1 00:00:00,080 --> 00:00:03,520 Speaker 1: Welcome to had a Money. I'm Joel and I am Matt, 2 00:00:03,560 --> 00:00:06,240 Speaker 1: and today we're answering your listener questions. 3 00:00:25,440 --> 00:00:27,920 Speaker 2: You know what, buddy, We've got listener questions to get to. 4 00:00:28,000 --> 00:00:31,360 Speaker 2: We've got five of them, including a listener who is 5 00:00:31,480 --> 00:00:35,160 Speaker 2: wondering if prepaid college plans if they are a good deal. 6 00:00:35,440 --> 00:00:37,480 Speaker 2: Another listener he is wanting to know what he should 7 00:00:37,520 --> 00:00:41,240 Speaker 2: be doing with some different maturing savings bond that he 8 00:00:41,320 --> 00:00:43,720 Speaker 2: got way back in the day. And then another listener 9 00:00:43,920 --> 00:00:46,640 Speaker 2: is wondering, it's where we're going to tackle the roth 10 00:00:46,760 --> 00:00:51,000 Speaker 2: versus traditional Ira debates a classic Yeah, it's like, yeah, 11 00:00:51,040 --> 00:00:53,840 Speaker 2: a classic battle that it's been a minute since we 12 00:00:53,920 --> 00:00:56,120 Speaker 2: have visited. So I'm looking forward to those three questions 13 00:00:56,560 --> 00:00:58,840 Speaker 2: plus a few others. But by the way, so we 14 00:00:59,120 --> 00:01:00,880 Speaker 2: talked last week about how you and I we went 15 00:01:00,880 --> 00:01:03,840 Speaker 2: to a Braves game, and uh, one of the things 16 00:01:03,840 --> 00:01:06,400 Speaker 2: we didn't mention. Well, first of all, thank you to Adam. 17 00:01:06,520 --> 00:01:08,240 Speaker 2: He's the one that our friend Adam. He hooked us 18 00:01:08,280 --> 00:01:10,720 Speaker 2: up with the seats, with the fancy seats, by the way, 19 00:01:10,840 --> 00:01:14,160 Speaker 2: and with the fancy seats you get free concessions. So 20 00:01:14,720 --> 00:01:17,319 Speaker 2: you got a couple brought worsts that were that were 21 00:01:17,319 --> 00:01:19,440 Speaker 2: really good. I got some brisket that was pretty tasty. 22 00:01:19,680 --> 00:01:23,080 Speaker 2: But you also have and which is I mean, come on, 23 00:01:23,200 --> 00:01:26,200 Speaker 2: that's like right apart. You're speaking a love language right there. 24 00:01:26,400 --> 00:01:31,440 Speaker 2: But you also get free prepackaged foods like roasted peanuts, crackerjacks, 25 00:01:31,760 --> 00:01:35,520 Speaker 2: even some cotton candy crackerjacks, the classic ballpark tree, superclassic. 26 00:01:35,520 --> 00:01:37,759 Speaker 2: And so my question to you, Joel, is it frugal 27 00:01:37,840 --> 00:01:40,520 Speaker 2: or cheap that I took home a bag of unopened 28 00:01:40,560 --> 00:01:42,520 Speaker 2: cracker jacks to share with my kids. 29 00:01:42,520 --> 00:01:44,280 Speaker 1: There's a little treat. I think it's frugal. I think 30 00:01:44,280 --> 00:01:46,400 Speaker 1: if you had good if you had stuffed your pockets 31 00:01:46,440 --> 00:01:49,960 Speaker 1: with eighteen crackerjacks, or if you like bought brought a 32 00:01:50,000 --> 00:01:51,680 Speaker 1: backpack and you just started like loading that. 33 00:01:51,640 --> 00:01:53,560 Speaker 2: Puppy up, that makes all the difference different. 34 00:01:53,680 --> 00:01:55,160 Speaker 1: Yeah, but one on the way out. 35 00:01:56,120 --> 00:01:58,440 Speaker 2: It makes me think of like at Costco, the samples. 36 00:01:58,520 --> 00:02:00,680 Speaker 2: It's just a part of the deal. They expect you 37 00:02:00,720 --> 00:02:03,080 Speaker 2: to try the samples, even if you're gonna grab one 38 00:02:03,200 --> 00:02:04,960 Speaker 2: on the way out the door, no big deal. But 39 00:02:05,040 --> 00:02:06,680 Speaker 2: like you said, if you show up with a lunch 40 00:02:06,720 --> 00:02:09,920 Speaker 2: box and start loading up with half cut granola bar, 41 00:02:10,880 --> 00:02:13,200 Speaker 2: like you're gonna get You're gonna get looked. 42 00:02:13,040 --> 00:02:14,840 Speaker 1: At, and then I'm gonna get the stink guy. 43 00:02:14,800 --> 00:02:17,960 Speaker 2: Right exactly. Yeah, And so there's an it's not like 44 00:02:17,960 --> 00:02:18,880 Speaker 2: we're breaking any rules. 45 00:02:18,880 --> 00:02:20,720 Speaker 1: I guess. If there was a clear rule that said. 46 00:02:20,560 --> 00:02:23,120 Speaker 2: Hey no, which I guess I don't know if that's 47 00:02:23,160 --> 00:02:25,720 Speaker 2: a technical rule, hey no, no snacks allowed it, then 48 00:02:25,760 --> 00:02:28,560 Speaker 2: it would maybe be considered cheap. But there's just the 49 00:02:28,840 --> 00:02:30,639 Speaker 2: element of wanting to get your money's worth you too, 50 00:02:30,680 --> 00:02:33,960 Speaker 2: because again, these are the fancy seats, and so I'm like, 51 00:02:34,000 --> 00:02:36,440 Speaker 2: all right, I don't want to. 52 00:02:35,040 --> 00:02:37,080 Speaker 1: Don't you didn't pay a nine for them, We got 53 00:02:37,160 --> 00:02:39,800 Speaker 1: them for free, but especially if you had paid for 54 00:02:39,840 --> 00:02:40,320 Speaker 1: the nice one. 55 00:02:40,440 --> 00:02:42,840 Speaker 2: Gets like, there is an element of wanting to make 56 00:02:42,880 --> 00:02:44,160 Speaker 2: sure that you get your money's worth. 57 00:02:44,200 --> 00:02:46,680 Speaker 1: Yeah. Well, it makes me think of taking packets right 58 00:02:46,800 --> 00:02:48,679 Speaker 1: when you're at your favorite fast food chain or something 59 00:02:48,760 --> 00:02:52,040 Speaker 1: like that, and taking a couple or maybe a couple 60 00:02:52,080 --> 00:02:54,840 Speaker 1: more than you think you'll need is fine. Loading your 61 00:02:54,840 --> 00:02:56,919 Speaker 1: bag up so you can have like ketchup and you 62 00:02:56,919 --> 00:02:59,120 Speaker 1: don't actually have to buy at the grocery store. That's cheap, 63 00:02:59,160 --> 00:03:01,839 Speaker 1: I think. So, yeah, there's no rule, there's no sign 64 00:03:01,919 --> 00:03:05,520 Speaker 1: up that's maximum for aloud. It's still just nakoo. It's 65 00:03:05,880 --> 00:03:07,959 Speaker 1: the family was there and you told her to open 66 00:03:08,000 --> 00:03:10,160 Speaker 1: her new purse that you got for her, and we're like, 67 00:03:10,360 --> 00:03:13,240 Speaker 1: maybe load it up, load it up? Yeah, yeah, probably 68 00:03:13,280 --> 00:03:15,359 Speaker 1: not cool. Yeah, not cool at all. All right, let's 69 00:03:15,400 --> 00:03:17,040 Speaker 1: mention the beer we're having on this episode, Matt. This 70 00:03:17,120 --> 00:03:20,440 Speaker 1: is called var by Halfway Crooks. It's a check style pilsner. 71 00:03:20,720 --> 00:03:24,079 Speaker 1: I don't know what makes a pilsner check style in particular, 72 00:03:24,080 --> 00:03:25,640 Speaker 1: but we'll give well no either. We'll give our thoughts 73 00:03:25,639 --> 00:03:26,840 Speaker 1: on this listen at the end of the episode. 74 00:03:26,960 --> 00:03:29,960 Speaker 2: Well maybe because I guess the original style of it was. 75 00:03:31,040 --> 00:03:33,640 Speaker 2: I'm assuming it originated in checkless body. Yeah, but what 76 00:03:33,680 --> 00:03:36,160 Speaker 2: makes that different than a German pilsner. There's got to 77 00:03:36,160 --> 00:03:37,440 Speaker 2: be something. I'll figure it out. 78 00:03:37,560 --> 00:03:39,640 Speaker 1: But let's move on, Matt. Let's get to the or. 79 00:03:39,840 --> 00:03:42,440 Speaker 2: Won't or we won't by the times, we're gonna be 80 00:03:42,440 --> 00:03:43,000 Speaker 2: talking about money. 81 00:03:43,000 --> 00:03:45,600 Speaker 1: I'm gonna google it later though. Let's get to the 82 00:03:46,000 --> 00:03:48,080 Speaker 1: topic of hand. We're answering listener questions and if you 83 00:03:48,200 --> 00:03:50,120 Speaker 1: have a question you'd like Matt and I to address 84 00:03:50,160 --> 00:03:52,880 Speaker 1: on an upcoming ask htm episode, we would love to 85 00:03:52,920 --> 00:03:54,560 Speaker 1: hear it. Just go to how to money dot com 86 00:03:54,600 --> 00:03:58,160 Speaker 1: slash ask for simple instructions to record your voice memo 87 00:03:58,440 --> 00:04:00,520 Speaker 1: send it our way so we could be sure it soon. 88 00:04:00,680 --> 00:04:03,600 Speaker 1: But Matt, this first question comes from a listener who 89 00:04:03,880 --> 00:04:06,600 Speaker 1: wants to save up to help his kid get a 90 00:04:06,640 --> 00:04:07,800 Speaker 1: higher education in the future. 91 00:04:08,680 --> 00:04:11,040 Speaker 3: Hi, guys, this is Charles here. My wife and I 92 00:04:11,080 --> 00:04:14,240 Speaker 3: are expecting their first child. Naturally, i'd like to get 93 00:04:14,240 --> 00:04:18,120 Speaker 3: a jump on college savings. I'm doing some research on 94 00:04:19,000 --> 00:04:23,279 Speaker 3: prepaid college funds versus a five twenty nine plan. We 95 00:04:23,400 --> 00:04:25,280 Speaker 3: both currently live in the state of Florida that has 96 00:04:25,279 --> 00:04:28,680 Speaker 3: a prepaid college savings plan, which seems to be pretty good. 97 00:04:29,200 --> 00:04:31,119 Speaker 3: I ran the numbers and it seems like the yield 98 00:04:31,240 --> 00:04:36,279 Speaker 3: is actually higher for the prepaid account versus a typical 99 00:04:36,520 --> 00:04:39,159 Speaker 3: yield on a five point nine plan. Just wanted to 100 00:04:39,160 --> 00:04:43,240 Speaker 3: get your thoughts on these plans. From my understanding, you 101 00:04:43,320 --> 00:04:46,960 Speaker 3: can transfer the money to another state university, but neither 102 00:04:47,000 --> 00:04:49,240 Speaker 3: my wife nor I actually plan on staying in Florida 103 00:04:49,279 --> 00:04:51,920 Speaker 3: long term, so wanted to get your thoughts on these 104 00:04:51,920 --> 00:04:53,400 Speaker 3: two options. 105 00:04:53,480 --> 00:04:53,840 Speaker 1: Thank you. 106 00:04:54,680 --> 00:04:57,400 Speaker 2: That's right, Charles, you can actually transfer some of those funds, 107 00:04:57,440 --> 00:04:59,440 Speaker 2: but we'll get to that here. In a second. First 108 00:04:59,440 --> 00:05:03,400 Speaker 2: of all, congrats to you. You are expecting your firstborn 109 00:05:03,520 --> 00:05:05,520 Speaker 2: and by the way, you y'all are you and your 110 00:05:05,520 --> 00:05:07,680 Speaker 2: wife you're expecting. You don't even have your kid yet. 111 00:05:07,720 --> 00:05:09,839 Speaker 2: They're like on the ball, and you are looking to 112 00:05:09,920 --> 00:05:12,280 Speaker 2: say for your kids college. Charles is the kind of 113 00:05:12,279 --> 00:05:14,800 Speaker 2: guy that I grabs life by the horns. Yes, type 114 00:05:14,800 --> 00:05:18,400 Speaker 2: a personality, and I love it. I love your enthusiasm 115 00:05:18,520 --> 00:05:21,680 Speaker 2: on saving for your your brand new Kido's future, but 116 00:05:21,720 --> 00:05:23,840 Speaker 2: we do want you to temper that excitement just a 117 00:05:23,880 --> 00:05:27,520 Speaker 2: little bit, because yes, five twenty nine plans, specifically, they've 118 00:05:27,520 --> 00:05:30,799 Speaker 2: gotten a whole lot better thanks to recent law changes 119 00:05:30,960 --> 00:05:34,600 Speaker 2: which allow excess five twenty nine contributions to be rolled 120 00:05:34,640 --> 00:05:38,000 Speaker 2: into a roth ira for your kid. We love that 121 00:05:38,080 --> 00:05:41,160 Speaker 2: this is now like a safety net essentially that allows 122 00:05:41,200 --> 00:05:44,080 Speaker 2: you to sort of glean some of that money that 123 00:05:44,120 --> 00:05:46,880 Speaker 2: would otherwise be penalized were you to not use it for. 124 00:05:47,160 --> 00:05:50,080 Speaker 1: That was a massive improvement and it completely changed how 125 00:05:50,120 --> 00:05:51,560 Speaker 1: we viewed five twenty nine. So we were kind of 126 00:05:51,640 --> 00:05:53,800 Speaker 1: sort of ambivalent towards them, and still we don't think 127 00:05:53,800 --> 00:05:55,680 Speaker 1: they're like the best place, just like there are other 128 00:05:55,680 --> 00:05:57,800 Speaker 1: places saving for your own retirement that are more important. 