Speaker 1: Welcome to How the Money.
Speaker 2: I'm Joel, I am Matt.
Speaker 1: And today we're answering your listener questions.
Speaker 2: All right, buddy, let's get to it. Your is your
Speaker 2: throat all warmed up?
Speaker 1: I was born ready, Matt.
Speaker 2: We did just chat for about fifteen minutes about local
Speaker 2: politics before before we actually I had already hit record
Speaker 2: and then we got off topic, so went back over there, stopped, deleted,
Speaker 2: started fresh from the beginning.
Speaker 1: Sometimes that happens, like we're friends who we just like
Speaker 1: to catch up about random other stuff. Were yeah, that
Speaker 1: that's happening in our lives or around town, and then
Speaker 1: we're like, oh, wait, we're supposed to be recording a
Speaker 1: podcast now, aren't we.
Speaker 2: Got to talk about a personal finance not local politic?
Speaker 2: Yard signs is that we're.
Speaker 1: Just deliberating right now. Who's running for local school board?
Speaker 1: Is the thing?
Speaker 2: Just stop? Stop?
Speaker 3: All right?
Speaker 1: We are endorse candidate right now. Hey, if you.
Speaker 2: Want to, you to go out on a limb and
Speaker 2: no thanks, go for it. We're gonna talk about investing
Speaker 2: when you are younger, when you're twenty five. We're gonna
Speaker 2: specifically talk about some different accounts that this listener is
Speaker 2: asking about we're going to discuss insurance coverage limits. Specifically,
Speaker 2: we got some feedback from a listener. We will address
Speaker 2: that and plus another point that she raised. Another listener
Speaker 2: is asking what he should do about a four oh
Speaker 2: one k loan that he has. We've got all of
Speaker 2: that to get to plus more today. But buddy, I
Speaker 2: want to share something really quick. Folks might remember. I
Speaker 2: guess it was maybe two years ago that there is
Speaker 2: a small part of me that was thinking we might
Speaker 2: get a second vehicle, and I was considering a Tesla,
Speaker 2: and I was just like, I want to I want
Speaker 2: to drive it. I want to get to get to
Speaker 2: see what it feels like and what's great.
Speaker 1: About if you're going to do it, do it quick
Speaker 1: or that well?
Speaker 2: I know tax well that that time is it's no
Speaker 2: longer something I want to do. Okay, But one of
Speaker 2: the I don't know if you recall, but one of
Speaker 2: the things I shared was that it was a ton
Speaker 2: of fun to drive a Tesla, so much fun. I
Speaker 2: really enjoyed it, but it was a pain in the butt.
Speaker 2: So this was during a trip when we rented it,
Speaker 2: which is all, isn't that a great way to try
Speaker 2: out a car? By the way, while you are traveling
Speaker 2: somewhere to try to get that particular vehicle before you
Speaker 2: purchase the dang thing.
Speaker 1: Because like a twelve minute test drive, he giesn't tell
Speaker 1: you nothing.
Speaker 2: Second multi day extended test drive, which is so much fun,
Speaker 2: especially when it's a Tesla and you're not used to
Speaker 2: an evy. It was a ton of fun, but it
Speaker 2: was a pain in the butt to find the Tesla superchargers,
Speaker 2: the charge points or whatever O.
Speaker 1: My friends in California say the opposite that were crazy.
Speaker 1: Where I was, we had to go out of our
Speaker 1: way to get to a charger.
Speaker 2: That was the downside as opposed to a gas station
Speaker 2: on every single corner right, and not to mention because
Speaker 2: you're tapping into the supercharger as opposed to trickle you know,
Speaker 2: slow charging at home. If you weren't traveling, it ended
Speaker 2: up being just as expensive as having filled up traditional
Speaker 2: gas power vehicle right going to the gas station.
Speaker 1: Yeah, loading up on that battery at home.
Speaker 2: That's the way to do it. An of money.
Speaker 1: Yeah, if you're yeah, if you're filling up on the road, yeah,
Speaker 1: you're gonna pay a lot.
Speaker 2: So basically, what I learned was that Okay, I don't
Speaker 2: want a Tesla, and also I'm not gonna rent another
Speaker 2: Tesla again because it just didn't really work out for
Speaker 2: the type of trip that we were taking. Uh So
Speaker 2: you might be surprised to hear that I just rented
Speaker 2: another Tesla for a trip that Kate and I were taking.
Speaker 1: How you changed your tune?
Speaker 2: Here's the thing.
Speaker 1: In the span of three seconds.
Speaker 2: Would you rent a Tesla if it was substantially cheaper
Speaker 2: than even the most affordable economy traditionally gas powered vehicle, Yes,
Speaker 2: it would.
Speaker 1: And that's why I've been running evs lately. Rent a car,
Speaker 1: it's so great, dude.
Speaker 2: So the I went to one of the site aggregators,
Speaker 2: you know where it's got all the different different places
Speaker 2: that you can rent from. And then I hopped to
Speaker 2: one that I had rented from quite somewhat recently, just
Speaker 2: to see directly on the site, and they had they
Speaker 2: were running specials on electric vehicles specifically. It wasn't just Tesla,
Speaker 2: it was also like the the Ford mack e.
Speaker 1: I rented a subru electric car recently.
Speaker 2: Money it was great, enjoyed it.
Speaker 1: Yeah, yeah, So here's the deal.
Speaker 2: It was ninety six dollars total for this rental, as
Speaker 2: opposed to a little over three hundred oh my god,
Speaker 2: for even the most economy whatever, gas powered vehicle.
Speaker 1: That's where it's a hassle man.
Speaker 2: Yes, well here, and here's the other thing. I of
Speaker 2: course looked to where we were traveling, and there were
Speaker 2: superchargers very close by to where we're planning to travel.
Speaker 2: But I specifically paid like ten bucks more and got
Speaker 2: the long range because I think there's a chance we
Speaker 2: may not even need to charge at all, uh during
Speaker 2: that trip, because because you know, they charge you if
Speaker 2: you bring it back without over ninety percent battery life.
Speaker 2: But it's only thirty five bucks, and so like I
Speaker 2: might be able to save ten bucks or something. I
Speaker 2: don't know, maybe it's only fifteen or twenty five bucks
Speaker 2: to charge it myself. But the worst case scenario is
Speaker 2: let's say we're tight on time, we gotta make it
Speaker 2: back to the airport. What do you do? You just
Speaker 2: take it back and they just charge you thirty five
Speaker 2: bucks yah, which is still there is a still a
Speaker 2: massive savings to be had there. Going with the EV
Speaker 2: as opposed to a more traditional traditional vehicle. Last wanted
Speaker 2: to share that I like that because I think there's
Speaker 2: a there's good savings opportunity out there.
Speaker 1: I like that. I've been shocked at the discounts on
Speaker 1: EV's too when you're running a car. And last I
Speaker 1: was stayed at an Airbnb last time, and so I
Speaker 1: just messaged with the folks ahead of time, and I said, Hey,
Speaker 1: do you have a place I can plug in over there?
Speaker 1: Just trickle chargings fine? And they were like, yeah, we'll
Speaker 1: leave an extension cord out through the garage there you go.
Speaker 1: So I was like fueling up for free, yes, and
Speaker 1: so yeah, just ask the question of your host, if
Speaker 1: for a hotel or wherever you're staying, just just check
Speaker 1: and see. Maybe you don't even have to pay for
Speaker 1: a supercharger. Maybe there's some place close by you can
Speaker 1: charge up for free.
Speaker 2: In our case, we don't have it. It's not an Airbnb,
Speaker 2: so there's not going to be the ability to run
Speaker 2: that extension cord out otherwise.
Speaker 1: I don't know. Man, Did I tell you that go
Speaker 1: to Low's get a tow hundred foot extension cord just
Speaker 1: like tapp into this house near behind?
Speaker 2: Did I tell you that I literally threw an extension
Speaker 2: cord in the minivan because we rented a plug in
Speaker 2: hybrid for the road trip. Oh okay, and because I
Speaker 2: wanted to have the option wherever we stayed, because we
Speaker 2: stayed at Airbnb's the entire time to be able to
Speaker 2: use the extension. Dude, we absolutely use that extension cord.
Speaker 2: It was a smart thing that Chrysler Pacific, but yeah,
Speaker 2: it was. This is just a piece of advice out
Speaker 2: there for folks to make sure to shop around instead
Speaker 2: of going with the default, even when the default tends
Speaker 2: to be a money saver, like Kayak or Priceline or
Speaker 2: skyscanner one of those sites that I did check. Sometimes
Speaker 2: it pays to go directly to the business's website itself
Speaker 2: and to find the best deal.
