think that that's how much it requires

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Speaker 1: just to have health coverage in this country, even when

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Speaker 1: your employer is putting a substantial amount of the bill,

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Speaker 1: it's it's harrowing. That's kind of hard to fathom. And

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Speaker 1: I know that there are some employers who do even

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Speaker 1: better on the healthcare coverage front, and they pay even

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Speaker 1: more or all of your premiums. I think if you

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Speaker 1: are an individual working for one of those employers just

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Speaker 1: don't neglect to realize how great of a benefit that is,

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Speaker 1: because it really is substantial. And you see, you might

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Speaker 1: have friends working down the street for another firm that's

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Speaker 1: less generous and they are paying a lot more of

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Speaker 1: They've got more skin in the game essentially when it

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Speaker 1: comes to premiums than you do. So if you're in

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Speaker 1: that case, be thankful, I'd say, and Matt, I think

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Speaker 1: when it comes to this question, we want to compare

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Speaker 1: the total annual cost. Right It's hard to do because

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Speaker 1: we're using predicted costs. There's no way to one hundred

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Speaker 1: percent predict exactly what you're going to spend in healthcare

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Speaker 1: in a given year. So much of healthcare is like

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Speaker 1: ow I broke my ankle, I need to go see

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Speaker 1: the doctor right now. You don't usually know exactly what

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Speaker 1: you're going to spend in the coming year, understandably so,

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Speaker 1: but you can come up with a solid estimate, I think,

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Speaker 1: based on what you spent last year and whether or

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Speaker 1: not there any procedures you already have planned that are

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Speaker 1: in the works. And some folks they even batch bigger

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Speaker 1: health needs into a specific year while they're on let's

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Speaker 1: say a lower deductible plan, and then they move to

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Speaker 1: a higher deductible plan in years where they're less likely

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Speaker 1: to need care, which is I think a solid planning option.

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Speaker 1: If you're saying, listen, I know I've got this major surgery,

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Speaker 1: and my spouse has this other thing going up, my

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Speaker 1: kid needs to get their tonsils removed. Let's go for

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Speaker 1: the lower deductible plan in twenty twenty six, and then

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Speaker 1: twenty twenty seven, hopefully most of our major surgeries are

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Speaker 1: over with boom, Like, we're going to go back to

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Speaker 1: the high deductible plan, try to save more money. But

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Speaker 1: the total costs we're talking about here is premiums, it's

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Speaker 1: your potential deductible, it's copays, and it's also really important

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Speaker 1: to know what your out of pocket max is as well.

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Speaker 1: I think those are really kind of the crucial moving

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Speaker 1: parts we've got a factor in, Yeah, the overall costs,

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Speaker 1: because if you just go simply seeking lower premiums, well

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Speaker 1: that's often going to mean higher deductibles. So also take

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Speaker 1: into account how much cash, how much money you have

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Speaker 1: in savings, whether or not you can go with a

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Speaker 1: plan like that if you have some more healthcare expenses

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Speaker 1: next year, Joel, you mentioned copay costs as well. Those

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Speaker 1: really can add up, so make sure you are aware

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Speaker 1: of that if you do go and see the doctor regularly.

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Speaker 1: And it's yeah, And Brian he mentioned specifically looking into

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Speaker 1: the doctors that he has making sure that they accept

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Speaker 1: the new health insurance as well. It may not be

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Speaker 1: worth it for you. So you get you're a family

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Speaker 1: of five, right, If you have to go and find

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Speaker 1: a new pediatrician, if you have to find a new

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Speaker 1: doctor for you, if your wife or your partner, if

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Speaker 1: they need to go find a new doctor as well,

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Speaker 1: it might be a massive headache. But that being said,

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Speaker 1: I don't know. Maybe extreme time situations call for extreme

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Speaker 1: measures here and the ability to save an extreme amount

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Speaker 1: of money. Yeah, yeah, And so I don't want the

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Speaker 1: default to be like, well, yeah, obviously make sure because

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Speaker 1: that's just presupposing that he's not going to make a

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Speaker 1: big change like that. And I actually want to introduce

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Speaker 1: the idea that hey, maybe it's worth doing something completely

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Speaker 1: different in order to save some money here. Yeah maybe,

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Speaker 1: but you might with three kids, you're attached to the physician.

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Speaker 1: I mean, I remember Matt when we moved the one

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Speaker 1: of the hardest parts about leaving where we lived was

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Speaker 1: how much we loved the pediatrician where we were, and

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Speaker 1: we just not to throw shade, but we haven't found

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Speaker 1: a great pediatrician where we are now. It's just okay, yeah,

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Speaker 1: and we miss the old and we're like, we even

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Speaker 1: think about do we go back and just drive forty

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Speaker 1: five minutes to go see a pediatrician. Maybe you can.

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Speaker 1: And so if you if you feel that attached and

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Speaker 1: you're like, huh, well my pediatrician who we love, you know,

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Speaker 1: doesn't take this new healthcare coverage, doesn't doesn't take this plan,

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Speaker 1: well I get how that's going to help sway your decision,

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Speaker 1: and you might be like, not worth the savings if

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Speaker 1: we can't see that person again. And yeah, you got

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Speaker 1: a factor in prescriptions too, because if there are any

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Speaker 1: regular prescriptions that you'd want to you know, that you take,

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Speaker 1: you'd want to see how much those are going to

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Speaker 1: cost underneath this new plan as well. Although depending on

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Speaker 1: what you take, especially if it's an older generic, you

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Speaker 1: might actually save a lot of money by not going

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Speaker 1: through insurance and using a site that we've mentioned before

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Speaker 1: like cost plus Drugs. Good Rx is another good place.

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Speaker 1: So don't necessarily think you have to go through insurance

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Speaker 1: to save money on prescriptions. You might save more not

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Speaker 1: going through insurance. We'd also love to see you on

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Speaker 1: an HSA eligible high deductible health care plan if it

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Speaker 1: makes sense for your overall health care costs. Don't let

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Speaker 1: the tail wag the dog here, but if a high

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Speaker 1: deductible health care plan is ideal from that total cost

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Speaker 1: perspective that we're discussing, it'll mean you can utilize an

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Speaker 1: HSA two, which can just be another way to save

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Speaker 1: money on healthcare because it reduces your taxes for the

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Speaker 1: current year and it allows you to grow those dollars

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Speaker 1: for your future too. Your employer they might be generous

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Speaker 1: enough to even offer an HSA match. We have heard

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Speaker 1: from many listeners who have that as a benefit where

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Speaker 1: they work. That sweetens the pot. We're seeing more of

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Speaker 1: this and we love it. But just take that into

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Speaker 1: consideration as well, because there are additional perks with the

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Speaker 1: high deductible healthcare plan. You save on premiums, you have

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Speaker 1: access to the HSA. Still, that doesn't mean it's always

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Speaker 1: the best choice for everyone. Yeah. Yeah, And Brian, he's

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Speaker 1: talking about saving twelve hundred bucks here. But kind of

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Speaker 1: piggybacking off of the taking more extreme measures. I've got

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Speaker 1: to bring up health sharing plans because if you are

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Speaker 1: interested in saving, what I would say is the most

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Speaker 1: extreme amount of money trol. So I logged into our

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Speaker 1: state's healthcare exchange, so healthcare dot gov, or if you

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Speaker 1: live in a state where healthcare dot gov no longer

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Speaker 1: works because the state exchanges took over, check that out.

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Speaker 1: But I logged in there and guess what our family

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Speaker 1: of six monthly cost was going to be. I'm gonna

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Speaker 1: guess for a bronze plan for the cheapest. Okay, I'm

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Speaker 1: gonna guess like twenty three thousand monthly, So I'm me

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Speaker 1: eight nineteen hundred, twenty five hundred dollars wow a month?

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Speaker 1: Okay a month? Yeah, versus three hundred and seventy four

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Speaker 1: dollars a month, which is what we're paying here. This

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Speaker 1: is the difference between oh, paying over thirty thousand dollars

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Speaker 1: over the course of a year and versus six. And

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Speaker 1: that's you're not talking about a gold plan, No, this

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Speaker 1: was like prices you might be able to get a

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Speaker 1: plan starting at and it said that I could not

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Speaker 1: believe it, and by the way, when I said six

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Speaker 1: thousand dollars, that's not only the quote unquote premium that

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Speaker 1: I'm paying towards the health sharing but also that also

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Speaker 1: includes our out of pocket costs. So we spent a

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Speaker 1: little over six thousand dollars total last year. Yeah, and

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Speaker 1: you're probably thinking, all, yeah, I know how you are,

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Speaker 1: with like not ever going to see the doctor last

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Speaker 1: year was actually we had several doctor's visits out of

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Speaker 1: which is yeah, you have to take that rational a

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Speaker 1: few times kind of out of the ordinary for us.

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Speaker 1: So I'm just highlighting that if you are looking to

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Speaker 1: save the absolute most amount of money, you've got to

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Speaker 1: look into health sharing. And not all of them are

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Speaker 1: are are religious, are faith based either Sidera, So you

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Speaker 1: and I both both of us families are with Meta Share,

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Speaker 1: but Sidara is a great option as well, where there's

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Speaker 1: a whole lot of folks who are served well yea

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Speaker 1: via that organization. The problem is, it's really hard when

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Speaker 1: you're offered a Cadillac health insurance plan through your work,

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Speaker 1: the premiums are highly subsidized. It's tough to think about

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Speaker 1: saying none of the above and going getting your own

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Speaker 1: health sharing plan. I think it. They typically make the

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Speaker 1: most sense for self employee people, right who don't have

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Speaker 1: access to any sort of health coverage to work, or

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Speaker 1: if you're if maybe you're employed by an employer who says, yeah,

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Speaker 1: we don't you're kind of your own. Yeah, but like

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Speaker 1: we don't really subsize the premiums very much, and you're

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Speaker 1: feeling more of that healthcare dot Gov sort of slap

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Speaker 1: in the face where you're faced with paying the bulk

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Speaker 1: of the premiums yourself exactly. But even assuming the average

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Speaker 1: American where it's okay, say twenty seven thousand employers covering twenty,

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Speaker 1: you're covering six. I paid six total last year, not

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Speaker 1: just in the cost of health care, but also in

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Speaker 1: out of pockets what I call in my excel sheet

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Speaker 1: medical out of pocket costs. Yeah. Uh, and so you're

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Speaker 1: still looking at saving a few thousand dollars right there,

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Speaker 1: assuming uh, you know, a healthier year. But that's something

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Speaker 1: else you got to keep in mind too, because if

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Speaker 1: you do use the doctor a whole lot, if you've

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Speaker 1: got a whole lot of procedures lined up, if you've

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Speaker 1: got different you know, regular visits that you need to

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Speaker 1: go in and get things checked in on that's probably

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Speaker 1: not going to work out for you quite as well. Yeah,

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Speaker 1: So I think what we're ultimately saying here to Brian

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Speaker 1: is to, yeah, look at that over all out of

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Speaker 1: pocket costs and say, is it word jumping through these hoops?