129 00:05:57,920 --> 00:05:59,480 Speaker 1: But man, we sure like I'm a whole lot more 130 00:05:59,520 --> 00:06:01,839 Speaker 1: now doo. Yeah, it's always more important to be funding 131 00:06:01,960 --> 00:06:04,240 Speaker 1: your own retirement accounts. Like, So that's one of the 132 00:06:04,240 --> 00:06:06,800 Speaker 1: points I wanted to make your own retirement your own 133 00:06:06,839 --> 00:06:10,599 Speaker 1: financial goals. Make sure that you prioritize those first fully, 134 00:06:10,760 --> 00:06:14,440 Speaker 1: before you start talking away for a kid's future. Because yes, 135 00:06:14,480 --> 00:06:16,400 Speaker 1: it seems like it's the right and loving thing to 136 00:06:16,400 --> 00:06:18,279 Speaker 1: do for your kid, But the truth is, there is 137 00:06:18,320 --> 00:06:22,760 Speaker 1: no scholarship for retirement. There is only Social Security, which 138 00:06:22,839 --> 00:06:25,440 Speaker 1: may not cut it for you, and there are many 139 00:06:25,480 --> 00:06:27,640 Speaker 1: ways to skin the cat when it comes to paying 140 00:06:27,640 --> 00:06:29,920 Speaker 1: for college. So just make sure that you are at 141 00:06:30,000 --> 00:06:33,279 Speaker 1: least getting the full match in your workplace retirement account 142 00:06:33,320 --> 00:06:36,680 Speaker 1: and that you're maxing out your roth are before you 143 00:06:36,680 --> 00:06:39,760 Speaker 1: start putting money into Honestly, any account that is going 144 00:06:39,800 --> 00:06:42,200 Speaker 1: to be primarily for your kid's education. I think that's 145 00:06:42,200 --> 00:06:45,280 Speaker 1: a good rule with thumb, doing both those accounts really 146 00:06:45,320 --> 00:06:47,400 Speaker 1: well before you even think about doing anything else. 147 00:06:47,440 --> 00:06:49,039 Speaker 2: Those are the buckets you want to fill first. And 148 00:06:49,320 --> 00:06:51,960 Speaker 2: if you have an HSA, any overflow then goes into those. 149 00:06:52,040 --> 00:06:53,440 Speaker 1: Yeah, And if you have an HSA, I would say 150 00:06:53,520 --> 00:06:56,800 Speaker 1: HSA takes priority over the five pointy nine account too. 151 00:06:57,200 --> 00:06:59,240 Speaker 1: But let's talk about the pros and cons specifically of 152 00:06:59,279 --> 00:07:01,640 Speaker 1: the prepaid point that Charles is asking about. Matt. I mean, 153 00:07:02,240 --> 00:07:05,120 Speaker 1: assuming he's all set on the retirement front, let's get 154 00:07:05,160 --> 00:07:06,640 Speaker 1: to the heart of his question, which is whether or 155 00:07:06,640 --> 00:07:09,159 Speaker 1: not he should consider the Florida prepaid plan or stick 156 00:07:09,200 --> 00:07:12,720 Speaker 1: with the more standard five twenty nine account. And first 157 00:07:12,960 --> 00:07:16,080 Speaker 1: it's good to explain to folks how these prepaid accounts work. Basically, 158 00:07:16,560 --> 00:07:18,920 Speaker 1: the Florida plan, you choose the type of college that 159 00:07:18,960 --> 00:07:20,800 Speaker 1: you want to fund, that could be two year or 160 00:07:20,840 --> 00:07:23,720 Speaker 1: four year degree, and then you have a set dollar 161 00:07:23,720 --> 00:07:26,560 Speaker 1: amount that should pay every month to prefund this plan. So, 162 00:07:26,600 --> 00:07:29,440 Speaker 1: for example, the prepaid plan to cover a bachelor's degree 163 00:07:29,480 --> 00:07:31,480 Speaker 1: from a state school is one hundred and eighty one 164 00:07:31,520 --> 00:07:34,080 Speaker 1: dollars a month, which sounds reasonable, right. Then you can 165 00:07:34,080 --> 00:07:35,400 Speaker 1: set it you could forget the. 166 00:07:35,360 --> 00:07:37,200 Speaker 2: Cost of college. Yeah, like, oh, that's kind of sounds like. 167 00:07:37,200 --> 00:07:40,320 Speaker 1: A deal exactly, and it is. These accounts can be 168 00:07:40,360 --> 00:07:42,480 Speaker 1: a pretty sweet value. And one of the main reasons 169 00:07:42,520 --> 00:07:44,560 Speaker 1: they're so attractive is that it can help you protect 170 00:07:44,600 --> 00:07:48,520 Speaker 1: against tuition inflation, which we've seen. Right. If you look 171 00:07:48,520 --> 00:07:50,480 Speaker 1: at an inflation chart. The cost of college and the 172 00:07:50,560 --> 00:07:52,440 Speaker 1: cost of healthcare are two of the things that have 173 00:07:52,480 --> 00:07:54,680 Speaker 1: gone up the most in our society over the past 174 00:07:54,720 --> 00:07:57,720 Speaker 1: couple of decades, and so as college costs continue to rise, 175 00:07:57,960 --> 00:08:00,920 Speaker 1: prepaying for college gives you more of a no own quantity, 176 00:08:01,440 --> 00:08:03,120 Speaker 1: which is cool, which is kind of nice, or some 177 00:08:03,160 --> 00:08:03,880 Speaker 1: peace of mind in that. 178 00:08:04,040 --> 00:08:07,640 Speaker 2: That's right, especially if you value that higher education. But 179 00:08:07,720 --> 00:08:10,520 Speaker 2: there are some downsides as well, and the biggest one 180 00:08:10,640 --> 00:08:13,960 Speaker 2: is lack of flexibility. It's true that you do have 181 00:08:14,000 --> 00:08:16,200 Speaker 2: to be a Florida resident in order to open one 182 00:08:16,240 --> 00:08:18,560 Speaker 2: of these plans, and you actually you don't need to 183 00:08:18,640 --> 00:08:21,280 Speaker 2: even remain a resident in order to keep it open. 184 00:08:21,560 --> 00:08:24,120 Speaker 2: And actually that you can use these prepaid funds to 185 00:08:24,120 --> 00:08:26,560 Speaker 2: pay for college at a school that is out of state, 186 00:08:26,680 --> 00:08:29,400 Speaker 2: like you mentioned, but it's probably still not the best 187 00:08:29,480 --> 00:08:31,480 Speaker 2: bang for your buck in terms of saving for your 188 00:08:31,520 --> 00:08:34,480 Speaker 2: child's future education. So as opposed to fully paying for 189 00:08:34,520 --> 00:08:37,160 Speaker 2: that education with a state school in Florida, if you 190 00:08:37,280 --> 00:08:39,080 Speaker 2: are looking at an out of state school, the plan 191 00:08:39,120 --> 00:08:42,720 Speaker 2: will only pay the average rate of public colleges and 192 00:08:42,840 --> 00:08:45,720 Speaker 2: universities there in the state of Florida. So with that 193 00:08:45,760 --> 00:08:47,920 Speaker 2: in mind, we would rather see you fund a traditional 194 00:08:48,320 --> 00:08:52,880 Speaker 2: five twenty nine account with again your excess investment dollars, 195 00:08:53,200 --> 00:08:57,000 Speaker 2: especially since you are like you are knowingly entering into 196 00:08:57,640 --> 00:08:59,520 Speaker 2: the future knowing that you're not planning to stay there 197 00:08:59,520 --> 00:09:02,480 Speaker 2: in Florida. Be different if you have this long legacy 198 00:09:02,520 --> 00:09:05,520 Speaker 2: of family members who were born and raised in the state, 199 00:09:05,600 --> 00:09:09,240 Speaker 2: and all of your family members are buried in the cemetery. 200 00:09:09,000 --> 00:09:11,640 Speaker 1: Like there's Kainesville right next to the University of Florida. 201 00:09:11,720 --> 00:09:14,240 Speaker 2: There are certain individuals who are like, Yeah, I'm gonna 202 00:09:14,360 --> 00:09:16,079 Speaker 2: raise my family here and you're gonna bury me in 203 00:09:16,080 --> 00:09:16,520 Speaker 2: the backyard. 204 00:09:16,559 --> 00:09:18,680 Speaker 1: We go to four football games a year. You know, 205 00:09:18,720 --> 00:09:21,560 Speaker 1: they wear the clothing that's associated with the school, and 206 00:09:21,600 --> 00:09:24,679 Speaker 1: I've indoctrinated them. Yeah, Yeah, they're gonna they want to 207 00:09:24,720 --> 00:09:26,320 Speaker 1: They've wanted to go there since they were a child. 208 00:09:26,600 --> 00:09:28,920 Speaker 1: That's different than the prepaid education makes a ton of 209 00:09:28,960 --> 00:09:30,920 Speaker 1: sense because it is going to be the best money 210 00:09:30,960 --> 00:09:32,760 Speaker 1: saving device. But but you're right, Matt, based on the 211 00:09:32,760 --> 00:09:34,640 Speaker 1: fact that Charles and his family are going to be 212 00:09:34,679 --> 00:09:36,960 Speaker 1: leaving the state of Florida, it seems to make less sense. 213 00:09:37,280 --> 00:09:39,600 Speaker 2: And you just never know too, Like there you might 214 00:09:39,640 --> 00:09:41,400 Speaker 2: have a kid, even though you, and like you said, 215 00:09:41,480 --> 00:09:44,440 Speaker 2: you raise them to be a Floridian. What if they 216 00:09:44,559 --> 00:09:47,520 Speaker 2: end up moving to California. Like our kids, they have 217 00:09:47,559 --> 00:09:50,640 Speaker 2: their own opinions in their own minds. Yeah, it's important 218 00:09:50,640 --> 00:09:51,720 Speaker 2: to keep that in mind too. Sure. 219 00:09:51,920 --> 00:09:54,080 Speaker 1: Yeah, So basically I think this plan is too rigid 220 00:09:54,240 --> 00:09:57,080 Speaker 1: for Charles's purpose exactly, and for his kid and where 221 00:09:57,080 --> 00:09:59,079 Speaker 1: his kid wants to go or whether his kid even 222 00:09:59,080 --> 00:10:00,560 Speaker 1: wants to go to college at all in the future. 223 00:10:01,360 --> 00:10:04,080 Speaker 1: And basically, no matter where you open a traditional five 224 00:10:04,160 --> 00:10:07,280 Speaker 1: twenty nine plan, it's it's an investment vehicle for wherever 225 00:10:07,400 --> 00:10:09,520 Speaker 1: your kid wants to go to college. And again it's 226 00:10:09,559 --> 00:10:12,680 Speaker 1: just got that increased flexibility now the being able to 227 00:10:12,679 --> 00:10:15,200 Speaker 1: turn it into Wroth money, which is awesome. So we 228 00:10:15,200 --> 00:10:17,440 Speaker 1: would say going the traditional five to twenty nine plan 229 00:10:17,520 --> 00:10:20,280 Speaker 1: route makes the most sense from where we're sitting. And 230 00:10:20,360 --> 00:10:22,040 Speaker 1: if you move at some point in the future, Charles, 231 00:10:22,240 --> 00:10:24,440 Speaker 1: you can, and you move to a state that offers 232 00:10:24,480 --> 00:10:26,800 Speaker 1: you a tax deduction for contributing to a five to 233 00:10:26,840 --> 00:10:29,720 Speaker 1: twenty nine account, then you start contributing to that state's 234 00:10:29,720 --> 00:10:32,040 Speaker 1: five twenty nine account. But I think the traditional version 235 00:10:32,280 --> 00:10:36,720 Speaker 1: just makes more sense given your particulars than the prepaid totally. Yeah. 236 00:10:36,720 --> 00:10:38,680 Speaker 2: And of course, again, if your kid doesn't end up 237 00:10:38,679 --> 00:10:40,280 Speaker 2: going to college, and you know, you can still roll 238 00:10:40,280 --> 00:10:41,800 Speaker 2: that five twenty nine into the roth, you know, like 239 00:10:41,800 --> 00:10:44,320 Speaker 2: we just mentioned. But if you've been funding the Florida 240 00:10:44,400 --> 00:10:46,760 Speaker 2: Prepaid twition plan and your kid ends up not going 241 00:10:46,760 --> 00:10:49,839 Speaker 2: to college, well yes, you can get your money back, 242 00:10:49,840 --> 00:10:53,080 Speaker 2: but any growth that you've experienced over the past eighteen 243 00:10:53,200 --> 00:10:55,800 Speaker 2: years it gets completely wiped out. Yeah, so all that 244 00:10:55,880 --> 00:10:58,880 Speaker 2: interest that you would have earned gets forfeited, and that's 245 00:10:58,920 --> 00:11:01,160 Speaker 2: a huge bummer and you would have been better off, 246 00:11:01,400 --> 00:11:03,480 Speaker 2: you know, it's stuck that money even in a savings account, 247 00:11:03,520 --> 00:11:05,840 Speaker 2: not even invested, like you would have earned way more. 248 00:11:06,000 --> 00:11:08,760 Speaker 2: Just with that money sitting in a high yield savings account. 249 00:11:08,800 --> 00:11:10,360 Speaker 1: It's like an interest free loan at that point to 250 00:11:10,400 --> 00:11:12,800 Speaker 1: the state. And so that it's not the worst thing 251 00:11:12,800 --> 00:11:15,040 Speaker 1: that could have ever happened to you. But considering you're 252 00:11:15,040 --> 00:11:17,959 Speaker 1: asking the question ahead of time, I wouldn't want to 253 00:11:17,960 --> 00:11:19,680 Speaker 1: be in that position and I would rather see my 254 00:11:19,720 --> 00:11:22,680 Speaker 1: money grow. And even if your your child does go 255 00:11:22,760 --> 00:11:27,320 Speaker 1: to a Florida school, you're still going to be fine 256 00:11:27,400 --> 00:11:30,600 Speaker 1: having invested socked away money inside of a regular five 257 00:11:30,640 --> 00:11:33,439 Speaker 1: twenty nine plane, you'll have hopefully plenty to cover a 258 00:11:33,520 --> 00:11:34,240 Speaker 1: lot of that tuition. 259 00:11:34,400 --> 00:11:37,640 Speaker 2: Yeah, it may not be perfectly optimized, but one thing 260 00:11:37,679 --> 00:11:39,400 Speaker 2: that you learn as you just kind of go through 261 00:11:39,400 --> 00:11:41,240 Speaker 2: life is like you can never plan things out to 262 00:11:41,280 --> 00:11:43,200 Speaker 2: be exactly like to be the most optimized. 263 00:11:43,240 --> 00:11:46,040 Speaker 1: So I think the added flexibility is flexibility is helpful. 