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

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Speaker 1: Today we are answering your listener questions. That's right, buddy,

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Speaker 1: This is a listener question episode, which means we are

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Speaker 1: going to take five different listener questions ranging all sorts

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Speaker 1: of topics, but we are going to cover how to

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Speaker 1: negotiate your rents with your landlord. We've got a question

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Speaker 1: about that. We've got a question from a parent who

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Speaker 1: is wanting to make sure that they are are taking

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Speaker 1: steps to protect their child's Social Security number, which is

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Speaker 1: an important thing to do, and also to uh, We've

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Speaker 1: got a question regarding what to do when you're getting

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Speaker 1: close to the ira a income limits that that keep

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Speaker 1: you from being able to contribute to a roth ira

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Speaker 1: or traditional IRA. We're gonna get to that question there

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Speaker 1: later on plus two others. Buddy, what's our advice going

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Speaker 1: to be there? Just make less money, Make less money.

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Speaker 1: That's that's how you avoid these limits from that. That

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Speaker 1: would be bad advice, though we're we're not going to

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Speaker 1: do that is I mean, the same thing goes when

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Speaker 1: it comes to tax brackets. It's like, hey, you want

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Speaker 1: to avoid that tax bracket, make sure you just earn

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Speaker 1: less money exactly. Yeah, negotiate that salary reduction. That's what

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Speaker 1: we're all aiming for, right. Yeah. But what you've got

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Speaker 1: to know here about an electric vehicle, which I'm not

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Speaker 1: sure you are qualified to talk about because you no

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Speaker 1: longer have an electric vehicle. Right, I'll show my mouth

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Speaker 1: right now, this is all about. Yeah. I saw something

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Speaker 1: recently in our how to Money Facebook group, and there

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Speaker 1: was some chatter somebody looking to potentially lease an electric

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Speaker 1: car getting on the e V game, and someone had

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Speaker 1: mentioned in the comments of that post, Hey, don't forget

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Speaker 1: the factor in the expenses that go alongside of purchasing

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Speaker 1: an electric car, putting in a level to charger at

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Speaker 1: your house, getting an electrician to essentially make sure that

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Speaker 1: you can charge your car at your house. Right. Sometimes, Yeah,

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Speaker 1: often there's electrical work that needs to be done in

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Speaker 1: order to make sure that you're able to charge that

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Speaker 1: car with a level two charger that typically requires a

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Speaker 1: two volts outlet, and that requires some open space on

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Speaker 1: your electrical panel, yep, exactly to make sure it's not

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Speaker 1: full up. And so real quick, I just wanted to

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Speaker 1: comment on that idea, you know, especially as electric vehicles

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Speaker 1: become more and more commonplace. That's a question that people

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Speaker 1: have to wrestle with. All Right, do I need to

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Speaker 1: hire an electrician in order to get this level two

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Speaker 1: charger put in? Could cost you a thousand bucks or

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Speaker 1: something like that in order to do both to buy

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Speaker 1: the charger and have it installed. But I just want

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Speaker 1: to suggest to a whole lot of people out there

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Speaker 1: that that might be a cost that you don't need

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Speaker 1: to pay. Matt. I know I'm not an expert on

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Speaker 1: this anymore, but I did own an electric car for

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Speaker 1: very experience for six and a half years, and recently,

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Speaker 1: you know, sold my niece on Leaf. It was a

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Speaker 1: sad day. I miss it already. But I never bought

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Speaker 1: a level two charger for my niece on Leaf. I

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Speaker 1: only plugged it into you know, a standard electrical outlet. Yeah,

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Speaker 1: you're just using the USB charger. Basically, you can plug

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Speaker 1: your phone into that same charge you got off Amazon

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Speaker 1: for five bucks, and you can also play your car

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Speaker 1: into it. Pretty sweet, right, like six months to charge

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Speaker 1: your car? Yeah? Not possible, No, not possible. But I

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Speaker 1: need need to you know, a three pronged outlet which

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Speaker 1: was outside the house. But yeah, I think for for

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Speaker 1: a lot of folks that works perfectly fine. It charges

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Speaker 1: your car a heck of a lot slower, but especially

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Speaker 1: with the range that many of these vehicles are coming

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Speaker 1: with these days, plugging your car in overnight for twelve

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Speaker 1: hours before you drive it again the next day, your

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Speaker 1: battery is gonna get recharged, um a whole lot in

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Speaker 1: that amount of time, even if you're just plugged into

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Speaker 1: a standard outlet. And at the same time, you know,

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Speaker 1: one of the things we've talked about on the show

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Speaker 1: before is charging your battery more slowly is better for

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Speaker 1: the life of the battery, the long term life. So

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Speaker 1: at the same time, you're not forking out the money

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Speaker 1: up front to install you know, this fancier fast charger,

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Speaker 1: and you're also gonna be doing your battery a favor too. Nice. Yeah,

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Speaker 1: I like that. I like basically, I mean, you're addressing

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Speaker 1: the fact that, like you don't have to get all

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Speaker 1: the fancy stuff, you know, like if you know what

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Speaker 1: your needs are, uh and and certainly you know if

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Speaker 1: you are driveing a lot of miles in order to

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Speaker 1: get to work and you get home and you only

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Speaker 1: have you know, I don't know, maybe ten hours and

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Speaker 1: you know that, you know what, over the course of

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Speaker 1: a week, I'm going to see my personage drop even

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Speaker 1: when I charge it, you know, as much as I

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Speaker 1: can in the minute I get home. I think it

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Speaker 1: is important to to actually consider your you know, your needs,

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Speaker 1: your driving habits are crucial in the equation. Just don't

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Speaker 1: assume you gotta get one exactly, man, Yeah, totally agree.

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Speaker 1: All right, Well, hopefully we saved at least one person

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Speaker 1: from you know, an outlay of of quite a bit

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Speaker 1: of money to get that level two charger. All right, man,

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Speaker 1: let's mention the beer that we're having on today's episode.

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Speaker 1: This one is called Dark Side of the Strawberry Moon

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Speaker 1: by Cherry Street Brewing. They are just about an hour

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Speaker 1: north of us, outside of Atlanta, and they make great beers.

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Speaker 1: So I'm looking forward to having this one on the

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Speaker 1: show today. That's right, man, I am looking forward to

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Speaker 1: this one. And before we get into the actual questions,

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Speaker 1: we want to let our listeners know that if you

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Speaker 1: have personal finance or money questions, we would love to

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Speaker 1: hear them. Head over to how do Money dot com

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Speaker 1: forward slash ask uh and there are some simple instructions

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Speaker 1: on how it is that you can easily record your

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Speaker 1: question on your phone as well as how you can

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Speaker 1: easily shoot that voice memo over to us. It is

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Speaker 1: crazy easy, and I feel like in general to the

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Speaker 1: quality of the of the files we've been receiving, it's

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Speaker 1: so nice. I mean, because you know, the phones are

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Speaker 1: designed to make those files sound so good. So we

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Speaker 1: know a lot of folks like to reach out to

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Speaker 1: us v email, but honestly, if we can get those

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Speaker 1: as voice memos, we would love to take those on

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Speaker 1: an actual ask how the money episode. That's right, it's

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Speaker 1: fun for us to hear your voice. It's fun for

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Speaker 1: everybody else out there to hear your voice. That's why

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Speaker 1: we do the voice memos, and we don't answer email questions.

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Speaker 1: Sorry to those of you who email in. We reply,

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Speaker 1: but we don't always have the time to you know,

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Speaker 1: write out flesh out an entire specific response, but we

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Speaker 1: would love to talk about it on the show exactly. Yeah,

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Speaker 1: we still love you. All right, Let's get to the

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Speaker 1: first question though, Matt. This one is about negotiating your rent.

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Speaker 1: Hello Joel and Matt. My name is Low and I

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Speaker 1: live in Indianapolis. I currently pay just over a month

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Speaker 1: for rent for my apartment and with covid Um, I

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Speaker 1: know that rent prices have gone down, and I was curious.

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Speaker 1: And now my apartment, the exact same size UM just

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Speaker 1: in the building next door, is going up for around

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Speaker 1: a thousand dollars a month. So is there a way

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Speaker 1: to approach my apartment company about maybe decreasing my rent

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Speaker 1: or having that conversation. I really like where I live

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Speaker 1: and I'm not yet ready to buy a house and

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Speaker 1: I'm saving up for one, so this is kind of

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Speaker 1: the best solution in that way. Thanks for all your help. Well,

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Speaker 1: that's a great question, especially to given the falling rents

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Speaker 1: that we are seeing in a lot of cities. I'm

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Speaker 1: glad to see that you kept an eye out, you know,

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Speaker 1: on on what some of the apartments are going for

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Speaker 1: around you, maybe in the building next door. And you know,

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Speaker 1: I love that you are willing to negotiate, like some

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Speaker 1: people are too afraid to ask for a discount. So

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Speaker 1: many people aren't negotiating. But the first thing you know

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Speaker 1: that you're gonna want to do is bring the facts,

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Speaker 1: just like you're doing it. It sounds like you know

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Speaker 1: the prices of the places near where you live, and

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Speaker 1: so maybe just do a little bit more digging to

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Speaker 1: find out what the what, maybe what the average rent

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Speaker 1: is in your part of town for a similar spot.

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Speaker 1: So if you can go to that conversation and have

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Speaker 1: maybe an average of you know, three or four different

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Speaker 1: prices of you know, three or four different rates like

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Speaker 1: this can help you with your case. When you are

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Speaker 1: asking for that discount. You weren't asking just because you

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Speaker 1: want to pay less, but because you know the actual

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Speaker 1: market suggests that they should cut you a break. Yeah.

