Speaker 1: Welcome to How the Money. I'm Joel and I and Matt,
Speaker 1: and today we are answering your listener questions. Yeah, Joel,
Speaker 1: that's one of those episodes where we get to hear
Speaker 1: directly from our listeners and we get to answer some
Speaker 1: of their questions. A few that we have this week.
Speaker 1: We're gonna take one about an app that allows you
Speaker 1: to invest in different startups. We're gonna answer a question
Speaker 1: regarding a fixed rate versus a variable rate when it
Speaker 1: comes to student loans. And then we're also going to
Speaker 1: take a question as to why some homeowners are seeing
Speaker 1: their insurance rates skyrocket as well as what to do
Speaker 1: about those increased rates as well. And plus then we've
Speaker 1: got two other questions as well. Man, Yeah, if my
Speaker 1: homeowners insurance rates go up, I'm walking, I'm leaving. I
Speaker 1: want to burn that house down. I'll shy so you
Speaker 1: can do that. That's home's fraud. Don't do that. That's
Speaker 1: in church froud. Don't do that. Yeah. Yeah, not a
Speaker 1: good idea, but yeah, some good questions lined up, some
Speaker 1: kind of unique questions I think to today on the show, Matt.
Speaker 1: But before we get to those, I want to mention
Speaker 1: really quickly that Acorns, which is an app that we've
Speaker 1: talked about on the show before which kind of helps
Speaker 1: people save more money. It kind of rounds up you're
Speaker 1: spending and then siphons off and almost indecipherable amount of
Speaker 1: your money into a savings account, so so that you
Speaker 1: can develop savings much quicker than you otherwise normally would. Well,
Speaker 1: they've just launched something called Acorns Early, and basically what
Speaker 1: they're trying to do with this is help you save
Speaker 1: and invest for your children in a similar fashion. And
Speaker 1: I just think that's so cool math that Acorns is
Speaker 1: launching this, And it does cost five bucks a month
Speaker 1: in order to have one of these accounts to start
Speaker 1: investing for your kid early. But the cool thing is
Speaker 1: if you had a baby in you qualify for a
Speaker 1: free Acorns family plan until your child turns eighteen. So
Speaker 1: I don't know the math on that right off the
Speaker 1: top of my head, but five dollars a month times
Speaker 1: twelve months times eighteen years, that's a lot of free
Speaker 1: Acorns Early account time, right. I thought you're gonna say
Speaker 1: it didn't know the math of how many free years
Speaker 1: that meant you had, And I was gonna say eighteen
Speaker 1: eighteen free years, but how many months overall? That's math
Speaker 1: that's beyond my pay grade, right, Yeah, but it's worth
Speaker 1: pointing out to that there are other brokerages and banks
Speaker 1: out there that offer accounts for kids for free. However,
Speaker 1: what's kind of special about this Acorn's Early account is
Speaker 1: they seem to be focusing on some of that personal
Speaker 1: finance education, right. I saw that if when you sign up,
Speaker 1: you get like a couple of free books, uh to
Speaker 1: teach kids, you know, different lessons. It's sort of like, uh,
Speaker 1: the Little Red Hen but with money instead, you know,
Speaker 1: a Little Red Hen, classic great book, but just different
Speaker 1: ways to teach kids and connect with them about how
Speaker 1: saving works and how you know, interest works, how compounding
Speaker 1: interest works. It really does seem like that they're committed
Speaker 1: to partnering with parents when it comes to raising your
Speaker 1: kids to be financially savvy. Yeah, and I know that's
Speaker 1: a question that comes up quite a bit for from
Speaker 1: our listeners, from most Americans. How do I teach my
Speaker 1: kids to to handle mone a well? And having something
Speaker 1: like acorns Early that service where not only are you
Speaker 1: investing for their future, but you're also at the same
Speaker 1: time helping them with financial literacy tools that are going
Speaker 1: to benefit them in the long run. That's kind of
Speaker 1: a nice little pairing, right, even though it does cost
Speaker 1: that five bucks a month. I agree. I think having
Speaker 1: both of those things simultaneously, actually doing the savings and
Speaker 1: then having Acorns as a partner essentially helping you teach
Speaker 1: your kids about money and how to handle it well
Speaker 1: is is pretty great. Yeah, And the fact that it's
Speaker 1: free definitely worth signing up, even if you're not totally
Speaker 1: sure what you want to do with that account yet, right,
Speaker 1: you know, you may not even have a need for
Speaker 1: an account for your kids, but because it is free,
Speaker 1: it doesn't hurt to go ahead and sign up, and
Speaker 1: you can even sit on that account until you find
Speaker 1: yourself in a position where it is necessary. Sort of
Speaker 1: like the fact that I signed us up for TikTok
Speaker 1: Joel just in case. Just in case, I mean, I
Speaker 1: feel that way about a lot of the news different
Speaker 1: social media accounts. Don't want somebody grabbing that how the
Speaker 1: Money handle on TikTok. Well, I waited too late. Somebody
Speaker 1: already did, Like kid has how the Money, so I
Speaker 1: had to get how the Money pod and so I'm
Speaker 1: not totally sure if we're ever gonna use that accounts
Speaker 1: and you know what that would look like, but I
Speaker 1: wanted to go ahead and make that happen just in
Speaker 1: case we do want to use that in the future.
Speaker 1: Never hurts to go ahead and sign up for another account.
Speaker 1: Go ahead and reserve your spot now. Yeah, and if
Speaker 1: that TikTok squatter wants to hand us back regular how
Speaker 1: the Money will take it, well, we can reach out
Speaker 1: to them, even though we'll probably never use it. All right, Matt, Well,
Speaker 1: let's mention the beer that we're having on the show today.