Speaker 1: Don't forget Costco's auto rental program as well. It's a
Speaker 1: good place to look. All right, Let's mention the beer
Speaker 1: we're having on this episode, Matt. This is called Marbits
Speaker 1: by Southern Grist. It's a marshmallow IPA. We'll give our
Speaker 1: thoughts later. Should be interesting, Yes we will, all right.
Speaker 1: If you have a money question, we'd love to hear
Speaker 1: from you, just go to how to money dot com
Speaker 1: slash ask read the instructions or record your question on
Speaker 1: the voicemail app of your phone. Email it over to
Speaker 1: us at how to Moneypod at gmail dot com. We
Speaker 1: want to hear from you. Hopefully we can take your
Speaker 1: question next week on the show. Matt, let's get to
Speaker 1: a question specifically about a four oh one K loan
Speaker 1: UH and a nervousness about not being able to pay
Speaker 1: it back in time.
Speaker 3: Hello, Matt and Joel. My name is Nathan Parkinson from Pocatello, Idaho.
Speaker 3: I have a four to oh one k through my
Speaker 3: work right now that I have a four to oh
Speaker 3: one K loan through, and I was thinking about moving
Speaker 3: jobs and one of the places I was planning on
Speaker 3: going to doesn't have a four to oh one K.
Speaker 3: The difference in pay might be at least thirty thousand dollars,
Speaker 3: so I wasn't sure if I can't pay off that loan.
Speaker 3: I've read that sixty to ninety days that you have
Speaker 3: to pay it off or you might get charged on
Speaker 3: your tax taxes. I just wanted to be able to
Speaker 3: find out if I should be looking for a different
Speaker 3: job that actually offers a four o one K loan
Speaker 3: and how I might be able to find something that
Speaker 3: can either get a match or if it doesn't have
Speaker 3: a four to one k loan, how I go about
Speaker 3: getting more into my IRA four oh one k.
Speaker 2: Thanks Matt and Joel. Oh, Nathan's in a tight spot here, Joel,
Speaker 2: I certainly hate to see him not take this job
Speaker 2: that pays a whole lot more because of this decision
Speaker 2: that he's made here in the pasture. Honestly, these are
Speaker 2: the sorts of situations. These are the things we want
Speaker 2: folks to avoid completely, and it's why we tend to
Speaker 2: be against four one k loans because the common refrain
Speaker 2: that you hear when you talk about a four one
Speaker 2: k loan is like, hey, you're just gonna pay yourself back,
Speaker 2: no harm, no foul.
Speaker 1: Even that interest to your paying. Yeah, it's going back
Speaker 1: to you.
Speaker 2: But the assumption is that because of that, I guess
Speaker 2: it's just not that bad. But when you take the
Speaker 2: money out, it's also not in the market, it's not
Speaker 2: growing on your behalf, and then you might end up
Speaker 2: in a situation like Nathan, where you are looking for
Speaker 2: a new job, or maybe even worse, maybe you are
Speaker 2: in a situation where you get laid off and oh
Speaker 2: you know what, that four one k loan, it can
Speaker 2: present a real issue. Yes, you don't have the ability
Speaker 2: to pay it back pretty quickly.
Speaker 1: That's right. Yeah, So the four on k loan, it
Speaker 1: sounds like the easiest way to get money. Hey, it's
Speaker 1: better than a lot of other options. And it might
Speaker 1: be depending on your you know, ability to pay back
Speaker 1: how long it's going to take. But there are a
Speaker 1: lot of potential downsides too. And think about the run
Speaker 1: up we've seen in the market, Matt, what Nathan took
Speaker 1: out not to you know, point into this source spot Nathan, Sorry,
Speaker 1: but like it. The ruin is the market's been up
Speaker 1: like what thirty five percent essentially over the past five
Speaker 1: or six months. So Nathan's right, if he doesn't pay
Speaker 1: this loan back in a timely fashion, he's gonna owe money,
Speaker 1: right because it's going to be treated as a disbursement.
Speaker 1: So I think he said in his email he owes
Speaker 1: about fifty three hundred dollars toward this four O one
Speaker 1: k loan. And so what does that look like, Well,
Speaker 1: it means he's going to pay ordinary income tax on
Speaker 1: that money, as well as a ten percent early would
Speaker 1: draw penalty on top. So I don't think Nathan's fifty
Speaker 1: nine and a half. Because of that, he is gonna
Speaker 1: owe that extra ten percent. And that's I don't know.
Speaker 1: To somebody like me, that feels like Harry Houdini got
Speaker 1: punch Matt. You remember, That's that's how we ended up dying, right,
Speaker 1: was like somebody punched him when he wasn't ready, and
Speaker 1: was it.
Speaker 2: I thought it was like a canniball.
Speaker 1: I thought it was somebody. I think I think it
Speaker 1: was like some young fella, because he would let people
Speaker 1: come punch him as hard as as hard as he
Speaker 1: could during his acts, and they were like, oh, I'm
Speaker 1: going to punch her, and he wasn't. He wasn't ready,
Speaker 1: he wasn't doing his act. It was like the kind
Speaker 1: of sucker punched him exactly exactly.
Speaker 2: I don't like that.
Speaker 1: Of course, he wasn't ready, internal bleeding, all that kind
Speaker 1: of stuff. That's what this feels like to me.
Speaker 2: You probably gotta feel pretty bad about yourself if you're
Speaker 2: the guy that like Initially you're like, yeah, I gotcha,
Speaker 2: but then you're like, oh, I'm.
Speaker 1: Sorry, dude, I killed the greatest musician magician of all time,
Speaker 1: you know, killed the guy. Yeah, Well, in this specifics
Speaker 1: matter here, by the way, because the IRS says that
Speaker 1: you need to pay back this four one K loan
Speaker 1: before you file taxes, and you could even wait until
Speaker 1: October with an extension next year. That'd be fine with
Speaker 1: the IRS. They're okay with that. But your employer likely
Speaker 1: has more stringent requirements in their play in documents, and
Speaker 1: that's what you're really going to want to pay attention to.
Speaker 1: Most plans that you pay back that loan in full
Speaker 1: right when you leave your job with no grace period
Speaker 1: your employer, I don't know, Nathan mentioned like sixty or
Speaker 1: ninety days. Yeah, there's a chance that your employer has
Speaker 1: has that written into those planned documents. But don't count
Speaker 1: your chickens before they hatch. Don't assume this. Make sure
Speaker 1: that that's the case, that that's exactly how your employer
Speaker 1: treats this dispartment disbursement. You want to just make sure
Speaker 1: you're following the letter of the law here, because, like
Speaker 1: we just said, the adverse consequences could be significant, and.
Speaker 2: This is one of those really important things where man
Speaker 2: I would be willing to make a lot of sacrifices
Speaker 2: in order to pay this four K loan back in
Speaker 2: the required time period, Like, for instance, I might even
Speaker 2: be willing to delay taking that new job, if that's
Speaker 2: something you have any control over, in order to pay
Speaker 2: this the sucker off, maybe even take out like I would.
Speaker 2: I think I would certainly be willing to drain my
Speaker 2: emergency fund, maybe even borrow from a helock in order
Speaker 2: to avoid that negative outcome, and then of course make
Speaker 2: a plan to replenish that e fund, make a plan
Speaker 2: to pay back that he loock eight like as soon
Speaker 2: as possible. I certain I don't think I would go
Speaker 2: as far as like taking on a payday loan. Joel.
Speaker 1: Yeah, that feels a little a little too far, But like,
Speaker 1: the only way I'm doing that, Matt, is if there's
Speaker 1: some mob boss who's starting to break my knee caps
Speaker 1: And in that case, I'd probably take out a payday loan,
Speaker 1: But that's it.
Speaker 2: You might want to consider it, and.
Speaker 1: I'm not in that kind of trouble right now.
Speaker 2: I don't think I would do this, But depending on
Speaker 2: your situation, you might even want to, like maybe borrow
Speaker 2: from a relative with the assurances. And this is obviously
Speaker 2: assuming that you are taking this very seriously and you
Speaker 2: plan to not borrow from yourself like this every again,
Speaker 2: but just make assurances to them that they that you
Speaker 2: will be paying them back regularly over the coming year
Speaker 2: or so. But man, just that the difference in your
Speaker 2: salary right there, that thirty thousand dollars is significant, and
Speaker 2: I wouldn't let the four o one k loan keep
Speaker 2: you tethered to that significantly lower paying job.
Speaker 4: You know.
Speaker 2: I think where there's a will, there's a way. But
Speaker 2: certainly make it a high priority to completely eliminate this.