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Speaker 1: And am I gonna have to give up too much

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Speaker 1: in order to save the twelve hundred bucks? Or is man?

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Speaker 1: I'm still getting everything that I really value. Maybe a

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Speaker 1: couple things are gone, but I don't really care about

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Speaker 1: those things or use those things anyway. And yeah, it's

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Speaker 1: really it's partly math, but it's partly kind of lifestyle

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Speaker 1: and what you care about when it comes to your

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Speaker 1: healthcare coverage. But twelve hundred bucks, that's not chump change.

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Speaker 1: It's potentially worth jumping through some of those hoops in

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Speaker 1: order to save that much money every year. All Right,

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Speaker 1: We've got more questions to get to. We'll get theoretical

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Speaker 1: about buy now, pay later, and we'll also man that

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Speaker 1: classic personal finance question of investing or paying down debt.

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Speaker 1: We've got a good question on that front. We'll get

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Speaker 1: to those and more right after this. All right, buddy,

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Speaker 1: we are back from the break. Let's now hear from

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Speaker 1: a listener who has a hypothetical discount question for.

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Speaker 3: Us, again from Philadelphia, calling in with yet another question.

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Speaker 3: This question pertains to buy now and pay later services. Now,

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Speaker 3: I would like to preface this with I have never

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Speaker 3: in my life used or even considered to use any

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Speaker 3: of these services. And I say that just to cover myself,

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Speaker 3: because I know your views of them are fairly negative.

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Speaker 3: And I understand that and mostly agree that. Said, I

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Speaker 3: had a thought experiment. I thought you might want to

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Speaker 3: indulge me in it. What if to attract more people

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Speaker 3: to use buy now and pay later services and to

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Speaker 3: get them used to using them in general, they started

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Speaker 3: offering large discounts on the items that you were purchasing.

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Speaker 3: Figure something along the lines of ten twenty thirty percent off.

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Speaker 3: Would something like that move the needle on how you

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Speaker 3: felt about buy now pay later services? If your answer

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Speaker 3: is no, I would be curious if there's anything these

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Speaker 3: buy now now, pay later services could do to interest

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Speaker 3: you in using them. For instance, even a larger discount,

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Speaker 3: let's say eighty percent off just to be ridiculous, or

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Speaker 3: perhaps some other kind of bonus that I can't think of.

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Speaker 3: Is there anything that would get you interested in doing this,

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Speaker 3: and I promise I don't work for these companies and

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Speaker 3: I'm trying to trick you into using the services and

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Speaker 3: or becoming an advertiser for them by now pay later services.

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Speaker 3: Can they be made into something that the how the

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Speaker 3: money guys would approve of? What do you say, man,

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Speaker 3: Jil can you fix it? As always? Best? Wayne out?

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Speaker 1: Inside man for Klarna? Wayne, not cool? Wayne, we know

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Speaker 1: what you're doing now, Matt, I could if there was

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Speaker 1: a gun to your head, would you use a buy now,

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Speaker 1: Pay later service? If it was existential life or death? Yeah? Okay,

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Speaker 1: that's not wouldn't be the end of the world. Okay, Yeah,

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Speaker 1: I agree, I agree. So they're they're Wayne, that's the answer.

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Speaker 1: If Matt were faced, Well, a lot of it does

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Speaker 1: come down to the discount, so that it comes down

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Speaker 1: to the particulars. So I mean, I'm glad that Wayne's

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Speaker 1: avoided them so far, but I think the shortening it

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Speaker 1: truly is yes, like not even goin to my head

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Speaker 1: sort of situation. And I think what Wayne is really

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Speaker 1: putting his finger on the heart of why we're not

429
00:21:09,000 --> 00:21:11,720
Speaker 1: fans of buy now, Pay later if there were discounts

430
00:21:11,760 --> 00:21:14,600
Speaker 1: involved for using buy now pay Later, I'd be more

431
00:21:14,760 --> 00:21:17,240
Speaker 1: than happy to consider using them. I actually did, and

432
00:21:17,280 --> 00:21:18,560
Speaker 1: I think I talked about this on the show. I

433
00:21:18,680 --> 00:21:20,840
Speaker 1: used by Now Pay Later one time, and it was

434
00:21:20,880 --> 00:21:23,320
Speaker 1: because I got a meaningful discount on some running shoes.

435
00:21:23,440 --> 00:21:25,320
Speaker 1: I don't I don't remember if it was like, do

436
00:21:25,359 --> 00:21:28,119
Speaker 1: you buy anything else other than running shoes? No, not really.

437
00:21:28,560 --> 00:21:31,600
Speaker 1: I just ripped through on so fast, though, but it

438
00:21:31,640 --> 00:21:33,840
Speaker 1: was I was like, I'll just go buy these shoes

439
00:21:33,840 --> 00:21:36,280
Speaker 1: are a good price here, And then there was I

440
00:21:36,320 --> 00:21:38,040
Speaker 1: think it was like fifty bucks off one hundred and

441
00:21:38,040 --> 00:21:40,400
Speaker 1: fifty bucks for using Clara, and I was like, I'll

442
00:21:40,440 --> 00:21:42,240
Speaker 1: just get another pair of shoes. I stick them on

443
00:21:42,280 --> 00:21:43,520
Speaker 1: the top of my closet mat in a row, and

444
00:21:43,520 --> 00:21:44,840
Speaker 1: then I just like pull down the next pair when

445
00:21:44,880 --> 00:21:47,479
Speaker 1: I need it. But yeah, I was like, well, if

446
00:21:47,480 --> 00:21:50,359
Speaker 1: they're gonna offer me fifty bucks off, then I'm happy.

447
00:21:50,440 --> 00:21:51,959
Speaker 1: I'm happy to use by Now pay Later. And then

448
00:21:51,960 --> 00:21:54,200
Speaker 1: I just didn't use it, Like by Now Pay Later.

449
00:21:54,200 --> 00:21:56,880
Speaker 1: I immediately paid off the loan or whatever they call

450
00:21:56,920 --> 00:21:59,480
Speaker 1: it in order to avoid the behavioral trap because I

451
00:21:59,520 --> 00:22:01,040
Speaker 1: just don't want to be caught in that sort of

452
00:22:01,080 --> 00:22:02,919
Speaker 1: like I've got how many outstanding loans do I have?

453
00:22:03,000 --> 00:22:04,960
Speaker 1: And am I being tempted to buy things I wouldn't

454
00:22:05,000 --> 00:22:07,159
Speaker 1: otherwise buy? But yeah, if there was like a ten

455
00:22:07,240 --> 00:22:10,320
Speaker 1: or twenty percent off perk for using buy now, Pay later,

456
00:22:10,320 --> 00:22:12,439
Speaker 1: I'd probably use it a lot more. Yeah, you know.

457
00:22:12,760 --> 00:22:15,399
Speaker 1: Like so occasionally folks will reach out to us to

458
00:22:15,480 --> 00:22:17,760
Speaker 1: say that, well, credit cards, they're not much better than

459
00:22:17,760 --> 00:22:20,000
Speaker 1: buy not pay later, Like you are still using debt

460
00:22:20,000 --> 00:22:21,840
Speaker 1: to purchase something that you don't have the money for

461
00:22:21,920 --> 00:22:24,720
Speaker 1: at the time, And that's that's kind of true. But

462
00:22:25,080 --> 00:22:26,720
Speaker 1: I think I would say that if that is how

463
00:22:26,800 --> 00:22:29,600
Speaker 1: you are actually using your credit cards, and if that

464
00:22:29,680 --> 00:22:31,400
Speaker 1: is how you are using your buy now, pay later,

465
00:22:31,600 --> 00:22:34,360
Speaker 1: well then that's not something I'm happy with, right, that's

466
00:22:34,400 --> 00:22:37,399
Speaker 1: not happy with you, I'm not because if that if

467
00:22:37,440 --> 00:22:38,919
Speaker 1: you don't have the cash on like you need to

468
00:22:38,960 --> 00:22:40,920
Speaker 1: have the cash on hand if you are going to

469
00:22:41,040 --> 00:22:43,000
Speaker 1: use these methods of payment, it doesn't matter if it's

470
00:22:43,000 --> 00:22:44,600
Speaker 1: a credit card or if it's a buy now, Pay later,

471
00:22:44,720 --> 00:22:47,439
Speaker 1: like that is the like you must have that ticket

472
00:22:47,480 --> 00:22:49,480
Speaker 1: in order to ride Like that is like we're trying

473
00:22:49,480 --> 00:22:51,480
Speaker 1: to raise the standard here, We're trying to raise the bar,

474
00:22:52,760 --> 00:22:55,479
Speaker 1: like the cash on hand that is your license to

475
00:22:55,560 --> 00:22:58,639
Speaker 1: be able to play this game. Otherwise then it's too

476
00:22:58,680 --> 00:23:01,439
Speaker 1: slippery of a slope. Otherwise we don't once you messing

477
00:23:01,480 --> 00:23:04,520
Speaker 1: with it at all. And so if okay, then if

478
00:23:04,520 --> 00:23:05,920
Speaker 1: they are the same, You got the cash on hand,

479
00:23:05,960 --> 00:23:07,840
Speaker 1: why would you then go with a credit card over

480
00:23:08,200 --> 00:23:09,760
Speaker 1: the buy not pay later? And it does come down

481
00:23:09,800 --> 00:23:12,000
Speaker 1: to the perks, going back to what you're saying as

482
00:23:12,000 --> 00:23:14,160
Speaker 1: far as getting the discount, you were saying, like, maybe

483
00:23:14,240 --> 00:23:17,920
Speaker 1: get like ten or twenty percent off, like truly, if

484
00:23:18,240 --> 00:23:20,480
Speaker 1: like I would do it for like five percent off? Yeah,

485
00:23:20,560 --> 00:23:23,040
Speaker 1: because because that's roughly what a credit card. Yeah, because

486
00:23:23,040 --> 00:23:25,840
Speaker 1: I'm getting anywhere between two percent and six percent off

487
00:23:25,840 --> 00:23:27,879
Speaker 1: with my credit cards. If there is a buy not

488
00:23:28,000 --> 00:23:31,320
Speaker 1: Pay later. And this is me maybe wishing this out

489
00:23:31,320 --> 00:23:33,240
Speaker 1: into existence, but if there was a a buy now,

490
00:23:33,280 --> 00:23:35,480
Speaker 1: Pay later that was willing to offer five percent off

491
00:23:35,560 --> 00:23:37,760
Speaker 1: just across the board in order to use their products,

492
00:23:38,320 --> 00:23:40,399
Speaker 1: guess what I would do it. I would get in there,

493
00:23:40,400 --> 00:23:44,080
Speaker 1: I'd figure out how to incorporate that into my financial system,

494
00:23:44,119 --> 00:23:46,080
Speaker 1: into my Excel spreadsheets to spread that out over the

495
00:23:46,080 --> 00:23:48,480
Speaker 1: four months. But actually probably wouldn't do that. I'll probably

496
00:23:48,520 --> 00:23:49,960
Speaker 1: just like i'd do with a credit card. I would

497
00:23:49,960 --> 00:23:51,879
Speaker 1: pay it off at the end of the month, snag

498
00:23:51,960 --> 00:23:55,840
Speaker 1: the discount, and I would probably stop using credit cards.