Speaker 1: We're drinking a beer called Barry Salty by Talisman Brewing Company.
Speaker 1: Big thanks to listener Andy for donating this one to
Speaker 1: the show. We'll give our thoughts on this Raspberry Goza
Speaker 1: at the end of this episode. That's right, Joel, And
Speaker 1: and again this is a listener questions episode, and so
Speaker 1: we want to make sure our listeners know that they
Speaker 1: can submit their own questions on our website at how
Speaker 1: the Money dot com forward slash ask. There you can
Speaker 1: find the simple instructions on how you can send us
Speaker 1: a voice memo. And we appreciate all of our listeners
Speaker 1: who send in their questions and if you have a
Speaker 1: good one for us, we would love to hear from you.
Speaker 1: And so Joel, let's go ahead and take our first
Speaker 1: question from this episode. Hey, Matt and Joel, this is
Speaker 1: Zach from Atlanta, fellow a t L resident, and fellow
Speaker 1: fan of Monday Night Brewing. Hey, so, my question is
Speaker 1: regarding fixed rate versus variable rate loan refinancing, specifically for
Speaker 1: my student loan. So I know the best advice usually
Speaker 1: is to go with a fixed rate refinance because interest
Speaker 1: rates have been historically very low lately and it's less
Speaker 1: risk to have a fixed rate. However, since the Chairman
Speaker 1: of the Fed recently committed to keeping interest rates very
Speaker 1: low for the next two years in light of the
Speaker 1: pandemic and whatnot, I'm wondering if it would be more
Speaker 1: prudent to actually refinance with a variable rate since I
Speaker 1: could count on that race staying pretty low the next
Speaker 1: couple of years, especially if I tried to pay off
Speaker 1: this thing in the next few years. So yeah, I'm
Speaker 1: just wondering if you guys thoughts have changed on that
Speaker 1: at all. So thank you and thank you guys for
Speaker 1: the show. I really appreciate all the advice you guys
Speaker 1: have motivated me to recently buy a house here in
Speaker 1: Atlanta and pursue house hacking. So yeah, really thankful. Keep
Speaker 1: it up, guys, Zach your house hacking, Oh my gosh,
Speaker 1: I love it. I love hearing that. It's like, seriously
Speaker 1: one of the number one ways to jump start your
Speaker 1: wealth building by massively lowering the amount of money outgoing
Speaker 1: every month towards like what you pay to live somewhere
Speaker 1: and owning that home and running out parts of it
Speaker 1: two people for years to come. And that's gonna be
Speaker 1: a big head start to Zack and building his finances
Speaker 1: in a positive direction. Not only is he possibly lowering
Speaker 1: his expenses significantly, but he might even be making some
Speaker 1: every single month on top of, you know, ways paying
Speaker 1: towards his mortgage. So that's when house hacking it reaches
Speaker 1: a just like the perfect level possible if you're actually
Speaker 1: making money to live in a place like house hacking nirvana.
Speaker 1: And then Zach also a great job on supporting an
Speaker 1: amazing local craft brewery. Monday Night Man, they rule the
Speaker 1: day that actually that we're recording this uh, they are
Speaker 1: releasing another one of their special hop hut I p A. S.
Speaker 1: And Joel, you and I we went in on one. Uh,
Speaker 1: one of us needs to go pick that up in
Speaker 1: the next few days. Yeah, we do. It's gonna be
Speaker 1: a good one that I'm excited and the beers have
Speaker 1: gotten so good. Yeah, we love Monday Night. But Zack
Speaker 1: onto your question about fixed rate or floating rate student
Speaker 1: loan refinancing, Well, you make an astute observation. First, Matt
Speaker 1: and I were typically fans of fixed rates for mortgages
Speaker 1: and for student loans. We have been over the past
Speaker 1: few years, in particular because we've basically been at historically
Speaker 1: low rates and we're still at historically low rates. But
Speaker 1: for some people it actually does make more sense right
Speaker 1: now to have a floating rate instead of a fixed rate.
Speaker 1: And so yeah, let's talk about why that's the case
Speaker 1: and who that applies to. Refinancing into a variable rate
Speaker 1: makes more sense for your situation, in particular because of
Speaker 1: the Fed's decision to keep rates low for the next
Speaker 1: couple of years, which is kind of uncommon to have
Speaker 1: that signal, for them to announce that and say that
Speaker 1: this is what we're gonna do, because you know what
Speaker 1: if they go back on what they said, they're going
Speaker 1: to get a lot of crap. Yeah, exactly, exactly, So
Speaker 1: it just really helps people out when it comes to
Speaker 1: planning and how they're going to organize their debt, which
Speaker 1: is Zac's question, right, And it's just such a sweet
Speaker 1: advantage to be able to know and count on the
Speaker 1: fact that that floating rate is going to stay low
Speaker 1: for at least a few years. Yeah, exact. This could
Speaker 1: be an especially great decision for you because you mentioned
Speaker 1: that you want to pay this loan off in the
Speaker 1: next few years. Right. We wouldn't normally recommend a floating
Speaker 1: rate for someone who you know, might take you know,
Speaker 1: eight or twelve years to pay off their student loan, Butza,
Speaker 1: it sounds like you can really get after it in
Speaker 1: short order. So a floating rate a variable rates for you,
Speaker 1: it's gonna be a solid move, and it will mean
Speaker 1: that you'll be able to pay less in interest overall,
Speaker 1: which is a huge win. Yes, so much if it
Speaker 1: comes down to time frame as to whether you're choosing
Speaker 1: something that's variable or or a rate that's floating. When
Speaker 1: it comes to the mortgage you're choosing, or when you're
Speaker 1: considering a home equity line of credit, versus a home
Speaker 1: equity loan in a short time frame with kind of
Speaker 1: the FED telegraphing what they're gonna do, means that a
Speaker 1: floating rate is a better idea for a lot of
Speaker 1: people right now. And Zach also too, it's it's really
Speaker 1: important to mention and for anybody else with the student loan,
Speaker 1: that federal student loan payments are essentially on hiatus until October,
Speaker 1: and so if you are refinancing a federal student loan,
Speaker 1: you're going to lose that benefit and you're going to
Speaker 1: need to start paying on it pretty quickly. But it
Speaker 1: sounds like that's not a deal breaker for you because
Speaker 1: you are looking to pay it off as quickly as possible.
