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Speaker 1: Welcome to Out of Money. I'm Joel, I'm Matt.

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Speaker 2: Today we're answering your listener questions.

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Speaker 1: That's right, We've got a listener question episode lined up

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Speaker 1: for you on this beautiful Monday, and we've got five.

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Speaker 1: Like always, we've got five listener questions to get to

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Speaker 1: a letten.

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Speaker 2: Me terrible weather, by the way, where our listeners are. Matt,

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Speaker 2: you have no idea that is true. It's nice here,

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Speaker 2: it's beautiful here though so a little little hot still,

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Speaker 2: it's a little warm.

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Speaker 1: She's got student loans and she's trying to figure out

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Speaker 1: how much money to keep on hand, how much liquidity

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Speaker 1: while also paying down those student loans. We'll get to

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Speaker 1: her question. We're going to cover a five twenty nine

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Speaker 1: strategy for adults for adult learners. All adults should be learners,

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Speaker 1: but if you're looking to go back to school, and

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Speaker 1: we're going to talk about that lifelong learning is important.

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Speaker 1: And another listener he's worried about the He's wondering maybe

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Speaker 1: if he should be worried about some of the bank

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Speaker 1: downgrades that have been making their way through the news.

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Speaker 1: We'll get to those three questions, plus a couple others

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Speaker 1: throughout today's episode. All right, I look forward to it.

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Speaker 2: But before we get to that, Matt, I wanted to

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Speaker 2: ask you kind of a frugal or cheap I've got

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Speaker 2: a couple pairs of headphones. As a dude who listens

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Speaker 2: to a lot of tunes, who listens to podcasts, but

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Speaker 2: who also creates audio for a living, I wear headphones

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Speaker 2: a lot of the day, and over time those headphones

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Speaker 2: they wear out, right, but one I actually have two

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Speaker 2: pairs that this is happening to right now. The ear

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Speaker 2: muff thingies that go on the outside.

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Speaker 1: Are like the base. They're basically disintegrating. I'm pretty sure

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Speaker 1: that's the technical term for the muff. So the other

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Speaker 1: none of your most the pads, right the question that

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Speaker 1: creates the nice seal.

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Speaker 2: Yes, but these pads are wearing out, they're molting whatever,

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Speaker 2: and actually I like a little flecks of black all

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Speaker 2: over me from these pads.

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Speaker 1: Is often look over at you and you've got something

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Speaker 1: yes on your face.

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Speaker 2: I know, like right there, buddy, So is it frugal

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Speaker 2: or cheap that I'm replacing the pads not the headphones?

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Speaker 1: Uh? It is the earth conscious thing. It's the green

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Speaker 1: thing to do, most likely because I'm sure that you

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Speaker 1: could just easily toss those and buy a pair for

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Speaker 1: like another cheap pair for like ten bucks.

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Speaker 2: They're not super cheap headphones. They're probably like fifty five

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Speaker 2: sixty really yeah.

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Speaker 1: I mean you watch all the slick deals and all.

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Speaker 2: That, because I'm honure you could get a fifty dollars

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Speaker 2: pair for ten When you're wearing headphones all day every day,

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Speaker 2: you don't want the ten dollars pairs. So there's a

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Speaker 2: difference in like ergonomics and sound quall.

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Speaker 1: That's why I don't like the over the ear because

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Speaker 1: it presses on I think it has to do with

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Speaker 1: the fact that I wear glasses, and so I've got glasses,

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Speaker 1: and when you do the over the ear, even though

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Speaker 1: they're not really supposed to push on your ear, they

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Speaker 1: still push on your ear a little bit. And we

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Speaker 1: got glasses. It smushes the car your ear up against

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Speaker 1: your head and it sandwiches the acetate the arm of

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Speaker 1: the glass glasses there, and it hurts. That's why I

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Speaker 1: like the in ear. Even while I'm sitting here at

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Speaker 1: the desk, I don't like doing plug in. I like

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Speaker 1: to do the blue.

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Speaker 2: I think we can both agree that the worst of

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Speaker 2: both worlds is the on ear headphones. Yep, only psychos

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Speaker 2: where those my parents included. I don't know, it's headphones.

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Speaker 2: I'm like, who would get these?

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Speaker 1: They're the default cheap headphone, Like they look like they're

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Speaker 1: the nicer ones, but in reality.

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Speaker 2: They just yeah, they don't quite cut it, all right,

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Speaker 2: So I think I play paid like eight or nine

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Speaker 2: dollars for a replacement for the muffs.

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Speaker 1: I'm like a fifty to sixty dollars pair headphones. Yeah

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Speaker 1: all right, Well if that's the case, then I think

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Speaker 1: you probably made the right move. I was thinking those

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Speaker 1: were like a ten dollars, just a cheap pair, But

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Speaker 1: I just rocked my beats. Yeah there go.

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Speaker 2: If I see a great sale at some point, maybe

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Speaker 2: I'll upgrade. But these things are still working. They're just

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Speaker 2: I don't I don't want all the molting, you know,

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Speaker 2: the plastic stuff all over.

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Speaker 1: I don't want extinct dinosaur particles on you, you know, right, petroleum,

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Speaker 1: that's where plastic stalk's from.

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Speaker 3: With.

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Speaker 1: Yeah, let's introduce the beer that we're going to enjoy

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Speaker 1: it today. So this is a beer. This is a

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Speaker 1: collaboration actually between Burial and the Eighth State, which is

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Speaker 1: a brewery in Greenville, South Carolina. This beer is called

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Speaker 1: These are depictions of yet another revolutionary absence. This is

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Speaker 1: an Imperial Stouts. We were just joking about how you

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Speaker 1: shouldn't drink big stouts in the summer, in the summer heat,

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Speaker 1: and here we go. So this is what we're gonna

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Speaker 1: enjoy it today. We'll share our thoughts at the end

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Speaker 1: of the episode.

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Speaker 2: And you always have to laugh at any burial naming

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Speaker 2: convention because they're all ridiculous and over the top, and

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Speaker 2: a state evidently allows it.

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Speaker 1: Like, fine, you guys want to name it your ridiculous name.

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Speaker 1: You guys do your things, all right.

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Speaker 2: But we take listener questions every single week now on

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Speaker 2: the show, and we would love to take yours. So

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Speaker 2: if you have a money question, please feel free to

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Speaker 2: reach out. You can submit yours at howdomoney dot com,

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Speaker 2: slash ask, or simple Instructions. It's really just recording a

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Speaker 2: quick voice memo into your phone and emailing it our way.

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Speaker 2: But yeah, hopefully we can take yours next Monday. All right,

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Speaker 2: But let's get to our first question for this episode.

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Speaker 2: This one is from a listener who's got a bunch

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Speaker 2: of young kids and has multiple money goals.

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Speaker 4: Hey Matt and Joel. I'm Rachel from Crystal Lake, a

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Speaker 4: sub of Chicago. You don't know this, but you come

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Speaker 4: with me on several walks and I love it. Thank

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Speaker 4: you so much. I'm a consultant with variable income and

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Speaker 4: my husband is in sales. Together we bring in approximately

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Speaker 4: two hundred K a year. We have three kids, ages

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Speaker 4: five at under and boy are the expensive. Together we

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Speaker 4: have about one hundred K and student loans with interest

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Speaker 4: rates that vary from five to seven point twenty five percent.

