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Speaker 1: Welcome to Had the Money. I'm Joel and I am Matt.

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Speaker 2: And today we're answering your listener questions.

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Speaker 1: Welcome to Listener Question Monday. Everybody where we have a

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Speaker 1: chance to hear directly from you via your voice memos.

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Speaker 1: Thank you to everyone who has previously. Do you know

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Speaker 1: how many voice memos we've fielded here on the show, Joel?

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Speaker 1: How many? I don't know, but it is a lot.

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Speaker 1: Maybe next episode I will look that number up and

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Speaker 1: cap it for folks, but it definitely is a substantial

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Speaker 1: number of listeners. But we're gonna hear from a couple

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Speaker 1: and they are looking for the smart way to cut

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Speaker 1: up their credit cards, Joel. They might be looking for

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Speaker 1: a way to simplify their finances. Another listener, he is wondering.

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Speaker 2: Asking for like a scissor recommendation, or or if.

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Speaker 1: They should put it in the block of ice, which, hey,

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Speaker 1: I'm not going to knock that, by the way, if

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Speaker 1: that is a strategy that might work for you, we'll

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Speaker 1: get to exactly why that might make sense later on.

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Speaker 2: I'm going to say I don't know any other brands

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Speaker 2: besides Fiskers.

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Speaker 1: But we've got another listener and he's asking about the

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Speaker 1: unrealized capital gains tax on his four win k if

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Speaker 1: that's something that he should start preparing for now. And

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Speaker 1: another guy he's wondering if it makes sense to put

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Speaker 1: down more than twenty percent on the home that he's

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Speaker 1: looking to purchase, maybe thirty percent or even fifty percent

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Speaker 1: for achiever. So we'll get to those and more during

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Speaker 1: today's Ask How to Money episode A.

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Speaker 2: Right, speaking speaking of over achievers, Matt, my my friend Scott,

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Speaker 2: neighbor lives around the corner, went over to his house recently.

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Speaker 1: He had a little bake.

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Speaker 2: Sale his kiddo's. They oh nice selling cookies. He had

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Speaker 2: homemade strawberry ice cream. It was delicious right on, and

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Speaker 2: so we supported the neighborhood.

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Speaker 1: Very Americana right there. Homemade strawberry ice scree one hundred

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Speaker 1: percent was a good It was delicious, nice, so good.

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Speaker 3: Well.

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Speaker 2: The thing I noticed that he pointed out when I

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Speaker 2: showed up, he knows I like beer. Everybody knows I

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Speaker 2: like beer. I kind of weird, like a badge of

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Speaker 2: honor on my body at all times. He has a

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Speaker 2: kegerator in his garage.

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Speaker 1: Nice.

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Speaker 2: I didn't ask him about the money saving aspect, of it.

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Speaker 2: I think it's more the beer loving aspect. The reason

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Speaker 2: is the reason why he does this. But he got

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Speaker 2: this antique refrigerator for like very little money, oh.

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Speaker 1: Like a fifties kind of with like the big handle,

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Speaker 1: big latch handle. That's right exactly.

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Speaker 2: He drolled a couple holes for some tap handles, and

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Speaker 2: he's got some ponykegs inside the fridge. When people come over,

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Speaker 2: it's really easy to pour a pint.

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Speaker 1: Did you did you get a point during the big sale?

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Speaker 1: But I saw him this morning and you said you didn't. No,

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Speaker 1: I didn't at that time because I was more there

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Speaker 1: for the sweets. But he was like, come over, have

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Speaker 1: a beer sometimes. So I think I will partake soon.

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Speaker 1: But okay, is this something that you are personally interested in?

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Speaker 1: I don't know.

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Speaker 2: Because one, I'm curious about how long is it take

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Speaker 2: for the beer to go flat. I'm guessing it's months.

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Speaker 2: I'm guessing you get time.

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Speaker 1: I don't know actually, And then okay, I feel as

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Speaker 1: two beer lovers, I feel like this is that you

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Speaker 1: and I should should be aware.

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Speaker 2: But the other thing I'm curious about is how much

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Speaker 2: money it saves.

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Speaker 3: You know.

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Speaker 2: I tried to look this up to see, and it

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Speaker 2: looks like, depending on obviously the quality of beer you

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Speaker 2: can get, you say, get Core's Light, yes, and pay

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Speaker 2: sixty bucks for one of those small kegs and you get.

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Speaker 1: Like sixty pints or something.

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Speaker 2: I think something like that, Okay, might be paying roughly

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Speaker 2: a dollar a beer, a little more if you get

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Speaker 2: something nicer, you might be paying three dollars a beer.

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Speaker 1: Yeah. I can't imagine you're doing it much from a

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Speaker 1: cost saving standpoint. Yeah. Yeah. So the reason I asked

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Speaker 1: if you were interested is because I feel like like

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Speaker 1: older yeah right, I should say younger Matt. Like back

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Speaker 1: in the day, I would hear this and think, oh yeah,

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Speaker 1: I totally want to have a Cagraator. But if you

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Speaker 1: think about it, it's mostly well, first of all, you

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Speaker 1: cut down on a variety of beer that you're drinking

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Speaker 1: because you're the biggest downside. You're committing full on to

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Speaker 1: just drinking the same beer for who knows how long,

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Speaker 1: ye guess party and try all the beers exactly. Imagine

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Speaker 1: if instead of having different craft beers on the show,

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Speaker 1: if instead we built a Cagreator and we're like all right,

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Speaker 1: drinking some Newcastle again, that would be nearly as fun. Yeah,

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Speaker 1: but what is fun, I guess is the ability to

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Speaker 1: offer somebody some beer on draft, because that's just I

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Speaker 1: don't know, that's cool. Yeah, if you're like hanging out,

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Speaker 1: he's got it set up there in his garage. Does

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Speaker 1: he have like a dude garage. Does he have a

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Speaker 1: couch in there, like a place to sit and see

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Speaker 1: a couch?

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Speaker 2: But he might have moved it out for the bake sale.

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Speaker 2: I don't know, but I'll tell you next time I

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Speaker 2: go over there.

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Speaker 1: Sounds like fun. Speaking of beer, you and I are

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Speaker 1: enjoying the eleventh Passing. This is okay. So actually it

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Speaker 1: says for foolish thinking? Is that what it's called it?

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Speaker 1: The eleventh passing? You can't tell. With some of the

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Speaker 1: Burial labels, it's really hard to know. Difficult, but either way,

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Speaker 1: this is a stout by Burial, and based on the

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Speaker 1: fact that it says the eleventh passing and at the

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Speaker 1: bottom that says ano x one, so Roman numerals eleven.

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Speaker 1: I think this is their eleventh anniversary celebration beer.

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Speaker 2: And they make good beers in general, but usually the

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Speaker 2: anniversary beers are taken up a notch, so this one

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Speaker 2: definitely is excited to drink this one.

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Speaker 1: Share our thoughts at the end.

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Speaker 2: Exactly all right, Matt, let's get to listener questions. If

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Speaker 2: you have a money question, we would love to hear

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Speaker 2: from you. The crazier the better. The way to do

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Speaker 2: that is just to record a voice memo, state your name,

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Speaker 2: where you live at the beginning of it, then send

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Speaker 2: it our way via email, or you can go to

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Speaker 2: hot money dot com slash ask for the simple directions. Matt,

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Speaker 2: let's get to a question about how much this listener

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Speaker 2: should be putting down on a home purchase.

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Speaker 3: Hey, what's going on, Matt and Joel. My name is

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Speaker 3: TJ and I'm sending this voice message in from Sacramento, California.

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Speaker 3: I'm a big fan of the podcast. I've been listening

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Speaker 3: since the beginning of twenty twenty four and it's definitely

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Speaker 3: changed my life for the better. So, my wife and

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Speaker 3: I are currently renters in Sacramento and we're planning on

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Speaker 3: moving to Albuquerque in the next five years to be

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Speaker 3: close to the family. We're currently saving twenty six hundred

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Speaker 3: a month in a high yeal save his account towards

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Speaker 3: the down payment and the house that we've been looking

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Speaker 3: at are currently in the low to mid three hundred

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Speaker 3: thousand dollars range. By the time we're ready to move,

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Speaker 3: we should have saved up roughly one hundred and fifty

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Speaker 3: to one hundred and seventy thousand. So my question is,

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Speaker 3: as first time home buyers, should we put down what

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Speaker 3: could be a thirty to fifty percent down payment or

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Speaker 3: should we be more conservative with our money. We're also

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Speaker 3: budgeting for home repairs, saving up one percent of our

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Speaker 3: estimated home value yearly, and budgeting towards other aspects of

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Speaker 3: life separately using a budgeting software. But we just wanting

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Speaker 3: to reach out and get your guys opinion on it

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Speaker 3: before we make this next big step. Thanks again for

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Speaker 3: everything you guys do. A big fan of the podcast,

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Speaker 3: big fan of craft beer, and I look forward to

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Speaker 3: here in the next episode.

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Speaker 1: All right, TJ, First off, amazing job. I would say

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Speaker 1: on multiple fronts here. To be able to save as

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Speaker 1: much money as you are consistently every single month for

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Speaker 1: this goal just shows an incredible amount of discipline and

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Speaker 1: getting after it. And I'll also point out that you

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Speaker 1: are moving from a state that has a higher cost

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Speaker 1: of living, so California. Is this expensive to live in California,

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Speaker 1: mass Sacramento is specifically as well, moving to a state,

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Speaker 1: specifically a town Albuquerque, with significantly lower So I looked

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Speaker 1: it up. The cost of living in Albuquerque is like,

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Speaker 1: I think, four percent lower than the national average, whereas

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Speaker 1: Sacramento is something like twenty percent more. And so that's

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Speaker 1: such a cheat code, doesn't it to move from it?

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Speaker 1: So does a really expensive place to a much cheaper

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Speaker 1: cost of living place, especially if it means being able

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Speaker 1: to keep your income on a similar trajectory, Yes, you're talking.

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Speaker 1: You really are talking about bringing massive amounts of money

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Speaker 1: back in your life. Not that not that I would

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Speaker 1: convince you or tell anybody that they should move for

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Speaker 1: financial reasons only, but yeah, it really can make a

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Speaker 1: big goal. In TJ's case, he said he's got family,

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Speaker 1: her friends also over there in Albuquerque, so he's got

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Speaker 1: a whole bunch of folks that know what's going on.

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Speaker 1: He's got lots of reasons to go there for his

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Speaker 1: dollar to just go a whole lot further. But also

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Speaker 1: it doesn't sound like he's looking to expand his price

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Speaker 1: point because I think a lot of folks they would

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Speaker 1: take the bigger savings pile as an opportunity to buy

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Speaker 1: the governor's mansion. Right. But TJ, again, it sounds like

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Speaker 1: you know, whether you ought to put the full amount

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Speaker 1: down or not, it sounds like you are prioritizing keeping

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Speaker 1: your housing costs low. And I think that's just a

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Speaker 1: recipe for just additional margin in your life, and you're

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Speaker 1: going to have so much more financial breathing room as

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Speaker 1: well as future financial success and achieving some of the

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Speaker 1: different goals that you might set for yourselves.

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Speaker 2: Yeah, it makes me think of a recent conversation mat

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Speaker 2: that we had with Amanda Walt, and she was talking

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Speaker 2: about she looks at people's budgets all the time on

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Speaker 2: our Instagram channel, and she said, cars and houses. How

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Speaker 2: much people are dedicating to those two expenses in their life,

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Speaker 2: It often tells the tale of how their finances are

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Speaker 2: going overall.

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Speaker 1: That's true.

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Speaker 2: So basically, keeping that budge reasonable is going to pay

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Speaker 2: dividends for years to come. So then that begs the question,

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Speaker 2: which is what TJ asked, Well, how much of the

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Speaker 2: money he saved should he put down on the home purchase.

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Speaker 2: He's going to have at least twenty percent on hand,

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Speaker 2: which is the minimum we would like for people to

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Speaker 2: put down. I'm not going to say it's like this

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Speaker 2: hard and fast rule that you can't put less down.

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Speaker 2: People do it all the time, and they end up

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Speaker 2: doing okay putting us down, especially if it's your first

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Speaker 2: home purchase. I think there is wiggle room there. But

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Speaker 2: the good thing about having at least twenty percent to

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Speaker 2: put down is that allows you to qualify for the

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Speaker 2: best rates in terms, it allows you to avoid PMI

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Speaker 2: private mortgage insurance, which can be a pesky add on

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Speaker 2: fee of one hundred bucks and in some circumstances it

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Speaker 2: could cost hundreds.

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Speaker 1: Even of dollars, anywhere between like half a percent to

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Speaker 1: one and a half percent.

