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Speaker 1: Welcome to Out of Money.

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Speaker 2: I'm Joel and I am Matt, and today.

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Speaker 1: We're answering your listener questions.

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Speaker 3: That's right, man, it's Monday, and we hope that we

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Speaker 3: are able to help you kick off your week. We

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Speaker 3: are excited to hear from listeners, to hear their financial

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Speaker 3: quandaries that they find themselves in.

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Speaker 1: Joel, what's better than our two voices in your earbuds

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Speaker 1: on a Monday morning, sting on.

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Speaker 2: A Monday morning.

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Speaker 3: Lots of other things, That's what my wife said, Lots

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Speaker 3: of other things. Yeah, but we are thankful for all

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Speaker 3: of you listeners out there. We've got a question from

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Speaker 3: a listener who is asking about his savings rate, specifically,

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Speaker 3: like what goes into a savings rate? And we've got

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Speaker 3: maybe an easier just like if you zoom ount, we're

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Speaker 3: gonna provide an easier way of thinking about your savings rate.

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Speaker 3: Another listeners asking you about some of these new sites

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Speaker 3: that are cropping up that allow you to easily tap

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Speaker 3: your home equity, whether or not that that's something that

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Speaker 3: they should utilize. Another listener, she's actually she's lost a

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Speaker 3: chunk of her retirement funds. It came as a shock

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Speaker 3: to her. So I'm actually pumped to talk about that

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Speaker 3: and just to help other listeners to prepare for this

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Speaker 3: inevitable outcome.

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Speaker 2: I'm just gonna leave it like that.

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Speaker 1: I'm hanging on the edge mat. That was a good tease.

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Speaker 2: Oh you like it? Yeah, OK, very good.

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Speaker 1: So, yeah, there's an interesting conundrum that this listener finds

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Speaker 1: herself in. We'll talk about that and more. One great

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Speaker 1: thing that a different listener wrote in about that she's experienced,

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Speaker 1: and I don't know that we've ever mentioned this specific

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Speaker 1: We've been talking a lot about We talked regularly about

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Speaker 1: the library.

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Speaker 3: How to you know, the free service berriers that you

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Speaker 3: can pick up at our local library at least. Oh

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Speaker 3: you've talked about that, free trees outside, that's true, but yeah,

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Speaker 3: free books obviously, But then there's a bunch of other

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Speaker 3: things there are, even like seed libraries at library. I mean,

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Speaker 3: there's like so many different things that libraries have branched

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Speaker 3: down into and they can be money saving and also

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Speaker 3: a great place to spend time, specifically with kids. There's

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Speaker 3: like a play kitchen at our local library that my

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Speaker 3: kids love and we'll go there just like hanging out

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Speaker 3: the basement.

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Speaker 2: Yeah, lower level.

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Speaker 3: Well, dude, especially this time a year when you're looking

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Speaker 3: for things to do that don't involve being outside in

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Speaker 3: the scorching heat. The public library offers free air conditioning.

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Speaker 2: But like legit, that's.

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Speaker 3: Yeah, we're spending more time at the public library as well.

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Speaker 1: Yeah, you can bump up your AC, turn it off

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Speaker 1: for a minute, and had to head the library. Well,

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Speaker 1: that was not what I was going to comment on,

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Speaker 1: although you're right that is a good place to stay cool.

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Speaker 2: It's fun classes during this heat wave. Community. Yeah, there's

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Speaker 2: lots of great things.

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Speaker 1: Something in public library or something else, because I think

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Speaker 1: recently mentioned about signing up for Consumer Reports to get

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Speaker 1: reviews of something, or let's say you're looking for reliability

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Speaker 1: features of your of an automobile you're considering purchasing. Consumer

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Speaker 1: Reports just has like the data on it. They have

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Speaker 1: the biggest, the best data Matt when it comes to

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Speaker 1: their cars and just given all their subscribers.

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Speaker 3: Mike Quincy, that's an interview that we had. This is

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Speaker 3: I guess a couple of years ago, but he talked

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Speaker 3: about just how in depth they go when it comes

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Speaker 3: to reviewing their vehicles, especially from from not only from

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Speaker 3: the readers. But then also from their road testing that

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Speaker 3: they do every vehicle. They pay for the vehicles and

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Speaker 3: they put them through and they don't tell them that

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Speaker 3: they are that they're with Consumer Reports. That's one of

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Speaker 3: the most fascinating things from from that interview, the fact

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Speaker 3: that they kind of walk in as unassuming individuals. That's

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Speaker 3: why who are looking to purchase a vehicle, so that

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Speaker 3: way they don't like the super nice one that they

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Speaker 3: know has been that they've gone over with a fine

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Speaker 3: tooth comb exactly ensure that's not element.

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Speaker 2: That kind of thing.

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Speaker 1: Well, you can get Consumer Reports from your library, by

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Speaker 1: the way, and we've there to go that recently, so

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Speaker 1: it was a big build up and you get it

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Speaker 1: digitally or physically whatever you prefer. But yeah, you can

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Speaker 1: get it on the libby app or you can run

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Speaker 1: into your library and snag a copy. But because I

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Speaker 1: don't know, Consumer Reports cost twenty something dollars a year,

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Speaker 1: and honestly, it's it's worth it if if you like

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Speaker 1: the material they put out, because it is kind of

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Speaker 1: unbiased information that comes out of Consumer Reports. I trust

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Speaker 1: everything comes out from them because of their process. So

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Speaker 1: it's a crucial part of what they do. And so yeah,

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Speaker 1: love consumer reports. But if you're like, I don't know,

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Speaker 1: want to be frugal, grab it for free from library.

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Speaker 2: Absolutely, yeah, it makes sense, especially if you're already going

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Speaker 2: to be there because you're there to pick up other

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Speaker 2: great perks like free passes to your local zoo or

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Speaker 2: to a local museum, that kind of thing.

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Speaker 3: They seriously, your local library has way more resources than

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Speaker 3: you're probably thinking, I think, And we always talk about books.

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Speaker 2: Yeah, because we're nerds.

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Speaker 3: We are trying to get smarter, and one of the

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Speaker 3: ways you do that is by reading more books. The

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Speaker 3: fact is, though not everybody out there likes the read books,

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Speaker 3: and that's totally fine, and so because of that, Because

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Speaker 3: of that, I think there might be a lot of

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Speaker 3: folks who they hear us.

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Speaker 2: Talking about the free public library and it's not.

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Speaker 3: Free, by the way, because you pay with your taxes,

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Speaker 3: but they just tune us out once we start talking

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Speaker 3: about the library.

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Speaker 2: But there's all you can rent movies, there's all sorts

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Speaker 2: of awesome stuff.

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Speaker 1: Oh, we go in there, we get so on our

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Speaker 1: every road trip, we run in the library before we

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Speaker 1: go the DVD player and get the DVD player. But

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Speaker 1: we also even more than that is that they have

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Speaker 1: these things called play aways, So because they don't know

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Speaker 1: what that is. So the kids don't have uh smartphones

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Speaker 1: where they can like listen to stuff.

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Speaker 2: On Libby right respect Yeah playways.

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Speaker 3: Well it's a bummer that I guess they don't. They

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Speaker 3: can't listen to an audiobook right, their own personal audiobook.

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Speaker 1: Except for they can with playaways. So playaways are audiobooks,

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Speaker 1: but the specific book it's kind of like a digital

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Speaker 1: version of a cassette tape proceeds that you would have

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Speaker 1: had back in the day for a book. And so yeah,

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Speaker 1: we'll load up get a few of the playaways. Kids

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Speaker 1: can plug their headphones dirrectly in and they've got books

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Speaker 1: to listen to on the way And I.

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Speaker 2: Didn't even know about that.

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Speaker 1: It makes the best card trip ever if they've got

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Speaker 1: the playoways on hand, because they will sit there contented

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Speaker 1: for hours listening to their books.

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Speaker 4: Yeah.

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Speaker 2: Wait, so is it a singular device that they can

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Speaker 2: all plug into.

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Speaker 1: No, it's for every single separate Yeah, they've each got

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Speaker 1: their own books.

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Speaker 2: I guess you can get your own splitter. And let's say,

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Speaker 2: for instance, you two out of four.

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Speaker 1: Kids or whatever wanted to listen to the same book. Yeah,

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Speaker 1: it's brilliant.

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Speaker 2: That's you.

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Speaker 1: Yeah, I love it all right, a few library facts

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Speaker 1: come in your way. I hope that helps.

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Speaker 5: Matt.

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Speaker 1: Let's mention the beer we're having on this episode. It's

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Speaker 1: called Hammer Red amber Ale by Sweetwater Brewing. We'll give

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Speaker 1: our thoughts on this one at the end of the episode,

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Speaker 1: but let's get to the listener questions. And if you

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Speaker 1: have a money question, we'd love to tackle it on

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Speaker 1: an upcoming ask htm episode. Just got a hot money

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

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Speaker 1: don't know, just record it on the police MEMDMO app

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Speaker 1: of your phone, send it to us via email, and

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Speaker 1: hope to take it next week on the show. Let's

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Speaker 1: get to the first one, Matt. This is about newfangled

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Speaker 1: ways of tapping your home equity.

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Speaker 5: Hi, guys, Stanley Poe here on the North coast of America,

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Speaker 5: the Great Lakes region. Having had a helock loan years

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Speaker 5: ago and paying that off, I'm not too excited about

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Speaker 5: doing that again, but we are looking at potential options

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Speaker 5: for financing a home improvement project. One thing I came

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Speaker 5: across just recently is home tap dot com. Home Tap Equities.

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Speaker 5: No excuse me, Home Tap Investments Incorporated. Wondered if you

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Speaker 5: knew anything about those folks. As far as I read,

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Speaker 5: it looks worth looking into. But looking for your sound

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Speaker 5: advice home tap dot Com. I'll hang up and listen

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Speaker 5: for your answer.

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Speaker 3: Thanks all right, Stanley, thank you for your question. And

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Speaker 3: first things first, know that you are not alone here

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Speaker 3: when it comes to considering tapping some of that home

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Speaker 3: equity in order to do anything with it. I feel

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Speaker 3: like I'm getting calls like every other day, Joel har Yeah,

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Speaker 3: it's just like, hey, by the our guess it's calls,

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Speaker 3: but it's also mailers, it's emails. It's just they're hitting

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Speaker 3: you on every single front where. It's just like, did

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Speaker 3: you know that you've got all this equity that is

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Speaker 3: available to you?

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Speaker 1: By the way, you know that you're loaded?

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Speaker 3: Yes, Like they are just reminding you of how much

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Speaker 3: cash that you're sitting on. And Americans like they we

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Speaker 3: have a record amount of home equity these days thanks

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Speaker 3: to the rapidly rising home prices. We are talking like

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Speaker 3: literally tillions of collective dollars is at our disposal. Although

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Speaker 3: I will say that that quick rise and home equity

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Speaker 3: and home prizes. It has stapered off, right, because we

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Speaker 3: saw it skyrocket in twenty twenty, basically around the time

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Speaker 3: everyone started getting stimmy checks. Yeah, and oh my gosh,

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Speaker 3: it blew up. But then starting in twenty two it

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Speaker 3: slowed down a little bit. It's a bit of a question. Yeah,

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Speaker 3: we'll get to the specifics of your question, Stanley, But

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Speaker 3: for most folks, we want to highlight the fact that, oh,

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Speaker 3: this is such a great thing. We've all got so

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Speaker 3: much equity in our homes. But the best thing to

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Speaker 3: do is just to pretend that that mountain of money,

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Speaker 3: that mountain of home equity that were that a lot

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Speaker 3: of us are sitting on, that it doesn't exist. Because yeah,

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Speaker 3: it makes you feel a lot wealthier, and you are

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Speaker 3: wealthier on paper because of that. But using your home

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Speaker 3: as a piggy bank where you're rating it for the funds,

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Speaker 3: I think that's a bad idea for the majority of

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Speaker 3: the time.

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Speaker 1: Yeah, at least that's true. I mean, Stanley is planning

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Speaker 1: on using equity dollars for a fairly defensible reason though, right,

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Speaker 1: and that's to sink those dollars back into his home

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Speaker 1: in a form of improved and how there are a

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Speaker 1: lot of people who use home equity in a lot

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Speaker 1: worse ways than that, And so when you're talking about

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Speaker 1: that's also a tax deductible reason to use a home

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Speaker 1: equity line of credit, there are other ways you could

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Speaker 1: use that home equity line of credit and you wouldn't

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Speaker 1: see a tax break for doing so. So I am

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Speaker 1: okay with using home equity lines of credit within reason

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Speaker 1: for the reason they're most intended for. But also I

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Speaker 1: would say, don't assume that the dollars you spend are

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Speaker 1: going to come back to you in the form of

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Speaker 1: additional home equity. The truth is almost no upgrades you

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Speaker 1: make are going to increase the value of your home

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Speaker 1: commensurate with what it costs to do that addition, or

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Speaker 1: to you know, make your kitchen look more beautiful. It's

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Speaker 1: certainly okay to take out some helocked dollars to make

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Speaker 1: some of those improvements, with a caveat that you're making

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Speaker 1: those improvements because they bring you joy, right that you

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Speaker 1: plan on being at home for a while.

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Speaker 3: Do it for you, do it for not because don't

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Speaker 3: justify it by saying, oh, this is going to increase

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Speaker 3: the ho villues. Because it will but like you said, Jill,

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Speaker 3: it's not certainly not dollar for dollar.

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Speaker 1: And we talked what recently Matt about how the if

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Speaker 1: you change yourage doors, that's one of the very few

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Speaker 1: improvements that pays off, like more than the value of

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Speaker 1: what you put in.

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Speaker 3: Should we mention listener Greg his tip about the garage door. Oh, yeah,

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Speaker 3: it was a great tip to do that.

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Speaker 1: Yeah, So basically what he was saying was paint your

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Speaker 1: garage doors a faux wood color. And that actually is

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Speaker 1: like an eighty dollars solution to changing out your garage

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Speaker 1: door instead of like replacing the whole thing and spending

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Speaker 1: thousands of dollars, just do that one simple thing.