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Speaker 4: We've maxed out contribution for my husband's work, and I

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Speaker 4: save a minimum of two K a month that doesn't

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Speaker 4: go to taxes. Combined, we have about two hundred and

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Speaker 4: sixteen K left on a mortgage with a rate under

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Speaker 4: four point five percent, on which we make two hundred

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Speaker 4: dollars principal payments extra per month. At present, we have

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Speaker 4: forty K all together in the various CDs and high

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Speaker 4: yield savings accounts, keeping money aside. I'll need to pay

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Speaker 4: taxes should I pay off the stuit loans for us,

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Speaker 4: keeping certain percentage above the emergency fund as liquid. Pay

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Speaker 4: less and have more liquid and how do we decide

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Speaker 4: how much to put into home upgrades with excellent ROI.

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Speaker 4: I've paid off the only car we have this year

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Speaker 4: and we don't have any credit cards that have a

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Speaker 4: balance with interest applied. Thank you so much for your

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Speaker 4: insight and your help.

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Speaker 1: You guys rock all right, Rachel. So going back to

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Speaker 1: what you were saying there at the beginning, we are

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Speaker 1: happy to hear that we are your walking buddies. It's

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Speaker 1: like the yeah, two buds that gets to walk along

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Speaker 1: with you and you don't need to have a schedule

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Speaker 1: and figure out where it is that you're going to

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Speaker 1: meet up for where you're gonna reconnoiter meet up with somebody.

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Speaker 1: But yeah, we love that. Thank you for bringing us along.

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Speaker 1: And also another note too, man, kids, it is true

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Speaker 1: they are expensive. They're not quite as expensive as some

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Speaker 1: of the different headlines out there would lead you to believe.

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Speaker 1: You know, I think is it like seven hundred and

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Speaker 1: fifty thousand dollars.

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Speaker 2: Now like the I think it's like three hundred and

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Speaker 2: eight thousand something like that was last time.

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Speaker 1: He thought was a lot more. It used to be

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Speaker 1: in the upper twos. Now as there's not that much,

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Speaker 1: that's a lot money over twenty years. Still a lot.

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Speaker 2: But I think for some people that can scare you

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Speaker 2: off and you'll be like, I thought I was gonna

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Speaker 2: have kids, but not if it costs that much. There's

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Speaker 2: a lot of there are a lot of ways to

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Speaker 2: make sure that your kids don't cost quite. They're only

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Speaker 2: cost three, I'm gonna have like five more kids. Right,

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Speaker 2: it gets overwhelming, and yeah, I realized, like, yeah, it's

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Speaker 2: not easy, but of course it is worth it even

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Speaker 2: though it's costly. Right, But Matt, let's let's talk about

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Speaker 2: kind of gets a racil's question. There's kind of a

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Speaker 2: lot going on in this one, so we'll try to

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Speaker 2: get to a bunch of the points or the questions

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Speaker 2: that you had. And it sounds like y'all are doing

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Speaker 2: really well from an income standpoint, which is great, and

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Speaker 2: on top of that, you're saving and investing in a

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Speaker 2: solid clip. You don't have any debts that are out

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Speaker 2: of control, and you've got that paid off car and

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Speaker 2: that's something we dig like, we oh, yeah, we don't

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Speaker 2: like cardbt that's one of our least favorite things.

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Speaker 1: And I think she said that they paid off the

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Speaker 1: only car that they have, which makes it sound like

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Speaker 1: that there are a one car family that they're rocking

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Speaker 1: that with three kids. That is awesome. Hang on to

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Speaker 1: that as long as you can. Yeah, the longer you

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Speaker 1: can stick with that. Yeah, I'm like salivating this beer

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Speaker 1: so it's so good. I just took a sip. But

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Speaker 1: it's just easier than I think a lot of people,

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Speaker 1: like in their minds, are like, oh, we've got okay,

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Speaker 1: we've got kids. Now, we definitely have to get the

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Speaker 1: be the two car family thing. But with so many

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Speaker 1: people working remotely and the ability it takes a little

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Speaker 1: more work to schedule, but the ability to bike. I literally,

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Speaker 1: I mean I bike my dude to preschool this morning

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Speaker 1: on the cargo bike. I'm gonna and with ride sharing too,

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Speaker 1: we're gonna we're gonna take the van in to get

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Speaker 1: some repair work done later this week, Gonna take it

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Speaker 1: there and then I'm gonna uber home because guess what,

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Speaker 1: all right, fifteen twenty bucks with tip and all of

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Speaker 1: a sudden, that means I don't need that second car.

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Speaker 2: Yeah, it's definitely a line item in the budget that

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Speaker 2: more and more people can and should question, especially especially

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Speaker 2: given how many more people are working hybrid or fully

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Speaker 2: remote these days. On the student loan front, by the way,

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Speaker 2: whether or not it's a priority to pay off those

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Speaker 2: that student loan debt, it depends largely on this new

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Speaker 2: save plan, right, which is changing the game for anybody

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Speaker 2: who has outstanding student loan debt. It's this save plan

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Speaker 2: is likely going to change your payment amount. It is

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Speaker 2: for a whole lot of people. And there's this helpful

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Speaker 2: calculator on student Loan planner that will link to in

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Speaker 2: the show notes. But if this new save plan is

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Speaker 2: going to reduce your payment substantially and your balance still

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Speaker 2: won't be growing, which is part of the benefit of

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Speaker 2: this new save plan, your student loans likely shouldn't be

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Speaker 2: a top priority. The biggest benefits come to low and

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Speaker 2: middle class income earners though, which isn't you guys, Rachel.

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Speaker 2: It sounds like you guys are making more than that

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Speaker 2: and you have three kids, though, so much depends on

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Speaker 2: the specifics of what sort of subsidy you're going to

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Speaker 2: qualify for under the new safe guidelines. How long have

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Speaker 2: you been paying on those student loans, right, how much?

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Speaker 2: There's a lot of different fact balance is left, and

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Speaker 2: so yeah, take that into consideration. Plug your numbers into

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Speaker 2: that calculator and kind of see, well, oh, it looks

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Speaker 2: like my payment is not going to be changed. If

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Speaker 2: that's the case, then that higher rate student loan debt

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Speaker 2: is probably a bigger priority for you than it is

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Speaker 2: for other people.

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Speaker 1: Sure, yeah, yeah, normally this would be honestly, just a

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Speaker 1: really tough one.

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Speaker 5: Right.

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Speaker 1: So she specifically said that her student loan interest rates

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Speaker 1: are a little bit I don't know if they're a

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Speaker 1: little bit higher relative to most other folks, but they're

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Speaker 1: on the line, right, So typically any loans that are

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Speaker 1: higher than seven percent, like I would want those gone

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Speaker 1: if that was me, And anything lower than seven percent, like,

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Speaker 1: in my mind, that wouldn't be the worst debt in

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Speaker 1: the world to keep her around if you have other goals,

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Speaker 1: if you are investing solidly, But if your payments Rachel,

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Speaker 1: if they get reduced with this new safe plan, and

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Speaker 1: you know, like let's say you hit that max twenty

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Speaker 1: or twenty five years of repayments and then you end

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Speaker 1: up coming out ahead, then I see no reason to

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Speaker 1: pay down on them early, even though that might be

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Speaker 1: your natural tendency. Especially, I mean you mentioned her her

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Speaker 1: mortgage making ex additional payments to that. I get the

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Speaker 1: impression that they don't like having debt around and that's

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Speaker 1: something that they might want to eliminate.