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Speaker 2: Yeah, So yeah, being able to avoid that is incredibly nice.

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Speaker 2: But beyond that, if you put more than twenty percent down,

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Speaker 2: you're typically not doing yourself any favors. You're not really

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Speaker 2: bringing down the overall loan amount, you're not really reducing

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Speaker 2: the interest rate or anything like that. True, so I guess,

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Speaker 2: and we can talk about the benefits of putting more

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Speaker 2: than twenty percent down, but the benefits are minimal.

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Speaker 1: I'd say they're less. But of course you're gonna you know,

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Speaker 1: when you put down more, you're gonna pay less and

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Speaker 1: interest every single month, your monthly payment's gonna be less.

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Speaker 1: So it's not an unreasonable choice. But I think the

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Speaker 1: real question is what could you do with that money

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Speaker 1: were you to not put it down towards that house,

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Speaker 1: would you be able to use that money better elsewhere?

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Speaker 1: And the calculations they have changed from let's say the

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Speaker 1: three percent mortgage days like a decade ago, because it

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Speaker 1: was certainly I would say it was a no brainer

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Speaker 1: to take out a thirty year loan back then hold

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Speaker 1: on to your cash, but the insurance a bit more

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Speaker 1: nuanced these days, when you've got rates for a thirty

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Speaker 1: year in like the six and a half percent range.

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Speaker 1: And this is for folks with solid credit, even more

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Speaker 1: if you don't have a great credit score. And so

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Speaker 1: that's just something to consider. And again I will say,

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Speaker 1: though TJ, he's talking about buying a home five years

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Speaker 1: from now, so it's just tough to know where rates

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Speaker 1: are going to go. So that's one of the differences

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Speaker 1: the market is going to be. What are the rate's

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Speaker 1: gonna be? Yeah, because if they are, let's say they're

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Speaker 1: even higher than where they are are currently. We'll shoot,

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Speaker 1: I would be very tempted to put down a heck

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Speaker 1: of a lot more towards that home, but if they are,

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Speaker 1: if we do end up back in the it takes

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Speaker 1: down to five, four or three percent, Okay, well, there's

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Speaker 1: going to be absolutely the zero reason to put down

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Speaker 1: any additional dollars beyond that twenty percent. Yeah, exactly.

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Speaker 2: The market and the terms really dictate whether or not

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Speaker 2: you should be coming to the closing table with even

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Speaker 2: more of that cash. And once you find this specific

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Speaker 2: house you want to buy, you'll likely have a good

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Speaker 2: idea of how much cash you're going to need in

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Speaker 2: order to bring that house up to your standards. So

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Speaker 2: it might be three thousand bucks, you might say, listen,

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Speaker 2: it's only the countertops. That's the only thing we need update.

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Speaker 2: Other than that, it's perfect. Or it could be thirty

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Speaker 2: thousand bucks. You know, you might say, we need to

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Speaker 2: redo all the bathrooms and paint the whole interior to

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Speaker 2: bring it up to our standards. Unfortunately, you've saved enough

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Speaker 2: to be able to make that choice and to be

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Speaker 2: able to pay for those repairs in cash. But either way,

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Speaker 2: keep the cash on hand for some of those upfront costs,

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Speaker 2: and then for some of those essentially inevitable costs that

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Speaker 2: come with buying your own place. I'm guessing that this

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Speaker 2: home is going to be larger than where you're currently renting,

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Speaker 2: which likely means spending a bit more on furnishing this

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Speaker 2: new home as well. And so while your savings account

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Speaker 2: rate isn't going to be as high, there is some

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Speaker 2: benefit to that liquidity. It'll help prevent you from taking

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Speaker 2: on worse kinds of debt in the future.

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Speaker 1: Yeah, and you even said the word roal liquidity, Like

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Speaker 1: basically that's what we're talking about here, because like, even

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Speaker 1: beyond just looking at the house, having cash in the bank,

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Speaker 1: especially when rates are solid, it's just going to mean

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Speaker 1: more flexibility for your life overall, because let's say you

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Speaker 1: want to switch careers, or let's say that there's two

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Speaker 1: of y'all who are earning an income right now, but

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Speaker 1: you want to switch down to just one income. Well,

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Speaker 1: having that cash in the bank versus essentially pre paying

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Speaker 1: the mortgage there on your home like that is going

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Speaker 1: to give you the option to do that. And so

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Speaker 1: we're actually not sure of how much you're investing. I

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Speaker 1: don't think DJ mentioned anything about that, but like, you

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Speaker 1: might be crushing it, but we wouldn't want you forking

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Speaker 1: over all of your cash towards a down payment if

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Speaker 1: you aren't getting let's say the full match in your

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Speaker 1: workplace retirement account, or let's say you're not acting out

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Speaker 1: your roth IRA. Well, if you're in that kind of position,

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Speaker 1: obviously we want to get you investing. But I'm guessing,

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Speaker 1: based on just everything that TJ's got lined up that

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Speaker 1: he I think he is doing a pretty solid job there,

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Speaker 1: because it sounds like he's got good financial habits. Yeah, exactly,

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Speaker 1: he's an amazing job. He's an a killer job saving

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Speaker 1: for this more immediate goal, and so I've got to

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Speaker 1: think that he's also thinking long term and he's just like, oh,

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Speaker 1: of course, fellas, I'm not going to state that because

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Speaker 1: it's just assumed we all do that, right, And to UTJ,

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Speaker 1: I would say, yes, it's great that you're doing that,

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Speaker 1: but no, not everybody does that.

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Speaker 2: I think it's important for us to note to Matt

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Speaker 2: that you know, you and I were not fans of

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Speaker 2: mortgage debt. We're not like, take on as much as possible.

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Speaker 2: This is a good thing. It's beneficial for your financial future,

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Speaker 2: but we also don't consider it bad debt, and so

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Speaker 2: it's this it kind of inhabits this gray area in

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Speaker 2: our minds. Although if you're one of those people with

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Speaker 2: a two point seventy five percent mortgage rate locked in

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Speaker 2: that you refinanced in two ten years ago, gosh, it's

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Speaker 2: almost good debt, right because you can make more in

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Speaker 2: a savings account, in a completely non risky account, which

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Speaker 2: is incredible as long as you're not tempted. And this

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Speaker 2: is a really and caveat Matt to fritter away additional

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Speaker 2: dollars that you don't include in the down payment.

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Speaker 1: He's not gonna do that.

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Speaker 2: I don't think he's gonna do that there yet. But

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Speaker 2: even out there, for everyone else out there who's listening,

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Speaker 2: that is a temptation. Like more cash in the bank account,

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Speaker 2: it can burn a hole in your pocket and you

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Speaker 2: might say, all right, well, hey, we hit that mark

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Speaker 2: putting twenty percent down on the home, and so now

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Speaker 2: I'm gonna buy a Go Kart for my kid. Well,

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Speaker 2: I don't know, whatever it is, like, whatever you're interested

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Speaker 2: in buying, that just kind of well, we've got free

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Speaker 2: cash hanging out in the savings Account's not allocated for

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Speaker 2: anything in particular. If that's the case, it would be

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Speaker 2: better off to put that cash towards the down payment

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Speaker 2: and have a smaller note every single month.

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Speaker 1: Totally understand what you're saying, but like, like reading between

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Speaker 1: the lines with TJ, there's no way that he's going

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Speaker 1: to fritter this money. Yeah, like he's talking, like he's looking.

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Speaker 1: This is the kind of person that is looking five

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Speaker 1: years into the future and he is currently budgeting for

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Speaker 1: home repair expenses one percent of the home purchase price already. Yeah,

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Speaker 1: he's a hyper planner. Yes, And so honestly, DJ, like

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Speaker 1: I wouldn't say this to many folks, but I would

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Speaker 1: honestly look to some of the more near term things

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Speaker 1: that might make your life a little bit more fun

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Speaker 1: or enjoyable. A go cart, like a go cart for

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Speaker 1: your kids, or I don't know, for yourself, but they

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Speaker 1: make it don't go. But like maybe this is thinking

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Speaker 1: through like different ways you can give your money away,

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Speaker 1: or spending money on your wife or your partner, or

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Speaker 1: like spending money on your friends or even on yourself,

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Speaker 1: because I think if you can maybe and I'm not

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Speaker 1: talking about going crazy and for most listeners or maybe

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Speaker 1: I should say for most Americans out there, this is

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Speaker 1: not the position that they're finding themselves in. But I do,

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Speaker 1: as I read it between the lines a little bit.

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Speaker 1: I do see TJ maybe being like slightly more tight

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Speaker 1: fisted with his money and incredibly disciplined, and.

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Speaker 2: Really are reading between the tea leaves over.

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Speaker 1: Yeah, who is planning for home repair expenses five years

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Speaker 1: in advance like that? This is somebody that has a

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Speaker 1: game plan. And I love that. But I'm just saying, I.

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Speaker 2: Just need you to buy a home these days with

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Speaker 2: how much you need to say about I mean, it's impressive.

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Speaker 1: It's true in that part, it's true, But I'm just

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Speaker 1: saying I see myself in TJ. And I look back

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Speaker 1: to when I was younger, and there are certain times

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Speaker 1: when I know I could have been a little more

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Speaker 1: generous when it came to some of the things I

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Speaker 1: may have missed out on, especially maybe when he's younger.

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Speaker 1: Maybe there are certain experiences that he's not going to

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Speaker 1: be able to easily accommodate once he moves to Albuquerque

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Speaker 1: versus right now when he's in California, or things that

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Speaker 1: he can't do five ten years down the road. Once

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Speaker 1: he's a little bit older, or maybe once kids are

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Speaker 1: in the picture, if that's a priority of his.

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Speaker 2: So take that trip to Disneyland, is what you're saying.

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Speaker 1: Yeah, I don't know, I'm I'm just throwing that out there.

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Speaker 1: I'm not gonna automatically assume that TJ's not spending money.

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Speaker 1: Maybe he's making a killer income and he's also spending

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Speaker 1: his money in a way that's bringing him a lot

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Speaker 1: of joy. But I just wanted to mention that that's all.

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Speaker 1: I think.

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Speaker 2: Ultimately, when it comes down to it, what you gain

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Speaker 2: from putting more than twenty percent down on a home

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Speaker 2: isn't as impressive as what you can do with the

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Speaker 2: funds if you're more intentional with the money above and

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Speaker 2: beyond that twenty percent, whether it's saving for unexpected expenses

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Speaker 2: and repairs, whether it's investing for your future. There are

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Speaker 2: just better ways to utilize that money. And yeah, maybe

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Speaker 2: our tune changes if mortgage rates are ten eleven, twelve percent,

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Speaker 2: but given where they are or where they're at right now,

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Speaker 2: there's still kind of in that gray middling area. So

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Speaker 2: put twenty percent down, TJ, find better things to do

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Speaker 2: with the rest of it. Is kind of our suggestion.

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Speaker 2: All right, Matt, We've got more to get to on

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Speaker 2: this episode, including a nuanced question about compounding returns. We'll

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Speaker 2: get to that and more right after this.

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Speaker 1: All right, Joe, we are back from the break in.

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Speaker 1: Let's hear from a couple who has a credit card question.

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Speaker 4: I am Colin and I am Carly, and today we

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Speaker 4: have two questions. First question, an effort to simplify from

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Speaker 4: a twelve credit cards to a critical few, including my

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Speaker 4: oldest cards. Are there any strategies you may have that

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Speaker 4: limit negative impacts on a credit score?

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Speaker 1: Should I just cancel?

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Speaker 4: Should I let them close? Naturally? Could the cancelation of

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Speaker 4: my recent cards actually increase my average credit age and

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Speaker 4: make it a wash? We'd love to hear your thoughts

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Speaker 4: more importantly, being avid how to money and poor not

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Speaker 4: poor fans since episode one. Love to share a beer

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Speaker 4: at our wedding with you in October.

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Speaker 3: Thanks so much, best friends out.

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Speaker 1: That was adorable. I love that.

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Speaker 2: Yeah uh, and my goodness, thank you for the invite

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Speaker 2: to your wedding.

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Speaker 1: That means a lot.

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Speaker 2: Joel's going to be there. I wish, I really wish,

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Speaker 2: I wish, I wish we could be there I feel

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Speaker 2: like I hate that you said that, because now it

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Speaker 2: makes me feel for just plit a second, like a

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Speaker 2: jerk for not being there.

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Speaker 1: Yeah.

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Speaker 2: Yeah, no, Colin, we looked at our calendar. Not quite

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Speaker 2: possible to make it. And Matt, this was a legitimate invite,

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Speaker 2: not just they's literally real week sent.

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Speaker 1: We got the stage story. Those things cost money, so

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Speaker 1: we appreciate the fact.

