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

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Speaker 1: and today we are answering your listener questions. Listen our

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Speaker 1: question Monday, Joel. We've got five fantastic questions from listeners

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Speaker 1: and we're gonna get to every single one of them

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Speaker 1: this episode. This is an ask htm episode where we're

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Speaker 1: able to provide some direct advice, some some tips directly

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Speaker 1: to our listeners. I'm looking forward to it, man, But

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Speaker 1: before we get to some of those listening questions, I

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Speaker 1: want to let you know I got something in the

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Speaker 1: mail the other day and it was distressing on multiple fronts.

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Speaker 1: It was a bill from the state of Florida. Uh.

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Speaker 1: I was in Orlando visiting my mother in law recently.

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Speaker 1: This was a bill for an unpaid toll which so,

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Speaker 1: so you've mentioned this on the show before, how you

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Speaker 1: didn't have any money on you at the time this time,

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Speaker 1: and there was no one there to take the money

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Speaker 1: and there was no way to pay, and so I

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Speaker 1: was like this, I blow through this. I don't know.

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Speaker 1: So this isn't a follow up from that first instance

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Speaker 1: where maybe they should have learned I did pay that. Literally,

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Speaker 1: like I'm getting off the exit, going to my mother

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Speaker 1: in law's house, and there is no way to pay

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Speaker 1: this toll because there's no credit card machine and there,

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Speaker 1: and there's literally no one there to take cash. So eventually,

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Speaker 1: I guess the state, the state Authorda, gets around to,

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Speaker 1: you know, sending this to me in the mail. What

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Speaker 1: I thought was crazy, though, is that the actual toll

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Speaker 1: itself costs a dollar fifty um. They say it's a

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Speaker 1: dollar fifty nine and what they sent me, but there's

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Speaker 1: a fee attached to it, I guess because they know

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Speaker 1: I'm gonna pay with the credit card and they have

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Speaker 1: to you know, compensate for those fees somehow of two

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Speaker 1: dollars and fifty cents and so yeah, basically the total

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Speaker 1: I'm paying them is just over four dollars. But it

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Speaker 1: just made me think, like, how much goes into sending

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Speaker 1: me this bill. There's postage, there's like printing, there's you know,

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Speaker 1: letter costs. There's all these costs that go into sending

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Speaker 1: me this bill for four dollars. It felt like a

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Speaker 1: poorly run operation. And I don't mind paying the tools.

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Speaker 1: I realized that's how the State of Florida, in Orlando

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Speaker 1: in particular, gets a lot of its revenue to keep

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Speaker 1: its roadways like into the condition they pay for the turnpike. Man,

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Speaker 1: that's how they keep the alligators off of the road.

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Speaker 1: Which I'm cool, man, I don't want to be like

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Speaker 1: running over alligators on my trip down there. But yeah,

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Speaker 1: it just it all felt just a little goofy to

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Speaker 1: me to get this in the mail. And I feel like,

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Speaker 1: next time, man, they should just make it easier to

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Speaker 1: pay when you're driving through there or you have I mean,

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Speaker 1: so here's the thing you're supposed to pay. But what

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Speaker 1: if you said, nobody is there, if you don't have

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Speaker 1: exact change, what do you do? I mean one time

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Speaker 1: that happened to me. I didn't have the money, and

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Speaker 1: they basically take down your information and they say they're

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Speaker 1: going to build you later. And so they yeah, they

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Speaker 1: send you a build in the mail. And that's fine

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Speaker 1: if there's somebody there. But if there's nobody there, right,

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Speaker 1: and like, are you supposed to just like I mean,

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Speaker 1: so I was gonna say, in my case, I always

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Speaker 1: keep it twenty in my wallet, like I always keep that,

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Speaker 1: you know, a spare twenty kind of tuck back there.

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Speaker 1: I oftentimes even forget that it's there when I do

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Speaker 1: need it, which is I don't have any cash, and

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Speaker 1: you're like, wait, what I do I do? Yeah, I'll

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Speaker 1: think about it later in the day. But even for me,

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Speaker 1: that twenty wouldn't have helped, I guess in this situation,

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Speaker 1: unless I would have been willing to drop the whole

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Speaker 1: twenty in there, which obviously you ended up paying four dollars.

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Speaker 1: You know, in some sense, I would rather do that

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Speaker 1: than drop a whole twenty, right, Yeah, I don't know

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Speaker 1: if this system even worse like that. If you could

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Speaker 1: stick in a twenty and it would it would actually work.

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Speaker 1: But yeah, if it gave you change, then I'd be

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Speaker 1: fine with that. Yeah, except I wouldn't. I wouldn't want

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Speaker 1: like eighteen dollars and fifty cents in quarters. It's like,

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Speaker 1: did you ever go to like the arcade, like as

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Speaker 1: a kid, and they got the change machines put in

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Speaker 1: a you know, one other billified all our bill, and

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Speaker 1: it just spits out quarters. They need that, that's what

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Speaker 1: they need. That's what they need, but they don't have

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Speaker 1: that and nobody present. So I mean, I paid it,

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Speaker 1: but I felt like it was unfair, But I don't

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Speaker 1: know who to complain too. And that would just waste

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Speaker 1: more of my time, dude. I will say though, in general,

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Speaker 1: I feel like I'm a fan of tolls on roads

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Speaker 1: because if you're trying to pay for like that stretch

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Speaker 1: of road, like what better way than to build a

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Speaker 1: people who use it, you know what I'm saying. No,

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Speaker 1: I completely agree. I think I don't like how it

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Speaker 1: slows you down like that kind of sucks if you

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Speaker 1: live there otherwise the sun passed or whatever. You know,

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Speaker 1: that there's probably pretty easy. You're just kind of used

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Speaker 1: to it by now. But for visitors who don't don't

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Speaker 1: come often get mistick it to you, it could be

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Speaker 1: a little frustrating. Although I don't mind, Like I agree,

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Speaker 1: I think it is probably the most efficient way to

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Speaker 1: pay for roads, and especially now that evs are proliferating,

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Speaker 1: like you know, and you can't get gas tax out

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Speaker 1: of those people, you gotta find a way to do

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Speaker 1: it somehow, And that's that's a good way of doing it. Yeah,

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Speaker 1: I guess it's always worth keeping maybe a handful of

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Speaker 1: quarters in the console in the coin tray. Yeah, alright,

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Speaker 1: but yeah, for for for tolls in Florida and for

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Speaker 1: all these shopping carts a right, let's keep going, Matt,

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

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Speaker 1: This one is called Barrel Farm. It's by Monday Night Brewing.

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Speaker 1: And yeah, our our fridge down here in our little,

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Speaker 1: you know, basement studio, broke, so we had to just

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Speaker 1: snag whatever was in your refrigerator upstairs in your actual house.

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Speaker 1: And so yeah, we'll drink this one. Let let everyone

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Speaker 1: know how it is at the end of the episode,

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Speaker 1: and hopefully we'll get that refrigerator repaired to the parts

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Speaker 1: on the way. And although I got this for us

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Speaker 1: for the specific show, so we bought two of them,

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Speaker 1: one for me and Kate, one for me and you there,

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Speaker 1: that's how much I like this beer, because I've had

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Speaker 1: this one before. We just haven't had it yet on

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Speaker 1: the show. But we'll get to what we think about

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Speaker 1: it at the end of the episode, no doubt. But

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Speaker 1: for now, let's get on to listener questions. For anyone

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Speaker 1: out there who has a question they want to submit

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Speaker 1: for Matt and I UH to be on an upcoming episode,

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Speaker 1: just go to how to money dot com slash ask.

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Speaker 1: There are simple instructions there for you to be able

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Speaker 1: to submit your audio file so that we can take

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Speaker 1: it on a future ask htm episode, and Matt, let's

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Speaker 1: get to the first one for today. This one's about

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Speaker 1: how you go about getting a mortgage when your credit

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Speaker 1: is not so great. Hey, Money friends, this is Megan

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Speaker 1: from Alaska. I was wondering if you could talk a

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Speaker 1: little bit about mortgage or home buying options for people

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Speaker 1: with less than stellar credit. I had a rather unfortunate

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Speaker 1: situation with my ex husband and he stopped paying a

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Speaker 1: mutually owned debt, which then caused my credit score to plummet. However,

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Speaker 1: I recognize that when looking at housing, it makes a

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Speaker 1: lot more sense to purchase a house and pay the

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Speaker 1: mortgage than it does to rent. It seems to be

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Speaker 1: less money, you get more bang for your buck et, cetera. However,

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Speaker 1: with my credit score being pretty trashed, it seems as

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Speaker 1: though getting a mortgage might be unattainable. Is my only

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Speaker 1: option to wait it out and improve my credit score?

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Speaker 1: Or are there options for people like me? Thank you

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Speaker 1: so much, Megan, thanks for your question, and there are

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Speaker 1: options for someone like you, and we'll get to those

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Speaker 1: here as we answer your question. But first off, we're

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Speaker 1: sorry here that your ex husband's poor handling of your

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Speaker 1: your mutual credit hurt you. But let's talk about kind

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Speaker 1: of rebounding from that, right, Let's let's talk about rebuilding

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Speaker 1: your credit score. And so, first of all, please be

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Speaker 1: careful dealing with any company who says that they can

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Speaker 1: rocket your score back into solid range for or a fee.