Speaker 1: But for everybody listening before you decide to do something
Speaker 1: like this in refinance a federal student loan, read our
Speaker 1: article on how to money dot com about student loan
Speaker 1: refinancing before you do it. There are a lot of
Speaker 1: ins and outs and a lot of particulars that you
Speaker 1: need to take into consideration, and there are certainly some
Speaker 1: cases where it makes more sense to stick with having
Speaker 1: your federal loan instead of refinancing because of the rights
Speaker 1: that you have as a federal student loan holder. But
Speaker 1: still it can make sense to refinance with a private lender,
Speaker 1: in particular if it means that you can pay off
Speaker 1: your loan more quickly while paying less interest. And in
Speaker 1: that article, Matt, we also talked about a couple of
Speaker 1: our favorite companies for people to consider doing a student
Speaker 1: loan refinance with. So will make sure to put that
Speaker 1: article in our show notes for this episode, Yes, we will, man,
Speaker 1: all right. Next up, we're gonna take one on four
Speaker 1: one K distributions as well as increasing insurance rates. But
Speaker 1: first let's take a quick break. All right, we're back
Speaker 1: from the break in. Our next question is about taking
Speaker 1: a distribution from your retirement account, and this one comes
Speaker 1: from the Windy City. Hi guys, this is Elizabeth in Chicago.
Speaker 1: I hope you and your families are well. I wanted
Speaker 1: to ask what you thought about taking a four one
Speaker 1: K distribution under the Cares Act. It looks like my
Speaker 1: company is offering this if you meet certain criteria. I
Speaker 1: understand there's no early withdrawal penalty, which is provided under
Speaker 1: the Act. However, it's not clear if you have to
Speaker 1: pay back the distribution or not. An example would be
Speaker 1: to take a small amount of my balance, say ten
Speaker 1: dollars to do some home improvement surround my house that
Speaker 1: are not critical but do increase the value of my
Speaker 1: home in the long term. Thanks Elizabeth, Thanks so much
Speaker 1: for that question, and we hope that you are doing
Speaker 1: well too. And as much as I like renovating homes. Uh,
Speaker 1: the ore quick answer is going to be that we're
Speaker 1: not a fan of you taking money out of your
Speaker 1: froe owen k, even though it's become easier to do so.
Speaker 1: The Cares Act. It did away with a penalty for
Speaker 1: taking money out of your froe own k early, specifically
Speaker 1: as a way to help people who do need to
Speaker 1: access that money that they otherwise wouldn't be able to touch.
Speaker 1: And you know, you can take up two hundred thousand
Speaker 1: dollars out while avoiding that ten percent penalty that you
Speaker 1: would normally incur, and you can pay the taxes over
Speaker 1: a three year period as well. And so you know,
Speaker 1: I say all these things, and you might be thinking
Speaker 1: to yourself, like, this sounds pretty great, right, Yeah, in reality,
Speaker 1: is not something that we would recommend. Yeah, And that's
Speaker 1: ultimately because your money is best left in your account
Speaker 1: to grow for years to come, and in particular, home
Speaker 1: improvements is not a good reason to tap your retirement
Speaker 1: accounts early. If you had lost your job and this
Speaker 1: money would would be needed to put food on the table,
Speaker 1: I think you know we'd be having a different conversation.
Speaker 1: But to do something like like home improvements, it doesn't
Speaker 1: make sense to tap your retirement account, even just to
Speaker 1: take ten tho dollars out, despite the fact that it's
Speaker 1: become easier and less financially burdensome to tap that four
Speaker 1: O one K right now. Right if you really do
Speaker 1: want to do those home improvements, Matt and I would
Speaker 1: suggest a couple of other ways to tackle it. One
Speaker 1: is to make a goal to save up ten thousand
Speaker 1: dollars and pay for those renovations in cash. You could
Speaker 1: even right now consider taking out a home equity line
Speaker 1: of credit and pay for the repairs that way, and
Speaker 1: bonus rates are incredibly low on those right now. But
Speaker 1: we're just not fans of taking money out of your
Speaker 1: retirement account in order to get work done on your home.
Speaker 1: I know that the Cares Act and the ability to
Speaker 1: withdraw funds from your four O one K have caused
Speaker 1: a lot of people to tap their retirement accounts, and
Speaker 1: lots of people just took that as a signal that
Speaker 1: now was a good time to take money out of
Speaker 1: retirement in particular too to avoid those fees and pay
Speaker 1: the taxes over a more time year period. But there
Speaker 1: are very few people who are going to be better
Speaker 1: financially served to take money out of their retirement accounts
Speaker 1: instead of just continuing to let it grow. Yeah, and
Speaker 1: one last thing, Elizabeth, Uh, if you make renovations and
Speaker 1: make improvements to your home, make sure that you're doing
Speaker 1: them for yourself, right. Don't necessarily go into that thinking
Speaker 1: that you're gonna be able to get that money out
Speaker 1: when it does come time to sell at home. Oftentimes,
Speaker 1: the dollar amount that we put into our homes to
Speaker 1: improve it, that doesn't necessarily translate dollar for dollar when
Speaker 1: it comes time to sell. So make sure that those
Speaker 1: improvements are for you, not for the next owner of
Speaker 1: your house. All right, Joe. Our next question is from
Speaker 1: a listener who is seeing his homeowner insurance premiums skyrockets,
Speaker 1: so let's hear from him. Hey, guys, my name is Pavel.