Speaker 1: Yeah, I mean, it'd be it'd be kind of like
Speaker 1: a self inflicted wound to say, I'm gonna stay at
Speaker 1: this job if I really want to move on, and
Speaker 1: I'm going to get paid a lot more just because
Speaker 1: of this four one k loan. There's there's got to
Speaker 1: be a way. And you mentioned some good methods, Matt,
Speaker 1: of finding the money to get rid of this four
Speaker 1: one k loan so that you're not, you know, taking
Speaker 1: keeping that money out of your four one k forever. Yeah,
Speaker 1: and that you're also not paying the tax and penalty,
Speaker 1: which is a big deal. You also mentioned, Nathan, that
Speaker 1: you're holding out for another job or for an employer
Speaker 1: that offers a four to one K, and.
Speaker 2: Which I will say, by the way, to reiterate, we're
Speaker 2: talking about a four one K loan, not because at
Speaker 2: one point he said, what if the new one doesn't
Speaker 2: have a four one K loan? I think maybe he misspoke,
Speaker 2: and I think he's specifically talking about a four one
Speaker 2: K plan. Yeah, specifically, especially one with a match.
Speaker 1: And you do have to consider that, you know, you
Speaker 1: and I talked regularly, Matt about the secondary benefits that
Speaker 1: employers offer, and those benefits had up incredibly some you know,
Speaker 1: some employers offering health insurance with a significant discount where
Speaker 1: they'll pay like eighty or ninety percent of the premiums
Speaker 1: for you and straight up free. Yeah.
Speaker 2: I got friends that are having babies and everything is
Speaker 2: just like completely covered at super fancy employers. Has me
Speaker 2: just weeping those Catillac health care plans. Knowing how much
Speaker 2: money IVE spent on labor and delivery over my lifetime.
Speaker 1: I know, as self employed individuals the healthcare stuff.
Speaker 2: Had the privilege of being able to do that.
Speaker 1: Yes, yes, so those things really matter and a four
Speaker 1: one K plan is incredibly helpful. I think not having
Speaker 1: access to a workplace retirement account would be a bummer,
Speaker 1: no match, no ability to shovel chunks of money into
Speaker 1: a tax advantaged account. That's that's a downer. It's a
Speaker 1: downer for anyone who wants to be smart with their money,
Speaker 1: Like you're looking for that in an employer and you're
Speaker 1: hoping that they're competitive in the right.
Speaker 2: But it's not a deal breaker though, No, especially especially
Speaker 2: given the difference in income. So and here's the other
Speaker 2: thing too that I want to address, Like, you can
Speaker 2: still get really wealthy, Nathan with just an IRA. Yeah, yeah, so.
Speaker 1: I could be a roth Ira millionaire in what thirty
Speaker 1: six years? Thirty five?
Speaker 2: Well, at seven and a half percent, it's thirty five years.
Speaker 2: I was way off. It's a here right there. That's
Speaker 2: pretty incredible in my opinion. And that's just the I mean,
Speaker 2: I know for a lot of folks it might be
Speaker 2: it it's difficult for them to max out an IRA
Speaker 2: every single year as opposed to a four to one K.
Speaker 2: You can become a four to one K millionaire in
Speaker 2: as little as twenty years. But at the same time,
Speaker 2: who's maxing out there four one k? I know some
Speaker 2: folks are, but there's a lot of folks for saying
Speaker 2: twenty three thousand, five hundred dollars. Dudes, I'm sorry, but
Speaker 2: I ain't got that kind of money setting around, right.
Speaker 1: That'd be a third of my income, or that'd be
Speaker 1: half of my income, and that seems impossible.
Speaker 2: But it's still possible, even just with the boring old
Speaker 2: IRA at your disposal.
Speaker 1: And well, there's that, but let's just say this. Let's
Speaker 1: say Nathan plans to invest at least half of just
Speaker 1: the raise that he's getting, a thirty thousand dollars raise.
Speaker 1: That's hey maxing out right there, a roth IRA every
Speaker 1: year just became super easy. If he's got a high
Speaker 1: deductible health care plan through the employer and HSA, he
Speaker 1: can max that out too, And then he's got more
Speaker 1: money left over toss into a taxable brokerage account as well.
Speaker 1: So he's just got a whole bunch of accounts at
Speaker 1: his disposal. It does not have to be the workplace
Speaker 1: retirement account, the four to one K, or the TSP
Speaker 1: at other employers, or a four to fifty seven B
Speaker 1: like it can be some of these other accounts that
Speaker 1: are widely accessible to almost everyone. It doesn't have to
Speaker 1: be a tax advantage account through your employer. I think
Speaker 1: that makes it easy because it's deducted from your paycheck.
Speaker 1: It's automatic, right, and you don't really have to think
Speaker 1: about it. That's one of the perks.
Speaker 2: You don't really feel it.
Speaker 1: That's right. So you're going to have to make a
Speaker 1: proactive plan to save for yourself in some of these accounts,
Speaker 1: including probably in all likelihood, automatic contributions monthly from your
Speaker 1: bank account towards some of these accounts. I think you
Speaker 1: can just you can still do an incredible job saving
Speaker 1: for your future without an employer plan. It just takes
Speaker 1: more intentionality and it falls more directly on your shoulders.
Speaker 1: But I wouldn't let that, especially especially with a massive
Speaker 1: pay increase like this. I would not let that be
Speaker 1: a deal breaker by any stretch of the imagination.
Speaker 2: Sure, and again we're talking about investing in your ability
Speaker 2: to grow wealth here, but let's make sure that that, Nathan,
Speaker 2: that your first order of business is one hundred percent
Speaker 2: to be able to pay off that for win k
Speaker 2: loan and honestly just to be able to man, let's
Speaker 2: just stay away from that altogether in the future as well.
Speaker 1: We've got more money questions to get to, Matt, including
Speaker 1: a listener who wants to limit their grocery and restaurants spending.
Speaker 1: We'll get to that and more. We'll get to that
Speaker 1: in a whole lot more right after this. All right,
Speaker 1: we are back from the break. We've got more listener
Speaker 1: questions to get to Joel. This doesn't happen very often,
Speaker 1: but we're going to hear from a listener who has
Speaker 1: been listening to the podcast for quite a while, longer
Speaker 1: than my mom's been listening to the podcast.
Speaker 2: Let's hear from Bryant.
Speaker 5: What's up, fellas. Briant here from Montana. Longtime listening to
Speaker 5: the show about six years, and I really appreciate what
Speaker 5: you guys do. I've just got another boring investment question
Speaker 5: that nobody probably wants to hear about, but I've been
Speaker 5: pretty curious and I'm going to shoot anyway. A little context.
Speaker 5: My wife and I are both twenty five years old,
Speaker 5: and we've been together since we were sophomores in high school,
Speaker 5: and she actually just finished up her doctoral degree and
Speaker 5: started her career. We are very fortunate and we were
Speaker 5: able to get through school debt free, so we currently
Speaker 5: do not have any debt as far as investing goes.
Speaker 5: I currently max out my roth IRA and my HSA.
Speaker 5: On top of that, I have a pretty solid pension
Speaker 5: and I've been investing for about five years. My wife
Speaker 5: is kind of in the opposite boat. She hasn't been
Speaker 5: able to invest at all while she was in school,
Speaker 5: but is looking to start now. Her employer offers her
Speaker 5: a four oh one K with up to a five
Speaker 5: percent match in an HSA. Of course, we plan to
Speaker 5: put enough money into her traditional four oh one K
Speaker 5: to get the mast and max out her HSA. That
Speaker 5: would put us at about twenty percent of our income.
Speaker 5: We're looking to up that to about twenty four percent,
Speaker 5: and we were just curious whether we should put that
Speaker 5: extra money into her four oh one K or whether
Speaker 5: we should open a roth IRA for her. I'd really
Speaker 5: appreciate some feedback, Pretty curious on what I should do.
Speaker 5: I'm currently leaning towards the IRA, but would love to
Speaker 5: get your guys' thoughts. Thanks.
Speaker 2: All right, Joel, is this just a yes or no
Speaker 2: answer to to Bryant as to whether or not you
Speaker 2: should go ahead with the IRA. Let's have some color?
Speaker 4: Yeah?
Speaker 1: Okay? Well, first off, high school sweethearts. I love I
Speaker 1: love that. That's awesome. You guys been together for a
Speaker 1: long time and their sophomores. Yes, and he's been listening
Speaker 1: for a while too, Yes, sincebody's been listening since he
Speaker 1: was a teenager.
Speaker 2: Yes, that's crazy. Yeah, he's like, finally I can enjoy
Speaker 2: a craft beer, just.
Speaker 1: Like just like the buddy, the boys came right exactly,
Speaker 1: And I mean it's no wonder that he's crushing it already, right,
Speaker 1: and his wife has her doctorate at this young age
Speaker 1: as well, graduating debt free. That's just an incredible way
Speaker 1: to get started, like Tyra getting off on the right foot.