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Speaker 1: We're gonna do to your credit score what doge coin

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Speaker 1: did recently, UH, A lot of these companies, what they

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Speaker 1: offer like, it's not totally legit, it's a it's a

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Speaker 1: shady practice and oftentimes doesn't work. UH. It's it's better

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Speaker 1: to work on raising your credit score yourself. And so

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Speaker 1: we talked about rebuilding a rough credit score back in

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Speaker 1: UH episode one thirteen. We talked about it in detail.

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Speaker 1: But the most important things to do are to pay

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Speaker 1: every account in full and on time, make sure that

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Speaker 1: you're prioritizing paying down high credit card balances in order

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Speaker 1: to lower that utilization rate, keeping your credit lines open, UH,

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Speaker 1: and then also not opening new lines for the time being. Obviously,

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Speaker 1: this is kind of general advice for anyone out there

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Speaker 1: who's looking to rebuild the credit score. And I'm guessing,

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Speaker 1: Megan that you're probably doing these things because it sounds

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Speaker 1: like the way that your score was negatively impacted was

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Speaker 1: specifically due to your husband. Yeah, but really, the d

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Speaker 1: I Y route when it comes to rebuilding your credit

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Speaker 1: score is the way to go, not trusting that somebody

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Speaker 1: else is going to be able to do you do

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Speaker 1: your solid and help you out in that regard for

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Speaker 1: a fee exactly for a large and it's just going

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Speaker 1: to do you a favor. It's like, hey, by the way,

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Speaker 1: let's let's take care of your credit for you on

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Speaker 1: the house. Yeah. But but even with like a low

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Speaker 1: credit score, you can still qualify for a mortgage, Megan. Typically,

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Speaker 1: if you have a credit score around five, which is

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Speaker 1: really low, you might qualify for an fh a loan

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Speaker 1: where you have to put roughly ten percent down on

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Speaker 1: that home purchase. If your score is a little bit higher,

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Speaker 1: let's say it's five eighty or or higher than that,

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Speaker 1: you can even qualify for a mortgage that only requires

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Speaker 1: a down payment of three and a half percent. And

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Speaker 1: that sounds nice, right, It's like, oh, cool, I can

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Speaker 1: get into a house with like not having to pay

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Speaker 1: much down. I can buy five houses right now. But yeah,

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Speaker 1: you're you're not gonna be getting the most competitive interest

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Speaker 1: rates compared to a conventional loan where you're putting down

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Speaker 1: and then don't forget too to factor in f h

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Speaker 1: A mortgage insurance costs. Like both, there's an upfront premium

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Speaker 1: and the annual premiums too. It's just not an ideal

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Speaker 1: product that costs are going to be higher. Um. And

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Speaker 1: there's a reason for it, right. The reason is because

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Speaker 1: they're ending to someone who has a credit score that

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Speaker 1: isn't so hot. And so while you might find a

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Speaker 1: lender that's willing to give you an f h A loan,

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Speaker 1: it doesn't mean that it's going to be with the

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Speaker 1: most favorable terms. Yeah, there's f h A loans. Those

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Speaker 1: other nonconforming loans aren't great, But Megan, you know another

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Speaker 1: option you may have heard about is going with a

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Speaker 1: lender who does manual underwriting. And this is where they

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Speaker 1: manually look at your finances, everything from your payment histories

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Speaker 1: to the paying your utilities on time, and they don't

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Speaker 1: rely on your credit score. And I don't personally think

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Speaker 1: I know anyone who who's done this because it is

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Speaker 1: extremely rare. Yeah, manual underwriting exactly, um. But you know

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Speaker 1: something worth pointing out though, is that manual underwriting It

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Speaker 1: only works if you have no credit score, like like

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Speaker 1: if you literally have never had a credit card, no

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Speaker 1: student loans, nothing. If you have a low credit score

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Speaker 1: like you have megan, then finding a lender who does

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Speaker 1: manual underwriting, it's not going to necessarily help your situation.

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Speaker 1: Going with a lender who does manual underwriting will only help. Uh,

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Speaker 1: if you're kind of more of a on the extreme

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Speaker 1: edge of personal finances and you know you've based really

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Speaker 1: said no to credit, that's not what we recommend because

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Speaker 1: obviously having a good credit score impacts so many different

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Speaker 1: areas in your finances. But for those out there who

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Speaker 1: are in that situation, you also do have an option.

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Speaker 1: That s all right if you have shunned the credit

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Speaker 1: score completely, that that is really the only option you

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Speaker 1: have is to go the manual underwriting way. But yeah,

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Speaker 1: like making at the end of your question, you said,

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Speaker 1: should I just wait? Is that the best option for me?

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Speaker 1: And you know, just because you might be able to

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Speaker 1: qualify for a mortgage doesn't mean that that's the best

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Speaker 1: move for you right now. It might be worth not

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Speaker 1: buying a house right now because of the bad credit

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Speaker 1: score and plus At the same time, lending standards have

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Speaker 1: gotten tighter over the past year, you might find it

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Speaker 1: even harder to get alone these days. Owning a home

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Speaker 1: I think is a great goal, but renting might make

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Speaker 1: the most sense for you for the next year or

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Speaker 1: two while you're working hard to rebuild that score on

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Speaker 1: your own. And not only should you focus on building

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Speaker 1: up that credit score, but you should also prioritize saving

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Speaker 1: more money in order to make a bigger down payment.

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Speaker 1: That is another thing that's gonna help you get the

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Speaker 1: best terms as your credit score rebuilds, as you have

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Speaker 1: more cash in the bank. You know, maybe you even

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Speaker 1: get to the point where you've got to put down

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Speaker 1: you can get that conventional alone with the best possible terms,

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Speaker 1: putting you in the best possible position to be able

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Speaker 1: to afford that home. So yeah, waiting is probably the

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Speaker 1: best idea, even though there are potential options for you

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Speaker 1: out there and too. By the time you get that nice,

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Speaker 1: huge down payment saved up, you're ready to buy. The

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Speaker 1: housing market bubble will have popped and then you can

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Speaker 1: come in scoop up a deal. I'm just joking. I'm

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Speaker 1: not predicting, making crazy predicting housing crash, but you never know,

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Speaker 1: you never know. I wouldn't be waiting for that though,

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Speaker 1: mostly be waiting for the savings in the credit score.

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Speaker 1: But are We got more questions to get to, including

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Speaker 1: is there ever a good reason to take out a

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Speaker 1: loan from your four oh one K. We'll get to

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Speaker 1: that and more right after this break. All right, we

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Speaker 1: are back in the brake, and let's hear a question

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Speaker 1: from a listener who is thinking about borrowing from herself. Hie, Matt,

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Speaker 1: and Jeel. This is Rachel from San Jose, California. I

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Speaker 1: really love listening to your show and getting insights on

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Speaker 1: how I can reach financial independence. I'm twenty eight and

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Speaker 1: I'm going to be relocating to Colorado for work, and

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Speaker 1: I'm planning on purchasing my first home, hopefully around five

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Speaker 1: hundred thousand UM. Ideally i'd like to put down to

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Speaker 1: avoid p M I and I was considering taking a

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Speaker 1: loan um from my four O one case so I

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Speaker 1: don't have to dip into my savings too much. I

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Speaker 1: invested early in my four O one case, so I

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Speaker 1: have a pretty healthy balance in my account, and I

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Speaker 1: figure since I'm still relatively young, I can rebound on

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Speaker 1: my investments, since I will have over fifty k my

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Speaker 1: four one K to invest after I take out the loan.

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Speaker 1: I also do invest in my hi A and other

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Speaker 1: various accounts like my wrath Era. I do plan on

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Speaker 1: staying with my employer for some time, so paying the

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Speaker 1: speck should not be an issue. I wanted to get

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Speaker 1: your thoughts on this since I do hear different things

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Speaker 1: about taking a loan from your form oh one k

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Speaker 1: and you know anything else I should consider. Didn't really

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Speaker 1: love listening to your show, and I hope you guys

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Speaker 1: are able to help me with my question. Thanks all right,

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Speaker 1: Matt locks to cover here. I feel like a four

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Speaker 1: oh one K loan is one of those hotly debated

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Speaker 1: topics in the personal finance community. Some people are gonna

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Speaker 1: be like, sure, go for it, not a big deal,

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Speaker 1: and other people will be like, never ever touch your

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Speaker 1: four o one k uh. And it's the nuclear option exactly.

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Speaker 1: I've heard it referred to as that. And we're somewhere

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Speaker 1: in the middle, and we'll talk about that here. We

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Speaker 1: we try to be reasonable. That's that's our whole thing here,

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Speaker 1: that's ours our attempt. It works at least half the time,

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Speaker 1: but Yeah, Rachel, I love that you're gonna be putting

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Speaker 1: down on your home purchase, as we just talked about

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Speaker 1: in answer to Megan's question, We love that like that

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Speaker 1: puts you in the best position. And it's especially tough

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Speaker 1: in much of Colorado. It's gotten a lot more expensive

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Speaker 1: to buy a home in Colorado mat these days. And

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Speaker 1: I mean everywhere, but Colorado is one of those super

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Speaker 1: hot spots. So congrats on saving up so much money.