499
00:23:55,840 --> 00:23:58,640
Speaker 1: Although that being said, there are other perks as well

500
00:23:58,640 --> 00:24:01,440
Speaker 1: that the credit cards offered, right, not just the discount,

501
00:24:01,480 --> 00:24:03,160
Speaker 1: but I think I would consider it like the buyer

502
00:24:03,200 --> 00:24:05,760
Speaker 1: protections and how if someone steals your credit card. Wouldn't

503
00:24:05,760 --> 00:24:07,959
Speaker 1: rent a card, I'm sorry, I wouldn't rent a vehicle

504
00:24:08,280 --> 00:24:11,200
Speaker 1: with buy not pay later. Yeah, and some of these

505
00:24:11,280 --> 00:24:14,440
Speaker 1: other flight and some of these other perks that maybe

506
00:24:14,440 --> 00:24:17,280
Speaker 1: we can touch on. But as far as just general spending,

507
00:24:17,480 --> 00:24:19,080
Speaker 1: I think I do it even for five percent, not

508
00:24:19,119 --> 00:24:21,320
Speaker 1: even you don't even need a tune me with eighty percent,

509
00:24:21,400 --> 00:24:23,200
Speaker 1: because you're so What you're really getting at the heart

510
00:24:23,200 --> 00:24:28,159
Speaker 1: at is that credit cards offer meaningful protections and benefits

511
00:24:28,400 --> 00:24:30,960
Speaker 1: when you use them. The only thing that buy now,

512
00:24:31,040 --> 00:24:33,560
Speaker 1: pay later offers. The only perk you get is you

513
00:24:33,600 --> 00:24:36,000
Speaker 1: get to pay that item off over a longer period

514
00:24:36,040 --> 00:24:38,680
Speaker 1: of time. And so what that leads to for so

515
00:24:38,720 --> 00:24:40,520
Speaker 1: many people, What that has led to for so many

516
00:24:40,960 --> 00:24:44,720
Speaker 1: is poor behavioral and financial results, which have been well documented.

517
00:24:44,960 --> 00:24:48,080
Speaker 1: People spend more on average when they have the ability

518
00:24:48,280 --> 00:24:50,320
Speaker 1: to use buy now, pay later Klarna or afterpay or

519
00:24:50,320 --> 00:24:52,480
Speaker 1: whatever at checkout, and it's it's just one of the

520
00:24:52,520 --> 00:24:54,840
Speaker 1: reasons to be wary when you see those statistics that

521
00:24:54,840 --> 00:24:57,000
Speaker 1: that's why retailers want to do business with buy now,

522
00:24:57,040 --> 00:24:59,560
Speaker 1: pay later companies because they know that when they make

523
00:24:59,600 --> 00:25:02,600
Speaker 1: that available at checkout, people will buy more stuff, they

524
00:25:02,640 --> 00:25:04,919
Speaker 1: will add more things to their card, it will juice

525
00:25:05,160 --> 00:25:09,320
Speaker 1: their sales. And you could, you know, argue that tapping

526
00:25:09,400 --> 00:25:12,280
Speaker 1: your credit card to pay insulates you from maybe some

527
00:25:12,359 --> 00:25:15,000
Speaker 1: of the pain and friction of buying too. And yes

528
00:25:15,040 --> 00:25:17,159
Speaker 1: that I think that can be true for lots of folks.

529
00:25:17,480 --> 00:25:20,560
Speaker 1: But the goal of using a credit card it's not

530
00:25:20,720 --> 00:25:23,600
Speaker 1: just to mitigate the pain of purchases. That's but that

531
00:25:23,720 --> 00:25:27,359
Speaker 1: is the whole essential use case and reason for existence

532
00:25:27,400 --> 00:25:30,240
Speaker 1: to buy now, pay later companies to mitigate friction. And

533
00:25:30,680 --> 00:25:33,920
Speaker 1: you know, there are important consumer protections alongside these rewards

534
00:25:34,119 --> 00:25:36,960
Speaker 1: that I think and boosting your credit score by now

535
00:25:36,960 --> 00:25:39,719
Speaker 1: pay later doesn't do that. Credit cards do help do that.

536
00:25:39,760 --> 00:25:42,560
Speaker 1: I think there's so many Even though credit cards have

537
00:25:42,560 --> 00:25:45,400
Speaker 1: their downsides, there are so many potential positives for using

538
00:25:45,440 --> 00:25:48,280
Speaker 1: them if you use them effectively. There just really aren't

539
00:25:48,440 --> 00:25:50,399
Speaker 1: any for buy not pay later yeah, thinking about the

540
00:25:50,680 --> 00:25:53,639
Speaker 1: friction lists, I'm assuming are there apps on your phone

541
00:25:54,240 --> 00:25:56,320
Speaker 1: or can you put Klarna or the different buy now

542
00:25:56,359 --> 00:26:00,280
Speaker 1: pay later companies in your wallet? Right, because I like,

543
00:26:00,320 --> 00:26:02,280
Speaker 1: I've been thinking about it recently and the fact that

544
00:26:02,320 --> 00:26:05,359
Speaker 1: I can double click and pay and then the little

545
00:26:05,960 --> 00:26:10,199
Speaker 1: transaction device, the clover or the square pay or whatever

546
00:26:10,520 --> 00:26:12,280
Speaker 1: like when they has it, when it's got the little

547
00:26:12,640 --> 00:26:14,760
Speaker 1: when it's got the little ding like the little chime.

548
00:26:14,920 --> 00:26:18,840
Speaker 1: There's something about that that makes it so satisfying. And

549
00:26:18,920 --> 00:26:21,159
Speaker 1: I think I've mentioned this before, but I've since that,

550
00:26:21,520 --> 00:26:23,879
Speaker 1: since I've mentioned it previously, I've been thinking about that

551
00:26:24,160 --> 00:26:26,679
Speaker 1: because it used to be what with a chip You

552
00:26:26,720 --> 00:26:28,879
Speaker 1: stick it in there and it would make this terrible

553
00:26:28,920 --> 00:26:32,600
Speaker 1: sound like that, Yeah, and it made what does that reinforce?

554
00:26:32,640 --> 00:26:34,520
Speaker 1: It makes it seem like you did something wrong, as

555
00:26:34,520 --> 00:26:37,239
Speaker 1: opposed to they completely change the user interface of it.

556
00:26:38,000 --> 00:26:42,920
Speaker 1: Now it's like this nice little congratulations you have been approved.

557
00:26:43,160 --> 00:26:44,800
Speaker 1: You did it. I think I was half the reason

558
00:26:44,840 --> 00:26:47,600
Speaker 1: they invented. It's a nice technology. It's a nice pat

559
00:26:47,680 --> 00:26:51,080
Speaker 1: on the back. And I think that's the friction. Whereas honestly,

560
00:26:51,720 --> 00:26:54,560
Speaker 1: I think credit cards feel a little more dangerous because

561
00:26:54,560 --> 00:26:55,920
Speaker 1: of the fact that we can use them in Apple

562
00:26:55,920 --> 00:26:58,080
Speaker 1: Pay or the Google Pay and the wallets as opposed

563
00:26:58,080 --> 00:27:00,840
Speaker 1: to because when you're sitting down at a computer clicking

564
00:27:01,440 --> 00:27:04,960
Speaker 1: the uh, the four easy installments, the four that doesn't

565
00:27:04,960 --> 00:27:07,240
Speaker 1: seem any more difficult to me than the fact that

566
00:27:07,240 --> 00:27:09,160
Speaker 1: you've got a credit card auto saved in there, right,

567
00:27:09,680 --> 00:27:12,960
Speaker 1: But the in personness of that sort of physical response

568
00:27:13,000 --> 00:27:15,760
Speaker 1: that a device does to you when you purchase something

569
00:27:16,000 --> 00:27:18,600
Speaker 1: that to me almost puts credit cards back on my radar.

570
00:27:18,640 --> 00:27:21,600
Speaker 1: As far as the payment method, that might be a

571
00:27:21,640 --> 00:27:24,720
Speaker 1: bit more nefarious right now. Yeah, yeah, Well we talked

572
00:27:24,720 --> 00:27:27,320
Speaker 1: about this with Jason Gorski a while back, right when

573
00:27:27,359 --> 00:27:31,080
Speaker 1: he professor who writes about the power of cash, And

574
00:27:31,400 --> 00:27:34,080
Speaker 1: I do think they're again like kind of what you're

575
00:27:34,119 --> 00:27:36,960
Speaker 1: getting at is the insertion took a few seconds, was

576
00:27:37,000 --> 00:27:40,280
Speaker 1: kind of annoying. The tapping makes it then the awful buzz, Yeah,

577
00:27:40,320 --> 00:27:43,040
Speaker 1: it makes it super easy and you feel like you're

578
00:27:43,040 --> 00:27:46,040
Speaker 1: breezing through the line. And I think that is actually

579
00:27:46,040 --> 00:27:51,000
Speaker 1: a downside making it really easy to use credit cardslet

580
00:27:51,000 --> 00:27:53,359
Speaker 1: physically parting with the cash that's right hand, that's right.

581
00:27:53,400 --> 00:27:55,160
Speaker 1: So we have to be careful about how we're paying

582
00:27:55,480 --> 00:27:57,960
Speaker 1: what we're getting used to, how we're reconciling our books

583
00:27:58,000 --> 00:27:59,720
Speaker 1: and looking at our spending at the end of the month.