Speaker 1: I'm from Central Florida, work here as a police officer,
Speaker 1: and I have a question about a home insurance. I
Speaker 1: have a whole house mortgage. We've been paying it for
Speaker 1: about six years, have nine years left. And I know
Speaker 1: just when I started with a house mortgage, my home
Speaker 1: insurance used to be about thousand dollars a years, and
Speaker 1: I went to eleven hundred. This year, my house insurance
Speaker 1: is eighteen hundred. I have no idea what happened. I
Speaker 1: didn't file any claims, maybe because I live in Florida
Speaker 1: and we have hurricanes once in a while, but it
Speaker 1: used to be thousand dollars a year and it's eighteen hundreds.
Speaker 1: I message my insurance company or group that manages insurance companies,
Speaker 1: ask them to find me a better rate, and they
Speaker 1: told me they can't find anything cheaper. Do you think
Speaker 1: it's because Florida is a hurricane state or you think
Speaker 1: I can still find a cheaper, better insurance at another places.
Speaker 1: Please let me know. Thanks love your show by Pablo.
Speaker 1: Thanks so much for your question, man, and thanks for
Speaker 1: being a police officer. It's really hard work right now,
Speaker 1: and so yeah, we just want to wish you luck
Speaker 1: and please stay safe out there. Also, congrats, by the way,
Speaker 1: and getting a fifteen year moreach did you notice how
Speaker 1: he kind of snucked at it at the beginning of
Speaker 1: the question, Matt, he he has what nine years left,
Speaker 1: nine plus six fifteen years exactly, So that's huge. And
Speaker 1: Paul is going to have his home paid off a
Speaker 1: faster than most people are, that's for sure, and that's
Speaker 1: caused for celebrations. So yeah, before we get to your question, Pablo,
Speaker 1: just congrats on that man. That's a big time financial feat.
Speaker 1: And so Pavla, let's go ahead and first and address
Speaker 1: you know, why you are seeing your rates increase Florida.
Speaker 1: It's a tricky beast when it comes to home insurance rates.
Speaker 1: They've been rising across the board in your state for years.
Speaker 1: You mentioned hurricanes, like, yeah, they definitely have something to
Speaker 1: do with that, but there are other reasons for increased
Speaker 1: insurance costs as well. There has been a tidal wave
Speaker 1: of lawsuits against insurance companies as unscrupulous contractors have been
Speaker 1: combing neighborhoods, encouraging homeowners to fill out claims even you know,
Speaker 1: when they necessarily haven't been valid even and so because
Speaker 1: of this, some insurers are ceasing operations in the state
Speaker 1: um or at least in some specific counties. And then
Speaker 1: when that happens, there's a lack of competition, which only
Speaker 1: drives up rates. Yeah, so hurricanes part of the problem,
Speaker 1: not the whole problem. And if you are a homeowner
Speaker 1: in the state of Florida, you have definitely noticed that
Speaker 1: your homeowners insurance that the premiums have gone up quite
Speaker 1: a bit. So in addition to that lack of competition
Speaker 1: map that you just mentioned, for the insurers who are
Speaker 1: still insuring homes in Florida, it just costs more to
Speaker 1: do business too, and they're having the rais rates in
Speaker 1: order to remain profitable. The Tampa Bay Times actually reported
Speaker 1: that some insurance companies are requesting rate hikes ranging from
Speaker 1: twenty to sixty percent, and analysts say that basically everybody
Speaker 1: in the state it should expect at least a twenty
Speaker 1: increase in their homeowners insurance costs this year. So Pavlos,
Speaker 1: not just you, it's actually everybody. So talk to your neighbors.
Speaker 1: You'll find out that they're having the same experience. Yeah. Unfortunately,
Speaker 1: in Pavlo's case, it sounds like he's maybe more on
Speaker 1: the sixty percent end of things, which totally sucks. Yeah. Yeah,
Speaker 1: and I don't know if that's comforting or that's just
Speaker 1: disconcerting that basically everybody in the state of Florida is
Speaker 1: going through this this same thing. But knowing the facts
Speaker 1: and knowing that that it's happening to everybody at least
Speaker 1: in part at least helps you make sense of the situation.
Speaker 1: And then you know, you said you asked your insurance
Speaker 1: company for a better rate, Pavel, But the thing that
Speaker 1: you need to do is shop with multiple of insurers
Speaker 1: to to get a new quote. Rates can vary widely
Speaker 1: from insure to insure. So because of that, we like
Speaker 1: policy genius for shopping your homeowner's policy uh and also
Speaker 1: reaching out to a local independent agent who can quickly
Speaker 1: shop with multiple insurers as well. In addition to that too,
Speaker 1: you know, there might be some other creative ways that
Speaker 1: you can reduce your premiums. UH. You can raise your deductible,
Speaker 1: you can kind of bundle your policy with your auto
Speaker 1: insurance as well, and really just see what other discounts
Speaker 1: there are available to you. May maybe even being a
Speaker 1: police officer, there might be some discounts available to you
Speaker 1: just because of your work. Yeah, I know, my insurance
Speaker 1: agent has gotten annoyed at me. Through the year, sometimes
Speaker 1: asking about what discounts are available, basically like harangked her,
Speaker 1: what about where I went to college? What about this stuff?
