Speaker 1: Welcome to Out of Money. I'm Joel, I'm Matt's and
Speaker 1: today we're answering your listener questions.
Speaker 2: Happy Monday everybody, as you are likely recovering from having
Speaker 2: lost one hour of sleep yesterday, well last night. Spring
Speaker 2: Ford is the worst.
Speaker 1: Man. Oh yeah, fall Back the absolute best.
Speaker 2: I remember realizing that for the first time as a
Speaker 2: freshman in college, someone mentioning that, and it was we're
Speaker 2: hanging out and it's like eleven thirty at night, thinking okay,
Speaker 2: maybe we should kind of wrap things up, but then
Speaker 2: someone said no, it's actually technically it's more like ten thirty, and.
Speaker 1: We're like, yeah, let's keep gaming, you'll.
Speaker 2: We kept the party going then because of that. Fallback
Speaker 2: is the best.
Speaker 1: Yeah, spring Ford is the worst. Hope you guys are recovering, Well.
Speaker 2: Yeah, this is our how to Money Monday episode. Though,
Speaker 2: we're going to hear from a listener who's asking for
Speaker 2: our favorite way to book a travel deal for all
Speaker 2: the folks out there who are looking to get some
Speaker 2: vacation under your belt this summer this spring. Another listener
Speaker 2: she's got some four to one K match changes there
Speaker 2: at her employer, who's it's getting a little more generous.
Speaker 2: It's thrown her for a loop. She's trying to figure
Speaker 2: out what's going on, and another listener is wondering what
Speaker 2: our take is on long term disability insurance. Maybe we'll
Speaker 2: even share whether or not we have long term disability ourselves.
Speaker 2: We'll get to that and more during our episode today.
Speaker 1: Buddy and ebe charging question too, Mattha will take so
Speaker 1: electric vehicles. If you want the electric vehicle to save
Speaker 1: you the most money, you got to figure out think
Speaker 1: about how you charge it and when you charge it.
Speaker 2: I don't know if there is anything else out there
Speaker 2: that Jiel thinks about more that he doesn't have than
Speaker 2: an electric vehicle.
Speaker 1: That's true that Yeah, you're right. One of these days though,
Speaker 1: I'll get back in the EB game. Have that Nissan
Speaker 1: lead for six years, loved it, that's right. I think
Speaker 1: evs are fantastic. Just you were an early adopter is
Speaker 1: what they're called, Joel. Yeah, and what do they say
Speaker 1: that you've earned it? Pioneers get slaughtered and I might
Speaker 1: have with my eighty mile range in Nissan Leaf, I
Speaker 1: see people selling those now.
Speaker 2: You can still drive it around for like twenty miles
Speaker 2: before the thing crapped out by the time you sold it.
Speaker 1: Well, I see people selling them now and it's amazing.
Speaker 1: They're like, uh, it really only gets about forty five
Speaker 1: miles which to charge these days.
Speaker 2: I'm thinking about it from a kids standpoint, like in
Speaker 2: that kind of what you want, it's like they can't
Speaker 2: get far from home before it's like a boomerang where
Speaker 2: they have to kind of like get back home, Like, yeah,
Speaker 2: I gotta charge charge the right.
Speaker 1: If you get that car for your kid, make sure
Speaker 1: you have triple A because you might need to tow
Speaker 1: it on occasion. It's true.
Speaker 2: Before we get going, I've actually got a frugal or
Speaker 2: cheap for you. And this is going to be part
Speaker 2: confessional as well. Oh yeah right, sure bring it. I
Speaker 2: think our listeners you, I think equas I know what
Speaker 2: I'm about to share, but listeners, hopefully should would get
Speaker 2: a kick out of this.
Speaker 1: I like playing priests to your confession.
Speaker 2: So obviously we've got a small business here that we run,
Speaker 2: and so obviously we have a business checking account, but
Speaker 2: we don't just have one business checking account. We actually
Speaker 2: have two separate banks who we bank with because.
Speaker 1: Of just the massive amounts of money that are gone
Speaker 1: exactly once you go above that two fifty. Just kidding,
Speaker 1: just kidding.
Speaker 2: Now, the reason that we have two separate bank accounts
Speaker 2: is because so we've always had a Capital one checking account.
Speaker 2: We got grandfathered in. It's a total, completely free account.
Speaker 1: One of the best business accounts. But then we found
Speaker 1: another one.
Speaker 2: It's great, there's another one. And we've talked about this company,
Speaker 2: this bank on the show before Leley. It's l I
Speaker 2: l I dot Co. And the reason we'd previously mentioned
Speaker 2: them it was, actually, I'm pretty sure it was in
Speaker 2: response to a listener's question, Oh yeah, and they're looking
Speaker 2: to find a place to stash their business funds for
Speaker 2: their small business, and we went and found this bank.
Speaker 2: And the reason we still have them is because they
Speaker 2: pay three percent in the savings account that you can
Speaker 2: link to the business checking account.
Speaker 1: And like, six nine months ago, is four percent? Wasn't
Speaker 1: it was?
Speaker 2: I think it was a little bit higher, but even still,
Speaker 2: three percent is fantastic, especially for.
Speaker 1: Business accounts which typically paid nothing.
Speaker 2: And so someone might ask, well, why are you keeping
Speaker 2: that Capital Wan account around, Well, it's because when we
Speaker 2: open that account with them, they send us a bunch.
Speaker 1: Of checks, a bunch of paper checks.
Speaker 2: We've got these big oversized almost you know, like the
Speaker 2: big oversized check that business.
Speaker 1: Is, right.
Speaker 2: They make you feel so legit. It makes you feel
Speaker 2: like a little kid, like you're writing fake checks. But
Speaker 2: I don't know, but we rarely write checks except for
Speaker 2: our four win k, which is with fidelity. The way
Speaker 2: it's set up, we have to send in a paper check.
Speaker 2: It's not something that we can do digitally. And I
Speaker 2: think folks can probably hear when we're going with this.
Speaker 2: In an effort to optimize, we keep most of our
Speaker 2: cash over in Leley, earning that interest, which, by the way,
Speaker 2: they charge you for the best rate, but of course
Speaker 2: you earn back more than what that rate is if
Speaker 2: you've got a decent amount of money in there. And
Speaker 2: so when I cut checks for the employer portion of
Speaker 2: our four wind k JUAL, I have to transfer money
Speaker 2: from Leey over to Capital one. And guess what I
Speaker 2: forgot to do in the most recent iteration reason.
Speaker 1: Yeah, got to send it over.
Speaker 2: There's just a lot financially going on with a business
Speaker 2: in my life. Completely slipped my mind, and so I
Speaker 2: saw the insufficient funds. Basically a bounce check is what happened.
Speaker 2: And so we got hit you and I four fifty each,
Speaker 2: I guess with a nine dollars insufficient funds charge. And
Speaker 2: so the question here is are we being frugal or
Speaker 2: cheap by having two separate accounts? And in this case
Speaker 2: it came back to bite us or you know, I
Speaker 2: dropped the ball basically as well. What I'm confessing here,
Speaker 2: but I want to know no word. You know it's
Speaker 2: worth it. I'm not mad at you if you're wondering, Yeah,
Speaker 2: thank you. Well, I think the question comes down to
Speaker 2: how onerous is it? And then how much are we
Speaker 2: actually making by having a higher interest rate from Ley
Speaker 2: and so part of it too, was just a testing
Speaker 2: for so we could offer good information to our listeners
Speaker 2: like you and O are guinea pigs of a sort
Speaker 2: from time to time for financial products to a certain extent.
Speaker 1: So for that reason alone, it was worth at least
Speaker 1: giving it a go. But point now that we've given
Speaker 1: both a go, they're both great accounts. Yeah, should we
Speaker 1: consolidate back to one? Maybe? Maybe just for simplicity.
Speaker 2: I like seeing that interest payment every single month. Yeah,
Speaker 2: and it more than pays for the It's a fifteen
Speaker 2: dollars a month charge and we make much more than that. Yeah, again,
Speaker 2: not because we have the vast quantities of money there
Speaker 2: in our business checking account, but enough in my opinion
Speaker 2: to handle making one digital transfer every three months, which
Speaker 2: is how often I typically do that.
Speaker 1: Yeah, so I think, yeah's let's hold onto both. I mean,
Speaker 1: I have frugal multiple.
Speaker 2: It sounds like you sounds like you're giving up the
Speaker 2: thumbs up frugal. I think so.
Speaker 1: And yeah, I think that's one of those things too.