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Speaker 2: Which, let's be honest, is a really good way to

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Speaker 2: think about debt. But at the same time, when you

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Speaker 2: have low interest rate, debt and savings rates are higher

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Speaker 2: and other financial goals, so other things you do, you've

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Speaker 2: got to moderate maybe your approach to debt and investing.

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Speaker 1: Exactly so with that forgiveness of mind, and after you

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Speaker 1: crunch your own numbers, if it's likely that this new

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Speaker 1: plan could basically tip those higher student loans, especially the

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Speaker 1: ones that are around seven and a quarter to a

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Speaker 1: lower effective rate essentially at the end of the day,

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Speaker 1: then it certainly makes even more sense to not prioritize

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Speaker 1: paying down the student loans.

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Speaker 2: Yeah, and one of the heart at the heart of

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Speaker 2: Rachel's question, it comes down to liquidity, which is such

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Speaker 2: an important question map for people because having more cash

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Speaker 2: on hand gives you options, gives you flexibility, and can

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Speaker 2: give you peace of mind. And fortunately you're not hammered

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Speaker 2: as hard now having money in savings as you were

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Speaker 2: just a few years ago. And so how much money

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Speaker 2: do you keep on hand? Rachel, that's a good question,

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Speaker 2: And it seems like we're not prioritizing student loans, which

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Speaker 2: because of this new saved plan, they're not as highber

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Speaker 2: a priority as they would have been in years past.

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Speaker 2: But it often comes down to what you're gonna do

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Speaker 2: with the money instead. That is really the crux of everything,

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Speaker 2: Like what are your alternative options? Because if you're just

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Speaker 2: gonna blow that money, which I don't think you are,

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Speaker 2: It doesn't sound like you're that kind of person who's like

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Speaker 2: going to go on a self control Yeah, shopping's free

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Speaker 2: with it, like you just want to know the best

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Speaker 2: place to funnel it. Well, if you were going to

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Speaker 2: spend it in a silly way, it would make sense

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Speaker 2: to go ahead and be done with those student loans

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Speaker 2: as opposed to buying more stuff. But you're already investing

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Speaker 2: it sounds like you're maxing out your husband's four O

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Speaker 2: one k at work. It might make sense to go

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Speaker 2: ahead and at least open up roth iras though for

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Speaker 2: the both of you. Yeah, maybe max those out to

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Speaker 2: the total of thirteen grand a year for both of you.

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Speaker 2: And if you did that, if you got the money invested,

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Speaker 2: I think Matt, you and I would both feel better

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Speaker 2: about them missing out on the guaranteed return on their

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Speaker 2: money by paying off the student loans because they're putting

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Speaker 2: it in a tax advantaged account to grow and compound

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Speaker 2: for their future.

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Speaker 1: Sure, yeah, if you wanted to do it by the book,

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Speaker 1: you would say the equivalent amount that you have outstanding

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Speaker 1: on your student loans, invest that money. So once you

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Speaker 1: have that much additional money set aside and is either

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Speaker 1: invested or even in a savings account where you're earning

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Speaker 1: a higher rate. But again knowing that when you do

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Speaker 1: invest that money is going to compound, it kind of

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Speaker 1: makes sense that you don't. It doesn't need to be

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Speaker 1: dollar for dollar per se. I think if it was me,

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Speaker 1: I would not only use some of the additional money

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Speaker 1: to make sure that they've maxed out their rothy race

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Speaker 1: for this year, but also set aside money for next year.

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Speaker 1: That way, you have that money ready to like it's

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Speaker 1: sitting there on the sidelines, ready to go. January first

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Speaker 1: hits you're able to lump some invest and next year

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Speaker 1: it's fourteen thousand dollars because they're upping the contribution limits

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Speaker 1: from sixty five to seven thousand, which is we love

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Speaker 1: to see, which is awesome. And so if I were

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Speaker 1: in your shoes and I was able to max out

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Speaker 1: not only this year but also next year's, I think

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Speaker 1: I would feel much much more comfortable about saying, Okay,

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Speaker 1: let's just see kind of how this plays out with

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Speaker 1: the student loans. We don't necessarily need to pay those

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Speaker 1: off ahead of time. But let's also get to home renovations, Rachel,

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Speaker 1: because first of all, it sounds like you've got the

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Speaker 1: ability to use that additional two thousand dollars a month

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Speaker 1: that you're setting aside, and you've got the potential just

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Speaker 1: to straight up pay cash for any projects that you've

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Speaker 1: gotten mind, which is awesome.

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Speaker 2: Not to mention the two hundred bucks a month they're

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Speaker 2: prepaying towards the mortgage, like funnel that back into home

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Speaker 2: rental project.

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Speaker 1: There you go twenty two hundred dollars and this is

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Speaker 1: gonna be way better than taking out a heelock at

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Speaker 1: today's rates. But then you asked about how much to

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Speaker 1: put towards renovating, and this is going to have to

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Speaker 1: be a judgment call on your part. You know, you

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Speaker 1: and your husband y'all need to talk about this. You'll

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Speaker 1: need to think through what aspects of your home that

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Speaker 1: you'd like to change the most, and what will honestly

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Speaker 1: have the most impact for y'all is a family. You know,

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Speaker 1: like with something as simple as adding some cubbies in

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Speaker 1: a mudroom, would that drastically improve the quality of life there.

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Speaker 1: That's literally something that Kate and I did when we

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Speaker 1: moved into our house last summer. Did not cost a

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Speaker 1: lot of money, but it subs I mean, I don't

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Speaker 1: know what we would do with all the shoes, the backpacks,

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Speaker 1: the jackets in the winter, the bicycle helmets. Just adding

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Speaker 1: these cubbies where each person we got six of them

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Speaker 1: there where they have their own space, dramatically increased the

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Speaker 1: usability of our little entry were there but with her

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Speaker 1: or maybe like she's got three kids, so maybe she's

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Speaker 1: realizing that what they need is another bathroom or something

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Speaker 1: right but way those needs while at the same time

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Speaker 1: keeping in mind that you may not be in this

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Speaker 1: house forever, and so you don't want to necessarily overbuild

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Speaker 1: your street or your neighborhood. It's difficult because you, on

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Speaker 1: one hand, you want to keep that in mind, but

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Speaker 1: you also don't want to make these improvements with return

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Speaker 1: on investment. As the only consideration, because I think the

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Speaker 1: last I read a new garage door is actually what

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Speaker 1: ranks the highest as far as what improves the resale.

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Speaker 1: And you just never know with who it is that's

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Speaker 1: going to buy your house whether or not they're going to

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Speaker 1: value the improvements that you made. And so what I

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Speaker 1: would say is make sure that you're adding utility for

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Speaker 1: the way it is that you and your family live there,

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Speaker 1: without getting crazy with it. But instead of ROI, make

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Speaker 1: it rou return of utility or something like that. Have

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Speaker 1: that be the filter to which you think through some

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Speaker 1: of these improvements.

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Speaker 2: And so much of it comes down to how long

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Speaker 2: you think you're going to be in the house. If

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Speaker 2: you're like, hey, listen, we're on two acres out here,

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Speaker 2: and this is the perfect spot for our family, it's

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Speaker 2: just the house that's insufficient, and so if we do this,

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Speaker 2: this and this, then hey, we're going to be here

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Speaker 2: for the next thirty And granted I think some people

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Speaker 2: think that and maybe that doesn't end up being the case.