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Speaker 2: That you have to account for every person who comes

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Speaker 2: to your wedding. By the way, when it comes to

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Speaker 2: feeding them, and I'm not sure if I think they're serving.

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Speaker 2: I think they said one of the groomsmen is making beers.

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Speaker 2: That's right, he's a homebrewer. They know they invite us,

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Speaker 2: we're going to drink a few beers. So we seriously

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Speaker 2: thank you so much for inviting us to your wedding.

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Speaker 2: I wish we could make it and yeah, alas can't

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Speaker 2: make it work. And we wish the best to you

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Speaker 2: guys on your wedding day and moving forward. And we'll

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Speaker 2: send you, guys a couple of pairs of how to

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Speaker 2: money socks as a wedding present. Don't know if it's

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Speaker 2: a great wedding present, but we'll send it anyway.

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Speaker 1: I wanted to only send you all one pair of socks,

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Speaker 1: but then Joel convinced, and I was going to force

435
00:18:06,400 --> 00:18:08,639
Speaker 1: all the shy one to share, and it's going to

436
00:18:08,720 --> 00:18:10,840
Speaker 1: put your marriage to the test instead of going to

437
00:18:10,880 --> 00:18:13,560
Speaker 1: marriage counseling. You say, oh, we listened to how to money,

438
00:18:13,720 --> 00:18:16,600
Speaker 1: and we share this one pair of sox. But Joel

439
00:18:16,640 --> 00:18:18,840
Speaker 1: talk me out of it. We'll send you guys to but.

440
00:18:19,040 --> 00:18:21,119
Speaker 2: I don't want to like put hurles in their in

441
00:18:21,160 --> 00:18:23,919
Speaker 2: the marriage, in the path of their marriage right from

442
00:18:23,920 --> 00:18:24,280
Speaker 2: the gig car.

443
00:18:24,440 --> 00:18:27,320
Speaker 1: Yeah, let's talk about credit cards because it sounds like

444
00:18:27,359 --> 00:18:29,720
Speaker 1: these two they've been using credit cards to the max,

445
00:18:30,040 --> 00:18:32,080
Speaker 1: or maybe not quite to the max.

446
00:18:31,880 --> 00:18:33,600
Speaker 2: Because there are folks are maxing them out.

447
00:18:33,640 --> 00:18:35,639
Speaker 1: But no, no, no, no, not like that they are not

448
00:18:35,720 --> 00:18:37,720
Speaker 1: hitting their credit limit. I'm talking about the number of

449
00:18:37,720 --> 00:18:39,760
Speaker 1: cards that some folks cycle through, because there's some folks

450
00:18:39,760 --> 00:18:42,720
Speaker 1: out there who have not just like a dozen cards,

451
00:18:43,000 --> 00:18:46,199
Speaker 1: like Colin and Carly said, but like dozens of credit cards.

452
00:18:46,359 --> 00:18:48,679
Speaker 2: And so were our friend the points guy, Brian Kelly.

453
00:18:48,960 --> 00:18:50,359
Speaker 1: Who did we talk to you at one point that

454
00:18:50,440 --> 00:18:53,480
Speaker 1: had like the baseball card collector binder with like the

455
00:18:53,520 --> 00:18:55,520
Speaker 1: clear pages with the spots for all the different cards.

456
00:18:55,520 --> 00:18:57,800
Speaker 1: He wasn't Brian, but I don't remember somebody I forget

457
00:18:57,800 --> 00:19:00,639
Speaker 1: who was uses That's how he keeps up with his

458
00:19:00,680 --> 00:19:02,080
Speaker 1: credit cards. How I used to keep track of your

459
00:19:02,080 --> 00:19:05,000
Speaker 1: POGs back, which, no, you just put the POGs in

460
00:19:05,000 --> 00:19:05,520
Speaker 1: the tube.

461
00:19:05,640 --> 00:19:07,640
Speaker 2: They had the tube, but they also had the similar debase.

462
00:19:07,760 --> 00:19:09,800
Speaker 1: They really yeah, Oh I didn't see that. I never

463
00:19:09,800 --> 00:19:11,280
Speaker 1: had that. I thought they did because they had some

464
00:19:11,320 --> 00:19:12,920
Speaker 1: cool designs on them. I just had like one or

465
00:19:12,920 --> 00:19:15,879
Speaker 1: two good slammers. Well, we ever talked about POGs on

466
00:19:15,920 --> 00:19:18,280
Speaker 1: the podcast. Probably the worst toy we had as kids.

467
00:19:18,359 --> 00:19:21,320
Speaker 1: Are you kidding? Bogs were way better than pencil fighting?

468
00:19:21,359 --> 00:19:21,800
Speaker 1: Looking back?

469
00:19:22,080 --> 00:19:23,720
Speaker 2: I don't think they were looking back, and they were

470
00:19:23,720 --> 00:19:24,320
Speaker 2: pretty dumb.

471
00:19:24,680 --> 00:19:27,200
Speaker 1: I feel like whatever part of your brain likes the

472
00:19:27,240 --> 00:19:30,879
Speaker 1: gambling aspect of it, like was ticket, like was stimulated

473
00:19:30,920 --> 00:19:32,800
Speaker 1: when you're like doing POGs because it kind of has

474
00:19:32,840 --> 00:19:34,119
Speaker 1: like this dice element to it.

475
00:19:34,119 --> 00:19:36,080
Speaker 2: It's kind of like the what was it, the modern

476
00:19:36,160 --> 00:19:38,879
Speaker 2: version of Jack's I never played that sixties.

477
00:19:38,960 --> 00:19:41,439
Speaker 1: Yes, it kind of was. But we're talking about their

478
00:19:41,480 --> 00:19:43,639
Speaker 1: ability to use credit cards in a strategic way, and

479
00:19:43,640 --> 00:19:46,880
Speaker 1: I'm totally fine for the reason for reducing the number

480
00:19:46,920 --> 00:19:49,000
Speaker 1: of credit cards though, that they have in their arsenal,

481
00:19:49,320 --> 00:19:51,160
Speaker 1: because I think, you know, I don't know, maybe playing

482
00:19:51,160 --> 00:19:53,040
Speaker 1: the game in a big way like that made sense

483
00:19:53,040 --> 00:19:56,679
Speaker 1: for y'all early on. Maybe you don't want the complexity anymore.

484
00:19:56,680 --> 00:19:59,640
Speaker 1: Maybe again, you're just looking to streamline your financial life

485
00:19:59,680 --> 00:20:02,240
Speaker 1: a little little bit. I can get behind that. But

486
00:20:02,280 --> 00:20:03,840
Speaker 1: at the same time, I just don't lend you to

487
00:20:03,920 --> 00:20:06,640
Speaker 1: hurt your credit score in the process. Yeah, so yeah,

488
00:20:06,680 --> 00:20:07,800
Speaker 1: let kind of get to the heart of the question.

489
00:20:07,840 --> 00:20:11,399
Speaker 1: Let's talk about I guess, de leveraging their credit cards

490
00:20:11,480 --> 00:20:12,320
Speaker 1: in a wise way.

491
00:20:12,359 --> 00:20:14,600
Speaker 2: I think I think that's a good way to put it, deleveraging,

492
00:20:15,000 --> 00:20:17,680
Speaker 2: and it's not because they're trying to pay off credit

493
00:20:17,680 --> 00:20:19,280
Speaker 2: card debt or anything like that. It sounds like they've

494
00:20:19,280 --> 00:20:22,800
Speaker 2: handled these cards incredibly wisely. They've benefited from the use

495
00:20:22,920 --> 00:20:25,200
Speaker 2: of a slew of different credit cards, and we think

496
00:20:25,240 --> 00:20:26,840
Speaker 2: that a lot of our listeners can And by the way,

497
00:20:26,880 --> 00:20:28,840
Speaker 2: we've got a lot of information up on our site

498
00:20:28,880 --> 00:20:30,959
Speaker 2: about the wise use of credit cards, so you can

499
00:20:31,000 --> 00:20:33,159
Speaker 2: find out how to money dot com. And typically one

500
00:20:33,200 --> 00:20:35,280
Speaker 2: of the things you'll find there if you're looking around,

501
00:20:35,640 --> 00:20:38,480
Speaker 2: is that we're not fans of closing credit cards, and

502
00:20:38,520 --> 00:20:41,119
Speaker 2: so this question is something we would typically warn people

503
00:20:41,520 --> 00:20:44,320
Speaker 2: against doing. Matt, you mentioned the simplification, and I get

504
00:20:44,640 --> 00:20:48,160
Speaker 2: kind of the desire for that, But the only meaningful

505
00:20:48,200 --> 00:20:51,560
Speaker 2: benefit for you in elimitting a credit card from your

506
00:20:51,560 --> 00:20:54,359
Speaker 2: life typically is just getting rid of the temptation to

507
00:20:54,440 --> 00:20:56,280
Speaker 2: use a credit card when you can't control your spending.

508
00:20:56,359 --> 00:20:59,959
Speaker 2: In that case, yes, do whatever it takes, because spending

509
00:21:00,080 --> 00:21:02,320
Speaker 2: in a way that you can't control is so bad

510
00:21:02,359 --> 00:21:06,040
Speaker 2: for your finances that we want you to avoid that completely.

511
00:21:06,480 --> 00:21:07,919
Speaker 2: Another one I guess is to get rid of an

512
00:21:07,960 --> 00:21:10,720
Speaker 2: annual fee, but you can often just ask their credit

513
00:21:10,720 --> 00:21:13,200
Speaker 2: card company to move you to a card that doesn't

514
00:21:13,200 --> 00:21:16,160
Speaker 2: have an annual fee. They can downgrade you. Essentially that

515
00:21:16,359 --> 00:21:19,800
Speaker 2: saves yourself money every single year while keeping that credit

516
00:21:19,880 --> 00:21:23,040
Speaker 2: card line open, which means no damage to your credit score,

517
00:21:23,040 --> 00:21:24,960
Speaker 2: which we're fans of. And so I just want to

518
00:21:25,000 --> 00:21:27,680
Speaker 2: note that your credit score, it might get dinged here

519
00:21:27,800 --> 00:21:29,760
Speaker 2: while you're closing some of these accounts, so be ready

520
00:21:29,760 --> 00:21:32,440
Speaker 2: for that and know that that is a potential downside

521
00:21:32,480 --> 00:21:34,800
Speaker 2: of closing some of these credit cards. And depending on

522
00:21:34,840 --> 00:21:37,600
Speaker 2: your current score and your near term credit needs. You're

523
00:21:37,600 --> 00:21:40,000
Speaker 2: getting married, are you going to be buying a home,

524
00:21:40,119 --> 00:21:42,200
Speaker 2: buying a new car, or something like that. Then I

525
00:21:42,200 --> 00:21:44,200
Speaker 2: would say hold off on closing any of your credit

526
00:21:44,280 --> 00:21:47,040
Speaker 2: lines because the downside and the higher interest rate, the

527
00:21:47,080 --> 00:21:50,320
Speaker 2: worst terms attached to that financing is probably not going

528
00:21:50,359 --> 00:21:52,320
Speaker 2: to make up for the fact that you've just simplified

529
00:21:52,320 --> 00:21:53,320
Speaker 2: your credit cards a little bit.

530
00:21:53,359 --> 00:21:55,879
Speaker 1: That's true. Yeah, okay, So one thing Colin mentioned that's

531
00:21:55,960 --> 00:21:59,439
Speaker 1: really smart is keeping his oldest cards, which is totally clutch.

532
00:21:59,560 --> 00:22:02,360
Speaker 1: And that's because the length of your credit history it

533
00:22:02,480 --> 00:22:04,399
Speaker 1: is one of the main factors in your credit score,

534
00:22:04,800 --> 00:22:07,160
Speaker 1: and so it would cause even more pain to close

535
00:22:07,200 --> 00:22:09,119
Speaker 1: a card that was open, let's say for ten or

536
00:22:09,160 --> 00:22:11,760
Speaker 1: fifteen years, then to just close one that, let's say

537
00:22:11,800 --> 00:22:13,879
Speaker 1: that you open during the pandemic something like that. So

538
00:22:14,040 --> 00:22:16,960
Speaker 1: prioritize keeping those older lines of credit around, and then

539
00:22:17,400 --> 00:22:20,080
Speaker 1: the process for going about closing these things do them gradually,

540
00:22:20,119 --> 00:22:22,000
Speaker 1: like do them over time, because if you close a

541
00:22:22,040 --> 00:22:24,439
Speaker 1: bunch let's say, in a single day, well that's going

542
00:22:24,480 --> 00:22:28,359
Speaker 1: to lead to a dramatic reduction in your overall credit

543
00:22:28,480 --> 00:22:32,080
Speaker 1: utilization ratio or rate, which is another important component of

544
00:22:32,080 --> 00:22:35,119
Speaker 1: your credit score. That map the credit utilization rate. Essentially,

545
00:22:35,160 --> 00:22:36,800
Speaker 1: you want to be able to have a lot of

546
00:22:36,800 --> 00:22:38,840
Speaker 1: credit that's offered to you, but you don't want to

547
00:22:39,200 --> 00:22:41,680
Speaker 1: use anywhere close to the amount of credit that's offered

548
00:22:41,680 --> 00:22:44,280
Speaker 1: to you. And so by reducing that upper limit, right

549
00:22:44,320 --> 00:22:47,480
Speaker 1: like the upper number, it effectively increases the ratio of

550
00:22:47,520 --> 00:22:49,880
Speaker 1: the amount of charges that you actually do have on

551
00:22:49,920 --> 00:22:50,480
Speaker 1: those credit card.