Speaker 1: Where Lily, maybe for someone who has a small business
Speaker 1: that doesn't have much money sitting in there for long,
Speaker 1: the three percent interest might sound great, and you might
Speaker 1: be like, well, I haven't seen any other business accounts
Speaker 1: that offer a rate of interest like this. But if
Speaker 1: you don't have a decent chunk sitting there inside of
Speaker 1: your business account, which you and I have to do
Speaker 1: to pay other people, or when money just kind of
Speaker 1: sits for a minute before we pay ourselves, it's gonna yeah,
Speaker 1: have to cover rent, but futilities. Super small businesses, it's
Speaker 1: it's just we're very small business. But super small businesses
Speaker 1: might get you know, their eyes might pop open and
Speaker 1: be like, WHOA great, this is awesome, But in reality,
Speaker 1: it's probably not worth jumping through those hoops if you
Speaker 1: got to pay the fifteen bucks a month and you
Speaker 1: don't have much money earning interest.
Speaker 2: All right, The beer that you and I are going
Speaker 2: to enjoy during this episode, it's called a beer a missou.
Speaker 1: That's right. It's like tier massou, but beer. This is
Speaker 1: a gotta love a beer with a bad pun.
Speaker 2: An Imperial Milk porter. Buy six bridges and we will
Speaker 2: share our thoughts on this one at the end.
Speaker 1: Of the episode, no doubt. All right, if you have
Speaker 1: a money question, we'd love to take your question on
Speaker 1: the next ask htm episode. Just basically record a voice
Speaker 1: memo on your phone, email it over to us at
Speaker 1: how too Money pod at gmail dot com. And if
Speaker 1: you're like a little confused, just got to how to
Speaker 1: money dot com slash ask for the simple directions spelled out.
Speaker 1: Make it nice and easy for you. Matt, let's get
Speaker 1: to a question specifically about what to do when your
Speaker 1: employer changes the four h one K match that you're
Speaker 1: eligible for. By the way, this comes from listener Chelsea, Hi.
Speaker 3: Joel, and Matt. I had a question about an update
Speaker 3: that my company is making to the four to one
Speaker 3: K plan. Specifically how they structure the matching of employee contributions.
Speaker 3: So previously the way it worked was that the company
Speaker 3: matched contributions up to seven percent of eligible pay, and
Speaker 3: now they are dividing that into a three percent non
Speaker 3: elective contribution. So the company contributes three percent whether or
Speaker 3: not an employee pays into the four one K plan
Speaker 3: or not, and then they're also adding a four percent
Speaker 3: elective dollar for dollar match on top of that, so
Speaker 3: everybody gets three percent, and then if an employee contributes
Speaker 3: more of their own then they can get the full
Speaker 3: match up to seven percent. And previously I don't believe
Speaker 3: there was any non elective contribution.
Speaker 2: So.
Speaker 3: To me, it's it seems like the company is now
Speaker 3: paying more into the employee's four one K accounts, basically
Speaker 3: a three percent for everybody. It doesn't affect me because
Speaker 3: they've always contributed more than seven percent and gotten the
Speaker 3: full match. But I guess I'm just wondering why they
Speaker 3: would make this change.
Speaker 1: I'm sure it.
Speaker 3: Maybe has tax implications or something, but yeah, just curious
Speaker 3: in wondering if you could clear that up for me.
Speaker 3: Thank you.
Speaker 2: Oh, I think Chelsea's got a suspicious streaking her she's thinking, Hey,
Speaker 2: you guys are going to pull the wall over my eyes. No,
Speaker 2: that's I don't think that's actually the case.
Speaker 1: I think Chelsea, I get that instinct because it feels
Speaker 1: like in the financial world like they're trying to dupe.
Speaker 2: Yet there's they're gotcha's they're trying to get one over.
Speaker 2: Yet Yeah, all over the.
Speaker 1: Place, you and I we highlight scams or we highlight
Speaker 1: people who get taken advantage of, and so Chelsea's just alert.
Speaker 2: I don't want to become that person totally. No, I
Speaker 2: don't think that that's actually what's happening. It sounds like, Chelsea,
Speaker 2: and you didn't share what company you work for, but
Speaker 2: it sounds like it's a just a generous, solid company.
Speaker 2: It doesn't sound like that they're trying to the trick
Speaker 2: here or anything. I think they might be paying a
Speaker 2: bit more. Right, So you're saying, well, like, why would
Speaker 2: they do this? There are many reasons I think that
Speaker 2: we'll get to but bottom line, they're just making some
Speaker 2: of those matching funds easier to access, no matter what
Speaker 2: the financial status of the individual employee is. You, of course,
Speaker 2: you were brilliant to have always gotten the free money
Speaker 2: you've always gotten the full match, and that means that
Speaker 2: you've been contributing with the employer money included at least
Speaker 2: fourteen percent.
Speaker 1: Of your overall salary each year.
Speaker 2: Because I think she said she was even going above
Speaker 2: and beyond that, and so that's that's amazing, that's fantastic.
Speaker 1: That's ultimately where we want everyone to be. The fact
Speaker 1: that Chelsea was there even before she got an added
Speaker 1: incentive from her employer is great, it's laudable, and it's
Speaker 1: truly what most people should shoot for. Is I think
Speaker 1: a minimum saving trade of fifteen percent, and that you
Speaker 1: kind of alluded to this, Let's talk about why her
Speaker 1: employer is doing this. I think at least in part,
Speaker 1: they're probably doing it to ensure that every single employee
Speaker 1: is at least saving something for their future. This is,
Speaker 1: especially with Secure Act two point zero, kind of part
Speaker 1: of the push to get the average employee invested, many
Speaker 1: of whom don't invest at all if there's not an
Speaker 1: automatic opt in. And so, you know, financial literacy in
Speaker 1: our country is pretty bad. That's pretty self evident. And
Speaker 1: your employer, well, they might see that a decent chunk
Speaker 1: of folks are missing out on this perk altogether, like
Speaker 1: they're just not banking anything for their future. And maybe
Speaker 1: it sounds a little paternalistic, but I think of it
Speaker 1: as a good thing for employers to kind of watch
Speaker 1: out for that segment of the population and kind of
Speaker 1: force their hand in that way, although really it's the
Speaker 1: employer forcing their own hand to make those contributions.
Speaker 2: And sure, well, and you can always opt out. It's
Speaker 2: not like you don't have a choice, like you automatically
Speaker 2: get roll but enrolled, but if you don't want to
Speaker 2: continue to do that, it's just back out.
Speaker 1: You can back out.
Speaker 2: It's just a nudge in the right direction.
Speaker 1: There's as yeah, right, I think this is this is
Speaker 1: going to help write the ship at least for some
Speaker 1: of those people at least a little bit, right, getting
Speaker 1: them to invest something. And then you know, with these
Speaker 1: automatic contribution requirements becoming normal, this is just an on
Speaker 1: trend move for your employer, Chelsea, And it could also
Speaker 1: make budgeting more simple for your employer. This is another
Speaker 1: reason that they might be interested in doing this. Right,
Speaker 1: with elective contributions, it's hard to know what percentage of
Speaker 1: folks are going to invest and how much they're going
Speaker 1: to invest. And so the employer's like, wait, is Chelsea
Speaker 1: gonna max her four one K and we're going to
Speaker 1: be giving the full match to her? And what about
Speaker 1: other people? What are they going to do? Well, now
Speaker 1: they're going to have at least a better idea of
Speaker 1: how much the match overall each year is likely going
Speaker 1: to cost them. I think it just makes for easier
Speaker 1: financial planning for your employer, so maybe it feels a
Speaker 1: little more generous, and it also just gives them a
Speaker 1: little more future knowledge about what they're gonna have to
Speaker 1: fork over.
Speaker 2: Yeah, I think that's definitely true. It's both for the benefit,
Speaker 2: I think of the employer, but also the employee because
Speaker 2: from an employee standpoint, it's like, hey, we're all in
Speaker 2: this together, like we are all saving for our future.
Speaker 2: There's like a cohesive team sort of like can do attitude. Sure,
Speaker 2: and I think that that is well, especially for new hires.
Speaker 2: You know, Let's say you're look, you're considering a few
Speaker 2: different employers and you've got this one and they're saying, hey,
Speaker 2: no matter what, and this isn't going to affect your pay,
Speaker 2: but you're going to be enrolled in a four and
Speaker 2: K where you get a three percent match of your salary.
Speaker 2: It feels like free money. There's something that's really attractive
Speaker 2: about that that I think I would be drawn to,
Speaker 2: especially if I was early in my career.
Speaker 1: Well, I think the other thing that maybe goes underrated,
Speaker 1: undernoticed is those benevolent employers. They tend to get good
Speaker 1: street cred. I think about the employers in our town,
Speaker 1: matt where we live, and there are companies who just
Speaker 1: constantly make the headlines about being great places to work,
Speaker 1: and part of that is often what the benefits are.