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Speaker 3: Which will go a long way replacing the whole thing.

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Speaker 3: But yeah, I don't know why that's literally when he

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Speaker 3: sent that in first of all, so he sent before

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Speaker 3: and after pictures as well, it looked good. Oh, it

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Speaker 3: looks so good because I don't know, like maybe the

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Speaker 3: first time you hear that, you think.

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Speaker 1: Eh, faux wood paint sounds.

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Speaker 2: A little cheesy.

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Speaker 3: But when he said the picture of it, it looked amazing,

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Speaker 3: so much so that I afforded it to my wife

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Speaker 3: because we've been literally we've been trying to figure out

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Speaker 3: what we're going to do in this in a similar situation,

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Speaker 3: like one hole side of our house is basically this

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Speaker 3: giant white garage door on a white house, and I'm like, oh,

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Speaker 3: wait a minute, we could paint the stupid thing and

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Speaker 3: that would go so even just a solid color. Like

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Speaker 3: it's not something that's really crossed our mind, and we're

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Speaker 3: not necessarily looking to increase our home value necessarily, but

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Speaker 3: it could go a really long ways and making it

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Speaker 3: look nice. Yeah, Like that's why it by default does

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Speaker 3: make your home values go up because it looks nicer, yeah,

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Speaker 3: than it does if.

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Speaker 2: It's just been in the same color as the house.

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Speaker 1: So that's like anyway that eighty bucks is more than

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Speaker 1: going to pay for itself.

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Speaker 4: Oh yeah.

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Speaker 1: But most of the time, whatever you're trying to do

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Speaker 1: to your home, do it for you, and do it

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Speaker 1: because you can afford to do it, not because you're hoping.

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Speaker 1: That's exactly you're banking on the fact that, hey, if

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Speaker 1: I take this money out push it into my home,

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Speaker 1: then now my home is going to be worth just

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Speaker 1: as much, if not more than what I put into it.

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Speaker 2: Totally. Yeah, And here's the other thing.

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Speaker 3: Most helocks, they come with a variable rate, and those

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Speaker 3: rates have gone up significantly in recent years, making that

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Speaker 3: decision even more fraud even more costly. And so if

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Speaker 3: you're looking at getting a helock, you might have a

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Speaker 3: rate that potentially even starts with a nine, unless, that is,

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Speaker 3: you opted to go with one of these new fangled

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Speaker 3: services like home Tap. And that's what Stanley is asking about.

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Speaker 3: Their pitch is that you can access some of your

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Speaker 3: home equity without taking on a loan, which sounds pretty nice,

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Speaker 3: but of course there's a catch instead of saddling, because

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Speaker 3: what they say on the website is like, it's not alone.

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Speaker 3: They don't stick you with a monthly payment. Instead, what

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Speaker 3: they do they take partial ownership of your home instead.

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Speaker 3: They're essentially in the whole pitch. The whole idea is

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Speaker 3: to oh.

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Speaker 2: Man, we're gonna make this as easy as possible for you.

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Speaker 3: Oh you know all those hoops you have to jump

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Speaker 3: through where you have to get a credit check. Oh

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Speaker 3: your credit's not so great, Sorry, you don't get the

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Speaker 3: heel act. They're like, no, no, no, we don't ask those

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Speaker 3: kind of questions. All we do we just take a

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Speaker 3: stake in your actual home.

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Speaker 1: Ye to me, like, this is a scary uh form

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Speaker 1: of borrowing because you're not just borrowing, like you said, Matt,

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Speaker 1: you're giving up ownership rights to a portion of a

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Speaker 1: percentage of your home. You're taking on an investor, which

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Speaker 1: to me sounds like a terrible idea. It's got like

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Speaker 1: ursula aerial tendencies, right, it's the in exchange for those

303
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Speaker 1: feet give me your voice. Yeah, and obviously aerial comes

304
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Speaker 1: off fine in the end. Spoiler alert if you haven't

305
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Speaker 1: seen heads up, though, you don't always come out ahead

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Speaker 1: right exactly? What makes you think of the like fintech companies.

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Speaker 1: When fintech companies first started kind of coming into bogue,

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Speaker 1: Acorns was one of those first ones. They were helping

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Speaker 1: people solve problems, and there were really good ones. They're

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Speaker 1: budgeting apps and stuff that really do a lot of

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Speaker 1: good for people. But what about those apps that help

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Speaker 1: you get paid early? Those seem really nice too. And

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Speaker 1: there's all sorts of fintech apps like like earn in

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Speaker 1: or whatever who say, oh, yeah, I get your paycheck

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Speaker 1: a few days early, get paid on the day you

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Speaker 1: work instead of waiting for your paycheck to come through

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Speaker 1: a lot of fintech companies. Now you have to watch

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Speaker 1: out for the products because in the fine print it's

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Speaker 1: not nearly as good as it seems on the marketing material.

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Speaker 1: Because yes, now you're home, you've got an investor attached

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Speaker 1: to it. If you go with a company like hometap

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Speaker 1: and there are other companies in this space too, they

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Speaker 1: stand a benefit when your home goes up in value,

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Speaker 1: taking a piece of the proceeds when you sell your

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Speaker 1: home in the future. So for example, if you borrow

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Speaker 1: twenty percent of the value of your home, they add

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Speaker 1: a discount value to their investment, meaning they'll get a

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Speaker 1: stake that's larger than twenty percent, maybe like twenty five percent,

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Speaker 1: could be even more than that. And then if you

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Speaker 1: use those funds to improve your property, they're winning with

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Speaker 1: every renovation you make. And while you don't have to

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Speaker 1: pay them back on a monthly basis, there's a ticking

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Speaker 1: ten year clock. So yes, you're right, like you don't

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Speaker 1: have a monthly obligation like you do with a helock,

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Speaker 1: but they're gonna still want their payback and they want

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Speaker 1: it within a decade. And then if you don't have

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00:14:13,200 --> 00:14:15,840
Speaker 1: the money, because they're part owners, they can force the

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Speaker 1: sale of your home at that point in time, so

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Speaker 1: basically within ten years, you got to pay them back

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Speaker 1: a big, pretty penny. If you don't have the cash,

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Speaker 1: they might be able to say, all right.

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Speaker 3: We need our cash yep, and we own a portion

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Speaker 3: of this house, forcing it to go to sale.

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Speaker 1: Yeah, hey, Stanley, let's put that on the market. And

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Speaker 1: you're like, no, I still like this place, and it's like,

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Speaker 1: you know, we do two.

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Speaker 6: For the part.

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Speaker 2: Yeah.

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Speaker 3: But then on top of that, there's fees on the

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Speaker 3: front end as well. There's a three and a half

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Speaker 3: percent fee off the top. There are appraisal fees, title charges,

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Speaker 3: government courting charges as well. Many banks and credit unions

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Speaker 3: they will allow you to avoid those fees completely when

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Speaker 3: taking on a heelock, not with home tap, Like, yeah,

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Speaker 3: the more you read into the details, the worse it

356
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Speaker 3: looks like. I wouldn't necessarily go as far as to

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Speaker 3: say that this is predatory, but it's close because the

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Speaker 3: folks who are wanting to borrow from their home but

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Speaker 3: they can't afford the monthly payments. I feel like the

360
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Speaker 3: magic of home tap is the fact that the downsides

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Speaker 3: are way far down the road. Yeah, and what it

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Speaker 3: reminds me of what it mirrors, essentially, are like credit cards,

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Speaker 3: where it's just like, oh, you don't you can't handle

364
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Speaker 3: the cost of buying this thing, not just oh just

365
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Speaker 3: stick it on plastic, or just tap your card buy

366
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Speaker 3: not pay later, just double click that home button face

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Speaker 3: ID recognize boo vibrates in your hand.

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Speaker 1: I love that, by the way, it's so great. It's

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Speaker 1: like bupple stealskin.

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Speaker 2: Yes, But here's the thing.

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Speaker 3: With credit cards, though you like you realize the error

372
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Speaker 3: of your ways in thirty days, Like it doesn't take

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Speaker 3: long for you to be like, oh man, I don't

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Speaker 3: really like that, Whereas with this, like you don't realize

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Speaker 3: how royally you've been screwed potentially for a decade. And

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Speaker 3: that's what's so crazy, is I mean, so what the

377
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Speaker 3: majority of Americans net worth is tied up in their homes.

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Speaker 3: We don't like that that's the case, but that's just

379
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Speaker 3: the case. And if potentially in a decade, you're giving

380
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Speaker 3: up a quarter of that growth down the road, you know,

381
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Speaker 3: if not more to this company that you signed your

382
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Speaker 3: soul away ten years prior, Like, that's to me, that's

383
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Speaker 3: the biggest downside is folks might be signing up for

384
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Speaker 3: this without completely realizing that's what they what they're what

385
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Speaker 3: they're giving away way off down the future.

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Speaker 2: That's exactly right.

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Speaker 1: I mean, this is I don't know that I would

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Speaker 1: call it predatory. I don't know that I would go

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Speaker 1: that far, but I would say.

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Speaker 2: That it's close.

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Speaker 1: It's very close predatory adjacent probably, And so I think

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Speaker 1: people who want to borrow from their home but they

393
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Speaker 1: can't afford the monthly payments, they're going to find this

394
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Speaker 1: appealing that people who can least afford to oh, home

395
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Speaker 1: Tap ten years down the road a massive sum of money.

396
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Speaker 1: And then you know, taking on an investor in your

397
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Speaker 1: primary home means you know, appreciation is going to be

398
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Speaker 1: split as your value grows. This is one of those

399
00:16:43,560 --> 00:16:46,320
Speaker 1: things it sounds too good to be true, and the

400
00:16:46,360 --> 00:16:49,080
Speaker 1: fine print reveals that it is. Like I just I

401
00:16:49,120 --> 00:16:52,040
Speaker 1: get why people might be attracted to something like home Tap,

402
00:16:52,280 --> 00:16:54,880
Speaker 1: but when you dig into the details, it's a turd

403
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Speaker 1: with gold spray paint on it.

404
00:16:57,360 --> 00:16:59,040
Speaker 3: And you know, you mentioned there's other companies there in

405
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Speaker 3: the space as well, Joel, but we've seen a massive

406
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Speaker 3: increase in home equity, so there should be no surprise

407
00:17:04,960 --> 00:17:07,040
Speaker 3: that there are going to be new companies innovating and

408
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Speaker 3: trying to find ways to tap into this.

409
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Speaker 1: How do we profit from this boon in home equity?

410
00:17:11,280 --> 00:17:13,600
Speaker 3: Yeah, and what there's money to be made market and

411
00:17:14,200 --> 00:17:16,439
Speaker 3: encourage people in fact to tap the money they have

412
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Speaker 3: in their homes totally. And because of that, I feel

413
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Speaker 3: like it's it kind of has like some Wild West

414
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Speaker 3: elements to it where we're still figuring some of this out.

415
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Speaker 3: Ideally Stanley and anybody else out there who has a

416
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Speaker 3: home project that they're looking to accomplish, Like you're gonna

417
00:17:29,920 --> 00:17:31,920
Speaker 3: want to save up, you want to pay cash for

418
00:17:31,960 --> 00:17:34,120
Speaker 3: those improvements that you want to make, But if you

419
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Speaker 3: can't wait, we would say shopping around for a regular

420
00:17:37,280 --> 00:17:39,840
Speaker 3: helock is going to be a much better plan. I

421
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Speaker 3: think one of the other things I like about helocks too,

422
00:17:41,840 --> 00:17:44,879
Speaker 3: is like it's just more gradual. It's more akin to

423
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Speaker 3: credit cards, right where you kind of immediately feel the

424
00:17:47,119 --> 00:17:49,800
Speaker 3: pain of that, Like you get your heelock, Okay, it's

425
00:17:49,800 --> 00:17:51,680
Speaker 3: sitting there. It's just kind of waiting on you right,

426
00:17:51,760 --> 00:17:54,120
Speaker 3: like you haven't even pulled this. I like helocks even

427
00:17:54,119 --> 00:17:56,680
Speaker 3: better than home equity loans, even though home equity loans

428
00:17:56,680 --> 00:17:58,640
Speaker 3: tend to have lower rates because when you take out

429
00:17:58,640 --> 00:18:00,760
Speaker 3: a home equity loan, you've got a big old chunk

430
00:18:00,760 --> 00:18:02,720
Speaker 3: of money. It's kind of burning a hole in your pocket,

431
00:18:02,760 --> 00:18:03,119
Speaker 3: like to.

432
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Speaker 2: Use it all. Whereas with the helock, it's there.

433
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Speaker 3: If you need it. We pull some money out. Oh,

434
00:18:08,000 --> 00:18:10,639
Speaker 3: we're starting to make interest payments on that. You can

435
00:18:10,760 --> 00:18:14,720
Speaker 3: easily gauge how that makes you feel. Yeah, Instaney even

436
00:18:14,760 --> 00:18:16,520
Speaker 3: mentioned that right earlier. He's just like, Oh, this is

437
00:18:16,520 --> 00:18:18,400
Speaker 3: something that I've done in the past. I definitely don't

438
00:18:18,400 --> 00:18:20,639
Speaker 3: want to do that again. He's trying to avoid that

439
00:18:20,760 --> 00:18:24,320
Speaker 3: downside feeling. But with home tap you avoid that feeling

440
00:18:24,359 --> 00:18:26,840
Speaker 3: all together because you're kicking it ten years down down

441
00:18:26,880 --> 00:18:28,760
Speaker 3: the road, off into the future, and which at that

442
00:18:28,800 --> 00:18:30,400
Speaker 3: point is too late. It's too late to make any

443
00:18:30,480 --> 00:18:32,000
Speaker 3: changes to what it is that you've done with that money.

444
00:18:32,359 --> 00:18:33,720
Speaker 3: You did something with that money ten years.