552
00:22:50,480 --> 00:22:53,399
Speaker 2: It's kind of convoluted, and it feels like something is

553
00:22:53,760 --> 00:22:56,600
Speaker 2: being put in the way of our feet to trip

554
00:22:56,680 --> 00:22:59,240
Speaker 2: us up. But that's exactly how it works and makes

555
00:22:59,240 --> 00:22:59,560
Speaker 2: sense though.

556
00:22:59,640 --> 00:23:01,040
Speaker 1: Like if you like, I like to think about it

557
00:23:01,080 --> 00:23:03,200
Speaker 1: like a stereo, Like if you know that you always

558
00:23:03,200 --> 00:23:06,520
Speaker 1: want to blash your stereo at like seven, Well you

559
00:23:06,520 --> 00:23:08,760
Speaker 1: don't want your syria to only go up to eight, right,

560
00:23:08,760 --> 00:23:10,320
Speaker 1: but like you would have stereo that goes up to

561
00:23:10,359 --> 00:23:13,240
Speaker 1: like eleven, like spinal tap. Yeah, well that's the truth.

562
00:23:13,400 --> 00:23:17,040
Speaker 2: So the high your credit limit and the less you

563
00:23:17,119 --> 00:23:18,760
Speaker 2: use of that credit limit, the better off you're going

564
00:23:18,840 --> 00:23:21,040
Speaker 2: to be when it comes to your credit score. So yes,

565
00:23:21,160 --> 00:23:23,240
Speaker 2: keep that in mind. And also I think it's important

566
00:23:23,280 --> 00:23:26,600
Speaker 2: to note, Matt, so when it comes to closing credit cards,

567
00:23:27,000 --> 00:23:29,359
Speaker 2: don't forget to use any rewards that you've got left

568
00:23:29,400 --> 00:23:32,200
Speaker 2: before you close those accounts. It depends on the specific card,

569
00:23:32,480 --> 00:23:35,239
Speaker 2: but basically you're going to lose those rewards if you

570
00:23:35,280 --> 00:23:39,560
Speaker 2: close the card. So American Express points are typically forfeited immediately,

571
00:23:39,600 --> 00:23:42,560
Speaker 2: same with Capital One unless you transfer them ahead of time,

572
00:23:42,640 --> 00:23:45,840
Speaker 2: so be sure to do that. Other issuers like Chase

573
00:23:45,840 --> 00:23:48,639
Speaker 2: offer a thirty day grace period. City I think actually

574
00:23:48,720 --> 00:23:51,120
Speaker 2: offers a ninety day grace period to use any points

575
00:23:51,160 --> 00:23:54,240
Speaker 2: to you have accrued, So give it. How many cards

576
00:23:54,280 --> 00:23:56,680
Speaker 2: you've got, My guess is you've got some sweet point

577
00:23:56,720 --> 00:23:59,880
Speaker 2: balance is racked up. Don't close any of those accounts

578
00:24:00,080 --> 00:24:03,240
Speaker 2: without having a plan to use or to transfer those points,

579
00:24:03,280 --> 00:24:05,600
Speaker 2: because those can be valuable Matt. That can mean a

580
00:24:05,600 --> 00:24:08,360
Speaker 2: couple nights to free hotel stay, maybe some free airfare.

581
00:24:08,440 --> 00:24:12,040
Speaker 1: Although when it comes to different airlines and the different carriers,

582
00:24:12,119 --> 00:24:15,000
Speaker 1: the points typically don't expire. So some of the better

583
00:24:15,119 --> 00:24:19,280
Speaker 1: I know, the better airlines, so Delta are certainly Southwest obviously,

584
00:24:19,640 --> 00:24:23,560
Speaker 1: but then United their points never expire. American airlines they've

585
00:24:23,600 --> 00:24:27,880
Speaker 1: got some stipulations, and then like the lesser carriers like Frontier,

586
00:24:28,160 --> 00:24:30,399
Speaker 1: of course they've got even more stipulations. I think that

587
00:24:30,440 --> 00:24:32,480
Speaker 1: you've only got like six months or six or twelve

588
00:24:32,520 --> 00:24:34,399
Speaker 1: months before you have to. There needs to be some

589
00:24:34,440 --> 00:24:36,600
Speaker 1: activity there, otherwise you're gonna lose those.

590
00:24:36,480 --> 00:24:38,720
Speaker 2: I think with Frontier, if you submit to a physical beating,

591
00:24:38,720 --> 00:24:41,320
Speaker 2: they still allow you to use those points. That just

592
00:24:41,320 --> 00:24:43,399
Speaker 2: sounds like a policy they would have. Don't quote me

593
00:24:43,400 --> 00:24:43,800
Speaker 2: on that, but.

594
00:24:43,840 --> 00:24:45,280
Speaker 1: Yeah, as long as you're with some of the better

595
00:24:45,320 --> 00:24:47,920
Speaker 1: airlines here in the US, you should be totally fine

596
00:24:48,000 --> 00:24:49,439
Speaker 1: when it comes to airline miles.

597
00:24:49,520 --> 00:24:51,560
Speaker 2: So basically, I'm just saying, log into that account, be

598
00:24:51,640 --> 00:24:54,760
Speaker 2: cognizant of what rewards you have. If and even if

599
00:24:54,760 --> 00:24:58,360
Speaker 2: you're going to get an inferior transfer, I'm turning those

600
00:24:58,359 --> 00:25:01,560
Speaker 2: rewards points into cash. Do that if you're intent on

601
00:25:01,600 --> 00:25:04,440
Speaker 2: closing that credit card anyway, because better to get something.

602
00:25:04,280 --> 00:25:06,639
Speaker 1: Rather than nothing. And again, there's honestly no harm in

603
00:25:06,680 --> 00:25:09,679
Speaker 1: just keeping those credit cards around that don't come with

604
00:25:09,760 --> 00:25:11,439
Speaker 1: an annual fee. I think that's just the best way

605
00:25:11,480 --> 00:25:14,040
Speaker 1: overall to keep your credit score elevated, especially y'all are

606
00:25:14,080 --> 00:25:16,440
Speaker 1: starting your life out together. Maybe that means a new

607
00:25:16,640 --> 00:25:18,680
Speaker 1: you know, home purchase here in the near future, or

608
00:25:18,680 --> 00:25:21,080
Speaker 1: even just renting map even just renting right That credit

609
00:25:21,280 --> 00:25:24,199
Speaker 1: matters so many different implications, but you can do minimal

610
00:25:24,280 --> 00:25:26,760
Speaker 1: damage to their credit score, and also simplify your credit

611
00:25:26,840 --> 00:25:28,840
Speaker 1: card holdings if you close the right cards and just

612
00:25:28,840 --> 00:25:33,080
Speaker 1: do so slowly over time. And actually he mentioned just

613
00:25:33,160 --> 00:25:35,600
Speaker 1: kind of letting them sort of close naturally over time,

614
00:25:35,680 --> 00:25:37,800
Speaker 1: like if they just slowly like die off. I kind

615
00:25:37,800 --> 00:25:40,360
Speaker 1: of like that strategy as well. But just make sure

616
00:25:40,359 --> 00:25:42,359
Speaker 1: to keep the cards that you've had the longest around,

617
00:25:42,440 --> 00:25:45,439
Speaker 1: keep those active, and keep your credit utilization below that

618
00:25:45,480 --> 00:25:49,840
Speaker 1: all important thirty percent mark. And also, Carly Colin, congrats

619
00:25:49,840 --> 00:25:51,320
Speaker 1: to you both on getting hitched.

620
00:25:51,400 --> 00:25:53,359
Speaker 2: Yeah, wish we could be there. Wish mac coun perform

621
00:25:53,440 --> 00:25:55,560
Speaker 2: the ceremony. You've never done one of those, Matt, but

622
00:25:55,600 --> 00:25:59,119
Speaker 2: I would love to see it someday, someday, someday. All right,

623
00:25:59,320 --> 00:26:01,800
Speaker 2: let's get to the next question, Matt. This one is

624
00:26:01,960 --> 00:26:05,560
Speaker 2: about compounding, and this listener is wondering if there's a

625
00:26:05,560 --> 00:26:07,359
Speaker 2: way he can screw up that process.

626
00:26:07,640 --> 00:26:10,320
Speaker 5: Hey, guys, this is Stephen Indy got a question for

627
00:26:10,440 --> 00:26:13,679
Speaker 5: you regarding compound interest and how it might relate to

628
00:26:14,080 --> 00:26:17,800
Speaker 5: four one k's. The question was actually triggered by your

629
00:26:17,840 --> 00:26:21,480
Speaker 5: discussion with Ed Slott. A little background. My wife and

630
00:26:21,520 --> 00:26:24,399
Speaker 5: I have over eight hundred thousand in individual traditional for

631
00:26:24,560 --> 00:26:28,159
Speaker 5: one k's, and at this point it seems like the

632
00:26:28,280 --> 00:26:31,600
Speaker 5: values are being largely driven by the fluctuations of the

633
00:26:31,640 --> 00:26:36,359
Speaker 5: market opposed to our individual contributions, which has been considering

634
00:26:36,520 --> 00:26:40,960
Speaker 5: halting contributions to the traditional four one k's and actually

635
00:26:41,040 --> 00:26:46,320
Speaker 5: transitioning future contributions to ROTH four one k's instead, starting

636
00:26:46,320 --> 00:26:49,600
Speaker 5: in twenty twenty five. Just to be clear, I don't

637
00:26:49,600 --> 00:26:51,800
Speaker 5: want to rule any money over. It would be only

638
00:26:51,880 --> 00:26:55,000
Speaker 5: new contributions that would be going into the ross, and

639
00:26:55,080 --> 00:26:57,680
Speaker 5: all the balance that is in the traditionals would remain.

640
00:26:58,520 --> 00:27:01,920
Speaker 5: My question is would fun only all future contributions into

641
00:27:02,000 --> 00:27:06,000
Speaker 5: the ROTH four one case lessen the possible impact compounding

642
00:27:06,000 --> 00:27:09,640
Speaker 5: interest will have on our combined accounts. I imagine most

643
00:27:09,680 --> 00:27:11,960
Speaker 5: of us have seen the graphs depicting how the effects

644
00:27:11,960 --> 00:27:14,840
Speaker 5: of compounding rocket up and to the right as our

645
00:27:14,880 --> 00:27:18,960
Speaker 5: balances get exceedingly larger. So my concern is that since

646
00:27:19,000 --> 00:27:22,159
Speaker 5: our ross would be starting at zero, we would be

647
00:27:22,200 --> 00:27:25,800
Speaker 5: limiting the benefits the compounding could have provided have we

648
00:27:25,880 --> 00:27:29,119
Speaker 5: continued to contribute fully to our traditional four to one case.

649
00:27:29,880 --> 00:27:33,200
Speaker 5: To be clear, I'm not asking if you think switching

650
00:27:33,440 --> 00:27:37,199
Speaker 5: to a ROTH from the traditional is preferable. I'm simply

651
00:27:37,240 --> 00:27:40,320
Speaker 5: curious if this decision would lessen our ability to benefit

652
00:27:40,359 --> 00:27:44,200
Speaker 5: from compound interest. Thanks fellas, keep up the great work

653
00:27:44,320 --> 00:27:47,119
Speaker 5: and I love your show, Steven, Indy bye.