264 00:11:46,160 --> 00:11:50,720 Speaker 1: It's worth potentially turning down that super duper optimization ability 265 00:11:50,720 --> 00:11:53,280 Speaker 1: that prepaid plans can offer if you jump through all 266 00:11:53,320 --> 00:11:55,360 Speaker 1: the hoops to make them work for your famou that's right. 267 00:11:55,440 --> 00:11:57,280 Speaker 2: Yeah, Okay, So speaking of kids, we're going to get 268 00:11:57,280 --> 00:11:59,680 Speaker 2: to a question here in a little bit about when 269 00:11:59,880 --> 00:12:02,800 Speaker 2: is the right time to give your kid a credit card? 270 00:12:03,040 --> 00:12:05,120 Speaker 2: And we will get to that question and more right 271 00:12:05,280 --> 00:12:15,520 Speaker 2: after the break, Right. 272 00:12:15,440 --> 00:12:17,360 Speaker 1: Matt, let's keep going. We've got more questions to get 273 00:12:17,360 --> 00:12:20,480 Speaker 1: to for more. In fact, yes, exactly, And this next one, 274 00:12:20,520 --> 00:12:24,840 Speaker 1: this one is specifically about redeeming bonds that this listener's 275 00:12:24,840 --> 00:12:26,679 Speaker 1: had for a while. Hi, Matt and Joel. 276 00:12:26,760 --> 00:12:29,160 Speaker 4: This is Dan from Minnetonka, Minnesota, and I have a 277 00:12:29,240 --> 00:12:33,440 Speaker 4: question regarding Series EE bonds. As a kid, my grandparents 278 00:12:33,440 --> 00:12:38,720 Speaker 4: would give me bonds instead of cash at birthdays, holidays, graduations, 279 00:12:38,720 --> 00:12:43,200 Speaker 4: et cetera, and those bonds, since their thirty year bonds 280 00:12:43,240 --> 00:12:45,760 Speaker 4: are starting to mature. A few of them already have, 281 00:12:45,800 --> 00:12:47,600 Speaker 4: and I have cashed them and put them into our 282 00:12:47,640 --> 00:12:51,800 Speaker 4: high Yield savings account, but there's a few yet to 283 00:12:51,800 --> 00:12:55,040 Speaker 4: be cashed, and the last one matures in August of 284 00:12:55,040 --> 00:12:58,800 Speaker 4: twenty thirty five. The interest rates on the bonds that 285 00:12:58,960 --> 00:13:01,320 Speaker 4: are yet to be cashed top out at four percent, 286 00:13:01,880 --> 00:13:04,400 Speaker 4: and starting in about two years, the ones that will 287 00:13:04,440 --> 00:13:07,240 Speaker 4: be cashed dipped down to as low as two point 288 00:13:07,280 --> 00:13:10,120 Speaker 4: eight percent. My question to you is is it worth 289 00:13:10,280 --> 00:13:13,040 Speaker 4: cashing in the bonds now and sticking them in a 290 00:13:13,080 --> 00:13:15,880 Speaker 4: high yield savings account or CD to take advantage of 291 00:13:15,960 --> 00:13:19,160 Speaker 4: high interest rates, or should I let them mature to 292 00:13:19,280 --> 00:13:22,120 Speaker 4: their maturity date. I guess I don't know the pros 293 00:13:22,160 --> 00:13:25,199 Speaker 4: and cons of either route, so I'm looking to hear 294 00:13:25,240 --> 00:13:27,920 Speaker 4: your thoughts on that. I plugged all the bonds into 295 00:13:27,960 --> 00:13:30,520 Speaker 4: Treasurydirect dot gov to see if I can answer this 296 00:13:30,600 --> 00:13:33,720 Speaker 4: question for myself, but unfortunately, they only allow me to 297 00:13:34,000 --> 00:13:36,760 Speaker 4: enter a maturity date as far off as November of 298 00:13:36,800 --> 00:13:39,960 Speaker 4: twenty twenty three, which doesn't really help me forecast how 299 00:13:40,040 --> 00:13:42,040 Speaker 4: much those bonds will be worth when they do hit 300 00:13:42,080 --> 00:13:45,960 Speaker 4: their maturity date. So my other question is do you 301 00:13:46,360 --> 00:13:48,559 Speaker 4: have another tool that you can point me to that 302 00:13:48,600 --> 00:13:51,160 Speaker 4: would help me better answer this question. Thanks so much, 303 00:13:51,400 --> 00:13:52,960 Speaker 4: and I look forward to hearing your thoughts. 304 00:13:53,120 --> 00:13:56,280 Speaker 2: I Joel, if only we all had grandparents like Dan 305 00:13:56,320 --> 00:14:01,520 Speaker 2: Didy instead of giving us toys as kids, instead they 306 00:14:01,520 --> 00:14:03,080 Speaker 2: were investing for our future. 307 00:14:03,080 --> 00:14:04,559 Speaker 1: I'm going to call my grandma to night and be like, 308 00:14:04,600 --> 00:14:05,960 Speaker 1: what's the olds of that? 309 00:14:05,960 --> 00:14:07,800 Speaker 2: That's a great gift. Even though Dan, I'm sure he. 310 00:14:07,760 --> 00:14:09,360 Speaker 1: Was probably know she got me cool stuff. Back in 311 00:14:09,360 --> 00:14:09,600 Speaker 1: the day. 312 00:14:09,600 --> 00:14:11,840 Speaker 2: I had like a Davy Crockett coonskin cap that was awesome. 313 00:14:11,880 --> 00:14:14,760 Speaker 2: Oh yeah, kind of like from is it a Christmas story? 314 00:14:14,880 --> 00:14:16,959 Speaker 1: Like oh yeah, the Bully where you like the Bully 315 00:14:17,000 --> 00:14:22,040 Speaker 1: pretty much? No, the exact opposite. Dan probably did want 316 00:14:22,080 --> 00:14:24,560 Speaker 1: something like that. You probably wanted a segagendis it's like, 317 00:14:24,560 --> 00:14:26,840 Speaker 1: come on, it's the lame. But now he likes it 318 00:14:26,880 --> 00:14:27,520 Speaker 1: as an adult. 319 00:14:27,600 --> 00:14:29,920 Speaker 2: Yeah, I'm sure he thinks this is pretty sink and cool. 320 00:14:30,240 --> 00:14:33,120 Speaker 2: Now that you've got this cash regularly, you know, coming 321 00:14:33,160 --> 00:14:34,800 Speaker 2: into your life. Dan, I love that you are in 322 00:14:34,800 --> 00:14:36,720 Speaker 2: this position and you are now trying to figure out 323 00:14:36,720 --> 00:14:38,440 Speaker 2: what to do with the savings bonds. 324 00:14:38,560 --> 00:14:40,560 Speaker 1: Yeah, so now that that Dan is sitting in the 325 00:14:40,600 --> 00:14:44,240 Speaker 1: cap Pard seat, he mentioned the difficulty of the treasurydirect 326 00:14:44,240 --> 00:14:47,760 Speaker 1: dot gov. It's true, the website is not terribly intuitive. 327 00:14:47,760 --> 00:14:50,800 Speaker 1: It's it's it's not great, and we were pointing a 328 00:14:50,840 --> 00:14:52,920 Speaker 1: lot of people in that direction, Matt to buy eyebonds 329 00:14:53,000 --> 00:14:55,720 Speaker 1: for a little while because the rates were so great, 330 00:14:56,000 --> 00:14:58,600 Speaker 1: and especially they're the savings accounts. 331 00:14:58,640 --> 00:15:02,680 Speaker 2: Yeah, they're peg to inflation. Inflation has eased slightly, but 332 00:15:02,720 --> 00:15:05,360 Speaker 2: we're not seeing the rates like the easter exactly. But 333 00:15:05,600 --> 00:15:07,560 Speaker 2: people had to deal with that Krummy website if they 334 00:15:07,560 --> 00:15:10,080 Speaker 2: wanted to buy eye bonds. And the rules by the way, 335 00:15:10,120 --> 00:15:13,320 Speaker 2: surrounding the redemption of those e bonds that Dan's asking about, 336 00:15:13,320 --> 00:15:16,200 Speaker 2: they're similar to the rules for redeeming eyebonds, which, like 337 00:15:16,240 --> 00:15:18,360 Speaker 2: I said, a lot of how to money listeners bought 338 00:15:18,400 --> 00:15:21,480 Speaker 2: some of those, So it's worth discussing. And I think 339 00:15:21,760 --> 00:15:23,400 Speaker 2: not just Dan can take something away from this, but 340 00:15:23,440 --> 00:15:25,280 Speaker 2: all hod of money listeners who are like, when and 341 00:15:25,320 --> 00:15:30,320 Speaker 2: how do I actually redeem those eyebonds? So yeah, basically 342 00:15:30,480 --> 00:15:32,360 Speaker 2: you have to hold both of these types. 343 00:15:32,160 --> 00:15:34,280 Speaker 1: Of bonds for at least a year. Your money is 344 00:15:34,400 --> 00:15:36,520 Speaker 1: locked away. You don't have access to it for twelve months, 345 00:15:36,640 --> 00:15:39,520 Speaker 1: but once that time period's up, you have access to 346 00:15:39,560 --> 00:15:42,720 Speaker 1: that money again. You don't have to grab those funds, 347 00:15:42,760 --> 00:15:44,960 Speaker 1: but you can. But if you don't hold those bonds 348 00:15:44,960 --> 00:15:47,240 Speaker 1: for at least five years, you're going to forfeit three 349 00:15:47,320 --> 00:15:49,960 Speaker 1: months worth of interest. And so in Dan's case, he 350 00:15:50,120 --> 00:15:52,400 Speaker 1: is well past the five year mark on all of 351 00:15:52,440 --> 00:15:54,600 Speaker 1: the E bonds that he has. He's not going to 352 00:15:54,640 --> 00:15:57,440 Speaker 1: get penalized at all. He's not going to forfeit any 353 00:15:57,480 --> 00:16:00,880 Speaker 1: interest there. But at the same time, right, you're not 354 00:16:00,920 --> 00:16:03,760 Speaker 1: doing yourself any favors Dan by continuing to hold them, 355 00:16:03,880 --> 00:16:04,320 Speaker 1: That's right. 356 00:16:04,400 --> 00:16:07,680 Speaker 2: Yeah, So having had those e bonds like they have 357 00:16:07,800 --> 00:16:10,520 Speaker 2: been especially great for Dan over the past decade because 358 00:16:10,640 --> 00:16:15,040 Speaker 2: rates for savers were crummy. New E bonds were literally 359 00:16:15,040 --> 00:16:18,840 Speaker 2: paying point one percent for years on end, which made 360 00:16:18,920 --> 00:16:23,000 Speaker 2: them effectively worthless considering inflation. But despite newer bonds and 361 00:16:23,000 --> 00:16:25,960 Speaker 2: savings accounts paying next to nothing, Dan he kept earning 362 00:16:26,320 --> 00:16:29,120 Speaker 2: higher returns in one of the safest vehicles out there. 363 00:16:29,160 --> 00:16:31,440 Speaker 2: You know, to be earning like three to four percent 364 00:16:31,880 --> 00:16:34,960 Speaker 2: and more on most of those bonds, while like zero 365 00:16:34,960 --> 00:16:38,800 Speaker 2: point five percent was the most that savvy savers could 366 00:16:38,840 --> 00:16:41,000 Speaker 2: actually get out in the open market. That's pretty dank cool. 367 00:16:41,080 --> 00:16:43,600 Speaker 1: Yeah, these new pop and savings rates that we're talking 368 00:16:43,600 --> 00:16:46,160 Speaker 1: about close to five percent essentially for people in a 369 00:16:46,200 --> 00:16:49,800 Speaker 1: traditional savings account through one of our favorite online banks. 370 00:16:50,080 --> 00:16:53,040 Speaker 1: That's that's new. And for a long long time, Yeah, 371 00:16:53,080 --> 00:16:54,880 Speaker 1: it was cheap to borrow money, but it was also 372 00:16:55,640 --> 00:16:58,200 Speaker 1: savers were getting crushed in the fust full to save money. Yeah, 373 00:16:58,240 --> 00:16:59,880 Speaker 1: and so yeah, if you had bought EE bonds at 374 00:16:59,880 --> 00:17:03,560 Speaker 1: the right time, you were out pacing those despondent savers 375 00:17:03,600 --> 00:17:06,440 Speaker 1: for a long time. But let's talk about what you 376 00:17:06,480 --> 00:17:09,320 Speaker 1: do now. We would suggest selling those bonds, being done 377 00:17:09,359 --> 00:17:12,560 Speaker 1: with them, and then take that money, stick it in 378 00:17:12,560 --> 00:17:15,280 Speaker 1: a vehicle that's going to offer you a better return. 379 00:17:15,400 --> 00:17:18,760 Speaker 1: You mentioned savings, you mentioned CDs. Those are both great options, 380 00:17:18,760 --> 00:17:20,560 Speaker 1: and again they're going to pay you more than what 381 00:17:20,600 --> 00:17:24,800 Speaker 1: you're earning currently on those EE bonds. CD lattering, which 382 00:17:24,840 --> 00:17:27,000 Speaker 1: we talked about on a Friday flight not too long ago. 383 00:17:27,160 --> 00:17:29,280 Speaker 1: That could make a lot of sense with you for 384 00:17:29,320 --> 00:17:31,679 Speaker 1: you with some of this money as you cash it 385 00:17:31,720 --> 00:17:34,320 Speaker 1: out of the EE bonds. But I'm also curious about 386 00:17:34,359 --> 00:17:37,320 Speaker 1: how much you're investing in what vehicles you're investing in. 387 00:17:37,600 --> 00:17:40,680 Speaker 1: Because even in today's environment, which is better for savers, Dan, 388 00:17:40,720 --> 00:17:44,320 Speaker 1: we would say, don't lean too hard in the savings direction. Yeah, 389 00:17:44,359 --> 00:17:46,760 Speaker 1: it's nice to get five percent on savings, which you 390 00:17:47,119 --> 00:17:48,960 Speaker 1: couldn't get for a long time, but make sure that 391 00:17:48,960 --> 00:17:52,719 Speaker 1: you're investing meaningfully in tax advantaged accounts for your future too. 392 00:17:52,760 --> 00:17:55,560 Speaker 1: That's how you build and grow wealth. Savings is great, 393 00:17:55,560 --> 00:17:58,199 Speaker 1: and you want a certain amount liquid, of course, but 394 00:17:58,280 --> 00:18:00,919 Speaker 1: you also don't want to overdo it because savings alone 395 00:18:01,240 --> 00:18:02,840 Speaker 1: isn't going to help you outpace inflation. 