445
00:18:33,560 --> 00:18:35,560
Speaker 1: Ago, A decade later, it's like in an anvil dropped

446
00:18:35,600 --> 00:18:39,120
Speaker 1: on your head. Yeah, and almost unsuspecting because you remember

447
00:18:39,160 --> 00:18:42,000
Speaker 1: what you signed, you know, ten years ago, I guess,

448
00:18:42,000 --> 00:18:44,840
Speaker 1: but maybe vaguely. I barely remember what happened ten years ago.

449
00:18:44,880 --> 00:18:45,080
Speaker 4: Matt.

450
00:18:45,119 --> 00:18:48,119
Speaker 1: My memory, my memory sucks, and so yeah, I just

451
00:18:48,119 --> 00:18:49,920
Speaker 1: think that this is this is one of those products

452
00:18:49,960 --> 00:18:52,280
Speaker 1: that should be avoided at all costs, and I would

453
00:18:52,359 --> 00:18:55,240
Speaker 1: rather forego any sort of improvement. I would rather take

454
00:18:55,240 --> 00:18:57,399
Speaker 1: out a regular helock. I would rather take longer to

455
00:18:57,440 --> 00:18:59,679
Speaker 1: save up the money all of the above than do

456
00:19:00,000 --> 00:19:02,879
Speaker 1: any sort of deal with one of these companies that

457
00:19:02,920 --> 00:19:06,000
Speaker 1: wants to take a portion of my home and own

458
00:19:06,000 --> 00:19:09,040
Speaker 1: a percentage with me. No way, Jose. It's different than

459
00:19:09,080 --> 00:19:10,960
Speaker 1: a traditional mortgage in that sense where yes, you're not

460
00:19:10,960 --> 00:19:13,320
Speaker 1: the full owner of your home until you fully pay

461
00:19:13,359 --> 00:19:15,679
Speaker 1: off that mortgage. But a traditional mortgage is something that's

462
00:19:15,680 --> 00:19:19,359
Speaker 1: easily understood and it's not nearly as egregious as this is.

463
00:19:19,440 --> 00:19:21,080
Speaker 2: That's right, Okay, we've got more to get to.

464
00:19:21,200 --> 00:19:23,879
Speaker 3: We're gonna hear from a listener who is considering an

465
00:19:23,880 --> 00:19:26,360
Speaker 3: innovative way of purchasing his first home.

466
00:19:26,400 --> 00:19:28,080
Speaker 2: We'll get to that and more right after this.

467
00:19:35,880 --> 00:19:38,199
Speaker 1: All right, we're back, and we've got more of your

468
00:19:38,200 --> 00:19:40,639
Speaker 1: money questions to get to, including that one about an

469
00:19:40,720 --> 00:19:44,040
Speaker 1: interesting way to potentially buy your first home. But Matt,

470
00:19:44,119 --> 00:19:47,200
Speaker 1: now we've got to get to a question about cashing

471
00:19:47,200 --> 00:19:49,800
Speaker 1: out a retirement account and finding you didn't get as

472
00:19:49,880 --> 00:19:51,280
Speaker 1: much money as you thought you were going to.

473
00:19:51,840 --> 00:19:51,959
Speaker 5: Hi.

474
00:19:52,119 --> 00:19:55,560
Speaker 6: My name is Evelyn. I'm from Los Angeles, California. I

475
00:19:55,600 --> 00:19:58,439
Speaker 6: took out one hundred thousand dollars this year out of

476
00:19:58,480 --> 00:20:01,560
Speaker 6: my four h three B two buy a house. They

477
00:20:01,680 --> 00:20:05,000
Speaker 6: socked me with a twenty eight thousand dollars tax bill,

478
00:20:05,080 --> 00:20:07,520
Speaker 6: which they just took right out of the rest of

479
00:20:07,560 --> 00:20:10,880
Speaker 6: my four H three B. I was wondering, is there

480
00:20:11,000 --> 00:20:12,879
Speaker 6: any way I'm going to be able to get that

481
00:20:13,160 --> 00:20:19,200
Speaker 6: back next year. I will be retiring in twenty twenty five,

482
00:20:19,400 --> 00:20:23,199
Speaker 6: if that helps, and I am in my seventies. Thank you.

483
00:20:24,000 --> 00:20:27,800
Speaker 6: I love your show. I learn something every week.

484
00:20:27,760 --> 00:20:30,560
Speaker 3: All right, Evelyn, thank you for saying that. Very glad

485
00:20:30,600 --> 00:20:32,560
Speaker 3: that the show has been helpful, not only for folks

486
00:20:32,600 --> 00:20:34,879
Speaker 3: who are maybe just starting in their careers, which is

487
00:20:34,880 --> 00:20:36,760
Speaker 3: a lot of our listeners, but even for folks who

488
00:20:36,760 --> 00:20:40,639
Speaker 3: are reaching the end of their working career. And actually,

489
00:20:40,720 --> 00:20:42,640
Speaker 3: let's dwell on her age here for a second, because

490
00:20:42,640 --> 00:20:44,840
Speaker 3: she said that she's in her seventies. This is really

491
00:20:44,880 --> 00:20:48,239
Speaker 3: important because what I'm highlighting here is the fact that

492
00:20:48,280 --> 00:20:51,520
Speaker 3: we're not talking about a four h three B loan.

493
00:20:52,040 --> 00:20:53,879
Speaker 3: We're also not talking about tapping a four to three B.

494
00:20:54,000 --> 00:20:58,040
Speaker 3: Early we're talking about distributions like these are Evelyn's retirement

495
00:20:58,080 --> 00:21:00,200
Speaker 3: savings that she has socked away within her fourth three B.

496
00:21:00,359 --> 00:21:03,600
Speaker 1: This is the intended time, Yeah, exactly exactly, the government

497
00:21:03,600 --> 00:21:06,960
Speaker 1: apportion time to take that money without taking a tax

498
00:21:07,040 --> 00:21:10,800
Speaker 1: hit or a penalty for withdrawing those funds, because after

499
00:21:10,840 --> 00:21:13,280
Speaker 1: fifty nine and a half, it's all fair game, doesn't

500
00:21:13,400 --> 00:21:15,480
Speaker 1: mean And it's funny, maoun. I've talked to people before

501
00:21:15,520 --> 00:21:18,479
Speaker 1: who they think retirement money. They reach retirement and they're like,

502
00:21:18,760 --> 00:21:20,600
Speaker 1: let me add it, and they want to like gobble

503
00:21:20,640 --> 00:21:22,600
Speaker 1: it all up really quickly. No, it's meant the last year,

504
00:21:22,600 --> 00:21:26,240
Speaker 1: whole retirement years, right for decades, but still at least

505
00:21:26,240 --> 00:21:29,680
Speaker 1: now you don't it doesn't come with those those penalties

506
00:21:30,000 --> 00:21:32,440
Speaker 1: attached to it. So let's talk about Evelynce four or

507
00:21:32,440 --> 00:21:34,919
Speaker 1: three B. Why did they withhold tax which she took

508
00:21:35,000 --> 00:21:37,159
Speaker 1: money out out of it? Well, it's because the company

509
00:21:37,160 --> 00:21:39,919
Speaker 1: that manages your retirement account, Evelyn, they don't want you

510
00:21:39,960 --> 00:21:42,560
Speaker 1: to get caught flat footed at tax time, and more

511
00:21:42,600 --> 00:21:45,560
Speaker 1: than your company, the irs actually makes this mandatory. So

512
00:21:45,920 --> 00:21:48,480
Speaker 1: they're really the ones if you want to yell at somebody,

513
00:21:48,520 --> 00:21:50,440
Speaker 1: although I don't know matter if you've seen a those

514
00:21:50,440 --> 00:21:52,240
Speaker 1: stats about people getting the IRS on the phone, it's

515
00:21:52,240 --> 00:21:54,600
Speaker 1: like impossible, somebody lower than ever, something like one in

516
00:21:54,720 --> 00:21:56,560
Speaker 1: five people are able to get through to somebody at

517
00:21:56,560 --> 00:21:58,840
Speaker 1: the IRS, and when they do it they wait hours.

518
00:21:59,040 --> 00:22:01,720
Speaker 1: So don't don't bother calling. But this is this is

519
00:22:01,760 --> 00:22:03,800
Speaker 1: a mandatory thing. They're the ones who want to make

520
00:22:03,800 --> 00:22:06,080
Speaker 1: sure you're prepared for the tax bill, which is why

521
00:22:06,160 --> 00:22:10,440
Speaker 1: they make your retirement provider that company withhold that money

522
00:22:10,520 --> 00:22:12,840
Speaker 1: on your behalf. So if you've contributed to that four

523
00:22:12,920 --> 00:22:15,119
Speaker 1: or three B with pre tax dollars, you're going to

524
00:22:15,160 --> 00:22:18,640
Speaker 1: owe a decent chunk of tax in April. But if

525
00:22:18,680 --> 00:22:20,640
Speaker 1: you ended up spending all the money you took out,

526
00:22:20,840 --> 00:22:23,159
Speaker 1: you could find yourself in a buying come tax time. Right,

527
00:22:23,240 --> 00:22:25,440
Speaker 1: Let's say they did float you all of the money

528
00:22:25,440 --> 00:22:27,879
Speaker 1: that you requested, and you spent all of it, and

529
00:22:27,920 --> 00:22:30,320
Speaker 1: then tax time comes around. The IRS is saying is

530
00:22:30,359 --> 00:22:33,080
Speaker 1: holding out their hands, please pay us, and you're like, hey,

531
00:22:33,280 --> 00:22:35,359
Speaker 1: we'll have any money. That's why they do this. So

532
00:22:35,560 --> 00:22:38,560
Speaker 1: withholding taxes from your withdrawal is basically a way to

533
00:22:38,600 --> 00:22:39,800
Speaker 1: prevent that from happening to you.

534
00:22:39,920 --> 00:22:40,360
Speaker 2: That's right.

535
00:22:40,440 --> 00:22:43,840
Speaker 3: Yeah, And Evelyn asked about getting that money back. Well,

536
00:22:43,880 --> 00:22:45,479
Speaker 3: you're not going to be able to get that full

537
00:22:45,880 --> 00:22:49,720
Speaker 3: twenty eight thousand dollars back that was withheld. But depending

538
00:22:49,840 --> 00:22:52,399
Speaker 3: on your actual income this year, there's a chance that

539
00:22:52,480 --> 00:22:55,320
Speaker 3: you might find that you get some of it back

540
00:22:55,359 --> 00:22:56,680
Speaker 3: when you file your taxes.

541
00:22:56,920 --> 00:22:57,920
Speaker 2: But it's not likely.

542
00:22:58,160 --> 00:23:00,560
Speaker 3: Because given two things that you may mention, the fact

543
00:23:00,560 --> 00:23:03,800
Speaker 3: that she's still working, so she has her the income

544
00:23:03,840 --> 00:23:05,639
Speaker 3: that she's normally used to, but then on top of

545
00:23:05,640 --> 00:23:07,160
Speaker 3: that the money that she took out as well.

546
00:23:07,440 --> 00:23:08,720
Speaker 2: But what we're talking.

547
00:23:08,560 --> 00:23:12,200
Speaker 3: About here, though, Evelyn, is the difference between taxes and fees.

548
00:23:12,440 --> 00:23:14,520
Speaker 2: Right, there's no way to avoid.

549
00:23:14,320 --> 00:23:17,920
Speaker 1: Taxes, like I guess the hsaying, but well, yes, but

550
00:23:18,280 --> 00:23:20,760
Speaker 1: it's only the tax code.

551
00:23:20,800 --> 00:23:23,119
Speaker 3: It's the loopholes that the IRS has created. If you

552
00:23:23,160 --> 00:23:25,320
Speaker 3: follow the rules, Yeah, there are ways to avoid taxes

553
00:23:25,320 --> 00:23:27,560
Speaker 3: in that way, but if they have basically outlined that're like,

554
00:23:27,600 --> 00:23:30,560
Speaker 3: oh no, this is income tax like youos taxes, it's

555
00:23:30,560 --> 00:23:31,960
Speaker 3: not something that it's not like you can get on

556
00:23:32,000 --> 00:23:34,200
Speaker 3: the phone with the IRS. You're one of the five

557
00:23:34,200 --> 00:23:37,400
Speaker 3: people that makes it through and ask them politely, hey,

558
00:23:37,920 --> 00:23:39,080
Speaker 3: is there a way that we can just kind of

559
00:23:39,119 --> 00:23:40,960
Speaker 3: wave that twenty.

560
00:23:40,720 --> 00:23:41,760
Speaker 2: Eight thousand dollars.

561
00:23:42,080 --> 00:23:44,000
Speaker 3: It's not like a credit card angel fee where you

562
00:23:44,040 --> 00:23:45,920
Speaker 3: call them up and you're like, hey, I don't want

563
00:23:45,920 --> 00:23:47,040
Speaker 3: to pay this anymore and they're.

564
00:23:46,880 --> 00:23:50,200
Speaker 2: Like, wait, wait, wait, don't leave. Well, let's just wave

565
00:23:50,200 --> 00:23:51,479
Speaker 2: that for a year. We'll cut that for you.

566
00:23:51,560 --> 00:23:55,200
Speaker 1: So, while yes, the tax man always gets his money

567
00:23:55,520 --> 00:23:58,120
Speaker 1: and it kind of stinks to take on one hundred

568
00:23:58,119 --> 00:24:00,280
Speaker 1: thousand dollars and only get eighty thousand dollars of it,

569
00:24:00,359 --> 00:24:02,679
Speaker 1: you won't be nearly as shock to come April. And

570
00:24:02,720 --> 00:24:05,399
Speaker 1: if I were you, I would also allow that to

571
00:24:05,440 --> 00:24:07,200
Speaker 1: be like a little bit of a bomb that hey,

572
00:24:07,240 --> 00:24:09,560
Speaker 1: maybe you've got better terms. You were able to buy

573
00:24:09,560 --> 00:24:11,880
Speaker 1: this house that you're going to be in for many

574
00:24:12,000 --> 00:24:16,440
Speaker 1: years to come, and your diligence in saving and investing

575
00:24:16,480 --> 00:24:18,879
Speaker 1: for your retirement has paid off at this point in

576
00:24:18,960 --> 00:24:21,359
Speaker 1: time to allow you to use those funds in a

577
00:24:21,400 --> 00:24:23,840
Speaker 1: wise way to provide that roof over your house for

578
00:24:24,040 --> 00:24:24,920
Speaker 1: a long time to come.