654
00:27:47,440 --> 00:27:49,119
Speaker 1: So did he say that they have him and his

655
00:27:49,160 --> 00:27:52,200
Speaker 1: wife have over eight hundred thousand in which I will

656
00:27:52,200 --> 00:27:54,920
Speaker 1: say he said to individual four to one k's, which

657
00:27:55,359 --> 00:27:57,159
Speaker 1: confused me for a second because I thought he's going

658
00:27:57,200 --> 00:27:59,360
Speaker 1: to start talking about individual retirement accounts, but he's talking

659
00:27:59,359 --> 00:28:01,440
Speaker 1: about four one tis the fact that I guess him

660
00:28:01,440 --> 00:28:03,960
Speaker 1: and his wife both have for one k's that have

661
00:28:04,040 --> 00:28:06,399
Speaker 1: a significant amount of money there in there, which is

662
00:28:06,480 --> 00:28:07,320
Speaker 1: really impressive.

663
00:28:07,400 --> 00:28:09,520
Speaker 2: Yeah, and Steve didn't mention how old they are, and

664
00:28:09,560 --> 00:28:11,280
Speaker 2: I couldn't tell from his voice. I couldn't tell if

665
00:28:11,280 --> 00:28:13,320
Speaker 2: he's like twenty six or if he's like forty six.

666
00:28:13,480 --> 00:28:16,440
Speaker 2: I'm guessing he's not twenty six because it'd be practically

667
00:28:16,480 --> 00:28:18,240
Speaker 2: impossible to amass that much money in a pour on

668
00:28:18,359 --> 00:28:19,240
Speaker 2: k over that period of time.

669
00:28:19,280 --> 00:28:21,320
Speaker 1: Steve is ageless, that is what you're saying, Yeah, an

670
00:28:21,320 --> 00:28:21,760
Speaker 1: age of four.

671
00:28:21,840 --> 00:28:23,480
Speaker 2: Well, we just talked Matt about four to one k

672
00:28:23,560 --> 00:28:25,760
Speaker 2: millionaires and how it takes about eighteen years if you're

673
00:28:25,760 --> 00:28:27,439
Speaker 2: maxing out those accounts to become a four to one

674
00:28:27,480 --> 00:28:30,800
Speaker 2: K millionaire. So my guess is, you know, Steve started early,

675
00:28:31,000 --> 00:28:33,920
Speaker 2: he went hard, and now he's reaping the rewards because

676
00:28:33,920 --> 00:28:34,879
Speaker 2: he's almost at that point.

677
00:28:35,040 --> 00:28:37,000
Speaker 1: Yeah, and I will say, Steve, I love that you're

678
00:28:37,040 --> 00:28:40,440
Speaker 1: planning to prioritize those Roth contributions moving forward, because Ed

679
00:28:40,480 --> 00:28:42,800
Speaker 1: Slott he's all about it and sorrow. We will make

680
00:28:42,800 --> 00:28:44,680
Speaker 1: sure to link to that episode in the show notes.

681
00:28:44,960 --> 00:28:48,000
Speaker 1: But that'll offer you some of that tax diversification there

682
00:28:48,000 --> 00:28:49,720
Speaker 1: in the future, and you're going to have less of

683
00:28:49,760 --> 00:28:52,720
Speaker 1: a essentially that ticking time bomb on your hands. But

684
00:28:53,120 --> 00:28:55,160
Speaker 1: that's not your question. What you're talking about is when

685
00:28:55,160 --> 00:28:57,880
Speaker 1: it comes to compounding, you want to know if by

686
00:28:58,040 --> 00:29:00,320
Speaker 1: moving starting a new account starting at Z or if

687
00:29:00,320 --> 00:29:02,360
Speaker 1: you're going to be missing out not at all. And

688
00:29:02,400 --> 00:29:05,080
Speaker 1: so let's maybe illustrate this with an example here. Let's

689
00:29:05,080 --> 00:29:08,120
Speaker 1: say you've got an account with eight hundred thousand dollars

690
00:29:08,120 --> 00:29:10,719
Speaker 1: in it. Let's say you also have another account with

691
00:29:10,920 --> 00:29:12,840
Speaker 1: two hundred thousand dollars in it. Sounds like a total

692
00:29:12,880 --> 00:29:14,720
Speaker 1: of a million right there. There you go. And then

693
00:29:14,840 --> 00:29:18,320
Speaker 1: let's say both of those accounts doubled after seven years,

694
00:29:18,480 --> 00:29:21,600
Speaker 1: which is actually that's roughly which you can't expect. Typically,

695
00:29:21,840 --> 00:29:23,720
Speaker 1: if that was the case, you would have one point

696
00:29:23,720 --> 00:29:27,120
Speaker 1: six million on hand and four hundred thousand respectively for

697
00:29:27,160 --> 00:29:30,960
Speaker 1: a total of what two million dollars. Well, if you

698
00:29:31,080 --> 00:29:33,080
Speaker 1: had just one account with one million dollars in it

699
00:29:33,120 --> 00:29:35,280
Speaker 1: basically got the same starting point, and then that doubled,

700
00:29:35,440 --> 00:29:38,320
Speaker 1: well you would also have two million dollars. So what

701
00:29:38,360 --> 00:29:40,520
Speaker 1: we're highlighting here is that when you have multiple you

702
00:29:40,520 --> 00:29:43,920
Speaker 1: could have one hundred accounts with ten thousand dollars in it.

703
00:29:43,960 --> 00:29:46,280
Speaker 1: Do I do my math right? Yeah? And it would

704
00:29:46,320 --> 00:29:48,200
Speaker 1: The compounding would still be the same. It doesn't matter

705
00:29:48,240 --> 00:29:50,040
Speaker 1: how many times you slice and dice it. It's same

706
00:29:50,040 --> 00:29:52,200
Speaker 1: with think a pizza. You can cut it into eight slicus. Yeah,

707
00:29:52,240 --> 00:29:54,160
Speaker 1: you can cut it into sixteen, you can even cut

708
00:29:54,200 --> 00:29:56,160
Speaker 1: it into thirty two, but it's still the same amount

709
00:29:56,160 --> 00:29:59,200
Speaker 1: of pizza overall. And although the pizza's not growing, I

710
00:29:59,200 --> 00:30:02,560
Speaker 1: guess in this example, but your retirement accounts are. So

711
00:30:02,600 --> 00:30:04,320
Speaker 1: Basically what you're alluding to, Matt here is that the

712
00:30:04,360 --> 00:30:05,200
Speaker 1: power of compounding.

713
00:30:05,240 --> 00:30:08,320
Speaker 2: It's not about having everything in one account exactly, It's

714
00:30:08,320 --> 00:30:12,360
Speaker 2: about having more dollars at use inside of those investments

715
00:30:12,520 --> 00:30:15,800
Speaker 2: to grow for your future. And yes, I think having

716
00:30:15,840 --> 00:30:18,240
Speaker 2: fewer accounts can be helpful. Well, that can be helpful

717
00:30:18,240 --> 00:30:21,200
Speaker 2: from a simplification process, although it's also not necessary.

718
00:30:21,560 --> 00:30:23,200
Speaker 1: It's all about it all.

719
00:30:23,040 --> 00:30:28,080
Speaker 2: Comes down to having more total dollars growing on your behalf,

720
00:30:28,600 --> 00:30:30,720
Speaker 2: and then every time those dollars grow, you've got more

721
00:30:30,760 --> 00:30:34,160
Speaker 2: dollars at work for you. And so essentially, no matter

722
00:30:34,200 --> 00:30:36,800
Speaker 2: how those dollars are sliced up, the math is the same,

723
00:30:37,240 --> 00:30:40,200
Speaker 2: no matter how investments get divided amongst different accounts. So

724
00:30:40,200 --> 00:30:42,680
Speaker 2: we would say, yeah, pivot to making roth contributions. That

725
00:30:42,840 --> 00:30:45,680
Speaker 2: sound from a tax perspective, it's also sound from a

726
00:30:45,680 --> 00:30:47,800
Speaker 2: growth perspective, a compounding returns perspective.

727
00:30:47,920 --> 00:30:50,080
Speaker 1: So I think maybe what's at the heart of the

728
00:30:50,120 --> 00:30:52,600
Speaker 1: issue here is he even mentioned this in his question

729
00:30:52,720 --> 00:30:54,840
Speaker 1: right where he said that it seems like the majority

730
00:30:54,880 --> 00:30:57,280
Speaker 1: of his growth is coming from the fluctuations in the market,

731
00:30:57,280 --> 00:31:00,120
Speaker 1: because what he's highlighting here is the fact that well,

732
00:31:00,720 --> 00:31:03,080
Speaker 1: what I'm adding to my accounts that really it almost

733
00:31:03,080 --> 00:31:05,200
Speaker 1: seems like it has no bearing on the growth or

734
00:31:05,320 --> 00:31:09,000
Speaker 1: my total dollar amount that's in there. Yes, one percent,

735
00:31:09,040 --> 00:31:11,360
Speaker 1: and so that's where you want to be exactly. I

736
00:31:11,440 --> 00:31:14,240
Speaker 1: understand what you're getting at, which is that, well, by

737
00:31:14,240 --> 00:31:16,760
Speaker 1: starting with a new account, it seems like there's going

738
00:31:16,800 --> 00:31:19,280
Speaker 1: to be less compounding going on. Well, yes, that's true

739
00:31:19,320 --> 00:31:22,000
Speaker 1: in that specific account, but we're not talking about that

740
00:31:22,040 --> 00:31:25,040
Speaker 1: specific account. We're talking about the total number of dollars

741
00:31:25,040 --> 00:31:27,400
Speaker 1: that you have overall, your your investments overall, and so

742
00:31:27,760 --> 00:31:29,680
Speaker 1: just keep that in mind because it's all and here's

743
00:31:29,720 --> 00:31:31,920
Speaker 1: something else this. I feel like there's a chance here

744
00:31:31,960 --> 00:31:35,239
Speaker 1: to play this little psychological trick on yourself, because there

745
00:31:35,320 --> 00:31:37,560
Speaker 1: might be a temptation to say, well, why should I

746
00:31:37,600 --> 00:31:39,719
Speaker 1: contribute to my four one K? Why should I continue

747
00:31:39,720 --> 00:31:42,600
Speaker 1: to invest in my IRA? It hardly does anything at

748
00:31:42,600 --> 00:31:45,120
Speaker 1: all to my overall investment amount, and so there could

749
00:31:45,160 --> 00:31:46,840
Speaker 1: be a temptation to kind of like let off the

750
00:31:46,880 --> 00:31:49,080
Speaker 1: gas a little bit. And that's fine if you got

751
00:31:49,120 --> 00:31:53,200
Speaker 1: other goals in life. But what if you instead you said, well,

752
00:31:53,200 --> 00:31:54,680
Speaker 1: I want to continue to invest, and I want to

753
00:31:54,720 --> 00:31:56,560
Speaker 1: trick myself into thinking I'm having more of an impact

754
00:31:56,600 --> 00:31:59,360
Speaker 1: on my overall net worth than I'm actually having. Go

755
00:31:59,360 --> 00:32:01,760
Speaker 1: ahead and open separate account, because you're going to see

756
00:32:01,920 --> 00:32:04,960
Speaker 1: it go from zero dollars to seven thousand dollars and

757
00:32:05,000 --> 00:32:07,280
Speaker 1: the next year you're gonna double that by taking it

758
00:32:07,280 --> 00:32:09,480
Speaker 1: from seven to fourteen by your contributions.

759
00:32:09,520 --> 00:32:13,280
Speaker 2: Kind of feels like you're starting from scratch, and I agree's.

760
00:32:12,560 --> 00:32:16,760
Speaker 1: Essentially like you're giving yourself more agency on autonomy over

761
00:32:16,840 --> 00:32:20,080
Speaker 1: your overall wealth, when in reality, the dollar amount isn't

762
00:32:20,080 --> 00:32:21,960
Speaker 1: the same had you continue to invest that within your

763
00:32:21,960 --> 00:32:24,800
Speaker 1: four one K, but the ability, right it is the same. Yeah, Yeah,

764
00:32:24,800 --> 00:32:26,960
Speaker 1: but it feels different, Yeah, because you see like the

765
00:32:27,000 --> 00:32:29,040
Speaker 1: needle move a little bit more in that specific account.

766
00:32:29,080 --> 00:32:32,160
Speaker 2: And we know howslan psychology is to our ability to

767
00:32:32,240 --> 00:32:33,200
Speaker 2: do the right thing right.

768
00:32:33,240 --> 00:32:36,120
Speaker 1: So theoretically this makes sense. I've never tried this, but Steve,

769
00:32:36,120 --> 00:32:37,520
Speaker 1: maybe give it a shot and let us know how

770
00:32:37,560 --> 00:32:39,920
Speaker 1: this impacts you from a psychological standpoint.