584
00:28:00,119 --> 00:28:02,920
Speaker 1: And if by now pay later works for you, you're

585
00:28:03,000 --> 00:28:05,040
Speaker 1: using it in a really intentional manner and you're not

586
00:28:05,080 --> 00:28:09,239
Speaker 1: overspending using those services, then by all means like you

587
00:28:09,280 --> 00:28:12,280
Speaker 1: do you. But I just think the whole way they're

588
00:28:12,320 --> 00:28:15,680
Speaker 1: designed is essentially to get people to spend in ways

589
00:28:15,680 --> 00:28:20,920
Speaker 1: the otherwise wouldn't, to become even more of a consumer.

590
00:28:21,400 --> 00:28:25,000
Speaker 1: And I think those incentives have really gotten the best

591
00:28:25,000 --> 00:28:27,160
Speaker 1: of a lot of people. Speaking of paying with cash,

592
00:28:27,200 --> 00:28:29,760
Speaker 1: did you notice the old lady who was paying for

593
00:28:29,800 --> 00:28:32,760
Speaker 1: her coffee with cash this morning? No, And she was

594
00:28:32,760 --> 00:28:34,960
Speaker 1: a little confused about the price, and he's like, oh, no,

595
00:28:35,040 --> 00:28:37,760
Speaker 1: we actually round down when you pay with cash, so

596
00:28:37,840 --> 00:28:40,080
Speaker 1: he didn't say the precise amount. But I was like,

597
00:28:40,120 --> 00:28:41,800
Speaker 1: oh my gosh, that's right. Yeah, because when you pay

598
00:28:41,800 --> 00:28:45,040
Speaker 1: with card, they charge you that service feed That's true. Yeah,

599
00:28:45,080 --> 00:28:47,840
Speaker 1: but yeah, fascinating how that has an impact on how

600
00:28:47,880 --> 00:28:50,400
Speaker 1: it is we consume, though, Joel, let's hear from a

601
00:28:50,400 --> 00:28:53,080
Speaker 1: listener who is trying to right her former wrongs.

602
00:28:53,800 --> 00:28:56,720
Speaker 4: I met and Joel, This is Kelsey from Colorado, springs.

603
00:28:56,920 --> 00:29:01,560
Speaker 4: Love your podcast, and I have a question regarding investing

604
00:29:01,760 --> 00:29:05,240
Speaker 4: for four one K wrath Ira and brokerage accounts first

605
00:29:05,600 --> 00:29:11,400
Speaker 4: paying our debt and saving. So for context, my first job,

606
00:29:11,600 --> 00:29:14,800
Speaker 4: I wasn't making a bunch was my first job, and

607
00:29:14,880 --> 00:29:18,040
Speaker 4: so I was investing fifteen to twenty percent of that

608
00:29:18,040 --> 00:29:21,120
Speaker 4: those still in my four to one K and putting

609
00:29:21,200 --> 00:29:24,840
Speaker 4: five hundred lives a month into maxing out my roth

610
00:29:24,880 --> 00:29:31,840
Speaker 4: IRA as well. I was young and naive and strut

611
00:29:31,880 --> 00:29:36,640
Speaker 4: for money, took out some loans trying to pay those off,

612
00:29:36,760 --> 00:29:41,040
Speaker 4: still in there about eighteen percent wracked up credit card debt.

613
00:29:41,160 --> 00:29:47,760
Speaker 4: Have since been paying those off, but just curious your

614
00:29:47,760 --> 00:29:51,800
Speaker 4: thoughts on whether I continue putting into my four one

615
00:29:51,920 --> 00:29:55,360
Speaker 4: K and roth first, maybe pausing those for a little bit,

616
00:29:56,040 --> 00:30:00,440
Speaker 4: just so that I can get my auto and other

617
00:30:00,520 --> 00:30:05,400
Speaker 4: signature loans paid off for contacts. I have about ninety

618
00:30:05,840 --> 00:30:11,440
Speaker 4: thousand dollars in my roth IRA, about eight thousand dollars

619
00:30:11,480 --> 00:30:17,040
Speaker 4: in savings, but have about twenty five thousand dollars in debt.

620
00:30:17,200 --> 00:30:20,760
Speaker 4: So just trying to figure out how I can navigate

621
00:30:20,800 --> 00:30:23,280
Speaker 4: this thought I was doing the right thing, but now

622
00:30:23,320 --> 00:30:26,560
Speaker 4: in a little bit of a financial picko, which ironically

623
00:30:26,640 --> 00:30:30,640
Speaker 4: feels like it came from investing so much so any

624
00:30:30,680 --> 00:30:33,680
Speaker 4: insight is super helpful. Looking to buy a house within

625
00:30:33,760 --> 00:30:36,360
Speaker 4: the next two years or so, and just wanting to

626
00:30:36,400 --> 00:30:39,200
Speaker 4: make sure I'm handling my money here on out in

627
00:30:39,240 --> 00:30:41,920
Speaker 4: the right way. Love your podcast, Love what you guys

628
00:30:41,960 --> 00:30:42,360
Speaker 4: are doing.

629
00:30:42,600 --> 00:30:45,920
Speaker 1: Thanks, Oh man, I'm so glad Kelsey said this question

630
00:30:46,240 --> 00:30:50,040
Speaker 1: largely because it's like one of those point essential personal

631
00:30:50,080 --> 00:30:53,680
Speaker 1: finance questions that people will have, the investing first, debt

632
00:30:53,680 --> 00:30:58,400
Speaker 1: payoff question, And there's never just like a right or

633
00:30:58,400 --> 00:31:01,760
Speaker 1: wrong yes or no answer to this either, never completely straightforward,

634
00:31:01,800 --> 00:31:04,280
Speaker 1: and the answer really depends on a number of factors.

635
00:31:05,200 --> 00:31:08,040
Speaker 1: Despite the credit card debt and the loans that Kelsey

636
00:31:08,320 --> 00:31:11,520
Speaker 1: has taken out, which aren't our fave, I think we

637
00:31:11,520 --> 00:31:13,560
Speaker 1: should also just say congrats to her for all she's

638
00:31:13,560 --> 00:31:15,320
Speaker 1: been able to do saving for her future. She's got

639
00:31:15,400 --> 00:31:18,680
Speaker 1: ninety thousand dollars in a roth iray. Yeah, that in particular,

640
00:31:18,720 --> 00:31:21,600
Speaker 1: that's pretty solid. That's solid, man, And that's going to

641
00:31:21,640 --> 00:31:24,920
Speaker 1: grow to be a much larger amount over time thanks

642
00:31:24,920 --> 00:31:27,840
Speaker 1: to compounding returns. And those are that they'll never be taxed,

643
00:31:27,960 --> 00:31:29,920
Speaker 1: which is one of our favorite things about the roth

644
00:31:29,960 --> 00:31:33,040
Speaker 1: Ira that's all your money tax free in the future,

645
00:31:33,040 --> 00:31:36,160
Speaker 1: which is a beautiful thing. Also, Matt, do you want

646
00:31:36,200 --> 00:31:39,600
Speaker 1: to highlight how you did something Oh, very similar to

647
00:31:39,640 --> 00:31:42,160
Speaker 1: what Kelsey did by investing. I heard I heard too early.

648
00:31:42,200 --> 00:31:45,720
Speaker 1: I heard in Kelsey's voice, She's just like, then this happened.

649
00:31:46,000 --> 00:31:48,200
Speaker 1: Don't feel bad about it. I mean, I don't know.

650
00:31:48,320 --> 00:31:50,160
Speaker 1: Is it like a rite of passage that there are

651
00:31:50,480 --> 00:31:53,240
Speaker 1: there's a certain subset of us make this mistake. But

652
00:31:53,360 --> 00:31:56,000
Speaker 1: like you, I heard the glories of compounding. I had

653
00:31:56,040 --> 00:31:57,880
Speaker 1: some friends who were a little bit older, and I

654
00:31:57,920 --> 00:32:00,280
Speaker 1: was like, oh man, they're already investing. I need I

655
00:32:00,280 --> 00:32:02,040
Speaker 1: got to get investing as well. You were O old

656
00:32:02,640 --> 00:32:05,840
Speaker 1: twenty three okay, yeah, which is or twenty two very young,

657
00:32:05,880 --> 00:32:07,880
Speaker 1: because the average person doesn't start investing till like what

658
00:32:08,040 --> 00:32:10,360
Speaker 1: like like thirty times. I don't even know. But I

659
00:32:10,440 --> 00:32:12,840
Speaker 1: just knew that I wanted to invest. I hadn't been,

660
00:32:13,040 --> 00:32:15,240
Speaker 1: and so I had I had ground to makeup drill.

661
00:32:15,280 --> 00:32:17,440
Speaker 1: That's basically where I saw myself. And but what I

662
00:32:17,440 --> 00:32:19,920
Speaker 1: didn't do was have money in the bank, and so

663
00:32:20,000 --> 00:32:23,120
Speaker 1: I was investing. Again. I didn't have nearly as much

664
00:32:23,240 --> 00:32:26,280
Speaker 1: as Kelsey, but I found myself in a tight spot,

665
00:32:26,440 --> 00:32:29,960
Speaker 1: and instead of relying on debt, I actually pulled those

666
00:32:30,520 --> 00:32:34,000
Speaker 1: contributions out, which probably ended up costing me more money

667
00:32:34,040 --> 00:32:35,880
Speaker 1: because the market was down a little bit and I

668
00:32:35,960 --> 00:32:39,480
Speaker 1: was investing in mutual funds that were very expensive, and

669
00:32:39,560 --> 00:32:42,080
Speaker 1: so it was like a double waymy I learned that

670
00:32:42,160 --> 00:32:46,040
Speaker 1: lesson there early on. Next to learn it early though, Yeah, yeah,

671
00:32:46,080 --> 00:32:47,960
Speaker 1: oh yeah, you learned the lessons with like one or

672
00:32:47,960 --> 00:32:49,920
Speaker 1: two zeros at the end of it, as opposed to

673
00:32:49,960 --> 00:32:52,560
Speaker 1: like three or four. Yeah. But we're gonna talk about

674
00:32:52,560 --> 00:32:54,960
Speaker 1: the money gears here, Kelsey, because when you go through

675
00:32:55,000 --> 00:32:57,120
Speaker 1: the money gears, which by the way, you can find

676
00:32:57,160 --> 00:32:58,680
Speaker 1: up on the website it had to money dot com

677
00:32:58,720 --> 00:33:02,160
Speaker 1: forward slash start here. But you will see that paying