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Speaker 1: And I think to Matt, one of the keys and

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Speaker 1: negotiating rent is to propose something that makes your landlord

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Speaker 1: want to give you a discount and they get their idea. Yeah, exactly,

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Speaker 1: like inception planting in their brain and they're like, wait

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Speaker 1: a second, this is brilliant. Um, should we be paying

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Speaker 1: you to live there? You're such a great it's such

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Speaker 1: a good ambassador for this play. Yeah. Uh. And I

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Speaker 1: think one of the keys is really is to be

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Speaker 1: kind about it. I don't imagine that low was going

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Speaker 1: to go in their guns blazing, like making people angry,

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Speaker 1: but but be super kind when you are asking for

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Speaker 1: a discount. Turnover is of course, like a real problem

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Speaker 1: for so many landlords. It takes work to get the

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Speaker 1: place ready for the next tenant, to find another good one,

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Speaker 1: get a moved in there. And so if you have

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Speaker 1: been a great tenant, you've been there for a while,

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Speaker 1: maybe proposed signing a longer lease something like that may

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Speaker 1: get you a rent discount when your landlord might otherwise

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Speaker 1: have been like, no, go, I'm not interested. So you

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Speaker 1: offer to sign maybe a two year lease and see

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Speaker 1: if that works. Obviously you're gonna have to be okay

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Speaker 1: living there for two years, you know, don't sign it

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Speaker 1: to your lease if you're not willing to stay there longer.

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Speaker 1: Being a little flexible and offering your landlord something in

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Speaker 1: return for that reduced rent that makes those negotiations go

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Speaker 1: a whole lot smoother. Yeah, And honestly, like bigger landlords

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Speaker 1: are often going to be less likely to budge than

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Speaker 1: maybe some smaller mom and pop landlords. But you might

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Speaker 1: be able to get say like a half priced month,

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Speaker 1: you know, or maybe some other perk instead of a

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Speaker 1: recurring monthly discount, especially if your complex is kind of

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Speaker 1: offering a bone on us to new tenants who they

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Speaker 1: are trying to attract. Uh. This is one of those

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Speaker 1: instances where they're they're willing to reward the new customer,

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Speaker 1: but we want to see them reward uh and make

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Speaker 1: sure that they're taking care of the long standing customers,

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Speaker 1: you know, the folks like you who have been there

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Speaker 1: for multiple years. In the end, too, it kind of

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Speaker 1: just comes down to being the squeaky wheel, you know.

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Speaker 1: And so if you can speak up, let your voice

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Speaker 1: be heard, make it clear that, hey, I see what

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Speaker 1: these other apartments are going for. I'd really love to

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Speaker 1: be able to see my rat go down. Ask that discount. Yeah,

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Speaker 1: sometimes you gotta present your resume. Have been here three

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Speaker 1: years and I've been a great tenant. I pay on

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Speaker 1: time every single month. Don't you love tenants like me?

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Speaker 1: Anyway that you can strengthen your case, um, you know,

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Speaker 1: by talking about how good of a tenant you've been

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Speaker 1: is going to help. And sometimes, Matt, the only solution

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Speaker 1: actually for somebody like low is that they have to

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Speaker 1: move in order to get the best deal. I hope

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Speaker 1: that's not the case in her situation, because she seems

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Speaker 1: to really like where she lives. Um. But sadly, loyalty

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Speaker 1: isn't always rewarded, and and that's the case often with

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Speaker 1: a lot of the bigger landlords and many of the

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Speaker 1: big rental companies out there, they can be short sighted

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Speaker 1: and there are often you know, deals to attract new customers,

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Speaker 1: like you mentioned, but they're rarely deals to make the

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Speaker 1: current customers feel special and feel like they're also you know,

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Speaker 1: getting in on some of the savings. And so it's

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Speaker 1: gonna be best to also be willing to move and

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Speaker 1: take one of those cheaper deals elsewhere if the management

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Speaker 1: company at your current place refuses to make any concessions

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Speaker 1: and give you any sort of a discount on your rent,

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Speaker 1: because like Matt said, rents have been falling in cities

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Speaker 1: around the country, and if they're pretending that what you're

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Speaker 1: paying for rent right now should stay the same for

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Speaker 1: the upcoming year, they're not being realistic. And so you're

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Speaker 1: gonna have to do your best looking out for yourself.

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Speaker 1: And they had of benefit too. If she does end

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Speaker 1: up moving to the building next door, I mean, that's

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Speaker 1: not a big move. You might not have the higher movers.

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Speaker 1: You just like grab your stuff and just start slowly

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Speaker 1: taking trips without having to hire a truck, without having

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Speaker 1: to hire movers. But hopefully that's not the case, hopefully

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Speaker 1: you're able to maintain your current spots if that's a

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Speaker 1: building that you've enjoyed. So we've got several more questions

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Speaker 1: we're gonna get to this episode, including one about placing

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Speaker 1: a credit freeze but on your kid social security number.

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Speaker 1: We'll get to that one right after the break. All right,

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Speaker 1: let's keep taking questions, Matt, And this next one comes

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Speaker 1: from a listener who is concerned about her child's identity

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Speaker 1: being stolen. Hi, guys, after hearing your recent episode about

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Speaker 1: getting a PIN from the I R S, my husband

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Speaker 1: and I just did hours. Thanks so much. Now my

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Speaker 1: question is how do we protect our babies social Security

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Speaker 1: number from I d FF. Thanks for all you do.

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Speaker 1: Love from Queens, New York City. All right, and that

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Speaker 1: question was from Kathy up there in Queen's Uh and Cathy,

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Speaker 1: we are so glad that you signed up for that

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Speaker 1: I R S PIN. That's something that we talked about

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Speaker 1: on a Friday episode. Um, I guess maybe a little

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Speaker 1: over a month ago. And it's super easy and nice

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Speaker 1: to know that your tax return won't be messed with,

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Speaker 1: you know, by a scammer, by you know, taking that

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Speaker 1: one simple step by getting that I r. S pin Uh.

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Speaker 1: It is important to mention, however, that if if you

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Speaker 1: want to protect your own identity from other potential methods

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Speaker 1: of ID theft, then what you're gonna need to do

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Speaker 1: is actually freeze your credit with each of the major

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Speaker 1: credit bureaus. Uh. This is a fairly simple process, and

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Speaker 1: Joel actually just wrote an article up at How the

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Speaker 1: Money dot com about how to do that, and we'll

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Speaker 1: make sure to link to that in our show notes.

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Speaker 1: This is something that all How the Money listeners should

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Speaker 1: strongly consider doing. It is the best credit protection possible

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Speaker 1: by far, and the best part, it's completely free. I

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Speaker 1: love free stuff, even stuff I don't need sometimes, which

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Speaker 1: sometimes leads to clutter, so I should probably not get

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Speaker 1: crummy free stuff. It's kind of like masks over the

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Speaker 1: past twelve months, right, You're like, but it was a

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Speaker 1: free mask, and then all of a sudden you've got

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Speaker 1: all these masks with like Georgia Broadcasting logo on it.

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Speaker 1: You got a mask from your your gas company. Everybody

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Speaker 1: was given white masks, that's for sure. It was also nice,

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Speaker 1: though I'm still rolling with the first mask that my

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Speaker 1: mom gave me like mid March last year. So but

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Speaker 1: I totally agree with you, Matt that credit freeze is

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Speaker 1: is the best protection possible for people when it comes

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Speaker 1: to make sure their identity isn't stolen by some sort

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Speaker 1: of criminal. And one thing that people need to know

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Speaker 1: is that you don't want to sign up for credit monitoring.

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Speaker 1: You actually want the credit freeze, and I went into

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Speaker 1: that in depth in that article. But those services, the

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Speaker 1: credit monitoring services, will often cost you about ten bucks

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Speaker 1: a month, and they don't do nearly as much as

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Speaker 1: the credit free does. And the freeze, as you mentioned,

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Speaker 1: is free, right, So it's something free that does a

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Speaker 1: way better job than the thing that costs ten dollars.

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Speaker 1: Count me in. Oh, but let's move on to the

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Speaker 1: actual question that Cathy had to about protecting your kids

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Speaker 1: from identity theft. You can also freeze their credit in

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Speaker 1: the same way that you're freezing yours if they're under

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Speaker 1: the age of sixteen. Sixteen and seventeen year olds are

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Speaker 1: allowed to freeze their own credit. But we would say

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Speaker 1: that a freeze is the best answer for people of

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Speaker 1: any age, children included. And it's a great thing that

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Speaker 1: parents are now allowed to freeze their child's credit free

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Speaker 1: of charge in a similar way in which they can

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Speaker 1: freeze in their own Yeah, and this is the best

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Speaker 1: way to prevent someone from opening up credit in your

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Speaker 1: kids name and basically tarnishing it, you know, before they're

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Speaker 1: even able to get to use it. And sadly, it's

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Speaker 1: often a loved one or a relative who ends up

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Speaker 1: being the identity thief. It's someone who kind of has

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Speaker 1: access to, you know, your kids social Security number. And

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Speaker 1: so the annoying thing too is that it's not quite

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Speaker 1: as easy as it is to freeze your own, which

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Speaker 1: you can do completely online and mere minute literally it's

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Speaker 1: it's super easy, really quick. But to do it for

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Speaker 1: your kids, you actually have to gather some documents send

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Speaker 1: them in uh in the actual mail, like snail mail,

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Speaker 1: like a letter. Yeah, don't do that, more stamp that

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Speaker 1: whole thing. Uh. And you you would need to send

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Speaker 1: that information to each of the three bureaus, uh, including

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Speaker 1: like a copy of their birth certificate, social security number,

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Speaker 1: uh in some proof of of of your I D

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Speaker 1: as well, and so will link to each bureau's process

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Speaker 1: for freezing a child's credit in the show notes. But

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Speaker 1: bottom line, Ethie, we are glad to hear that you're

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Speaker 1: watching out for your kids that you're gonna hopefully lock

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Speaker 1: it down and make sure that, uh, that their identity

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Speaker 1: isn't being used to open up lines of credit that

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Speaker 1: somebody else is going to be taking the advantage of.