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Speaker 2: But if if you think you're gonna be there long term,

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Speaker 2: it makes even more sense. I think the funnel money

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Speaker 2: into the house and make it the way you want

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Speaker 2: it to be as opposed to thinking about pure resale value,

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Speaker 2: because if you're only going to be there for a

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Speaker 2: year or two and you're gonna need like bigger bones

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Speaker 2: essentially at some point you need a bigger, better house

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Speaker 2: something like that, then you probably don't want to sink

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Speaker 2: too much in you want to be saving up for

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Speaker 2: the next time payments.

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Speaker 1: They Yeah, that's when you go to Ikea and just

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Speaker 1: get yourself some organization pieces the temporary fix. Yes, it's

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Speaker 1: a band aid, which is very much the temporary fix. Right, Actually,

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Speaker 1: scratch that. Scratch Ikea. Instead, go to your local Salvation

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Speaker 1: Army or Goodwill and find you a quality piece furniture

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Speaker 1: that might also solve some organizational needs. If that's what

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Speaker 1: you got going, it's even better. Yeah.

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Speaker 2: And I think the period matt of your life with

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Speaker 2: young kids, it can be financially daunting. It feels like

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Speaker 2: you're trying to do a bunch of different things at once.

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Speaker 2: Three kids under.

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Speaker 1: The age of five.

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Speaker 2: That's about as tough as it gets from a financial

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Speaker 2: and a mental perspective. It can be very trying. Childcare

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Speaker 2: is expensive if you depending on whether or not you

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Speaker 2: have help or something from family members, you're trying to

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Speaker 2: excel in your career, you're trying to save for retirement,

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Speaker 2: you're trying to buy or fix up a house. It

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Speaker 2: feels like a lot and Matt, you and I we

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Speaker 2: know that feeling very well because you know, we're not

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Speaker 2: too far away from those years, those years. Our youngest

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Speaker 2: boys they're still three and so in our oldest are

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Speaker 2: ten now, so we still know, we still remember. It's

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Speaker 2: a fresh experience that you're trying to do all those

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Speaker 2: things at once, So just make sure you keep chipping away.

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Speaker 2: Know that those goals don't happen overnight. Make little adjustments

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Speaker 2: here and there, and then celebrate the wins and successes

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Speaker 2: along the way, because it's just so easy to fixate

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Speaker 2: on the future and think about the easier years that

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Speaker 2: are coming down the pike. But enjoy these two because

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Speaker 2: they really are special times, even though you're pretty worn

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Speaker 2: out at the end of the day.

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Speaker 1: That's right. So Rachel, best of luck to you, and

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Speaker 1: I look forward to our walks together as we continue

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Speaker 1: to talk about our finance, the walks that we don't

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Speaker 1: even know we're taking. We take walks around here, but

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Speaker 1: we just Yeah, Rachel needs the recorder of a podcast

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Speaker 1: and send it our way. That way, it's like it's

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00:18:08,240 --> 00:18:11,960
Speaker 1: like a penpal. That'd be beautiful relationship. But we've got

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Speaker 1: four more questions to get to, including one from a

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Speaker 1: divorce a whether or not she's on the right track.

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Speaker 1: We'll hear from her, plus others right after this. All right,

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Speaker 1: we're back.

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Speaker 2: We've got more money questions to get to from Awesome

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Speaker 2: how to Money listeners and Matthi's next question is specifically

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Speaker 2: about one of our favorite retirement accounts that not enough

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Speaker 2: people know about.

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Speaker 6: I'm Madam Joel. This is She's from Atlanta. Thank you

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Speaker 6: for all you do and the wealth of information that

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Speaker 6: you provide today. I had a quick question about it's

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Speaker 6: a sea accounts, particularly with regards to reinbursement later in life,

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Speaker 6: potentially decades down the road. How does it work in

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Speaker 6: case of family members? For example, if I pay for

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Speaker 6: a medical expense for my kids now and I want

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Speaker 6: to get reimbursed for that thirty forty years down the road,

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Speaker 6: would I be able to withdraw that fund and use

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Speaker 6: it for myself? And also, how does it work in

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Speaker 6: the case of spouse. If expense currently occurs for one spouse,

436
00:19:28,160 --> 00:19:34,600
Speaker 6: can the partner withdraw or reimburse that amount for his

437
00:19:34,840 --> 00:19:39,600
Speaker 6: or her use or medical expense later down the road.

438
00:19:40,320 --> 00:19:41,720
Speaker 6: I'm just curious. Thank you so much.

439
00:19:42,480 --> 00:19:45,040
Speaker 1: Oh so a Sheesh is from Atlanta. I don't think

440
00:19:45,040 --> 00:19:50,600
Speaker 1: we get enough Atlanta Atlanta listener questions sentence which Aesh.

441
00:19:50,640 --> 00:19:54,040
Speaker 1: So we're actually gonna should we talk about this here?

442
00:19:54,400 --> 00:19:57,840
Speaker 1: We're going to have a listener beer hang here next week,

443
00:19:58,080 --> 00:20:01,520
Speaker 1: not this Friday, but the next friday after that, September fifteenth.

444
00:20:01,640 --> 00:20:03,360
Speaker 1: It took a lot of coaxing to get Matt out

445
00:20:03,359 --> 00:20:06,080
Speaker 1: of his hobbit hole. Do we want to go ahead

446
00:20:06,080 --> 00:20:08,119
Speaker 1: and share? So go ahead and pencil that on the

447
00:20:08,119 --> 00:20:10,240
Speaker 1: calendar because we talked about maybe doing it at like

448
00:20:10,240 --> 00:20:12,400
Speaker 1: around five, should go ahead nail it down, think four

449
00:20:12,440 --> 00:20:15,760
Speaker 1: to eight at InterVoice brewing indicator indicator. Yeah, so they've

450
00:20:15,760 --> 00:20:19,720
Speaker 1: got awesome pizza there. We'll make more official announcements in

451
00:20:19,720 --> 00:20:21,800
Speaker 1: the future. But as Shish, this is like the little

452
00:20:21,800 --> 00:20:25,040
Speaker 1: insider heads up for you as well as any others

453
00:20:25,040 --> 00:20:27,399
Speaker 1: who might be listening at this point who were from Atlanta.

454
00:20:27,520 --> 00:20:29,640
Speaker 2: Said great pizza, and that is true. But Inner Voice

455
00:20:29,680 --> 00:20:31,480
Speaker 2: has great beers to here is so good.

456
00:20:31,560 --> 00:20:34,159
Speaker 1: Yeah, So literally we're going there because you, and we

457
00:20:34,280 --> 00:20:37,119
Speaker 1: chose this location because we're the ones that got to

458
00:20:37,359 --> 00:20:39,920
Speaker 1: organize it. But we haven't been to InterVoice and we've

459
00:20:39,920 --> 00:20:42,320
Speaker 1: had their beers before. They're so good. And the pizza

460
00:20:42,520 --> 00:20:46,560
Speaker 1: it's Glyde Pizza, right, like, so this is a pizza

461
00:20:46,640 --> 00:20:49,359
Speaker 1: rha that you that our families used to frequent when

462
00:20:49,400 --> 00:20:51,760
Speaker 1: we lived in town, and they opened the second location

463
00:20:51,920 --> 00:20:54,359
Speaker 1: out there indicator I can't snink in wait, it's going

464
00:20:54,440 --> 00:20:55,800
Speaker 1: to be a ton of fun. So if you are

465
00:20:55,800 --> 00:20:58,200
Speaker 1: in Atlanta or the surrounding Atlanta area, mark that on

466
00:20:58,480 --> 00:20:59,920
Speaker 1: your calendar September fifteenth.