678
00:33:02,160 --> 00:33:06,000
Speaker 1: off high interest debt that is gear number three. It's

679
00:33:06,120 --> 00:33:08,520
Speaker 1: just after getting your four one K match. It's just

680
00:33:08,600 --> 00:33:12,760
Speaker 1: after saving up the basic emergency fund. But then after

681
00:33:12,800 --> 00:33:16,840
Speaker 1: that credit card debt or other debts with double digit

682
00:33:17,360 --> 00:33:20,360
Speaker 1: interest rates, that should be your top focus. And that

683
00:33:20,480 --> 00:33:23,120
Speaker 1: is because you are unlikely to see higher returns from

684
00:33:23,160 --> 00:33:25,640
Speaker 1: the market were you to invest those dollars. And so

685
00:33:26,480 --> 00:33:29,120
Speaker 1: the thinking goes like, why not get the guaranteed return

686
00:33:29,840 --> 00:33:32,280
Speaker 1: along with the peace of mind of not having that

687
00:33:32,320 --> 00:33:34,520
Speaker 1: debt in your life anymore. Yeah, yeah, yeah, and I'm

688
00:33:34,560 --> 00:33:36,520
Speaker 1: with you on that. I mean, I think for a

689
00:33:36,560 --> 00:33:39,640
Speaker 1: little while, probably the best way for Kelsey to proceed

690
00:33:39,680 --> 00:33:43,120
Speaker 1: is to suspend any contributions she might be making to

691
00:33:43,240 --> 00:33:47,680
Speaker 1: her wroth IRA. Yeah. And normally, Matt, we're not telling people,

692
00:33:47,800 --> 00:33:50,280
Speaker 1: don't contribute to your wroth IRA, but the truth is,

693
00:33:50,280 --> 00:33:52,520
Speaker 1: if you're doing it out of order, Yeah, for a

694
00:33:52,520 --> 00:33:55,120
Speaker 1: little while, you do need to stop that. We say,

695
00:33:55,160 --> 00:33:57,440
Speaker 1: keep getting them four one K match at work if

696
00:33:57,520 --> 00:34:00,320
Speaker 1: you have one, but don't contribute beyond that either. And this,

697
00:34:00,880 --> 00:34:03,320
Speaker 1: if you do both of those things, stop contribute to

698
00:34:03,320 --> 00:34:05,440
Speaker 1: your roth. Contribute less to your four one k only

699
00:34:05,520 --> 00:34:07,720
Speaker 1: up to the match that allows you to claw back

700
00:34:07,960 --> 00:34:10,799
Speaker 1: more cash flow to work towards debt, payoff a heck

701
00:34:10,840 --> 00:34:14,239
Speaker 1: of a lot more quickly. Every other dollar basically that

702
00:34:14,280 --> 00:34:16,359
Speaker 1: you can afford to part with each month it should

703
00:34:16,400 --> 00:34:18,480
Speaker 1: be funneled then towards the credit card debt and the

704
00:34:18,520 --> 00:34:21,560
Speaker 1: eighteen percent loan that you mentioned. You know, hopefully, hopefully

705
00:34:21,600 --> 00:34:23,960
Speaker 1: that hyper focus is going to allow you to eradicate

706
00:34:24,200 --> 00:34:26,840
Speaker 1: those debts more quickly, get them completely out of your life,

707
00:34:26,960 --> 00:34:30,000
Speaker 1: because after that, that's when you can resume investing for

708
00:34:30,000 --> 00:34:33,120
Speaker 1: your future and you'll have even more money for that

709
00:34:33,160 --> 00:34:37,000
Speaker 1: purpose with less debt lingering in your life. But sometimes Matt, like,

710
00:34:37,040 --> 00:34:38,799
Speaker 1: trying to do all those things at once feels like

711
00:34:38,800 --> 00:34:40,880
Speaker 1: spinning a bunch of plates, and it can feel like

712
00:34:41,320 --> 00:34:43,239
Speaker 1: it's so easy to lose one, and then you lose

713
00:34:43,280 --> 00:34:44,879
Speaker 1: them all. They all come crashing down to the ground.

714
00:34:44,960 --> 00:34:47,640
Speaker 1: Drop them. Plant's. Yeah, that's where the hyper focus comes in,

715
00:34:47,800 --> 00:34:50,120
Speaker 1: especially when you have higher interest rate debt. It's like,

716
00:34:50,160 --> 00:34:52,600
Speaker 1: just let's go all in on that. Put the other

717
00:34:52,640 --> 00:34:54,080
Speaker 1: stuff to the side for now. You can get back

718
00:34:54,120 --> 00:34:56,120
Speaker 1: to it soon. Yeah. Well, aside from like that eighteen

719
00:34:56,160 --> 00:34:59,120
Speaker 1: percent loan that she mentioned, which so she mentioned her

720
00:34:59,200 --> 00:35:01,560
Speaker 1: car loan, and I'm guess seeing that that car loan

721
00:35:01,640 --> 00:35:05,359
Speaker 1: is not as offensive as maybe some of her credit

722
00:35:05,440 --> 00:35:07,680
Speaker 1: card debt or that eight percent loan that she took out,

723
00:35:07,719 --> 00:35:09,880
Speaker 1: So I hope. So, I imagine you're right, medium or

724
00:35:10,120 --> 00:35:14,000
Speaker 1: even low interest rate debt is worth addressing here, and

725
00:35:14,360 --> 00:35:17,000
Speaker 1: that is money gear number six. It is further on

726
00:35:17,120 --> 00:35:18,799
Speaker 1: down the line, and that's because there are just more

727
00:35:18,840 --> 00:35:20,720
Speaker 1: productive things that you can be doing with your money.

728
00:35:21,480 --> 00:35:24,120
Speaker 1: You don't have to forsake investing until you are completely

729
00:35:24,480 --> 00:35:28,160
Speaker 1: debt free. We ideally want all the how to money

730
00:35:28,200 --> 00:35:29,680
Speaker 1: listeners out there to not have a car loan. But

731
00:35:29,680 --> 00:35:32,040
Speaker 1: if you've already got one in your life and you're

732
00:35:32,040 --> 00:35:34,439
Speaker 1: making this a binary choice, I would love to see

733
00:35:34,440 --> 00:35:37,560
Speaker 1: you paying off a bit more slowly while also investing.

734
00:35:38,440 --> 00:35:40,560
Speaker 1: Like I think about too over the most recent years,

735
00:35:40,600 --> 00:35:42,400
Speaker 1: like this isn't the best decision right for her to

736
00:35:42,480 --> 00:35:46,040
Speaker 1: be investing aggressively while keeping some of the really high

737
00:35:46,120 --> 00:35:49,160
Speaker 1: rate debt around like the credit cards as as well.

738
00:35:49,239 --> 00:35:51,840
Speaker 1: But it's also not the worst outcome because of what

739
00:35:51,880 --> 00:35:53,680
Speaker 1: the market has done over the past few years. But

740
00:35:53,719 --> 00:35:56,879
Speaker 1: the thing is is that is not guaranteed to continue. Yeah,

741
00:35:56,880 --> 00:35:58,719
Speaker 1: you looked to last year and you're looking at twenty

742
00:35:58,719 --> 00:36:02,160
Speaker 1: five percent returns, but in the year before that too,

743
00:36:02,239 --> 00:36:04,839
Speaker 1: But you go one more year Joel to twenty twenty two,

744
00:36:04,880 --> 00:36:07,080
Speaker 1: and things weren't looking so great, sure, and so you

745
00:36:07,120 --> 00:36:11,000
Speaker 1: can't count on that continuing, even though you're not in

746
00:36:11,040 --> 00:36:14,480
Speaker 1: the most terrible position given what you have done over

747
00:36:14,480 --> 00:36:15,759
Speaker 1: the past few years. But what you are playing with

748
00:36:15,800 --> 00:36:17,920
Speaker 1: fire right when you yes it is to keep it

749
00:36:17,960 --> 00:36:21,359
Speaker 1: is risky, you know. Eighteen twenty something percent interest rate

750
00:36:21,440 --> 00:36:25,359
Speaker 1: debt around in your life for longer than you need to. Man,

751
00:36:25,440 --> 00:36:28,520
Speaker 1: I always I hear people sometimes talk to me about

752
00:36:28,600 --> 00:36:31,160
Speaker 1: credit card debt as though it's not a big deal.

753
00:36:31,360 --> 00:36:35,040
Speaker 1: I've got six eight, ten thousand dollars hanging out and yeah,

754
00:36:35,040 --> 00:36:36,840
Speaker 1: I have the cash to pay it off. But you know,

755
00:36:36,880 --> 00:36:40,760
Speaker 1: I'm just I'll get around to it, and like, nothing

756
00:36:41,400 --> 00:36:43,799
Speaker 1: bothers me more than that. I you know, I don't

757
00:36:43,840 --> 00:36:47,359
Speaker 1: like to give unsolicited advice. We give advice here because

758
00:36:47,360 --> 00:36:50,600
Speaker 1: it's solicited. People are asking questions, but it's not financial advice,

759
00:36:50,600 --> 00:36:53,600
Speaker 1: by the way, This is just for fun. But when

760
00:36:53,640 --> 00:36:55,040
Speaker 1: those people like come up and say that to me,

761
00:36:55,080 --> 00:36:57,120
Speaker 1: I mean, it bothers me so much, even though I

762
00:36:57,160 --> 00:37:00,160
Speaker 1: don't want to offer my advice. But like, but what

763
00:37:00,200 --> 00:37:01,319
Speaker 1: you want to say is what are you doing with

764
00:37:01,360 --> 00:37:03,520
Speaker 1: your life right? Exactly? What do you think? It is

765
00:37:03,600 --> 00:37:05,560
Speaker 1: a big problem and there aren't many better things you

766
00:37:05,600 --> 00:37:08,200
Speaker 1: could be doing with your money than paying that debt

767
00:37:08,200 --> 00:37:10,520
Speaker 1: down as quickly as possible. Is it just interesting though, too,

768
00:37:10,640 --> 00:37:13,120
Speaker 1: that Kelsey did invest so aggressively though, because that's the thing.

769
00:37:13,120 --> 00:37:14,800
Speaker 1: I think most folks who are kind of like I

770
00:37:14,840 --> 00:37:16,560
Speaker 1: don't know, I'll take care of that at some point.