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Speaker 1: And Matt just you just said lock it down, and

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Speaker 1: I love that you said that, But there's just one

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Speaker 1: more thing I'm gonna throw in when you say that

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Speaker 1: there is such a thing called a credit lock. The

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Speaker 1: credit lock often costs money. Actually, some of the credit

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Speaker 1: bureaus started twenty five a month to lock your credit

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Speaker 1: and they want to make it sound like the credit

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Speaker 1: lock is even better than the credit freeze because there's

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Speaker 1: alerts associated with it and they'll watch it, they'll keep

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Speaker 1: an eye on it. But you do not want to

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Speaker 1: do that. You don't wanna avoid any product that sounds

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Speaker 1: like credit lock, LifeLock, any of these sort of locks

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Speaker 1: you want to actually avoid. It's unfortunate though, yeah, it

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Speaker 1: has seeped its way into the vernacular a little bit

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Speaker 1: by you know, even missing it. But what you're looking

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Speaker 1: for are specifically freezes, and that's why it freeze it.

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Speaker 1: You might want to follow the exact links that we put,

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Speaker 1: you know, in that article because it'll take you to

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Speaker 1: the free spot on the website, and we don't want

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Speaker 1: you to get jumbled up into the paid junk that

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Speaker 1: you actually don't want to sign up for. Freezes are free. Yeah,

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Speaker 1: and again, it's gonna take it just a little bit

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Speaker 1: longer to to freeze your child's credit. Like Matt said,

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Speaker 1: you gotta actually send in some forms, but it's gonna

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Speaker 1: be well worth it. You're watching off for your kids

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Speaker 1: credit and that's great, all right, Matt. Let's get to

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Speaker 1: the next question. This one is about how much are

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Speaker 1: you supposed to save for retirement? Hey, Joel A Matte,

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Speaker 1: This is Massa from Boston and I have a question

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Speaker 1: inspired by your episode about the seven money gears. I

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Speaker 1: work for a local school that offers both a pension

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Speaker 1: and for one K. The school pays for the pension,

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Speaker 1: and I contribute just enough to the four one K

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Speaker 1: to snag all of the employer match. The second money

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Speaker 1: care My HR department's crystal Ball says that my retirement

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Speaker 1: income is going to be a hundred and four percent

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Speaker 1: of the income I would earn in my last year

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Speaker 1: of work if I retired at The experts say that

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Speaker 1: I should target income replacement during retirement. Do you all

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Speaker 1: have a target income replacement level I should shoot for?

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Speaker 1: I asked, because you all tend to recommend that we

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Speaker 1: max out our retirement savings. But it seems like I'll

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Speaker 1: do okay during retirement. Despite having skipped past the invest

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Speaker 1: in tax shelter him and accounts money gear, I don't

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Speaker 1: have any debt left to pay off, lower interest or otherwise,

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Speaker 1: so I'm presently cruising along in the top money gear

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Speaker 1: pursuing other big savings and investing goals. Anyway, thanks for

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Speaker 1: your awesome podcast and keep up the good work. By

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Speaker 1: the way, instead of using an insta pot, what I

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Speaker 1: do to humidify my bedroom during the dry winter months

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Speaker 1: here in New England is to hang a damp towel

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Speaker 1: right before I go to bed. As it dries, it

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Speaker 1: adds moisture to the air. And when you think the

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Speaker 1: towel might be starting to get a little funky, just

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Speaker 1: throw it in with the laundry machine washable humidifier. Y'all, Joel,

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Speaker 1: you recognize this voice. This is Massa. He's back, our

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Speaker 1: good buddy. That's right. I love hearing Mastha's voice again

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Speaker 1: on the show. Massa is gonna hear from you again,

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Speaker 1: and thanks to you for that suggestion. I really do

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Speaker 1: love the idea, like you said, of being able to

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Speaker 1: have something that's like something that you normally have to

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Speaker 1: clean my hand or a place, you know, a funky

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Speaker 1: towels starting to get maybe a little bit of mildew

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Speaker 1: or mold on it, but just throwing that in the

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Speaker 1: wash it sounds super easy. Uh. And I also love

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Speaker 1: that someone from Boston says y'all, although I don't think

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Speaker 1: he actually says that. I think he's just don't know

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Speaker 1: if he's making fun of us. Do we say it

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Speaker 1: too much? Do we? Maybe? I think we do. I mean,

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Speaker 1: we like, we use it a proper amount. I say

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Speaker 1: it just like I would normally my my real life,

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Speaker 1: I guess. But let's be honest, though, there's just no

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Speaker 1: better way to say you all. Uh. And I know

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Speaker 1: like some guys use guys or whatever, but y'all, it's

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Speaker 1: just like the most efficient way to say it. It's

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Speaker 1: a single consonant, so you can say it very quickly

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Speaker 1: and easily. Y'all. I like it. But Masa, we love

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Speaker 1: that you are in the top money gear right now,

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Speaker 1: which is a huge accomplishment and you have a pension

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Speaker 1: and a four oh one K, which is super awesome.

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Speaker 1: And so you mentioned the kind of like the retirement

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Speaker 1: crystal ball, right, But the question we want to ask

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Speaker 1: is how accurate is the forecast that you know, the

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Speaker 1: little calculator or whatever you're able to use there, maybe

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Speaker 1: they're on your retirement website. How well do you think

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Speaker 1: that's going to actually reflect your future? Right, Uh, we

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Speaker 1: don't know your career goals, but there's probably a reasonable

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Speaker 1: chance that you know that you're gonna leave the job

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Speaker 1: before your crew, say thirty years of service, making you

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Speaker 1: maybe eligible for the full pension amounts. Most folks don't

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Speaker 1: stay in a job that long, and you never know

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Speaker 1: how your career goals might actually change. Pensions are nice,

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Speaker 1: but they can sort of, you know, be like a

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Speaker 1: bit of a golden handcuff situation, you know, like keeping

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Speaker 1: us somewhere when you know you might otherwise prefer to

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Speaker 1: to pursue something different, maybe even move to a different city,

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Speaker 1: maybe somewhere a little bit warmer. We don't have to

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Speaker 1: worry about that humidifier, you know as much. Yeah, and

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Speaker 1: your employer can also at any time say actually the pension.

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Speaker 1: We're done. You won't be able to accrue additional service time.

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Speaker 1: And so right now, maybe the crystal ball is is

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Speaker 1: making it seem like you've got thirty working years towards

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Speaker 1: that pension. But if service time a cruel stops now.

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Speaker 1: I mean this happened to my mom, you know a

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Speaker 1: few years ago. This happened to me a few years

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Speaker 1: back at my former employer, where they were like, we're

430
00:19:39,760 --> 00:19:42,840
Speaker 1: not doing that anymore. New hires don't get the pension,

431
00:19:43,080 --> 00:19:46,360
Speaker 1: and people that are still hanging around who did qualify, well,

432
00:19:46,400 --> 00:19:48,200
Speaker 1: guess what, you know, You're not gonna have any more

433
00:19:48,280 --> 00:19:51,159
Speaker 1: years added to your service time. So yeah, your pension

434
00:19:51,200 --> 00:19:54,240
Speaker 1: stops here. Um, so it can be really hard to

435
00:19:54,280 --> 00:19:58,400
Speaker 1: make decisions solely based on those employer predictions. We would

436
00:19:58,440 --> 00:20:01,960
Speaker 1: say that you should consider actually contributing even more to

437
00:20:02,400 --> 00:20:04,440
Speaker 1: that four one K or opening up a roth ira

438
00:20:04,560 --> 00:20:07,000
Speaker 1: if you can. I think it can't hurt to save

439
00:20:07,080 --> 00:20:10,320
Speaker 1: a bit more than that algorithm suggests based on those

440
00:20:10,400 --> 00:20:13,280
Speaker 1: other possibilities, and it might also save you massa from

441
00:20:13,320 --> 00:20:15,600
Speaker 1: not having enough if you were to make a career

442
00:20:15,640 --> 00:20:18,119
Speaker 1: move in the future. Yeah, and so that actually raises

443
00:20:18,200 --> 00:20:21,800
Speaker 1: the question, is it possible to save too much for retirement,

444
00:20:21,960 --> 00:20:24,080
Speaker 1: and you know, I do think the answer to that

445
00:20:24,200 --> 00:20:27,080
Speaker 1: is yes. But that's not a struggle for most Americans

446
00:20:27,080 --> 00:20:30,359
Speaker 1: at least that's true. If you're you know, so intently

447
00:20:30,400 --> 00:20:32,760
Speaker 1: focused on the future that you are sacrificing some of

448
00:20:32,760 --> 00:20:35,640
Speaker 1: the smaller you know, once that you have today, then