Speaker 1: And some of these companies just have superior matches or
Speaker 1: better four one K plans and.
Speaker 2: Completely free healthcare where everything is covered, including dude.
Speaker 1: Man, the word gets around in your network and people
Speaker 1: are like, oh, ye, you should come over here to
Speaker 1: work at mail Trimp because hey, they got these like
Speaker 1: cool benefits that most people don't offer, and that's just
Speaker 1: great press for anybody out there who's looking for work.
Speaker 1: They're like, yeah, maybe well apply over there.
Speaker 2: It's funny that you mention that's totally what I was
Speaker 2: thinking of when I mentioned the healthcare one, because I
Speaker 2: get like I considered applying for a job like a
Speaker 2: long time begue, because I had a bunch of friends.
Speaker 2: So you're gonna say last week, I was gonna last week. Well,
Speaker 2: that's the thing that this was years ago. I don't
Speaker 2: know if they've changed their benefits since they were purchased
Speaker 2: by the big company that took them over. But even still, yes,
Speaker 2: like you said, I think that's something that absolutely that
Speaker 2: is worth considering.
Speaker 1: It's like that halo effect, right. The company gets and
Speaker 1: the more generous they are with their employees, the more
Speaker 1: likely they are to get lauded for that, and that's
Speaker 1: going to attract more great employees totally.
Speaker 2: And it's again so it's not just for the benefit
Speaker 2: of the employee, but for the employer as well. I
Speaker 2: think you're talking about budgeting, but I think it's just
Speaker 2: going to be more I think it could be easier
Speaker 2: to administer as well, when you know that everyone is
Speaker 2: on board and that out of minimum they're getting a
Speaker 2: three percent match. Like you said, it's good from a
Speaker 2: planning standpoint, but it's gonna be much easier to administer.
Speaker 2: I think the other big thing that this could do
Speaker 2: for your employer is that it allows them to achieve
Speaker 2: us known as safe harbor status by contributing to everyone's
Speaker 2: for when who works throughout the company. They can avoid
Speaker 2: certain non discrimination testing requirements, and this can be just
Speaker 2: a big pain in the butt that the something that
Speaker 2: the IRS requires. Many small businesses ought to go this route,
Speaker 2: and basically it's just easier to ensure that their plan
Speaker 2: is completely compliant with government regulations. And the cool thing
Speaker 2: for employees about a safe harbor forlwan K is that
Speaker 2: the three percent match also vests immediately. It happens right away,
Speaker 2: so there's no need to wait a year or two
Speaker 2: to ensure that those funds are actually years before they
Speaker 2: have the ability to claw them back.
Speaker 1: Yeah.
Speaker 2: Yeah, And you and I we can easily count on
Speaker 2: the dollars being yours.
Speaker 1: You and I were actually talking about that at lunch
Speaker 1: time before we recorded Matt and just how with the
Speaker 1: job hopping that happens so much in today's world, especially
Speaker 1: younger workers not staying at jobs nearly as long those
Speaker 1: You've got to look at the fine print of how
Speaker 1: long it takes for that match to vest, because if
Speaker 1: it's two years, if it's three or four years, and
Speaker 1: you're not there that long, all those match dollars could
Speaker 1: just like fly away vanish out the window, and so
Speaker 1: that it's nice to know that in one of these
Speaker 1: sorts of four to one K plans, the match is
Speaker 1: vested immediately, there's no risk of losing it.
Speaker 2: Yeah, i'd call those phantom four one ks. Yeah, that'd
Speaker 2: be the Friday flight headline. That's a it's a good term.
Speaker 2: I'm sure it's been used before. Just take that one away, Okay, Yeah,
Speaker 2: I actually probably have already used that. I probably stole
Speaker 2: it from somebody just unknowingly. There's I think maybe a
Speaker 2: potential downside for you, and that I just want to
Speaker 2: highlight that you could dial back your paycheck deduction two
Speaker 2: four percent right to where you're still getting the full
Speaker 2: seven percent from your employer because of this change, but
Speaker 2: your overall savings rate would go down, you know, And
Speaker 2: I would just say, we're ok with you taking the
Speaker 2: extra money and putting it into like, let's say a
Speaker 2: roth IRA or an HSA or a different retirement vehicle
Speaker 2: if your funds would be better suited. If you're like, hey,
Speaker 2: I'm gonna get the full match, which means I can
Speaker 2: reduce my overall contribution, but I hey, I'm gonna take
Speaker 2: those funds and put them in another vehicle that's going
Speaker 2: to be just as good for my future.
Speaker 1: That's great, But don't let this non elective match change
Speaker 1: cause you to save and invest less overall. That's the
Speaker 1: only way I think this could have a negative impact.
Speaker 1: If you like cool, I'm just going to down my
Speaker 1: contributions back. I'm investing instead of that fourteen percent, only
Speaker 1: eleven percent, and I'm just going to consume the rest
Speaker 1: and up upgrade my budget, increase my spending. That is truly,
Speaker 1: as I thought about it, the real only downside from
Speaker 1: your perspective that I could think of.
Speaker 2: And that's only I mean. So, yeah, you're taking a
Speaker 2: more conservative financial approach to the long term, making sure
Speaker 2: you have enough set aside. That's only a downside if
Speaker 2: let's say you have only been contributing towards your four
Speaker 2: one K or saving four retirement for like five years,
Speaker 2: or let's say you are early earlier on in your career.
Speaker 2: But let's say you've been doing this for twenty, maybe
Speaker 2: even thirty years. I see this as not necessarily a
Speaker 2: downside if you now have the ability to perhaps pull
Speaker 2: back a little bit on your savings rate, and that
Speaker 2: allows you to prioritize some other financial other not financial goals,
Speaker 2: but other Oh yeah, financial goals too, like you gotta yeah,
Speaker 2: Like those still take money, and so not knowing how
Speaker 2: much you have set aside, that's the only thing that
Speaker 2: makes me want to qualify the fact that that might
Speaker 2: be a negative, because it could be a positive. It
Speaker 2: could be a great thing. I think Chelsea, either way,
Speaker 2: is going to continue to She sounds like a saver,
Speaker 2: so she's going to get after it. And I love
Speaker 2: that more of her fellow employees are going to have
Speaker 2: the chance to get that nest egg rolling. Oh you know,
Speaker 2: it takes a little bit. Sometimes it takes a little
Speaker 2: kick in the pants, and in this case, the employee
Speaker 2: is doing that.
Speaker 1: For for folks. And now when she passes the HR
Speaker 1: person in the parking garage, she doesn't have to give
Speaker 1: them the stink eye because she's like, way, oh no,
Speaker 1: it's all good.
Speaker 2: She's like, oh, how come, Chelsea. She doesn't look nearly
Speaker 2: as suspicious as we would pass each other. But we
Speaker 2: do hope that that answers your question. Gives you plenty
Speaker 2: to think about, Joe, We've got more to get to
Speaker 2: including we're talking about retirement accounts here. We're going to
Speaker 2: hear from another listener who has a proliferation of retirement
Speaker 2: account options available to him. We'll get to that and
Speaker 2: more right after this.
Speaker 1: All right, Matt, we're back. Let's keep the ask HDM
Speaker 1: questions rolling. This next question is specifically about a benefit
Speaker 1: that you get from your employer, but is it going
Speaker 1: to be enough to cover you in a time of need?
Speaker 4: Hi, guys, this is Mike from Maryland, longtime listener and
Speaker 4: I love the show. My question for you is about
Speaker 4: long term disability policies. I'm a healthcare worker and I
Speaker 4: bought a disability policy three years ago that pays out
Speaker 4: about one hundred thousand a year, with riders to automatically
Speaker 4: injust for inflation. I recently became a federal employee, literally
Speaker 4: a week before the new administration came into office, and
Speaker 4: reading through my benefit package, I saw that I have
Speaker 4: the opportunity to buy into a policy through the federal government.
Speaker 4: If you were in my position, would you drop the
Speaker 4: private policy and join the government policy. There's a couple
Speaker 4: of reasons I'm hesitant to drop my policy. One is
Speaker 4: I work for an agency that the current administration is
Speaker 4: not very fond of, and being a new employee in
Speaker 4: the probationary period. Even though it's a federal job, I'm
Speaker 4: not one hundred percent sure how secure my job is.
Speaker 4: Second is I prefer not to rely on my employer
Speaker 4: completely when it comes to my livelihood. For example, I
Speaker 4: could purchase mal practice insurance through my employer, but I
Speaker 4: always keep a private policy because in the end, I
Speaker 4: don't think the company will always have my best interests
Speaker 4: in mind. And third is, I've never stayed at a
Speaker 4: job for more than two years, sustaining twenty years and
Speaker 4: keeping the policy seems daunting, and I know it will
Speaker 4: be more expensive to restart the policy when I'm older.