771
00:37:16,800 --> 00:37:20,000
Speaker 1: They're also I'm guessing not typically the folks who are

772
00:37:20,000 --> 00:37:23,279
Speaker 1: funneling dollars like it's their like it's their job into

773
00:37:23,320 --> 00:37:25,960
Speaker 1: the wroth, which it sounds like Kelsey has. Yeah, she's

774
00:37:26,000 --> 00:37:27,440
Speaker 1: got way more in her wrath, by the way, than

775
00:37:27,840 --> 00:37:31,440
Speaker 1: I did when I had to tap my tap my contributions.

776
00:37:31,480 --> 00:37:33,680
Speaker 1: When when I found myself in that cash pinch, we

777
00:37:33,719 --> 00:37:36,000
Speaker 1: should we should out for it. Maybe a last little

778
00:37:36,000 --> 00:37:38,600
Speaker 1: piece of advice here for Kelsey, and I just want

779
00:37:38,640 --> 00:37:40,640
Speaker 1: to note that she's got money in savings, she's also

780
00:37:40,680 --> 00:37:44,480
Speaker 1: gotten money in WROTH contributions that are accessible, and she

781
00:37:44,680 --> 00:37:47,399
Speaker 1: could use either one of those or both to pay

782
00:37:47,400 --> 00:37:50,360
Speaker 1: down her debt more quickly. But I would say, in

783
00:37:50,400 --> 00:37:53,200
Speaker 1: all likelihood she shouldn't. And that's because you know, while

784
00:37:53,239 --> 00:37:56,760
Speaker 1: WROTH contributions they are accessible without paying tax or penalty,

785
00:37:57,000 --> 00:37:59,280
Speaker 1: you can never get those dollars back into the wroth

786
00:37:59,600 --> 00:38:03,080
Speaker 1: right because of annual contribution limits, and you're interrupting the

787
00:38:03,080 --> 00:38:05,719
Speaker 1: compounding of those dollars. But it can also, I think,

788
00:38:05,760 --> 00:38:08,520
Speaker 1: create this unhealthy relationship with your retirement accounts that we

789
00:38:08,560 --> 00:38:11,080
Speaker 1: want to prevent where we're seeing more and more Americans

790
00:38:11,520 --> 00:38:13,640
Speaker 1: feeling like they can take money out of their retirement

791
00:38:13,680 --> 00:38:18,680
Speaker 1: account because of changes to the law and just wanting

792
00:38:18,719 --> 00:38:21,120
Speaker 1: it to make it easy and not pinch their lifestyle.

793
00:38:21,160 --> 00:38:23,040
Speaker 1: They're taking money from their four to one case, and

794
00:38:23,080 --> 00:38:25,839
Speaker 1: that to me is a red flag. We see people

795
00:38:25,840 --> 00:38:28,800
Speaker 1: going back to the well multiple times to their retirement

796
00:38:28,840 --> 00:38:32,240
Speaker 1: accounts when they shouldn't. It would also be much better

797
00:38:32,320 --> 00:38:34,879
Speaker 1: to invest less, to be more frugal, and to pay

798
00:38:34,920 --> 00:38:37,080
Speaker 1: down those debts quickly with cash flow that you have.

799
00:38:37,360 --> 00:38:40,439
Speaker 1: I think that's the proper relationship. You want to this debt,

800
00:38:40,560 --> 00:38:43,520
Speaker 1: like get rid of it quickly, but don't necessarily pull

801
00:38:43,520 --> 00:38:45,319
Speaker 1: money from your investments to do so well. And she

802
00:38:45,360 --> 00:38:49,160
Speaker 1: also doesn't want to completely deplete her liquid savings on

803
00:38:49,200 --> 00:38:51,799
Speaker 1: hand in case she finds herself again cash strapped off

804
00:38:51,800 --> 00:38:54,680
Speaker 1: in the future to where she feels forced to draw

805
00:38:54,800 --> 00:38:59,240
Speaker 1: on retirement contributions. And specifically she said eight thousand dollars

806
00:38:59,360 --> 00:39:02,319
Speaker 1: is what she has on hand in cash, and that's

807
00:39:02,360 --> 00:39:05,120
Speaker 1: not a ton. I mean it's great, it's a great start,

808
00:39:05,120 --> 00:39:07,120
Speaker 1: but after you pay off that high interest rate debt

809
00:39:07,160 --> 00:39:10,879
Speaker 1: again just heading cruising down down those money gears, I'd

810
00:39:10,920 --> 00:39:13,319
Speaker 1: be looking to beef that up to three to six

811
00:39:13,360 --> 00:39:16,160
Speaker 1: months worth of living expenses, and I'm guessing that's probably

812
00:39:16,239 --> 00:39:19,120
Speaker 1: for you. It sounds like she might be single. She

813
00:39:19,120 --> 00:39:20,799
Speaker 1: didn't mention a family, but I'm guessing for her that's

814
00:39:20,840 --> 00:39:23,680
Speaker 1: probably like a couple months worth of living expenses. But

815
00:39:23,719 --> 00:39:25,960
Speaker 1: then beyond that, I would even want to want to

816
00:39:26,000 --> 00:39:28,160
Speaker 1: see something even a bit more robust than what she's

817
00:39:28,200 --> 00:39:31,520
Speaker 1: currently got. Agreed, But Kelsey, you got this one step

818
00:39:31,520 --> 00:39:33,239
Speaker 1: at a time. We know you get rid of that

819
00:39:33,239 --> 00:39:34,960
Speaker 1: debt and you'll get back to investing in no time.

820
00:39:35,040 --> 00:39:36,520
Speaker 1: All right, mat we got more questions to get to.

821
00:39:36,760 --> 00:39:39,600
Speaker 1: Let's talk about how closing a credit card impacts your credit.

822
00:39:39,680 --> 00:39:49,440
Speaker 1: We'll get to that more right after this. All right, buddy,

823
00:39:49,440 --> 00:39:52,200
Speaker 1: we are back from the break. It is now time

824
00:39:52,280 --> 00:39:54,720
Speaker 1: for the Facebook question of the Week, which is from

825
00:39:54,800 --> 00:39:58,759
Speaker 1: an anonymous poster who writes the guys that would be

826
00:39:58,840 --> 00:40:01,400
Speaker 1: You'd me Jeal. The guys have mentioned multiple times how

827
00:40:01,440 --> 00:40:03,239
Speaker 1: closing a credit card can cause a dip in your

828
00:40:03,239 --> 00:40:06,560
Speaker 1: credit score, especially if that is your longest active credit line.

829
00:40:06,760 --> 00:40:09,560
Speaker 1: I have an opportunity to pay off my mortgage only

830
00:40:09,600 --> 00:40:12,160
Speaker 1: current outstanding debts, and I use my credit card more

831
00:40:12,200 --> 00:40:14,520
Speaker 1: like a debit card and pay it off weekly. With

832
00:40:14,680 --> 00:40:17,239
Speaker 1: paying off my mortgage and essentially closing out that line

833
00:40:17,280 --> 00:40:20,640
Speaker 1: of credit hurt my credit score, particularly if I am

834
00:40:20,680 --> 00:40:23,399
Speaker 1: looking at investing in other real estate in the next

835
00:40:23,440 --> 00:40:26,680
Speaker 1: two years. Yeah, which you think, jo'l. That's a great question.

836
00:40:26,800 --> 00:40:29,719
Speaker 1: Help this poster to understand. And this is one of

837
00:40:29,719 --> 00:40:33,239
Speaker 1: those non basic personal finance questions where you're getting a

838
00:40:33,239 --> 00:40:36,080
Speaker 1: little bit further into the weeds about how your credit

839
00:40:36,080 --> 00:40:39,080
Speaker 1: score is constructed. But I'm glad people are asking this

840
00:40:39,200 --> 00:40:43,240
Speaker 1: question because all this stuff matters, right, And Yeah, paying

841
00:40:43,239 --> 00:40:45,080
Speaker 1: that close of attention to your credit score, how the

842
00:40:45,120 --> 00:40:48,760
Speaker 1: credit scoring system works, shows a high level of personal

843
00:40:48,760 --> 00:40:52,120
Speaker 1: finance acuity. And it's typically, by the way, why we

844
00:40:52,160 --> 00:40:56,200
Speaker 1: don't recommend people close a credit card accounts, because if

845
00:40:56,800 --> 00:40:58,920
Speaker 1: you can avoid it, it's actually going to help boost

846
00:40:58,920 --> 00:41:00,800
Speaker 1: your credit scord if you keep that credit card active

847
00:41:00,800 --> 00:41:04,080
Speaker 1: in your credit mix. If it doesn't have an annual fee,

848
00:41:04,440 --> 00:41:06,120
Speaker 1: just use it less. And if it does have an

849
00:41:06,120 --> 00:41:08,040
Speaker 1: annual fee, maybe ask your credit card company if you

850
00:41:08,040 --> 00:41:10,279
Speaker 1: can downgrade to a card that doesn't have one. That

851
00:41:10,320 --> 00:41:12,160
Speaker 1: way you kind of get the best of both worlds.

852
00:41:12,160 --> 00:41:14,160
Speaker 1: But I just want to maybe highlight the credit card

853
00:41:14,200 --> 00:41:16,279
Speaker 1: thing map before we get to this mortgaging, because that's

854
00:41:16,280 --> 00:41:19,399
Speaker 1: a question that gets asked even more frequently, and it's

855
00:41:19,400 --> 00:41:21,520
Speaker 1: why we typically recommend people, Hey, we want you to

856
00:41:21,560 --> 00:41:24,600
Speaker 1: keep your credit score robust. Closing the card could do

857
00:41:24,719 --> 00:41:27,200
Speaker 1: the opposite, it's a more more typical example. But you

858
00:41:27,200 --> 00:41:29,719
Speaker 1: can't do that with your mortgage. And so if your

859
00:41:29,719 --> 00:41:32,480
Speaker 1: mortgage is winding down, which is a great thing, you

860
00:41:32,520 --> 00:41:36,080
Speaker 1: can't really stop that process, no, nor would you want to, right,

861
00:41:36,600 --> 00:41:39,480
Speaker 1: And so, yeah, paying off your mortgage it will ding

862
00:41:39,600 --> 00:41:42,279
Speaker 1: your credit score, which sounds kind of ridiculous, but it's true.