396 00:18:02,920 --> 00:18:04,239 Speaker 2: Yeah, I mean, so much of it comes down to 397 00:18:04,280 --> 00:18:06,240 Speaker 2: what it is that you actually want to do with 398 00:18:06,320 --> 00:18:08,120 Speaker 2: that money, right, Like what are your goals for that money, 399 00:18:08,119 --> 00:18:10,479 Speaker 2: Because if it's if we're talking about money that's going 400 00:18:10,520 --> 00:18:13,359 Speaker 2: to become your emergency fund, well you don't want that 401 00:18:13,480 --> 00:18:15,399 Speaker 2: money even in a CD. You want that to be 402 00:18:15,640 --> 00:18:18,639 Speaker 2: liquid cash within your savings account. If you are looking 403 00:18:18,760 --> 00:18:21,720 Speaker 2: at like a short term savings goal, like something in 404 00:18:21,720 --> 00:18:24,480 Speaker 2: the next two years, then a CD that that makes sense, right, 405 00:18:24,520 --> 00:18:27,240 Speaker 2: It's like a guaranteed return on money that you will 406 00:18:27,280 --> 00:18:29,840 Speaker 2: know that you want access to in like eighteen months, 407 00:18:29,920 --> 00:18:32,160 Speaker 2: that kind of thing. But even still honestly, if you're 408 00:18:32,359 --> 00:18:36,400 Speaker 2: stockpiling that money for say an investment opportunity, well that's 409 00:18:36,400 --> 00:18:38,679 Speaker 2: an instance where you want that cash even still to 410 00:18:38,680 --> 00:18:40,160 Speaker 2: be liquid because you want to be able to pounce 411 00:18:40,200 --> 00:18:43,159 Speaker 2: on something where say a property to show up, if 412 00:18:43,200 --> 00:18:45,760 Speaker 2: you're talking about a down payment for for something like that, 413 00:18:45,840 --> 00:18:48,960 Speaker 2: and so really you like, I guess the reason I 414 00:18:49,000 --> 00:18:52,000 Speaker 2: mentioned this is because CDs are good for some of 415 00:18:52,000 --> 00:18:54,040 Speaker 2: those rare short term goals, but beyond that you really 416 00:18:54,080 --> 00:18:56,560 Speaker 2: should be investing. Like if you're talking about three plus 417 00:18:56,680 --> 00:19:00,280 Speaker 2: years before you want to access that money, it's a 418 00:19:00,359 --> 00:19:03,359 Speaker 2: very very good chance that money invested in the stock market, 419 00:19:03,440 --> 00:19:06,119 Speaker 2: even in a taxable brokerage account, it's going to be 420 00:19:06,440 --> 00:19:08,360 Speaker 2: much higher than where it is right now. 421 00:19:08,680 --> 00:19:11,400 Speaker 1: And so he might be too conservative if he takes 422 00:19:11,400 --> 00:19:13,240 Speaker 1: money from these bonds and he just sticks it in 423 00:19:13,280 --> 00:19:16,320 Speaker 1: savings and CDs, and he might be under exposed to 424 00:19:16,320 --> 00:19:18,879 Speaker 1: the market. Yes exactly, I mean so, like personally, the 425 00:19:18,880 --> 00:19:22,159 Speaker 1: only CDs that I partake in are penalty free CDs 426 00:19:22,200 --> 00:19:25,160 Speaker 1: because of the flexibility that they offer. Yes, you lock 427 00:19:25,200 --> 00:19:25,480 Speaker 1: in that. 428 00:19:25,520 --> 00:19:28,800 Speaker 2: Rate, but effectively they behave just like cash because they 429 00:19:28,840 --> 00:19:31,840 Speaker 2: are fully liquid. I think with ale ally, maybe you 430 00:19:31,880 --> 00:19:34,119 Speaker 2: can't touch it for like literally it's like seven days, 431 00:19:34,119 --> 00:19:36,600 Speaker 2: but beyond that you have full access to it without 432 00:19:36,640 --> 00:19:38,880 Speaker 2: getting hit with any any kind of penalty. So, Dan, 433 00:19:38,960 --> 00:19:41,000 Speaker 2: I think what's important is to think through what you're 434 00:19:41,040 --> 00:19:44,840 Speaker 2: planning to use that money for. Once you designate what 435 00:19:45,000 --> 00:19:47,040 Speaker 2: goal this money is going to help you to achieve that, 436 00:19:47,119 --> 00:19:48,800 Speaker 2: I think that can help inform what you should be 437 00:19:48,840 --> 00:19:51,120 Speaker 2: doing with that money when it comes to you know, 438 00:19:51,359 --> 00:19:54,399 Speaker 2: whether it's again having cash on hand for an emergency, 439 00:19:54,640 --> 00:19:57,200 Speaker 2: short term or near term goal versus a long term 440 00:19:57,200 --> 00:19:59,440 Speaker 2: goal where you definitely do want to be exposed to 441 00:19:59,440 --> 00:20:01,040 Speaker 2: the market where you do want to be invested. 442 00:20:01,160 --> 00:20:03,639 Speaker 1: Yeah, it's kind of like you have different pieces of 443 00:20:03,640 --> 00:20:05,520 Speaker 1: your wardrobe for different things, Right, you got a suit 444 00:20:05,600 --> 00:20:07,639 Speaker 1: for once a year where you need one, or at 445 00:20:07,680 --> 00:20:10,679 Speaker 1: least me, right, rarely, rarely do I ever dress up? 446 00:20:10,920 --> 00:20:13,840 Speaker 1: And I like it that way. But yeah, and even 447 00:20:13,880 --> 00:20:15,480 Speaker 1: collar of shirts, man, it's a rarity for me. It's 448 00:20:15,480 --> 00:20:17,440 Speaker 1: like T shirts and shorts these days. But hey, you 449 00:20:17,520 --> 00:20:19,720 Speaker 1: were in a collar shirt today. Yeah, that's true looking shirt. 450 00:20:19,760 --> 00:20:21,359 Speaker 1: I don't thank you, man, I got the T shirt 451 00:20:21,400 --> 00:20:24,119 Speaker 1: on today. Well, and I think CDs are kind of 452 00:20:24,160 --> 00:20:26,440 Speaker 1: like that suit. It's not that they make no sense. 453 00:20:26,440 --> 00:20:29,360 Speaker 1: And I think you know rates, especially for medium term savings, 454 00:20:29,440 --> 00:20:32,640 Speaker 1: They've not been better on CDs in a really long time. 455 00:20:32,880 --> 00:20:35,000 Speaker 1: But what are you saving for? What's the time period? 456 00:20:35,080 --> 00:20:37,120 Speaker 1: It's really only they'll really only make sense for people 457 00:20:37,119 --> 00:20:40,320 Speaker 1: who have those medium term goals. Other than that, straight 458 00:20:40,400 --> 00:20:43,520 Speaker 1: up liquid savings and investing in the market are the 459 00:20:43,520 --> 00:20:44,120 Speaker 1: two best things. 460 00:20:44,119 --> 00:20:46,040 Speaker 2: See you said suits, I would have called CD is 461 00:20:46,040 --> 00:20:49,760 Speaker 2: more like like a sweater vest or something like that. 462 00:20:49,760 --> 00:20:52,159 Speaker 2: It's not like the most casual thing. It's also not 463 00:20:52,160 --> 00:20:53,919 Speaker 2: the most dressy thing. But I also to see what 464 00:20:53,920 --> 00:20:56,320 Speaker 2: you're saying, like we're talking about the specific uses for 465 00:20:56,400 --> 00:20:58,560 Speaker 2: your money. Identify that and that'll tell you have a 466 00:20:58,560 --> 00:20:59,720 Speaker 2: sweater vest, no. 467 00:21:00,359 --> 00:21:02,240 Speaker 1: I mean or just like a sweater you know, like 468 00:21:02,280 --> 00:21:03,960 Speaker 1: a sweater. I didn't say sweater rest because I don't 469 00:21:03,960 --> 00:21:05,719 Speaker 1: have one and I don't think i'll ever wear one. 470 00:21:05,800 --> 00:21:08,560 Speaker 2: You can dress it up. It's like Carlton from from 471 00:21:08,600 --> 00:21:09,200 Speaker 2: Freshmans of. 472 00:21:09,119 --> 00:21:10,960 Speaker 1: Bel Air, the Jim Tressel of This World's. 473 00:21:12,400 --> 00:21:14,440 Speaker 2: But yeah, identify what it is that you want to 474 00:21:14,560 --> 00:21:17,080 Speaker 2: use or do with that money, and that'll inform what 475 00:21:17,160 --> 00:21:19,840 Speaker 2: you should be the different types of vehicles where you 476 00:21:19,920 --> 00:21:22,439 Speaker 2: are sticking that money. But let's go ahead and get 477 00:21:22,480 --> 00:21:24,879 Speaker 2: to our next question. A listener, she's wondering if now 478 00:21:25,000 --> 00:21:27,120 Speaker 2: is the right time to give her kid a credit card. 479 00:21:27,600 --> 00:21:29,600 Speaker 5: Hi, Matt and Joel. My name is Tara and I'm 480 00:21:29,600 --> 00:21:32,200 Speaker 5: from Salt Lake City, Utah, and I have a question 481 00:21:32,280 --> 00:21:34,879 Speaker 5: about when it's the right time to get a credit 482 00:21:34,960 --> 00:21:37,560 Speaker 5: card for one of your kids. I have a son 483 00:21:37,600 --> 00:21:41,040 Speaker 5: who just finished his freshman year of college, and he 484 00:21:41,400 --> 00:21:44,200 Speaker 5: is asking if now is a good time to get 485 00:21:44,240 --> 00:21:47,920 Speaker 5: a credit card so he can start building some credit history. 486 00:21:48,600 --> 00:21:53,720 Speaker 5: He is very responsible and very financially literate, but I 487 00:21:53,760 --> 00:21:57,320 Speaker 5: am still worried about the risk of just having that 488 00:21:57,640 --> 00:22:01,000 Speaker 5: option of going into credit card debt. And I don't 489 00:22:01,040 --> 00:22:03,600 Speaker 5: want him to, you know, getting into any trouble when 490 00:22:03,600 --> 00:22:06,399 Speaker 5: he's so young. So I was wondering what you guys 491 00:22:06,440 --> 00:22:10,280 Speaker 5: recommend about how important is a credit history for a 492 00:22:10,280 --> 00:22:13,480 Speaker 5: college student and when is a good time for them 493 00:22:13,520 --> 00:22:15,160 Speaker 5: to start building that history. 494 00:22:15,280 --> 00:22:18,399 Speaker 1: Thank you, Matt, you said kid. Tara said kid, But 495 00:22:18,560 --> 00:22:20,399 Speaker 1: sounds like her son is a young adult, right. 496 00:22:20,320 --> 00:22:22,920 Speaker 2: College kids? Yeah, college and young adults. 497 00:22:23,080 --> 00:22:25,080 Speaker 1: Years old as we are. I guess everybody's kids, now, 498 00:22:25,960 --> 00:22:28,679 Speaker 1: that's true. We're gtting older, not ancient, but I don't know, 499 00:22:28,720 --> 00:22:31,920 Speaker 1: I feel older. But now now you don't look at buddy, 500 00:22:31,920 --> 00:22:34,439 Speaker 1: Oh thank you're looking fresh, collar shirt on over there. Well, 501 00:22:34,520 --> 00:22:36,640 Speaker 1: you know, I dressed up today, and. 502 00:22:36,560 --> 00:22:38,600 Speaker 2: They do have snaps, by the way, which kurl snaps. 503 00:22:38,640 --> 00:22:41,600 Speaker 2: It takes it down a notch when it comes to dressiness, 504 00:22:41,680 --> 00:22:43,440 Speaker 2: or brings it up a notch. Well, yeah, it depends 505 00:22:43,440 --> 00:22:45,280 Speaker 2: where you're from, dependsit. 506 00:22:44,920 --> 00:22:48,280 Speaker 1: Of your point. This is like Montana fancy right here exactly. 507 00:22:48,560 --> 00:22:50,080 Speaker 1: Well in Tara's from Utah. But a lot of people 508 00:22:50,200 --> 00:22:52,639 Speaker 1: dressed like this there too. Pearl snaps, pearl snaps, all right, 509 00:22:52,800 --> 00:22:54,280 Speaker 1: they gotta be a thing in Utah. Let's get back 510 00:22:54,280 --> 00:22:56,920 Speaker 1: to it. I would say, now is a great time 511 00:22:57,040 --> 00:22:59,159 Speaker 1: for her son to be opening your credit card? Read okay, 512 00:22:59,480 --> 00:23:01,720 Speaker 1: so yeah, And it's really a great time for a 513 00:23:01,720 --> 00:23:03,840 Speaker 1: few reasons. First, it's easy for him to get a 514 00:23:03,840 --> 00:23:06,239 Speaker 1: credit card as a college student because with proof of 515 00:23:06,480 --> 00:23:08,879 Speaker 1: enrollment he should be able to get a solid student 516 00:23:08,920 --> 00:23:12,040 Speaker 1: credit card, no problems. Discover has some of the best 517 00:23:12,720 --> 00:23:16,679 Speaker 1: student credit cards, by the way. Secondly, he's probably is 518 00:23:16,720 --> 00:23:19,679 Speaker 1: going to make some mistakes right with money. Nobody, almost 519 00:23:19,680 --> 00:23:23,480 Speaker 1: nobody that I know of, handles money perfectly, and he's 520 00:23:23,680 --> 00:23:26,200 Speaker 1: probably going to Rackham said some dabt or not paid 521 00:23:26,240 --> 00:23:28,800 Speaker 1: the bill on time or something like that. That is something 522 00:23:28,920 --> 00:23:32,520 Speaker 1: a young adult is prone to do. He's but he's 523 00:23:32,520 --> 00:23:35,040 Speaker 1: going to make those mistakes on a smaller scale because 524 00:23:35,080 --> 00:23:36,960 Speaker 1: that card is going to have a smaller limit. And 525 00:23:37,080 --> 00:23:40,080 Speaker 1: you said that he's responsible, that he's financially literate, he 526 00:23:40,160 --> 00:23:43,560 Speaker 1: knows what's up. Yeah, my guess is that's largely because 527 00:23:43,560 --> 00:23:46,480 Speaker 1: of Tara's influence, because she's been an awesome mom imparting 528 00:23:46,520 --> 00:23:49,639 Speaker 1: knowledge over the years. So the older he gets, the 529 00:23:49,640 --> 00:23:53,440 Speaker 1: more independence that he achieves, the less influential Tara. I'm 530 00:23:53,440 --> 00:23:55,920 Speaker 1: sure as you already have realized that you're going to 531 00:23:55,960 --> 00:23:57,639 Speaker 1: become in his life. And so we would say, putting 532 00:23:57,640 --> 00:24:01,080 Speaker 1: plastic in his hands now while you're still somewhat involved 533 00:24:01,119 --> 00:24:05,159 Speaker 1: in his finances will ensure will help make sure that 534 00:24:05,200 --> 00:24:08,639 Speaker 1: he doesn't go too far off the rails without anybody noticing. 