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Speaker 1: Also too, it sounds like you're really doing a great

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Speaker 1: job with your investments overall. You've got the four oh

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Speaker 1: one k h s A and and I RA. It's

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Speaker 1: kind of that sweet trifecta of retirements savings, which is great. Um,

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Speaker 1: and yeah, so let's talk about four o one k

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Speaker 1: loans just a little bit more. They're not ideal, and

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Speaker 1: many people use them in a way that puts them

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Speaker 1: in even more difficult financial circumstances. And one of the

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Speaker 1: biggest problems with a four oh one K loan is

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Speaker 1: if you lose your job, you'll have to pay that

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Speaker 1: money back quickly or you're gonna be forced to pay

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Speaker 1: tax and an additional penalty on the money you borrowed.

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Speaker 1: So four oh one K loan can really sink people

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Speaker 1: if they don't use them properly. A four O one

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Speaker 1: K shouldn't be treated as a piggy bank to grab

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Speaker 1: money from for random uses, and that's how a lot

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Speaker 1: of people view those months were definitely against using them

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Speaker 1: in that way. That's right, yeah, and that's why many

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Speaker 1: folks in the personal finance community they suggest avoiding them

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Speaker 1: at all costs. But we feel that a four one

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Speaker 1: K loan could also be done well. We think it

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Speaker 1: could work, and so that's what we'll talk about now. Specifically, Rachel,

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Speaker 1: if if you decide to take a loan from your

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Speaker 1: four own K, we feel that it should be an

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Speaker 1: amount that you can pay off within one to two years.

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Speaker 1: That the company you have your investments with might offer you,

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Speaker 1: let's say, like a five year payback period, but like

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Speaker 1: we wouldn't recommend that you take that long. We want

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Speaker 1: you to get that money back in quickly. Uh. And

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Speaker 1: that's partially because the money that you borrow it won't

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Speaker 1: be growing and you know for you in the market,

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Speaker 1: and the quicker you can pay it back, then the

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Speaker 1: faster that money is going to get back to working

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Speaker 1: for you again. But you also want to prioritize the

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Speaker 1: payback just in case an unexpected job loss were to occur.

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Speaker 1: You know, you said that you liked your job and

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Speaker 1: you're not expecting to leave anytime soon, But that's also

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Speaker 1: a two way street. Hopefully you're you know, I'm sure

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Speaker 1: you do a great job, but if your employers looking

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Speaker 1: at maybe downsize, you could be on the chopping block.

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Speaker 1: I doubt Rachel's on the chopping not Rachel. Sounds awesome.

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Speaker 1: But the good news, though, is that recent law changes

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Speaker 1: give you more time to pay that money back if

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Speaker 1: you did lose your job, and so you now you

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Speaker 1: can wait until you file taxes the year after you

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Speaker 1: withdraw that money. So that's the good news. But the

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Speaker 1: bad news is that if you lose your job, it's

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Speaker 1: probably gonna be more difficult to pay that money back.

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Speaker 1: It becomes harder to pay anything without recurring income work

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Speaker 1: right and and so yeah, man, I agree with you.

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Speaker 1: I think there are some pros to taking the four

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Speaker 1: oh one k loan compared to some of the other

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Speaker 1: methods you might attempt to get that money. But one

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Speaker 1: of the biggest dangers I think is that your attitude

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Speaker 1: can change towards money that's meant for retirement. You shouldn't

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Speaker 1: use your four oh one K to pad your lifestyle,

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Speaker 1: and that's how some people use it. It's not a

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Speaker 1: piggy bank, right, and tapping it for things that your

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Speaker 1: emergency fund should cover is something that scares us. I

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Speaker 1: think that's what we don't want to give this blanket

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Speaker 1: like four own k loans, they're great, go for it

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Speaker 1: because there are a lot of people who might hear

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Speaker 1: that and they say, cool, I'm going to tap mind

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Speaker 1: to pay for that Maui vacation. But you can't afford

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Speaker 1: because some rental cards are really expensive. Uh, we've talked

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Speaker 1: about that a few weeks ago. Plus it sounds like

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Speaker 1: you do have enough in savings right now to cover

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Speaker 1: the down payment. Uh, it's currently sitting in your savings account.

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Speaker 1: That's what it sounded like when you when you pose

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Speaker 1: the question. So consider using the money that you already

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Speaker 1: have to hit that down mark and then work to

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Speaker 1: build up your savings again instead of going the four

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Speaker 1: oh one K low route. Even though taking out this

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Speaker 1: four one K loan is for a decent reason, right,

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Speaker 1: you're building up your down payment. You're trying to avoid

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Speaker 1: that monthly fee of p M. I. If that's the

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Speaker 1: only option you have available to you, we would say

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Speaker 1: go for it because it makes the most financial sense.

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Speaker 1: But it's still ideal to use money that you already

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Speaker 1: have on hand. That's what that should be there for,

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Speaker 1: and then you can build that back up in the

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Speaker 1: months to come after you close on your house. Yeah,

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Speaker 1: that's right, man. I think using the money for a

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Speaker 1: down payment on a house on an appreciating asset might

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Speaker 1: be one of the only instances that we would recommend

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Speaker 1: for folks to use that. But don't use one of

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Speaker 1: those for something that depreciates, like buying a tesla like

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Speaker 1: Joel has been talking about here recently. No, I haven't

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Speaker 1: just kidding. I want the riv and truck, you know that.

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Speaker 1: Now you want the Vida. I want both idva and

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Speaker 1: that's gonna come out in a few years, right. I

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Speaker 1: probably won't get either, but you know part of me

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Speaker 1: once you can always hope, you always dream. But Rachel,

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Speaker 1: you know, if I was in your situation, like I

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Speaker 1: would honestly see this as a challenge to try to

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Speaker 1: find a place that's going to cost maybe less than

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Speaker 1: what you're currently looking to spend. I think there's a

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Speaker 1: good chance that you're gonna be able to find a

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Speaker 1: good spot. I think there's plenty of great houses in

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Speaker 1: Colorado that will cost less than thousand dollars. There's a

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Speaker 1: chance maybe that you're used to seeing those San Jose

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Speaker 1: home prices, you know, upwards of one million dollars, and

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Speaker 1: it just feels like you're getting just this insane steel

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Speaker 1: in Colorado for the space. But the thing is, like,

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Speaker 1: do you really need that much house or do you

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Speaker 1: just want it? You know, just because you had in

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Speaker 1: your mind that you're gonna spend this much doesn't necessarily

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Speaker 1: mean that you have to pay the average home cost

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Speaker 1: amount in Colorado. And so we would recommend that you

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Speaker 1: continue saving that crazy right trying to find other ways

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Speaker 1: to cut back as you just keep talking away more

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Speaker 1: money into your savings for that down payment. Uh, and

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Speaker 1: then just try not to touch that four one k

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Speaker 1: at all. You know. Imagine if you've taken this money

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Speaker 1: out it's last spring after the market had tanked, you

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Speaker 1: would have missed out on some serious gains within your

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Speaker 1: retirement account. So leave it all invested and keep it

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Speaker 1: growing if possible. We feel that that is the best

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Speaker 1: option here. Yep. Option one the by far and away

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Speaker 1: best option. Use cash you have on hand. Four one

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Speaker 1: K loan at least in Rachel situation. Isn't the worst idea, though,

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Speaker 1: even though it is a terrible idea for lots of people.

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Speaker 1: Totally all right, Let's move on to the next question, though, Matt,

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Speaker 1: this one is maybe the best question we've ever gotten,

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Speaker 1: and mostly because of this voice effect. This is cyber dude.

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Speaker 1: After listening to your show, I realized I need to

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Speaker 1: get serious about saving and investing. I'm in my mid fifties,

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Speaker 1: my salary is mid sixties, and I'm signing up for

429
00:19:25,040 --> 00:19:27,240
Speaker 1: my company's h S A and four oh one K

430
00:19:27,840 --> 00:19:31,879
Speaker 1: since I recently started working there. I have around twenty

431
00:19:31,960 --> 00:19:35,080
Speaker 1: thousand dollars in an I RA A and fifteen thousand

432
00:19:35,119 --> 00:19:39,240
Speaker 1: dollars in my checking account. Condos in my neighborhood start

433
00:19:39,280 --> 00:19:43,760
Speaker 1: at around three hundred thousand dollars. At this point, should

434
00:19:43,800 --> 00:19:46,639
Speaker 1: I go all in on saving for retirement or a

435
00:19:46,680 --> 00:19:50,320
Speaker 1: down payment? What are my best options for doing so?

436
00:19:51,240 --> 00:19:53,639
Speaker 1: I'd like to keep some of my cash semi liquid

437
00:19:53,680 --> 00:19:57,000
Speaker 1: for emergencies. I could get a one month c D

438
00:19:57,040 --> 00:20:01,120
Speaker 1: with my bank at point zero two. The past decade

439
00:20:01,200 --> 00:20:04,240
Speaker 1: was really hard on me financially, and I'm trying to

440
00:20:04,320 --> 00:20:07,520
Speaker 1: turn that around. Thank you, Joel. What do you think

441
00:20:07,560 --> 00:20:10,280
Speaker 1: about the cyber voice, the cyber dude. I didn't know

442
00:20:10,320 --> 00:20:12,560
Speaker 1: we were going to get questions from robots about personal finance,

443
00:20:12,600 --> 00:20:14,840
Speaker 1: but I'm glad we did. Uh. That's my favorite question

444
00:20:14,840 --> 00:20:17,439
Speaker 1: of all time. I love the robot voice. It's worth mentioning.