449
00:20:35,800 --> 00:20:38,240
Speaker 1: you know you should question whether your investing goals are

450
00:20:38,359 --> 00:20:41,439
Speaker 1: perhaps too ambitious, or you know, you might be putting

451
00:20:41,480 --> 00:20:44,560
Speaker 1: off other major purchases, like maybe buying a home because

452
00:20:44,560 --> 00:20:46,760
Speaker 1: you're stashing so much money away for the future. It's

453
00:20:46,800 --> 00:20:49,000
Speaker 1: smart to to make sure that you don't get so

454
00:20:49,240 --> 00:20:52,479
Speaker 1: my opic when it comes to investing for retirement that

455
00:20:52,560 --> 00:20:54,640
Speaker 1: you miss out on some of the important things now

456
00:20:54,680 --> 00:20:57,400
Speaker 1: that you possibly miss out on living life now as well. Yeah,

457
00:20:57,520 --> 00:20:59,840
Speaker 1: and Matt, I think that that can happen, and that

458
00:21:00,119 --> 00:21:02,920
Speaker 1: one of the things that the fire crowd has been

459
00:21:02,960 --> 00:21:06,000
Speaker 1: you know, accused of, at least financial independence retire early

460
00:21:06,040 --> 00:21:07,440
Speaker 1: for the folks that are like I want to retire

461
00:21:07,480 --> 00:21:11,439
Speaker 1: at forty and or thirty or thirty, and sometimes that

462
00:21:11,560 --> 00:21:16,280
Speaker 1: hyper focus on retirement can lead to massive amounts of deprivation.

463
00:21:16,520 --> 00:21:19,040
Speaker 1: And we think there's a healthy balance that's deserved there

464
00:21:19,160 --> 00:21:21,439
Speaker 1: in your life and in your personal finances. And I

465
00:21:21,440 --> 00:21:24,480
Speaker 1: think another important thing to consider here, Massa, is are

466
00:21:24,480 --> 00:21:26,440
Speaker 1: you looking to do a bunch of traveling in retirement

467
00:21:26,840 --> 00:21:28,520
Speaker 1: or are you actually looking to be one of those

468
00:21:28,520 --> 00:21:31,000
Speaker 1: fire people and retire early, you know, maybe not at thirty,

469
00:21:31,040 --> 00:21:34,080
Speaker 1: but maybe at fifty. Or will you have kids that

470
00:21:34,119 --> 00:21:36,639
Speaker 1: you want to inherit some money when you eventually pass away,

471
00:21:36,880 --> 00:21:39,600
Speaker 1: you want to prioritize retirement savings even more if that's

472
00:21:39,640 --> 00:21:42,080
Speaker 1: the case. Basically, what we're talking about here is like, like,

473
00:21:42,160 --> 00:21:44,520
Speaker 1: what do you project your future lifestyle to look like? Like?

474
00:21:44,560 --> 00:21:47,280
Speaker 1: What are your sort of ultimate long long term goals here? Yeah,

475
00:21:47,359 --> 00:21:49,840
Speaker 1: not just what that algorithm says your life look like,

476
00:21:50,240 --> 00:21:53,119
Speaker 1: but and says what your your income and savings are

477
00:21:53,119 --> 00:21:55,800
Speaker 1: gonna look like over the next fifteen years. Your life

478
00:21:55,880 --> 00:21:58,879
Speaker 1: might look a whole lot different than what that algorithm

479
00:21:58,960 --> 00:22:01,399
Speaker 1: is telling you. So Massa, hopefully that helps a little bit.

480
00:22:01,480 --> 00:22:04,320
Speaker 1: You know, income replacement in retirement is a difficult question

481
00:22:04,400 --> 00:22:07,320
Speaker 1: to answer. You know, the expert consensus has often said

482
00:22:07,359 --> 00:22:12,000
Speaker 1: somewhere around of your pre retirement income is what you're

483
00:22:12,000 --> 00:22:14,680
Speaker 1: gonna want to have in retirement income. And you're right

484
00:22:14,720 --> 00:22:17,920
Speaker 1: that many people who own a home mortgage free won't

485
00:22:17,920 --> 00:22:20,360
Speaker 1: need to be able to generate of their current pay

486
00:22:20,359 --> 00:22:23,119
Speaker 1: in retirement. But so much of that depends on the

487
00:22:23,160 --> 00:22:26,320
Speaker 1: individual and what they want their retirement to look like. Like,

488
00:22:26,359 --> 00:22:28,840
Speaker 1: are you gonna be taking European cruises down the Danube

489
00:22:29,200 --> 00:22:31,880
Speaker 1: like three times a year? I don't know. You've gotta

490
00:22:31,920 --> 00:22:34,119
Speaker 1: factor all those kinds of things. That sounds like, Massa,

491
00:22:34,359 --> 00:22:36,160
Speaker 1: I mean, yeah, I could be done. I can see

492
00:22:36,200 --> 00:22:38,160
Speaker 1: him doing some of those euro cruises. That sounds nice,

493
00:22:38,440 --> 00:22:41,639
Speaker 1: But yeah, everybody's situation differs, and so you can't fully

494
00:22:41,640 --> 00:22:44,480
Speaker 1: trust that crystal ball for a few reasons that we mentioned. Um,

495
00:22:44,480 --> 00:22:47,119
Speaker 1: and you also have to really take your own situation

496
00:22:47,440 --> 00:22:51,040
Speaker 1: into account before you decide that you're going to, you know,

497
00:22:51,240 --> 00:22:54,320
Speaker 1: stop investing as much as you're currently investing. That's right, Yes,

498
00:22:54,359 --> 00:22:56,080
Speaker 1: so Massa, hopefully we were able to point you in

499
00:22:56,080 --> 00:22:58,119
Speaker 1: the right direction. Joel. We've got a couple more questions

500
00:22:58,119 --> 00:23:01,119
Speaker 1: that we're gonna get to, including one one about the

501
00:23:01,160 --> 00:23:03,560
Speaker 1: best way to pay a credit card in order to

502
00:23:03,920 --> 00:23:07,240
Speaker 1: obviously receive the benefits of using that credit card that

503
00:23:07,240 --> 00:23:10,359
Speaker 1: we'll talk about here in a second, but without accruing interest.

504
00:23:10,440 --> 00:23:12,280
Speaker 1: We're gonna get to that one plus one other. Right

505
00:23:12,320 --> 00:23:23,359
Speaker 1: after the break, we're back. We've got a couple more

506
00:23:23,440 --> 00:23:26,560
Speaker 1: questions to get to, including this question, which seems like

507
00:23:26,600 --> 00:23:28,440
Speaker 1: it shouldn't be that hard, but it gets a little

508
00:23:28,440 --> 00:23:31,480
Speaker 1: more detailed than it first seems about how you actually

509
00:23:31,480 --> 00:23:34,120
Speaker 1: pay your credit card each month. Hi, Joel and Matt.

510
00:23:34,440 --> 00:23:37,440
Speaker 1: My name is Petelia and I'm from playing Field, New Jersey.

511
00:23:37,840 --> 00:23:40,720
Speaker 1: So my question is about credit cards to ner payment.

512
00:23:41,200 --> 00:23:44,080
Speaker 1: So I am well aware of the APR that's applied

513
00:23:44,200 --> 00:23:47,359
Speaker 1: for the year. I've divided the math figured it out

514
00:23:47,520 --> 00:23:50,600
Speaker 1: by month, but now I'm having a hard time figuring

515
00:23:50,640 --> 00:23:53,760
Speaker 1: out by ds. So I started using my credit card,

516
00:23:53,800 --> 00:23:56,680
Speaker 1: which has a zero balance, and I want to keep

517
00:23:56,680 --> 00:23:59,879
Speaker 1: it that way to make purchases. For one, I went

518
00:24:00,359 --> 00:24:04,040
Speaker 1: get points off of it, get my money's worth and too.

519
00:24:04,600 --> 00:24:08,000
Speaker 1: I also want to keep my credit active and just

520
00:24:08,160 --> 00:24:11,920
Speaker 1: try to maximize that in any way possible. So I'm

521
00:24:11,920 --> 00:24:14,199
Speaker 1: having a hard time trying to figure out when to

522
00:24:14,240 --> 00:24:17,480
Speaker 1: make my payments. Should I pay them off right away

523
00:24:17,520 --> 00:24:20,920
Speaker 1: to avoid any daily interest. Should I pay them off

524
00:24:20,960 --> 00:24:23,800
Speaker 1: at the end of the week, bi weekly along with

525
00:24:23,840 --> 00:24:26,280
Speaker 1: my paychecks, or at the end of the month. But

526
00:24:26,400 --> 00:24:29,560
Speaker 1: then I can't help, But to wonder, I'll be then

527
00:24:29,720 --> 00:24:33,000
Speaker 1: paying for eight p R for the days that the

528
00:24:33,119 --> 00:24:37,600
Speaker 1: bounce was in the account, I guess. And the second

529
00:24:37,640 --> 00:24:41,359
Speaker 1: part of the question would be would disaffect my credit score?