Speaker 1: I mean, that's an understatement for where Brian and his
Speaker 1: wifer are you going in life. I mean they're just
Speaker 1: starting off with everything kind of going in their direction
Speaker 1: to win at their backs.
Speaker 2: Yeah, they are doing all the right stuff already. The
Speaker 2: guy the roth Ira, the HSA A pension as well,
Speaker 2: So I guess he's got some sort of old school
Speaker 2: government job perhaps I don't know, but he's doing basically
Speaker 2: d all of the above, and it's helping him to
Speaker 2: sock away quite a bit of money and in let's say,
Speaker 2: very tax friendly vehicles as well. I'll say, Brian, a
Speaker 2: guy wasn't necessarily picking up any of this in your voice.
Speaker 2: But the fact that your wife hasn't started investing yet
Speaker 2: is nothing to be too worried about. Man, Like, she's
Speaker 2: been working her butt off, she's been getting that debt
Speaker 2: free degree, which is incredible, and the higher likely income
Speaker 2: that she is going to be able to earn that
Speaker 2: she's gonna be able to garner will be well worth
Speaker 2: it as far as a standard of living, how much
Speaker 2: you're going to be able to invest, ultimately leading to
Speaker 2: greater levels of financial freedom financial independence. So kudos to
Speaker 2: you both for rushing it like that. I love too
Speaker 2: that he said that twenty percent of his income. It
Speaker 2: doesn't kind of feel like quite enough if he wants
Speaker 2: to ramp it up to twenty four percent. And a
Speaker 2: lot of folks, Matt, they continue to increase their standard
Speaker 2: of living as that income goes up. And yeah, maybe
Speaker 2: they kind of bump up their their four one K
Speaker 2: contribution by one percent each year or something like that.
Speaker 2: But even then, you're what's your the amount of money
Speaker 2: you're investing, it might not be keeping pace with the
Speaker 2: rate of pay increases that you're getting. So actually, as
Speaker 2: a percentage of your income, you're not doing as well
Speaker 2: as you were in those early years. And the truth
Speaker 2: is not having any student loans, which is I think
Speaker 2: rare for people, especially with the amount of degrees they've
Speaker 2: gotten in their household. That's hard to come by. But
Speaker 2: not having those student loans makes it even more feasible
Speaker 2: to dedicate more of your resources towards investing for your future.
Speaker 2: And there's just something incredibly powerful but delaying some of
Speaker 2: those lifestyle upgrades intention right when you're doing it on
Speaker 2: purpose for a missional purpose of having greater levels of
Speaker 2: financial freedom earlier in your life. And speaking from the
Speaker 2: other side of forty Bryant, like, especially if you plan
Speaker 2: to have kids, funneling more money away now is going
Speaker 2: to allow for those greater levels of work and life
Speaker 2: flexibility when it has the most impact. Matt, You and
Speaker 2: I talk about this regularly just as friends, but like
Speaker 2: where the happiness curve, where it hits the bottom is
Speaker 2: typically right where you and I are in life, and
Speaker 2: we feel like we're living our best lives now because
Speaker 2: we're not worried about we're not trying to build this
Speaker 2: like nose of the grindstone career, and we're also not
Speaker 2: worried about finances because we front loaded a lot of
Speaker 2: that sacrifice. I think that's where a lot of people
Speaker 2: find themselves is they're like, I guess I need to
Speaker 2: start saving for retirement. I haven't done anything yet, and
Speaker 2: so they just.
Speaker 1: Feel like they have to work all the time and
Speaker 1: they're missing out on a lot of the relational and
Speaker 1: familial things that really make life worth living in this
Speaker 1: spot in life in particular.
Speaker 2: So yeah, yeah, there are just more responsibilities that are
Speaker 2: thrust upon us as we're trying to achieve, oftentimes at
Speaker 2: this age career. But then there's demands being asked of
Speaker 2: us from as a kid or I'm sorry, like as
Speaker 2: a son or a daughter, from our parents as they
Speaker 2: are aging from the standpoint of what it is that
Speaker 2: we're trying to be able to provide for our kids
Speaker 2: for them as well. But I think keeping that lifestyle
Speaker 2: creep in check is basically what you're alluding to. And
Speaker 2: I think just like I picture the horse, you know,
Speaker 2: like the horses pulling the carriages and the cities, and
Speaker 2: they got the blinders on because it doesn't really matter.
Speaker 2: All the craziness is going around them out there in
Speaker 2: the city. All they need to be able to do
Speaker 2: is just to walk exactly straight ahead. And I think
Speaker 2: if you can kind of keep the blinders on from
Speaker 2: a lifestyle standpoint, it's like, it doesn't really matter that
Speaker 2: that guy over there or your old friends from high
Speaker 2: school or college are going on this trip or they're
Speaker 2: doing that. Man, such a great reason to get off
Speaker 2: of social media so that you're not keeping up with
Speaker 2: the lifestyle upgrades that lots of other folks are opting
Speaker 2: to do, whether intentionally or not intentionally. But what we're
Speaker 2: saying here is to continue to intentionally limit some of
Speaker 2: your spending and it's going to make socking away more
Speaker 2: money for future you just even more feasible. Easy.
Speaker 1: My buddy Jim just bought a boat. Maybe maybe that's
Speaker 1: why I should do with my extra income.
Speaker 2: And it's like, oh, I guess it's time that we
Speaker 2: all get both, right, Huh.
Speaker 1: It's like, no, enjoy your buddy Jim's boat, Like, don't
Speaker 1: get one yourself and keep investing. It doesn't mean that
Speaker 1: you can't, over time like increase your spending, right. I
Speaker 1: think you and I have also found ways to loosen
Speaker 1: the reins in regards to that. But yeah, you want
Speaker 1: to do the right things first, and he's at a
Speaker 1: particular age and place to be able to kind of
Speaker 1: double down.
Speaker 2: On these efforts such yeah, I can have such a
Speaker 2: massive impact. And for him, he's thinking about bumping it
Speaker 2: up like five percent, right, Well, if you run the number,
Speaker 2: is that simple increase five percent? It can cut five
Speaker 2: years of your working timeline off. We'll link to a
Speaker 2: classic Mister money Mustache post that really very clearly and
Speaker 2: easily lays this out. But it might even incentivize you
Speaker 2: to try to even increase your contribution amounts over time.
Speaker 2: But the heart of your question here four one K
Speaker 2: versus roth Ira. Yes, we are leaning the same direction
Speaker 2: you are, and I'm going to say wroth Ira certainly
Speaker 2: get the full match with your four one k, of course,
Speaker 2: but then or I guess with your wife, but then
Speaker 2: make sure that you are maxing out her wroth Ira,
Speaker 2: and if you want to contribute more than that, increasing
Speaker 2: four one K contributions after that can make sense. So
Speaker 2: could opening a taxable brokerage account if early retirement is
Speaker 2: a goal of years. But the taking the wroth route
Speaker 2: is great because it's such a flexible account. It's giving
Speaker 2: you greater levels of tax flexibility. In the future as well.
Speaker 2: And actually, on the note of tax, like, you are
Speaker 2: likely going to continue to earn more and more money,
Speaker 2: so you are in a you're currently in a lower
Speaker 2: tax bracket. Let's go ahead and buy the bullet, Now
Speaker 2: pay the tax man, and never have to worry about
Speaker 2: taxes in that account for the rest of your life.
Speaker 1: Well, at some point you might get to the point
Speaker 1: where regular contributions to roth Ira aren't allowed. Yeah, And
Speaker 1: so actually being able to fill that bucket up while
Speaker 1: the bucket's accessible makes sense because at some point you
Speaker 1: might lose access to that bucket. And I do too
Speaker 1: the kind of having some pre tax some post tax
Speaker 1: money it allows you that tax flexibility in the future.
Speaker 1: I think that's underrated because later in life you can
Speaker 1: kind of sort of it's like a choose your own
Speaker 1: adventure when it comes to how much you pay in
Speaker 1: tax depending on which buckets you're withdrawing from. And I
Speaker 1: do think that's that can be a really smart way
Speaker 1: to apportion your funds. And it just makes sense too
Speaker 1: in regards to a four one K, get the match
Speaker 1: or sticking some money in there, then go into the
Speaker 1: roth are and then go back into the four one K,
Speaker 1: and you know you might be kind of neck and
Speaker 1: neck those accounts with how much money you're setting aside
Speaker 1: in both of them over time, and then when it
Speaker 1: comes time to tap them, you've got a lot of options, right,
Speaker 1: And so yeah, that flexibility comes in quite handy. We've
Speaker 1: had different guests on the show, Matt who have different
Speaker 1: post tax and pre tax preferences. I think there's a
Speaker 1: compelling case for both. But I do think that combo
Speaker 1: of the four one K get the match the rothncks.