Speaker 4: Curious to know what you think?
Speaker 2: Thanks, all right, long term disability insurance.
Speaker 1: Policy, and I start one thing out there before we
Speaker 1: get into long term dispelling Sure. Just when Mike mentioned
Speaker 1: he works for the federal governments and we talked about
Speaker 1: this on a recent Friday flight with what doge has
Speaker 1: been up to? Well, that's true. Just prioritize your savings
Speaker 1: and be prepared for whatever might come down the pike.
Speaker 1: It sounds like in Mike's case, his position and might
Speaker 1: be disfavored. So I just want to yeah, put that
Speaker 1: blinking in red on his radar, just to be prepared
Speaker 1: in case he ort to lose his job or something
Speaker 1: like that.
Speaker 2: Sure, Well, the fact is Mike has done his homework.
Speaker 2: You know, he's purchased his own long term disability policy
Speaker 2: before even taking this job. And we think that most folks,
Speaker 2: not everyone out there, but we think most folks need
Speaker 2: term life insurance. We talk about it fairly regularly, but
Speaker 2: disability insurance it kind of gets a short end of
Speaker 2: the stick. Talk about it, Yeah, nearly as much, and
Speaker 2: it might even be more crucial. And that's because stats
Speaker 2: show that one in four folks will actually become disabled
Speaker 2: at least for a short period of time before they retire.
Speaker 2: And so Mike, if you were to become disabled for
Speaker 2: a couple of years, well, that's going to have a
Speaker 2: significant impact on your income most likely. And while there
Speaker 2: might be some different programs out there, like state or
Speaker 2: government benefits that might be open to you, getting those
Speaker 2: benefits is a it can be a hassle, it's a process,
Speaker 2: and they likely won't provide anything close to what your
Speaker 2: current long term insurance policy is willing to pay out.
Speaker 1: Yeah, it might be a drop in the bucket, right
Speaker 1: compared to what you need compared to your current income,
Speaker 1: and so that could help, but it's it's certainly not
Speaker 1: going to cover the vast majority of your expenses. So
Speaker 1: having a disability insurance policy, yeah, it could could help
Speaker 1: you if you can't work for an extended period of time.
Speaker 1: But you might not need the one you purchased on
Speaker 1: the open market anymore thanks to this new policy offered
Speaker 1: by your work. I say, you might not. But there
Speaker 1: are a few caveats here, by the way, in our opinion,
Speaker 1: most folks don't need a short term disability policy.
Speaker 2: There are oh good opportunity to talk about the duck insurance.
Speaker 1: That's right, Yeah, yeah, yeah, that's what that's that's what
Speaker 1: AFLAC is typically trying to sell you, Like if you
Speaker 1: get hurt.
Speaker 2: I try to avoid the actual names of companies just
Speaker 2: in case they want to spised on the podcast.
Speaker 1: Well, but you will not hear us voicing for a flag,
Speaker 1: that's for sure true. And so yeah, that's that's what
Speaker 1: an emergency fund is supposed to help with. So some
Speaker 1: folks might say, oh, yeah, let me get the short
Speaker 1: term disability policy just in case I get injured, but
Speaker 1: it doesn't last that long. Well, the emergency fund. We
Speaker 1: think of that as self insuring, as essentially your short
Speaker 1: term disability policy that you are covering with funds that
Speaker 1: you have in a high heel savings account. We like
Speaker 1: the idea right of self ensuring for a potential six
Speaker 1: month work drout or something like that if you were
Speaker 1: to lose your job. It's why we're so keen on
Speaker 1: saving up a substantial emergency fund, and it's part of
Speaker 1: our money gears if you go check it out at
Speaker 1: how money dot com. But a long term disability policy
Speaker 1: that can particul is something we're more keen on. It's
Speaker 1: something that can help if something happens to you and
Speaker 1: you can't work for quite a while, for an extended
Speaker 1: period of time, and my given your particular circumstances, I'd
Speaker 1: be reluctant. I would say to let go of this
Speaker 1: individual policy right now.
Speaker 2: Well, and I think that it's clear that Mike is
Speaker 2: he's hesitant to give this thing up. And I think
Speaker 2: this in part comes down to your risk tolerance and
Speaker 2: how comfortable you are playing around the edges essentially clips
Speaker 2: to the edge of the cliff, And so if you
Speaker 2: are someone who likes to be a bit more independent
Speaker 2: or if you don't have others who you can count
Speaker 2: on for income. This is absolutely something that you're going
Speaker 2: to be more drawn towards. But at the same time,
Speaker 2: like let's say you're thinking, Okay, what would happen if
Speaker 2: I couldn't work, if I couldn't earn an income for
Speaker 2: a couple of years, what would that scenario look like?
Speaker 2: And if you've got a mom who would like basically
Speaker 2: make you move home and take care of you and
Speaker 2: help cover your expenses or something like that, Okay, well
Speaker 2: maybe or you know, you've got some parents who are like, man,
Speaker 2: I know that they would love to have me back
Speaker 2: back home in my hometown, back in my childhood bedroom.
Speaker 2: You know, like if that's the kind of scenario that
Speaker 2: and there's like in a really solid financial position, well
Speaker 2: guess what, I don't think long term disability is something
Speaker 2: that you wouldn't necessarily want to consider all that much.
Speaker 1: And so, yeah, a lot of other backstops.
Speaker 2: A lot of it comes down to your individual situation. Yeah, yeah,
Speaker 2: and just.
Speaker 1: Especially with the price of it, which is something we
Speaker 1: need to talk about too totally.
Speaker 2: And it comes down to like, if you have a
Speaker 2: I don't hear him mentioning a partner necessarily and so
Speaker 2: it's kind of it comes down to him and his
Speaker 2: ability to earn an income. But if you have a partner,
Speaker 2: a partner who can work or who is currently working,
Speaker 2: it's like, okay, well we're not going to necessarily be
Speaker 2: in dire straits. If the worst were to happen to me.
Speaker 1: That dephrased some of that risk. The emergency funds as
Speaker 1: well as another paycheck coming into the household, maybe having
Speaker 1: kids yet that you would also have to support less responsibility. Yeah,
Speaker 1: all those things would allow you to take a little
Speaker 1: bit more risk. And it sounds like one of the
Speaker 1: things Mike said is he doesn't necessarily plan on staying
Speaker 1: in this job for too long, or any job for
Speaker 1: too long. And I think even if you wanted to, Mike,
Speaker 1: it sounds like your job might not be super secure.
Speaker 1: But if neither of those things were true, we might
Speaker 1: have different advice. Because opting for the work provided policy only,
Speaker 1: you'd likely be paying a fair amount less every single
Speaker 1: month for that coverage. But for everyone listening, I would
Speaker 1: say double check and see what the actual coverage includes.
Speaker 1: Because employer provided insurance policies rarely provide enough coverage on
Speaker 1: both the life and disability front. So you might say, oh, great,
Speaker 1: a free plan from my employer. Fantastic, I don't have
Speaker 1: to buy my own policy because I am covered. And
Speaker 1: that's just like maybe but probably not right. Sometimes doubling
Speaker 1: up actually makes the most sense. I think, you know,
Speaker 1: taking the minimum amount of life insurance for insta for
Speaker 1: most employer plans and getting extra coverage on your own
Speaker 1: often makes the most sense. Matt. Back when I worked
Speaker 1: for a company getting a W two, they offered life
Speaker 1: insurance at one x your pay, and so that just
Speaker 1: wasn't enough life insurance, but you could buy more through
Speaker 1: the company. But the race that they would charge if
Speaker 1: you were to buy through the company were far in
Speaker 1: excess of what I could get on the private market.
Speaker 1: And so let's say I was uninsurable, that I'd had
Speaker 1: a bunch of different health catastrophes, then maybe it would
Speaker 1: make sense for me to get life insurance, more life
Speaker 1: insurance through my employer, because it would be prohibitively expensive
Speaker 1: on the open market. But for young healthy people in particular,
Speaker 1: not getting more insurance through your employer and getting it
Speaker 1: on the private market means you're going to have enough coverage,
Speaker 1: it means it's going to cost less.