535 00:24:08,680 --> 00:24:10,520 Speaker 1: If he gets his first card at twenty three, he's 536 00:24:10,520 --> 00:24:12,639 Speaker 1: in his own apartment, whatever, you've lost a little bit 537 00:24:12,680 --> 00:24:14,359 Speaker 1: of that oversight, and so I love the idea of 538 00:24:14,440 --> 00:24:17,959 Speaker 1: him getting it while you still have conversations and you 539 00:24:18,000 --> 00:24:19,920 Speaker 1: still kind of know a little bit more about what's 540 00:24:19,960 --> 00:24:21,440 Speaker 1: going on with how he handles money. 541 00:24:21,520 --> 00:24:23,360 Speaker 2: Yeah, and terror. I'm not sure if you heard our 542 00:24:23,840 --> 00:24:27,920 Speaker 2: recent episode with Yanelli Spanal, but she got into credit 543 00:24:27,920 --> 00:24:29,760 Speaker 2: card trouble while she was in college. That was a 544 00:24:29,760 --> 00:24:31,560 Speaker 2: big part of her story and it took her a 545 00:24:31,680 --> 00:24:34,680 Speaker 2: while to crawl out of it. But she also didn't 546 00:24:34,680 --> 00:24:36,560 Speaker 2: have someone who was there asking her questions, who is 547 00:24:36,840 --> 00:24:38,920 Speaker 2: offering advice, who was helping her out. 548 00:24:39,080 --> 00:24:41,320 Speaker 1: She was even made fun of right when she went 549 00:24:41,320 --> 00:24:43,840 Speaker 1: down the proval bath. That's true, what are you doing? Yeah? 550 00:24:43,920 --> 00:24:46,520 Speaker 2: Yeah, And so on one hand, we wouldn't recommend that 551 00:24:46,640 --> 00:24:49,200 Speaker 2: every single college student out there get a credit card 552 00:24:49,240 --> 00:24:52,480 Speaker 2: because mini actually can get into trouble, but learning to 553 00:24:52,600 --> 00:24:55,240 Speaker 2: use them wisely is the goal here, and we think 554 00:24:55,280 --> 00:24:58,000 Speaker 2: that waiting until he's completely out on his own that 555 00:24:58,040 --> 00:25:01,600 Speaker 2: can often result in more trouble over the long haul. 556 00:25:02,200 --> 00:25:04,600 Speaker 2: So that being said, I think now really is a 557 00:25:04,600 --> 00:25:06,199 Speaker 2: good time to start. It makes me think about like 558 00:25:06,240 --> 00:25:09,000 Speaker 2: teaching your kids how to drive. I've been thinking about 559 00:25:09,040 --> 00:25:11,879 Speaker 2: this because, like recently, the kids, whenever we're out of 560 00:25:11,920 --> 00:25:13,040 Speaker 2: light and it turns green. 561 00:25:12,880 --> 00:25:13,920 Speaker 1: They like yell go. 562 00:25:15,880 --> 00:25:19,399 Speaker 2: And we had not stop, but like turn to them 563 00:25:19,440 --> 00:25:23,119 Speaker 2: and say, hey, actually it's important to not just immediately 564 00:25:23,160 --> 00:25:25,159 Speaker 2: go and assume that the intersection is clear, Like you 565 00:25:25,160 --> 00:25:26,600 Speaker 2: want to look left, you want to look right and 566 00:25:26,640 --> 00:25:28,479 Speaker 2: make sure that someone's not gonna run a red light 567 00:25:28,520 --> 00:25:31,000 Speaker 2: and where you would get t boned. But there are 568 00:25:31,040 --> 00:25:34,240 Speaker 2: these opportunities to start teaching them about driving, even though 569 00:25:34,240 --> 00:25:36,600 Speaker 2: none of my kids are anywhere near driving age, and 570 00:25:36,640 --> 00:25:38,680 Speaker 2: you don't want to overdo it, right like where everything 571 00:25:38,760 --> 00:25:41,440 Speaker 2: is a lesson, not every mom or dad. But then 572 00:25:41,640 --> 00:25:44,640 Speaker 2: like so it's a driving example, Like imagine once your 573 00:25:44,720 --> 00:25:47,960 Speaker 2: kid gets their learners permit, when should they start driving? 574 00:25:48,040 --> 00:25:51,160 Speaker 2: Like in my mind day one. Because the more experience 575 00:25:51,200 --> 00:25:53,320 Speaker 2: that they have behind the wheel with you right there 576 00:25:53,359 --> 00:25:56,320 Speaker 2: sitting shotgun under your tootles, they're gonna have experience, They're 577 00:25:56,320 --> 00:25:58,240 Speaker 2: gonna have log a ton of miles. That way, when 578 00:25:58,240 --> 00:25:59,480 Speaker 2: they do go out on their end, they're gonna be 579 00:25:59,520 --> 00:26:02,080 Speaker 2: able to make wiser decisions. And so when it comes 580 00:26:02,119 --> 00:26:04,520 Speaker 2: to credit cards, even if you have so for everyone 581 00:26:04,520 --> 00:26:06,400 Speaker 2: else out there, if you have a kid who doesn't 582 00:26:06,960 --> 00:26:09,280 Speaker 2: have the ability ability to get a credit card because 583 00:26:09,280 --> 00:26:11,479 Speaker 2: they're too young, when you start talking to him about 584 00:26:11,560 --> 00:26:14,280 Speaker 2: what it means to use credit well, and then when 585 00:26:14,280 --> 00:26:16,600 Speaker 2: they are of age and they can get a credit card, 586 00:26:16,880 --> 00:26:19,440 Speaker 2: you are also hopefully can you know you're you're gonna 587 00:26:19,440 --> 00:26:21,800 Speaker 2: be able to be there alongside, walk alongside them, help 588 00:26:21,840 --> 00:26:23,720 Speaker 2: them to maybe create a framework as to how it 589 00:26:23,760 --> 00:26:26,040 Speaker 2: is that they should use a credit card, use a 590 00:26:26,080 --> 00:26:26,840 Speaker 2: credit card wisely. 591 00:26:26,880 --> 00:26:28,560 Speaker 1: All right, So, speaking of which, I think one of 592 00:26:28,560 --> 00:26:30,760 Speaker 1: the things that Tara Cannon probably should encourage her son 593 00:26:30,800 --> 00:26:33,159 Speaker 1: to do as he gets this credit card is to 594 00:26:33,200 --> 00:26:36,199 Speaker 1: suggest that he used that credit card to pay for 595 00:26:36,280 --> 00:26:39,040 Speaker 1: maybe just one expense in his life, to to not 596 00:26:39,359 --> 00:26:41,439 Speaker 1: go overboard and be like pay for everything with it, 597 00:26:41,480 --> 00:26:43,360 Speaker 1: but start to wade into the waters, dip your toe 598 00:26:43,440 --> 00:26:47,520 Speaker 1: in and like maybe use it only for gas purchases. 599 00:26:47,600 --> 00:26:49,920 Speaker 1: Let's say, Boom, I like it. It's a good guardrail. Yeah, 600 00:26:49,960 --> 00:26:51,960 Speaker 1: we're sticking with a car theme. Yeah, so it's like 601 00:26:52,000 --> 00:26:54,880 Speaker 1: I always use at the gas station and I don't 602 00:26:54,920 --> 00:26:56,240 Speaker 1: use for anything else, and I pay it off on 603 00:26:56,320 --> 00:26:58,240 Speaker 1: time and infull every single month. I think from a 604 00:26:58,440 --> 00:27:01,000 Speaker 1: from a behavioral standpoint, this will help him start building 605 00:27:01,000 --> 00:27:03,280 Speaker 1: his credit history, which is going to be important, you 606 00:27:03,280 --> 00:27:04,760 Speaker 1: know when he wants to rent an apartment or a 607 00:27:04,760 --> 00:27:06,919 Speaker 1: house in the future. And then he'll be keeping that 608 00:27:07,000 --> 00:27:09,679 Speaker 1: utilization low at the same time building up his credit 609 00:27:09,680 --> 00:27:12,280 Speaker 1: score by charging very little. It gives him the best 610 00:27:12,280 --> 00:27:14,320 Speaker 1: of both worlds. And some folks would tell you credit 611 00:27:14,320 --> 00:27:17,640 Speaker 1: scores don't matter. That's not true, not in modern society. 612 00:27:17,880 --> 00:27:19,640 Speaker 1: I don't, Matt, You and I we don't love all 613 00:27:19,640 --> 00:27:21,320 Speaker 1: the rules of the credit score game, the way the 614 00:27:21,320 --> 00:27:23,640 Speaker 1: bureaus play that game. But it's just not a game 615 00:27:23,680 --> 00:27:26,080 Speaker 1: you can opt out of in modern society these days. 616 00:27:26,080 --> 00:27:27,080 Speaker 2: So that's true. 617 00:27:27,200 --> 00:27:29,080 Speaker 1: Yeah, So I think maybe that's a good kind of 618 00:27:29,160 --> 00:27:30,399 Speaker 1: way to think about it. It's like, hey, yeah, you 619 00:27:30,400 --> 00:27:32,720 Speaker 1: should open this card, but maybe just use it for 620 00:27:32,760 --> 00:27:35,920 Speaker 1: this and that purchase, pick one thing, pick a recurring subscription, 621 00:27:36,280 --> 00:27:38,040 Speaker 1: have it on auto pay, pay it off every month, 622 00:27:38,200 --> 00:27:41,160 Speaker 1: start building that credit score, and eventually he can expand 623 00:27:41,200 --> 00:27:42,359 Speaker 1: his usage in the future. 624 00:27:42,440 --> 00:27:45,440 Speaker 2: That's right. Yeah, And Terry, you're kind of talking about 625 00:27:45,480 --> 00:27:48,080 Speaker 2: like how important is this And yes, it does have 626 00:27:48,320 --> 00:27:52,640 Speaker 2: immediate implications to his finances now, but honestly, it's not 627 00:27:53,040 --> 00:27:56,320 Speaker 2: massively important right now. It's just that sort of what 628 00:27:56,400 --> 00:28:00,760 Speaker 2: Joel's saying, the habits that's handling credit, Well, what that 629 00:28:00,960 --> 00:28:02,720 Speaker 2: is able, like the impact that is going to have 630 00:28:02,800 --> 00:28:05,200 Speaker 2: for him long term, the ability to start building that 631 00:28:05,760 --> 00:28:08,080 Speaker 2: length of credit history, the impact that that's going to 632 00:28:08,160 --> 00:28:09,800 Speaker 2: have down the road. It's all of these things like 633 00:28:09,840 --> 00:28:12,479 Speaker 2: way down the road that are going to positively impact them, 634 00:28:12,480 --> 00:28:15,400 Speaker 2: as opposed to like the near term things like this 635 00:28:15,440 --> 00:28:18,040 Speaker 2: is a long game that we're talking about here, which okay, 636 00:28:18,040 --> 00:28:20,520 Speaker 2: I another example like makes me think of We recently 637 00:28:20,520 --> 00:28:23,840 Speaker 2: paid one of our daughters to rebraid some tassels on 638 00:28:23,840 --> 00:28:26,760 Speaker 2: one of our rugs because the vacuum cleaner pulls it 639 00:28:26,800 --> 00:28:29,520 Speaker 2: apart or whatever. And it's pretty complicated, like it took 640 00:28:29,520 --> 00:28:30,679 Speaker 2: her a while to actually do it. We paid her 641 00:28:30,720 --> 00:28:34,800 Speaker 2: seven bucks. And it's not that that seven dollars dramatically 642 00:28:34,800 --> 00:28:37,080 Speaker 2: increase her net worth, and we're all about increasing her 643 00:28:37,119 --> 00:28:39,760 Speaker 2: net worth right now. No, it's about work ethic. It's 644 00:28:39,800 --> 00:28:43,600 Speaker 2: about tying doing a job or chore to getting paid, 645 00:28:44,280 --> 00:28:46,640 Speaker 2: and it's about helping her over time to build up 646 00:28:46,680 --> 00:28:48,560 Speaker 2: that money and to teach her how to spend it well, 647 00:28:48,600 --> 00:28:50,280 Speaker 2: how to save it well, how to give it away well, 648 00:28:50,320 --> 00:28:52,320 Speaker 2: it's all of these things. It's all of the lessons 649 00:28:52,360 --> 00:28:54,320 Speaker 2: that she's learning over time. It's the foundation that we're 650 00:28:54,320 --> 00:28:58,040 Speaker 2: building now as opposed to the immediate benefit that it 651 00:28:58,080 --> 00:29:00,280 Speaker 2: would provide her by being able to buy something, you know, 652 00:29:00,320 --> 00:29:01,520 Speaker 2: with five bucks, that kind of thing. 