445
00:20:17,440 --> 00:20:19,600
Speaker 1: He wanted to send into question, but he didn't want

446
00:20:19,600 --> 00:20:21,600
Speaker 1: to use his actual voice because he has family members

447
00:20:21,640 --> 00:20:23,560
Speaker 1: who listened to the show, and so he didn't want

448
00:20:23,600 --> 00:20:27,040
Speaker 1: to incriminate himself. I guess no one will know who

449
00:20:27,040 --> 00:20:30,440
Speaker 1: you are now, so kind of anonymous like Witness Protection,

450
00:20:30,480 --> 00:20:32,040
Speaker 1: you know, kind of sitting there in the shadows with

451
00:20:32,119 --> 00:20:35,600
Speaker 1: a voice with the voice changer thing. Uh, the cyber dude, Well,

452
00:20:35,640 --> 00:20:37,480
Speaker 1: you know, we're sorry that the last decade has been

453
00:20:37,520 --> 00:20:40,040
Speaker 1: a tough one for you financially, but you you're asking

454
00:20:40,080 --> 00:20:42,640
Speaker 1: the right questions, You're heading in the right direction, and

455
00:20:42,680 --> 00:20:46,240
Speaker 1: we love that. Getting serious means investing in your company's

456
00:20:46,280 --> 00:20:49,199
Speaker 1: retirement plan and in hs A, that's awesome. Just make

457
00:20:49,240 --> 00:20:52,119
Speaker 1: sure that you are actually investing within that hs A,

458
00:20:52,240 --> 00:20:54,440
Speaker 1: not just saving money in it, treating it like a

459
00:20:54,480 --> 00:20:56,760
Speaker 1: savings account. Uh, and we'll actually we'll talk more about

460
00:20:56,760 --> 00:20:58,720
Speaker 1: that here in a little bit. Yeah, but cyber dude,

461
00:20:58,760 --> 00:21:01,240
Speaker 1: you are already on the right at You've still got

462
00:21:01,280 --> 00:21:04,560
Speaker 1: hopefully fifteen good years to be earning, saving and investing

463
00:21:04,920 --> 00:21:07,399
Speaker 1: before you're likely going to want to quit working, or

464
00:21:07,400 --> 00:21:09,399
Speaker 1: at least stop working full time, like a lot of people,

465
00:21:09,520 --> 00:21:11,560
Speaker 1: you know, get to that age, uh, you know, into

466
00:21:11,720 --> 00:21:14,200
Speaker 1: like right around seventy, and some people want to bag

467
00:21:14,200 --> 00:21:16,479
Speaker 1: work all together. But other people say, you know what,

468
00:21:16,520 --> 00:21:18,359
Speaker 1: I want to work part time one for the income

469
00:21:18,359 --> 00:21:20,600
Speaker 1: in one, like it's something to do, Like work gives

470
00:21:20,680 --> 00:21:24,280
Speaker 1: us meaningful rewards that aren't monetary, and so yeah, that

471
00:21:24,359 --> 00:21:26,679
Speaker 1: might be the best, the best move for you, because

472
00:21:26,680 --> 00:21:30,240
Speaker 1: work provides a lot of satisfaction. But we suggest planning

473
00:21:30,280 --> 00:21:33,680
Speaker 1: to work until around age seventy and then delaying social

474
00:21:33,720 --> 00:21:37,600
Speaker 1: security until then as well. For most people, there's just

475
00:21:37,720 --> 00:21:42,040
Speaker 1: no better guaranteed return than waiting to take social security.

476
00:21:42,520 --> 00:21:44,359
Speaker 1: So I would say make that a goal of yours.

477
00:21:44,440 --> 00:21:46,960
Speaker 1: And if you want to know specifically for your situation,

478
00:21:47,119 --> 00:21:50,639
Speaker 1: when the best time to take your social security is,

479
00:21:50,960 --> 00:21:53,400
Speaker 1: there is actually a free calculator that you can use

480
00:21:53,800 --> 00:21:56,880
Speaker 1: at open social Security dot com. There's a guy who

481
00:21:56,920 --> 00:22:00,119
Speaker 1: just completely nerds out on social security so hard, and

482
00:22:00,119 --> 00:22:02,719
Speaker 1: he's made this just amazing calculator trying to you know,

483
00:22:02,760 --> 00:22:05,560
Speaker 1: basically have all the inputs that he can think of

484
00:22:05,760 --> 00:22:08,159
Speaker 1: that would affect your situation um and he makes it

485
00:22:08,200 --> 00:22:10,720
Speaker 1: available for free. So we'll link to that in our

486
00:22:10,720 --> 00:22:12,640
Speaker 1: show notes. That will be us nerding out on SoC

487
00:22:12,720 --> 00:22:15,680
Speaker 1: security in like forty years. Sorry, And so let's go

488
00:22:15,680 --> 00:22:17,920
Speaker 1: ahead and get to what he's specifically asking about here.

489
00:22:17,920 --> 00:22:20,400
Speaker 1: The condo cyber dude is wondering if you should buy

490
00:22:20,440 --> 00:22:22,359
Speaker 1: that condo or invest more of his money. And if

491
00:22:22,359 --> 00:22:25,159
Speaker 1: we boil this question down, you know you're wondering if

492
00:22:25,200 --> 00:22:27,280
Speaker 1: you should buy an asset with the funds that you've

493
00:22:27,320 --> 00:22:30,639
Speaker 1: got or if you should invest them. And so having

494
00:22:30,720 --> 00:22:32,720
Speaker 1: you know that asset might be helpful. Having that condo,

495
00:22:32,800 --> 00:22:34,680
Speaker 1: it'll give you a place to live with with a

496
00:22:34,760 --> 00:22:37,560
Speaker 1: fixed cost, which is great, but we would rather see

497
00:22:37,560 --> 00:22:40,760
Speaker 1: you rent a modest place and then continue to invest

498
00:22:40,760 --> 00:22:42,560
Speaker 1: at a higher clip. So if you put your money

499
00:22:42,640 --> 00:22:45,520
Speaker 1: saying a total stock market fund, it will on average

500
00:22:46,000 --> 00:22:49,320
Speaker 1: offer you a much better rate of return uh than

501
00:22:49,400 --> 00:22:51,480
Speaker 1: what you're going to see with your condo. And similar

502
00:22:51,480 --> 00:22:52,840
Speaker 1: to what we said earlier, the key here is to

503
00:22:52,920 --> 00:22:55,800
Speaker 1: actually invest that money, not just spend it. I think

504
00:22:55,840 --> 00:22:58,720
Speaker 1: sometimes when you purchase an asset that requires money, right

505
00:22:58,720 --> 00:23:01,960
Speaker 1: like like your condo, that value is going to grow

506
00:23:02,040 --> 00:23:04,120
Speaker 1: because it's you've kind of set up this framework. You've

507
00:23:04,119 --> 00:23:06,640
Speaker 1: got these payments going towards it, as opposed to maybe

508
00:23:06,640 --> 00:23:08,640
Speaker 1: just extra money that's sitting there and you're checking account

509
00:23:08,760 --> 00:23:11,360
Speaker 1: make sure that you're actually being proactive and in diligent

510
00:23:11,400 --> 00:23:13,159
Speaker 1: with those funds to make sure that you are getting

511
00:23:13,160 --> 00:23:16,280
Speaker 1: those dollars invested. Yeah, if you're just renting a modest

512
00:23:16,280 --> 00:23:19,840
Speaker 1: place and spending the difference that that you should be investing,

513
00:23:20,160 --> 00:23:21,840
Speaker 1: then you're not going to make up any ground when

514
00:23:21,880 --> 00:23:24,640
Speaker 1: it comes to your investments. And to Matt, yeah, investing

515
00:23:24,720 --> 00:23:27,560
Speaker 1: more of your money and not sinking that into a condo,

516
00:23:27,880 --> 00:23:30,280
Speaker 1: it's gonna be the best move typically, you know, over

517
00:23:30,440 --> 00:23:34,080
Speaker 1: over the next fifteen years from a return standpoint, Right

518
00:23:34,080 --> 00:23:37,040
Speaker 1: from from just purely looking at the numbers, but it's

519
00:23:37,040 --> 00:23:41,320
Speaker 1: also worth considering whether owning a place is just a

520
00:23:41,400 --> 00:23:45,879
Speaker 1: really high goal of cyber dudes. Uh, sorry, it's just

521
00:23:46,080 --> 00:23:48,720
Speaker 1: it's funny. Yeah, I can't. Yeah, I keep thinking cyber

522
00:23:48,720 --> 00:23:50,399
Speaker 1: truck everything you say cyber dude as well, Like it

523
00:23:50,400 --> 00:23:51,760
Speaker 1: makes me think of the cyber truck and I just

524
00:23:51,800 --> 00:23:55,840
Speaker 1: picture of this metallic dude transform or something like yeah.