Speaker 2: Yeah, just because there's a policy available to you through
Speaker 2: your employer doesn't mean it's the best nor necessarily the
Speaker 2: most cost effective way to go about it. And it
Speaker 2: sounds like Mike's you know that he's got his own
Speaker 2: solid policy there that's going to pay out well if
Speaker 2: he does encounter a disability. And he also mentioned the
Speaker 2: inflation adjustment as well. There's an inflation adjustment clause and
Speaker 2: that's pretty massive, Like that's a huge deal. And so
Speaker 2: I think if I were these days, yeah, yeah, well
Speaker 2: hopefully yeah, hopefully re pass the worst of it, but man,
Speaker 2: it's inflation. It is sticky. If I were you, Mike,
Speaker 2: I would hang on to that policy at least for now.
Speaker 2: And by the way, for folks out there who might
Speaker 2: be considering this, if you are looking into it, just
Speaker 2: know that a policy out there on the open market,
Speaker 2: it's not cheap. It often costs one to three percent
Speaker 2: of your annual salary. It depends on a number of factors,
Speaker 2: elimination periods and things like that are built into your
Speaker 2: specific policy. But given the stats, it is an insurance
Speaker 2: policy that more folks should consider that being said, I
Speaker 2: don't want to discourage folks, but I don't personally have
Speaker 2: a long term disability policy in play strol, do you?
Speaker 1: No? I do not either, But I will say we're
Speaker 1: risky dudes. I guess if I lost my voice completely
Speaker 1: that would be that potentially put me in a bad position.
Speaker 1: But talking about kind of how much risk we.
Speaker 2: Can, there's also other things well here before you keep moving, Yeah,
Speaker 2: like you're touching on like a specialized career, right, and
Speaker 2: if you, let's say you're like a concert pianist and
Speaker 2: like this is the only thing that you can do
Speaker 2: and you make a ton of money doing that, that's
Speaker 2: the kind of scenario, the kind of situation where it
Speaker 2: might pay to go with some long term disability.
Speaker 1: Or they're literally people who have like football players pianists
Speaker 1: who have insurance policies on the parts of their body
Speaker 1: that make them income. Right, they're specialized policies for those people.
Speaker 1: And you and I don't think we qualify to get
Speaker 1: that sort of level of insurance from our you know,
Speaker 1: from our carriers.
Speaker 2: But anybody and can talk like I do, and most
Speaker 2: folks actually can speak a little bit better.
Speaker 1: Than I can.
Speaker 2: Dole but that's an important consideration though, like if you
Speaker 2: are flexible to doing other like I've done lots of
Speaker 2: different things in my life. I don't have like a
Speaker 2: career that looks incredibly specialized. I'm very open to being
Speaker 2: flexible to trying new things. Okay, and I we've even
Speaker 2: talked about this, and she's like, well, I would go
Speaker 2: to work if something happened to you. It's like, okay, cool,
Speaker 2: these are conversations that are important now. And if you
Speaker 2: broke your back, maybe I would host for by myself
Speaker 2: for a little bit and then you'd be back on
Speaker 2: the mic, hopefully a no time, like they're also hosted
Speaker 2: from the bed. Just be like, all right, this is true.
Speaker 2: That's just what it looks like, right, we could do that.
Speaker 1: I think the other thing to note of why like
Speaker 1: I don't have a policy is I'm comfortable holding on
Speaker 1: to more cash self ensuring more even for long term
Speaker 1: potential disability needs. And you're right, Matt, there's just a
Speaker 1: lot of flexibility I think that we have that. Maybe
Speaker 1: not everybody has exactly, and so I would say, yeah,
Speaker 1: it's not for everyone, but more people should consider it.
Speaker 2: Yeah, And it depends too how close you are to retirement,
Speaker 2: because that means you're you just you've got more money
Speaker 2: set aside. You're less dependent on your income to provide
Speaker 2: for your standard of living as opposed to your investment
Speaker 2: dollars doing some of that heavy lifting.
Speaker 1: The culture you are to financial independence, the less likely
Speaker 1: it makes sense to.
Speaker 2: Per But let's get to our next listener question. This
Speaker 2: is from a listener who is considering a number of
Speaker 2: different options to make sure that he is properly prepared
Speaker 2: for retirement.
Speaker 5: Hi, Matt and Joel, this is Greg from Los Angeles.
Speaker 5: I really enjoy the show and all the knowledge and
Speaker 5: insight that it provides, and I keep telling my friends
Speaker 5: and coworkers about it to help give them a better
Speaker 5: financial footing. I am a public servant, so I am
Speaker 5: contributing towards a pension when I retire. Over the last
Speaker 5: couple of years, I have been maxing out my roth IRA.
Speaker 5: My question is I am in the beneficial position of
Speaker 5: potentially earning more than one hundred and forty thousand in
Speaker 5: the next couple of years, and I wanted to get
Speaker 5: your thoughts about you contributing to my personal wrath. Should
Speaker 5: I continue to do the roth Ira and once I
Speaker 5: get to that limit, just do.
Speaker 2: A backdoor WROTH.
Speaker 5: Or what I'm finding from my employer is that we
Speaker 5: have the ability to contribute to a savings account which
Speaker 5: is a four to oh one K, and I'm wondering
Speaker 5: if I should just start that post tax and roll
Speaker 5: over my current roth IRA. I am in the process
Speaker 5: of also my pension. I contribute to the four fifty
Speaker 5: seven offered by my employer, and this four oh one
Speaker 5: K would then be a third bucket to fill, either
Speaker 5: pre or post tax. Appreciate all your time and consideration
Speaker 5: and wishing you the best in coffee and beer.
Speaker 1: Oh Greg, thank you first of all for spreading the word,
Speaker 1: for telling other people about the show. We really appreciate it.
Speaker 1: If every single one out there listening told one friend,
Speaker 1: just told one friend, just proselytized a little bit about HTM,
Speaker 1: we double our listenership. Joe. That's how it works, Matt.
Speaker 1: So thank you, Greg. Appreciate that. And by the way,
Speaker 1: great coffee and beer, they really are inexpensive ways in
Speaker 1: modern way, in moderation to bring some extra joy to
Speaker 1: your life, even.
Speaker 2: It can be in expensive ways sometimes ye like we
Speaker 2: say it's our craft beer equivalent for a reason.
Speaker 1: We don't.
Speaker 2: We're not spending the bare minim on our beard drool.
Speaker 1: No, and you're not on your coffee either.
Speaker 2: In particular, I've actually I've kind of changed it all
Speaker 2: them back a little bit.
Speaker 1: Yeah. Is that partly because coffee bean prices have gone
Speaker 1: up so much that the kinds of stuff is going
Speaker 1: to have?
Speaker 2: You personally experienced that if you were just to look
Speaker 2: at what they call it, I mean interesting, I shop
Speaker 2: mostly at Costco, but yes, I look at the price.
Speaker 2: What if it's impacting the cheaper beans in because the
Speaker 2: nicer stuff. So okay, So first of all, personally, all right,
Speaker 2: try not to let this be a massive tangent. But
Speaker 2: I have personally dialed back my coffee consumption. I don't
Speaker 2: know if you've noticed, but I don't make coffee here
Speaker 2: in the office.
Speaker 1: Anymore, now that you point it out, Yeah, no, I
Speaker 1: didn't think about that.
Speaker 2: It's been a couple months and I realized, you know what,
Speaker 2: I feel like my coffee drinking has gotten out of hand,
Speaker 2: and not from like a health standpoint. I could totally
Speaker 2: fall asleep at night, just fine, but I realized it
Speaker 2: was something I wasn't needing I guess, I don't know.
Speaker 2: It felt like it was getting just a bit out
Speaker 2: of hand, in particular when I was and I was
Speaker 2: just buying some of the nicer stuff, Like some of
Speaker 2: the bags I was mining. Man, it's like a ten
Speaker 2: ounce bag or like a twelve ounce bag for like
Speaker 2: twenty five bucks instead of what I'm talking about were
Speaker 2: fancy coffee that you're looking at like over two dollars
Speaker 2: an ounce. But I think Kate and I have found
Speaker 2: the sweet spot specifically, if folks want to know countercultures,
Speaker 2: Big Trouble. They sell it at Whole Foods, which is
Speaker 2: on our path to school Hu for carpool, and oftentimes
Speaker 2: you can go in there and you get it on sale,
Speaker 2: and like when it's on sale, I'm paying less than
Speaker 2: a dollar an ounce. And this is like solid, really
Speaker 2: tasty stuff that we're drinking on the regular. I still
Speaker 2: go out and splurriage and we'll get like a bag
Speaker 2: of the nice stuff, or someone gives me some really
Speaker 2: good stuff, which you like to do. Yeah, one of
Speaker 2: our local roasters. That's phenomenal. I'm still drinking, but those
Speaker 2: bags are expensive. I'm still drinking the Kirkland signature. But
Speaker 2: I don't know any better, and I kind of don't
Speaker 2: want to know better. I'm like purposely blindfolding myself. That's
Speaker 2: to fancy coffee to make sure that I don't spend
Speaker 2: too much. I'm trying to do that with wine. But
Speaker 2: the more wine I drink, I'm like, oh, that's now
Speaker 2: I know. I don't even know how to say it.