467
00:20:59,680 --> 00:21:02,480
Speaker 2: Yeah, to see out there. It's we don't do this enough.

468
00:21:02,520 --> 00:21:05,119
Speaker 2: It's always fun to meet listeners in person, not just

469
00:21:05,240 --> 00:21:07,199
Speaker 2: I want to watch with them virtually when doing it

470
00:21:07,240 --> 00:21:08,480
Speaker 2: in real war, we're not actually.

471
00:21:08,200 --> 00:21:10,200
Speaker 1: There, so although we like that too.

472
00:21:10,560 --> 00:21:12,679
Speaker 2: And at first, I just want to let everyone know,

473
00:21:13,160 --> 00:21:15,399
Speaker 2: like why a she she's asking this and the reason

474
00:21:15,600 --> 00:21:18,000
Speaker 2: is because the HSA is actually one of the best

475
00:21:18,000 --> 00:21:20,320
Speaker 2: accounts to save for retirement and that's how he's trying

476
00:21:20,320 --> 00:21:21,920
Speaker 2: to use it. Like we've talked about this, We've done

477
00:21:22,080 --> 00:21:23,879
Speaker 2: whole episodes on this, we have articles up on the

478
00:21:23,880 --> 00:21:26,800
Speaker 2: side about this, but almost nobody knows sadly that the

479
00:21:26,920 --> 00:21:28,800
Speaker 2: HSA is one of the best ways, is one of

480
00:21:28,840 --> 00:21:31,120
Speaker 2: the best accounts with which to say.

481
00:21:30,920 --> 00:21:31,800
Speaker 1: For their future.

482
00:21:31,840 --> 00:21:33,960
Speaker 2: And they you know, a lot of people treat their

483
00:21:34,080 --> 00:21:35,720
Speaker 2: HSA as a way to save a little bit on

484
00:21:36,040 --> 00:21:39,080
Speaker 2: taxes to pay for current health care expenses. But that's

485
00:21:39,240 --> 00:21:41,560
Speaker 2: not the best way to go about it if you're

486
00:21:42,080 --> 00:21:44,800
Speaker 2: thinking long term, because you can turn your HSA into

487
00:21:44,800 --> 00:21:47,639
Speaker 2: a triple or even a quadruple tax advantaged account that

488
00:21:47,680 --> 00:21:50,840
Speaker 2: can grow for years and decades, that can compound for

489
00:21:50,920 --> 00:21:52,920
Speaker 2: a long time if you do it right. And that's

490
00:21:53,280 --> 00:21:55,240
Speaker 2: that's the way she is treating it, which I just

491
00:21:55,240 --> 00:21:56,280
Speaker 2: got to say, mad props.

492
00:21:56,480 --> 00:21:58,800
Speaker 1: And part of what it takes to get maximum value

493
00:21:59,440 --> 00:22:02,120
Speaker 1: is to pay for all of your healthcare expenses out

494
00:22:02,119 --> 00:22:05,680
Speaker 1: of pocket so that you can allow for that tech

495
00:22:05,800 --> 00:22:09,440
Speaker 1: sheltered money to keep on growing and compounding. That makes

496
00:22:09,440 --> 00:22:13,919
Speaker 1: me think of Charlie Munger's quote on compounding, which is

497
00:22:13,920 --> 00:22:15,520
Speaker 1: like the number one or the first rule when it

498
00:22:15,560 --> 00:22:20,200
Speaker 1: comes to compounding to never interrupt it this unnecessarily, which

499
00:22:20,240 --> 00:22:22,679
Speaker 1: is it's okay to touch it when you need to

500
00:22:22,680 --> 00:22:24,560
Speaker 1: tap it, but you got to let that thing go.

501
00:22:25,000 --> 00:22:26,960
Speaker 1: And that's what we want you to also do here

502
00:22:27,040 --> 00:22:29,520
Speaker 1: with when it comes to your HSA. But on top

503
00:22:29,560 --> 00:22:32,280
Speaker 1: of that, though, you'll want to have records for every

504
00:22:32,760 --> 00:22:34,880
Speaker 1: health expense that you incur, which is going to help

505
00:22:34,920 --> 00:22:38,760
Speaker 1: you when it comes time to withdraw those funds. I

506
00:22:38,800 --> 00:22:40,960
Speaker 1: have never had an HSA, so I've never been able

507
00:22:40,960 --> 00:22:42,560
Speaker 1: to do this, but you better believe if I hadn't

508
00:22:42,760 --> 00:22:45,399
Speaker 1: a high deductible plan, I would also have an HSA,

509
00:22:45,720 --> 00:22:48,240
Speaker 1: and you better believe I would have an Excel sheet

510
00:22:48,400 --> 00:22:52,000
Speaker 1: or a Google sheet with the date, description, of course,

511
00:22:52,040 --> 00:22:54,560
Speaker 1: the price. But also make sure that you're either taking

512
00:22:54,560 --> 00:22:57,399
Speaker 1: a screenshot of those expenses or you're taking a picture

513
00:22:57,520 --> 00:22:59,680
Speaker 1: of the receipt to actually have the receipt in case

514
00:22:59,720 --> 00:23:02,720
Speaker 1: the eye used wants to have proof of that as well.

515
00:23:03,040 --> 00:23:05,960
Speaker 1: Keep it organized. Upload it to a folder. Maybe the

516
00:23:06,119 --> 00:23:08,600
Speaker 1: HSA folder lay labeled by year. Perhaps, I don't know.

517
00:23:08,640 --> 00:23:10,040
Speaker 1: You come up with your own system, but you got

518
00:23:10,040 --> 00:23:13,040
Speaker 1: to stay organized. That's key to making the HSA work

519
00:23:13,400 --> 00:23:15,520
Speaker 1: as a retirement account. Yeah. Have you ever heard of

520
00:23:15,680 --> 00:23:17,280
Speaker 1: hyper thymsia? No?

521
00:23:17,480 --> 00:23:19,840
Speaker 2: Okay, so this is when you remember everything and apparently

522
00:23:19,840 --> 00:23:22,640
Speaker 2: it's a real problem, Like I always like talking about.

523
00:23:22,480 --> 00:23:25,120
Speaker 1: It, amnesia, right, Yeah, Okay, Well, you remember nothing, which

524
00:23:25,160 --> 00:23:26,760
Speaker 1: is more akin to what I have. I don't.

525
00:23:26,880 --> 00:23:29,320
Speaker 2: I don't remember things very well. I just asked my wife.

526
00:23:29,320 --> 00:23:32,199
Speaker 2: But hyper thymnesia is apparently when you remember everything. I

527
00:23:32,200 --> 00:23:34,159
Speaker 2: don't think she has this. And so because of that,

528
00:23:34,200 --> 00:23:36,399
Speaker 2: he needs to marry taylose documents, and even if you

529
00:23:36,440 --> 00:23:37,960
Speaker 2: remembered it, he wouldn't be able to prove it to

530
00:23:38,000 --> 00:23:39,520
Speaker 2: the irs. So you got to keep the record.