525
00:23:56,200 --> 00:23:58,520
Speaker 1: But like yeah, I feel like if he's gonna gain

526
00:23:58,560 --> 00:24:01,440
Speaker 1: a lot of satisfaction and some of that emotional peace

527
00:24:01,440 --> 00:24:03,800
Speaker 1: of mind by having his own place, if it's really

528
00:24:03,800 --> 00:24:05,800
Speaker 1: important to him to kind of have his own home

529
00:24:06,040 --> 00:24:07,840
Speaker 1: and to not be a renter, then I would say,

530
00:24:07,880 --> 00:24:10,400
Speaker 1: don't completely discount the idea of buying a condo at

531
00:24:10,440 --> 00:24:13,240
Speaker 1: some point, but it really is going to be I

532
00:24:13,280 --> 00:24:16,520
Speaker 1: think the best move for him numerically over the next

533
00:24:16,520 --> 00:24:19,080
Speaker 1: fifteen years is to, you know, rent some place that's inexpensive.

534
00:24:19,119 --> 00:24:21,320
Speaker 1: We've talked about that before. To rent prices have actually

535
00:24:21,400 --> 00:24:23,240
Speaker 1: kind of dropped off a bit. Home prices have just

536
00:24:23,280 --> 00:24:26,119
Speaker 1: continued to skyrocket. If you run a modest place, you're

537
00:24:26,119 --> 00:24:29,159
Speaker 1: gonna have a lower monthly payment. That condo isn't going

538
00:24:29,200 --> 00:24:31,560
Speaker 1: to be eating up some of your additional money as

539
00:24:31,560 --> 00:24:33,240
Speaker 1: you have to make repairs, because the landlord is going

540
00:24:33,280 --> 00:24:35,320
Speaker 1: to do that for you. You're going to have more freedom,

541
00:24:35,320 --> 00:24:37,800
Speaker 1: more money to be able to maximize some of those

542
00:24:37,880 --> 00:24:41,160
Speaker 1: investment accounts that you have at your disposal. That's right, dude. Yeah,

543
00:24:41,200 --> 00:24:43,840
Speaker 1: So get that ira A fired back up in addition

544
00:24:43,880 --> 00:24:46,520
Speaker 1: to the h s A and the workplace retirement account

545
00:24:46,560 --> 00:24:49,159
Speaker 1: that you have there, and with that you'll be stashing

546
00:24:49,160 --> 00:24:51,640
Speaker 1: away tons of money for your future. And by the way,

547
00:24:51,880 --> 00:24:54,480
Speaker 1: you mentioned CDs as well, don't worry about that. Just

548
00:24:54,560 --> 00:24:57,639
Speaker 1: keep your liquid cash in an online savings account with

549
00:24:57,680 --> 00:25:00,080
Speaker 1: one of our favorite banks like ally c I HE

550
00:25:00,440 --> 00:25:03,359
Speaker 1: or Discover. You'll get paid even more all that money

551
00:25:03,359 --> 00:25:06,760
Speaker 1: than what your bank is offering there within a c D.

552
00:25:07,280 --> 00:25:08,800
Speaker 1: But it is wise, of course to keep some of

553
00:25:08,800 --> 00:25:11,280
Speaker 1: that money on hand, uh in case of an emergency.

554
00:25:11,320 --> 00:25:13,960
Speaker 1: You don't want to completely drain your account. Cyber dude.

555
00:25:13,960 --> 00:25:16,760
Speaker 1: We're pulling for you, and best of luck as you

556
00:25:16,960 --> 00:25:20,359
Speaker 1: ramp up that investing for your retirement. You still got

557
00:25:20,359 --> 00:25:21,879
Speaker 1: plenty of time, man, You got plenty of runway, So

558
00:25:21,920 --> 00:25:23,800
Speaker 1: make it happen. All right, Matt, We got a couple

559
00:25:23,920 --> 00:25:27,919
Speaker 1: more questions to get to, including an insightful question about

560
00:25:27,960 --> 00:25:30,920
Speaker 1: international investing. We'll get to that and more right after

561
00:25:31,040 --> 00:25:41,920
Speaker 1: this break. All right, we are back from the break

562
00:25:41,920 --> 00:25:44,119
Speaker 1: and we're gonna get to that question about investing in

563
00:25:44,160 --> 00:25:47,120
Speaker 1: international funds. But first let's take a question about the

564
00:25:47,200 --> 00:25:49,600
Speaker 1: best retirement account of all time, the h s A,

565
00:25:49,840 --> 00:25:53,520
Speaker 1: the Health Savings Account. Hi guys, my name's Cam. I'm

566
00:25:53,520 --> 00:25:56,399
Speaker 1: from New York. I'm the twenty seven year old Marine

567
00:25:56,400 --> 00:26:00,360
Speaker 1: Corps veteran with access to a complete health coverage through

568
00:26:00,400 --> 00:26:03,399
Speaker 1: the Betteran Affairs Office for life. I am also single,

569
00:26:03,480 --> 00:26:06,160
Speaker 1: with no dependence and in good health, so don't see

570
00:26:06,200 --> 00:26:09,480
Speaker 1: the doctor regularly at all. I recently started a new

571
00:26:09,560 --> 00:26:13,000
Speaker 1: job that offers a high deductible health plan and hs

572
00:26:13,000 --> 00:26:17,600
Speaker 1: A with an annual five employer contribution. This plan cost

573
00:26:17,680 --> 00:26:22,159
Speaker 1: me about fift annually in pre tax payroll deductions. I

574
00:26:22,200 --> 00:26:24,719
Speaker 1: currently max out my wrath I ra A as well

575
00:26:24,760 --> 00:26:27,320
Speaker 1: as contribute eight percent to my company's four oh win

576
00:26:27,400 --> 00:26:31,119
Speaker 1: K plan, which is the max employer match. I also

577
00:26:31,200 --> 00:26:34,479
Speaker 1: have an individual investment account I contribute to. My question

578
00:26:34,560 --> 00:26:36,920
Speaker 1: is is it worth paying for the high deductible health

579
00:26:36,920 --> 00:26:40,000
Speaker 1: plan in order to receive the five dollar employer match?

580
00:26:40,400 --> 00:26:43,840
Speaker 1: Even though I never intend on utilizing that healthcare. My

581
00:26:43,920 --> 00:26:46,120
Speaker 1: goal is to use the hs A as an additional

582
00:26:46,160 --> 00:26:49,720
Speaker 1: retirement account and lower my yearly taxable income. However, I

583
00:26:49,800 --> 00:26:52,359
Speaker 1: do not intend on contributing any money to the hs

584
00:26:52,359 --> 00:26:54,800
Speaker 1: A myself, it seems as though I would be better

585
00:26:54,840 --> 00:26:57,560
Speaker 1: suited canceling the employer health plan as I received my

586
00:26:57,600 --> 00:27:01,320
Speaker 1: healthcare through the v A and perhaps in US in

587
00:27:01,359 --> 00:27:04,840
Speaker 1: my individual investment account, rather than pay for coverage that

588
00:27:04,880 --> 00:27:07,679
Speaker 1: I don't intend to use just to receive the employers

589
00:27:07,720 --> 00:27:12,200
Speaker 1: five contribution. Let me know your thoughts. Thanks, Cam love

590
00:27:12,240 --> 00:27:15,040
Speaker 1: this question. H S A S are such a good account,

591
00:27:15,320 --> 00:27:17,159
Speaker 1: and I love that you have access to one. But

592
00:27:17,240 --> 00:27:20,320
Speaker 1: you're in a really interesting position that most people are

593
00:27:20,359 --> 00:27:22,680
Speaker 1: not in. And yeah, we'll talk about whether or not

594
00:27:22,720 --> 00:27:25,399
Speaker 1: you should be participating, but but first, let's kind of

595
00:27:25,440 --> 00:27:28,280
Speaker 1: do a quick primer on health save muse accounts for

596
00:27:28,320 --> 00:27:30,800
Speaker 1: everyone else. Matt, you and I did a deep dive

597
00:27:30,960 --> 00:27:33,320
Speaker 1: on hs as a while back on the show What

598
00:27:33,359 --> 00:27:34,919
Speaker 1: will link to that episode in the show notes for

599
00:27:34,920 --> 00:27:38,000
Speaker 1: people who want the super nerdy deep dive. But h

600
00:27:38,119 --> 00:27:41,440
Speaker 1: S A S are basically tied with roth iras as

601
00:27:41,520 --> 00:27:44,760
Speaker 1: our favorite retirement account. They're both just superbly wonderful and

602
00:27:44,920 --> 00:27:48,400
Speaker 1: h H S A s are truly incredible because they

603
00:27:48,440 --> 00:27:51,680
Speaker 1: have a triple tax advantage status, and that means that

604
00:27:51,720 --> 00:27:53,840
Speaker 1: you don't pay tax on the money that you put

605
00:27:53,880 --> 00:27:56,280
Speaker 1: into your H S A. You also don't pay tax

606
00:27:56,520 --> 00:27:59,679
Speaker 1: on the earnings, which means you should be investing that

607
00:27:59,720 --> 00:28:02,560
Speaker 1: money and you won't pay tax when you withdraw the

608
00:28:02,600 --> 00:28:06,000
Speaker 1: money from that h s A if spent on qualified

609
00:28:06,359 --> 00:28:09,520
Speaker 1: health expenses, and most people use h S A S,

610
00:28:09,840 --> 00:28:12,040
Speaker 1: we would say improperly. They use h s A S

611
00:28:12,080 --> 00:28:15,320
Speaker 1: to spend for current year health expenses. But we think

612
00:28:15,320 --> 00:28:17,440
Speaker 1: that they're best used when you can invest that money

613
00:28:17,680 --> 00:28:20,040
Speaker 1: and not tap it for decades to come. It's okay,