Speaker 1: It's like this lethal in a good way option for people,
Speaker 1: and I think it's the route that most people should consider.
Speaker 1: There's certainly outliers right where if you're super low income
Speaker 1: earner you might want to go roth Ira and Roth
Speaker 1: for one K. If you are an incredibly high income
Speaker 1: earner like you.
Speaker 2: Might be time to get the tax break on both. Yeah.
Speaker 1: Yeah, so so those are It's there is no one
Speaker 1: size fits all, but I do think for the average
Speaker 1: person that that's the comba that makes the most.
Speaker 2: Sense, and specifically for Bryant's situation, sounds it sounds like,
Speaker 2: based on what he told us, that's what I would do.
Speaker 2: One caveat though, like we've been I was just praising
Speaker 2: his desire to want to increase his percentage of saving
Speaker 2: and investing. I will say this is just assuming like
Speaker 2: you are the one that has listened to us for
Speaker 2: so long, and so I'm just assuming that your wife
Speaker 2: is also on the same page. That being said, just
Speaker 2: for the sake of argument here, let's say that she's
Speaker 2: starting to kind of change your tune a little bit.
Speaker 2: It's just like, man, we've been working so hard and
Speaker 2: I want to be able to go with two ply
Speaker 2: toilet paper, or like, maybe it's time for a second car.
Speaker 2: What's something else that comes into's and comes into Joel.
Speaker 2: I don't know, but I want twins. That'd be a
Speaker 2: much bigger expect that would be for many.
Speaker 1: Years to come.
Speaker 2: I just want to say that it's not just about
Speaker 2: what your goals are. Obviously, Like y'all are a team, right,
Speaker 2: I mean, y'all are married, y'all are y'all are partners
Speaker 2: for a life, and so don't be overly frugal, uh
Speaker 2: And maybe what she would potentially call cheap in an
Speaker 2: effort to sort of win this little battle, and you
Speaker 2: end up losing the war decades down the road. Like,
Speaker 2: the goal is for y'all to a mass an incredible
Speaker 2: amount of wealth, so that decades on the road, you've
Speaker 2: won the war. You're both living the life. You're proud,
Speaker 2: and you can look back fondly on the sacrifices that
Speaker 2: you've made as a couple. I just wanted to throw
Speaker 2: that out there. Yeah, I just want to make sure
Speaker 2: that you are reaching some of those goals that you'll
Speaker 2: have together, that they are in fact both of Y'all's what.
Speaker 1: You're saying is he should be telling his wife, Matt
Speaker 1: and Joel told me to save sixty percent of my income.
Speaker 1: She hates us because we just ruined her life and
Speaker 1: like that. But that's I think where some people get
Speaker 1: sometimes when they start learning about the compounding returns and
Speaker 1: what that can do, and they're like, I'm just gonna
Speaker 1: like put all my a in that one basket. You've
Speaker 1: seen the truth and you can't unsee it. And compounding
Speaker 1: returns are awesome. But you know, we would also say
Speaker 1: life has to be lived. It's you want to take
Speaker 1: advantage of both those things, living an awesome life and
Speaker 1: saving and investing for the future. But Bryant, best of
Speaker 1: luck to you to your wife. You guys are doing
Speaker 1: awesome and I'm sure you'll continue to do so. Matt,
Speaker 1: let's get to another question. This one comes from someone
Speaker 1: who's in the money advice space.
Speaker 4: Hi, Matt, angel this is Angela and Richmond Hill, Georgia.
Speaker 4: I've been listening to your show for several years now
Speaker 4: and want to thank you for your thoughtful content. I'm
Speaker 4: in a credit financial counselor and I really like your
Speaker 4: ask how to Money episodes as it makes me think
Speaker 4: about how I would respond if they were my clients.
Speaker 4: I did want to comment on two listener questions. The
Speaker 4: first was from around January of this year, and I
Speaker 4: just haven't gotten around to doing a voice memo. The
Speaker 4: listener was asking about maxing out their TSP. Well, maxing
Speaker 4: out early might seem like a good idea. Once the
Speaker 4: TSP is max the employee can't contribute anymore, which means
Speaker 4: they can't be matched for the rest of the year,
Speaker 4: so they're basically essentially leaving money on the table. The
Speaker 4: second question had to do with lowering insurance costs for
Speaker 4: a vehicle the listener called a few weeks ago. One
Speaker 4: of the things a listener mentioned was lowering his liability
Speaker 4: to the state minimum, and I don't know that that
Speaker 4: was clearly addressed. While lowering are even canceling property assurance
Speaker 4: comprehensive and collision, especially on the Honda makes sense. Lowering
Speaker 4: the liability is exposing him to much greater risk. I
Speaker 4: find that most people don't understand the difference between property
Speaker 4: and liability on their policies and was curious about your thoughts.
Speaker 4: Thanks so much, Have a.
Speaker 2: Great day, all right, Joel, what do you think about
Speaker 2: Angela's feedback? Should we start a new segment called Joel
Speaker 2: Matt stinks?
Speaker 1: I don't think so, Okay, Yeah, that might be ripping
Speaker 1: off somebody else's okay, we Joel Matt suck. I don't
Speaker 1: know that. Yeah, that's a different or are totally awful
Speaker 1: Joe matter totally offul Maybe that no, But if you
Speaker 1: do have like I love stuff like this, we're like, oh, yeah,
Speaker 1: it's a good forum, I think right now.
Speaker 2: And it helps me to realize too that if we
Speaker 2: haven't parsed out, I don't know, there's nuance and a
Speaker 2: lot of these questions, and sometimes we sometimes will gloss
Speaker 2: over certain aspects of.
Speaker 1: We'll miss something in a question. Sure, and it's kind
Speaker 1: of important, and so maybe we like answered it three
Speaker 1: quarters of the way and we certainly left out a
Speaker 1: quarter or some people just disagree with our advice sometimes
Speaker 1: and they think that, maybe, yeah, we really could stand
Speaker 1: to be informed. So we appreciate appreciate this sort of
Speaker 1: feedback of it all.
Speaker 2: Yeah.
Speaker 1: I think we try to say regularly too that that
Speaker 1: there's a lot of subjective nature, just like in our
Speaker 1: answer to the last question to our advice, and even
Speaker 1: the way we view some of these things has changed
Speaker 1: since we started the podcast in terms of like balance
Speaker 1: and in terms of how we think about retirement and work,
Speaker 1: and that's informing how we answer questions do you.
Speaker 2: Think about life?
Speaker 1: Yeah?
Speaker 2: Yeah, it just depends on what aspect of life that
Speaker 2: you are taken into account. Like there's you got the
Speaker 2: financial side of things, but then you've kind of got
Speaker 2: the life fulfillment side of things, and you've got the
Speaker 2: work satisfaction side of things, and are a ton of
Speaker 2: different factors for sure.
Speaker 1: By the way, one thing Angela mentioned she said that
Speaker 1: she was a what she says, she was a budget
Speaker 1: coach or a money counselor money counselor right, And I
Speaker 1: think that's I think that's super cool. You and I.
Speaker 1: We've had people in her position on the show in
Speaker 1: the past for interview segments, and I think a lot
Speaker 1: of times knee jerk people go to financial advisors. They
Speaker 1: think that's the pro they need, and financial advisors can
Speaker 1: be expensive and it might not make the most sense
Speaker 1: for them where they're out on their wealth building journey,
Speaker 1: but a money counselor or a budget coach can often
Speaker 1: be a great use of your money for a specific
Speaker 1: period of time as you're trying to learn the ropes
Speaker 1: and you want some personal, one on one feedback. So Angela,
Speaker 1: we're glad you're out there doing your thing, and really
Speaker 1: do appreciate your feedback.
Speaker 2: That's right. Yeah, And Angela is right about maxing out
Speaker 2: your workplace retirement accounts too early, like for instance, a
Speaker 2: four to one K or a TSP that she mentioned.
Speaker 2: And so again, for many folks, it sounds impossible, right,
Speaker 2: Like we're again we're talking about over twenty three thousand
Speaker 2: dollars over the course of a year. I think a
Speaker 2: lot of folks are thinking, how am I supposed to
Speaker 2: make that happen, let alone doing.
Speaker 1: It faster than over the course of a year, right,
Speaker 1: My problem is not that I contributed too quickly. Yeah,
Speaker 1: retirement accounts like.