Speaker 1: I mean, they are all sorts of discounts available, and
Speaker 1: so it's important to ask for them. And so much
Speaker 1: of the time the discounts go to the people who
Speaker 1: ask for it. And and this is definitely one of
Speaker 1: those cases where there are probably some discounts you're eligible
Speaker 1: before that you just haven't been notified of, and you know,
Speaker 1: all you gotta do is ask. But hopefully those tips
Speaker 1: for for shopping around, for asking about those discounts with
Speaker 1: your current insurer can help you lower those costs. I
Speaker 1: know that's that's a pretty steep increase and that's a
Speaker 1: tough burden to bear financially. So best of luck to
Speaker 1: you and to all your neighbors and everybody in Florida
Speaker 1: there who's fighting these ridiculously high home insurance rates. All right,
Speaker 1: we got a couple more questions that we need to
Speaker 1: get to, including one listener who IT wants to know
Speaker 1: about getting a credit line increase and opening a new
Speaker 1: credit card. And we'll take that question and one more
Speaker 1: right after this break. All right, Joe, we are back
Speaker 1: for the break. We're taking a listener questions, and before
Speaker 1: we get to that question about credit cards and credit scores,
Speaker 1: let's take one about an app that allows you to
Speaker 1: invest in new startups. Hey guys, this is Jeff from Augusta, Georgia.
Speaker 1: First off, want to thank you all for all y'all
Speaker 1: have done and the advice y'all give people, and I
Speaker 1: just really appreciate, uh, what you'll do for everybody out there.
Speaker 1: I have a question about investing through a website called
Speaker 1: republic Dot. CEO camera Carl them Um, and I wanted
Speaker 1: to invest in a company called Wherewell who I was
Speaker 1: contacted by through a nonprofit called co Op for Education,
Speaker 1: who helps support Guatemalan kids get through school. And I
Speaker 1: was just, um curious if y'all think this is a
Speaker 1: safe company because I've never heard of it. I've only
Speaker 1: seen six five star reviews on Google and one article
Speaker 1: on Forbes, and that's pretty much all the information I've
Speaker 1: been able to find. Uh. Where Will is a company
Speaker 1: that makes consciously made clothing and I would like to
Speaker 1: help support them or get in on an investment opportunity
Speaker 1: with them. Let me know why y'all think about this
Speaker 1: and have a good one. Jeff, thanks for your question, man,
Speaker 1: and and thanks for saying thanks. We love doing this.
Speaker 1: It really is a whole lot of fun to get
Speaker 1: to talk about money with your best buddy. And also
Speaker 1: to Jeff sent us some beers recently, so Jeff big
Speaker 1: thanks for that too. Yeah, if only we had kind
Speaker 1: of been on our game a little bit, we could
Speaker 1: have enjoyed one of those beers while we answered his question.
Speaker 1: It would have been like he was sitting right here
Speaker 1: with us. We're so not thoughtful. Yeah. Well, actually we
Speaker 1: just couldn't wait to drink this beer, so we would
Speaker 1: have made it happen. They were good. They were good.
Speaker 1: Years don't keep as well as questions do. That's right.
Speaker 1: You can put a question on the shelf for a
Speaker 1: few months, but beers you kind of need to get
Speaker 1: to him. So that's true. So Jeff, let's get to
Speaker 1: your question. Speaking of which, first, Man, I love your
Speaker 1: desire to invest in in companies that are doing good.
Speaker 1: But first let's talk about this kind of investing, specifically
Speaker 1: start up investing. It's really really risky in most startups
Speaker 1: that are raising capital don't end up providing a big
Speaker 1: investor return, and startups overall, they end up failing. You
Speaker 1: would be lucky to even get your initial investment back
Speaker 1: years down the road. Also too, when it comes to
Speaker 1: investing in a startup, it's not some sort of liquid
Speaker 1: investment where you can always pull that money back, taking
Speaker 1: either a small loss or pulling some of that gain
Speaker 1: off the table. It's it's one of those investments where
Speaker 1: your money is tied up for quite a bit of time,
Speaker 1: typically for quite an number of years. So you really
Speaker 1: have to be committed to it in order to look
Speaker 1: past those risks and still do it anyway. Yeah, So
Speaker 1: not only do we not recommend investing with a single company,
Speaker 1: we definitely don't recommend investing with a company that is
Speaker 1: just getting started. Uh. And so what do we recommend
Speaker 1: and that is widely diversified index funds. Jeff, you probably
Speaker 1: have heard to say that before, but worth mentioning again.
Speaker 1: But Jeff, we wanted to specifically talk about Republic. There
Speaker 1: are other companies that have similar business models like we
Speaker 1: funder and seed invest. These different platforms allow you to
Speaker 1: even get started for as little as ten dollars, and
Speaker 1: there are a lot of new businesses and startups out
Speaker 1: there that you can invest in as a novice investor,
Speaker 1: you know, through these sites, which is pretty cool. And
Speaker 1: the reason it is cool is because traditionally you wouldn't
Speaker 1: be able to invest in these startups unless you were
Speaker 1: an accredited investor, and that means that you would have
Speaker 1: to have over one million dollars of net worth. So
Speaker 1: that's you, right, right, Matt. Yeah, I was actually gonna
Speaker 1: say you you're at the accredited investor at this table.