579
00:24:25,160 --> 00:24:28,800
Speaker 3: Yeah, I think the biggest lesson learned here for Evelyn,

580
00:24:28,840 --> 00:24:30,600
Speaker 3: but then also for other folks is to have a

581
00:24:30,640 --> 00:24:33,359
Speaker 3: plan with it, Like when it comes to how it

582
00:24:33,440 --> 00:24:35,680
Speaker 3: is that you are going to draw down on your

583
00:24:35,680 --> 00:24:38,320
Speaker 3: retirement funds goes a really long way, because, like we

584
00:24:38,320 --> 00:24:41,200
Speaker 3: were talking about earlier, how there's you know, most likely

585
00:24:41,240 --> 00:24:44,480
Speaker 3: she her tax rate probably went up, right, because again

586
00:24:44,560 --> 00:24:47,359
Speaker 3: she is currently working, she's still is she a teacher?

587
00:24:47,440 --> 00:24:48,080
Speaker 2: Is that what she said?

588
00:24:48,320 --> 00:24:50,760
Speaker 3: And she's thinking about retiring maybe after twenty twenty five.

589
00:24:50,920 --> 00:24:52,920
Speaker 3: And so she's got her regular income that she's used

590
00:24:52,920 --> 00:24:55,000
Speaker 3: to paying. But then on top of that she one

591
00:24:55,119 --> 00:24:57,840
Speaker 3: hundred thousand dollars chunk. That's a huge amount of money,

592
00:24:58,000 --> 00:25:00,720
Speaker 3: which more than likely bumped her up to an even

593
00:25:00,760 --> 00:25:04,400
Speaker 3: higher tax bracket. And so to have a plan of

594
00:25:04,440 --> 00:25:06,480
Speaker 3: how it is that you want to approach pulling that

595
00:25:06,560 --> 00:25:09,440
Speaker 3: money out could save you a good amount of money,

596
00:25:09,440 --> 00:25:11,320
Speaker 3: not just in the amount of money that's taxed at

597
00:25:11,359 --> 00:25:13,439
Speaker 3: the higher rate, but even just money that's taxed at all.

598
00:25:13,440 --> 00:25:16,040
Speaker 3: Because I think, like she said, it doesn't matter that

599
00:25:16,080 --> 00:25:17,960
Speaker 3: she pulled the money out right for a home purchase.

600
00:25:18,000 --> 00:25:19,280
Speaker 3: She could have just pulled it out because she wanted

601
00:25:19,320 --> 00:25:21,680
Speaker 3: to go on some global trip. That's fine, it's at

602
00:25:21,720 --> 00:25:23,600
Speaker 3: least the home purchase. It's her money, Yeah, but at

603
00:25:23,680 --> 00:25:23,960
Speaker 3: least the.

604
00:25:23,920 --> 00:25:26,080
Speaker 1: Home purchase potentially allows you to get better terms and

605
00:25:26,119 --> 00:25:29,320
Speaker 1: saved money, whereas yeah, yeah, the trip, it's like put

606
00:25:29,359 --> 00:25:30,000
Speaker 1: it off just a little.

607
00:25:30,440 --> 00:25:30,680
Speaker 2: True.

608
00:25:30,720 --> 00:25:32,840
Speaker 3: But ultimately, Evelyn, you can do what you want with

609
00:25:32,880 --> 00:25:34,960
Speaker 3: your money is your money. But the fact that you

610
00:25:35,000 --> 00:25:37,760
Speaker 3: did use that to buy the house, like I would

611
00:25:37,800 --> 00:25:40,560
Speaker 3: have taken out as much money as possible before getting

612
00:25:40,560 --> 00:25:43,119
Speaker 3: bumped up to the next tax bracket, and then personally

613
00:25:43,160 --> 00:25:45,720
Speaker 3: I keep it pretty fat emergency fund on hand, but

614
00:25:45,800 --> 00:25:47,959
Speaker 3: I would have rated the heck out of my savings

615
00:25:48,000 --> 00:25:51,360
Speaker 3: account just to find any spare dollar that I could

616
00:25:51,359 --> 00:25:55,040
Speaker 3: find to put towards that down payment, knowing, well, if

617
00:25:55,040 --> 00:25:56,919
Speaker 3: worst comes to worst and I need to tap some

618
00:25:56,920 --> 00:25:59,280
Speaker 3: additional funds because there is an emergency, oh well, I've

619
00:25:59,320 --> 00:26:01,680
Speaker 3: got my retirement. Is that I am not going to

620
00:26:01,720 --> 00:26:04,919
Speaker 3: get hit with a ten percent penalty because I'm withdrawing

621
00:26:04,920 --> 00:26:07,280
Speaker 3: it early. No, In fact, these are my retirement dollars.

622
00:26:07,280 --> 00:26:08,720
Speaker 3: I can use them how it is that I would

623
00:26:08,760 --> 00:26:09,480
Speaker 3: like to use them.

624
00:26:09,520 --> 00:26:11,160
Speaker 2: But the whole name of the game is avoiding tax

625
00:26:11,160 --> 00:26:12,320
Speaker 2: as much as possible.

626
00:26:12,000 --> 00:26:14,560
Speaker 3: Yes, and avoiding the years in particular where you're going

627
00:26:14,600 --> 00:26:17,560
Speaker 3: to have an elevated adjusted gross income and you just

628
00:26:18,200 --> 00:26:21,120
Speaker 3: unfortunately experienced a year where that was much higher than usual.

629
00:26:21,200 --> 00:26:23,679
Speaker 3: Meeting that you paid more taxes than you otherwise would have.

630
00:26:23,720 --> 00:26:25,639
Speaker 2: Yeah, so those are the kind of years that we're

631
00:26:25,640 --> 00:26:26,480
Speaker 2: trying to avoid.

632
00:26:26,200 --> 00:26:27,840
Speaker 1: Here, and I think from here on out the four

633
00:26:27,880 --> 00:26:29,959
Speaker 1: percent rule, using that as a rule of thumb at

634
00:26:30,000 --> 00:26:31,919
Speaker 1: least to help you figure out how much money to

635
00:26:31,920 --> 00:26:33,280
Speaker 1: take out and give in your grain. And this is

636
00:26:33,840 --> 00:26:36,879
Speaker 1: an extenuating circumstance, right buying a house. This isn't probably

637
00:26:36,880 --> 00:26:39,160
Speaker 1: not gonna do that next year or the year after exactly. Yeah,

638
00:26:39,280 --> 00:26:42,680
Speaker 1: having done this, but yeah, ultimately we just don't want

639
00:26:42,720 --> 00:26:45,160
Speaker 1: you rating your account because you're done with work or

640
00:26:45,200 --> 00:26:47,480
Speaker 1: you're soon to be done with work. Just a smart

641
00:26:47,520 --> 00:26:50,400
Speaker 1: withdrawal strategy will help you minimize that tax burden exactly

642
00:26:50,440 --> 00:26:52,400
Speaker 1: over the coming years. And by the way, Matt, coming

643
00:26:52,480 --> 00:26:54,520
Speaker 1: up on Wednesday, we're going to have a conversation with

644
00:26:54,600 --> 00:26:58,560
Speaker 1: Dan Otter, who runs the nonprofit four or three bys

645
00:26:58,680 --> 00:27:00,840
Speaker 1: dot org. So if you're a teacher, if you have

646
00:27:00,960 --> 00:27:03,520
Speaker 1: teacher friends, make sure they listen to this episode. Dan

647
00:27:03,560 --> 00:27:06,800
Speaker 1: Otter has so much wisdom on minimizing the fees when

648
00:27:06,840 --> 00:27:09,840
Speaker 1: you're investing in a four H three B as an educator,

649
00:27:10,200 --> 00:27:11,960
Speaker 1: and ultimately a lot of advice too on how to

650
00:27:12,080 --> 00:27:15,080
Speaker 1: retire rich as someone who is a teacher in K

651
00:27:15,119 --> 00:27:18,440
Speaker 1: through twelve. That might sound like an oxymoron, but Dan

652
00:27:18,480 --> 00:27:20,080
Speaker 1: says it's not, so I'm looking forward to that combo.

653
00:27:20,359 --> 00:27:22,160
Speaker 1: Let's get to our next question, Matt. This one comes

654
00:27:22,160 --> 00:27:25,480
Speaker 1: from a listener who wants to buy a house, and

655
00:27:25,520 --> 00:27:28,000
Speaker 1: he's got an interesting way he's trying to go about it.

656
00:27:28,560 --> 00:27:30,520
Speaker 4: Hey guys, my name's Ethan, and I'm a big fan

657
00:27:30,560 --> 00:27:33,480
Speaker 4: of the podcast. The information you put out there is priceless,

658
00:27:33,600 --> 00:27:35,520
Speaker 4: so huge. Thanks for that and hope you keep it up.

659
00:27:35,920 --> 00:27:38,280
Speaker 4: I'm currently renting a house with my fiance in Denver.

660
00:27:38,600 --> 00:27:40,560
Speaker 4: We love the house and have a great relationship with

661
00:27:40,600 --> 00:27:43,040
Speaker 4: our landlord. I am eager to get into real estate

662
00:27:43,080 --> 00:27:45,280
Speaker 4: and have been thinking about asking my landlord if he'd

663
00:27:45,280 --> 00:27:47,520
Speaker 4: be willing to sell. We would intend to live in

664
00:27:47,560 --> 00:27:49,840
Speaker 4: the house for two years to avoid capital gains tax,

665
00:27:49,960 --> 00:27:53,359
Speaker 4: and rent it thereafter. I'm pretty confident it would rent well.

666
00:27:53,640 --> 00:27:55,640
Speaker 4: We are both on money Gear number seven and are

667
00:27:55,640 --> 00:27:58,480
Speaker 4: probably ready to take the next big step with our finances.

668
00:27:58,760 --> 00:28:00,840
Speaker 4: I'm thinking that buying from our landlord would be a

669
00:28:00,840 --> 00:28:02,960
Speaker 4: great way to get a deal off the market and

670
00:28:02,960 --> 00:28:06,040
Speaker 4: skip some realtor fees. Plus we know the house well

671
00:28:06,119 --> 00:28:09,360
Speaker 4: because we're living in it. My main hesitation is due

672
00:28:09,400 --> 00:28:12,120
Speaker 4: to the inflated Denver real estate market. You can find

673
00:28:12,119 --> 00:28:14,720
Speaker 4: the same size house in other cities for three fourths

674
00:28:14,720 --> 00:28:18,080
Speaker 4: of the price. Denver is attractive right now, which adds

675
00:28:18,119 --> 00:28:21,080
Speaker 4: to my rentability confidence, but the high price may make

676
00:28:21,080 --> 00:28:24,640
Speaker 4: it very difficult to cash flow. Our monthly payments will

677
00:28:24,680 --> 00:28:28,080
Speaker 4: definitely be more than our monthly rent, so I'm curious

678
00:28:28,119 --> 00:28:29,919
Speaker 4: what you guys think about the idea and if there

679
00:28:30,000 --> 00:28:32,679
Speaker 4: is something else I should be considering first. I am

680
00:28:32,720 --> 00:28:34,600
Speaker 4: also curious how we should bring this up to our

681
00:28:34,640 --> 00:28:37,520
Speaker 4: landlord in a way that is both thoughtful and respectful.

682
00:28:38,040 --> 00:28:41,400
Speaker 4: He only recently purchased the house for below market value,

683
00:28:41,640 --> 00:28:43,960
Speaker 4: and he probably put about fifty K into the house

684
00:28:44,000 --> 00:28:46,520
Speaker 4: before renting it out. How do we make sure that

685
00:28:46,600 --> 00:28:49,320
Speaker 4: we are offering the right amount for the house? Are

686
00:28:49,320 --> 00:28:52,200
Speaker 4: there any other favorable offers we could pitch to him

687
00:28:52,280 --> 00:28:54,920
Speaker 4: to increase his chances in selling to us. I'm not

688
00:28:54,920 --> 00:28:57,600
Speaker 4: sure if my landlord would even be willing to sell,

689
00:28:57,960 --> 00:29:00,360
Speaker 4: but I want to go into this well educated in

690
00:29:00,400 --> 00:29:02,600
Speaker 4: Any advice you can provide from the landlord's point of

691
00:29:02,640 --> 00:29:04,160
Speaker 4: view would be greatly appreciated.

692
00:29:04,680 --> 00:29:05,800
Speaker 2: Thanks Matt.

693
00:29:05,880 --> 00:29:07,360
Speaker 1: Is this one of your tenants trying to buy it?

694
00:29:07,800 --> 00:29:08,080
Speaker 2: Actually?

695
00:29:08,120 --> 00:29:09,360
Speaker 3: I was going to ask you if you've ever had

696
00:29:09,400 --> 00:29:12,040
Speaker 3: tenants ask you, you know, a question like this where

697
00:29:12,080 --> 00:29:13,480
Speaker 3: they're like, Hey, would you ever.

698
00:29:13,480 --> 00:29:15,640
Speaker 2: Consider selling to me? I you have?

699
00:29:15,800 --> 00:29:16,360
Speaker 1: I think, right?

700
00:29:16,400 --> 00:29:17,280
Speaker 4: I have you?

701
00:29:17,400 --> 00:29:17,760
Speaker 2: Or have you not?

702
00:29:17,840 --> 00:29:20,560
Speaker 1: Okay, No, I don't think I can remember. I've never

703
00:29:20,600 --> 00:29:22,920
Speaker 1: had anyone ask me that question. I'm kind of surprised.