653 00:29:01,600 --> 00:29:03,239 Speaker 1: Yeah, and I don't think you want to teach your 654 00:29:03,280 --> 00:29:05,160 Speaker 1: kids that credit cards are bad. I mean, I think 655 00:29:05,160 --> 00:29:08,800 Speaker 1: there's some parts of the personal finance media spear they 656 00:29:08,840 --> 00:29:11,160 Speaker 1: want to say that, and so people run away from them, 657 00:29:11,480 --> 00:29:14,920 Speaker 1: often to their detriment, hurts their credit score. And if 658 00:29:14,920 --> 00:29:16,640 Speaker 1: you just think credit cards are the enemy, no, no, no, 659 00:29:16,720 --> 00:29:18,760 Speaker 1: they're not. They can be a tool. So help teach 660 00:29:18,760 --> 00:29:20,320 Speaker 1: your some that they can be an effective tool to 661 00:29:20,320 --> 00:29:23,160 Speaker 1: build his credit and eventually he'll get rewards and stuff 662 00:29:23,160 --> 00:29:25,640 Speaker 1: from him, and he'll learn how to use them effectively, 663 00:29:25,640 --> 00:29:28,760 Speaker 1: and they'll actually help spur him on in his wealth 664 00:29:28,760 --> 00:29:31,400 Speaker 1: building attempts in his financial future. So I think having 665 00:29:31,600 --> 00:29:35,800 Speaker 1: positive conversations about how to handle credit wisely and waiting 666 00:29:35,800 --> 00:29:38,400 Speaker 1: into those waters now again while you guys can still 667 00:29:38,400 --> 00:29:41,000 Speaker 1: have that open line of communication makes a whole lot 668 00:29:41,040 --> 00:29:41,280 Speaker 1: of sense. 669 00:29:41,400 --> 00:29:43,120 Speaker 2: Yeah, it's better for him to make mistakes with like 670 00:29:43,160 --> 00:29:45,920 Speaker 2: a single zero behind it as opposed to like three 671 00:29:46,000 --> 00:29:49,640 Speaker 2: or four zeros yes behind that number. But also don't 672 00:29:49,640 --> 00:29:53,120 Speaker 2: forget about the piggyback approach to helping your kid establish 673 00:29:53,120 --> 00:29:55,520 Speaker 2: a good credit score. Some credit card companies out there, 674 00:29:55,560 --> 00:29:57,640 Speaker 2: they don't have any sort of age limit. You can 675 00:29:57,920 --> 00:30:00,960 Speaker 2: literally put your infant on your account, which would help 676 00:30:01,000 --> 00:30:03,720 Speaker 2: them to build some credit history. Others they don't allow 677 00:30:03,720 --> 00:30:05,080 Speaker 2: you to do it until they note. 678 00:30:05,080 --> 00:30:07,760 Speaker 1: For Charles, by the way, who's very proactive, his kid 679 00:30:07,800 --> 00:30:09,920 Speaker 1: has a social Security number. He can make that happen. 680 00:30:09,960 --> 00:30:12,320 Speaker 2: He's like, yeah, they're gonna come home from the hospital 681 00:30:12,480 --> 00:30:13,760 Speaker 2: and first things first. 682 00:30:14,960 --> 00:30:16,320 Speaker 1: But there is no. 683 00:30:16,440 --> 00:30:19,480 Speaker 2: Rush on this because like, honestly, just adding your kid 684 00:30:19,520 --> 00:30:22,320 Speaker 2: at the like, at age sixteen or eighteen, like that's 685 00:30:22,360 --> 00:30:24,720 Speaker 2: totally fine as well. So I might want to consider 686 00:30:24,760 --> 00:30:28,600 Speaker 2: doing this adding him as an authorized user on one 687 00:30:28,640 --> 00:30:31,240 Speaker 2: of your cards, giving him that head start, but then 688 00:30:31,360 --> 00:30:34,520 Speaker 2: not giving him possession of that card in addition to 689 00:30:34,720 --> 00:30:37,480 Speaker 2: encouraging him to get his own credit card too. By 690 00:30:37,520 --> 00:30:39,680 Speaker 2: doing all of this, I think he's gonna have one 691 00:30:39,680 --> 00:30:42,040 Speaker 2: of those eight hundred credit scores here with, you know, 692 00:30:42,120 --> 00:30:43,680 Speaker 2: before no time at all. 693 00:30:43,600 --> 00:30:44,680 Speaker 1: Is gonna have a better one than we do. 694 00:30:44,800 --> 00:30:47,880 Speaker 2: What's great too, is that his credit history, even it's 695 00:30:47,880 --> 00:30:50,680 Speaker 2: a smaller portion of your overall FICO credit score, is 696 00:30:50,720 --> 00:30:54,640 Speaker 2: it fifteen percent credit history? Whereas payment history and like 697 00:30:54,680 --> 00:30:58,120 Speaker 2: credit utilization. They take much bigger chunks of that pie 698 00:30:58,240 --> 00:31:01,280 Speaker 2: that everyone's used to seeing. But even still, him getting 699 00:31:01,280 --> 00:31:03,360 Speaker 2: started now is going to set him on the path 700 00:31:03,400 --> 00:31:05,120 Speaker 2: to having a solid credit score. 701 00:31:05,400 --> 00:31:08,680 Speaker 1: Sweet but Terah, keep up the good work. Obviously, the 702 00:31:08,680 --> 00:31:11,160 Speaker 1: apple doesn't fall far from the tree. So Matt, we've 703 00:31:11,160 --> 00:31:13,320 Speaker 1: got a couple more questions to get to, including one 704 00:31:13,480 --> 00:31:17,440 Speaker 1: about a slightly fancier version of life insurance. We'll get 705 00:31:17,440 --> 00:31:18,720 Speaker 1: to that and more right after this. 706 00:31:28,480 --> 00:31:30,400 Speaker 2: All right, man, we are back for the break taking 707 00:31:30,480 --> 00:31:33,440 Speaker 2: listener questions, and let's hear one now about an insurance 708 00:31:33,480 --> 00:31:35,200 Speaker 2: product that offers a refund. 709 00:31:36,240 --> 00:31:39,840 Speaker 6: Hi, Joel and Matt, my name is Trisca Hoover. I'm 710 00:31:39,920 --> 00:31:43,400 Speaker 6: calling from Phoenix, Arizona. I found your podcast a few 711 00:31:43,400 --> 00:31:46,640 Speaker 6: months ago and have been enjoying learning about each of 712 00:31:46,680 --> 00:31:51,200 Speaker 6: you and your families and personal finances. Of course, one 713 00:31:51,240 --> 00:31:54,160 Speaker 6: of your recent episodes talked about life insurance and it 714 00:31:54,200 --> 00:31:57,840 Speaker 6: made me think about what I have, which is a 715 00:31:57,960 --> 00:32:03,720 Speaker 6: return of premium policy for thirty years, at which time 716 00:32:04,480 --> 00:32:07,440 Speaker 6: I get all the policy premiums pay back in one month. 717 00:32:07,520 --> 00:32:12,640 Speaker 6: Some Additionally, it says money can be borrowed against this account, 718 00:32:13,160 --> 00:32:15,800 Speaker 6: and I assume that when you pay that back, you 719 00:32:15,920 --> 00:32:19,640 Speaker 6: pay interest to the insurance company rather than your account. 720 00:32:20,200 --> 00:32:23,560 Speaker 6: And I was just curious if you think borrowing from 721 00:32:23,600 --> 00:32:27,680 Speaker 6: that account is even a good idea, and if you 722 00:32:28,440 --> 00:32:32,680 Speaker 6: even would recommend every turn of premium policy or if 723 00:32:32,720 --> 00:32:34,720 Speaker 6: I should try to cash this out and put it 724 00:32:34,760 --> 00:32:37,720 Speaker 6: somewhere else. Thanks again, I appreciate all your help. 725 00:32:38,360 --> 00:32:41,120 Speaker 1: Triska, thanks for your question. And Matt, we do talk 726 00:32:41,160 --> 00:32:43,240 Speaker 1: about our family soon done it on this episode, right, Yeah, 727 00:32:43,360 --> 00:32:43,760 Speaker 1: keeps it? 728 00:32:44,200 --> 00:32:48,080 Speaker 2: Yeah, just talking about my daughter rebraiding those toassles on 729 00:32:48,160 --> 00:32:49,040 Speaker 2: the rug, all the. 730 00:32:49,000 --> 00:32:51,560 Speaker 1: Ways in which he forces her to do labor around 731 00:32:51,560 --> 00:32:54,360 Speaker 1: the house. That's one of my favorite parts of the show. Well, no, 732 00:32:54,440 --> 00:32:55,240 Speaker 1: I mean we want to got to. 733 00:32:55,200 --> 00:32:56,080 Speaker 2: Put them to work somehow. 734 00:32:56,160 --> 00:32:58,120 Speaker 1: Yeah. The truth is there's a lot of places you 735 00:32:58,120 --> 00:33:00,280 Speaker 1: can turn for money information. And you can go great 736 00:33:00,280 --> 00:33:03,760 Speaker 1: to invest Opedia for you know, and honestly, that's a great, 737 00:33:03,800 --> 00:33:06,560 Speaker 1: great website. That's a lot of great information. There's so 738 00:33:06,640 --> 00:33:09,400 Speaker 1: much information out there on the web. Chat gipt is 739 00:33:09,440 --> 00:33:11,400 Speaker 1: just another place people turn it for money advice now 740 00:33:11,680 --> 00:33:14,320 Speaker 1: and so yeah, we want to be we strive to 741 00:33:14,360 --> 00:33:17,600 Speaker 1: be personal and discussed, like talk about ways in which 742 00:33:17,600 --> 00:33:20,200 Speaker 1: we're implementing the things that we talk about here in 743 00:33:20,320 --> 00:33:23,840 Speaker 1: our own personal lives. And uh yeah, so AI, you 744 00:33:23,840 --> 00:33:26,560 Speaker 1: can't replace two best buds Drink and Biro you can, 745 00:33:26,640 --> 00:33:28,760 Speaker 1: and you can't replace a community of awesome folks helping 746 00:33:28,800 --> 00:33:30,880 Speaker 1: each other out, like in the how to Money Facebook group. 747 00:33:30,880 --> 00:33:33,200 Speaker 1: I mean, there's there's a whole lot more offered than 748 00:33:33,280 --> 00:33:35,560 Speaker 1: just information in sure in that place. 749 00:33:35,880 --> 00:33:38,920 Speaker 2: Yeah and yeah, and basically, Trusca, what I guess, what 750 00:33:38,920 --> 00:33:42,040 Speaker 2: I want to communicate is I appreciate you appreciating us 751 00:33:42,440 --> 00:33:45,480 Speaker 2: because we love podcasting and obviously we could not do 752 00:33:45,520 --> 00:33:48,120 Speaker 2: it without all of our great listeners out there. But 753 00:33:48,200 --> 00:33:52,440 Speaker 2: let's talk about return of premium life insurance and so basically, 754 00:33:52,480 --> 00:33:54,760 Speaker 2: the way it works, if you are still alive after 755 00:33:54,960 --> 00:33:58,040 Speaker 2: that term ends, depending on your plan, you'll either get 756 00:33:58,040 --> 00:34:01,360 Speaker 2: one percent of those premiums back or sometimes a diminished 757 00:34:01,720 --> 00:34:04,960 Speaker 2: rate a diminished amount back in a lump sum. But 758 00:34:05,360 --> 00:34:08,040 Speaker 2: is this a good idea because it certainly sounds nice 759 00:34:08,080 --> 00:34:10,239 Speaker 2: to get your money back to snag all of those 760 00:34:10,280 --> 00:34:12,480 Speaker 2: premiums that you paid over the years. If you don't 761 00:34:12,560 --> 00:34:14,880 Speaker 2: end up needing that policy, and again, basically, if you 762 00:34:14,880 --> 00:34:17,840 Speaker 2: don't kick the bucket in the twenty or thirty year term. 763 00:34:18,200 --> 00:34:21,839 Speaker 2: But if you want a money back guarantee, which is 764 00:34:21,920 --> 00:34:24,360 Speaker 2: basically what this is, you're gonna have to pay for it, 765 00:34:24,840 --> 00:34:27,919 Speaker 2: and you might end up paying thirty percent more than 766 00:34:28,000 --> 00:34:31,240 Speaker 2: what you would pay for traditional level term life insurance. 767 00:34:31,400 --> 00:34:34,120 Speaker 2: But honestly, it could even be more expensive than that. 768 00:34:34,840 --> 00:34:37,239 Speaker 2: You are paying a fat premium in order to take 769 00:34:37,280 --> 00:34:39,719 Speaker 2: advantage of this sweet sweet benefit that they're offering you. 770 00:34:40,000 --> 00:34:43,000 Speaker 1: It sounds sweet, but it's not. Yeah, yeah, it sounds enticing. 771 00:34:43,040 --> 00:34:45,480 Speaker 1: It's a great marketing quotes. It's on the sweet sweet right, 772 00:34:45,800 --> 00:34:48,000 Speaker 1: But instead of thinking about something like return of premium 773 00:34:48,000 --> 00:34:51,560 Speaker 1: life insurance as a good investment, which it's not, think 774 00:34:51,600 --> 00:34:54,120 Speaker 1: about it as a forced method of savings exactly. 775 00:34:54,200 --> 00:34:55,960 Speaker 2: That's actually how you should be thinking about it. 776 00:34:56,000 --> 00:34:57,799 Speaker 1: Yeah, yeah, yeah. You only get the money you paid, 777 00:34:58,360 --> 00:35:01,360 Speaker 1: you paid in back at the end of thirty years, 778 00:35:01,400 --> 00:35:04,640 Speaker 1: nothing else, So you're kind of making that no returns, 779 00:35:04,719 --> 00:35:08,160 Speaker 1: no growth, no other benefits. We talked about that Florida 780 00:35:08,239 --> 00:35:10,440 Speaker 1: prepaid plan earlier, where it's like an interest free loan 781 00:35:10,480 --> 00:35:12,040 Speaker 1: to the state. This is like an interest free loan 782 00:35:12,080 --> 00:35:14,200 Speaker 1: to the insurance company, and it would be a better 783 00:35:14,280 --> 00:35:17,640 Speaker 1: financial option to avoid this return of premium life insurance 784 00:35:17,640 --> 00:35:20,680 Speaker 1: and take the excess that you would have spent on 785 00:35:20,920 --> 00:35:24,640 Speaker 1: that policy and stick it into tax advantage retirement funds instead. 786 00:35:24,960 --> 00:35:27,600 Speaker 1: Over that thirty year span, which is the length of 787 00:35:27,640 --> 00:35:29,879 Speaker 1: most term policies, you're going to see that money grow 788 00:35:30,400 --> 00:35:34,520 Speaker 1: significantly for yourself. And this is just another complication of 789 00:35:34,520 --> 00:35:37,040 Speaker 1: a basic product that we're not fans of. It's less 790 00:35:37,040 --> 00:35:39,280 Speaker 1: egregious than some of the other types of life insurance 791 00:35:39,320 --> 00:35:41,560 Speaker 1: that are out there that are being sold to people 792 00:35:41,640 --> 00:35:44,120 Speaker 1: right and left, but it's still it's not something we 793 00:35:44,120 --> 00:35:45,399 Speaker 1: can get behind. That's right. 