Speaker 2: The worst tumble brag of all time. But there are
Speaker 2: some go get our financial independence minded folks out there
Speaker 2: who really do attempt this, and so in an effort
Speaker 2: to just get that out of the way, they just
Speaker 2: ratchet up their contribution amounts to the sky, getting much
Speaker 2: smaller paychecks for a while until they hit that max
Speaker 2: early on, which maybe emotionally feels really good. But it
Speaker 2: certainly seems like you're doing the right thing here, but
Speaker 2: you might be leaving money on the table. Like Angela mentioned,
Speaker 2: if you max out your contributions let's say by June, well,
Speaker 2: you run the risk of missing out on any mash
Speaker 2: dollars that would have been yours had you taken just
Speaker 2: the steadier taurus approach.
Speaker 1: Over the course of the year. And similar to an
Speaker 1: earlier question, I mean, so much depends on your employer's
Speaker 1: plan documents, because in some cases you won't be missing
Speaker 1: out on the match, and others who will, right, And
Speaker 1: so the best approach is typically to figure out what
Speaker 1: your biweekly contribution should be in order to make twenty
Speaker 1: six equal investments with each paycheck that leaves nothing to chance, right,
Speaker 1: you are doing equal investment amounts. And yes, Matt, you
Speaker 1: talk about funding the WROTH in full on day one
Speaker 1: of the year, right as soon as as soon as
Speaker 1: you possibly can, because that way, your money is invested
Speaker 1: for a longer time. And I think like people want
Speaker 1: to optimize all the way. That's kind of what they're
Speaker 1: going for here, to fund their account early. But if
Speaker 1: it means yeah, your money's invested longer, but you have
Speaker 1: fewer dollars to invest because you're not getting the full match,
Speaker 1: that's a problem and you want to avoid that. But
Speaker 1: then some companies will have language in their play around
Speaker 1: something known as true ups where they'll ensure that you
Speaker 1: get the full match, even if you stuffed all that
Speaker 1: money into your four to one K early on, and
Speaker 1: they'll basically cut a check at the end of the
Speaker 1: year for whatever match you might have missed out on
Speaker 1: during that year. As long as you max it out,
Speaker 1: you're going to get the full amount of the match
Speaker 1: that the employer offers you. I know what your plan
Speaker 1: documents say, because some are generous in that way, others
Speaker 1: are not. And you don't want to make a mistake
Speaker 1: and miss out on matching dollars because you funded too early.
Speaker 2: Exactly, And this might be something you have to dig
Speaker 2: into a little bit because there probably aren't going to
Speaker 2: be a ton of folks at your company who are
Speaker 2: investing in this way.
Speaker 1: So the question the HR person does not often get
Speaker 1: to see exactly.
Speaker 2: So you certainly reached out to them, but it might
Speaker 2: take you doing a little command f assertion some of
Speaker 2: these terms like true ups and having to dig in
Speaker 2: deep to become a little to become an expert there
Speaker 2: on your specific plan. Angel also referenced insurance, and this
Speaker 2: is a case where you don't want to be cheap, right,
Speaker 2: I think, especially if your vehicle is older, you might
Speaker 2: want to eliminate comprehensive coverage in order to save on
Speaker 2: insurance costs in order to keep that money there in savings.
Speaker 2: But it's one thing to shop around and compare rates
Speaker 2: with other insurance companies. But if you are cheap, you
Speaker 2: might opt for inferior coverage amounts, putting you at a
Speaker 2: significant financial risk. And we're specifically talking about liability insurance
Speaker 2: here because as state minimums, they are not indicative of
Speaker 2: what your coverage should be. There is no there's no
Speaker 2: one size fits all answer to how much you should
Speaker 2: be insured for, because my answer would be very different.
Speaker 2: If I was, like a previous caller, twenty or twenty
Speaker 2: five years old, my net worth is like zero or
Speaker 2: even negative. Right, If I've got ten twenty thirty thousand
Speaker 2: student loans, there's a big difference between that and where
Speaker 2: I've been. After let's say, decades and decades of investing
Speaker 2: regularly in the.
Speaker 1: Market, insurance becomes more important.
Speaker 2: Yeah, it's more. Initially it just kind of seems like
Speaker 2: a nuisance. It's like, oh, this is thing that you
Speaker 2: have to do. But the older you get and the
Speaker 2: more wealthy build, it's like I see it with rosier
Speaker 2: color glasses.
Speaker 1: As I get older, it's.
Speaker 2: Like, oh, man, what a great thing to have to
Speaker 2: be able to make sure that I've mitigated that risk.
Speaker 2: We won't get into specifics here, but when it comes
Speaker 2: to the liability insurance that we have on our old
Speaker 2: one hundred and ninety thousand mile minivan, Joel, I've got
Speaker 2: twenty times what our state limit is. Wow, which sounds
Speaker 2: kind of crazy, but not when you consider the fact,
Speaker 2: I don't know, some folks are just more litigious than others. Right,
Speaker 2: it doesn't really matter if you've got an old, ratty
Speaker 2: look in minivan, they're gonna try to come after you.
Speaker 2: But specifically, I mean, we live close to a fairly
Speaker 2: you know, we live in a big city or near
Speaker 2: a big city where there are like Lamborghinis driving down
Speaker 2: the Interstate. And when I see that, when I'm sharing
Speaker 2: a lane, yeah, sharing the Interstate highway lane with like
Speaker 2: a Lambeau.
Speaker 1: Hey you try to raise them.
Speaker 2: Hey, I'm getting into a different lane because I don't
Speaker 2: want to be behind them. But be like, that's a
Speaker 2: really expensive vehicle, and you could easily blow through not
Speaker 2: just your statement of THEMS, but like I mean, like
Speaker 2: something that's even substantially, even something that's ten or twenty x,
Speaker 2: it would not be difficult to blow through some of
Speaker 2: those liability minimums. And so you need to keep all
Speaker 2: this into account. Where you live that matters, right, And
Speaker 2: so I guess that's what I'm getting here. Like, for instance,
Speaker 2: if you lived in a small little town where you
Speaker 2: know everybody and nobody's really soon ay each other, and
Speaker 2: everyone drives ten year old tell you how to pickup trucks, Okay,
Speaker 2: you probably don't need to go with like some super
Speaker 2: off the charts coverage amount. Yeah, but it's just another
Speaker 2: instance where your context and specifically where you live and
Speaker 2: where you're driving it matters.
Speaker 1: I think a lot of times frugal people are they're
Speaker 1: getting the quotes, and they aren't getting quotes for state
Speaker 1: minimum coverage, and they're not thinking about, well, how much
Speaker 1: do what are my insurance needs? And so it's they're
Speaker 1: just comparing prices between the lowest common denominator insurance policy
Speaker 1: and they probably need to get quotes for insurance that's
Speaker 1: going to cover them in case of a more substantial
Speaker 1: claim or encounter with a Lamborghini or something like that. Right, So, yeah,
Speaker 1: you do need to be careful. And it's kind of
Speaker 1: like you must be over forty eight inches to ride
Speaker 1: this ride or something like that. They still let people
Speaker 1: as tall as me ride those rides, right, And so
Speaker 1: I think you don't want the bare minimum. That's not
Speaker 1: going to be enough for a whole lot of people.
Speaker 1: So I do appreciate Angela mentioning that I'm not sure
Speaker 1: why we didn't address and answer that question. I don't
Speaker 1: even remember that question right now on that, but I
Speaker 1: think it also it might make sense if you're kind
Speaker 1: of confused, you're not sure how do I decide what
Speaker 1: sort of coverage I need? This is going to very
Speaker 1: person a person kind of like you're you're mentioning you
Speaker 1: might want to hire an independent insurance agent, not just
Speaker 1: to help you shop rates with a bunch of companies,
Speaker 1: but to offer some advice right about what kind of
Speaker 1: coverage limits you might need given your financial situation. And
Speaker 1: my guess is an independent insurance agent should be able
Speaker 1: to help you on that front.
Speaker 2: Yep, independent broker. Yeah, like even with like homeowners, the
Speaker 2: ability to talk through replacement costs, right price per square foot,
Speaker 2: what just kind of what the trends are. I think
Speaker 2: that can be really helpful.
Speaker 1: For what are the trade offs between me going with
Speaker 1: a two thousand dollars deductible versus a five thousand dollars deductible?
Speaker 1: What are the premium changes can I self ensure for that?
Speaker 1: Those are good questions to ask. And then there's Yeah,
Speaker 1: there's a site called Trusted choice dot com where you
Speaker 1: can find an independent insurance agent near you, So be
Speaker 1: sure to check that out. That that could be an
Speaker 1: important task for you to look into this week or
Speaker 1: in the coming weeks.
Speaker 2: Absolutely, Joe, we got more to get. See, we're going
Speaker 2: to hear from a listener who's interested in cutting back
Speaker 2: on their grocery spending as well as how much they're
Speaker 2: spending going out to eat. We'll get to that and
Speaker 2: more right after this Harbor.