704
00:29:22,920 --> 00:29:25,120
Speaker 1: So well, I did have one couple they moved right

705
00:29:25,160 --> 00:29:27,880
Speaker 1: around the corner, and so like, they love the neighborhood,

706
00:29:27,880 --> 00:29:29,600
Speaker 1: and they kind of mentioned it in passing, but they

707
00:29:29,600 --> 00:29:31,000
Speaker 1: didn't seem super serious about it.

708
00:29:31,160 --> 00:29:32,920
Speaker 3: Okay, So I have some tenants that did that did

709
00:29:32,920 --> 00:29:35,040
Speaker 3: a very similar thing, like literally you could see from

710
00:29:35,040 --> 00:29:37,280
Speaker 3: the front ports of the rental to the house that

711
00:29:37,320 --> 00:29:37,760
Speaker 3: they purchased.

712
00:29:39,000 --> 00:29:40,880
Speaker 2: Yes, and they love the neighborhood.

713
00:29:41,040 --> 00:29:43,040
Speaker 3: And even if that's y'all, like, I don't see why

714
00:29:43,040 --> 00:29:46,000
Speaker 3: you wouldn't at least try to reach out to your landlord.

715
00:29:46,560 --> 00:29:48,440
Speaker 3: Try to have the conversation, see if you can buy it.

716
00:29:48,840 --> 00:29:50,480
Speaker 3: You would be a good judge as to whether or

717
00:29:50,520 --> 00:29:53,280
Speaker 3: not it would rent. Well, you're you're currently renting it,

718
00:29:53,280 --> 00:29:54,880
Speaker 3: you're currently loving it. Enough to want to buy it,

719
00:29:54,920 --> 00:29:56,600
Speaker 3: so that's a check mark on the side of actually

720
00:29:56,680 --> 00:30:00,280
Speaker 3: going through with it. You mentioned cash flow, keep mind

721
00:30:00,280 --> 00:30:03,560
Speaker 3: that that is not the only benefit of owning real estate,

722
00:30:03,960 --> 00:30:07,560
Speaker 3: because of course, in higher cost cities you might lose

723
00:30:07,600 --> 00:30:11,680
Speaker 3: money every single month but still be making a wise investment, Totael. Matt,

724
00:30:11,760 --> 00:30:14,800
Speaker 3: that's thanks to the appreciation of the property that you

725
00:30:15,120 --> 00:30:17,760
Speaker 3: will be able to realize over time. So like you

726
00:30:17,880 --> 00:30:19,400
Speaker 3: do need to know that you need to have the

727
00:30:19,440 --> 00:30:21,680
Speaker 3: mental and you need to have the financial fortitude in

728
00:30:21,800 --> 00:30:25,920
Speaker 3: order to be willing to lose money on a consistent basis.

729
00:30:25,920 --> 00:30:28,080
Speaker 3: And this is certainly more of a long term approach,

730
00:30:28,120 --> 00:30:29,840
Speaker 3: but I think it's one that could make sense for

731
00:30:29,920 --> 00:30:32,120
Speaker 3: some folks. And it sounds like in your case, like

732
00:30:32,160 --> 00:30:34,400
Speaker 3: you mentioned avoiding capital gain, so you do want to

733
00:30:34,960 --> 00:30:38,720
Speaker 3: live in it for at least two years before transitioning

734
00:30:38,760 --> 00:30:40,640
Speaker 3: it to a rental, so you're at least looking at

735
00:30:40,920 --> 00:30:42,600
Speaker 3: a five year timeframe, which I think.

736
00:30:42,560 --> 00:30:43,160
Speaker 2: Is pretty healthy.

737
00:30:43,240 --> 00:30:45,760
Speaker 3: Yeah, I'm encouraged by the fact that he's not saying

738
00:30:45,880 --> 00:30:47,600
Speaker 3: I want to buy and then in a year or

739
00:30:47,600 --> 00:30:48,480
Speaker 3: two I want to flip it.

740
00:30:48,600 --> 00:30:50,560
Speaker 1: And basically so what you're saying too, Matt on the

741
00:30:50,560 --> 00:30:53,280
Speaker 1: cash flow versus appreciation thing. It's really important to recognize

742
00:30:53,320 --> 00:30:55,600
Speaker 1: that because I have a friend who recently texted me

743
00:30:55,640 --> 00:30:57,360
Speaker 1: and he's like, Oh, I'm thinking about buying this triplex

744
00:30:57,560 --> 00:31:01,560
Speaker 1: in this random location in Texas, and the numbers worked

745
00:31:01,680 --> 00:31:05,160
Speaker 1: from a monthly cash flow perspective, it more than exceeded

746
00:31:05,200 --> 00:31:07,280
Speaker 1: the one percent rule, which is awesome. The one thing

747
00:31:07,320 --> 00:31:09,000
Speaker 1: you have to realize, which means, by the way, that's

748
00:31:09,000 --> 00:31:12,640
Speaker 1: going to be profitable regularly and ongoing. The downside of

749
00:31:12,680 --> 00:31:15,080
Speaker 1: investing in a property like that is the appreciation is

750
00:31:15,080 --> 00:31:18,440
Speaker 1: going to be minimal in kind of backwards Texas. Essentially,

751
00:31:18,600 --> 00:31:20,200
Speaker 1: Yeah and sore.

752
00:31:19,640 --> 00:31:21,520
Speaker 2: Two different ways of realizing income.

753
00:31:21,600 --> 00:31:23,400
Speaker 1: It's nice if you can do both, but the truth

754
00:31:23,480 --> 00:31:25,760
Speaker 1: is you can't do both in all markets, especially in

755
00:31:25,800 --> 00:31:28,280
Speaker 1: market like Denver. Sure anything you said you're in money

756
00:31:28,320 --> 00:31:31,040
Speaker 1: gear number seven. That's another point in your favor to

757
00:31:31,080 --> 00:31:33,320
Speaker 1: try to pull this off. I think you know, trying

758
00:31:33,320 --> 00:31:37,000
Speaker 1: to buy rental real estate early or too early in

759
00:31:37,040 --> 00:31:40,240
Speaker 1: your wealth building endeavors. Unless you're doing something crazy like

760
00:31:40,280 --> 00:31:41,960
Speaker 1: house hacking, where the numbers just make a whole lot

761
00:31:42,000 --> 00:31:44,400
Speaker 1: more sense, it can take away from your ability to

762
00:31:44,520 --> 00:31:48,320
Speaker 1: fund those all important tax advantaged accounts. But if you've

763
00:31:48,320 --> 00:31:51,640
Speaker 1: been doing that and you've jettisoned all your troublesome debts,

764
00:31:52,040 --> 00:31:53,840
Speaker 1: which is where you're at of here in money gear seven,

765
00:31:54,120 --> 00:31:56,720
Speaker 1: and you're interested in owning rental properties heading in this

766
00:31:56,800 --> 00:31:59,040
Speaker 1: direction at this point in your financial journey, I think

767
00:31:59,080 --> 00:32:00,640
Speaker 1: it can make a whole lot of sense. I think

768
00:32:01,000 --> 00:32:05,040
Speaker 1: you have the financial wherewithal, you have the history of

769
00:32:05,080 --> 00:32:08,840
Speaker 1: handling your money properly, where you're trying to jump in

770
00:32:08,880 --> 00:32:11,040
Speaker 1: with both feet into owning a rental property at this

771
00:32:11,080 --> 00:32:14,600
Speaker 1: point in your you know, with the financial progress you've made,

772
00:32:14,680 --> 00:32:15,680
Speaker 1: I think it makes a whole.

773
00:32:15,480 --> 00:32:16,000
Speaker 2: Lot of sense.

774
00:32:16,080 --> 00:32:17,760
Speaker 3: Yeah, And I think the best way to broach the

775
00:32:17,800 --> 00:32:20,200
Speaker 3: subject is just to tell your landlord that you'd like

776
00:32:20,240 --> 00:32:22,360
Speaker 3: the house. In fact, we like it so much that

777
00:32:22,480 --> 00:32:25,840
Speaker 3: I want to own it. Would you consider selling it

778
00:32:25,880 --> 00:32:28,360
Speaker 3: to us? Because that's I don't know, you kind of

779
00:32:28,360 --> 00:32:30,320
Speaker 3: stroke his ego a little bit, like it's flattering to him.

780
00:32:30,360 --> 00:32:33,000
Speaker 2: It's like, hey, you've you've got yourself such a beautiful

781
00:32:33,000 --> 00:32:34,720
Speaker 2: home here. We would love to own it ourselves.

782
00:32:34,760 --> 00:32:37,240
Speaker 3: And it sounds like that y'all have a good relationship

783
00:32:37,240 --> 00:32:39,400
Speaker 3: with him, and so I think just putting the cards

784
00:32:39,440 --> 00:32:41,160
Speaker 3: out there on the table is a smart move, Like,

785
00:32:41,240 --> 00:32:43,480
Speaker 3: I don't think that there is any sort of sneaky

786
00:32:43,520 --> 00:32:45,280
Speaker 3: angle per se that you need to try to find

787
00:32:45,320 --> 00:32:47,480
Speaker 3: a way to weave in there. It puts the ball

788
00:32:47,520 --> 00:32:50,080
Speaker 3: there in his court. But then i'd make sure that

789
00:32:50,160 --> 00:32:53,320
Speaker 3: you've got the liquidity on hand to actually proceed and

790
00:32:53,360 --> 00:32:56,520
Speaker 3: move forward if he does express any interest. I'd also

791
00:32:56,760 --> 00:32:59,320
Speaker 3: make sure that I knew what the market value of

792
00:32:59,360 --> 00:33:03,440
Speaker 3: the home current is based on comps of recent comps

793
00:33:03,440 --> 00:33:05,280
Speaker 3: there in the area, based on what Zillo is saying

794
00:33:05,280 --> 00:33:05,800
Speaker 3: that it's worth.

795
00:33:05,960 --> 00:33:08,400
Speaker 1: Let's say, not just the zestament, but looking up to see, okay,

796
00:33:08,440 --> 00:33:10,480
Speaker 1: similar size, similar kind of homes he sent sales in

797
00:33:10,480 --> 00:33:11,120
Speaker 1: the past three months.

798
00:33:11,200 --> 00:33:13,880
Speaker 3: Yeah, it does a pretty accurate job at predicting that.

799
00:33:13,880 --> 00:33:15,640
Speaker 3: But let's say, for instance, and this is in Denver,

800
00:33:15,760 --> 00:33:19,160
Speaker 3: so home values are pretty sky high. That's a Denver

801
00:33:19,240 --> 00:33:21,120
Speaker 3: reference for folks out there. But let's say this home

802
00:33:21,240 --> 00:33:23,800
Speaker 3: is worth eight hundred thousand dollars. Well, no matter what

803
00:33:23,840 --> 00:33:26,520
Speaker 3: your landlord bought it for, no matter what he sunk

804
00:33:26,560 --> 00:33:28,760
Speaker 3: into it, it's likely what he's going to want to

805
00:33:28,840 --> 00:33:33,080
Speaker 3: sell it for. Now, I guess don't don't necessarily expect

806
00:33:33,120 --> 00:33:34,640
Speaker 3: him because he got such a great deal on it

807
00:33:34,680 --> 00:33:38,160
Speaker 3: that he's willing to say, oh, I got such a

808
00:33:38,160 --> 00:33:40,600
Speaker 3: good deal on it, maybe I offer these guys a

809
00:33:40,640 --> 00:33:42,680
Speaker 3: deal because then, like you said, it sounds like like

810
00:33:42,760 --> 00:33:46,120
Speaker 3: he is an investor himself, and so it doesn't hurt

811
00:33:46,280 --> 00:33:48,720
Speaker 3: to ask. But I think there's honestly probably a slim

812
00:33:48,800 --> 00:33:51,400
Speaker 3: chance of him actually giving this up because he's this

813
00:33:51,440 --> 00:33:52,760
Speaker 3: is something that is doing.

814
00:33:52,480 --> 00:33:54,400
Speaker 2: Well for him and his networth. But you never know.

815
00:33:54,520 --> 00:33:55,880
Speaker 2: But you never know, so go for it.

816
00:33:55,960 --> 00:33:58,719
Speaker 1: You never know what the landlord. Maybe he's saying, Man,

817
00:33:58,760 --> 00:34:01,240
Speaker 1: these are great tenants, but I did have to do

818
00:34:01,320 --> 00:34:03,680
Speaker 1: a lot of improvements, and man, I am lacking liquidity,

819
00:34:03,760 --> 00:34:06,600
Speaker 1: and you know, I guess this rental property game. Maybe

820
00:34:06,600 --> 00:34:07,920
Speaker 1: it's not I'm not cut out for it like I

821
00:34:07,960 --> 00:34:09,560
Speaker 1: thought I was going to. Maybe this is his first

822
00:34:09,680 --> 00:34:11,960
Speaker 1: endeavor and he's realized that it's more of a headache

823
00:34:11,960 --> 00:34:13,480
Speaker 1: than he thought it was going to be. You just

824
00:34:13,600 --> 00:34:16,200
Speaker 1: don't know, right what the landlord is going through, where

825
00:34:16,200 --> 00:34:18,200
Speaker 1: their head is at, and the other kind of what

826
00:34:18,239 --> 00:34:20,719
Speaker 1: you were just saying there at the end, Matt, If

827
00:34:20,760 --> 00:34:23,200
Speaker 1: you're going to pay roughly market rate anyway, why would

828
00:34:23,239 --> 00:34:25,440
Speaker 1: they want to buy this house, and I would say

829
00:34:25,560 --> 00:34:28,239
Speaker 1: because of the reduction in fees involved in buying and

830
00:34:28,280 --> 00:34:31,360
Speaker 1: selling a home, because of your familiarity with the home already.