530
00:24:41,480 --> 00:24:43,960
Speaker 1: How would it affect it if I make a payment

531
00:24:44,119 --> 00:24:47,440
Speaker 1: right away, if I get gas on Monday and by

532
00:24:47,480 --> 00:24:50,680
Speaker 1: Friday I have paid it off, would that negatively affect

533
00:24:50,680 --> 00:24:54,440
Speaker 1: the payment with the credit card company? Consider closing my account,

534
00:24:54,520 --> 00:24:57,640
Speaker 1: which I do not want to do. Thanks, guys, really

535
00:24:57,640 --> 00:24:59,800
Speaker 1: look forward to the response. I hope you guys really

536
00:24:59,840 --> 00:25:02,760
Speaker 1: get to answer my question. I really enjoy listening to

537
00:25:02,800 --> 00:25:05,679
Speaker 1: you both. Thank you, Hey, Badelia. We we love your

538
00:25:05,680 --> 00:25:08,240
Speaker 1: attention to detail here. You know, your reasons for using

539
00:25:08,240 --> 00:25:12,720
Speaker 1: a credit card for purchases is spot on. The rewards

540
00:25:12,760 --> 00:25:16,040
Speaker 1: can be pretty solid and it obviously it definitely helps

541
00:25:16,040 --> 00:25:17,960
Speaker 1: your credit score too, so it's a good call there.

542
00:25:18,200 --> 00:25:19,960
Speaker 1: And there are other benefits to of using a credit

543
00:25:20,000 --> 00:25:22,520
Speaker 1: card as a payment method, and we discussed those back

544
00:25:22,520 --> 00:25:25,080
Speaker 1: in episode one to be should to check that one

545
00:25:25,080 --> 00:25:28,440
Speaker 1: out for even more great reasons. You know, credit cards rock,

546
00:25:28,880 --> 00:25:31,280
Speaker 1: that is if you use them well, and that is

547
00:25:31,320 --> 00:25:32,639
Speaker 1: what your question is all about. You want to make

548
00:25:32,640 --> 00:25:35,359
Speaker 1: sure that you're you're using your credit card exactly like

549
00:25:35,400 --> 00:25:38,080
Speaker 1: you should to the fullest extent. Yeah, yeah, and badilia

550
00:25:38,200 --> 00:25:41,480
Speaker 1: When you should make that payment is a great question.

551
00:25:41,880 --> 00:25:44,760
Speaker 1: It's important to note that you actually aren't paying interest

552
00:25:45,040 --> 00:25:46,960
Speaker 1: on the charges that you make on that credit card

553
00:25:47,440 --> 00:25:50,159
Speaker 1: unless you don't pay your balances in full on the

554
00:25:50,200 --> 00:25:53,040
Speaker 1: due date. So like let's say I buy, you know,

555
00:25:53,119 --> 00:25:55,800
Speaker 1: a couple of avocados at the grocery store today, and

556
00:25:55,840 --> 00:25:58,720
Speaker 1: I don't pay that credit card balance off for three days.

557
00:25:58,880 --> 00:26:02,359
Speaker 1: I'm not paying daily interest on those avocados, fortunately, until

558
00:26:02,400 --> 00:26:05,960
Speaker 1: after I'm past do on that balance. At that point,

559
00:26:06,040 --> 00:26:08,800
Speaker 1: the credit card company will start to charge you interest

560
00:26:08,960 --> 00:26:11,200
Speaker 1: on the unpaid amount. But when you make a purchase,

561
00:26:11,240 --> 00:26:13,359
Speaker 1: the clock just doesn't start ticking right away. That's not

562
00:26:13,400 --> 00:26:15,919
Speaker 1: how it works. You've got time, and you don't have

563
00:26:15,960 --> 00:26:17,920
Speaker 1: to sweat it as hard as you're sweating it actually

564
00:26:18,000 --> 00:26:20,400
Speaker 1: right now. Yeah, And you're talking about basically the frequency

565
00:26:20,560 --> 00:26:22,600
Speaker 1: at which you should maybe pay your card off, And

566
00:26:22,600 --> 00:26:25,480
Speaker 1: some folks choose to pay their credit card bill more frequently,

567
00:26:25,720 --> 00:26:28,040
Speaker 1: you know, like every week or maybe every two weeks.

568
00:26:28,080 --> 00:26:30,679
Speaker 1: This can be annoying though, right, But it does have

569
00:26:30,720 --> 00:26:33,439
Speaker 1: a couple of upsides which is like, first of all,

570
00:26:33,480 --> 00:26:36,080
Speaker 1: you might find yourself more attentive to your purchases. You know,

571
00:26:36,119 --> 00:26:37,959
Speaker 1: if you are paying every week or every two weeks,

572
00:26:38,359 --> 00:26:40,200
Speaker 1: you're not gonna reach the end of the month and

573
00:26:40,200 --> 00:26:41,919
Speaker 1: and look back and realize that, like, holy crap, like

574
00:26:41,960 --> 00:26:44,480
Speaker 1: I way over spent this month. How many avocados did

575
00:26:44,480 --> 00:26:48,600
Speaker 1: I eat? Went away too many? I've got a serious problem. Uh,

576
00:26:48,640 --> 00:26:51,480
Speaker 1: And I think to by paying the bill more frequently, know,

577
00:26:51,520 --> 00:26:54,000
Speaker 1: you're doing an even bigger favor if your credit score

578
00:26:54,000 --> 00:26:56,360
Speaker 1: as well, because you're gonna have the lower balance when

579
00:26:56,400 --> 00:26:59,320
Speaker 1: the statement due date hits. Uh, And it'll reflect better

580
00:26:59,320 --> 00:27:01,320
Speaker 1: on how much of your credit you are using. That

581
00:27:01,520 --> 00:27:05,560
Speaker 1: it keeps your utilization rates low, which credit reporting agencies

582
00:27:05,640 --> 00:27:07,720
Speaker 1: really like to see. It's actually one of the top

583
00:27:07,880 --> 00:27:10,360
Speaker 1: reasons your credit score goes up or down is how

584
00:27:10,440 --> 00:27:12,920
Speaker 1: much of your available credit you're using. And so yeah,

585
00:27:13,160 --> 00:27:15,639
Speaker 1: by paying it more frequently every week or two, you

586
00:27:15,680 --> 00:27:17,320
Speaker 1: are going to be helping your score out a little bit.

587
00:27:17,520 --> 00:27:20,760
Speaker 1: For me, I'll say, I'm a fan of taking more

588
00:27:20,800 --> 00:27:23,240
Speaker 1: of a set it and forget it approach. Unless you

589
00:27:23,280 --> 00:27:25,840
Speaker 1: have a specific reason to be hyper attentive to your

590
00:27:25,840 --> 00:27:28,439
Speaker 1: credit score, like let's say you are planning to do

591
00:27:28,480 --> 00:27:31,679
Speaker 1: a reefinance really soon, and every point matters. You know,

592
00:27:31,760 --> 00:27:34,400
Speaker 1: you want to get above seven forty in order to

593
00:27:34,400 --> 00:27:37,120
Speaker 1: get the best terms. Just pay the balance in full

594
00:27:37,240 --> 00:27:39,800
Speaker 1: every month on or before the due date. It keeps

595
00:27:39,840 --> 00:27:42,000
Speaker 1: things simple. It means your brain doesn't have to be

596
00:27:42,040 --> 00:27:44,119
Speaker 1: working over time to you know, to set the calendar

597
00:27:44,160 --> 00:27:46,760
Speaker 1: reminder to pay that credit card balance every single week

598
00:27:46,840 --> 00:27:48,760
Speaker 1: or every other week. Yeah, being able to set out

599
00:27:48,760 --> 00:27:50,679
Speaker 1: on auto pay is a is a huge relief. I

600
00:27:50,720 --> 00:27:52,639
Speaker 1: will say, though, like I don't I personally don't use

601
00:27:52,680 --> 00:27:55,040
Speaker 1: auto pay because I kinda like for me, I pay

602
00:27:55,080 --> 00:27:57,840
Speaker 1: off my balance regardless of when the due date is

603
00:27:57,920 --> 00:27:59,720
Speaker 1: or regardless of when the statement date is at the

604
00:27:59,800 --> 00:28:01,480
Speaker 1: end of the month. Because and this I think a

605
00:28:01,520 --> 00:28:03,000
Speaker 1: lot of folks are this way, right, Like when they

606
00:28:03,040 --> 00:28:04,640
Speaker 1: plan for the month, when they budget for the month,

607
00:28:05,080 --> 00:28:07,080
Speaker 1: everything ends at the end of the month, and so

608
00:28:07,240 --> 00:28:10,000
Speaker 1: for me, uh, not carrying some of those transactions from

609
00:28:10,000 --> 00:28:12,199
Speaker 1: the previous month over into the new month. Right. So,

610
00:28:12,240 --> 00:28:14,600
Speaker 1: say you've got a statement that runs from the fifteen

611
00:28:14,880 --> 00:28:17,760
Speaker 1: basically to the next month's fifteen, Well, there's a lot

612
00:28:17,800 --> 00:28:19,800
Speaker 1: of kind of blending and crossing over that happens there.

613
00:28:19,960 --> 00:28:22,640
Speaker 1: I don't like that personally, and so that's the part

614
00:28:22,640 --> 00:28:25,040
Speaker 1: of why. You know, when I manually enter all my numbers,

615
00:28:25,119 --> 00:28:27,960
Speaker 1: all my expenses into my Excel spreadsheet. At the end

616
00:28:28,000 --> 00:28:29,719
Speaker 1: of the month, I just manually pay that off myself.