Speaker 1: Back from the break, Matt, it's time for the Facebook
Speaker 1: question of the week. This one comes from Stephen. He says,
Speaker 1: homeowner's insurance question. Do premiums go up on homeowner's insurance
Speaker 1: for using it the same way they do on car insurance?
Speaker 1: Our house was struck by lightning. Oh, some appliances are fried.
Speaker 1: That sounds terrible. It's one of those active god things
Speaker 1: you can't do much about, right, Yeah, he says, in
Speaker 1: the siding where it got hit is going to need
Speaker 1: to be repaired to our deductible as five thousand dollars.
Speaker 1: Any guidance or advice is appreciated.
Speaker 2: Five thousand bucks. All right. That's does is bring back
Speaker 2: are you having PTSD? Does is bringing back bad memories? Jo? Now,
Speaker 2: as so, your house didn't get struck by lightning, but
Speaker 2: the tree.
Speaker 1: Got struck by lightning, got struck.
Speaker 2: Which is why came through the roof.
Speaker 1: That's right, no awful, honestly, Like, it was not a
Speaker 1: fun experience, but it it could have been a lot worse.
Speaker 2: I did not.
Speaker 1: I don't have terrible memories about it that situation.
Speaker 2: Yeah.
Speaker 1: Fortunately unfortunately weren't in the house when it happened, or
Speaker 1: else I probably would have worse memories.
Speaker 2: Sure, yeah, so, But to answer Stephen, I mean, it
Speaker 2: varies from state to state because every state is going
Speaker 2: to have an insurance commissioner and it's their job to
Speaker 2: regulate the insurance companies and enforce the rules. In most states. Finally,
Speaker 2: a claim will cause your insurance premiums to increase, but
Speaker 2: how much it partly depends on the insurance companies. Some
Speaker 2: may not bump up the rates all that much, while
Speaker 2: others might consider dropping you all together. Like you use it,
Speaker 2: and you use it, you lose it, right Like, That's
Speaker 2: one of the one of the refrains that you sometimes hear.
Speaker 2: It's not common after a single claim, but it can happen,
Speaker 2: which means that in your case, you do need to
Speaker 2: be careful before you file a claim. I would be
Speaker 2: considering the long term consequences. And in your case, j
Speaker 2: it wasn't just like a couple of appliances that got fried, right,
Speaker 2: having to repaint the siding where it got charred. It
Speaker 2: was much more substantial than.
Speaker 1: That flooring framing.
Speaker 2: Yeah, it was water damage touched a.
Speaker 1: Whole lot of areas, which made meant the price tag
Speaker 1: went up, which meant the reality of claiming and filing
Speaker 1: claim made a whole lot more sense. And so yeah,
Speaker 1: how much your premiums can increase depends on a lot
Speaker 1: of factors, right, including the ad fault nature, which this
Speaker 1: is not the case. Even this wasn't so in your fault, right,
Speaker 1: this was, like I said, an act of God. The
Speaker 1: overall claim amount that can impact to the how much
Speaker 1: premiums go up for you. And rates have already been
Speaker 1: subject to higher increases over the past couple of years.
Speaker 1: Insurance companies are feeling the pain of higher payouts. You
Speaker 1: we read about the wildfires in Los Angeles, read about
Speaker 1: the hurricane damage right in the Southeast. I mean, it
Speaker 1: just feels like we're experiencing greater levels of more natural
Speaker 1: disasters and then so which means higher claim amounts. And
Speaker 1: we're also talking about just everything costing more right after
Speaker 1: a significant bout of inflation, So a premium increase of
Speaker 1: twenty to forty percent. I don't think that would be
Speaker 1: out of the question. And if you're paying let's take
Speaker 1: let's say three thousand dollars a year for your homemotos
Speaker 1: insurance right now, well they might say, hey, you actually
Speaker 1: need to pay four grand or forty two hundred forty
Speaker 1: five hundred starting next year. I don't like it, and
Speaker 1: it's important to mention that this claim is going to
Speaker 1: stick on your clue report, which would likely up your
Speaker 1: rates when getting quotes from other insurance companies in the future.
Speaker 1: SEA might say, Hey, definitely don't like that. I'm going
Speaker 1: to file a claim. I'm going to get paid out,
Speaker 1: and then at some point, maybe six months down the road,
Speaker 1: after I've like gotten far enough away from this incident
Speaker 1: and fixing everything back up, I'm going to go to
Speaker 1: another insurance company. And that's how I'm gonna be able
Speaker 1: to lower my rates. Maybe maybe, but maybe not, because
Speaker 1: they're all going to know about the claim you filed
Speaker 1: and that's going to impact the quotes they give you too.
Speaker 2: That's right. Yeah, so let's go back to the deductible
Speaker 2: five thousand dollars. This is a good thing because it's
Speaker 2: actually helping to keep your premiums lower. And on top
Speaker 2: of that, it makes it less likely that you are
Speaker 2: going to file the claim steven which keeps your premiums reasonable.
Speaker 2: Like we just discussed, and so I would run some numbers.
Speaker 2: How much is it going to cost for you to
Speaker 2: get these repairs done? Because if we're talking let's say
Speaker 2: seven thousand dollars in total or six certainly five? Right, like,
Speaker 2: you don't file a claim that would not make much
Speaker 2: financial sense in this case. Self insurance would be the
Speaker 2: right call. But let's say if oh, actually it's not
Speaker 2: just the sighting, some of the framing got charred or something. Oh,
Speaker 2: it's all the appliances, they're all on the fritz. Oh
Speaker 2: the electricals damage now too, Oh my gosh. Yeah, now
Speaker 2: we got to upgrade all We got upgrade our panel.
Speaker 2: And the service is actually I don't know, I'm just
Speaker 2: making these are terms i've heard as I've renovated at homes.
Speaker 2: The service coming from the street, there's something wrong with that. Well,
Speaker 2: if that were to be the case, and the replacement
Speaker 2: expenses and cost is coming in a good bit higher,
Speaker 2: then I think filing a claim could be this minus move.
Speaker 1: And there's always a great area here, Like it's never
Speaker 1: like the exact formula, I don't think, but I do think.
Speaker 1: I think of insurance homeowners insurance as mostly there for
Speaker 1: catastrophic reasons. If something significant happens that's incredibly beyond your
Speaker 1: ability to pay for or doesn't make any financial sense
Speaker 1: to file acclaim. So I think you're right, mat If
Speaker 1: it's like kind of close to that deductible amount, yeah,
Speaker 1: that's something you cover. You don't involve insurance at all
Speaker 1: because you don't want it on your clue report and
Speaker 1: you don't want to raise your premiums. And then but
Speaker 1: if that's not the case, and you've got a good
Speaker 1: bit of cash sitting on which hopefully you do have
Speaker 1: a good bit of cash, having a deductible that high,
Speaker 1: that means you're willing to take on the responsibility of
Speaker 1: self insurance. I think hopefully you can handle this on
Speaker 1: your own. But again, there's always a gray area, and
Speaker 1: there a sliding scale. It can be difficult to know
Speaker 1: the exact way to proceed.
Speaker 2: All right, Let's get to one more quick one. This
Speaker 2: is from Grace, and she writes, we are trying to
Speaker 2: find a way to limit our grocery and restaurant spending.
Speaker 2: And we thought we had a winning idea of getting
Speaker 2: Visa gift cards. Because the card won't let you pay
Speaker 2: when you run out of money, we could get one
Speaker 2: for each family member and not important but a bonus.
Speaker 2: Then in our real budget there is just the buying
Speaker 2: of the gift card for this purpose instead of a
Speaker 2: million little transactions. Grace, I hear you as the one
Speaker 2: who keeps up with the budget. All those small expenses
Speaker 2: get on my nerves, but she writes, then it turned
Speaker 2: out that there are fees to get the cards. They
Speaker 2: were quite prohibitive. Any other ideas, Cash isn't great because
Speaker 2: you can't use it to order door dash or anything
Speaker 2: like that, but maybe we will have to try it
Speaker 2: any other ideas well. I see the benefit of not
Speaker 2: being able to I see not being able to get
Speaker 2: door dash as a positive. Yes of going with cash.
Speaker 2: Let's go ahead and address that one right out of
Speaker 2: the gate. Don't do door dash.
Speaker 1: Yeah, if you're really trying to limit your hate door dash, man,
Speaker 1: how much you spend eating out or just on food in.
Speaker 2: General, don't make it so easy.
Speaker 1: This is the number one thing you want to eliminate.