831
00:34:31,480 --> 00:34:32,759
Speaker 1: I think the way you're going to be able to

832
00:34:32,800 --> 00:34:35,880
Speaker 1: negotiate is by telling your landlord that you'll split the

833
00:34:35,880 --> 00:34:39,520
Speaker 1: savings of you know, reduced agent costs with him. He

834
00:34:39,760 --> 00:34:43,440
Speaker 1: makes market rate or close to it when during on

835
00:34:43,480 --> 00:34:46,840
Speaker 1: the sale, and he saves a few extra percentage points

836
00:34:46,920 --> 00:34:50,440
Speaker 1: as well. You too, right, you also save on that front, right,

837
00:34:50,480 --> 00:34:52,359
Speaker 1: And so if we're talking about a home, let's say

838
00:34:52,360 --> 00:34:55,200
Speaker 1: it's worth eight hundred thousand dollars, that's twenty thousand dollars

839
00:34:55,200 --> 00:34:57,879
Speaker 1: worth of savings, which is substantial. I think that's why

840
00:34:57,880 --> 00:35:00,439
Speaker 1: it's at least worth feeling this out right, especially since

841
00:35:00,480 --> 00:35:02,560
Speaker 1: you like the place, you have long term goals for it,

842
00:35:02,800 --> 00:35:05,759
Speaker 1: you are in the financial position to likely pull this

843
00:35:05,880 --> 00:35:07,399
Speaker 1: off without being over your head too.

844
00:35:07,520 --> 00:35:09,960
Speaker 3: Yeah, Basically, you're appealing to the financial side of the

845
00:35:10,000 --> 00:35:11,560
Speaker 3: decision making matrix.

846
00:35:11,600 --> 00:35:11,759
Speaker 5: Here.

847
00:35:11,800 --> 00:35:14,920
Speaker 3: It's like, Okay, like I've realized some profit from those property,

848
00:35:14,960 --> 00:35:16,960
Speaker 3: Let's go ahead pull that profit out of that house.

849
00:35:17,040 --> 00:35:19,080
Speaker 3: I get to do something else with my money. But

850
00:35:19,320 --> 00:35:21,400
Speaker 3: on the other side, like there's so that's like the

851
00:35:21,440 --> 00:35:24,120
Speaker 3: financial lens to look through, but also like look through

852
00:35:24,160 --> 00:35:27,040
Speaker 3: the psychological or the emotional lens as well, and try

853
00:35:27,040 --> 00:35:30,000
Speaker 3: to figure out any potential pain points that he might

854
00:35:30,080 --> 00:35:33,080
Speaker 3: have as a landlord himself. Like you kind of mentioned

855
00:35:33,080 --> 00:35:34,920
Speaker 3: this sho like maybe this is his first rental property

856
00:35:34,920 --> 00:35:37,719
Speaker 3: and maybe he hates it. Maybe you can ethan it

857
00:35:37,719 --> 00:35:40,200
Speaker 3: sounds like y'all have a great relationship. Maybe you can say, hey,

858
00:35:41,120 --> 00:35:44,400
Speaker 3: we're great tenants. Not all tenants are great, or maybe

859
00:35:44,520 --> 00:35:46,920
Speaker 3: the tenants that were in here before, maybe you realize

860
00:35:47,080 --> 00:35:49,480
Speaker 3: that's not always the case. And if it's basically if

861
00:35:49,520 --> 00:35:51,360
Speaker 3: it's going to be a hassle for him to continue

862
00:35:51,360 --> 00:35:54,600
Speaker 3: to service and to essentially have a part time job

863
00:35:54,640 --> 00:35:56,920
Speaker 3: managing this property, that might not be something that he

864
00:35:56,920 --> 00:35:57,759
Speaker 3: wants to continue to do.

865
00:35:57,800 --> 00:35:59,440
Speaker 1: And maybe he's thought about selling it and he's like, oh,

866
00:35:59,480 --> 00:36:01,640
Speaker 1: that's kind of a yeah, right, And so if I'm

867
00:36:01,640 --> 00:36:03,279
Speaker 1: gonna sell it, I have to get the house ready,

868
00:36:03,360 --> 00:36:05,799
Speaker 1: I gotta do I gotta pay landscape blah blah blah

869
00:36:05,840 --> 00:36:07,880
Speaker 1: blah blah all this other stuff to it. And like

870
00:36:08,040 --> 00:36:10,520
Speaker 1: that sounds like a big giant thorn in my side

871
00:36:10,520 --> 00:36:12,200
Speaker 1: as well. And so you're saying, hey, we want to

872
00:36:12,200 --> 00:36:13,680
Speaker 1: buy it, we want to take it as is. You

873
00:36:13,680 --> 00:36:15,160
Speaker 1: don't have to do any of those things to get

874
00:36:15,440 --> 00:36:17,319
Speaker 1: to get this listing ready. You don't have to spend

875
00:36:17,320 --> 00:36:19,120
Speaker 1: the money to get the pictures taken. And now, guess what,

876
00:36:19,360 --> 00:36:21,719
Speaker 1: at a certain price point, videos are a necessity too.

877
00:36:22,120 --> 00:36:24,359
Speaker 1: Now to mention the agencies, there's all these different things

878
00:36:24,360 --> 00:36:26,719
Speaker 1: where if it's even crossed his mind, he's going to

879
00:36:26,840 --> 00:36:30,440
Speaker 1: entertain if you're in the range of a market offer,

880
00:36:30,760 --> 00:36:32,640
Speaker 1: because like we talked about the reduction of fees, the

881
00:36:32,680 --> 00:36:35,840
Speaker 1: reduction in hassle, So yeah, I think this is definitely

882
00:36:35,880 --> 00:36:38,000
Speaker 1: worth pursuing. I want to mention too, I'd still get

883
00:36:38,000 --> 00:36:40,239
Speaker 1: an inspection if I were you. Yeah, you live in

884
00:36:40,239 --> 00:36:43,400
Speaker 1: the house. Sure you're familiar with the minor issues that

885
00:36:43,440 --> 00:36:46,239
Speaker 1: it might have, but you might not know about something

886
00:36:46,320 --> 00:36:48,520
Speaker 1: that's lurking beneath the surface. And I think it's worth,

887
00:36:48,560 --> 00:36:50,359
Speaker 1: that's true, the five hundred bucks or so to get

888
00:36:50,360 --> 00:36:50,880
Speaker 1: that inspection.

889
00:36:50,920 --> 00:36:53,240
Speaker 3: There are still some professional services that are worth getting,

890
00:36:53,280 --> 00:36:55,040
Speaker 3: like even like, yeah, you're going to see a ton

891
00:36:55,120 --> 00:36:58,120
Speaker 3: by avoiding a realtor, but I think it would even

892
00:36:58,200 --> 00:37:00,879
Speaker 3: still pay to hire a real estate attorney as well.

893
00:37:00,920 --> 00:37:04,000
Speaker 3: Which is required only in something like half of all

894
00:37:04,040 --> 00:37:06,600
Speaker 3: states in the country. I'm not sure what it is,

895
00:37:06,600 --> 00:37:08,960
Speaker 3: Ethan there for you in Colorado, but that's not a

896
00:37:09,080 --> 00:37:11,040
Speaker 3: cost that I would skimp on just to make sure

897
00:37:11,080 --> 00:37:13,319
Speaker 3: everything is buttoned up well, especially if you're dealing with

898
00:37:13,320 --> 00:37:15,759
Speaker 3: somebody you know, you all have a great relationship, but

899
00:37:16,000 --> 00:37:17,759
Speaker 3: you just want to make sure that all the tea's

900
00:37:17,800 --> 00:37:20,920
Speaker 3: are crossed, all the eyes are dotted, and so even

901
00:37:21,000 --> 00:37:23,359
Speaker 3: if he's not willing he or she is not willing

902
00:37:23,440 --> 00:37:25,399
Speaker 3: to split that cost with you, that would be something

903
00:37:25,440 --> 00:37:27,759
Speaker 3: I would be more than happy. I guess not more

904
00:37:27,800 --> 00:37:30,080
Speaker 3: than happy, but I would be willing to pay out

905
00:37:30,080 --> 00:37:32,440
Speaker 3: of pocket one hundred percent myself. One thing I want

906
00:37:32,480 --> 00:37:35,840
Speaker 3: you to consider, Ethan, is to consider that you're saying

907
00:37:35,880 --> 00:37:37,440
Speaker 3: that it's going to be difficult for you to make

908
00:37:37,480 --> 00:37:38,080
Speaker 3: this work.

909
00:37:37,920 --> 00:37:39,000
Speaker 2: There in Denver.

910
00:37:39,880 --> 00:37:42,920
Speaker 3: If it was me, knowing what I know about rental properties,

911
00:37:42,920 --> 00:37:44,319
Speaker 3: I would want to make sure that you are doing

912
00:37:44,320 --> 00:37:46,040
Speaker 3: this because this is something that you want to pursue,

913
00:37:46,120 --> 00:37:48,840
Speaker 3: not just because it makes sense financially, because it is

914
00:37:48,880 --> 00:37:51,200
Speaker 3: harder to do these days, given where home prices are.

915
00:37:51,239 --> 00:37:53,759
Speaker 3: It is harder to do giving financing costs, mortgage rates,

916
00:37:54,400 --> 00:37:56,759
Speaker 3: and if that is all you're looking at, I think

917
00:37:56,840 --> 00:37:59,520
Speaker 3: you might be better served taking that money investing it

918
00:37:59,520 --> 00:38:02,160
Speaker 3: in the market like you've done. Y'all are in on

919
00:38:02,200 --> 00:38:04,600
Speaker 3: money gear number seven. But make sure you're doing this

920
00:38:04,640 --> 00:38:06,879
Speaker 3: for you, Like if you and your fiance are seeing

921
00:38:06,880 --> 00:38:09,680
Speaker 3: this as a way to put down roots and actually

922
00:38:09,719 --> 00:38:11,400
Speaker 3: we just love this house so much, we're actually not

923
00:38:11,440 --> 00:38:13,160
Speaker 3: going to sell it. We're going to end up renovating

924
00:38:13,160 --> 00:38:16,760
Speaker 3: this home. I think that that's a totally great reason

925
00:38:16,800 --> 00:38:19,040
Speaker 3: to purchase that home and to do all that you

926
00:38:19,080 --> 00:38:22,359
Speaker 3: can to purchase that home, because more than ever, it's

927
00:38:22,440 --> 00:38:25,120
Speaker 3: harder to get a great deal, especially on something like this,

928
00:38:26,120 --> 00:38:27,719
Speaker 3: given the market conditions that we're in.

929
00:38:27,920 --> 00:38:30,520
Speaker 1: Last thing I think i'd want to say, I would

930
00:38:30,520 --> 00:38:32,160
Speaker 1: want to make sure that Denver was going to be

931
00:38:32,160 --> 00:38:33,879
Speaker 1: where I called home for a long time to come.

932
00:38:34,000 --> 00:38:36,239
Speaker 3: Yes, that was a part of the renovation, like we're

933
00:38:36,239 --> 00:38:38,160
Speaker 3: going to live here forever, because it's kind of mindset

934
00:38:38,200 --> 00:38:39,960
Speaker 3: if you're thinking, oh, it is kind of expensive and

935
00:38:39,960 --> 00:38:41,480
Speaker 3: we're going to buy this, it'll be a rental property,

936
00:38:41,480 --> 00:38:43,960
Speaker 3: but then we might move to I don't know, Minnesota

937
00:38:43,960 --> 00:38:46,439
Speaker 3: because it's cheaper or something like that, or we've got

938
00:38:46,440 --> 00:38:47,040
Speaker 3: family there.

939
00:38:47,280 --> 00:38:50,160
Speaker 1: Well, then you're talking about it being even less profitable

940
00:38:50,160 --> 00:38:53,240
Speaker 1: because you're hiring a property manager and just you're adding

941
00:38:53,239 --> 00:38:56,520
Speaker 1: a whole bunch of stress to that decision. So if

942
00:38:56,520 --> 00:38:58,440
Speaker 1: you decide, hey, this is a good rental property, we

943
00:38:58,480 --> 00:38:59,640
Speaker 1: want to buy it, living it for a while, then

944
00:38:59,640 --> 00:39:01,440
Speaker 1: we'll r it out, but we're just going to move

945
00:39:01,480 --> 00:39:03,520
Speaker 1: down the street and will self manage, I think that

946
00:39:03,560 --> 00:39:06,719
Speaker 1: adds credence to this idea. But I think if if

947
00:39:07,000 --> 00:39:08,879
Speaker 1: in the back of your mind you're saying, three years

948
00:39:08,920 --> 00:39:11,479
Speaker 1: from now, we might not be around, then I would

949
00:39:11,520 --> 00:39:14,520
Speaker 1: just keep renting and I would save up that cash

950
00:39:14,600 --> 00:39:16,279
Speaker 1: for a rental property in the next place I was

951
00:39:16,320 --> 00:39:17,120
Speaker 1: planning to move to.

952
00:39:17,120 --> 00:39:19,200
Speaker 3: Totally Okay, I just thought of one other thing, which

953
00:39:19,239 --> 00:39:21,719
Speaker 3: is don't forget about the endowment effect, which is like

954
00:39:21,760 --> 00:39:26,640
Speaker 3: this behavioral psychological term that applies when something that you own.

955
00:39:27,000 --> 00:39:28,560
Speaker 3: In this case, you don't own it yet, Ethan, but

956
00:39:28,600 --> 00:39:30,160
Speaker 3: you're living there, you're renting it, so it kind of

957
00:39:30,160 --> 00:39:33,600
Speaker 3: feels like it's yours. But you might be valuing where

958
00:39:33,600 --> 00:39:37,040
Speaker 3: you are a little bit higher than maybe the next

959
00:39:37,080 --> 00:39:39,959
Speaker 3: rental property that you and your fiance are renting. Maybe

960
00:39:39,960 --> 00:39:41,719
Speaker 3: this is the first maybe up until now, you've always

961
00:39:41,760 --> 00:39:43,719
Speaker 3: lived in apartments and this is the first home that

962
00:39:43,760 --> 00:39:45,840
Speaker 3: y'all have rented together, and you're like, oh my gosh,

963
00:39:46,000 --> 00:39:47,719
Speaker 3: we're in a great stage of life. I want to

964
00:39:47,760 --> 00:39:51,600
Speaker 3: do this. How can I do this? Times five or whatever?