531
00:23:39,520 --> 00:23:41,800
Speaker 1: He's like, it's up here, and they're like, no, that

532
00:23:41,840 --> 00:23:42,880
Speaker 1: doesn't count, right.

533
00:23:43,080 --> 00:23:44,960
Speaker 2: Yeah, we can't tap that and get the files out

534
00:23:45,000 --> 00:23:48,560
Speaker 2: of your brain. But the heart of Ashes's question is

535
00:23:48,640 --> 00:23:51,320
Speaker 2: about whether or not his family members and their medical

536
00:23:51,359 --> 00:23:54,920
Speaker 2: needs qualify to make that document. So, if let's say

537
00:23:54,920 --> 00:23:58,040
Speaker 2: one of his kiddos goes to the er with this

538
00:23:58,160 --> 00:24:00,840
Speaker 2: or that injury God forbid, and you where you know,

539
00:24:00,840 --> 00:24:04,200
Speaker 2: you get a big medical bill, does that count towards

540
00:24:04,200 --> 00:24:06,800
Speaker 2: the HSA money you've set aside. The answer is yes, Right,

541
00:24:06,880 --> 00:24:08,920
Speaker 2: your HSA funds can be used to pay for out

542
00:24:08,920 --> 00:24:12,240
Speaker 2: of pocket qualified medical expenses incurred by your family members

543
00:24:12,400 --> 00:24:15,359
Speaker 2: who qualify as dependents on your taxes. The same is

544
00:24:15,359 --> 00:24:17,280
Speaker 2: true of your spouse, right if they're listed on your

545
00:24:17,280 --> 00:24:20,040
Speaker 2: tax return. If you're filing jointly then for that year, Yeah,

546
00:24:20,080 --> 00:24:23,360
Speaker 2: their expenses are also eligible. And so that's true whether

547
00:24:23,400 --> 00:24:26,159
Speaker 2: you have the individual or the family coverage within HSA

548
00:24:26,600 --> 00:24:27,400
Speaker 2: through your plan.

549
00:24:27,480 --> 00:24:29,960
Speaker 1: That's right. And your kids are actually included as long

550
00:24:30,040 --> 00:24:32,719
Speaker 1: as they are dependents, and that goes up. So if

551
00:24:32,720 --> 00:24:34,320
Speaker 1: your kids are students. A lot of kids go off

552
00:24:34,359 --> 00:24:38,359
Speaker 1: to college and so they qualify up through age twenty

553
00:24:38,400 --> 00:24:40,439
Speaker 1: three as well. So that's good to know when they

554
00:24:40,440 --> 00:24:42,480
Speaker 1: go off to college. And if you're like me and

555
00:24:42,520 --> 00:24:45,240
Speaker 1: you end up in the er because you ate some

556
00:24:45,359 --> 00:24:47,840
Speaker 1: leftovers that were left out on the counter and you

557
00:24:47,920 --> 00:24:50,280
Speaker 1: end up you think you're going to die, and it

558
00:24:50,320 --> 00:24:52,359
Speaker 1: turns out you've got food poisoning and you're laid up

559
00:24:52,359 --> 00:24:54,480
Speaker 1: in bed for multiple days. Why does that not surprise me?

560
00:24:55,920 --> 00:24:58,200
Speaker 1: Learn my lesson. I'm willing to eat my own leftovers

561
00:24:58,200 --> 00:25:00,760
Speaker 1: that where I know that they weren't necessarily left in

562
00:25:00,800 --> 00:25:05,040
Speaker 1: a car for two days. All the things we did

563
00:25:05,119 --> 00:25:08,119
Speaker 1: get I mean, you I can laugh now, but dude,

564
00:25:08,160 --> 00:25:10,399
Speaker 1: at the time, I literally thought I was dying. I

565
00:25:10,440 --> 00:25:11,399
Speaker 1: didn't know what was going on.

566
00:25:11,440 --> 00:25:13,679
Speaker 2: I'm sure your parents were like, we wish he would.

567
00:25:13,720 --> 00:25:14,960
Speaker 2: We're so mad at him right now.

568
00:25:15,400 --> 00:25:17,200
Speaker 1: I think I barely had a cell phone at that point,

569
00:25:17,240 --> 00:25:19,159
Speaker 1: so I think they knew. But you know, this is

570
00:25:19,160 --> 00:25:21,200
Speaker 1: back in the old it's not the eighties. It makes

571
00:25:21,240 --> 00:25:23,400
Speaker 1: me think of the Blue episode. It was the eighties.

572
00:25:23,920 --> 00:25:25,760
Speaker 1: It wasn't at all the eighties. That's when I was born.

573
00:25:25,800 --> 00:25:27,959
Speaker 1: But technology wasn't what it was while went back when

574
00:25:28,000 --> 00:25:30,520
Speaker 1: we were in college. That's true, we still remember pagers

575
00:25:31,320 --> 00:25:33,720
Speaker 1: and AOL is a messenger. But by the way back

576
00:25:33,720 --> 00:25:36,080
Speaker 1: to your question the sheish, it's also important to mention

577
00:25:36,240 --> 00:25:39,359
Speaker 1: that HSA funds that they can be used to cover

578
00:25:39,440 --> 00:25:43,760
Speaker 1: some things that your health insurance policy may not cover. So,

579
00:25:43,840 --> 00:25:46,800
Speaker 1: for instance, your health care plan it might not cover

580
00:25:47,040 --> 00:25:51,119
Speaker 1: new glasses or orthodontia when it comes, especially if we're

581
00:25:51,160 --> 00:25:54,639
Speaker 1: talking about your kids here, which can get crazy expensive.

582
00:25:54,680 --> 00:25:59,040
Speaker 1: But those count as qualified expenses through your HSA. So

583
00:25:59,200 --> 00:26:01,800
Speaker 1: if you end up spending five thousand dollars on braces,

584
00:26:02,000 --> 00:26:05,040
Speaker 1: make sure to put that in the sheet excel file

585
00:26:05,119 --> 00:26:07,320
Speaker 1: as well. But ashish Man, I love how it is

586
00:26:07,400 --> 00:26:10,440
Speaker 1: you're thinking about using your HSA. Your long time horizon

587
00:26:10,600 --> 00:26:13,199
Speaker 1: is amazing here in the fact that you're willing and

588
00:26:13,320 --> 00:26:17,119
Speaker 1: able to invest HSA dollars for thirty to forty years.

589
00:26:17,320 --> 00:26:20,320
Speaker 1: That is impressive. It's going to offer you so much

590
00:26:20,359 --> 00:26:24,240
Speaker 1: more future flexibility because you're maximizing all of these retirement

591
00:26:24,240 --> 00:26:25,520
Speaker 1: accounts that you have at your disposal.

592
00:26:25,600 --> 00:26:27,919
Speaker 2: Yeah, this is like the textbook way to use an

593
00:26:28,040 --> 00:26:30,399
Speaker 2: HSA if you have access to one, right, perfect like

594
00:26:30,440 --> 00:26:33,959
Speaker 2: maxid joker out, get all those tax benefits, invest it,

595
00:26:34,160 --> 00:26:36,200
Speaker 2: and then have a lot more money that's tax free

596
00:26:36,200 --> 00:26:38,600
Speaker 2: to spend later on. But you've got to document along

597
00:26:38,640 --> 00:26:40,080
Speaker 2: the way, right, and so there are a lot of

598
00:26:40,119 --> 00:26:42,960
Speaker 2: details that you need to know in order to make

599
00:26:43,000 --> 00:26:46,440
Speaker 2: that HSA work the most effectively for you possible. Right,

600
00:26:46,520 --> 00:26:49,400
Speaker 2: So she's good luck, keep it up, Man and Matt.