Speaker 1: Rio hoo.
Speaker 2: Yeah, it's like a Spanish wine. I had like one
Speaker 2: of those recently and I was.
Speaker 1: Like, oh, this is I like this. Okay, so sorry,
Speaker 1: we'll stop this changent very soon, but I'm going to
Speaker 1: pick you up a bottle. I haven't tried the Kirkland
Speaker 1: signature version of the Rio. I wonder if it's anything. Oh,
Speaker 1: we'll give it a try. Yeah, okay, I have to
Speaker 1: give it a go. But let's get to Greg's question, Matt,
Speaker 1: because that's what we do on the show, is answer questions.
Speaker 2: At some point. We will get to your question, Greg,
Speaker 2: after we talk about all the things that we want
Speaker 2: to talk about this right, this is our show, after all, Greg,
Speaker 2: not yours. Hey, he's the one that brought up coffee
Speaker 2: and beerus. I'm assuming he's a fan as well.
Speaker 1: If you didn't want that tangent. You shouldn't have asked
Speaker 1: for it. Well, congrats on having a pension available to you.
Speaker 1: That's that's becoming more rare obviously. But what should you do, Matt,
Speaker 1: when you're making the big bucks and you can't contribute
Speaker 1: directly to a roth ira? That is a question that
Speaker 1: is actually a good question to have. It's a good
Speaker 1: problem to have because it means you're moving up the
Speaker 1: income spectrum. And some people they think of that as
Speaker 1: a sad day, but I think of it as like
Speaker 1: a happy day because it means you're crushing it when
Speaker 1: it comes to the money you're making. I would rather
Speaker 1: make more and lose access then make less and still
Speaker 1: be ROTH eligible, like if I had to, you know,
Speaker 1: had to pull the lever on that choice.
Speaker 2: It's like option A or option B.
Speaker 1: Which one would you choose? Is okay? Well?
Speaker 2: I hate that I ca contribute directly to a wrath,
Speaker 2: but it means good things, right, And you know, Greg
Speaker 2: must be single because the income limit for joint filers
Speaker 2: is like two hundred and thirty thousand dollars, he cates
Speaker 2: one hundred and forty six thousand dollars for single individuals.
Speaker 1: But as you crust that threshold. My first suggestion would
Speaker 1: be to invest more overall dollars, which could help you
Speaker 1: remain ROTH eligible one escially, I guess the solution more
Speaker 1: people should consider him totally.
Speaker 2: Yeah, So if Greg were to start contributing to his
Speaker 2: traditional four one K so not his WROTH, if that's
Speaker 2: an option that's available to him, WROTH war one K
Speaker 2: no no no no, go with a traditional four onin K,
Speaker 2: and that could reduce your modified adjusted gross income, allowing
Speaker 2: you to keep contributing directly to a WROTH, meaning that
Speaker 2: there are going to be no extra hoops for you
Speaker 2: to jump through. Basically, if you're right on that line,
Speaker 2: every dollar you contribute to a pre tax account, it's
Speaker 2: going to help you to lower that modified adjusted gross income,
Speaker 2: potentially keeping you under that income threshold, which can mean
Speaker 2: you can keep talking money into your roth ira L
Speaker 2: like clockwork, just like you always have, and then you
Speaker 2: know if your income does go up substantially over time,
Speaker 2: or if you aren't keen on investing more money there.
Speaker 1: There's other ways to pull this off as well, which
Speaker 1: you've touched on, but I think that's sometimes matts. People
Speaker 1: are asking about, oh, student loan payments. If I contribute
Speaker 1: more to my retirement account, I might be able to
Speaker 1: lower those student loan payments. And I think that's just
Speaker 1: another reason yes, consider investing more, particularly in those years
Speaker 1: where it might make a difference in your monthly budget,
Speaker 1: right and in this case where it might make a
Speaker 1: difference in your WROTH eligibility and greg. You know, higher
Speaker 1: earners such as yourself can take advantage of what's known
Speaker 1: as the backdoor wroth. So that's something else that's worth mentioning.
Speaker 1: It's not another account some people think that it is.
Speaker 1: It's a process that you go through that involves basically
Speaker 1: extra hoops. And so what happens is you contribute money
Speaker 1: to your traditional IRA and then you convert those dollars
Speaker 1: into your wroth IRA instead of making that direct contribution
Speaker 1: to the wroth. And what you need to know is
Speaker 1: you're not claiming any sort of tax deduction for that
Speaker 1: initial contribution to your traditional IRA. You'll make what's known
Speaker 1: as a non deductible contribution. Read up on the details.
Speaker 1: We've got a piece on this up on our website.
Speaker 1: We'll link to it in the show notes. But the
Speaker 1: backdoor wroth can be the perfect way for you to
Speaker 1: basically keep contributing to that account if your income continues
Speaker 1: to rise. And we love that you're trying to continue
Speaker 1: to put in after tax dollars into investments, because yeah,
Speaker 1: I think having more WROTH dollars Matt is just going
Speaker 1: to mean more tax flexibility for Greg when he gets
Speaker 1: into his retirement years, he's going to have kind of
Speaker 1: the ability to dial in his tax rate if he
Speaker 1: has two bucks to pull from.
Speaker 2: And the last strategy that Greg mentioned contributing to his
Speaker 2: four one K and then converting those funds to a
Speaker 2: roth IRA. That's what's known as a mega backdoor WROTH,
Speaker 2: which I know is kind of ridiculous, gets a bit confusing,
Speaker 2: But if you've got even more money that you want
Speaker 2: to invest on top of maxing out your roth IRA,
Speaker 2: but contributing to that would allow you to invest even
Speaker 2: more dollars there towards your taxi managed rath IRA. So
Speaker 2: and with him, he's talking about all these options that
Speaker 2: he's got available to him, right Like he's got the pension,
Speaker 2: he's got the roth iray that he's been maxing out
Speaker 2: every year. But then on top of that, contributing to
Speaker 2: your employer plan as well, that's I feel like he's
Speaker 2: entering Greg's entering beast mode sort of territory. He's like
Speaker 2: or god mode you remember doing in Doom. Oh yeah,
Speaker 2: back in the day. His eyes have glazed over, they're
Speaker 2: like white, and he's like indestructible. From the retirement standpoint, it's.
Speaker 1: An embarrassment of riches essentially that Greg has here. And
Speaker 1: I will say too, Matt, I feel like I got
Speaker 1: a little confused listening to Greg's question. I just want
Speaker 1: to make sure that we're not missing anything here. So
Speaker 1: one thing I would suggest Greg, since there are there's
Speaker 1: a lot of money you're investing at this point, and
Speaker 1: there are a lot of options open to you, I
Speaker 1: think it might make sense to talk to a financial advisor.
Speaker 1: We have talked about two different places that we suggest
Speaker 1: people go find an advisor. There's hellonectarine dot com, and
Speaker 1: then there's Domain Money. Those are both too great places
Speaker 1: to turn Domain Money likes to. They're all about giving
Speaker 1: you kind of an all encompassing financial plan, and so
Speaker 1: the cost is more expensive. Hello Nectarine, I've actually went there, Matt.
Speaker 1: It used to be one hundred and fifty bucks flat
Speaker 1: for an hour. Now they have advisors who charge between
Speaker 1: one hundred and fifty and three hundred dollars an hour,
Speaker 1: so they've changed their business model, and more of those advisors.
Speaker 2: Are offering premium model.
Speaker 1: Yeah, and more of those advisors are now offering domain
Speaker 1: money ish sort of plans too. So if you're like
Speaker 1: I just got a few questions about this, that might
Speaker 1: be a great place to go. Especially again, you don't
Speaker 1: want to let the tax tail wag the dog, but
Speaker 1: you do want to make sure you're making a smart
Speaker 1: decision for your future and for your current and future taxes,
Speaker 1: So it might make sense to pay somebody for a
Speaker 1: couple hours of their time to kind of dice the
Speaker 1: details here totally.