965
00:39:51,800 --> 00:39:54,160
Speaker 3: Just already like this property, maybe why not just ask?

966
00:39:54,239 --> 00:39:56,279
Speaker 3: But there are also other properties out there, So just

967
00:39:56,360 --> 00:39:57,360
Speaker 3: keep that in the back of your mind. I'm not

968
00:39:57,400 --> 00:40:00,239
Speaker 3: saying that that's completely driving your decision to once buy

969
00:40:00,239 --> 00:40:01,400
Speaker 3: that particular to play.

970
00:40:01,200 --> 00:40:03,239
Speaker 2: The field in particular help, but yeah, keep your eyes open,

971
00:40:03,280 --> 00:40:05,400
Speaker 2: and there could be other great properties out.

972
00:40:05,239 --> 00:40:06,759
Speaker 3: There, and you might find better deals by looking at

973
00:40:06,840 --> 00:40:10,120
Speaker 3: and better opportunities by waiting. Given again, the conditions of

974
00:40:10,160 --> 00:40:12,520
Speaker 3: the market that we're currently in. Point yeah, we hope

975
00:40:12,560 --> 00:40:14,560
Speaker 3: that gets you pointed in the right direction. And Joel,

976
00:40:14,560 --> 00:40:16,560
Speaker 3: we've got more to get to. We're going to take

977
00:40:16,600 --> 00:40:19,640
Speaker 3: a question from a listener who's asking about a foundational

978
00:40:19,760 --> 00:40:21,200
Speaker 3: personal finance metric.

979
00:40:21,239 --> 00:40:22,600
Speaker 2: We'll get to that right after this.

980
00:40:30,520 --> 00:40:33,680
Speaker 1: All right, we're back. This asks how the money episode continues.

981
00:40:34,000 --> 00:40:36,160
Speaker 1: Now it's time to get to the Facebook question of

982
00:40:36,200 --> 00:40:38,960
Speaker 1: the week. This one comes from Calvin, who says should

983
00:40:38,960 --> 00:40:43,200
Speaker 1: additional mortgage payments be considered when determining my savings rate, Matt,

984
00:40:43,239 --> 00:40:45,960
Speaker 1: the savings rate conversation continues, Oh, that's it.

985
00:40:46,080 --> 00:40:47,239
Speaker 2: That's a short question the question.

986
00:40:47,320 --> 00:40:50,560
Speaker 1: Yeah, And I like how short and to the point

987
00:40:50,600 --> 00:40:52,759
Speaker 1: this is. And it's a good question. And you and

988
00:40:52,840 --> 00:40:55,400
Speaker 1: I we have been talking more about savings rates and

989
00:40:55,440 --> 00:40:58,560
Speaker 1: it's more complex of an answer then. I don't know,

990
00:40:58,560 --> 00:40:59,840
Speaker 1: maybe I thought it was on the face, and then

991
00:40:59,880 --> 00:41:02,120
Speaker 1: you and I started kind of like having conversations about

992
00:41:02,320 --> 00:41:05,480
Speaker 1: what is included in your savings rate, and it started

993
00:41:05,480 --> 00:41:09,400
Speaker 1: to get a little nerdy, and it's gotten nerdy on

994
00:41:09,160 --> 00:41:11,960
Speaker 1: on the podcast, on this show. The short answer for

995
00:41:12,040 --> 00:41:14,440
Speaker 1: Calvin here, though I don't know, I'm curious to hear

996
00:41:14,480 --> 00:41:16,360
Speaker 1: if you see if you agree with me, Matt, I

997
00:41:16,400 --> 00:41:19,120
Speaker 1: think is yes. Many of the how to Money commenters,

998
00:41:19,160 --> 00:41:22,440
Speaker 1: interestingly enough, didn't seem to agree with my take on this,

999
00:41:22,920 --> 00:41:24,680
Speaker 1: and so I think, you know, while making an additional

1000
00:41:24,680 --> 00:41:27,600
Speaker 1: payment or adding more to your monthly payment doesn't add

1001
00:41:27,680 --> 00:41:30,000
Speaker 1: more money to your high yield savings account, so it's

1002
00:41:30,040 --> 00:41:34,000
Speaker 1: not going to your savings. It's we consider paying down

1003
00:41:34,040 --> 00:41:37,400
Speaker 1: debt as money that isn't being consumed, which means I

1004
00:41:37,440 --> 00:41:40,359
Speaker 1: think of it as impacting your savings rate. So paying

1005
00:41:40,360 --> 00:41:42,719
Speaker 1: off your credit card debt, it's another money move that

1006
00:41:42,760 --> 00:41:45,719
Speaker 1: would also be included in your savings rate, even though

1007
00:41:45,719 --> 00:41:48,680
Speaker 1: it's not boosting your cash on hand. Matt, does that

1008
00:41:48,719 --> 00:41:51,279
Speaker 1: make sense to you? Agree with that totally makes sense. Okay, yes,

1009
00:41:51,280 --> 00:41:53,440
Speaker 1: you're not increasing savings, but it does count as your

1010
00:41:53,440 --> 00:41:54,560
Speaker 1: savings rate exactly.

1011
00:41:54,600 --> 00:41:56,600
Speaker 3: And this is this is taking the more zoomed out,

1012
00:41:56,800 --> 00:41:59,359
Speaker 3: high level view of what it is that you can

1013
00:41:59,400 --> 00:42:02,560
Speaker 3: do with your money, which is that your your net worth.

1014
00:42:02,600 --> 00:42:05,080
Speaker 3: It's either growing or shrinking. Like makes me think of

1015
00:42:05,080 --> 00:42:08,520
Speaker 3: like squirrels. They're either like eating an acorn or they're

1016
00:42:08,719 --> 00:42:13,640
Speaker 3: burying it in the ground like slocking aside, setting it aside.

1017
00:42:14,080 --> 00:42:16,240
Speaker 3: And so I think that's the best sort of filter

1018
00:42:16,320 --> 00:42:18,160
Speaker 3: that you can run some of these questions through. Is

1019
00:42:18,719 --> 00:42:21,600
Speaker 3: this making me wealthier or is this making me poorer?

1020
00:42:22,160 --> 00:42:24,400
Speaker 3: But that doesn't mean that you don't need liquidity. By

1021
00:42:24,400 --> 00:42:26,520
Speaker 3: the way, that this doesn't mean that you don't need

1022
00:42:26,600 --> 00:42:29,880
Speaker 3: access to cash at all, because we don't want you

1023
00:42:29,920 --> 00:42:32,080
Speaker 3: to start paying off your mortgage until you have some

1024
00:42:32,160 --> 00:42:35,000
Speaker 3: solid savings on hand. Just because we include debt payoff

1025
00:42:35,280 --> 00:42:37,719
Speaker 3: in your savings rate, that doesn't let you off the

1026
00:42:37,760 --> 00:42:39,840
Speaker 3: hook or it doesn't mean that it's not incredibly important

1027
00:42:39,880 --> 00:42:41,920
Speaker 3: to have cash on hand, cash in the bank that

1028
00:42:41,920 --> 00:42:44,319
Speaker 3: you have access easy access to because you can't eat

1029
00:42:44,320 --> 00:42:46,920
Speaker 3: your house because you know, someone would say, hey.

1030
00:42:47,400 --> 00:42:49,880
Speaker 2: Actually your bread houses right time. What about the heelock

1031
00:42:50,200 --> 00:42:51,600
Speaker 2: you can actually eat your house.

1032
00:42:52,040 --> 00:42:53,680
Speaker 3: It's not very easy to do that, and it's not

1033
00:42:54,000 --> 00:42:55,760
Speaker 3: cost effective or efficient.

1034
00:42:55,400 --> 00:42:57,440
Speaker 1: To do that. And if you're buying groceries with helock

1035
00:42:57,480 --> 00:42:58,920
Speaker 1: money like you're doing it wrong.

1036
00:42:59,440 --> 00:43:00,400
Speaker 2: You're doing it folks.

1037
00:43:00,920 --> 00:43:04,360
Speaker 3: Paying off your home, while it is an incredible accomplishment,

1038
00:43:04,440 --> 00:43:06,560
Speaker 3: it will take some time and it's just too risky

1039
00:43:06,640 --> 00:43:09,080
Speaker 3: to put all your eggs in that basket, to the

1040
00:43:09,160 --> 00:43:11,640
Speaker 3: exclusion of having a solid.

1041
00:43:11,280 --> 00:43:13,719
Speaker 2: Cash backup as well. So yes, it's part.

1042
00:43:13,520 --> 00:43:16,279
Speaker 3: Of your savings rate because it is money that you

1043
00:43:16,320 --> 00:43:19,320
Speaker 3: could have otherwise consumed. But if your cash on hand

1044
00:43:19,480 --> 00:43:21,719
Speaker 3: is tiny, if it's mini school, well you could still

1045
00:43:21,760 --> 00:43:24,279
Speaker 3: be in a big mind if you don't appropriate your

1046
00:43:24,280 --> 00:43:25,040
Speaker 3: funds properly.

1047
00:43:25,200 --> 00:43:28,279
Speaker 1: Yeah, I feel like that's a good answer. Yes, yeah, yeah,

1048
00:43:28,400 --> 00:43:31,000
Speaker 1: council savings rate doesn't count a savings You still need savings,

1049
00:43:31,040 --> 00:43:32,080
Speaker 1: you still need liquid cash.

1050
00:43:32,000 --> 00:43:33,560
Speaker 2: No matter what you're saving. It's just how do you

1051
00:43:33,600 --> 00:43:35,000
Speaker 2: want to save it, right, Yeah.

1052
00:43:34,800 --> 00:43:38,040
Speaker 1: And you'd be remiss if you started paying off your

1053
00:43:38,040 --> 00:43:40,919
Speaker 1: mortgage before you had proper savings on hand. But yeah,

1054
00:43:40,960 --> 00:43:43,480
Speaker 1: once you do, that's a reasonable choice to make. But

1055
00:43:43,560 --> 00:43:45,920
Speaker 1: as you know, also, Calvin, like, we're not fans of

1056
00:43:46,000 --> 00:43:49,520
Speaker 1: early mortgage payoff. If you've got a locked in low rate, Like,

1057
00:43:50,200 --> 00:43:52,200
Speaker 1: why would you want to get rid of it? Because

1058
00:43:52,680 --> 00:43:54,440
Speaker 1: there are so many better things you could do with

1059
00:43:54,520 --> 00:43:57,520
Speaker 1: that money, and especially with where savings rates are now

1060
00:43:57,640 --> 00:44:00,279
Speaker 1: if you've taken out a mortgage more recently though, right,

1061
00:44:00,360 --> 00:44:03,080
Speaker 1: And I think Calvin actually mentioned in the comments on Facebook,

1062
00:44:03,120 --> 00:44:05,640
Speaker 1: Matt that his rate is six point twenty five percent.

1063
00:44:06,400 --> 00:44:10,120
Speaker 1: The calculations change, okay, right, and it might make more change, right,

1064
00:44:10,200 --> 00:44:12,319
Speaker 1: It's a higher priority if that's the case than it

1065
00:44:12,360 --> 00:44:13,799
Speaker 1: is if you're one of those folks you took out

1066
00:44:13,840 --> 00:44:17,880
Speaker 1: a three percent loan five years ago. The goals here, though,

1067
00:44:18,080 --> 00:44:20,080
Speaker 1: are to make sure you aren't getting too risky, which

1068
00:44:20,080 --> 00:44:22,880
Speaker 1: means not having enough liquidity while building your net worth,

1069
00:44:23,160 --> 00:44:26,239
Speaker 1: which means debt payoff and investing both those things at

1070
00:44:26,239 --> 00:44:28,719
Speaker 1: the same time. And one great way to pay off

1071
00:44:28,719 --> 00:44:31,439
Speaker 1: your mortgage early without feeling like you're going overboard because Matt.

1072
00:44:31,480 --> 00:44:34,760
Speaker 1: Some people are like, they are so averse to debt,

1073
00:44:35,040 --> 00:44:37,120
Speaker 1: even low interest mortgage rate debt. They're saying, I've got

1074
00:44:37,160 --> 00:44:39,400
Speaker 1: to pay off my home early. I think my favorite

1075
00:44:39,719 --> 00:44:42,160
Speaker 1: way for people to think about doing that is making

1076
00:44:42,800 --> 00:44:46,760
Speaker 1: bi weekly payments, because you're not really sacrificing other financial goals.

1077
00:44:46,960 --> 00:44:50,480
Speaker 1: You end up making one extra payment a year thirteen

1078
00:44:50,520 --> 00:44:53,120
Speaker 1: instead of twelve. If you make bi weekly payments and

1079
00:44:53,200 --> 00:44:56,520
Speaker 1: so on a traditional thirty year mortgage, that can RaSE

1080
00:44:56,600 --> 00:44:59,239
Speaker 1: roughly six years off the back end of your loan.

1081
00:44:59,320 --> 00:45:01,360
Speaker 1: So I like that as kind of a way to

1082
00:45:01,480 --> 00:45:03,960
Speaker 1: do it, a small behavioral tweak that does allow you

1083
00:45:04,080 --> 00:45:08,080
Speaker 1: to accelerate mortgage payoff without feeling like you're shoveling cold

1084
00:45:08,080 --> 00:45:09,560
Speaker 1: into a steam engine. You're trying to go as hard

1085
00:45:09,560 --> 00:45:09,880
Speaker 1: as you can.

1086
00:45:09,960 --> 00:45:10,520
Speaker 2: That's true.