617
00:28:29,920 --> 00:28:32,359
Speaker 1: But that being said, I do only do it once

618
00:28:32,359 --> 00:28:34,800
Speaker 1: a month. You know, I'm not revisiting that multiple times

619
00:28:34,800 --> 00:28:37,600
Speaker 1: a month. That would keep my utilization down, but it's

620
00:28:37,600 --> 00:28:40,040
Speaker 1: not truly going to have a significant effect all my

621
00:28:40,040 --> 00:28:42,120
Speaker 1: credit score. Yeah. Yeah. And one other thing I wanted

622
00:28:42,160 --> 00:28:45,040
Speaker 1: to mention for Badilia's sake, is she mentioned, you know,

623
00:28:45,080 --> 00:28:48,160
Speaker 1: the possibility of the credit card company closing her account,

624
00:28:48,560 --> 00:28:50,600
Speaker 1: and yeah, that was actually something that had happened to

625
00:28:50,640 --> 00:28:52,440
Speaker 1: a lot of people earlier on in the pandemic. We

626
00:28:52,480 --> 00:28:55,520
Speaker 1: talked about that credit card companies were scared that people

627
00:28:55,600 --> 00:28:57,480
Speaker 1: were gonna lose their jobs, they were gonna wrap up

628
00:28:57,480 --> 00:28:58,960
Speaker 1: credit card debt, and they weren't going to be able

629
00:28:58,960 --> 00:29:01,200
Speaker 1: to pay pay their bi else. But that's not something

630
00:29:01,240 --> 00:29:03,640
Speaker 1: that people should be worried about in normal times. And

631
00:29:04,040 --> 00:29:06,040
Speaker 1: I think right now to ba Delia, as long as

632
00:29:06,040 --> 00:29:09,040
Speaker 1: you're using that card regularly, that's not something you need

633
00:29:09,080 --> 00:29:10,800
Speaker 1: to be worried about. As long as you're using it,

634
00:29:10,960 --> 00:29:14,240
Speaker 1: you know, a few times a year, preferably once a month.

635
00:29:14,640 --> 00:29:16,920
Speaker 1: You shouldn't be worried about a credit card company shutting

636
00:29:16,920 --> 00:29:19,960
Speaker 1: you down by either using that credit card too infrequently

637
00:29:20,440 --> 00:29:23,240
Speaker 1: or by paying the balance off too much. You shouldn't

638
00:29:23,240 --> 00:29:25,640
Speaker 1: be worried about that being a consequence of how you're

639
00:29:25,680 --> 00:29:28,240
Speaker 1: handling those credit cards. Yeah, yeah, there are limits as

640
00:29:28,240 --> 00:29:30,000
Speaker 1: to like how often you can pay on a card

641
00:29:30,080 --> 00:29:31,959
Speaker 1: or I mean I think like one that stands up

642
00:29:31,960 --> 00:29:33,280
Speaker 1: my mind with one of my cards, I'm pretty sure

643
00:29:33,280 --> 00:29:35,080
Speaker 1: it's six, Like you can't make more than six payments,

644
00:29:35,360 --> 00:29:38,280
Speaker 1: you know, within a billing cycle, which no problem, Like

645
00:29:38,320 --> 00:29:40,760
Speaker 1: I'm not gonna do that. Yeah, that would be Yeah,

646
00:29:40,760 --> 00:29:42,920
Speaker 1: a little too much attention to d T Yes, exactly,

647
00:29:43,080 --> 00:29:45,240
Speaker 1: And because truly it doesn't really matter, like if you

648
00:29:45,240 --> 00:29:46,800
Speaker 1: want to be able to keep up with those purchases,

649
00:29:47,240 --> 00:29:49,120
Speaker 1: you know, like every week or so, I think that's

650
00:29:49,160 --> 00:29:51,760
Speaker 1: totally fine. I kind of keep up with our expenses

651
00:29:51,880 --> 00:29:54,520
Speaker 1: like three times a month, like at the beginning, a

652
00:29:54,560 --> 00:29:56,160
Speaker 1: third of the way through, another third of the way through,

653
00:29:56,200 --> 00:29:57,760
Speaker 1: and then kind of like at the end, which I

654
00:29:57,800 --> 00:29:59,719
Speaker 1: guess also the beginning. Yeah, I guess it's it's kind

655
00:29:59,720 --> 00:30:02,640
Speaker 1: of like full, but more than that, it's just it's

656
00:30:02,680 --> 00:30:04,360
Speaker 1: it's kind of a waste of time, and it's not

657
00:30:04,480 --> 00:30:08,520
Speaker 1: something that I want to yea preoccupy my mind with totally. So, Padelia,

658
00:30:08,680 --> 00:30:10,680
Speaker 1: you're doing a great job. Don't worry too much, and

659
00:30:10,800 --> 00:30:12,760
Speaker 1: don't I think it's okay to worry less than you're

660
00:30:12,760 --> 00:30:15,440
Speaker 1: worrying now about how you're paying off your credit card

661
00:30:15,480 --> 00:30:17,200
Speaker 1: bills and and maybe doing it less frequently so that

662
00:30:17,280 --> 00:30:19,960
Speaker 1: it doesn't dominate your thoughts. But best of luck to

663
00:30:20,000 --> 00:30:22,000
Speaker 1: you are Matt. Let's get to our final question of

664
00:30:22,040 --> 00:30:24,719
Speaker 1: this episode. This one is about what do you do

665
00:30:24,840 --> 00:30:27,640
Speaker 1: when you're kind of hitting the income limits of being

666
00:30:27,640 --> 00:30:30,960
Speaker 1: able to contribute to roth IRA. Hi, Matt, and Joel,

667
00:30:31,120 --> 00:30:33,400
Speaker 1: this is Tom calling in from Orlando. I have a

668
00:30:33,480 --> 00:30:37,440
Speaker 1: question about maximum contributions to an IRA. As you know,

669
00:30:37,520 --> 00:30:40,560
Speaker 1: the limit for a married couple filing jointly in one

670
00:30:40,680 --> 00:30:43,640
Speaker 1: is six thousand dollars as long as you're combined modified

671
00:30:43,640 --> 00:30:49,000
Speaker 1: adjusted gross income is underd dollars. I feel blessed that

672
00:30:49,040 --> 00:30:51,800
Speaker 1: my wife and I are approaching that combined modified a

673
00:30:51,880 --> 00:30:54,680
Speaker 1: g I number, But the issue is that I typically

674
00:30:54,680 --> 00:30:57,680
Speaker 1: like to max out both of our ira A accounts

675
00:30:57,720 --> 00:31:00,000
Speaker 1: in January so that I can take advantage of more

676
00:31:00,080 --> 00:31:02,560
Speaker 1: time in the market, and I'm uncertain if I will

677
00:31:02,600 --> 00:31:04,520
Speaker 1: be over that threshold by the end of the year.

678
00:31:05,200 --> 00:31:08,400
Speaker 1: Both of us are expecting merit increases this year for

679
00:31:08,480 --> 00:31:12,719
Speaker 1: our upcoming annual reviews, and I've already put one thousand

680
00:31:12,760 --> 00:31:15,840
Speaker 1: dollars into each account. I'm not sure if I should

681
00:31:15,880 --> 00:31:18,000
Speaker 1: wait until the end of the year when I definitively

682
00:31:18,080 --> 00:31:21,200
Speaker 1: know our combined modified A g I before I put

683
00:31:21,200 --> 00:31:24,960
Speaker 1: the remainder in. To make things more complicated, it seems

684
00:31:24,960 --> 00:31:26,920
Speaker 1: that if you're modified A g I is between A

685
00:31:27,960 --> 00:31:31,640
Speaker 1: thousand and two eight thousand, you can contribute a quote

686
00:31:31,680 --> 00:31:35,120
Speaker 1: unquote reduced amount, but I couldn't find any details on

687
00:31:35,160 --> 00:31:38,480
Speaker 1: how to calculate that. I'm guessing it's maybe a linear scale,

688
00:31:38,520 --> 00:31:41,400
Speaker 1: but I'm not really sure. My last question is what

689
00:31:41,520 --> 00:31:43,680
Speaker 1: happens if I find out that I did go over

690
00:31:43,720 --> 00:31:47,800
Speaker 1: the contribution limit during the next tax filing. Will Turbo

691
00:31:47,840 --> 00:31:50,600
Speaker 1: Tax or H and R Block guide me through how

692
00:31:50,640 --> 00:31:52,960
Speaker 1: to resolve that, or my on my own to monitor

693
00:31:53,040 --> 00:31:55,640
Speaker 1: it and make any corrections. As you can see, I'm

694
00:31:55,640 --> 00:31:58,400
Speaker 1: a bit lost year, so I'd appreciate any guidance you

695
00:31:58,440 --> 00:32:01,200
Speaker 1: guys can give. Uh, thanks for keeping me on track

696
00:32:01,520 --> 00:32:05,120
Speaker 1: and keep doing what you're doing. Cheers. Alright, Tom, this

697
00:32:05,240 --> 00:32:07,400
Speaker 1: is a great question, and actually this is something that

698
00:32:07,440 --> 00:32:09,640
Speaker 1: we've never really covered before, so I'm excited to kind

699
00:32:09,640 --> 00:32:12,320
Speaker 1: of dive into it. But first of all, the nerdy details, Yeah,

700
00:32:12,360 --> 00:32:14,080
Speaker 1: I can die. I'm all about the nerdy details. I

701
00:32:14,200 --> 00:32:16,600
Speaker 1: love it. But too, I wanted to say congrats to

702
00:32:16,640 --> 00:32:19,479
Speaker 1: you and your wife for approaching that income threshold. Uh.