Speaker 2: So on the note of planning for your future, one, well,
Speaker 2: I guess one caveat too. It's always great to plan
Speaker 2: for your future. But Greg I wouldn't spend too much
Speaker 2: time on this as well, because so he said that
Speaker 2: he in the future years might be getting close to
Speaker 2: like earning close to one like you mentioned. One for
Speaker 2: six is the cutof off for Rotha, right, but that
Speaker 2: was actually for last year, for twenty twenty four, For
Speaker 2: twenty twenty five, it's one hundred and fifty thousand dollars,
Speaker 2: And so what I'm pointing out here is that by
Speaker 2: the time you hit that, you get closer to a
Speaker 2: one forty greg like there's a good chance that that
Speaker 2: threshold is moved even higher. And I'm not saying that
Speaker 2: you don't have the ability to like catch that threshold
Speaker 2: at some point. More power to you, man, I think
Speaker 2: you can totally do that. That's the goal. Yeah, absolutely,
Speaker 2: I think there's likely a very good chance that you're
Speaker 2: going to be able to earn more than what that
Speaker 2: threshold is.
Speaker 1: Like a greyhound, you want to catch that rabbit or
Speaker 1: whatever it is.
Speaker 2: But I'm just highlighting the fact that you're not quite there,
Speaker 2: and they're going to continue to raise that with inflation.
Speaker 2: I mean, I think like just a few years ago,
Speaker 2: or maybe four or five years ago, it was at
Speaker 2: like one hundred and twenty five thousand dollars or something
Speaker 2: like that. So it has come a long ways, and
Speaker 2: I think it will continue to do that as long
Speaker 2: as inflation continues to be sort of a thorn in
Speaker 2: everyone's side. So something else to keep in.
Speaker 1: Mind, no doubt. So, yeah, you might not actually have
Speaker 1: much of a problem, and you might be able to
Speaker 1: kind of keep going the easy route of contributing to
Speaker 1: to that roth for many years to come. Just depends
Speaker 1: on how quickly that income escalates. But Matt, we've got
Speaker 1: more to get to on this episode, including we'll talk
Speaker 1: travel tips. We'll get to that and more right after this.
Speaker 1: All right, buddy, we're back from the break.
Speaker 2: Let's keep talking about money. And of course now we've
Speaker 2: gotten the Facebook question of the week, and this week
Speaker 2: it's from Nathan and he asked, I was wondering if
Speaker 2: anyone had tips on booking flights and hotel? Are there
Speaker 2: sites that are good? Should I book them together or separately?
Speaker 2: Should I book directly with the hotel or with prices
Speaker 2: I see on other sites if they are cheaper? What
Speaker 2: do you think, Joel, all of the above.
Speaker 1: That's a good question. There's a lot to talk about here.
Speaker 1: We'll do our best to offer a brief but helpful answer.
Speaker 2: Just don't travel. Look nothing. If you want to say
Speaker 2: the most amount of money right, stay home.
Speaker 1: If you want to save you more, live in your
Speaker 1: mom's basement. That is going to be the best way
Speaker 1: to have that ninety percent savings. Right that everyone's shooting Formatt,
Speaker 1: but occasionally.
Speaker 2: Buy some groceries for the house. Come on, man, you
Speaker 2: don't want to be a total leech.
Speaker 1: Otherwise she's gonna kick you out. Well, we are all
Speaker 1: about traveling and saving money on travel. Maybe we should
Speaker 1: just mention a few of our favorite sites Matt for
Speaker 1: travel and flights specifically, it used to be this combo
Speaker 1: of Google Flights and Southwest, but now think the good
Speaker 1: Lord above. Southwest Flights are included in the Google results,
Speaker 1: so it's a one stop shop. You can set up
Speaker 1: fair alerts, which is clutch, and I don't know if
Speaker 1: you need any other sites for booking besides maybe a
Speaker 1: Going membership which she used to be known as Scott's
Speaker 1: Cheap Flights if you are a flexible travel nerd. I
Speaker 1: think Going is great because they're delivering those sweet deals
Speaker 1: to your inbox and you might be like, wait a
Speaker 1: second Germany for three hundred and eighty two dollars, I'm in.
Speaker 1: I didn't even realize I could get there that cheap.
Speaker 1: And that's what Scot's Chief Flights does so well. If
Speaker 1: you just take one international flight a year based on
Speaker 1: their recommendations, you easily more than pay for the membership fee.
Speaker 1: I think skyscanner is another solid site, But I don't know.
Speaker 1: I think that combo of Google Flights Southwest Scotts Chief Flights,
Speaker 1: if you're just using those three resources, I think you
Speaker 1: can get mostly where you want to go.
Speaker 2: Yeah, and that's the typically the most expensive part of traveling.
Speaker 1: But one other thing on Google flights is setting fair alerts.
Speaker 1: So when you're like, here's where I want to go,
Speaker 1: make sure you set that fair alert and look at those.
Speaker 2: You don't have to keep checking on it every time.
Speaker 1: And Google even tells you, hey, actually, right now, this
Speaker 1: is like an average time to buy, or hey, this
Speaker 1: is a really good price. You should book now. And
Speaker 1: that's always helpful. That helps me know when to pounce.
Speaker 2: Yeah, by make it happen, be done with it. As
Speaker 2: far as hotels, though, hot Wire price Line they're great.
Speaker 2: Don't forget about Airbnb, of course, we're always big fans
Speaker 2: of them. But if you really want a hotel, we
Speaker 2: like those third party sites, especially if you're willing to
Speaker 2: book a hotel room without knowing specifically where you're staying,
Speaker 2: like if you don't really care about the name of
Speaker 2: the place and you just want like a star rating, right,
Speaker 2: like a certain quality, certain caliber, of hotel that's totally
Speaker 2: the way to go. The hot wire hot rates that
Speaker 2: could give you an incredibly low price price line. They've
Speaker 2: got the express deals, and I think that that can
Speaker 2: be a great way to score a deal. And these
Speaker 2: sites used to have the best deals the majority of
Speaker 2: the time, but things have changed recently. Many of the
Speaker 2: hotels that you see listed on these actual websites, they've
Speaker 2: kind of wised up. And so if you see one
Speaker 2: that you like, look up pricing directly on their website,
Speaker 2: and what you can do. You can actually give them
Speaker 2: a call, which very few folks are willing to do
Speaker 2: these days. But if you call them up, there's a
Speaker 2: good chance that they'll match or even be a deal
Speaker 2: that you're seeing elsewhere. And then on top of that,
Speaker 2: you typically will get a better cancelation policy as well.
Speaker 2: By booking directly with hotel versus one of these third
Speaker 2: party sites. Non refundable. It can be worth it if
Speaker 2: you're getting like the absolute sickest deal, but if not,
Speaker 2: you know, I like the idea of keeping your options
Speaker 2: open just in case you want to change your mind
Speaker 2: or something else comes up and you want to pounce
Speaker 2: over there instead.
Speaker 1: Of over here, of the things that I think that
Speaker 1: I've noticed, Matt, we're trying to book through hot Wire
Speaker 1: or price line on occasion, is man, the deal the
Speaker 1: nightly rate looks like it's way better than maybe what's
Speaker 1: offered through the same hotel boo booking directly on their site,
Speaker 1: But you click all the way through and you look
Speaker 1: at the taxes and fees, fees, they're much more expensive
Speaker 1: on some of these third party travel sites that talk
Speaker 1: about helping you finding the best deal, and so you're like,
Speaker 1: at the end of the day, I'm not really saving
Speaker 1: much money, and yeah, the cancelation policy is way crummier,
Speaker 1: and actually maybe I'm paying more my going through one
Speaker 1: of these third party sites. Think going directly through the hotel.
Speaker 1: That did not used to be the case. It felt
Speaker 1: like you could almost always get a better deal on
Speaker 1: a third party site. That just feels like the era
Speaker 1: that hot Wire and price line, when they had the
Speaker 1: monopoly on the best prices. That's not really where we're
Speaker 1: at anymore. It's not like it used to be.
Speaker 2: Yeah, it's worth it to have another Safari or Firefox,
Speaker 2: not Firefox.
Speaker 1: What is it?
Speaker 2: Chrome Browser open and doing the command till day to
Speaker 2: be able to Firefox. Firefox is what the people still
Speaker 2: use that. I'm sure there's some Firefox users out there.
Speaker 2: But also, hey, we almost forgot about this costco travel.
Speaker 2: Don't forget about that, because you got to mention, depending
Speaker 2: on the type of trip that you're taking, you might
Speaker 2: find better deals on all sorts of like in particular
Speaker 2: like the all inclusive style travel packages. And that's particularly
Speaker 2: true for like more exotic destinations like Cleveland, not Cleveland,
Speaker 2: like Hawaii, like the Caribbean. And as always, the number
Speaker 2: one way to get a great travel deal is just
Speaker 2: to be flexible, not only on the dates that you're
Speaker 2: looking to travel, but also the location. I think the
Speaker 2: best way to think about going on a trip is
Speaker 2: just to be like, at some point in this season,
Speaker 2: I want to take a break. Yeah, and then man,
Speaker 2: the world's your oyster and you're gonna absolutely get the
Speaker 2: best deal. And then the Google Flights Explore feature is
Speaker 2: going to be awesome. For that you might get crazy
Speaker 2: cheap flights too, in awesome plays that wasn't even on
Speaker 2: your radar just because you clicked around some you were
Speaker 2: like doing a little bit exploring, see what's out there,
Speaker 2: Look what the deals are? And it doesn't take long
Speaker 2: before you're like, guess I'm gonna.