614
00:28:20,160 --> 00:28:22,159
Speaker 1: it sounds like that's the way you're thinking about this

615
00:28:22,359 --> 00:28:24,719
Speaker 1: h s A and so yeah, approaching the h s

616
00:28:24,720 --> 00:28:27,520
Speaker 1: A from that strategy that's sort of long term. Open

617
00:28:27,560 --> 00:28:30,199
Speaker 1: the h s A, continue to fund it, invest inside

618
00:28:30,200 --> 00:28:32,359
Speaker 1: of it, and grow just this massive nest egg for

619
00:28:32,440 --> 00:28:35,800
Speaker 1: retirement inside of that account. We would say that's the

620
00:28:35,840 --> 00:28:37,679
Speaker 1: way to go. Yeah, that's the right approach. And I

621
00:28:37,680 --> 00:28:39,880
Speaker 1: think sometimes folks can fall into thinking about their h

622
00:28:39,920 --> 00:28:41,520
Speaker 1: s A sort of like to think about F s

623
00:28:41,560 --> 00:28:44,360
Speaker 1: A S, which are flexible spending accounts where if you

624
00:28:44,360 --> 00:28:46,120
Speaker 1: don't use it, you lose it, and that is not

625
00:28:46,200 --> 00:28:47,720
Speaker 1: the case with h s A S. H s AS

626
00:28:47,760 --> 00:28:50,120
Speaker 1: you can grow for years upon years. Well, so I

627
00:28:50,120 --> 00:28:52,960
Speaker 1: think that's partly a function of the name, Matt, don't

628
00:28:52,960 --> 00:28:55,480
Speaker 1: you agree, Like it's called the Health Savings Account, and

629
00:28:55,520 --> 00:28:57,800
Speaker 1: I think it should actually be renamed into the Health

630
00:28:58,040 --> 00:29:00,520
Speaker 1: Investment Account, like the h i A. I think that

631
00:29:00,520 --> 00:29:03,280
Speaker 1: would better serve people, That would make them think and

632
00:29:03,320 --> 00:29:05,400
Speaker 1: no and realize that they can actually be investing inside

633
00:29:05,400 --> 00:29:07,360
Speaker 1: of this as opposed to just saving it and paying

634
00:29:07,360 --> 00:29:09,560
Speaker 1: for this year's pert expenses, which is, you know, not

635
00:29:09,640 --> 00:29:11,120
Speaker 1: a terrible way to use it. You're still getting a

636
00:29:11,120 --> 00:29:13,959
Speaker 1: tax benefit, but not nearly as good of a tax benefits,

637
00:29:14,040 --> 00:29:16,120
Speaker 1: not nearly as advantageous. But that probably speaks to why

638
00:29:16,160 --> 00:29:18,480
Speaker 1: this account was created in the first place, which which

639
00:29:18,520 --> 00:29:21,440
Speaker 1: is the pay for for health expenses. It's just that

640
00:29:21,560 --> 00:29:23,720
Speaker 1: you have the ability to also use it as an

641
00:29:23,760 --> 00:29:26,880
Speaker 1: investment vehicle, right But macam, you know, just because you

642
00:29:26,920 --> 00:29:29,080
Speaker 1: have access to one to an h s A, you know,

643
00:29:29,200 --> 00:29:31,560
Speaker 1: does that mean that you should use it? In almost

644
00:29:31,560 --> 00:29:34,680
Speaker 1: all cases, we would suggest that listeners with access to

645
00:29:34,760 --> 00:29:37,560
Speaker 1: an hs A through their job contribute to that hs

646
00:29:37,640 --> 00:29:39,240
Speaker 1: A because of all the you know, the reasons that

647
00:29:39,280 --> 00:29:42,440
Speaker 1: you just mentioned. But you know, Joel cam he's in

648
00:29:42,440 --> 00:29:44,880
Speaker 1: a slightly different position. It's essentially going to cost him

649
00:29:44,920 --> 00:29:47,440
Speaker 1: a thousand dollars a year to have that hs A,

650
00:29:47,800 --> 00:29:50,360
Speaker 1: which is that that's a really steep cost, you know,

651
00:29:50,560 --> 00:29:52,560
Speaker 1: like I wouldn't. I wouldn't pay fifteen hundred dollars in

652
00:29:52,640 --> 00:29:54,960
Speaker 1: order to snag that five dollars. It's just a bad deal.

653
00:29:55,200 --> 00:29:57,880
Speaker 1: But I'm guessing it's probably a great deal for everyone

654
00:29:57,920 --> 00:29:59,920
Speaker 1: else who who works there at his company. It's just

655
00:30:00,000 --> 00:30:02,280
Speaker 1: that when you get that that sweet free healthcare for life.

656
00:30:02,840 --> 00:30:06,160
Speaker 1: Since Cam has served in the Marines, that's just not

657
00:30:06,280 --> 00:30:08,960
Speaker 1: an expense that he needs a foot anymore. And also, Cam, yeah,

658
00:30:08,960 --> 00:30:11,360
Speaker 1: thanks for your service, by the way, totally Matt, I agree.

659
00:30:11,360 --> 00:30:13,680
Speaker 1: I'm sure Cam's co workers are thrilled that they have

660
00:30:13,760 --> 00:30:16,800
Speaker 1: access to this HSA that their employer partially funds. That's

661
00:30:16,800 --> 00:30:18,720
Speaker 1: a sweet position. He should be the biggest advocate for

662
00:30:18,760 --> 00:30:21,000
Speaker 1: the HSA, even though he can't partial or you know,

663
00:30:21,080 --> 00:30:23,920
Speaker 1: even though he's not going to participate it himself. Yeah,

664
00:30:23,960 --> 00:30:26,200
Speaker 1: and so yeah, let's get to that. Basically, you said

665
00:30:26,240 --> 00:30:28,680
Speaker 1: that you're you're not planning on contributing more money to

666
00:30:28,720 --> 00:30:31,720
Speaker 1: that hs A either. Even if you were, the cost

667
00:30:31,760 --> 00:30:34,840
Speaker 1: of the high deductible healthcare plan would still make this

668
00:30:35,160 --> 00:30:37,479
Speaker 1: a bad value proposition, and Matt, that's like what you

669
00:30:37,480 --> 00:30:41,320
Speaker 1: just said, the fee is essentially exorbitant that money invested

670
00:30:41,360 --> 00:30:43,440
Speaker 1: in the h s A. It does have the triple

671
00:30:43,480 --> 00:30:46,760
Speaker 1: tax advantage, but that's nothing compared to what we can

672
00:30:46,840 --> 00:30:49,720
Speaker 1: essentially call a thousand dollar fee that you're being charged

673
00:30:50,040 --> 00:30:52,440
Speaker 1: to to invest in that. In that way, I don't

674
00:30:52,480 --> 00:30:54,600
Speaker 1: even like hearing about investment fees that are you know,

675
00:30:54,800 --> 00:30:57,040
Speaker 1: half a percent or three quarters of a percent, and

676
00:30:57,080 --> 00:31:00,720
Speaker 1: this is effectively like a fee. So yeah, we would say,

677
00:31:00,760 --> 00:31:03,840
Speaker 1: like for everyone else who works there, uh, that that

678
00:31:03,880 --> 00:31:06,360
Speaker 1: it probably makes sense, but you should be ditching the

679
00:31:06,360 --> 00:31:09,400
Speaker 1: employer healthcare plan from your life and avoiding the h

680
00:31:09,520 --> 00:31:12,480
Speaker 1: s A because of that wonderfully free healthcare plan that

681
00:31:12,600 --> 00:31:15,320
Speaker 1: you've got. So yeah, although it's tempting because we talk

682
00:31:15,360 --> 00:31:17,760
Speaker 1: of hs as a lot here, it just doesn't make

683
00:31:17,760 --> 00:31:21,360
Speaker 1: sense for your specific situation, that's right. And you know

684
00:31:21,400 --> 00:31:23,560
Speaker 1: one last thing too that we wanted to mention camp.

685
00:31:23,640 --> 00:31:25,680
Speaker 1: You know, depending on your investing goals and when you

686
00:31:25,720 --> 00:31:28,880
Speaker 1: need the money, it also might make sense, uh for

687
00:31:28,960 --> 00:31:30,959
Speaker 1: you to contribute more money to your four owen K

688
00:31:31,520 --> 00:31:34,560
Speaker 1: instead of more into that individual brokerage account that you mentioned.

689
00:31:34,840 --> 00:31:37,200
Speaker 1: If you're investing for a big purchase, say, for instance,

690
00:31:37,280 --> 00:31:40,160
Speaker 1: like a home, and you intend to tap some of

691
00:31:40,200 --> 00:31:42,320
Speaker 1: that money in the next five to ten years, You're

692
00:31:42,360 --> 00:31:44,280
Speaker 1: probably going to be better served if you put that

693
00:31:44,320 --> 00:31:47,280
Speaker 1: into your individual brokerage account. But if this is money

694
00:31:47,320 --> 00:31:51,000
Speaker 1: that you won't need until decades down the road, then

695
00:31:51,040 --> 00:31:53,120
Speaker 1: we would recommend that you stash more into your four

696
00:31:53,120 --> 00:31:56,600
Speaker 1: own k H in order to snag that extra tax advantage.