794 00:35:45,800 --> 00:35:48,520 Speaker 2: But Tresca, if you already have one of these policies 795 00:35:48,560 --> 00:35:51,160 Speaker 2: in place, what should you do with it? And that's 796 00:35:51,160 --> 00:35:53,960 Speaker 2: stuff to answer without knowing more of the specifics of 797 00:35:54,000 --> 00:35:56,520 Speaker 2: your policy. Because if you are just a couple of 798 00:35:56,600 --> 00:35:59,960 Speaker 2: years into this policy and you haven't experienced any significant 799 00:36:00,080 --> 00:36:02,920 Speaker 2: health issues like cancer or something like that, it's probably 800 00:36:02,920 --> 00:36:05,480 Speaker 2: going to be worth getting just a plainal term life 801 00:36:05,480 --> 00:36:08,400 Speaker 2: insurance policy, and then once you've got that in hand, 802 00:36:08,840 --> 00:36:12,000 Speaker 2: ditch this policy. Certainly, get a couple of quotes before 803 00:36:12,200 --> 00:36:15,120 Speaker 2: you ditch the policy, but you want to make sure 804 00:36:15,120 --> 00:36:17,239 Speaker 2: that you are shopping around and that you know what 805 00:36:17,560 --> 00:36:20,560 Speaker 2: is available to you, and you might find that the 806 00:36:20,600 --> 00:36:23,800 Speaker 2: savings are significant, and then you can use those additional 807 00:36:23,840 --> 00:36:26,000 Speaker 2: dollars the difference there in a more productive way. You 808 00:36:26,040 --> 00:36:28,800 Speaker 2: can actually invest that money. But if you are a 809 00:36:28,840 --> 00:36:31,480 Speaker 2: lot further along, or again kind of going back to 810 00:36:31,600 --> 00:36:35,280 Speaker 2: health issues, if you experienced some health problems, some medical 811 00:36:35,280 --> 00:36:38,520 Speaker 2: problems that would raise rates on a new life insurance policy, 812 00:36:38,520 --> 00:36:42,080 Speaker 2: then it's probably best to stick with this one. And 813 00:36:42,160 --> 00:36:44,320 Speaker 2: it's just not that these plans aren't necessarily evil or 814 00:36:44,360 --> 00:36:46,040 Speaker 2: anything like that, but we are against them from a 815 00:36:46,080 --> 00:36:49,240 Speaker 2: principal standpoint. We would rather you go in a different direction. 816 00:36:49,440 --> 00:36:51,040 Speaker 2: But at the end of the day, it's honestly, it's 817 00:36:51,040 --> 00:36:53,200 Speaker 2: a math problem because you can figure out how much 818 00:36:53,239 --> 00:36:55,040 Speaker 2: you're saving every single month, and then you can take 819 00:36:55,040 --> 00:36:58,760 Speaker 2: that monthly amount, plug it into a compound interest calculator 820 00:36:59,160 --> 00:37:02,040 Speaker 2: at a conservative rate of return of what you would 821 00:37:02,040 --> 00:37:03,880 Speaker 2: make if that money were to be invested in the 822 00:37:03,880 --> 00:37:05,560 Speaker 2: stock market, and then at the end of that period 823 00:37:05,560 --> 00:37:08,560 Speaker 2: of time, you've got a certain amount of money now and. 824 00:37:08,560 --> 00:37:10,359 Speaker 1: Honestly, by the way, your money would be better off 825 00:37:10,360 --> 00:37:14,800 Speaker 1: in savings even then going towards this life insurance product. 826 00:37:14,880 --> 00:37:17,239 Speaker 2: Yeah, But then also do the math on again. If 827 00:37:17,280 --> 00:37:21,040 Speaker 2: you are pretty far into this policy, into this term, 828 00:37:21,160 --> 00:37:23,360 Speaker 2: how many years do you have left? And maybe it 829 00:37:23,360 --> 00:37:25,200 Speaker 2: does make sense for you to actually hang onto this 830 00:37:25,239 --> 00:37:29,000 Speaker 2: thing because you are pretty dang close pod committed receiving 831 00:37:29,040 --> 00:37:31,480 Speaker 2: that payout exactly. Yeah, it's a math problem at the 832 00:37:31,560 --> 00:37:32,000 Speaker 2: end of the day. 833 00:37:32,080 --> 00:37:34,799 Speaker 1: Yeah, for sure, so Chrisyet, we hope that's helpful. And 834 00:37:34,880 --> 00:37:38,320 Speaker 1: for everybody else out there listening, avoid these like level 835 00:37:38,480 --> 00:37:42,840 Speaker 1: term policies for almost everyone are ideal, and they're the cheapest. 836 00:37:42,880 --> 00:37:45,520 Speaker 1: They're the cheapest solution that allows you to funnel more 837 00:37:45,520 --> 00:37:48,160 Speaker 1: of your money into savings and investment vehicles and less 838 00:37:48,160 --> 00:37:51,080 Speaker 1: into life insurance. Get the coverage you need, Yes, spring 839 00:37:51,160 --> 00:37:53,120 Speaker 1: for the amount you need. Don't cheap out on that. 840 00:37:53,160 --> 00:37:55,080 Speaker 1: If you need a million dollars worth of coverage, don't 841 00:37:55,080 --> 00:37:56,920 Speaker 1: go with two hundred and fifty k. But don't go 842 00:37:57,000 --> 00:37:59,000 Speaker 1: with the products that get dressed up and cost more. 843 00:37:59,080 --> 00:38:01,399 Speaker 1: That doesn't make sense for most people, But Matt, let's 844 00:38:01,400 --> 00:38:03,600 Speaker 1: move on. Let's get to the last question for this episode. 845 00:38:03,600 --> 00:38:05,880 Speaker 1: This one's kind of a classic personal finance question that 846 00:38:05,920 --> 00:38:07,880 Speaker 1: really applies to almost everyone. 847 00:38:08,239 --> 00:38:12,719 Speaker 7: Hey, guys, this is Sean from southeastern Pennsylvania. And I'm 848 00:38:12,760 --> 00:38:15,640 Speaker 7: currently contributing fifteen percent to my wrong four one k 849 00:38:15,760 --> 00:38:18,960 Speaker 7: and MA actually get out. However, my total savings ray 850 00:38:19,000 --> 00:38:20,840 Speaker 7: could be higher if I change some of it to 851 00:38:20,880 --> 00:38:24,200 Speaker 7: traditional four one k contributions because of the tax deductions. 852 00:38:24,200 --> 00:38:27,960 Speaker 7: And I've sat around with ADP's paycheck calculator, going back 853 00:38:27,960 --> 00:38:31,759 Speaker 7: and forth between traditional and WROTH contribution percentages, and I'm 854 00:38:31,760 --> 00:38:34,360 Speaker 7: not sure what i should do. I'd love your guys thoughts. 855 00:38:34,400 --> 00:38:35,560 Speaker 7: Thanks so much, love the show. 856 00:38:36,040 --> 00:38:39,719 Speaker 2: All right, Sean, nicely done. You said you are investing 857 00:38:39,840 --> 00:38:43,920 Speaker 2: around fifteen percent of your income. That is awesome, and 858 00:38:43,960 --> 00:38:46,000 Speaker 2: that's what I want to highlight here because the main thing, 859 00:38:46,360 --> 00:38:48,719 Speaker 2: the most important thing to consider is getting that high 860 00:38:48,800 --> 00:38:52,440 Speaker 2: savings rate in place. Yeah, the Wroth versus traditional question, like, 861 00:38:52,680 --> 00:38:56,120 Speaker 2: that's an important consideration, but the heavy lift is getting 862 00:38:56,120 --> 00:38:58,400 Speaker 2: to the point where you can invest at least fifteen 863 00:38:58,440 --> 00:39:00,719 Speaker 2: percent of what it is that you are bringing in. 864 00:39:01,239 --> 00:39:03,080 Speaker 2: And that's the boat that you find yourself in. And 865 00:39:03,200 --> 00:39:05,840 Speaker 2: I'll say this is easier said than done, So Sean 866 00:39:06,200 --> 00:39:08,680 Speaker 2: mad props to you for getting to that point. 867 00:39:08,800 --> 00:39:10,799 Speaker 1: Yeah, yeah, all right, let's let's get into it. I'm 868 00:39:10,800 --> 00:39:14,440 Speaker 1: at Roth versut traditional. It's a big important decision that 869 00:39:14,520 --> 00:39:16,480 Speaker 1: a lot of people, most of our listeners are forced 870 00:39:16,520 --> 00:39:18,359 Speaker 1: to make at one point or another, whether it's through 871 00:39:18,400 --> 00:39:21,400 Speaker 1: an IRA that they're contributing to or whether it's to 872 00:39:22,680 --> 00:39:25,040 Speaker 1: a work sponsored retirement account like a four oh one K, 873 00:39:25,360 --> 00:39:27,400 Speaker 1: They've got to figure out which one do I choose? 874 00:39:27,719 --> 00:39:29,720 Speaker 1: And yeah, you can get the tax break now opting 875 00:39:29,760 --> 00:39:31,640 Speaker 1: to stick money in the traditional IRA or four to 876 00:39:31,680 --> 00:39:34,440 Speaker 1: one K instead of the ROTH version, which sounds pretty sweet. 877 00:39:34,640 --> 00:39:36,719 Speaker 1: And again it's not a bad move. But is it 878 00:39:36,800 --> 00:39:40,160 Speaker 1: the best move you can make. Probably not. It's it 879 00:39:40,200 --> 00:39:42,040 Speaker 1: is true that it's sticking money into a ROTH is 880 00:39:42,080 --> 00:39:44,600 Speaker 1: taking more money out of your hands in the short term. 881 00:39:44,840 --> 00:39:47,040 Speaker 1: But given where tax rates are now, which is pretty 882 00:39:47,040 --> 00:39:50,319 Speaker 1: low historically, and where they're likely to be, which we 883 00:39:50,360 --> 00:39:52,799 Speaker 1: think is higher in the future. And it's not just 884 00:39:53,080 --> 00:39:56,839 Speaker 1: a guess that Tax Cuts and Job Act is set 885 00:39:56,880 --> 00:39:59,640 Speaker 1: to sunset at the end of twenty twenty six, I believe, 886 00:39:59,719 --> 00:40:02,880 Speaker 1: or twenty five twenty five, and when it goes away, 887 00:40:02,920 --> 00:40:05,279 Speaker 1: which it is set to do, tax rates go up 888 00:40:05,960 --> 00:40:08,080 Speaker 1: that next year. Yeah, And so it's just not a 889 00:40:08,080 --> 00:40:11,279 Speaker 1: bad idea to pay the taxman now, given the facts 890 00:40:11,320 --> 00:40:13,320 Speaker 1: that we have at our disposal. 891 00:40:13,040 --> 00:40:17,000 Speaker 2: Yeah, yeah, we don't really get into politics, but I 892 00:40:17,040 --> 00:40:19,440 Speaker 2: see it highly unlikely that we're going to see government 893 00:40:19,520 --> 00:40:22,960 Speaker 2: spending go down, that we're going to see fewer entitlements 894 00:40:23,160 --> 00:40:25,640 Speaker 2: and fewer taxes upon us in the future. 895 00:40:25,719 --> 00:40:27,640 Speaker 1: We already know, we've talked about social security before on 896 00:40:27,680 --> 00:40:30,160 Speaker 1: the show, and just how yeah, like, will it be 897 00:40:30,239 --> 00:40:33,000 Speaker 1: there for future generations? We really think so? Then the 898 00:40:33,080 --> 00:40:36,320 Speaker 1: numbers show that will there be less and will politicians 899 00:40:36,360 --> 00:40:39,600 Speaker 1: have to make difficult decisions to fund social security in 900 00:40:39,680 --> 00:40:42,680 Speaker 1: a bigger way? Probably? And will that lead to increased 901 00:40:42,680 --> 00:40:46,160 Speaker 1: tax rates almost invin most likely? Yeah, yeah. 902 00:40:46,200 --> 00:40:49,319 Speaker 2: And so aside from where taxes are going to go 903 00:40:49,360 --> 00:40:52,080 Speaker 2: in the future, there are also caveats to this as well, 904 00:40:52,080 --> 00:40:54,960 Speaker 2: because it's not going with a wroth. It's not necessarily 905 00:40:54,960 --> 00:40:57,400 Speaker 2: best for everyone out there. Because if you, let's say 906 00:40:57,440 --> 00:40:59,839 Speaker 2: you're a high income earner, for instance, you might want 907 00:40:59,840 --> 00:41:03,080 Speaker 2: to that tax break. Now let's say you are single, 908 00:41:03,120 --> 00:41:05,880 Speaker 2: you are making well into the six figures, and that 909 00:41:05,920 --> 00:41:07,800 Speaker 2: you might be able to claw some of those dollars 910 00:41:07,840 --> 00:41:10,480 Speaker 2: that are taxed in that thirty two percent tax bracket 911 00:41:10,760 --> 00:41:13,560 Speaker 2: back by putting more into the traditional four one k. 912 00:41:13,960 --> 00:41:16,120 Speaker 2: If that's you, If that's where you find yourself that 913 00:41:16,200 --> 00:41:18,800 Speaker 2: might be a reasonable choice. And then even for others 914 00:41:19,360 --> 00:41:21,520 Speaker 2: investing in a traditional four to win K instead of 915 00:41:21,520 --> 00:41:24,680 Speaker 2: a ROTH, it's going to lower their AGI, which will 916 00:41:24,880 --> 00:41:27,960 Speaker 2: help to lower their student loan payment via the income 917 00:41:28,000 --> 00:41:31,880 Speaker 2: based repayment plans the IBr plans that the government offers. 