Speaker 1: Go to Mongolia?
Speaker 2: Sure, why not?
Speaker 1: Didn't realize you get there for two to eighty round trip.
Speaker 1: That's yeah, that's the cool thing. When you click the
Speaker 1: Explore feature, you might just be made aware of insanely
Speaker 1: low prices to a destination that you hadn't even thought about.
Speaker 1: And it might be guess what, especially if we're talking
Speaker 1: about Europe, a train ride away from the place you
Speaker 1: really want to go, And so you're like, sound, was
Speaker 1: like fine, great, let me fly into Milan and then
Speaker 1: I'll still get to hang out in Tuscany because the
Speaker 1: flight to Milan was way cheaper're.
Speaker 2: Describing my travel back in gosh when it was two
Speaker 2: thousand and three, Joel, Oh.
Speaker 1: Did you do that exactly? Tenrary?
Speaker 2: If we flew into Milan? Okay, we didn't. We went
Speaker 2: took a It was like a really long train ride.
Speaker 2: This is one of my first those train rational Yeah.
Speaker 1: Yeah, this one was rough. Well, especially when you're younger,
Speaker 1: you got extra free time. Yeah, we're willing to do
Speaker 1: it to save the money.
Speaker 2: We totally did that. And here is a little piece
Speaker 2: of advice that Nathan isn't asking, but consider driving because
Speaker 2: especially if you have a fam can't drive them alone,
Speaker 2: You can't drive them alone. But like I mean, consider
Speaker 2: something a little bit more local instead of going abroad.
Speaker 2: Everyone thinks about something more exotic. But there's a lot
Speaker 2: of amazing stuff here in the United States, and I know,
Speaker 2: especially with kids, when they can't fully.
Speaker 1: Appreciate all that's out there.
Speaker 2: Plus they're also not appreciating how much it costs to
Speaker 2: fly in a plane, the ability to pile everybody in
Speaker 2: a car, and to go see the mountains of West
Speaker 2: Virginia before we go see the mountains in the Alps.
Speaker 1: Says the guy who scoffed at my Cleveland suggestion.
Speaker 2: Hey, I'm going to hit up Cleveland at some point,
Speaker 2: but just haven't been there one of these days. Yeah,
Speaker 2: so something to consider as well.
Speaker 1: All right, Matt. One more quick Facebook question. This one's
Speaker 1: from an anonymous poster. They said, frugler cheap, unplugging my
Speaker 1: EV when peak hours hit and plugging back in after
Speaker 1: seven pm when I'm home and don't need to go anywhere,
Speaker 1: No brainer, one hundred percent approval. Right, I'd be curious
Speaker 1: to know the killawatt per hour price difference here, but
Speaker 1: often we're talking about getting that electricity for less than
Speaker 1: half of the price of full PA costs. I don't
Speaker 1: see why you'd pay extra if there's an easy way
Speaker 1: to avoid it, Matt, I think for this poster too,
Speaker 1: I would check with your electricity provider to see if
Speaker 1: there's an even better plan that you can be on
Speaker 1: as an EV owner at least or we live, the
Speaker 1: power companies offer something that's known as a super off
Speaker 1: peak rate, and so this rate is between eleven PM
Speaker 1: and seven am. It's only two point two cents per
Speaker 1: kill a whatt hour, which is like a fraction of
Speaker 1: what it costs typically to get electricity.
Speaker 2: I think on peak is thirty and so literally it's
Speaker 2: fifteen times more affordable crazy time.
Speaker 1: That's insane. So if you're an EV owner in particularly
Speaker 1: that it's worth considering think about how much something like
Speaker 1: that could save you, especially especially if you're the kind
Speaker 1: of person who's willing to I don't know, maybe do
Speaker 1: your start your washer and your dryer at night before
Speaker 1: you go to bed to or early in the morning dishwasher. Also,
Speaker 1: if you're using those appliances to during those hours and
Speaker 1: charging your EV. I think it's a no brainer to
Speaker 1: get that lower rate.
Speaker 2: Totally, and ultimately the biggest one is that you're not
Speaker 2: charging while you're out and about on the road, because
Speaker 2: if your unwillingness to pay peak prices meant that you
Speaker 2: forgot to charge your car at home and then you
Speaker 2: had to stop at is It charge point though some
Speaker 2: of the different stations, you gonna paying a whole lot
Speaker 2: more like five to seven times more. So the more
Speaker 2: you can charge at home, even if it's not the
Speaker 2: most optimized time, the more money that you're going to save.
Speaker 2: This might be the last time I shared the story,
Speaker 2: but when we were traveling in Colorado, we rented a Tesla.
Speaker 2: Onturo wanted to get a feel for what it's like
Speaker 2: to drive a Tesla and have an ev What that meant, though,
Speaker 2: is that we charged were charging at the Tesla superchargers,
Speaker 2: and I tracked my charges religiously, and the cost was
Speaker 2: pretty much exactly the same as had we rented a
Speaker 2: traditional internal combustion engine, based on the average price per
Speaker 2: gallon there in Colorado, times the number of miles that
Speaker 2: we drove. And so if that's you and you're constantly
Speaker 2: paying top tier charging prices, you're not doing this to
Speaker 2: save money. You're doing this for lifestyle.
Speaker 1: The money saving benefits of an EB come when you
Speaker 1: charge at home, and it can be amplified if you
Speaker 1: get one of those off super off pak rates, or
Speaker 1: if you charge at work. Oh yeah, more folks have
Speaker 1: a When I had, it's a benefit. Oh yeah, you
Speaker 1: did that, so I I would. They had one hundred
Speaker 1: and twenty bolt outlets, and I would plug in when
Speaker 1: I got to work. But eventually they installed real charging
Speaker 1: stations and they covered up all the one twenty volt.
Speaker 1: You know, I'm true frugal enough, I would have kept
Speaker 1: charging at the one twenty volt even though it was slower.
Speaker 1: I just charged it home. Then it just changed my habits.
Speaker 2: The more employers are even offering that as a perk,
Speaker 2: where it's just like, oh yeah, we got level two
Speaker 2: chargers here, like they are intentionally promo stalling level two
Speaker 2: the faster chargers for free. Speaking of attracting the top talent,
Speaker 2: that's the way to get folks on board, no doubt.
Speaker 2: When it's like a soft benefit.
Speaker 1: That folks were able to realize.
Speaker 2: But buddy, let's mention the beer that you and I
Speaker 2: enjoyed today, which is beer Missou? Do you want to
Speaker 2: say it? I said at the first time.
Speaker 1: Too, yea beer on massoue beer Massou, Tierra Missou, milk porter,
Speaker 1: Imperial milk porter. This matt was thinner than I thought
Speaker 1: it was going to be, but solid. It's a yeah,
Speaker 1: but it was an Imperial Porter, so I was like, oh,
Speaker 1: is it gonna be Is it gonna be bigger?
Speaker 2: Expecting it to be a bit heavier, kind.
Speaker 1: Of tasted more like a traditional porter, but I like
Speaker 1: the flavor profile.
Speaker 2: I was super good.
Speaker 1: Definitely had the Tierra Masioux vibes going on. A little
Speaker 1: bit sweet and lactosey for my taste, but a solid beer.
Speaker 1: And this is a local option too. I don't know
Speaker 1: that I've had much buy six bridges before. So yeah,
Speaker 1: we mualty dark but not too dark.
Speaker 5: Yeah.
Speaker 2: I had the like it wasn't bitter. That's one of
Speaker 2: the things that you get with a milk stout is
Speaker 2: that it does have some of that lactose sweetness. But
Speaker 2: I wouldn't call it. I don't think it was too sweet.
Speaker 2: It was just like milky smooth, yeah, as opposed to
Speaker 2: like hitting you over the head with a sweetness, just
Speaker 2: like a touch, a sweetness, really enjoyed. It definitely makes
Speaker 2: me realize I don't think I've eaten enough Tira Massou
Speaker 2: in my life. Speaking of Tuscany, but that's gonna be
Speaker 2: it for this episode. Listeners can find our show notes
Speaker 2: up on the website at howto money dot com, including
Speaker 2: that article to the back door roth Ira how to
Speaker 2: pull that off. So buddy, let's wrap it until next time.
Speaker 2: Best friends out, best friends out.
Speaker 1: Yeah, it's