697
00:31:56,960 --> 00:31:59,080
Speaker 1: It all depends on what you want to do with

698
00:31:59,240 --> 00:32:01,760
Speaker 1: that money, doubt all right, well, Cam, best of luck

699
00:32:01,840 --> 00:32:03,920
Speaker 1: to you as you move forward. Sorry, you can't take

700
00:32:03,920 --> 00:32:05,520
Speaker 1: advantage of the H s A, but in this case,

701
00:32:05,720 --> 00:32:08,280
Speaker 1: it doesn't make sense. And all right, Matt, let's get

702
00:32:08,280 --> 00:32:10,600
Speaker 1: to our last question for this episode. This one is

703
00:32:10,680 --> 00:32:13,400
Speaker 1: essentially calling us out for something that we leave out

704
00:32:13,440 --> 00:32:17,080
Speaker 1: of our investing portfolio. I'm Matt and Joel. This is

705
00:32:17,240 --> 00:32:20,320
Speaker 1: Curt and to make it like California. I really enjoy

706
00:32:20,400 --> 00:32:24,200
Speaker 1: the show, especially liked your episode where you guys discussed

707
00:32:24,200 --> 00:32:27,400
Speaker 1: how you guys personally invest. I just had one question

708
00:32:27,400 --> 00:32:31,600
Speaker 1: about that. I've always been a fan of, like you guys,

709
00:32:31,600 --> 00:32:35,000
Speaker 1: index funds for their costs, but I also have international

710
00:32:35,080 --> 00:32:37,880
Speaker 1: index funds, and I noticed neither of you guys, I

711
00:32:38,040 --> 00:32:41,280
Speaker 1: mentioned that in your portfolio. UM, I've always felt that

712
00:32:41,360 --> 00:32:44,200
Speaker 1: this is a good way to diversify and get some

713
00:32:44,280 --> 00:32:47,760
Speaker 1: of the economic growth outside the United States. For example,

714
00:32:47,760 --> 00:32:53,120
Speaker 1: I have the Fidelity Freedom or Fidelity Zero Fund International

715
00:32:53,200 --> 00:32:56,280
Speaker 1: fund about of my portfolio on that So I just

716
00:32:56,360 --> 00:32:58,920
Speaker 1: was wondering if that was a what you felt about

717
00:32:58,960 --> 00:33:03,240
Speaker 1: international funds And you guys don't have any thanks all right, Kurt,

718
00:33:03,280 --> 00:33:05,320
Speaker 1: that is an awesome question. And we thought that some

719
00:33:05,520 --> 00:33:09,640
Speaker 1: student observer might bring this up after that episode, and Uh, yeah, Kurt,

720
00:33:09,760 --> 00:33:12,800
Speaker 1: is that a student dude and were smart question. We

721
00:33:12,800 --> 00:33:14,600
Speaker 1: we actually talked about that back in the episode three

722
00:33:14,680 --> 00:33:16,240
Speaker 1: forty one. That's that's where we talked about how it

723
00:33:16,280 --> 00:33:17,960
Speaker 1: is that we invest our money. So if you haven't

724
00:33:18,160 --> 00:33:20,280
Speaker 1: listened to that one, you can listen back. But Kurt,

725
00:33:20,360 --> 00:33:23,000
Speaker 1: you know we're not against investing internationally. Uh. You said

726
00:33:23,000 --> 00:33:25,600
Speaker 1: that you've got around of your investments in a no

727
00:33:25,800 --> 00:33:29,560
Speaker 1: cost international index fund, and that's great. That Fidelity fund

728
00:33:29,560 --> 00:33:32,240
Speaker 1: in particular is a great choice. Vanguards v g T

729
00:33:32,520 --> 00:33:35,959
Speaker 1: s X is another low cost international stock fund. Uh.

730
00:33:35,960 --> 00:33:39,600
Speaker 1: And Vanguard also offers a total World stock market fund

731
00:33:40,040 --> 00:33:43,600
Speaker 1: that's also dirt cheap, which goes by vt w A

732
00:33:43,880 --> 00:33:48,480
Speaker 1: X or vt WAX, all these fun acronyms, uh, and

733
00:33:48,520 --> 00:33:51,520
Speaker 1: those are all worthwhile spots for you to consider investing

734
00:33:51,520 --> 00:33:54,280
Speaker 1: some of your money. And that last one too specifically

735
00:33:54,360 --> 00:33:56,600
Speaker 1: that we mentioned like that could easily be the only

736
00:33:56,640 --> 00:33:59,920
Speaker 1: funds you hold, since it puts your money in US

737
00:34:00,080 --> 00:34:03,320
Speaker 1: funds that put your money in emerging markets, European markets, uh,

738
00:34:03,360 --> 00:34:05,800
Speaker 1: the whole world. It's a global fund and there are

739
00:34:05,800 --> 00:34:08,480
Speaker 1: certainly good reasons to have more of your investment dollars

740
00:34:08,719 --> 00:34:12,280
Speaker 1: going into markets besides the US. That's not a terrible idea,

741
00:34:12,320 --> 00:34:14,920
Speaker 1: but there are reasons why we don't do that. Okay, Yeah,

742
00:34:14,960 --> 00:34:17,279
Speaker 1: you just gave some some good reasons for doing so.

743
00:34:17,400 --> 00:34:21,160
Speaker 1: And I think there are smart investors who would, you know,

744
00:34:21,239 --> 00:34:23,319
Speaker 1: say that they would disagree with us, or they would

745
00:34:23,320 --> 00:34:25,560
Speaker 1: say that, you know, any smart investor should have more

746
00:34:25,560 --> 00:34:28,960
Speaker 1: international exposure. And I understand that argument. Um, But so

747
00:34:29,000 --> 00:34:32,799
Speaker 1: why in the world don't we have that international stock exposure. Well,

748
00:34:33,040 --> 00:34:35,239
Speaker 1: there are a few reasons. Some might call it home

749
00:34:35,280 --> 00:34:38,560
Speaker 1: country bias, A belief to at least a certain extent,

750
00:34:38,640 --> 00:34:43,480
Speaker 1: that the United States has a superior economic engine driving progress,

751
00:34:43,600 --> 00:34:46,640
Speaker 1: and so there's less of a reason to invest overseas.

752
00:34:47,120 --> 00:34:51,120
Speaker 1: Past performance actually demonstrates this. International funds have you know,

753
00:34:51,239 --> 00:34:54,920
Speaker 1: vastly underperformed the SMP five hundred over the last decade,

754
00:34:55,080 --> 00:34:57,800
Speaker 1: although that's not necessarily indicative of what's gonna happen in

755
00:34:57,800 --> 00:35:02,279
Speaker 1: the future, right, it's Yeah. Another reason is that in

756
00:35:02,320 --> 00:35:05,600
Speaker 1: the past, international funds used to be more expensive. It

757
00:35:05,680 --> 00:35:08,760
Speaker 1: used to be that cost on international funds were higher

758
00:35:08,800 --> 00:35:11,239
Speaker 1: than US total stock market funds, and that extra cost

759
00:35:11,320 --> 00:35:14,719
Speaker 1: was something that we weren't willing to to to submit to. Essentially,

760
00:35:15,040 --> 00:35:17,360
Speaker 1: uh and Kurt is living proof Matt that that's not

761
00:35:17,400 --> 00:35:19,600
Speaker 1: the case anymore. The costs on those funds have come

762
00:35:19,640 --> 00:35:22,480
Speaker 1: down wildly in recent years. But there are also a

763
00:35:22,520 --> 00:35:25,839
Speaker 1: couple of other reasons. When you invest internationally, you do

764
00:35:25,920 --> 00:35:28,239
Speaker 1: run the risk of investing in markets that might have

765
00:35:28,640 --> 00:35:33,600
Speaker 1: weaker regulation and bigger currency fluctuations too. Those are reasons

766
00:35:33,640 --> 00:35:37,120
Speaker 1: that we don't prioritize it. But there's actually one really,

767
00:35:37,160 --> 00:35:40,560
Speaker 1: really big reason why we've basically stayed away from international

768
00:35:40,560 --> 00:35:43,560
Speaker 1: funds at least until this point. Yeah, the main reason

769
00:35:43,600 --> 00:35:45,800
Speaker 1: we're we're not investing in the different international funds is

770
00:35:45,840 --> 00:35:48,520
Speaker 1: that a vast majority of U S companies that we

771
00:35:48,560 --> 00:35:53,400
Speaker 1: hold in our US index funds have massive international exposure already.

772
00:35:53,840 --> 00:35:56,120
Speaker 1: So many of those companies do such a large chunk

773
00:35:56,160 --> 00:35:59,480
Speaker 1: of business overseas that we believe it's not as important

774
00:35:59,520 --> 00:36:02,320
Speaker 1: to own interne national funds as as others might suggest.

775
00:36:02,640 --> 00:36:05,799
Speaker 1: In fact, almost half of the revenue of companies in

776
00:36:05,840 --> 00:36:08,840
Speaker 1: the SMP five hundered comes from outside of the United States.

777
00:36:09,120 --> 00:36:11,600
Speaker 1: Makes me makes me think about my visit to China, Matt.

778
00:36:11,680 --> 00:36:13,879
Speaker 1: You know how many kfc s they've they've gone over there.