703
00:32:19,520 --> 00:32:21,720
Speaker 1: You know, even though you know it might keep you

704
00:32:21,760 --> 00:32:24,040
Speaker 1: from being able to fully participate in some retirement accounts,

705
00:32:24,160 --> 00:32:26,840
Speaker 1: that is a good problem to have, and actually you

706
00:32:26,880 --> 00:32:29,239
Speaker 1: know that's a great place to start your income. And so,

707
00:32:29,360 --> 00:32:31,680
Speaker 1: like you mentioned, in order to fully contribute to a

708
00:32:31,760 --> 00:32:35,160
Speaker 1: roth ira a you and your wife's modified adjusted gross

709
00:32:35,160 --> 00:32:38,120
Speaker 1: income or you're I guess do you say m A

710
00:32:38,240 --> 00:32:43,160
Speaker 1: g I or Maggie maguy, it needs to be thousand

711
00:32:43,200 --> 00:32:46,560
Speaker 1: dollars or less. Uh. But since we're such big fans

712
00:32:46,560 --> 00:32:48,480
Speaker 1: of the rath man, if I were in your shoes,

713
00:32:48,680 --> 00:32:51,200
Speaker 1: I would still move forward and fully fund both of

714
00:32:51,200 --> 00:32:53,760
Speaker 1: your wraths now since you already have that account, you know,

715
00:32:53,800 --> 00:32:56,440
Speaker 1: up and running, and to take advantage of as much

716
00:32:56,520 --> 00:32:58,840
Speaker 1: growth this year as possible. Just like you mentioned, I'm

717
00:32:58,840 --> 00:33:01,239
Speaker 1: a huge fan of kind of doing that lumps. I'm

718
00:33:01,280 --> 00:33:03,920
Speaker 1: investing at the beginning of the year. But then if

719
00:33:03,960 --> 00:33:05,400
Speaker 1: you get to the end of the year and your

720
00:33:05,840 --> 00:33:09,640
Speaker 1: m A G I Maggie is over the limit, well,

721
00:33:09,680 --> 00:33:12,600
Speaker 1: at that point what you can do is recharacterized from

722
00:33:12,640 --> 00:33:15,760
Speaker 1: a wrath to a traditional IRA. Uh. And so yeah,

723
00:33:15,760 --> 00:33:17,480
Speaker 1: I wouldn't wait until the end of the year to

724
00:33:17,720 --> 00:33:20,280
Speaker 1: contribute to your roth ira at all. Yeah, mat, Let's

725
00:33:20,280 --> 00:33:23,800
Speaker 1: talk about re characterization for a second, A fancy term. Yeah,

726
00:33:23,800 --> 00:33:26,280
Speaker 1: it is, and and basically that allows you to change

727
00:33:26,360 --> 00:33:30,360
Speaker 1: an IRA contribution from one type to another. The change

728
00:33:30,400 --> 00:33:32,560
Speaker 1: is going to be recorded as if the contribution were

729
00:33:32,640 --> 00:33:35,960
Speaker 1: originally made to the second i RA. So in your case,

730
00:33:36,120 --> 00:33:38,920
Speaker 1: the traditional IRA, and the tax benefit that you would

731
00:33:38,920 --> 00:33:42,000
Speaker 1: receive from that second IRA is a tax benefit that

732
00:33:42,040 --> 00:33:44,640
Speaker 1: you're left with. So, for example, if you pay taxes

733
00:33:44,680 --> 00:33:46,720
Speaker 1: now on any money that you contribute to a wrath,

734
00:33:47,000 --> 00:33:49,800
Speaker 1: but then we're to recharacterize it to a traditional hira

735
00:33:50,200 --> 00:33:52,040
Speaker 1: later on, you would still be able to get that

736
00:33:52,120 --> 00:33:55,680
Speaker 1: tax break on those contributions. That's right. And let's talk

737
00:33:55,680 --> 00:33:58,560
Speaker 1: about timing a little bit here too. Because typically you

738
00:33:58,560 --> 00:34:00,960
Speaker 1: would have until your tax filing deadline to make that

739
00:34:01,000 --> 00:34:04,480
Speaker 1: re characterization, and so for most folks that's April. But

740
00:34:04,960 --> 00:34:06,840
Speaker 1: if someone else is listening and you know they've already

741
00:34:06,880 --> 00:34:09,680
Speaker 1: filed their tax return or filed for an extension, what's

742
00:34:09,719 --> 00:34:11,520
Speaker 1: really cool is that the i R S will grant

743
00:34:11,560 --> 00:34:15,080
Speaker 1: you an automatic six months extension from the standard April

744
00:34:16,000 --> 00:34:19,560
Speaker 1: tax deadline to October fifteenth. That's pretty cool. However, it's

745
00:34:19,560 --> 00:34:21,680
Speaker 1: worth pointing out though, that you may need to file

746
00:34:21,880 --> 00:34:25,080
Speaker 1: in amended tax return. Yeah, for Tom this would be

747
00:34:25,160 --> 00:34:29,400
Speaker 1: April in all likelihood that he would be facing these

748
00:34:29,440 --> 00:34:31,960
Speaker 1: issues exactly. But but then also to some of the

749
00:34:32,000 --> 00:34:35,360
Speaker 1: tax benefit that you would receive from that traditional IRA

750
00:34:36,000 --> 00:34:38,360
Speaker 1: is dependent on whether or not you and your spouse

751
00:34:38,719 --> 00:34:42,640
Speaker 1: have workplace sponsored retirement accounts, because if that's the case,

752
00:34:42,760 --> 00:34:45,759
Speaker 1: there are additional limitations on the amount of the tax

753
00:34:45,760 --> 00:34:48,560
Speaker 1: deduction that you'd be able to take advantage of. Two

754
00:34:48,880 --> 00:34:51,720
Speaker 1: we're not going to dive into that in detail because

755
00:34:51,719 --> 00:34:53,600
Speaker 1: you didn't give any more details on that, but be

756
00:34:53,680 --> 00:34:56,000
Speaker 1: sure to keep that in mind too. That could have

757
00:34:56,360 --> 00:35:00,439
Speaker 1: a significant effect on your ability to have any sort

758
00:35:00,440 --> 00:35:03,359
Speaker 1: of tax advantage even in a traditional IRA. So make

759
00:35:03,360 --> 00:35:05,920
Speaker 1: sure to keep that in mind as well. That's right. Uh.

760
00:35:05,960 --> 00:35:08,920
Speaker 1: And so basically onto Tom's second question, he had a

761
00:35:08,960 --> 00:35:12,479
Speaker 1: lot of questions to be complex stuff. I understand. Yeah,

762
00:35:12,640 --> 00:35:15,360
Speaker 1: you basically we're asking about the phase up between you know,

763
00:35:15,400 --> 00:35:17,960
Speaker 1: if you earned between A hundred nine thousand and two

764
00:35:18,000 --> 00:35:20,879
Speaker 1: hundred eight thousand dollars for I RA A S. And Yes,

765
00:35:20,920 --> 00:35:24,160
Speaker 1: it is linear and it's evenly distributed. And so for example,

766
00:35:24,200 --> 00:35:27,960
Speaker 1: if you made say Hudd thousand, five hundred dollars, then

767
00:35:27,960 --> 00:35:30,440
Speaker 1: you're gonna be limited to contribute not six thousand dollars,

768
00:35:30,440 --> 00:35:33,040
Speaker 1: but fifty seven hundred dollars. Uh. And so then if

769
00:35:33,080 --> 00:35:36,399
Speaker 1: you made say Hud thousand, nine hundred dollars, you're gonna

770
00:35:36,400 --> 00:35:39,239
Speaker 1: be limited to five thousand, four hundred and sixty dollars.

771
00:35:39,280 --> 00:35:42,000
Speaker 1: You're getting closer to that next cut off amount. Uh.

772
00:35:42,000 --> 00:35:44,279
Speaker 1: And So Fidelity actually has a calculator that we're that

773
00:35:44,360 --> 00:35:46,400
Speaker 1: we can link to in our show notes where you

774
00:35:46,440 --> 00:35:49,320
Speaker 1: can enter in your exact A juice gross income you

775
00:35:49,440 --> 00:35:52,520
Speaker 1: Maggie or you're your Maggie at the end of the year.

776
00:35:52,640 --> 00:35:54,760
Speaker 1: That way you'll know exactly how much you can contribute

777
00:35:54,800 --> 00:35:57,359
Speaker 1: to your IRA. Kind of love the Internet matt full

778
00:35:57,360 --> 00:36:00,799
Speaker 1: of fancy helpful calculators, I will say, is difficult, Like

779
00:36:00,880 --> 00:36:02,680
Speaker 1: I think they are the only ones who had a

780
00:36:02,719 --> 00:36:05,040
Speaker 1: calculator like that. You know, there's other calculators out there,

781
00:36:05,239 --> 00:36:07,520
Speaker 1: compounding interest calculators and all that kind of stuff, but

782
00:36:07,560 --> 00:36:10,560
Speaker 1: not a lot of folks are asking for your modified

783
00:36:10,560 --> 00:36:13,680
Speaker 1: adjusted gross income for the RATH phase out. Yeah, exactly,

784
00:36:13,719 --> 00:36:15,480
Speaker 1: that's it's kind of a specific one, so yeah, we'll

785
00:36:15,560 --> 00:36:17,040
Speaker 1: definitely make sure to link to that in the show

786
00:36:17,080 --> 00:36:19,919
Speaker 1: notes totally. And as to whether or not to Tom

787
00:36:19,960 --> 00:36:23,040
Speaker 1: on your last question, your tax prep software will flag

788
00:36:23,080 --> 00:36:26,759
Speaker 1: This depends on this specific software you're using, but we