Speaker 1: Oh please, maybe in like a few decades. But even
Speaker 1: if I were an accredited investor in like a couple
Speaker 1: of decades, I would still be investing in widely diversified,
Speaker 1: low cost index funds. Yeah. No, I'm with you, And Matt,
Speaker 1: let's talk to about fees, because that's one of our
Speaker 1: reasons for talking about investing mostly in low cost mutual
Speaker 1: funds is not only the diversification, but it's the low fees.
Speaker 1: And when you look into what fees are being charged
Speaker 1: on platforms like Republic, well they claim that investing is
Speaker 1: free for investors, but Republic is making a chunk of
Speaker 1: six percent of the total funds raised plus two percent
Speaker 1: of the securities offered in a successful financing deal. And
Speaker 1: that's a that's a huge chunk of change given the
Speaker 1: shaky nature of investing in startups generally, and then the
Speaker 1: increased disadvantage that you're at when you consider those fees
Speaker 1: that are charged on the platform. It's just not how
Speaker 1: I would want to invest my money. Those fees make
Speaker 1: me weary, and I understand the need for them because
Speaker 1: Republic is essentially entering this new platform, this new way
Speaker 1: of investing. There there's a lot of risk involved, and
Speaker 1: they want a higher percentage commensurate with with the risk.
Speaker 1: But as an individual investor, I would just be hesitant
Speaker 1: to to pay those fees and to invest in that way. Yeah. Well, Joel,
Speaker 1: speaking of risk, that's something else we need to consider
Speaker 1: here as well. You know, Republic they claim to vet
Speaker 1: the companies that are able to raise funding on their
Speaker 1: platform where they take only less than five percent of applicants,
Speaker 1: and Republic they actually do a pretty good job on
Speaker 1: their site warning potential investors of the risks that exists.
Speaker 1: You know when you are investing in startups. You know,
Speaker 1: that's pretty impressive. They even specifically say on their site
Speaker 1: to quote unquote invest in a startup because you love
Speaker 1: their mission, product or service, not just for potential profit
Speaker 1: or return. And I love that they put that on
Speaker 1: there because that is truly the proper way to think
Speaker 1: about it. You know, this isn't a guaranteed slam dunk
Speaker 1: return on investment, you know, where you're gonna make a
Speaker 1: lot of money. Uh, it's there's a lot of risk involved. Yeah,
Speaker 1: but you know what, Matt, that's actually exactly what Jeff
Speaker 1: wanted to do. It sounds like he just really wanted
Speaker 1: to support this company that he believes in through investing
Speaker 1: in them, and so I can understand why he's drawn
Speaker 1: to it. It doesn't sound Jeff thinks he's gonna get
Speaker 1: rich making this investment in this startup. It's just because
Speaker 1: he he loves the company and wants to support them
Speaker 1: in what they're doing. And so I think that brings
Speaker 1: up the next point on how he should go about
Speaker 1: supporting a company that he actually believes in. Instead of
Speaker 1: investing in the startup you love, Matt, and Matt, you
Speaker 1: and I would say to support them as much as
Speaker 1: you can in other ways, like buying what they're selling
Speaker 1: and then giving those items that that company sells as
Speaker 1: gifts to your friends and family, and then let other
Speaker 1: people know about the crucial mission that this company is on.
Speaker 1: Those are all ways that you can support a company
Speaker 1: that you believe in without investing in a high fee
Speaker 1: manner hoping for a potential return. So basically funding that
Speaker 1: mission from an investor standpoint, it's just not the best move.
Speaker 1: And but at the same time, considering you can get
Speaker 1: started for so little money, if you wanted to put
Speaker 1: a hundred bucks or two hundred bucks towards it, it
Speaker 1: doesn't hurt to invest a little. I would just consider
Speaker 1: that more of a donation that has, you know, some
Speaker 1: extra potential at the same time, but the biggest way
Speaker 1: is just to to support that company in the traditional
Speaker 1: ways that you would support a company that you love.
Speaker 1: Nice man, those are some wise words. Totally agree with
Speaker 1: you there. Let's go ahead now and here our last
Speaker 1: question for the episode. This one has to do with
Speaker 1: credit cards. Hi, Joel him Matt, This is aoka from
Speaker 1: Grand Rapids, Michigan. I'm twenty five and new to personal finance.
Speaker 1: So I'm trying to build my credit up by looking
Speaker 1: up my credit score. What's bringing it down is my
Speaker 1: high credit usage. I didn't even know until finding your
Speaker 1: podcast recently that it was bad to spun your limit.
Speaker 1: I only have one visa card and a store card
Speaker 1: that I opened a few months ago. I want to
Speaker 1: ask my bank for a raised credit, but how much
Speaker 1: do I ask for I'm currently at one thousand. Also,
Speaker 1: I wanted to get two new credit card so I
Speaker 1: can have multiple lines of credit open, but when should
Speaker 1: I do that? Thanks for your help, Erica, A great question,
Speaker 1: and congrats on getting into personal finance. It's a it's
Speaker 1: an interesting world and you can go it's interesting, but
Speaker 1: it's fun, right, It's got like slightly higher stakes version
Speaker 1: of maybe play Monopoly or something because real money. Yeah, yeah, no,
Speaker 1: And it's really I think as someone who nerds out
Speaker 1: on it, I'm interested in delving deeper, and I hope
Speaker 1: that Erica feels the same way as she learns a
Speaker 1: little bit more. I think sometimes it can be frustrating
Speaker 1: that we have to learn as much as we do
Speaker 1: in order to kind of survive in the modern world.