1087
00:45:10,600 --> 00:45:12,560
Speaker 3: I will say, though, as we're sitting here and you

1088
00:45:12,600 --> 00:45:15,279
Speaker 3: mentioned six and a quarter percent mortgage rate, it doesn't

1089
00:45:15,280 --> 00:45:17,080
Speaker 3: make me think, well, whatever where rate's going to be

1090
00:45:17,080 --> 00:45:19,880
Speaker 3: in the future, and imagine if we are living in

1091
00:45:19,880 --> 00:45:22,319
Speaker 3: a world five years from now where rates are even higher. Yep,

1092
00:45:22,880 --> 00:45:26,440
Speaker 3: Like that's when the paying down the low mortgage, and

1093
00:45:26,719 --> 00:45:28,840
Speaker 3: right now six point twenty five does not sound like

1094
00:45:28,840 --> 00:45:31,319
Speaker 3: it's low, but it could be low. And that's when

1095
00:45:31,520 --> 00:45:33,919
Speaker 3: paying extra on a mortgage like this, where you're locking

1096
00:45:33,960 --> 00:45:36,840
Speaker 3: the money up. Personally, I have a hard time feeling

1097
00:45:37,160 --> 00:45:39,759
Speaker 3: one hundred percent comfortable with that, even just making that

1098
00:45:40,360 --> 00:45:43,680
Speaker 3: moderate additional payment, Like it's not like you're going balls

1099
00:45:43,680 --> 00:45:46,400
Speaker 3: of the wall, going hardcore extreme by doing them bi

1100
00:45:46,480 --> 00:45:49,640
Speaker 3: weekly payment thing, but even still, you're locking that money,

1101
00:45:49,680 --> 00:45:52,600
Speaker 3: you're setting it aside, and it's not money that you can.

1102
00:45:52,600 --> 00:45:53,319
Speaker 2: Pull back out.

1103
00:45:53,400 --> 00:45:55,880
Speaker 3: And that's the part that makes me a little bit uncomfortable,

1104
00:45:55,960 --> 00:45:57,959
Speaker 3: especially like when you consider the fact that how often

1105
00:45:57,960 --> 00:46:02,440
Speaker 3: do Americans move. Yes, you will see the benefit of

1106
00:46:02,719 --> 00:46:04,880
Speaker 3: eliminating that mortgage six years early.

1107
00:46:04,920 --> 00:46:05,480
Speaker 2: Is that what it is?

1108
00:46:05,560 --> 00:46:07,480
Speaker 3: Yeah, so twenty four years are you going to be

1109
00:46:07,480 --> 00:46:09,600
Speaker 3: in that home twenty four years from now when the

1110
00:46:09,640 --> 00:46:10,560
Speaker 3: average American moves.

1111
00:46:10,560 --> 00:46:12,319
Speaker 1: You'd still come out ahead if you sold, though, too,

1112
00:46:12,320 --> 00:46:13,880
Speaker 1: because you would have paid down some of the principles.

1113
00:46:13,880 --> 00:46:14,399
Speaker 2: That is true.

1114
00:46:14,600 --> 00:46:16,080
Speaker 3: That's another tip, by the way, if you're doing this,

1115
00:46:16,120 --> 00:46:18,880
Speaker 3: make sure that those additional payments are being applied towards

1116
00:46:18,920 --> 00:46:23,080
Speaker 3: the balance, the principal balance, not as additional or prepaid

1117
00:46:23,239 --> 00:46:26,600
Speaker 3: interest payments essentially, But even still, that's money that's just

1118
00:46:26,640 --> 00:46:29,400
Speaker 3: sitting there in equity in that home, as opposed to

1119
00:46:29,680 --> 00:46:31,880
Speaker 3: even just if it was socked set aside in a

1120
00:46:31,920 --> 00:46:35,520
Speaker 3: highield savings account. Think about again the liquidity the options

1121
00:46:35,600 --> 00:46:39,799
Speaker 3: that that gives you versus making these additional payments and

1122
00:46:39,800 --> 00:46:42,840
Speaker 3: not even seeing your monthly mortgage amount go down unless

1123
00:46:42,840 --> 00:46:45,160
Speaker 3: you get your mortgage recasted or something like that, which

1124
00:46:45,200 --> 00:46:47,279
Speaker 3: costs money though. And so that's the thing I just like,

1125
00:46:47,360 --> 00:46:51,360
Speaker 3: I really like the idea of if you're disciplined, sitting

1126
00:46:51,440 --> 00:46:53,839
Speaker 3: on that money, having that money grow. And you know what,

1127
00:46:53,920 --> 00:46:55,799
Speaker 3: at a certain point, if you feel that you know what, no,

1128
00:46:55,920 --> 00:46:57,960
Speaker 3: I really do want to be done with this mortgage, man,

1129
00:46:58,000 --> 00:47:02,040
Speaker 3: go ahead, pull the trigger, eliminate that mortgage completely. But

1130
00:47:02,120 --> 00:47:04,240
Speaker 3: I think you might find in a couple of years,

1131
00:47:04,520 --> 00:47:07,480
Speaker 3: like we're constantly changing and we're dynamic individuals, and you

1132
00:47:07,560 --> 00:47:09,160
Speaker 3: might have different goals in a couple of years. You

1133
00:47:09,239 --> 00:47:10,600
Speaker 3: might want to buy a different house, you might want

1134
00:47:10,640 --> 00:47:14,399
Speaker 3: to fully fund your kids college savings. You might want

1135
00:47:14,440 --> 00:47:17,320
Speaker 3: to start a new business, and these are all things

1136
00:47:17,640 --> 00:47:21,040
Speaker 3: that having options in cash on hand afford you off

1137
00:47:21,080 --> 00:47:23,160
Speaker 3: mortgage doesn't. You can't you can't start a business with

1138
00:47:23,160 --> 00:47:24,880
Speaker 3: a paidoff house that's all you have. You have the

1139
00:47:24,880 --> 00:47:26,719
Speaker 3: payoff and that's fantastic, and then you might need to

1140
00:47:26,719 --> 00:47:29,640
Speaker 3: borrow against it at worst at a higher term exactly.

1141
00:47:29,719 --> 00:47:31,560
Speaker 2: So, yeah, you're right, I put you to have optionality.

1142
00:47:31,640 --> 00:47:34,799
Speaker 1: Liquidity is under is underrated, and I think especially with

1143
00:47:34,880 --> 00:47:37,719
Speaker 1: higher savings rates these days, if you're if we're talking

1144
00:47:37,719 --> 00:47:40,040
Speaker 1: about an eight and a quarter percent mortgage, different story, right,

1145
00:47:40,120 --> 00:47:41,600
Speaker 1: but we're talking about six in a quarter, and it's

1146
00:47:41,600 --> 00:47:44,680
Speaker 1: not ideal, but it could be worse. And you're you're

1147
00:47:44,680 --> 00:47:46,799
Speaker 1: also right to point out, Matt that just because we've

1148
00:47:46,800 --> 00:47:50,640
Speaker 1: recently seen rates in the three percent range in recent memory,

1149
00:47:50,920 --> 00:47:53,680
Speaker 1: that doesn't mean like that we're likely to see those

1150
00:47:53,719 --> 00:47:56,200
Speaker 1: rates again. Some people think we're heading back to those rates,

1151
00:47:56,320 --> 00:47:58,919
Speaker 1: not before too long. I wouldn't bank on it, Like, yeah,

1152
00:47:58,960 --> 00:48:00,719
Speaker 1: I don't know if that's the case, and what if

1153
00:48:00,760 --> 00:48:04,000
Speaker 1: savings rates continue to go up, because yeah, I don't

1154
00:48:04,000 --> 00:48:06,000
Speaker 1: want to get into all that, but like, it's you're right,

1155
00:48:06,080 --> 00:48:07,960
Speaker 1: there's the bird in the hand, and I think the

1156
00:48:07,960 --> 00:48:09,600
Speaker 1: bird in the hand is liquidity.

1157
00:48:10,239 --> 00:48:12,279
Speaker 3: And so the fact that you're able to get a

1158
00:48:12,280 --> 00:48:14,800
Speaker 3: pretty dissent rate right now in savings let alone, actually

1159
00:48:14,840 --> 00:48:16,440
Speaker 3: if you were to actually invest it in the market

1160
00:48:16,480 --> 00:48:17,640
Speaker 3: over then you know, if you knew you were.

1161
00:48:17,600 --> 00:48:19,160
Speaker 1: Going to touch it for three four years, go ahead

1162
00:48:19,160 --> 00:48:21,920
Speaker 1: and stick it in the market. But you mentioned one keyword, discipline.

1163
00:48:22,120 --> 00:48:23,920
Speaker 1: You gotta have a discipline. If you don't have the

1164
00:48:23,920 --> 00:48:26,560
Speaker 1: discipline to do the money, pay off the house yep,

1165
00:48:26,960 --> 00:48:30,000
Speaker 1: and make those extra payments. Yeah, totally agree. But either way, yes,

1166
00:48:30,040 --> 00:48:32,680
Speaker 1: it counts as your savings. Right, that was the beginning

1167
00:48:32,680 --> 00:48:35,719
Speaker 1: of the question. All right, Matt, let's get back to

1168
00:48:35,760 --> 00:48:37,239
Speaker 1: the beer that we had on this episode. This one

1169
00:48:37,360 --> 00:48:40,600
Speaker 1: is called hammer Red. It's an amber ale by Sweetwater

1170
00:48:40,719 --> 00:48:44,919
Speaker 1: Brewing Company in collaboration with the Georgia Aquarium right down

1171
00:48:45,040 --> 00:48:45,799
Speaker 1: the road from US.

1172
00:48:45,960 --> 00:48:48,759
Speaker 3: Now, now, folks understand the naming convention. It's not a

1173
00:48:48,920 --> 00:48:52,279
Speaker 3: hammer head. It's a hammer red. Yes, it's got a

1174
00:48:52,280 --> 00:48:53,240
Speaker 3: hammerhead on the logo.

1175
00:48:53,360 --> 00:48:54,160
Speaker 2: Yeah, yeah, but.

1176
00:48:54,120 --> 00:48:56,000
Speaker 3: People can see that unless they're looking at her show

1177
00:48:56,239 --> 00:48:57,960
Speaker 3: right right now. But yeah, which, I thought this was

1178
00:48:57,960 --> 00:49:02,040
Speaker 3: pretty good. Had that nice kind of bready mouth feels

1179
00:49:02,120 --> 00:49:03,880
Speaker 3: got that amber. I don't know, just the kind of

1180
00:49:04,120 --> 00:49:07,160
Speaker 3: viscosity and thickness that you expect to enjoy when you're

1181
00:49:07,200 --> 00:49:10,759
Speaker 3: drinking enjoying red, when you're enjoying an amber ale.

1182
00:49:10,760 --> 00:49:12,920
Speaker 1: I think those first red I ever had was Killions

1183
00:49:12,960 --> 00:49:15,799
Speaker 1: Irish red. Oh dude, that's like not good, No, this

1184
00:49:15,840 --> 00:49:18,120
Speaker 1: is I think that's the first red ever. You know,

1185
00:49:18,160 --> 00:49:20,319
Speaker 1: one of my best memories with Killians is when I

1186
00:49:20,360 --> 00:49:22,719
Speaker 1: was first getting into craft beer and I remember thinking, oh,

1187
00:49:22,760 --> 00:49:26,200
Speaker 1: that's that sounds like something that's more interesting than Core's Light,

1188
00:49:26,400 --> 00:49:30,600
Speaker 1: right or whatever. Macro pills was being made that I

1189
00:49:30,840 --> 00:49:33,640
Speaker 1: was skipping over. But Kate and I were at the beach,

1190
00:49:33,920 --> 00:49:37,800
Speaker 1: and I remember thinking, yeah, Killian's red, take that out.

1191
00:49:37,640 --> 00:49:39,560
Speaker 2: To the beach. It's rough.

1192
00:49:39,760 --> 00:49:40,000
Speaker 4: I think.

1193
00:49:40,080 --> 00:49:40,759
Speaker 2: I think that's what I.

1194
00:49:40,719 --> 00:49:43,319
Speaker 3: Learned, that, Oh there's the right place and time for

1195
00:49:43,400 --> 00:49:46,479
Speaker 3: different types of beers. And for me, yeah, red Ale

1196
00:49:46,520 --> 00:49:48,799
Speaker 3: out on the beach wasn't wasn't hitting the spot for me.

1197
00:49:48,920 --> 00:49:51,239
Speaker 1: The other beer people confused with craft beer far too

1198
00:49:51,320 --> 00:49:55,279
Speaker 1: often is blue Moon. Sorry, guys, not craft beer, not.

1199
00:49:55,200 --> 00:49:58,120
Speaker 3: Even taste, which again, back in the day you're probably like, oh, yeah,

1200
00:49:58,120 --> 00:50:00,719
Speaker 3: this isn't bud Light. But at the same time, it's

1201
00:50:00,760 --> 00:50:03,440
Speaker 3: not the most interesting of Belgian wits.

1202
00:50:03,280 --> 00:50:04,040
Speaker 2: Out there either.

1203
00:50:04,239 --> 00:50:06,400
Speaker 1: No, it's not all right, Matt, that's gonna do it.

1204
00:50:06,400 --> 00:50:08,360
Speaker 1: For this episode, we'll put links to some of the

1205
00:50:08,360 --> 00:50:10,480
Speaker 1: resources we mentioned up in the show notes on our

1206
00:50:10,520 --> 00:50:12,240
Speaker 1: website at howtmoney dot com.

1207
00:50:12,280 --> 00:50:13,640
Speaker 3: That's right, and we will see you back here on

1208
00:50:13,680 --> 00:50:16,600
Speaker 3: Wednesday with our conversation with Dan Otter.

1209
00:50:16,800 --> 00:50:20,000
Speaker 2: And here's a little teaser. Dan's a man after own heart.

1210
00:50:20,200 --> 00:50:22,680
Speaker 2: If it was a different year, different location, I could

1211
00:50:22,680 --> 00:50:24,439
Speaker 2: see him being like a even almost like a third

1212
00:50:24,480 --> 00:50:26,319
Speaker 2: co host. He's a good guy. All right.

1213
00:50:26,520 --> 00:50:28,399
Speaker 3: That's gonna be it for this episode until next time.

1214
00:50:28,480 --> 00:50:42,200
Speaker 3: Best friends are best friends out.

1215
00:50:42,360 --> 00:50:44,759
Speaker 2: This is like a fundraising beer or something like that.

1216
00:50:44,840 --> 00:50:45,600
Speaker 1: I'm sure it is, ye