771
00:32:40,000 --> 00:32:42,760
Speaker 2: Yeah, I think in so many ways, pivoting to the

772
00:32:42,800 --> 00:32:45,280
Speaker 2: wroth over the traditional right now makes a whole lot

773
00:32:45,320 --> 00:32:46,880
Speaker 2: of makes a whole lot of sense for Steve, and

774
00:32:46,960 --> 00:32:50,400
Speaker 2: he should put his his fears aside, because no compounding

775
00:32:50,440 --> 00:32:52,480
Speaker 2: is going to work the same way, whether you continue

776
00:32:52,480 --> 00:32:54,240
Speaker 2: to invest in the same account you've been investing in,

777
00:32:54,560 --> 00:32:56,720
Speaker 2: or whether you're gonna move and pivot into a wroth.

778
00:32:57,000 --> 00:32:58,280
Speaker 2: And we think there are a lot of benefits of

779
00:32:58,320 --> 00:33:00,400
Speaker 2: doing a WROTH. I guess I want to throw this

780
00:33:00,440 --> 00:33:02,080
Speaker 2: out there, even tho I think this is highly unlikely.

781
00:33:02,480 --> 00:33:05,840
Speaker 2: The only difference you might potentially find, but I think

782
00:33:05,840 --> 00:33:08,240
Speaker 2: this is rare is you might get charged a higher

783
00:33:08,280 --> 00:33:10,200
Speaker 2: fee for having less money in a particular account. Like

784
00:33:10,280 --> 00:33:13,240
Speaker 2: sometimes there are price breaks that a financial advisor might offer,

785
00:33:13,280 --> 00:33:15,560
Speaker 2: for instance, if you have over a million dollars in

786
00:33:15,600 --> 00:33:18,840
Speaker 2: a single account, but typically that's even that's assets under management,

787
00:33:18,840 --> 00:33:22,000
Speaker 2: so it's not about just the single account. It's about

788
00:33:22,360 --> 00:33:25,200
Speaker 2: all the money that they're overseeing. But yeah, it's not

789
00:33:25,240 --> 00:33:26,840
Speaker 2: like you're going to get a better expense ratio with

790
00:33:26,920 --> 00:33:30,520
Speaker 2: Vanguard or Fidelity for having more money with them. Anybody

791
00:33:30,560 --> 00:33:33,080
Speaker 2: can get that point oh three percent fee. You don't

792
00:33:33,120 --> 00:33:36,640
Speaker 2: have to be special, high income earner, massive investor in

793
00:33:36,720 --> 00:33:38,000
Speaker 2: order to get the benefits.

794
00:33:38,000 --> 00:33:40,640
Speaker 1: You're democratized. We all get it. Yeah, So I don't know,

795
00:33:40,680 --> 00:33:43,320
Speaker 1: but I'm still thinking about the thing that I mentioned this, Steve.

796
00:33:43,360 --> 00:33:45,240
Speaker 1: I feel like there's a way for you to Like,

797
00:33:45,280 --> 00:33:46,640
Speaker 1: I just thought of another way to think about it,

798
00:33:46,640 --> 00:33:48,760
Speaker 1: which is, like those dollars that you're contributing, they kind

799
00:33:48,760 --> 00:33:50,600
Speaker 1: of feel like a big fish in a little pond, right,

800
00:33:51,240 --> 00:33:53,239
Speaker 1: and when you talk to people about, hey, what does

801
00:33:53,240 --> 00:33:54,920
Speaker 1: it feel like to be wealthier or to be rich?

802
00:33:54,960 --> 00:33:57,240
Speaker 1: And a lot of times it's relative. It's like it's

803
00:33:57,320 --> 00:34:00,520
Speaker 1: always in comparison to those around you. So I don't

804
00:34:00,560 --> 00:34:03,480
Speaker 1: know your positioning starting over and having starting from zero

805
00:34:03,600 --> 00:34:06,080
Speaker 1: in that roth ira as a negative, I could potentially

806
00:34:06,120 --> 00:34:07,600
Speaker 1: see this as a positive.

807
00:34:07,640 --> 00:34:10,560
Speaker 2: Think you feel maybe kind of like Rudy back in

808
00:34:10,600 --> 00:34:13,640
Speaker 2: the movie Rudy, like an underdog. You're the scrappy underdog

809
00:34:13,680 --> 00:34:15,879
Speaker 2: who finally makes it in as a defensive end.

810
00:34:16,440 --> 00:34:16,880
Speaker 1: Yeah.

811
00:34:16,960 --> 00:34:19,200
Speaker 2: Like, I think the more and more you've been able

812
00:34:19,200 --> 00:34:22,040
Speaker 2: to save, the more you see that your contributions make

813
00:34:22,120 --> 00:34:24,360
Speaker 2: less and less of an impact on overall returns. Starting

814
00:34:24,400 --> 00:34:26,440
Speaker 2: a new account could make you feel like that scrappy

815
00:34:26,480 --> 00:34:28,359
Speaker 2: underdog ready to take on the world again.

816
00:34:28,480 --> 00:34:30,239
Speaker 1: So good point. Yeah, all right, Joel, we got more

817
00:34:30,280 --> 00:34:32,839
Speaker 1: to get to. We're gonna discuss pay per mile, car

818
00:34:32,840 --> 00:34:35,040
Speaker 1: insurance and more. We'll get to that right after this.

819
00:34:42,840 --> 00:34:44,920
Speaker 2: All right, Matt, we're back for the break. It's now

820
00:34:45,080 --> 00:34:47,480
Speaker 2: time for the Facebook question of the week. This one

821
00:34:47,480 --> 00:34:50,920
Speaker 2: comes from Jeremy on Facebook and he said, what would

822
00:34:50,920 --> 00:34:54,000
Speaker 2: an unrealized capital gains tax mean for my four oh

823
00:34:54,040 --> 00:34:54,880
Speaker 2: one k, let's.

824
00:34:54,680 --> 00:34:57,919
Speaker 1: Get into it. Time to talk politics, Joel. Let's let's

825
00:34:57,920 --> 00:35:01,040
Speaker 1: try to avoid the worst parts of politics. We are,

826
00:35:01,080 --> 00:35:05,080
Speaker 1: of course, in a silly season politically, Matt. I don't

827
00:35:05,120 --> 00:35:08,280
Speaker 1: want to harp on politicians very much here, but both

828
00:35:08,320 --> 00:35:12,520
Speaker 1: sides of the political spectrum lack substantial policy proposals right now.

829
00:35:12,719 --> 00:35:15,080
Speaker 1: There's just not much meat on the bone from either candidate.

830
00:35:15,239 --> 00:35:17,480
Speaker 1: And this is a fairly new proposal that we've heard

831
00:35:17,480 --> 00:35:22,520
Speaker 1: from a minority of politicians from a certain sect, basically

832
00:35:22,560 --> 00:35:25,359
Speaker 1: to say, listen, because we're not getting enough tax out

833
00:35:25,400 --> 00:35:28,960
Speaker 1: of certain citizens, why don't we tax them for gains

834
00:35:29,320 --> 00:35:33,399
Speaker 1: even though they haven't sold shares or positions. I think

835
00:35:33,400 --> 00:35:35,719
Speaker 1: the most important thing to note here, and there's a

836
00:35:35,760 --> 00:35:38,040
Speaker 1: couple of things that are important for us to talk about,

837
00:35:38,239 --> 00:35:40,040
Speaker 1: is to take this with a grain of salt. First off,

838
00:35:40,400 --> 00:35:43,600
Speaker 1: because it's not that this proposal couldn't happen. It's just

839
00:35:43,600 --> 00:35:48,160
Speaker 1: that it's highly unlikely in the dysfunctional political environment that

840
00:35:48,200 --> 00:35:51,120
Speaker 1: we inhabit. So while people might say, hey, this is

841
00:35:51,239 --> 00:35:54,080
Speaker 1: something we're in favor of, and they might even mean it,

842
00:35:54,080 --> 00:35:55,800
Speaker 1: it doesn't mean that it's going to happen. Yeah, But

843
00:35:55,840 --> 00:35:59,800
Speaker 1: let's say an unrealized capital gains tax law where to pass,

844
00:36:00,000 --> 00:36:02,880
Speaker 1: which would be in Congress doing actually something productive. What

845
00:36:02,880 --> 00:36:05,960
Speaker 1: would happen to your four one K, Jeremy. Well, nothing,

846
00:36:06,280 --> 00:36:09,280
Speaker 1: And that's because this proposal is looking to target fewer

847
00:36:09,320 --> 00:36:12,120
Speaker 1: than ten thousand people across the US. And that's because

848
00:36:12,120 --> 00:36:13,840
Speaker 1: it would only be required for folks who have a

849
00:36:13,920 --> 00:36:17,440
Speaker 1: net worth of one hundred million dollars or more. So

850
00:36:17,480 --> 00:36:19,120
Speaker 1: there's a lot of folks talking about this. There are

851
00:36:19,120 --> 00:36:21,040
Speaker 1: a lot of individuals getting their painties all caught up

852
00:36:21,080 --> 00:36:23,520
Speaker 1: in a wad, and there's I don't know, maybe there's

853
00:36:23,520 --> 00:36:25,680
Speaker 1: certainly there's is there a chance that Jeremy falls into

854
00:36:25,680 --> 00:36:29,000
Speaker 1: this category dual? Maybe in fact he's one of these folks,

855
00:36:29,000 --> 00:36:30,879
Speaker 1: But I would say maybe if that were the case,

856
00:36:30,920 --> 00:36:33,160
Speaker 1: he probably isn't spending his time over right.

857
00:36:33,239 --> 00:36:35,400
Speaker 2: Listen, how the money yes faced the crew? Well, you

858
00:36:35,400 --> 00:36:36,600
Speaker 2: know what it makes me think of You've been called

859
00:36:36,640 --> 00:36:39,319
Speaker 2: the John D. Rockefeller of podcasting, and even you aren't

860
00:36:39,320 --> 00:36:40,680
Speaker 2: going to get caught up in this law if it

861
00:36:40,680 --> 00:36:41,520
Speaker 2: would have passed.

862
00:36:41,280 --> 00:36:42,960
Speaker 1: Right, So I'm not concerned about it at all.

863
00:36:44,200 --> 00:36:47,320
Speaker 2: So, yeah, Jeremy, maybe you're like loaded have massive dollars

864
00:36:47,920 --> 00:36:49,920
Speaker 2: on the line, but it's unlikely. If you're asking us

865
00:36:49,960 --> 00:36:53,560
Speaker 2: this question, you probably have high price financial advisors and

866
00:36:53,600 --> 00:36:56,359
Speaker 2: hopefully they're not stealing from you behind your back.

867
00:36:56,680 --> 00:36:58,719
Speaker 1: But for everybody else out there who's got let's say

868
00:36:58,760 --> 00:37:01,440
Speaker 1: five ten, fifteen thousand dollars in a brokerage account, well,

869
00:37:01,440 --> 00:37:02,719
Speaker 1: this isn't going to be something that you're going to

870
00:37:02,800 --> 00:37:03,600
Speaker 1: have to actually worry about.

871
00:37:03,600 --> 00:37:05,200
Speaker 2: Well, yeah, well you said five ten, fifteen, even if

872
00:37:05,200 --> 00:37:07,239
Speaker 2: you have five ten to fifteen million, because they're saying

873
00:37:07,239 --> 00:37:08,680
Speaker 2: those people aren't affected either.

874
00:37:08,800 --> 00:37:11,640
Speaker 1: So even if you said those folks are less likely

875
00:37:11,680 --> 00:37:13,279
Speaker 1: to be listened to the podcast, so you got fifteen million.

876
00:37:13,320 --> 00:37:15,000
Speaker 1: But even if you get to that point, you're like, listen, now,

877
00:37:15,040 --> 00:37:16,359
Speaker 1: I got to the five million point. We got some

878
00:37:16,400 --> 00:37:18,240
Speaker 1: listeners out there who might already be there, who probably

879
00:37:18,280 --> 00:37:20,279
Speaker 1: already are there, And we've got other listeners who are

880
00:37:20,280 --> 00:37:22,920
Speaker 1: well on their way to being a multimillionaire, which is awesome.

881
00:37:23,040 --> 00:37:28,080
Speaker 1: That's something worth celebrating. It typically happens over many decades.

882
00:37:28,480 --> 00:37:30,920
Speaker 1: But in you make a good point here that this

883
00:37:31,000 --> 00:37:34,040
Speaker 1: is all about brokerage accounts, not tax advantaged accounts. So

884
00:37:34,200 --> 00:37:35,160
Speaker 1: even if you.