789
00:36:26,880 --> 00:36:29,400
Speaker 1: kind of doubt it. Even if they send it a notification,

790
00:36:29,440 --> 00:36:32,160
Speaker 1: you'll likely have to manually log in to wherever you

791
00:36:32,200 --> 00:36:35,200
Speaker 1: have your RATH IRA and initiate the recharacterization of that

792
00:36:35,280 --> 00:36:38,319
Speaker 1: IRA yourself, if that's something you wanted to do. I

793
00:36:38,320 --> 00:36:40,960
Speaker 1: know the Vanguard has an online form and process that's

794
00:36:40,960 --> 00:36:44,759
Speaker 1: pretty easy to do. Most custodians will automatically calculate any

795
00:36:44,800 --> 00:36:47,719
Speaker 1: earnings and losses for you as well, so it's not

796
00:36:47,800 --> 00:36:50,320
Speaker 1: as painful of a process as it might appear. You

797
00:36:50,320 --> 00:36:53,839
Speaker 1: should be able to do it yourself without too much difficulty. Yeah,

798
00:36:53,840 --> 00:36:57,560
Speaker 1: that's right. So Tom, again, congrats on becoming a higher

799
00:36:57,560 --> 00:36:59,400
Speaker 1: way journal. You know, like where you're kind of getting

800
00:36:59,400 --> 00:37:01,080
Speaker 1: phase out of being able to take advantage of some

801
00:37:01,120 --> 00:37:03,920
Speaker 1: of these tax advantaged accounts, some of these benefits, some

802
00:37:03,920 --> 00:37:07,240
Speaker 1: of these deductions. But again, that is a good problem

803
00:37:07,280 --> 00:37:09,480
Speaker 1: to have, and hopefully we've kind of got you thinking

804
00:37:09,520 --> 00:37:11,880
Speaker 1: in the right direction on you know, how it is

805
00:37:11,880 --> 00:37:14,719
Speaker 1: that you should be investing these additional dollars as you

806
00:37:14,760 --> 00:37:17,040
Speaker 1: continue to earn more money. And Joel, let's go ahead

807
00:37:17,080 --> 00:37:18,720
Speaker 1: and shift gears. Let's take it back to the beer

808
00:37:19,000 --> 00:37:20,960
Speaker 1: that you and I enjoyed on this episode. This one

809
00:37:21,000 --> 00:37:23,560
Speaker 1: is called the Dark Side of the Strawberry Moon. This

810
00:37:23,560 --> 00:37:25,720
Speaker 1: one is by Cherry Street Brewing, who I am pretty

811
00:37:25,719 --> 00:37:28,680
Speaker 1: sure we've had beers on uh by them on the

812
00:37:28,719 --> 00:37:31,200
Speaker 1: show before, but we have never had this one before.

813
00:37:31,239 --> 00:37:33,200
Speaker 1: What were your thoughts. I do love a good Cherry

814
00:37:33,200 --> 00:37:36,520
Speaker 1: Street beer. They make great stuff, and man, I love

815
00:37:36,880 --> 00:37:39,680
Speaker 1: a strawberry sour beer. So this one had like a

816
00:37:39,680 --> 00:37:43,000
Speaker 1: little Pink Floyd reference in the name and on the graphics.

817
00:37:43,120 --> 00:37:45,359
Speaker 1: Did you ever go through a Pink Floyd phase? Ever? Din?

818
00:37:45,480 --> 00:37:47,560
Speaker 1: You never kind of went through that classic classic rock

819
00:37:47,719 --> 00:37:49,600
Speaker 1: I never watched The Wizard of Oz while listening to

820
00:37:49,640 --> 00:37:52,000
Speaker 1: Pink Floyd backwards. Wasn't that a thing? Yeah, it's totally

821
00:37:52,000 --> 00:37:53,440
Speaker 1: a thing. Back in the day, so at you g

822
00:37:53,640 --> 00:37:57,239
Speaker 1: a uh, the Georgia Theater used to actually play The

823
00:37:57,280 --> 00:38:00,239
Speaker 1: Wizard of Oz where it was sync up to the

824
00:38:00,320 --> 00:38:02,120
Speaker 1: Dark Side of Them backwards or now I don't remember.

825
00:38:02,120 --> 00:38:03,839
Speaker 1: I don't think it was backwards. But you definitely had

826
00:38:03,840 --> 00:38:06,239
Speaker 1: to start the album like at a certain point in

827
00:38:06,280 --> 00:38:08,359
Speaker 1: the movie for it, so like for its all line

828
00:38:08,440 --> 00:38:10,520
Speaker 1: up basically, and was it was it cool? I never

829
00:38:10,560 --> 00:38:13,319
Speaker 1: did mean, I never did it, Okay, all right, I

830
00:38:13,400 --> 00:38:15,160
Speaker 1: just have heard the stories. Well I'm not a Pink

831
00:38:15,200 --> 00:38:17,040
Speaker 1: Floy guy or and maybe it's just because I haven't

832
00:38:17,040 --> 00:38:19,200
Speaker 1: really given him a shot. Maybe I should. But um,

833
00:38:19,200 --> 00:38:22,239
Speaker 1: but the beer was good and it was tart. It

834
00:38:22,280 --> 00:38:25,040
Speaker 1: was fruity, a little bit of strawberry sweetness going on

835
00:38:25,080 --> 00:38:27,759
Speaker 1: at the same time. It felt like a perfect spring beer.

836
00:38:27,960 --> 00:38:31,799
Speaker 1: And since spring is all the way out now ring

837
00:38:31,880 --> 00:38:35,080
Speaker 1: has sprung, Yeah, it's nice to have a delicious strawberry

838
00:38:35,120 --> 00:38:38,200
Speaker 1: beer too to celebrate. So I really really enjoyed this one. Yeah,

839
00:38:38,239 --> 00:38:40,640
Speaker 1: it had nice berry notes going on, and I'll point

840
00:38:40,680 --> 00:38:44,040
Speaker 1: out there's a difference between a beer with strawberry and

841
00:38:44,080 --> 00:38:47,560
Speaker 1: it versus a beer with strawberry jam. We've had several beers,

842
00:38:47,600 --> 00:38:51,360
Speaker 1: interestingly enough, that incorporates strawberry jam and it has a

843
00:38:51,440 --> 00:38:53,040
Speaker 1: very different flavor because I don't know what it is

844
00:38:53,040 --> 00:38:55,080
Speaker 1: about strawberry jam, but like, I don't know if it's

845
00:38:55,120 --> 00:38:59,640
Speaker 1: the fermentation or just the way that jam makers process

846
00:38:59,680 --> 00:39:02,239
Speaker 1: straw areas, but it has a very unique flavor. This

847
00:39:02,280 --> 00:39:03,759
Speaker 1: was a little cleaner drinking. It doesn't kind of have

848
00:39:03,800 --> 00:39:05,799
Speaker 1: that fun going on, but it was still very very,

849
00:39:05,920 --> 00:39:08,720
Speaker 1: very very enjoyable, and with it being a wheat beer, uh,

850
00:39:08,760 --> 00:39:10,880
Speaker 1: you know, it definitely kind of had that weedy, chewy

851
00:39:11,040 --> 00:39:15,319
Speaker 1: finish that oftentimes reminds me of Captain Crunch. It's hard

852
00:39:15,320 --> 00:39:16,640
Speaker 1: for me to get away from that. But yeah, I

853
00:39:16,680 --> 00:39:18,279
Speaker 1: really enjoy this one. Glad that you and I got

854
00:39:18,280 --> 00:39:21,040
Speaker 1: to enjoy this one today on this beautiful spring day. Dude,

855
00:39:21,120 --> 00:39:23,239
Speaker 1: me too. Man, I really dug this beer and I

856
00:39:23,320 --> 00:39:27,440
Speaker 1: dug this episode at the same time. But that's kind

857
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Speaker 1: of close it out for this episode. We really appreciate

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00:39:29,760 --> 00:39:32,080
Speaker 1: you listening and if you want to check out the

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00:39:32,120 --> 00:39:34,080
Speaker 1: show notes, some of the links that we mentioned during

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00:39:34,120 --> 00:39:36,239
Speaker 1: this episode. Just go to our website how to money

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00:39:36,280 --> 00:39:38,399
Speaker 1: dot com. You'll find all of them there. I think

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Speaker 1: we we had a lot of links, fair amount of

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00:39:40,080 --> 00:39:42,040
Speaker 1: links in this one. Yeah. And if you've been listened

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00:39:42,080 --> 00:39:44,200
Speaker 1: to the show and you've found it enjoyable, if you

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00:39:44,280 --> 00:39:46,400
Speaker 1: found it helpful, resourceful, we would love for you to

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00:39:46,680 --> 00:39:50,000
Speaker 1: leave us a solid review over at Apple Podcasts or

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00:39:50,080 --> 00:39:52,279
Speaker 1: wherever it is that you listen to your podcast. It

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00:39:52,280 --> 00:39:53,799
Speaker 1: helps us to get the word out and it helps

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00:39:53,840 --> 00:39:57,000
Speaker 1: others to discover the show, uh and to get them

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00:39:57,040 --> 00:39:58,960
Speaker 1: kind of on the right path to to doing smart

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00:39:59,000 --> 00:40:01,920
Speaker 1: things with their money. So thanks in advanced for that, Joel.

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Speaker 1: That's gonna be it for this episode, Buddy. Until next time,

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Speaker 1: best Friends Out, Best Friends Out.