863
00:41:42,320 --> 00:41:45,560
Speaker 1: The fact that you now completely outright own this home. Yeah,

864
00:41:45,560 --> 00:41:48,040
Speaker 1: that's actually gonna hurt your credit score. That's one of

865
00:41:48,040 --> 00:41:50,959
Speaker 1: those counterintuitive realities of the credit scoring system that people

866
00:41:51,000 --> 00:41:53,399
Speaker 1: are just like, I what in the world you pay

867
00:41:53,440 --> 00:41:56,600
Speaker 1: off debt and it takes your score down a peg

868
00:41:56,800 --> 00:42:00,000
Speaker 1: like that. It's so counterintuitive, and it's kind of frustrating

869
00:42:00,640 --> 00:42:02,640
Speaker 1: as an individual consumer, to be honest. Yeah, And in

870
00:42:02,680 --> 00:42:06,520
Speaker 1: part not only because this is the longest line essentially

871
00:42:06,560 --> 00:42:09,440
Speaker 1: a line of credit where you've you know, you have

872
00:42:09,520 --> 00:42:11,319
Speaker 1: a history here of making payments, but also because of

873
00:42:11,320 --> 00:42:13,719
Speaker 1: the type. Right, So this is an installment loan that

874
00:42:13,719 --> 00:42:15,960
Speaker 1: you're paying off, and I'm guessing based on the way

875
00:42:15,960 --> 00:42:17,799
Speaker 1: this person is posting that they don't have any other

876
00:42:17,880 --> 00:42:20,320
Speaker 1: installment loans. Well they said, they said they don't have

877
00:42:20,360 --> 00:42:23,640
Speaker 1: any other debt, so it's not like they have student loans,

878
00:42:23,760 --> 00:42:25,439
Speaker 1: or it's not like they have a car payment where

879
00:42:25,440 --> 00:42:27,759
Speaker 1: they're paying that on a regular basis, which, by the way,

880
00:42:27,800 --> 00:42:30,680
Speaker 1: are great things from a personal finance standpoint, but from

881
00:42:30,880 --> 00:42:34,200
Speaker 1: a perfect credit score standpoint, not the best, not ideal.

882
00:42:34,920 --> 00:42:37,080
Speaker 1: I do want to highlight here though, that they wrote

883
00:42:37,120 --> 00:42:40,000
Speaker 1: I have an opportunity to pay off my mortgage, which

884
00:42:40,040 --> 00:42:42,960
Speaker 1: tells me that it's optional. Like I wonder if they

885
00:42:43,000 --> 00:42:46,359
Speaker 1: came in they got a bonus at work, or maybe

886
00:42:46,360 --> 00:42:48,319
Speaker 1: they inherited some money and they're thinking, oh, I want

887
00:42:48,320 --> 00:42:50,239
Speaker 1: to do something smart with this money. I'm going to

888
00:42:50,239 --> 00:42:52,480
Speaker 1: pay off the house. I have the opportunity to pay

889
00:42:52,480 --> 00:42:55,400
Speaker 1: this thing off ten years early. I should be jumping

890
00:42:55,680 --> 00:42:59,400
Speaker 1: at this opportunity. And I would say, let an opportunity

891
00:42:59,480 --> 00:43:04,200
Speaker 1: continue knock and don't answer that door, because I'm as

892
00:43:04,400 --> 00:43:07,279
Speaker 1: if you've had this loan for this mortgage for a while,

893
00:43:07,360 --> 00:43:09,360
Speaker 1: or if you like, let's see you refinanced ten fifteen

894
00:43:09,400 --> 00:43:12,200
Speaker 1: years ago, you've got this thing locked in. I'm guessing

895
00:43:12,320 --> 00:43:14,480
Speaker 1: at a really low rate. And again, there are just

896
00:43:14,680 --> 00:43:17,400
Speaker 1: better things, more optimal things that you can do with

897
00:43:17,440 --> 00:43:20,360
Speaker 1: those dollars than eliminate a three percent mortgage. Yeah, agreed,

898
00:43:20,520 --> 00:43:24,000
Speaker 1: saving and investing and you used to saving would not

899
00:43:24,360 --> 00:43:27,399
Speaker 1: outpace your mortgage rate. But it still does right now.

900
00:43:27,560 --> 00:43:31,120
Speaker 1: Until the Fed lowers interstrates even more and savers get

901
00:43:31,200 --> 00:43:33,120
Speaker 1: dinged even harder. The chances are, if you're in a

902
00:43:33,160 --> 00:43:35,960
Speaker 1: high held savings account with one of our favorite online banks,

903
00:43:36,320 --> 00:43:39,120
Speaker 1: that you're outpacing your mortgage rate. By the way, if

904
00:43:39,120 --> 00:43:41,200
Speaker 1: you do decide to pay off this mortgage, it shouldn't

905
00:43:41,200 --> 00:43:45,000
Speaker 1: negatively impact your ability to invest in more in real

906
00:43:45,080 --> 00:43:47,360
Speaker 1: estate and to get the best rates in the coming years.

907
00:43:47,560 --> 00:43:51,000
Speaker 1: Typically that yeah, getting rid of that line of credit

908
00:43:51,040 --> 00:43:54,280
Speaker 1: from your credit mix not ideal from a credit score perspective.

909
00:43:54,520 --> 00:43:56,799
Speaker 1: But if you have a great score, yeah, you'll see

910
00:43:56,800 --> 00:43:59,120
Speaker 1: a ding for a while, maybe for a few months,

911
00:43:59,560 --> 00:44:02,400
Speaker 1: but without the primary mortgage, you're gonna have tons of

912
00:44:02,400 --> 00:44:04,560
Speaker 1: cash flow to save up for a down payment for

913
00:44:04,640 --> 00:44:07,400
Speaker 1: those investment properties, and your credit score is going to

914
00:44:07,480 --> 00:44:10,520
Speaker 1: have more of like a short lived impact, negative impact,

915
00:44:10,719 --> 00:44:13,359
Speaker 1: and I think it'll bounce back pretty quickly. I doubt

916
00:44:13,360 --> 00:44:15,920
Speaker 1: it'll still be dinged after a couple of years. Yeah, agreed.

917
00:44:15,960 --> 00:44:18,040
Speaker 1: And even if it, even if it is still down

918
00:44:18,160 --> 00:44:19,680
Speaker 1: ten to fifteen points, if you have a really high

919
00:44:19,719 --> 00:44:21,879
Speaker 1: credit score to begin with, it doesn't matter. You're still

920
00:44:21,880 --> 00:44:24,319
Speaker 1: going to be able to qualify for the best rates

921
00:44:24,320 --> 00:44:26,000
Speaker 1: in terms. All right, you know what, Let's do another

922
00:44:26,000 --> 00:44:29,440
Speaker 1: one here real quick. Another anonymous poster. Hi trying to

923
00:44:29,480 --> 00:44:31,600
Speaker 1: learn here. I keep seeing that people should be investing

924
00:44:31,600 --> 00:44:34,560
Speaker 1: at least fifteen percent of their earnings. I think this

925
00:44:34,640 --> 00:44:37,920
Speaker 1: is the last money wheel. Does this include or not

926
00:44:37,960 --> 00:44:40,759
Speaker 1: include money you already put into your four oh one

927
00:44:40,840 --> 00:44:45,640
Speaker 1: k money wheel? Obviously we a man man, we're doing

928
00:44:45,640 --> 00:44:48,840
Speaker 1: a bad branding job. Money gear. It's the money gears

929
00:44:48,840 --> 00:44:50,640
Speaker 1: money years. And the reason we call it the money

930
00:44:50,680 --> 00:44:53,040
Speaker 1: years is because we like biking and we're like just

931
00:44:53,040 --> 00:44:55,359
Speaker 1: thinking about oh seven gears on the bike. When you're

932
00:44:55,360 --> 00:44:58,000
Speaker 1: first getting started, you start off on year one and

933
00:44:58,040 --> 00:45:00,320
Speaker 1: then before you got to gain some speed before you

934
00:45:00,440 --> 00:45:03,080
Speaker 1: ramp it up. That's right before you shift gears. So, yeah,

935
00:45:03,200 --> 00:45:05,400
Speaker 1: does this include four one K dollars? Though? Joel the

936
00:45:05,400 --> 00:45:08,480
Speaker 1: fifteen percent? Well, the answer the answer is simple here,

937
00:45:08,520 --> 00:45:10,920
Speaker 1: we're all about your savings rate being a minimum of

938
00:45:10,960 --> 00:45:14,800
Speaker 1: fifteen percent of your gross income. But gross income includes

939
00:45:14,840 --> 00:45:16,680
Speaker 1: your four one K right, so yes, yes, and so

940
00:45:16,719 --> 00:45:19,880
Speaker 1: we count investing and we count debt payoff in your

941
00:45:19,880 --> 00:45:22,879
Speaker 1: savings rate. So whether you're paying off credit card debt

942
00:45:23,200 --> 00:45:25,400
Speaker 1: or you are putting more money towards four on and

943
00:45:25,440 --> 00:45:28,200
Speaker 1: K roth I right, those are all included, we would

944
00:45:28,239 --> 00:45:30,279
Speaker 1: say in your your savings rate, what's known as your

945
00:45:30,280 --> 00:45:32,279
Speaker 1: savings rate. Part of the reason is because you're not

946
00:45:32,320 --> 00:45:34,799
Speaker 1: spending that money the others because if you had to

947
00:45:34,840 --> 00:45:37,120
Speaker 1: go into liquid savings at some point in the not

948
00:45:37,160 --> 00:45:40,400
Speaker 1: so distant future, you'd have way too much allocated to cash.

949
00:45:40,440 --> 00:45:42,600
Speaker 1: You'd be really imbalanced, right if like all of your

950
00:45:42,680 --> 00:45:46,319
Speaker 1: savings rate went straight into to a savings account. But

951
00:45:46,400 --> 00:45:50,800
Speaker 1: isn't that that's an investing question though, right, Well, versus

952
00:45:50,800 --> 00:45:54,680
Speaker 1: a percentage savings rate should go to saving, investing, paying

953
00:45:54,719 --> 00:45:57,319
Speaker 1: down debt, that's another question. And it's highly specific. But

954
00:45:57,520 --> 00:45:59,360
Speaker 1: you like diving into these details more than I do.

955
00:45:59,760 --> 00:46:01,560
Speaker 1: Like some of this. I like it makes me think

956
00:46:01,560 --> 00:46:04,160
Speaker 1: about like when you weigh yourself, Like some people are like, no, no,

957
00:46:04,160 --> 00:46:05,880
Speaker 1: you gotta weigh yourself first thing in the morning. And

958
00:46:05,920 --> 00:46:07,239
Speaker 1: some folks were like, no, I like to do it

959
00:46:07,239 --> 00:46:09,200
Speaker 1: at night before I get before I jump in the shower.

960
00:46:09,520 --> 00:46:12,440
Speaker 1: Or some folks they strip down and they're totally naked,

961
00:46:12,480 --> 00:46:14,480
Speaker 1: and some folks are like, ah, I just war my clothes.