885
00:37:35,120 --> 00:37:36,600
Speaker 2: Were the kind of person who had millions of dollars

886
00:37:36,640 --> 00:37:38,960
Speaker 2: in your four one k. It would still remain untouched

887
00:37:39,320 --> 00:37:42,120
Speaker 2: even if some sort of unrealized capital gains tax were

888
00:37:42,160 --> 00:37:45,160
Speaker 2: to be implemented. And to be honest, this is this

889
00:37:45,200 --> 00:37:48,960
Speaker 2: is bad policy. We'd rather see the highest capital gains

890
00:37:49,000 --> 00:37:52,239
Speaker 2: tax raised instead, which is another proposal that people on

891
00:37:52,320 --> 00:37:55,080
Speaker 2: both sides of the aisle have made to say, listen,

892
00:37:55,360 --> 00:37:58,520
Speaker 2: let's make the highest capital gains rate a little more

893
00:37:58,560 --> 00:38:03,080
Speaker 2: akin to income tax rates. That I think makes more sense.

894
00:38:03,120 --> 00:38:06,160
Speaker 2: But taxing unrealized gains opens up a can of worms.

895
00:38:06,160 --> 00:38:08,040
Speaker 2: And then you got to ask the question, well, how's

896
00:38:08,080 --> 00:38:10,319
Speaker 2: the government going to handle capital losses in a year

897
00:38:10,360 --> 00:38:13,560
Speaker 2: when the stock market goes down or an investment declines

898
00:38:13,560 --> 00:38:16,000
Speaker 2: in value. Are they going to reimburse investors in those years?

899
00:38:16,280 --> 00:38:20,399
Speaker 2: Chances are no, So this is bad policy, but it's

900
00:38:20,440 --> 00:38:23,680
Speaker 2: also unlikely to actually take roots. And even if it

901
00:38:23,719 --> 00:38:26,239
Speaker 2: does well, ninety nine point nine percent of pound of

902
00:38:26,280 --> 00:38:29,320
Speaker 2: money listeners are going to be completely unaffected. So for you, Jeremy,

903
00:38:29,520 --> 00:38:32,560
Speaker 2: I would say these proposals are just more noise in

904
00:38:32,680 --> 00:38:34,760
Speaker 2: the new stratosphere that you can safely ignore.

905
00:38:34,880 --> 00:38:36,759
Speaker 1: Nice, all right, we've actually got some time to hear

906
00:38:36,800 --> 00:38:40,279
Speaker 1: from another listener. Here's an email from polkit and you wrote,

907
00:38:40,520 --> 00:38:43,279
Speaker 1: I recently moved very close to work, and I'm able

908
00:38:43,320 --> 00:38:45,120
Speaker 1: to take a bus for the first time in seven

909
00:38:45,200 --> 00:38:49,000
Speaker 1: years for a fifteen minute commute to work. I'm talking,

910
00:38:49,120 --> 00:38:52,840
Speaker 1: I'm awesome. All these years, my minimum one way commute

911
00:38:52,840 --> 00:38:55,680
Speaker 1: has been an hour, so I'm really feeling relaxed about

912
00:38:55,719 --> 00:38:57,560
Speaker 1: not having to drive that much for work anymore. I

913
00:38:57,600 --> 00:39:00,760
Speaker 1: totally get it. I've been looking into pay per mile

914
00:39:00,880 --> 00:39:03,560
Speaker 1: and usage based insurance, but I need your advice on

915
00:39:03,680 --> 00:39:05,640
Speaker 1: which one to go for and some good companies that

916
00:39:05,680 --> 00:39:08,799
Speaker 1: provide such policies. Here in LA. My annual mileage used

917
00:39:08,800 --> 00:39:10,680
Speaker 1: to be around twelve thousand miles, but now it'll be

918
00:39:10,719 --> 00:39:13,040
Speaker 1: around three to four thousand miles. I did check in

919
00:39:13,080 --> 00:39:15,600
Speaker 1: with my current insurance provider was informed that twelve thousand

920
00:39:15,640 --> 00:39:18,839
Speaker 1: miles is the lowest annual mileage they can provide coverage for.

921
00:39:19,280 --> 00:39:22,040
Speaker 1: I got some quotes from Progressive All State State Farm.

922
00:39:22,320 --> 00:39:25,200
Speaker 1: Their premium is more than what I am currently paying.

923
00:39:25,560 --> 00:39:27,760
Speaker 1: There are some companies that show up when I search

924
00:39:28,080 --> 00:39:32,279
Speaker 1: Freeway insurance, metro Mile, Nationwide, Smart Miles, but I am

925
00:39:32,360 --> 00:39:35,200
Speaker 1: not sure how reliable these companies are. I would love

926
00:39:35,239 --> 00:39:37,520
Speaker 1: to hear your thoughts, Joel, what are your thoughts?

927
00:39:37,640 --> 00:39:40,080
Speaker 2: Yeah, I got a few thoughts. First off, can I

928
00:39:40,160 --> 00:39:43,040
Speaker 2: just say that bus transportation is underrated?

929
00:39:43,120 --> 00:39:43,640
Speaker 1: Underrated?

930
00:39:43,719 --> 00:39:46,320
Speaker 2: I would love to see more bus transportation in this country.

931
00:39:46,520 --> 00:39:49,680
Speaker 2: Makes me think of is it in Colombia? They have

932
00:39:49,920 --> 00:39:54,520
Speaker 2: a thriving bus system and you don't think about subway systems, Matt,

933
00:39:54,560 --> 00:39:56,520
Speaker 2: How hard they are, how expensive they are to create.

934
00:39:57,800 --> 00:39:59,719
Speaker 2: We've got the roads already, Let's just get more people

935
00:39:59,760 --> 00:40:02,560
Speaker 2: on b infrastructure is already there. Let's make it more

936
00:40:03,120 --> 00:40:03,800
Speaker 2: less expensive.

937
00:40:03,880 --> 00:40:05,680
Speaker 1: It's a part of why light rail always seems I

938
00:40:05,680 --> 00:40:07,200
Speaker 1: don't know, you don't want to scoff at it because

939
00:40:07,200 --> 00:40:09,480
Speaker 1: it's like, hey, somebody's got a dream and maybe people

940
00:40:09,520 --> 00:40:11,440
Speaker 1: will ride it. But it's like, hey, we've already got

941
00:40:11,480 --> 00:40:13,520
Speaker 1: the roads, Yes, how do we get more people to

942
00:40:13,840 --> 00:40:15,759
Speaker 1: travel via those roads more efficiently? In a bus?

943
00:40:15,800 --> 00:40:17,480
Speaker 2: Think about how many cars it takes off the road

944
00:40:17,520 --> 00:40:20,200
Speaker 2: by slamming a much more people into one ride. And

945
00:40:20,239 --> 00:40:22,640
Speaker 2: polkit is doing that, It's going to save him money

946
00:40:23,080 --> 00:40:26,120
Speaker 2: not just on his car insurance, but on his community

947
00:40:26,120 --> 00:40:28,719
Speaker 2: costs of raw and his cost of car ownership. And

948
00:40:29,080 --> 00:40:31,040
Speaker 2: it makes so much sense to me that people who

949
00:40:31,120 --> 00:40:34,560
Speaker 2: drive less should be able to pay less for insurance, right, Like,

950
00:40:34,960 --> 00:40:37,560
Speaker 2: why should the person who drives five thousand miles a

951
00:40:37,640 --> 00:40:40,200
Speaker 2: year pay the same as the person who drives fifteen

952
00:40:40,200 --> 00:40:42,839
Speaker 2: thousand miles a year. It just doesn't make any sense.

953
00:40:42,880 --> 00:40:44,960
Speaker 2: But we've kind of made it one size fits all insurance,

954
00:40:45,200 --> 00:40:47,160
Speaker 2: even though Oliver size is fairy.

955
00:40:47,200 --> 00:40:49,680
Speaker 1: You want me to be played Devil's advocate. Sure, Okay,

956
00:40:49,719 --> 00:40:51,840
Speaker 1: So I could actually see an argument for someone saying

957
00:40:51,880 --> 00:40:55,280
Speaker 1: that it should actually cost more for somebody who drives less,

958
00:40:55,760 --> 00:40:58,400
Speaker 1: because insurance is not a cue tael, It's not a consumable.

959
00:40:58,520 --> 00:41:00,560
Speaker 1: It's not like you're paying for gasoline, where like the

960
00:41:00,560 --> 00:41:02,280
Speaker 1: more you do it, the more you actually consume.

961
00:41:02,320 --> 00:41:03,680
Speaker 2: But the more you drive, the more at risk you

962
00:41:03,719 --> 00:41:04,800
Speaker 2: are typically for an accident.

963
00:41:04,920 --> 00:41:08,600
Speaker 1: Statistic Partially, I think, statistically speaking, yes, like people who

964
00:41:08,719 --> 00:41:10,680
Speaker 1: drive more are like there is a higher change of

965
00:41:10,680 --> 00:41:13,000
Speaker 1: them getting in an accident. But like, practically speaking, I

966
00:41:13,000 --> 00:41:15,799
Speaker 1: would dare say that someone who drives less is maybe

967
00:41:15,800 --> 00:41:17,879
Speaker 1: a little less experienced on the road versus someone who

968
00:41:17,960 --> 00:41:20,960
Speaker 1: drives significantly more. I'm just throwing that out there, Okay,

969
00:41:21,040 --> 00:41:23,640
Speaker 1: I can see an argument for I'm not going to

970
00:41:23,680 --> 00:41:25,879
Speaker 1: say that if you drive less, actually your premium should

971
00:41:25,880 --> 00:41:28,120
Speaker 1: be more expensive. But like, it kind of makes sense

972
00:41:28,160 --> 00:41:29,920
Speaker 1: to me why there aren't more folks jumping on this

973
00:41:30,000 --> 00:41:32,879
Speaker 1: because it doesn't decline more with how how many fewer miles? Yeah,

974
00:41:32,880 --> 00:41:34,960
Speaker 1: because there are other like practically speaking, I do think

975
00:41:34,960 --> 00:41:36,840
Speaker 1: that there are other factors at play.

976
00:41:36,960 --> 00:41:39,279
Speaker 2: Well, I will say this, there are companies who do

977
00:41:39,400 --> 00:41:41,560
Speaker 2: believe more like I do, and they think that you

978
00:41:41,600 --> 00:41:45,279
Speaker 2: should save more if you drive less miles, which is

979
00:41:45,280 --> 00:41:47,680
Speaker 2: good to see. Polkit mentioned some of those in his question,

980
00:41:48,200 --> 00:41:50,640
Speaker 2: but it's also a relatively new segment of the market

981
00:41:51,120 --> 00:41:53,759
Speaker 2: and so you might or might not save money going

982
00:41:53,760 --> 00:41:56,480
Speaker 2: with those With those guys, it's worth looking into and

983
00:41:56,480 --> 00:41:59,399
Speaker 2: getting quotes. But the amount of money you can save

984
00:41:59,560 --> 00:42:02,520
Speaker 2: is tip actually not as much as you would think,

985
00:42:03,239 --> 00:42:07,719
Speaker 2: and typically the sub four thousand mileage amount is key

986
00:42:07,800 --> 00:42:09,720
Speaker 2: to making pay by the mail. Makes sense, and polkit

987
00:42:09,760 --> 00:42:12,239
Speaker 2: fits into that if you're driving much more than that,

988
00:42:12,360 --> 00:42:14,400
Speaker 2: you're typically going to find the traditional car insurance. It

989
00:42:14,440 --> 00:42:17,160
Speaker 2: still makes the most sense. But I just word of

990
00:42:17,200 --> 00:42:19,439
Speaker 2: the wise, Polkit, Yeah, get some get some quotes from

991
00:42:19,440 --> 00:42:22,120
Speaker 2: these companies, but be careful and I wouldn't switch unless

992
00:42:22,160 --> 00:42:23,640
Speaker 2: it was going to mean substantial savings.

993
00:42:23,719 --> 00:42:25,840
Speaker 1: Yeah, Like, I wouldn't be concerned. Like some of the

994
00:42:25,840 --> 00:42:28,480
Speaker 1: companies that are offering these programs, they're legit companies. It's

995
00:42:28,480 --> 00:42:30,799
Speaker 1: not like these are new fly by night and around

996
00:42:30,800 --> 00:42:32,680
Speaker 1: for like a decade and they actually got I think

997
00:42:32,680 --> 00:42:34,719
Speaker 1: they were required recently by Lemonade, which is like a

998
00:42:34,719 --> 00:42:37,839
Speaker 1: newer startup. But like all stay nationwide, I'm not worried

999
00:42:37,880 --> 00:42:41,640
Speaker 1: about them not necessarily paying out where you defile acclaim. Well,

1000
00:42:41,680 --> 00:42:43,120
Speaker 1: I think one of the reasons that this is good

1001
00:42:43,160 --> 00:42:44,560
Speaker 1: to talk through though, is I think there might be

1002
00:42:44,560 --> 00:42:47,200
Speaker 1: more folks who might qualify for the pay per mile

1003
00:42:47,360 --> 00:42:50,359
Speaker 1: kind of insurance because of the just working from home. Yeah,

1004
00:42:50,400 --> 00:42:51,680
Speaker 1: I think there are a lot of folks who would

1005
00:42:51,960 --> 00:42:53,960
Speaker 1: used to think, well, I'm not I'm not one of

1006
00:42:54,000 --> 00:42:57,879
Speaker 1: those low mileage gals or fellas. But oh wait a minute.