601
00:26:49,440 --> 00:26:51,760
Speaker 2: Let's get to our next listener question. This one comes

602
00:26:51,800 --> 00:26:54,080
Speaker 2: from a listener she just like really wants to know

603
00:26:54,359 --> 00:26:57,080
Speaker 2: after going through a really difficult life event, whether she

604
00:26:57,240 --> 00:26:58,960
Speaker 2: is still on the right track with her money.

605
00:26:59,520 --> 00:26:59,680
Speaker 3: Hi.

606
00:27:00,200 --> 00:27:03,280
Speaker 5: My name is Down and I'm from Toledo, Ohio. I've

607
00:27:03,280 --> 00:27:06,280
Speaker 5: listened to your podcast for several months now. I love

608
00:27:06,359 --> 00:27:09,720
Speaker 5: all of your helpful Hence your explanations of all things

609
00:27:09,720 --> 00:27:13,399
Speaker 5: financial are so helpful. I am fifty seven years old,

610
00:27:13,600 --> 00:27:16,440
Speaker 5: I am single, live by myself and rent my home

611
00:27:17,160 --> 00:27:19,280
Speaker 5: I have not purchased a home because my job is

612
00:27:19,320 --> 00:27:23,119
Speaker 5: somewhat transitional, meaning that I am transferred to a different

613
00:27:23,160 --> 00:27:26,760
Speaker 5: location every two to three years. I bring home about

614
00:27:26,800 --> 00:27:29,879
Speaker 5: twenty eight hundred dollars a month after taxes, insurance, and

615
00:27:29,960 --> 00:27:32,840
Speaker 5: money for my four O one K are deducted. I

616
00:27:32,880 --> 00:27:35,960
Speaker 5: also have a side gig making about three hundred to

617
00:27:36,000 --> 00:27:39,520
Speaker 5: four hundred dollars a month. I have five percent taken

618
00:27:39,520 --> 00:27:41,880
Speaker 5: out for my four O one K, and my employer

619
00:27:41,960 --> 00:27:44,960
Speaker 5: matches that five percent. In addition to my four to

620
00:27:45,040 --> 00:27:47,960
Speaker 5: one K and my savings, I will also have a

621
00:27:48,040 --> 00:27:50,879
Speaker 5: retirement pension from working for the State of Ohio for

622
00:27:50,920 --> 00:27:55,240
Speaker 5: twenty seven years. My monthly living expenses are about seventeen

623
00:27:55,320 --> 00:27:58,560
Speaker 5: hundred dollars. I have an emergency fund of thirty six

624
00:27:58,680 --> 00:28:01,600
Speaker 5: hundred dollars in a savings age count, and I have

625
00:28:01,720 --> 00:28:05,399
Speaker 5: forty thousand dollars in a CD. My only debt is

626
00:28:05,400 --> 00:28:08,000
Speaker 5: a credit card with a balance of four thousand dollars.

627
00:28:08,920 --> 00:28:12,520
Speaker 5: My questions are one, I plan to use some of

628
00:28:12,560 --> 00:28:14,720
Speaker 5: the money in my CD to pay off my four

629
00:28:14,800 --> 00:28:18,639
Speaker 5: thousand dollars credit card debt once the CD matures in

630
00:28:18,720 --> 00:28:22,520
Speaker 5: five months, instead of waiting. Should I deplete my emergency

631
00:28:22,520 --> 00:28:25,080
Speaker 5: fund in my savings account now to pay most of

632
00:28:25,080 --> 00:28:28,800
Speaker 5: the credit card debt off. Two should I invest my

633
00:28:28,840 --> 00:28:32,320
Speaker 5: forty thousand dollars from the CD differently once it matures

634
00:28:32,320 --> 00:28:35,320
Speaker 5: in November? And if so, what might be some good

635
00:28:35,320 --> 00:28:40,240
Speaker 5: investment options. I have considered purchasing a short term rental property,

636
00:28:40,400 --> 00:28:42,200
Speaker 5: but I am a little leery of making such a

637
00:28:42,240 --> 00:28:46,960
Speaker 5: big purchase. And then three, I am recently divorced and

638
00:28:47,160 --> 00:28:50,080
Speaker 5: very concerned about doing the right thing with my finances

639
00:28:50,640 --> 00:28:53,280
Speaker 5: so that I can retire when it comes time without

640
00:28:53,320 --> 00:28:57,880
Speaker 5: being incapacitated financially. Am I on the right track or

641
00:28:57,920 --> 00:28:59,720
Speaker 5: do you feel that I should be doing things to

642
00:28:59,720 --> 00:29:04,360
Speaker 5: different Really? Any suggestions would be greatly appreciated. I love

643
00:29:04,400 --> 00:29:08,080
Speaker 5: the show, Thanks for the help, and take care all right.

644
00:29:08,120 --> 00:29:11,240
Speaker 1: Glad to have you on board, don and great job

645
00:29:11,320 --> 00:29:13,360
Speaker 1: keeping a nice gap between what it is that you

646
00:29:13,400 --> 00:29:15,440
Speaker 1: bring in every month and what goes out. You are

647
00:29:15,480 --> 00:29:20,160
Speaker 1: living frugally what she was saying, her monthly living expenses

648
00:29:20,160 --> 00:29:22,640
Speaker 1: are like seventeen hundred dollars a month. I don't care

649
00:29:22,680 --> 00:29:25,400
Speaker 1: where you live. That is incredible given today's the high

650
00:29:25,400 --> 00:29:26,240
Speaker 1: cost of living today.

651
00:29:26,360 --> 00:29:30,200
Speaker 2: Yeah, just housing, groceries, transportation, like to keep that all

652
00:29:30,440 --> 00:29:33,600
Speaker 2: in that spare is really impressive in so housing, So

653
00:29:33,960 --> 00:29:35,520
Speaker 2: she mentioned not owning a home.

654
00:29:35,800 --> 00:29:38,320
Speaker 1: Don don't worry about that because most folks have been

655
00:29:38,440 --> 00:29:42,760
Speaker 1: brainwashed into thinking that home ownership is the only way

656
00:29:42,800 --> 00:29:44,960
Speaker 1: to build wealth or the best way, right, the best way,

657
00:29:45,000 --> 00:29:46,960
Speaker 1: and it's not necessarily true. I think it can work

658
00:29:47,240 --> 00:29:50,480
Speaker 1: as a great forced method of savings, right, because when

659
00:29:50,480 --> 00:29:53,000
Speaker 1: you buy a home, that's just something you pay every

660
00:29:53,000 --> 00:29:55,600
Speaker 1: single month, and so you're kind of automatic. It's again

661
00:29:55,640 --> 00:29:59,440
Speaker 1: it's forced savings. But renters who are diligent investors, who

662
00:29:59,480 --> 00:30:01,239
Speaker 1: are listening to how to money or making the right

663
00:30:01,240 --> 00:30:03,160
Speaker 1: moves with their money, they can actually come out ahead

664
00:30:03,440 --> 00:30:07,960
Speaker 1: by not necessarily investing within you know, a primary resident.