962
00:46:15,320 --> 00:46:17,680
Speaker 1: Joel always wears his cutof geen shorts, though he never

963
00:46:17,719 --> 00:46:21,880
Speaker 1: takes those off. Yeah, like Cobias Chunky. I mean the

964
00:46:21,880 --> 00:46:23,359
Speaker 1: way I think about it, as long as you are

965
00:46:23,400 --> 00:46:26,560
Speaker 1: consistent with like however it is you're you are calculating

966
00:46:26,600 --> 00:46:28,520
Speaker 1: your savings rate over time, As long as you stick

967
00:46:28,560 --> 00:46:31,279
Speaker 1: with that, I think that's the biggest thing, especially if

968
00:46:31,480 --> 00:46:34,040
Speaker 1: early retirement is a goal of yours, to you know,

969
00:46:34,120 --> 00:46:36,239
Speaker 1: slowly but surely ratchet that thing up. I guess I

970
00:46:36,360 --> 00:46:39,600
Speaker 1: just worry that some of the basic personal finance advice

971
00:46:39,640 --> 00:46:42,839
Speaker 1: to the years has really told people, yeah, save ten

972
00:46:42,880 --> 00:46:44,840
Speaker 1: percent of your income, and we've and we set the

973
00:46:44,840 --> 00:46:47,879
Speaker 1: bar so low. Granted a lot of Americans not even

974
00:46:48,000 --> 00:46:49,879
Speaker 1: hitting that savings rate. And yeah, but if you set

975
00:46:49,920 --> 00:46:52,080
Speaker 1: the bar so low and you don't really help people

976
00:46:52,120 --> 00:46:54,520
Speaker 1: understand how much a higher savings rate can impact their

977
00:46:54,560 --> 00:46:58,840
Speaker 1: ability to attain financial freedom, then maybe we're letting people.

978
00:46:59,440 --> 00:47:02,920
Speaker 1: We're not helping people realize what they can build for themselves,

979
00:47:02,920 --> 00:47:05,960
Speaker 1: the piece out money they can amass, and the optionality

980
00:47:06,000 --> 00:47:09,040
Speaker 1: they're able to find in the not so distant future

981
00:47:09,239 --> 00:47:10,720
Speaker 1: if we say, you know, if we keep the savings

982
00:47:10,800 --> 00:47:13,839
Speaker 1: right ideal too low, or we make it sound like

983
00:47:13,880 --> 00:47:16,239
Speaker 1: it's not as important. So yeah, I guess that's where

984
00:47:16,520 --> 00:47:18,000
Speaker 1: I think it is important. But I think you're probably

985
00:47:18,040 --> 00:47:19,719
Speaker 1: right to Matt. People obsessed over it kind of as

986
00:47:19,760 --> 00:47:21,919
Speaker 1: far as the semantics way, they find Yeah, I'm less

987
00:47:21,920 --> 00:47:23,560
Speaker 1: interested in that, And I think maybe what they're saying

988
00:47:23,600 --> 00:47:26,239
Speaker 1: too is like, hey, my gross income and with that's

989
00:47:26,239 --> 00:47:28,319
Speaker 1: what you address there, right, Does it include the four

990
00:47:28,400 --> 00:47:30,920
Speaker 1: win k dollars? It's not just your take home pay

991
00:47:31,040 --> 00:47:33,400
Speaker 1: and you investing on your own within an IRA and

992
00:47:33,440 --> 00:47:36,280
Speaker 1: within a brokerage account. The four one k totally counts.

993
00:47:36,320 --> 00:47:38,239
Speaker 1: There are going to be so many four one k

994
00:47:38,320 --> 00:47:40,840
Speaker 1: millionaires in the next ten twenty thirty years because of

995
00:47:41,080 --> 00:47:43,160
Speaker 1: the fact that folks have been auto enrolled. They're going

996
00:47:43,239 --> 00:47:45,759
Speaker 1: to be doing that like clockwork. The behavioral aspect of

997
00:47:45,800 --> 00:47:48,359
Speaker 1: it is just firing on all cylinders, and yeah, they're

998
00:47:48,360 --> 00:47:51,600
Speaker 1: going to be hopefully set up quite well for retirement.

999
00:47:52,040 --> 00:47:54,120
Speaker 1: I think this poster will too, if they maintain it

1000
00:47:54,239 --> 00:47:57,239
Speaker 1: at least fifteen percent savings, right, which I think is

1001
00:47:57,239 --> 00:47:59,879
Speaker 1: the floor that most people should be striving for. All right, matt,

1002
00:48:00,040 --> 00:48:01,640
Speaker 1: Le's get back to the beer we had on this episode.

1003
00:48:01,640 --> 00:48:05,560
Speaker 1: This was an athletic brewing company upside down, Golden Ale

1004
00:48:05,880 --> 00:48:09,520
Speaker 1: upside don. An athletic, of course, is the heavy hitter

1005
00:48:09,600 --> 00:48:12,440
Speaker 1: in the ina beer space or your thoughts on this

1006
00:48:12,480 --> 00:48:16,160
Speaker 1: one the non alcoholic beer space. Yeah, you know what

1007
00:48:16,200 --> 00:48:18,520
Speaker 1: I thought of. So we're not vegan, but it makes

1008
00:48:18,560 --> 00:48:21,359
Speaker 1: me think of the fact that it's harder to cook.

1009
00:48:21,560 --> 00:48:24,759
Speaker 1: I think vegan meals that taste really good.

1010
00:48:24,840 --> 00:48:25,160
Speaker 2: M hm.

1011
00:48:25,800 --> 00:48:27,319
Speaker 1: And I think the same as tree when it comes

1012
00:48:27,360 --> 00:48:29,800
Speaker 1: to alcohol in beers, right, Like it's you're just working

1013
00:48:29,800 --> 00:48:32,359
Speaker 1: with less and it makes it tricky, like if you're

1014
00:48:32,400 --> 00:48:34,840
Speaker 1: not including butter or something like. There's just a depth

1015
00:48:35,160 --> 00:48:37,840
Speaker 1: and a richness that comes with that. And which is

1016
00:48:37,920 --> 00:48:39,520
Speaker 1: what's funny is I actually saw in here that it

1017
00:48:39,520 --> 00:48:43,439
Speaker 1: says this is vegan, So I thought I was gonna

1018
00:48:43,480 --> 00:48:46,440
Speaker 1: have like a food analogy, but in fact, this is

1019
00:48:46,520 --> 00:48:48,960
Speaker 1: a vegan beer. But I think if you think of

1020
00:48:49,000 --> 00:48:52,200
Speaker 1: this less as a beer and more as a different

1021
00:48:52,239 --> 00:48:54,400
Speaker 1: type of drink or a different type of beverage, then

1022
00:48:54,440 --> 00:48:56,200
Speaker 1: I can get behind it. Right. If I think of

1023
00:48:56,239 --> 00:48:59,839
Speaker 1: this as like a multi multi hopwater, then I'm like, oh, yeah,

1024
00:48:59,840 --> 00:49:01,520
Speaker 1: that was that was pretty good multi hop water. That's

1025
00:49:01,560 --> 00:49:03,320
Speaker 1: a really good way to describe it, as opposed to

1026
00:49:03,600 --> 00:49:06,520
Speaker 1: thinking of it as an actual beer. All that craft beer.

1027
00:49:06,520 --> 00:49:08,640
Speaker 1: All I can think while drinking this for the first

1028
00:49:08,680 --> 00:49:12,680
Speaker 1: half of the show was so watery but barely beer flavored.

1029
00:49:12,719 --> 00:49:14,920
Speaker 1: And then I had Yeah, I just had to reorient

1030
00:49:15,000 --> 00:49:17,680
Speaker 1: my mind to be like, this is this isn't craft beer. Yeah,

1031
00:49:17,880 --> 00:49:19,520
Speaker 1: so if you think of it as a craft in

1032
00:49:19,560 --> 00:49:22,239
Speaker 1: a beer, which is not really the same thing, Yeah,

1033
00:49:22,280 --> 00:49:24,319
Speaker 1: it's a different category. So if I put this more

1034
00:49:24,360 --> 00:49:27,880
Speaker 1: in the category of seltzer, oh okay, I could totally

1035
00:49:27,920 --> 00:49:33,480
Speaker 1: see myself opting for this over a lime seltzer from Aldi. Ah.

1036
00:49:33,480 --> 00:49:36,520
Speaker 1: Thought that would be a whole lot more affordable. Go

1037
00:49:36,600 --> 00:49:39,040
Speaker 1: with the seltzer. But that being said, it's still got

1038
00:49:39,080 --> 00:49:41,480
Speaker 1: those flavor profiles and I still really enjoyed it. Still

1039
00:49:41,520 --> 00:49:44,120
Speaker 1: really liked to notice here on the can that Athletic

1040
00:49:44,480 --> 00:49:48,719
Speaker 1: they restore They give up to two million every year

1041
00:49:48,760 --> 00:49:51,600
Speaker 1: to help restore local trails. Okay, that's something you can

1042
00:49:51,600 --> 00:49:53,719
Speaker 1: get behind right. Sure, yeah, I like that makes me.

1043
00:49:54,000 --> 00:49:56,799
Speaker 1: I don't think I ever had an Oduel's like your

1044
00:49:56,880 --> 00:49:59,279
Speaker 1: uncles in a beer. This has got to be better,

1045
00:49:59,320 --> 00:50:00,880
Speaker 1: I'm pretty sure I've I don't know something would be

1046
00:50:00,920 --> 00:50:03,120
Speaker 1: so long. I know that this is better. This has

1047
00:50:03,120 --> 00:50:04,600
Speaker 1: to be way better. I'm not even going to mention

1048
00:50:05,200 --> 00:50:07,359
Speaker 1: the fact that this has reminds me of lot Duels

1049
00:50:07,360 --> 00:50:09,240
Speaker 1: back when I was twenty years old, and it doesn't

1050
00:50:09,239 --> 00:50:11,160
Speaker 1: because I never had it, but my goodness, this has

1051
00:50:11,200 --> 00:50:14,319
Speaker 1: to supersed it by a long, a long way. Yeah,

1052
00:50:14,400 --> 00:50:16,160
Speaker 1: either way, glad that you and I got to share

1053
00:50:16,160 --> 00:50:17,759
Speaker 1: it today. You can find show notes up on the

1054
00:50:17,800 --> 00:50:20,520
Speaker 1: website at Howdymoney dot com and that's gonna be get money.

1055
00:50:20,719 --> 00:50:23,799
Speaker 1: So until next time, best friends Out, Best Friends Out,