Speaker 1: But I kind of take it as a challenge to
Speaker 1: learn more. But into Yeah, Erica, using most of your
Speaker 1: available credit does way negatively on your score in a
Speaker 1: big way. Most people don't know that, so especially now,
Speaker 1: definitely don't charge more than three a month on that
Speaker 1: card that you have, and consider paying the balance maybe
Speaker 1: two or three times every month as well. I have
Speaker 1: a friend Matt, who is personally so concerned with her
Speaker 1: credit score that even I mean, even though she's in
Speaker 1: great shape, she pays off her credit card balance about
Speaker 1: once a week just to ensure that Yeah, exactly right.
Speaker 1: She just wants to do the most to make sure
Speaker 1: that her credit score isn't being negatively impacted by the
Speaker 1: spending that she's putting on her credit card, even though
Speaker 1: she pays it off in full every month. Right, and
Speaker 1: considering the low limit that Erica has, that approach makes
Speaker 1: a lot of sense for her because we want to
Speaker 1: make sure she doesn't exceed that thirty percent utilization threshold,
Speaker 1: which won't be great for her score. Yeah, and so Erica,
Speaker 1: on asking for you know, that credit line increase, make
Speaker 1: sure that you have a multi year history of on
Speaker 1: time payments, you know, and if you've recently gotten a
Speaker 1: raise maybe I worked, that's a great reason that you
Speaker 1: can easily justify your request as well. Also, you know,
Speaker 1: if you've been able to raise your credit score, uh,
Speaker 1: your credit card company will be more likely to respond favorably.
Speaker 1: And increase that limit. Um, you know, and the worst
Speaker 1: they can say is no, uh, that won't hurt you
Speaker 1: in any way. And so one other part two as
Speaker 1: far as how much like I would personally take as
Speaker 1: much as they're willing to offer you. Essentially, the higher
Speaker 1: that you can get your credit line, the lower your
Speaker 1: utilization rate will typically be, and that's only a boon
Speaker 1: for your credit score. Yeah, I completely agree. The only
Speaker 1: thing you have to be wary of, Erica, is spending
Speaker 1: too much on that credit card if your limit gets
Speaker 1: massively increased, and it sounds like since you're getting into
Speaker 1: personal finance, that's something you're going to avoid. Let's also
Speaker 1: talk about getting a new credit card. We think that's
Speaker 1: great as well. We think most people should have more
Speaker 1: than one card. They should probably have three or four.
Speaker 1: That's gonna be the best case scenario for you when
Speaker 1: it comes to credit card rewards and diversifying those rewards
Speaker 1: too so, but of course, again, that only makes sense
Speaker 1: if you're paying them off in full every month. If
Speaker 1: your score is pretty good, you'll want to apply for
Speaker 1: a card that offers those additional perks for spending in
Speaker 1: specific ways. If your score is relatively low, though Erica, well,
Speaker 1: we would say consider going to your credit union to
Speaker 1: apply for a card. They're oftentimes they're more lenient and
Speaker 1: giving their members access to credit cards. You can also
Speaker 1: look into getting this card called the Pedal card, which
Speaker 1: doesn't check your credit score before approving. You will link
Speaker 1: to that one in the show notes. But it's by
Speaker 1: far the best credit card at this point for people
Speaker 1: that do have lower credit scores. And of course that's
Speaker 1: assuming Erica that you have maybe a lower credit score.
Speaker 1: But if you have a pretty decent credit score, you
Speaker 1: by all means look to just a traditional credit card
Speaker 1: and get the good ones like City Double Cash or
Speaker 1: something like that. And when it comes to applying for
Speaker 1: for new cards Erica, you'll probably want to wait about
Speaker 1: six months or you know, maybe a year between each
Speaker 1: credit card application. Every time you apply, you'll get a
Speaker 1: ding to your credit score that will take some time
Speaker 1: to recover, and applying, you know, for two or three
Speaker 1: cards in a short amount of time, that's gonna be
Speaker 1: a red flag. Something else to consider as well is
Speaker 1: that if you're planning to finance a bigger purchase like
Speaker 1: a car or a home, right, if you're looking at
Speaker 1: getting a new loan anytime soon, be sure to avoid
Speaker 1: opening up any new lines of credit, you know, within
Speaker 1: the preceding year if possible. So you don't want to
Speaker 1: open any of these new lines of credits before any
Speaker 1: of these big purchases, because you want to make sure
Speaker 1: that your score is gonna be rock solid. That way,
Speaker 1: you get the best loan terms and the best interest
Speaker 1: rate possible. Yeah. One more kind of outside the box
Speaker 1: way to to look at helping your credit score is
Speaker 1: if you have a family member, like a parent, who
Speaker 1: has great credit, you can ask them if they'd be
Speaker 1: willing to make you an authorized user on one of
Speaker 1: their credit cards, preferably one that has a long standing
Speaker 1: history that they've had for ten or twelve of twenty years.
Speaker 1: Even there are lots of credits. Have your parents out
Speaker 1: there who do this for their kids in order to
Speaker 1: help them establish solid credit footing. This will quickly help
Speaker 1: your score rise, and it could be a great way
Speaker 1: to help your kids kind of get started on the
Speaker 1: right path when it comes to their credit standing. And Matt,
Speaker 1: we've talked about this so many times. Your credit score
Speaker 1: is one of those things that is so important in
Speaker 1: modern society. You need to pay special attention to it,
Speaker 1: because it impacts everything from the rate you're gonna pay
Speaker 1: on a mortgage or a car loan to the rate
Speaker 1: you might pay for for homeowners insurance as well. I mean,
Speaker 1: there's so many impacts of that credit score on your finances,
Speaker 1: and so I'm glad that Eric is thinking about this
Speaker 1: because taking a long, hard look at your credit score
Speaker 1: and working to improve it is definitely one of those
Speaker 1: important things to do when you're kind of setting out
Speaker 1: on your personal finance journey. Ye. Man, it's implications are
Speaker 1: pretty far reaching. All right, let's go ahead and shift gears.