779
00:36:13,920 --> 00:36:17,640
Speaker 1: It's crazy, like KFC I think has more in China,

780
00:36:17,760 --> 00:36:20,080
Speaker 1: and then they do in the next Seriously, Yeah, when surprising,

781
00:36:20,120 --> 00:36:22,000
Speaker 1: I guess. But that being said, you know, it seems

782
00:36:22,040 --> 00:36:24,080
Speaker 1: as though there are articles written every other week about

783
00:36:24,080 --> 00:36:27,760
Speaker 1: the need to own international stocks for diversification. And again,

784
00:36:27,800 --> 00:36:30,000
Speaker 1: to be clear, we're not against others doing so, and

785
00:36:30,040 --> 00:36:32,160
Speaker 1: we might even you know, do more international investing in

786
00:36:32,200 --> 00:36:34,440
Speaker 1: the future as well, but for the time being, we

787
00:36:34,480 --> 00:36:36,920
Speaker 1: feel that the US Total Stock Market Index funds or

788
00:36:36,960 --> 00:36:41,680
Speaker 1: the SMP five hundred funds provide enough international diversification without

789
00:36:41,960 --> 00:36:45,439
Speaker 1: the additional risk of owning international funds. Again, that's where

790
00:36:45,480 --> 00:36:47,520
Speaker 1: we stand now. That might change in the coming decades.

791
00:36:47,560 --> 00:36:48,960
Speaker 1: You know, like, I'm curious to see where we stand

792
00:36:49,000 --> 00:36:51,360
Speaker 1: on this jole in twenty thirty years, as the different

793
00:36:51,360 --> 00:36:55,120
Speaker 1: economies of other major countries as they evolve, as they change,

794
00:36:55,200 --> 00:36:57,440
Speaker 1: and as our economy here in the U S as

795
00:36:57,440 --> 00:36:59,840
Speaker 1: it changes as well. Yeah, I mean, Matt, even some

796
00:37:00,040 --> 00:37:03,520
Speaker 1: the quote unquote downsize that I mentioned, you know, partially

797
00:37:03,560 --> 00:37:06,160
Speaker 1: in the answer to Kurt's question, have got by the wayside,

798
00:37:06,160 --> 00:37:09,720
Speaker 1: some of them, right, Like the additional expense of investing

799
00:37:09,760 --> 00:37:13,000
Speaker 1: internationally is not really a thing anymore. And so yeah,

800
00:37:13,040 --> 00:37:16,080
Speaker 1: as the reasons begin to take away to you know,

801
00:37:16,160 --> 00:37:18,720
Speaker 1: keep your money in like a US total stock market

802
00:37:18,719 --> 00:37:21,640
Speaker 1: fund in favor of at least some exposure to some

803
00:37:21,680 --> 00:37:24,000
Speaker 1: of those international index funds, it does get on my

804
00:37:24,120 --> 00:37:27,000
Speaker 1: radar in a more significant way. And I could see

805
00:37:27,000 --> 00:37:29,799
Speaker 1: myself at some point owning some international index funds, but

806
00:37:29,880 --> 00:37:32,440
Speaker 1: I just don't yet. Yeah. So, Kurt, hopefully that answers

807
00:37:32,480 --> 00:37:36,239
Speaker 1: your question, and happy investing to you, Joel. Let's shift gears.

808
00:37:36,280 --> 00:37:37,560
Speaker 1: Let's get back to the beer that you and I

809
00:37:37,560 --> 00:37:40,200
Speaker 1: shared on this episode. You and I enjoyed a barrel

810
00:37:40,280 --> 00:37:43,960
Speaker 1: farm uh, and this is their mixed culture farmhouse sour ale,

811
00:37:44,040 --> 00:37:47,080
Speaker 1: and this is blend number two. I've had blend number one.

812
00:37:47,120 --> 00:37:49,359
Speaker 1: It was delicious. What did you think about number two?

813
00:37:49,360 --> 00:37:51,920
Speaker 1: Oh my gosh, dude, this was so so good. I

814
00:37:51,960 --> 00:37:54,439
Speaker 1: felt like I was tasting peaches when I was drinking.

815
00:37:54,520 --> 00:37:56,600
Speaker 1: This definitely had a peach vibe, even though there were

816
00:37:56,640 --> 00:37:58,920
Speaker 1: no peaches like made in it. Like that's what I

817
00:37:58,960 --> 00:38:01,160
Speaker 1: love about beers, Like when you taste certain fruits in

818
00:38:01,160 --> 00:38:03,319
Speaker 1: an I p A and you could swear that there

819
00:38:03,360 --> 00:38:05,160
Speaker 1: was like blood, oranges or something like that in it,

820
00:38:05,560 --> 00:38:07,279
Speaker 1: but there weren't because it's just the flavor of the

821
00:38:07,280 --> 00:38:10,400
Speaker 1: hops coming through. And Yeah, the mixed culture going on

822
00:38:10,480 --> 00:38:13,880
Speaker 1: in this beer created just some really really interesting taste.

823
00:38:14,200 --> 00:38:17,560
Speaker 1: It was light, slightly funky, nicely tart, and I gotta

824
00:38:17,600 --> 00:38:21,200
Speaker 1: say this was incredibly delicious. Another winner from the folks

825
00:38:21,200 --> 00:38:23,600
Speaker 1: over at Monday n Garage. Yeah, im portan nice light

826
00:38:23,640 --> 00:38:26,560
Speaker 1: golden color, is pretty fizzy, and I totally agree with you,

827
00:38:26,600 --> 00:38:30,120
Speaker 1: like peaches, almost like apricot fruit as well, but it

828
00:38:30,160 --> 00:38:32,799
Speaker 1: had like this, just nice light but at the same

829
00:38:32,840 --> 00:38:36,479
Speaker 1: time woody and barrel nature like backbone to the beer,

830
00:38:36,840 --> 00:38:39,879
Speaker 1: and of course a nice level of acidity like any

831
00:38:39,920 --> 00:38:41,800
Speaker 1: sour that's got that's been barrel aged. And and and

832
00:38:41,920 --> 00:38:44,120
Speaker 1: is bringing the acidity. Dude, I can't help but the

833
00:38:44,200 --> 00:38:46,640
Speaker 1: love that style of beer, Like it convinces me that

834
00:38:46,680 --> 00:38:48,719
Speaker 1: this is like a health drink, you know, like like

835
00:38:48,760 --> 00:38:51,440
Speaker 1: as I drink this, it's like yes, yeah for real,

836
00:38:51,480 --> 00:38:54,400
Speaker 1: because it's mixed culture and so these are like live cultures.

837
00:38:54,600 --> 00:38:56,440
Speaker 1: It's it's not unlike yogurt and how they say that

838
00:38:56,520 --> 00:38:58,120
Speaker 1: it's good for your gut, good for your timing. You

839
00:38:58,160 --> 00:39:01,440
Speaker 1: also get that with these beers are made from wild

840
00:39:01,520 --> 00:39:03,640
Speaker 1: yeast strands and it can make it a little unpredictable,

841
00:39:03,680 --> 00:39:05,920
Speaker 1: but oh so delicious when it works. But yeah, I'm

842
00:39:05,920 --> 00:39:07,239
Speaker 1: glad you and I got to share this one on

843
00:39:07,280 --> 00:39:09,879
Speaker 1: the show today. And if you live near Atlanta or

844
00:39:09,920 --> 00:39:11,879
Speaker 1: in Georgia and you've never had a Money night beer,

845
00:39:11,960 --> 00:39:14,319
Speaker 1: we would highly recommend their stuff, especially some of these

846
00:39:14,400 --> 00:39:16,280
Speaker 1: nicer beers that they put out. Well, they keep expanding

847
00:39:16,280 --> 00:39:18,440
Speaker 1: their distribution footprint too. Social that's true. You want to

848
00:39:18,440 --> 00:39:20,080
Speaker 1: be able to get your Monday night beers in all

849
00:39:20,120 --> 00:39:22,239
Speaker 1: the Southeast pretty soon, I think that's true. Well, yeah,

850
00:39:22,280 --> 00:39:24,680
Speaker 1: I like my beers unpredictable, just like I like my

851
00:39:24,719 --> 00:39:27,480
Speaker 1: listener questions episodes. I think we had some good questions today,

852
00:39:27,960 --> 00:39:30,040
Speaker 1: but that's gonna do it for this episode. We really

853
00:39:30,040 --> 00:39:32,160
Speaker 1: appreciate you listening, and we'll have show notes up on

854
00:39:32,160 --> 00:39:35,200
Speaker 1: our website with links to some of the resources we mentioned.

855
00:39:35,440 --> 00:39:37,360
Speaker 1: That's at how to money dot com. That's right, and

856
00:39:37,400 --> 00:39:38,879
Speaker 1: you can also go to how do money dot com

857
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Speaker 1: forward slash ask if you would like to send us

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Speaker 1: your own listener question. We love taking these different questions.

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Speaker 1: A lot of these day we're about investing, but we

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Speaker 1: love hearing about all the random money situations that folks

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Speaker 1: find themselves in. Honestly, the more random they are, like,

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Speaker 1: the better, because no two situations are the same, uh,

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Speaker 1: And so I think that's one of the things we

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Speaker 1: enjoy about listener questions. So if you've been thinking about

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Speaker 1: sending us a question, head over to how do money

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Speaker 1: dot com slash ask uh and the instructions are there. Joel,

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Speaker 1: that's gonna be it, buddy for this episode. Until next time.

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Speaker 1: Best Friends Out, Best Friends Out,