918 00:41:32,000 --> 00:41:34,799 Speaker 2: So it's not necessarily a black or white decisions. There 919 00:41:34,840 --> 00:41:37,799 Speaker 2: are personal considerations you need to keep in mind as well. 920 00:41:37,800 --> 00:41:40,960 Speaker 2: But you know, all else being equal, we are fans 921 00:41:41,200 --> 00:41:43,600 Speaker 2: of the WROTH, and so you were talking about like 922 00:41:43,680 --> 00:41:46,160 Speaker 2: kind of the future implications of tax rates. That's another 923 00:41:46,280 --> 00:41:49,600 Speaker 2: personal consideration as well, is where is your income going 924 00:41:49,680 --> 00:41:51,560 Speaker 2: to be in the future, because you might think that, oh, 925 00:41:51,560 --> 00:41:55,200 Speaker 2: I'm making pretty good money now, well would if you 926 00:41:55,280 --> 00:41:57,759 Speaker 2: make even more money down the road? If that were 927 00:41:57,880 --> 00:41:59,400 Speaker 2: to be the case, then it would make sense if 928 00:41:59,400 --> 00:42:03,319 Speaker 2: you have the option to jump on the ROTH bandwagon. Now, 929 00:42:03,440 --> 00:42:05,800 Speaker 2: go ahead, pay those taxes and then have that money 930 00:42:05,800 --> 00:42:08,600 Speaker 2: sitting there tax free, and of course all the earnings 931 00:42:08,600 --> 00:42:10,160 Speaker 2: where you never have to pay taxes on it. 932 00:42:10,400 --> 00:42:12,080 Speaker 1: Or what if you know that your income is going 933 00:42:12,160 --> 00:42:14,320 Speaker 1: to go down in the next couple of years, Yeah, 934 00:42:14,440 --> 00:42:16,560 Speaker 1: I mean that changes. That changes the facts on the 935 00:42:16,560 --> 00:42:19,120 Speaker 1: ground for you in a personal way too. And so 936 00:42:19,239 --> 00:42:22,000 Speaker 1: if you're saying, man, I've got the killer job now, 937 00:42:22,120 --> 00:42:23,359 Speaker 1: but I'm going to go try to start my own 938 00:42:23,360 --> 00:42:24,759 Speaker 1: thing and my income is going to be lean, I'm 939 00:42:24,800 --> 00:42:28,759 Speaker 1: banking cash for that time, well, then yeah, it might 940 00:42:28,800 --> 00:42:32,080 Speaker 1: make sense to go the traditional route now, taking the 941 00:42:32,120 --> 00:42:35,719 Speaker 1: tax savings and ROTH very little tax yeah back and 942 00:42:35,760 --> 00:42:39,239 Speaker 1: then WROTH in future years when your incomes lower, but yeah, 943 00:42:39,560 --> 00:42:42,520 Speaker 1: and your employer match. By the way, it goes in 944 00:42:42,560 --> 00:42:45,719 Speaker 1: pre tax, So filling up a post tax bucket, which 945 00:42:45,760 --> 00:42:47,640 Speaker 1: would be the WROTH contributing more to that ROTH FORRAL 946 00:42:47,640 --> 00:42:49,799 Speaker 1: and k to the roth ira as well. If you 947 00:42:49,880 --> 00:42:52,080 Speaker 1: aren't one of those folks who's making money hand over fist, 948 00:42:52,239 --> 00:42:54,600 Speaker 1: it gives you a lot more ability to determine what 949 00:42:54,600 --> 00:42:56,040 Speaker 1: your tax rate is going to be when you do 950 00:42:56,080 --> 00:42:58,879 Speaker 1: reach retirement. Ah, to have multiple buckets to pull from 951 00:42:59,040 --> 00:43:01,920 Speaker 1: can really help you low or your overall tax rate 952 00:43:02,400 --> 00:43:05,440 Speaker 1: over those years. And so my parents they just retired, 953 00:43:05,480 --> 00:43:07,319 Speaker 1: and I'm so glad they have two buckets to pull 954 00:43:07,360 --> 00:43:09,440 Speaker 1: from because it's going to help them minimize their overall 955 00:43:09,480 --> 00:43:12,080 Speaker 1: tax burden when those disbursements are dialed in properly. And 956 00:43:12,440 --> 00:43:15,160 Speaker 1: that is something we've talked about it's like cool, this year, 957 00:43:15,200 --> 00:43:16,919 Speaker 1: maybe it makes more sense to take RATH money because 958 00:43:16,920 --> 00:43:19,680 Speaker 1: you still had some earned income from the jobs. Next year, 959 00:43:19,760 --> 00:43:22,640 Speaker 1: we can take a little bit from both piles, and 960 00:43:22,680 --> 00:43:24,360 Speaker 1: that is the way where you can kind of almost 961 00:43:24,560 --> 00:43:26,680 Speaker 1: identify what you want your tax rate to be and 962 00:43:26,680 --> 00:43:27,560 Speaker 1: shoot straight for it. 963 00:43:27,760 --> 00:43:30,160 Speaker 2: That's right. Yeah, So Sean, hopefully that gets you pointed 964 00:43:30,160 --> 00:43:31,719 Speaker 2: in the right direction. And I love that this is 965 00:43:31,719 --> 00:43:34,120 Speaker 2: something that you're thinking about, but also at the same time, 966 00:43:34,160 --> 00:43:35,799 Speaker 2: we don't want you to think about it too much. 967 00:43:35,840 --> 00:43:39,560 Speaker 2: There are oftentimes when we maybe focus on some of 968 00:43:39,560 --> 00:43:42,239 Speaker 2: these different aspects of personal finance, it means that if 969 00:43:42,239 --> 00:43:44,200 Speaker 2: we are overly focusing on it, it means that we are 970 00:43:44,280 --> 00:43:47,400 Speaker 2: neglecting like some other areas potentially that could move the 971 00:43:47,400 --> 00:43:50,600 Speaker 2: needle even more, like on the income side or maybe 972 00:43:50,640 --> 00:43:53,040 Speaker 2: on the spending side. Who knows. But this is something 973 00:43:53,040 --> 00:43:54,919 Speaker 2: else to keep in mind as well. But we hope 974 00:43:54,920 --> 00:43:56,880 Speaker 2: that that gives you the I guess, just the right 975 00:43:56,920 --> 00:43:59,480 Speaker 2: framework to approach how it is that you decide whether 976 00:43:59,560 --> 00:44:02,000 Speaker 2: or not you should go with a wroth or the traditional. 977 00:44:01,640 --> 00:44:03,240 Speaker 1: My guess, I'm just shoot from the hip here. Probably 978 00:44:03,280 --> 00:44:05,080 Speaker 1: four out of five people the roth makes the most sense, 979 00:44:05,120 --> 00:44:06,960 Speaker 1: but other people that one out of five in those 980 00:44:06,960 --> 00:44:09,560 Speaker 1: other situations, that's what a traditional makes most sense. But 981 00:44:09,560 --> 00:44:11,279 Speaker 1: hopefully the way we outlined it can help you figure 982 00:44:11,280 --> 00:44:14,200 Speaker 1: out which of those buckets you fit most into this right. 983 00:44:14,280 --> 00:44:16,680 Speaker 1: So now let's get back to this beer. It's a 984 00:44:16,800 --> 00:44:19,640 Speaker 1: check pilsner. It's called var it's by Halfway Crooks or 985 00:44:19,680 --> 00:44:22,080 Speaker 1: your thoughts on this one. I thought highly of this beer. 986 00:44:22,239 --> 00:44:27,960 Speaker 2: This is drank like a clean, refreshing slice of bread 987 00:44:28,280 --> 00:44:29,120 Speaker 2: in liquid form. 988 00:44:29,360 --> 00:44:30,399 Speaker 1: You know, it's it's. 989 00:44:30,320 --> 00:44:32,359 Speaker 2: Kind of got those bready elements, but at the same 990 00:44:32,400 --> 00:44:34,720 Speaker 2: time you've got, you know, the hot presence as well. 991 00:44:35,120 --> 00:44:38,160 Speaker 2: I don't personally know what makes a check pilsner, but 992 00:44:38,200 --> 00:44:38,640 Speaker 2: it makes. 993 00:44:38,480 --> 00:44:43,120 Speaker 1: Me Apparently it's a pilsner with less hot presence, and 994 00:44:43,160 --> 00:44:45,719 Speaker 1: so there are some of those pilsners do have more 995 00:44:45,760 --> 00:44:49,080 Speaker 1: hot bite going on. This one was super reserves wise 996 00:44:49,160 --> 00:44:52,400 Speaker 1: to lead with a bready yeah, the readiness. I've never 997 00:44:52,400 --> 00:44:54,480 Speaker 1: been to Eastern Europe. To me, this tastes like Eastern 998 00:44:54,480 --> 00:44:56,719 Speaker 1: Europe in liquid form what I imagine it to be like. 999 00:44:56,840 --> 00:44:58,719 Speaker 1: And I would say that's a good thing. I like, 1000 00:44:58,760 --> 00:45:00,320 Speaker 1: I would love to go someday. I was like a 1001 00:45:00,360 --> 00:45:00,719 Speaker 1: lot of fun. 1002 00:45:00,719 --> 00:45:02,759 Speaker 2: We should book a trip, look out for the next deal, 1003 00:45:03,040 --> 00:45:05,560 Speaker 2: take our next what if we I don't think our 1004 00:45:05,560 --> 00:45:08,400 Speaker 2: wives would be down with us basing our future travels 1005 00:45:08,440 --> 00:45:10,640 Speaker 2: only on the type of types of beer that we 1006 00:45:10,640 --> 00:45:12,520 Speaker 2: can drink while we're there. But it isn't a born 1007 00:45:12,560 --> 00:45:14,719 Speaker 2: consideration in factor in when you are the how to 1008 00:45:14,800 --> 00:45:16,520 Speaker 2: money guys, that is something that we think about. 1009 00:45:16,719 --> 00:45:18,239 Speaker 1: But that when they married us too. 1010 00:45:18,239 --> 00:45:20,120 Speaker 2: Although the quality of beers that I have coned like 1011 00:45:20,120 --> 00:45:22,000 Speaker 2: for you, you were kind of established in your craft 1012 00:45:22,040 --> 00:45:23,920 Speaker 2: beer ways when you noimally got married. But I was 1013 00:45:23,960 --> 00:45:24,799 Speaker 2: drinking like Blue Moon. 1014 00:45:27,160 --> 00:45:28,760 Speaker 1: That's one of the saddest things to me when people 1015 00:45:28,760 --> 00:45:30,319 Speaker 1: think that's a craft beer and I'm at that point. 1016 00:45:30,800 --> 00:45:32,680 Speaker 2: No, sorry, hey man, this is this is back in 1017 00:45:32,800 --> 00:45:33,719 Speaker 2: This is back in seven. 1018 00:45:33,760 --> 00:45:37,200 Speaker 1: That's macro trash. But hey, don't don't. 1019 00:45:37,200 --> 00:45:39,880 Speaker 2: Don't be hating on all the drinkers of Blue moonail. 1020 00:45:40,480 --> 00:45:41,960 Speaker 1: No, I don't hate on them. If that's what they 1021 00:45:41,960 --> 00:45:44,719 Speaker 1: want to drink, that's fine, but it's it's not craft beer. 1022 00:45:44,840 --> 00:45:49,479 Speaker 2: You heard it here, Send all the haymail to Joel Gmail, Like, uh, 1023 00:45:49,560 --> 00:45:52,040 Speaker 2: that is gonna be it for this episode for this listener, 1024 00:45:52,160 --> 00:45:55,839 Speaker 2: question Monday, this ask How to Money episode. You can 1025 00:45:55,840 --> 00:45:58,680 Speaker 2: find notes up on the website at how tomoney dot com. 1026 00:45:58,680 --> 00:46:00,000 Speaker 2: We'll make sure to link to you need the different 1027 00:46:00,120 --> 00:46:02,800 Speaker 2: resources we may have mentioned. That's where you can also 1028 00:46:03,040 --> 00:46:06,000 Speaker 2: find the sign up for our newsletter. 1029 00:46:05,680 --> 00:46:08,000 Speaker 1: And the new resources page we created. You said resources, 1030 00:46:08,120 --> 00:46:10,440 Speaker 1: so I've heard, oh we should mention we literally have. 1031 00:46:10,480 --> 00:46:11,680 Speaker 2: To go down the path of the newsletter. 1032 00:46:11,760 --> 00:46:13,480 Speaker 1: Yeah, well that's great, sign up for that, but then 1033 00:46:13,520 --> 00:46:16,640 Speaker 1: also go check out literally our new giant resources page 1034 00:46:16,680 --> 00:46:19,320 Speaker 1: that we break together. And so if you've heard mentioned 1035 00:46:19,320 --> 00:46:21,319 Speaker 1: something or you're wondering trying to find a link of 1036 00:46:21,320 --> 00:46:23,799 Speaker 1: something we mentioned in a past episode, it's probably there. 1037 00:46:24,040 --> 00:46:26,800 Speaker 1: It's a really exhaustive list of some of the resources 1038 00:46:26,800 --> 00:46:28,560 Speaker 1: we've mentioned over the years on the show. It took 1039 00:46:28,600 --> 00:46:30,200 Speaker 1: a while to put together, but we're glad we have 1040 00:46:30,239 --> 00:46:31,319 Speaker 1: it there for you now right. 1041 00:46:31,360 --> 00:46:34,040 Speaker 2: You can find it under on the main menu understart here, 1042 00:46:34,200 --> 00:46:36,200 Speaker 2: so it's always there for you and if it honestly, 1043 00:46:36,200 --> 00:46:38,200 Speaker 2: if it's been a minute since you've been to the website, 1044 00:46:38,280 --> 00:46:41,480 Speaker 2: I would recommend checking it out. We increased how respond 1045 00:46:41,560 --> 00:46:44,239 Speaker 2: what is it the site performance? How fast it is, 1046 00:46:44,280 --> 00:46:46,680 Speaker 2: so it's much more responses. 1047 00:46:46,200 --> 00:46:48,319 Speaker 1: It's like the usaying bolt websites now, so. 1048 00:46:48,600 --> 00:46:49,680 Speaker 2: Honestly, that's what it feels like. 1049 00:46:49,840 --> 00:46:50,440 Speaker 1: That's what it feels like. 1050 00:46:50,480 --> 00:46:52,400 Speaker 2: Is that check it out how to money dot Com, Joel. 1051 00:46:52,440 --> 00:46:54,920 Speaker 2: That's going to be it for this episode until next time. 1052 00:46:55,040 --> 00:46:57,359 Speaker 2: Best Friends Out, Best Friends. 1053 00:46:56,920 --> 00:47:00,279 Speaker 1: Out, the 1054 00:47:03,760 --> 00:47:07,200 Speaker 7: About the U