Speaker 1: Now let's get back to the beer for this episode. Um,
Speaker 1: this is a beer, another one that Andy donated to
Speaker 1: the show. So Andy, thank you again for donating this one.
Speaker 1: He sent this one to us in a crawler, so
Speaker 1: that means he probably was there at the himself when
Speaker 1: they filled this one up, which is pretty cool. This
Speaker 1: one is called Berry Salty, and this is a lightly
Speaker 1: fruited goza and this one was brewed by Talisman Brewing Company.
Speaker 1: Do I'll let you take the first go at it.
Speaker 1: What were your thoughts on this beer, buddy? So it's
Speaker 1: called berry Salty, so very salty, so very It really
Speaker 1: does kind of taste like eating a raspberry with a
Speaker 1: little bit of sea salt on it, which is kind
Speaker 1: of what I was expecting actually, based on the name
Speaker 1: and based on, you know, the initial look of the
Speaker 1: beer and the smell of it, and it was pretty
Speaker 1: spot on. I feel like they named it well, and
Speaker 1: I love raspberry beers, and in particular, with a little
Speaker 1: bit of that salt, it rounds it out and kind
Speaker 1: of creates two different dynamics going on. I really enjoyed
Speaker 1: this one because it's like, right up my alley. Yeah,
Speaker 1: you also like putting salt on all of your fruit,
Speaker 1: don't you know? I wouldn't say necessarily that people do that, right,
Speaker 1: Some people don't salt on watermelon. Oh yeah, some people
Speaker 1: think that's an actual thing. I don't even eat watermelon,
Speaker 1: so what ever, ever, what's wrong with you? I don't know.
Speaker 1: I don't like watermelon. I like most fruits, but watermelon
Speaker 1: just isn't out one of them. I don't. I don't
Speaker 1: think there's a single fruit that I don't like. All
Speaker 1: the fruits. Man in my six year old get along
Speaker 1: you get along so well. Her and I were actually
Speaker 1: both fighting over some chaerries the other day. So my thoughts, Man,
Speaker 1: I really like this beery it was. I felt it
Speaker 1: was lightly fruity. Sometimes I feel like raspberry beers can
Speaker 1: kind of overdo it. I do enjoy raspberries, but only
Speaker 1: in moderation, I'll say that. But this was a goza segment.
Speaker 1: It had a slightly briny flavor to it. It almost
Speaker 1: makes this beer kind of savory. Uh, And then that
Speaker 1: mixed with with this light kind of berry flavor to it,
Speaker 1: it made me think of tomatoes. Plus the color it's
Speaker 1: kind of got got like this like light orange kind
Speaker 1: of color to it kind of makes me think of
Speaker 1: tomatoes as well. Plus it's in the middle of summer
Speaker 1: and we've had some fresh tomatoes from our garden. But
Speaker 1: because of that salt, it almost gives this beer and
Speaker 1: umm a kind of flavory. You know about ummy. I've
Speaker 1: heard you use the term. I'm not educated in the
Speaker 1: ways of mom is terms. It's it's one of those
Speaker 1: terms where it's like salty, sweet, sour, bitter, and it's
Speaker 1: like tomatoes and steak like meat. Our supposed to have
Speaker 1: this additional flavor and they call it umm a because
Speaker 1: it doesn't really fall in any of the other categories
Speaker 1: on its own. Uh, it's like this sort of savory richness,
Speaker 1: and I feel like this beer totally has that, even
Speaker 1: though we can probably easily call it salty. But I
Speaker 1: think my head is also thinking about tomatoes as well,
Speaker 1: because I know tonight that we're gonna have b l
Speaker 1: T s and those tomatoes are going to be from
Speaker 1: the garden as well, so it should be some particularly
Speaker 1: wonderful BLT s. Man. Yeah, and I actually probably will
Speaker 1: put a little bit of salt on my tomato, not
Speaker 1: on my raspberries, though I don't roll like that. Would
Speaker 1: you ever drink a beer that had tomatoes in it? Like,
Speaker 1: do you think that would be a wise thing to
Speaker 1: brew a beer with tomatoes? Hey? I try it? I
Speaker 1: mean seriously, Like, this beer really does take my palette
Speaker 1: down that path of of savory and kind of umam a,
Speaker 1: you know, not to the point to where it feels
Speaker 1: like I'm like, you know, eating us a steak or
Speaker 1: eating a tomato. But it just kind of reminds me
Speaker 1: of that a little bit. So so I'm never gonna
Speaker 1: knock anything until I try it. How about that? There
Speaker 1: you go, I'd give it a shot to all Right, Matt,
Speaker 1: that's gonna do it for for this episode. For anybody
Speaker 1: who wants show notes for this episode, well you can
Speaker 1: get to our website, how to Money dot com and
Speaker 1: you'll get those there. Yeah, and we would also love
Speaker 1: it if you were a subscriber to the show. So
Speaker 1: if you haven't already done that, make sure you hit
Speaker 1: that button. And if you haven't left us a review
Speaker 1: over at Apple podcast we would be incredibly thankful if
Speaker 1: you were to do that. Just head over to Apple
Speaker 1: Podcasts and search how to Money, leave us a slid
Speaker 1: review over there, and thanks in advance. So Joel, that's
Speaker 1: going to be it, buddy. Until next time, Best Friends Out,
Speaker 1: Best Friends Out.