1007
00:42:57,920 --> 00:42:59,480
Speaker 1: I used to drive into the office five out of

1008
00:42:59,480 --> 00:43:01,200
Speaker 1: five days of the week. Now I'm only down to

1009
00:43:01,440 --> 00:43:05,160
Speaker 1: going in maybe tops two out of five days. Like literally,

1010
00:43:05,200 --> 00:43:08,839
Speaker 1: you've reduced the miles driven by three fifths. I'm all

1011
00:43:08,880 --> 00:43:10,640
Speaker 1: for you hopping over there and getting a quote and

1012
00:43:10,640 --> 00:43:12,600
Speaker 1: seeing what it is that they might charge you. I'm

1013
00:43:12,600 --> 00:43:14,120
Speaker 1: pointing to the fact that I don't want any stone

1014
00:43:14,160 --> 00:43:16,879
Speaker 1: to be left unturned here because hey, yes, this did

1015
00:43:16,920 --> 00:43:18,800
Speaker 1: not used to apply to you, but maybe it applies

1016
00:43:18,840 --> 00:43:21,080
Speaker 1: to you now. Yeah, if you've changed your habits, oftentimes

1017
00:43:21,080 --> 00:43:23,200
Speaker 1: you haven't re shopped the things you're paying for. And

1018
00:43:23,239 --> 00:43:24,799
Speaker 1: you're right, man, a lot of people have changed their

1019
00:43:24,840 --> 00:43:27,080
Speaker 1: driving habits, and so it's worth at least looking into

1020
00:43:27,120 --> 00:43:29,520
Speaker 1: and saying, well, how much i've been paying for car insurance? Yeah,

1021
00:43:29,560 --> 00:43:32,320
Speaker 1: and yeah, shop with the pay by the mile companies,

1022
00:43:32,480 --> 00:43:35,520
Speaker 1: but also shop with the traditional insurance companies. I would

1023
00:43:35,600 --> 00:43:37,560
Speaker 1: kind of I think you said it perfectly, leave no

1024
00:43:37,600 --> 00:43:39,719
Speaker 1: stone unturned when you're when you're doing the shopping. We

1025
00:43:39,800 --> 00:43:41,680
Speaker 1: just want folks to be open minded because I think

1026
00:43:41,680 --> 00:43:43,840
Speaker 1: oftentimes so folks can get locked into a way of

1027
00:43:43,880 --> 00:43:46,319
Speaker 1: thinking and you identify with like, well, I'm just I've

1028
00:43:46,320 --> 00:43:49,680
Speaker 1: always got the traditional car insurance. Well maybe that's not

1029
00:43:49,719 --> 00:43:51,879
Speaker 1: something that you need anymore. Maybe hey, maybe you don't

1030
00:43:51,880 --> 00:43:53,680
Speaker 1: even need a car anymore. Maybe this is something that

1031
00:43:53,719 --> 00:43:55,440
Speaker 1: you can completely cut from your life. Because I think

1032
00:43:55,440 --> 00:43:57,400
Speaker 1: it's a really important point too. There's like this threshold

1033
00:43:57,440 --> 00:43:59,680
Speaker 1: of like, well, I'm actually if I just cut the

1034
00:43:59,680 --> 00:44:02,839
Speaker 1: miles driven by a little bit more. Well, I can

1035
00:44:02,920 --> 00:44:05,920
Speaker 1: just rely on Uber or Lyft, maybe I can buy

1036
00:44:06,080 --> 00:44:08,600
Speaker 1: or whatever. Like, yeah, are actually ways to get around? Yeah,

1037
00:44:08,640 --> 00:44:09,080
Speaker 1: there are just.

1038
00:44:09,040 --> 00:44:11,560
Speaker 2: So many other options out if you reduce your driving enough,

1039
00:44:11,880 --> 00:44:13,799
Speaker 2: it makes sense to not have a car the world.

1040
00:44:14,600 --> 00:44:17,400
Speaker 2: You're talking about thousands and thousands of dollars in depreciation

1041
00:44:17,520 --> 00:44:20,200
Speaker 2: costs and insurance costs and gas costs, I mean all

1042
00:44:20,239 --> 00:44:22,680
Speaker 2: this stuff, And so then it makes ride share and

1043
00:44:22,719 --> 00:44:25,400
Speaker 2: rental cars feel like a drop in the bucket compared

1044
00:44:25,400 --> 00:44:27,480
Speaker 2: to what you were spending. So I think that's another

1045
00:44:27,480 --> 00:44:30,160
Speaker 2: important point, Polkit like, yeah, you're taking the bus, you're

1046
00:44:30,160 --> 00:44:32,120
Speaker 2: closer to work, which is awesome, and yeah, you still

1047
00:44:32,160 --> 00:44:33,960
Speaker 2: need a car on occasion, But are there other ways

1048
00:44:33,960 --> 00:44:36,600
Speaker 2: to get around than having your own car, Because that

1049
00:44:36,640 --> 00:44:39,640
Speaker 2: could save you even more money and just means less hassle. Hey,

1050
00:44:39,640 --> 00:44:41,680
Speaker 2: guess what, you never got to go to the mechanic again,

1051
00:44:42,000 --> 00:44:44,000
Speaker 2: that car that you're riding around in, it's somebody else's

1052
00:44:44,000 --> 00:44:45,959
Speaker 2: problem of something breaks, So at.

1053
00:44:45,920 --> 00:44:48,239
Speaker 1: Least at least consider that. I think that's totally worth

1054
00:44:48,320 --> 00:44:50,920
Speaker 1: considering it. Privacy, that's the only other concern because with

1055
00:44:50,960 --> 00:44:52,840
Speaker 1: a lot of these companies, you have to plug in

1056
00:44:52,880 --> 00:44:55,200
Speaker 1: the thing in the uh port for them to actually

1057
00:44:55,239 --> 00:44:57,239
Speaker 1: track your miles, because they don't want you just to say, oh,

1058
00:44:57,239 --> 00:44:59,160
Speaker 1: I drive a thousand miles a month. Although the ones

1059
00:44:59,160 --> 00:45:01,080
Speaker 1: that one thousand miles of yeah, although the ones that

1060
00:45:01,080 --> 00:45:02,640
Speaker 1: don't send you the thing to plug in there. I

1061
00:45:02,680 --> 00:45:05,399
Speaker 1: saw there's one company and they require you to take

1062
00:45:05,400 --> 00:45:08,359
Speaker 1: a picture of your odometer to and send I didn't

1063
00:45:08,360 --> 00:45:09,880
Speaker 1: like at the end of every month, right now, at

1064
00:45:09,880 --> 00:45:12,000
Speaker 1: the end of every week, which also kind of sounds

1065
00:45:12,040 --> 00:45:13,560
Speaker 1: like a hassle. But I feel like that that's totally

1066
00:45:13,600 --> 00:45:16,000
Speaker 1: something that you would do. You're like, it's not the

1067
00:45:16,040 --> 00:45:19,120
Speaker 1: picture of my phone done. That's easy. I could see

1068
00:45:19,160 --> 00:45:21,160
Speaker 1: using photoshop to your advantage on that one, Matt, I'm

1069
00:45:21,160 --> 00:45:23,920
Speaker 1: pretty handy with photo shine. Now that's true. That's cheating, Okay,

1070
00:45:24,000 --> 00:45:27,360
Speaker 1: don't do it. Just to clarify, I'm not advocating scam

1071
00:45:27,400 --> 00:45:28,560
Speaker 1: your insurance company at all.

1072
00:45:28,640 --> 00:45:32,400
Speaker 2: Dishonest, yes, but these two companies might make sense. I

1073
00:45:32,400 --> 00:45:34,960
Speaker 2: would if you're gonna save a few bucks, probably not

1074
00:45:35,000 --> 00:45:37,240
Speaker 2: worth it, and the real money savings might be found

1075
00:45:37,400 --> 00:45:40,160
Speaker 2: in ditching your car altogether. Now that you've been able

1076
00:45:40,160 --> 00:45:42,239
Speaker 2: to get those miles down so low. All right, Matt,

1077
00:45:42,320 --> 00:45:43,640
Speaker 2: let's get back to the beer that we had on

1078
00:45:43,680 --> 00:45:46,560
Speaker 2: this episode. This one is called the Eleventh Passing. It's

1079
00:45:46,600 --> 00:45:50,080
Speaker 2: my Burial brewing Company. It is a kitchen sink stout.

1080
00:45:50,160 --> 00:45:51,400
Speaker 2: What were your thoughts on this one.

1081
00:45:51,719 --> 00:45:53,160
Speaker 1: I almost don't know where to start with this because

1082
00:45:53,200 --> 00:45:54,960
Speaker 1: there are so many different flavors going on. It's got

1083
00:45:55,080 --> 00:45:57,160
Speaker 1: some nice coffee notes. I'll say. That's like one of

1084
00:45:57,160 --> 00:45:58,799
Speaker 1: the first things I noticed, and I looked at the bottle.

1085
00:45:58,840 --> 00:46:01,799
Speaker 1: There's two different types of coffee that they incorporated into

1086
00:46:01,840 --> 00:46:04,600
Speaker 1: this beer, along with a handful of different like toasted

1087
00:46:04,719 --> 00:46:08,120
Speaker 1: nuts and vanilla flavoring going on. It's like a ping

1088
00:46:08,160 --> 00:46:11,279
Speaker 1: pong ball in my mouth. Oh my gosh, dried fruits. Yeah,

1089
00:46:11,320 --> 00:46:14,680
Speaker 1: this thing is the kitchen sink stout. That's certainly an

1090
00:46:14,680 --> 00:46:15,800
Speaker 1: app way to put it. They put a lot of

1091
00:46:15,800 --> 00:46:18,759
Speaker 1: stuff in here. Yeah, but it all melds really nicely together.

1092
00:46:18,800 --> 00:46:20,800
Speaker 1: I was really good. You mentioned the nuts. It's nutty.

1093
00:46:20,840 --> 00:46:23,640
Speaker 2: It's got those toasted macadamia nuts which offer kind of

1094
00:46:23,680 --> 00:46:27,279
Speaker 2: the sweet nuttiness. It was multifaceted, and it was also

1095
00:46:27,440 --> 00:46:31,600
Speaker 2: just a big, beastly burly stout. So yeah, I really

1096
00:46:31,680 --> 00:46:34,080
Speaker 2: I really enjoyed this one. You expect a lot from

1097
00:46:34,080 --> 00:46:35,799
Speaker 2: Burial in general, but when they come up with like

1098
00:46:35,880 --> 00:46:38,640
Speaker 2: an anniversary stout, you expected to be next level and

1099
00:46:38,640 --> 00:46:39,360
Speaker 2: this one.

1100
00:46:39,120 --> 00:46:41,160
Speaker 1: Was all right, well, that's gonna be it for this episode.

1101
00:46:41,200 --> 00:46:42,880
Speaker 1: You can find our show notes up on the website

1102
00:46:42,880 --> 00:46:45,399
Speaker 1: at howtomoney dot com, where we'll make sure to link

1103
00:46:45,440 --> 00:46:48,239
Speaker 1: to we mentioned I think at least two previous episodes,

1104
00:46:48,600 --> 00:46:52,280
Speaker 1: two previous interviews ed Slott as well as Amanda Wolf

1105
00:46:52,360 --> 00:46:54,520
Speaker 1: during our episode today. We'll link to those as well

1106
00:46:54,560 --> 00:46:57,680
Speaker 1: as different resources like our credit card tool that's how

1107
00:46:57,719 --> 00:47:01,200
Speaker 1: toomoney dot com forward slash credit card in order to

1108
00:47:01,200 --> 00:47:03,239
Speaker 1: find a card that's going to work the best for you,

1109
00:47:03,560 --> 00:47:05,239
Speaker 1: and how it is that you spend your money and

1110
00:47:05,239 --> 00:47:07,279
Speaker 1: what it is some of the different rewards that you're

1111
00:47:07,320 --> 00:47:09,239
Speaker 1: gunning for. So let's go ahead to wrap this up

1112
00:47:09,320 --> 00:47:12,319
Speaker 1: until next time, Buddy, best Friends Out, Best Friends Out,