Speaker 1: And there are other other things you can do, of course,
Speaker 1: which we'll talk about to reduce your grocery spend, but
Speaker 1: you know, doing the app based takeout orders is one
Speaker 1: of the worst things you do. So I do think
Speaker 1: actually moving the cash is a reasonable choice here, dude,
Speaker 1: because it's going to to prevent the worst thing in
Speaker 1: the world that you can do, and it's also going
Speaker 1: to put those limits on you. Yeah, that don't come
Speaker 1: with fees.
Speaker 2: I will say, if you're looking for more convenience, because
Speaker 2: folks are thinking, well, I don't want to like roll
Speaker 2: with hundreds of dollars in my wallet or in my
Speaker 2: purse kick at old school, and only put the amount
Speaker 2: of money that you want to spend on discretionary spending
Speaker 2: in your checking and or whatever, like spending account. Like
Speaker 2: sometimes newer banks these days are calling them spending accounts,
Speaker 2: but like that's that's kind of how these accounts were
Speaker 2: created back in the day, and I think most people,
Speaker 2: including myself, I only kind of it's random the amounts
Speaker 2: of money I have in my checking account and my
Speaker 2: spending account versus my savings. Like basically I try to
Speaker 2: keep as little in my checking account as possible so
Speaker 2: I can earn the interest in the savings account, right Like,
Speaker 2: that's what us optimizers are out here doing. But I
Speaker 2: think you can take a more methodical approach. And if
Speaker 2: you so, it sounds like she is tracking her spending anyway,
Speaker 2: because she's talking about all the purchases that she's inundated
Speaker 2: with at the end of the month, and maybe she
Speaker 2: hates them just as much as I do. But that
Speaker 2: being said, you probably know how much you're spending every
Speaker 2: single month on eating out and groceries and things like that,
Speaker 2: and so simply just move that amount of money to
Speaker 2: your checking account and then you are going to roll
Speaker 2: with your debit card. And I think that can be
Speaker 2: a nice Granted, there are always going to be workarounds,
Speaker 2: right Like you could just say, oh, well, then I
Speaker 2: could just go in there and transfer that money over. Well,
Speaker 2: in a similar way, you could also go to the ATM,
Speaker 2: that's right and pull more cash.
Speaker 1: There's always a way to circumvent your desire to save money.
Speaker 2: You are still potentially your own worst enemy here. Nothing
Speaker 2: is you proof.
Speaker 1: There's no complete cure for humanity that Matt has found
Speaker 1: yet or that I found it. But I think making
Speaker 1: it harder on yourself to do the things that are
Speaker 1: in your worst interest in terms of saving on your
Speaker 1: grocery bill makes a lot of sense. And then where
Speaker 1: you shot matters to talk about that all the time.
Speaker 1: No cost grocery stores Aldy in Legal in particular Trader
Speaker 1: Joe's solid for savings. Just find a grocery store where
Speaker 1: you can buy stuff for less and buy the off
Speaker 1: brand stuff the store brand stuff, I guess you might say,
Speaker 1: and I think also, Matt, at least what we've found
Speaker 1: is planning ahead just saves our butts. Like the more
Speaker 1: we're flying by the seat of ours, the more likely
Speaker 1: we are to make a bad decision on a whim.
Speaker 1: And so we've been taken to like on the smoker
Speaker 1: smoking like two chickens or something like that on the weekend.
Speaker 1: It's like ten dollars for two chickens right at Costco,
Speaker 1: and then I smoke both of them, and we have
Speaker 1: like three or four meals we plan to make out
Speaker 1: of those chickens throughout the week, and so it's not
Speaker 1: very expensive, but it does take a little bit of foresight.
Speaker 1: And so yeah, I did, I think just the more
Speaker 1: you can plan and figure out multiple meals with the
Speaker 1: limited range of ingredients the weekend ahead of time, that
Speaker 1: that'll save your bacon too, And because eating out really,
Speaker 1: when it comes down to it, I think for most
Speaker 1: it is the worst man the grocery store savings. You
Speaker 1: can save money there, but the biggest savings is just
Speaker 1: eating out less and eating at home more.
Speaker 2: At the end of the day. I will also say
Speaker 2: that I am not totally completely against these prepay cards
Speaker 2: if it allows you to save even more money by
Speaker 2: the fact that you're not eating out as much, or
Speaker 2: maybe splurge purchases like buying stuff like on a whim
Speaker 2: in the grocery store. I think that, hey, you got
Speaker 2: to spend three bucks. Oh, you got to spend five
Speaker 2: bucks a month in order to have this card. Okay, Well,
Speaker 2: if it allows you to save fifty dollars two hundred
Speaker 2: bucks by not eating out, then I think that might
Speaker 2: just for you be the price of admission here in
Speaker 2: order to kind of implement some behavior change.
Speaker 1: And some of those grocery stores will. If you buy
Speaker 1: the groceries online and you opt to go pick them up,
Speaker 1: someone else actually does the shopping for you. It's much
Speaker 1: easier to stick to your list if you're not going
Speaker 1: into the grocery store itself, you're much less likely to succumb.
Speaker 1: You're actually it's pretty impossible to come to like the
Speaker 1: shelf on the side.
Speaker 2: Right, we're buying on a whim.
Speaker 1: Well, hey, the chips are two for five dollars to
Speaker 1: this week, I should stock up. You're gonna do that
Speaker 1: if you go in the store. But if you just
Speaker 1: buy online the stuff that's on your list, and then
Speaker 1: you opt to go pick up at some grocery stores,
Speaker 1: you're not paying a dollar more, you're not paying anything.
Speaker 1: They'll just add that on as a service for you
Speaker 1: bring the groceries out to your car. That can be
Speaker 1: the best of both worlds for a lot of folks,
Speaker 1: I think, when it comes to to making it easier
Speaker 1: to eat at home and to save me money the
Speaker 1: same time.
Speaker 2: Yeah, that's right, so Grace, we hope that helps let
Speaker 2: us know what you end up doing toocause I'm kind
Speaker 2: of curious to see if like go going with the
Speaker 2: old school cash envelopes, if that, if that's the what's
Speaker 2: required in order for you to just stick to the budget. Joel,
Speaker 2: let's get back to the beer that you and I enjoyed,
Speaker 2: which was a mar bits By Southern Grist, which I'll say,
Speaker 2: this isn't the first Southern. We've had a lot of
Speaker 2: Southern Grists.
Speaker 3: Are you.
Speaker 2: I think you're drawn to the Southern Grist brewery labels.
Speaker 2: Is that is that at the labels?
Speaker 1: That must be the name of the But I also
Speaker 1: saw I'm also we've had so many beers. I want
Speaker 1: to try something that's unique, something I've never had before,
Speaker 1: and so this was a marshmallow infused IPA.
Speaker 2: Indeed, it was.
Speaker 1: I think this is takeoff on Lucky Charms. It looks
Speaker 1: like it with the rainbow on the front and stuff.
Speaker 2: It's literally, yeah, it's got like a little four leaf
Speaker 2: clover all over the place. It's got like the little
Speaker 2: like graveyard headstone looking at marshmallow, you know, the kind
Speaker 2: of fake marshmallow that we're talking about, the crunchy kind
Speaker 2: of marshmallows.
Speaker 1: So, what are your thoughts?
Speaker 2: One of my favorite?
Speaker 1: Yeah, I mean neither. I was gonna say one of
Speaker 1: my least favorit it's actually it's got I think I
Speaker 1: just don't like marshmallows either.
Speaker 2: I think that's it. Like, it's very It's not often
Speaker 2: that I'm like, oh, yeah, what's the marshmallows, like even
Speaker 2: when you kind of toast it just right when you're
Speaker 2: doing uh smores or whatever, that's not really that's not
Speaker 2: my jam. But I will say the creaminess lends itself
Speaker 2: to to the ipa as far as the because sometimes
Speaker 2: you will have IPAs that have lactos in there. But
Speaker 2: there's something about this one with a bitterness from the
Speaker 2: hops that seemed to kind of kind of ruffle. Yeah,
Speaker 2: that kind of clashed with the marshmallow the sweetness that
Speaker 2: they're trying to pull out there. So it's you know,
Speaker 2: there's like almost two competing flavor profiles that we're going
Speaker 2: head to head. Yeah, a little bit, but yeah, it's
Speaker 2: still fun to fun to enjoy and drink.
Speaker 1: It's good to experiment. This experiment felt flat on its face.
Speaker 2: We shared it. So it's the sixteen ounce? Can I
Speaker 2: drink my eight ounces? Looks like you left one ounce?
Speaker 1: Might not finish? Yeah, all right, that's going to do it, Matt.
Speaker 1: For this episode, we'll put links to the show notes,
Speaker 1: some of the some of the stuff we mentioned up
Speaker 1: on our website at howtmoney dot com.
Speaker 2: That's right, buddy, that's it. So until next time, Best
Speaker 2: Friends Out best friends out