665
00:30:08,040 --> 00:30:10,720
Speaker 1: That's even more true today than it was given where

666
00:30:10,720 --> 00:30:13,160
Speaker 1: five or ten years they are given where housing prices are.

667
00:30:13,080 --> 00:30:17,000
Speaker 2: Yeah, resolutely, we've seen massive increases in both the cost

668
00:30:17,120 --> 00:30:20,160
Speaker 2: of rents and the cost of a home, but less

669
00:30:20,640 --> 00:30:23,200
Speaker 2: growth in the cost of rent and so renters are

670
00:30:23,240 --> 00:30:26,160
Speaker 2: sitting prettier than homeowners or people who want to be

671
00:30:26,200 --> 00:30:28,080
Speaker 2: homeowners now. And so I just want to mention too,

672
00:30:28,160 --> 00:30:29,960
Speaker 2: like how great is it to work for an employer

673
00:30:29,960 --> 00:30:31,920
Speaker 2: who matches dollar for dollar up to five percent.

674
00:30:32,240 --> 00:30:33,320
Speaker 1: That is pretty great.

675
00:30:33,720 --> 00:30:35,680
Speaker 2: Not necessarily the norm, but it's pretty sweet. And so

676
00:30:36,320 --> 00:30:38,520
Speaker 2: that means just by default, by putting in the five

677
00:30:38,680 --> 00:30:42,320
Speaker 2: you're getting a ten percent total of your salary tossed

678
00:30:42,320 --> 00:30:45,080
Speaker 2: into a retirement account, which is a really good place

679
00:30:45,120 --> 00:30:47,160
Speaker 2: to be, right especially since you've got that pension to

680
00:30:47,200 --> 00:30:49,880
Speaker 2: go along with what you've been putting away on your own.

681
00:30:50,240 --> 00:30:52,360
Speaker 2: In many ways, you're ahead of the game when it

682
00:30:52,360 --> 00:30:55,040
Speaker 2: comes to retirement savings. So this is a good place

683
00:30:55,080 --> 00:30:57,480
Speaker 2: to be. It's not that maybe you can't do more

684
00:30:57,520 --> 00:30:59,080
Speaker 2: down the road, but it's a good place. It's a

685
00:30:59,120 --> 00:31:01,280
Speaker 2: really good starting posies. And let's talk about the credit

686
00:31:01,280 --> 00:31:03,040
Speaker 2: card debt for a second, because you're not alone on

687
00:31:03,080 --> 00:31:06,120
Speaker 2: that either. About half of Americans have revolving credit card

688
00:31:06,200 --> 00:31:09,120
Speaker 2: debt to the tune of like over six thousand dollars. Fortunately,

689
00:31:09,200 --> 00:31:11,360
Speaker 2: you've got less than that, but we would say that

690
00:31:11,400 --> 00:31:13,280
Speaker 2: this should be a really high priority for you to

691
00:31:13,320 --> 00:31:17,080
Speaker 2: pay it off. But should you eliminate that small savings

692
00:31:17,120 --> 00:31:19,040
Speaker 2: nest egg in order to do it in order to.

693
00:31:19,080 --> 00:31:22,240
Speaker 1: Do it right now? We'd say probably not. That's that's right. Yeah,

694
00:31:22,280 --> 00:31:24,320
Speaker 1: So if don if you look at our money gears.

695
00:31:24,520 --> 00:31:27,880
Speaker 1: We want folks amassing four hundred and sixty seven dollars

696
00:31:28,360 --> 00:31:31,440
Speaker 1: before they start paying off the credit card debt. And

697
00:31:31,680 --> 00:31:34,520
Speaker 1: the thing is, you have more than that in savings.

698
00:31:34,720 --> 00:31:36,560
Speaker 1: It's just not that all of it is liquid. You've

699
00:31:36,600 --> 00:31:38,360
Speaker 1: got a lot of it, some of it in CDs.

700
00:31:38,800 --> 00:31:41,760
Speaker 1: But if that were to you, like let's just say

701
00:31:41,760 --> 00:31:45,320
Speaker 1: an emergency comes along, well, you'd be putting that expense

702
00:31:45,480 --> 00:31:47,959
Speaker 1: of that emergency right back on your credit card. And

703
00:31:48,000 --> 00:31:50,880
Speaker 1: so feel free to take whatever you have an access

704
00:31:51,000 --> 00:31:54,800
Speaker 1: of that bare bones base emergency fund and pay that

705
00:31:54,840 --> 00:31:56,600
Speaker 1: to the credit card company. Go ahead and reduce your balance,

706
00:31:56,640 --> 00:32:00,240
Speaker 1: but don't use all of it because you are again

707
00:32:00,240 --> 00:32:02,200
Speaker 1: you would be in a position to where you have

708
00:32:02,320 --> 00:32:05,040
Speaker 1: no cash on hand. And on top of that too,

709
00:32:05,440 --> 00:32:08,680
Speaker 1: she pulls in I think combined between her main gig

710
00:32:08,720 --> 00:32:10,720
Speaker 1: as well as her side gig, she's bringing in over

711
00:32:10,800 --> 00:32:13,720
Speaker 1: three thousand dollars, so something like fifteen hundred dollars a

712
00:32:13,720 --> 00:32:17,600
Speaker 1: month because her living expenses are seventeen, right, so she's

713
00:32:17,640 --> 00:32:20,120
Speaker 1: got some excess funds on hand, and I think the

714
00:32:20,160 --> 00:32:23,000
Speaker 1: ability to start paying down that credit card balance even

715
00:32:23,040 --> 00:32:27,120
Speaker 1: before that was it forty thousand that she's gotten slocked

716
00:32:27,120 --> 00:32:28,880
Speaker 1: away on that CD that's going to mature later this year.

717
00:32:29,440 --> 00:32:32,000
Speaker 1: Down you have the ability to really start shipping away,

718
00:32:32,040 --> 00:32:34,840
Speaker 1: and by the time that thing matures, you could be

719
00:32:35,080 --> 00:32:37,920
Speaker 1: totally free and clear of that credit card. Best by

720
00:32:38,280 --> 00:32:40,840
Speaker 1: starting to chip away at it now, because you are

721
00:32:40,880 --> 00:32:43,320
Speaker 1: living so frugally, and because you've got that little making

722
00:32:43,320 --> 00:32:44,440
Speaker 1: that three or hundred bucks on the.

723
00:32:44,440 --> 00:32:48,320
Speaker 2: Side, I love that because your margin is so substantial.

724
00:32:48,400 --> 00:32:51,960
Speaker 2: Even though you're not making six figures, you're still doing

725
00:32:52,120 --> 00:32:53,800
Speaker 2: You still got a big gap there, which is the

726
00:32:53,880 --> 00:32:55,200
Speaker 2: key to financial success.

727
00:32:55,280 --> 00:32:57,560
Speaker 1: Right. The bigger the gap, the more the more moves

728
00:32:57,600 --> 00:32:59,080
Speaker 1: you can make that are going to benefit your future,

729
00:32:59,080 --> 00:33:01,280
Speaker 1: regardless of how much much you make. Right, But the

730
00:33:01,280 --> 00:33:03,400
Speaker 1: credit card debt's holding you back. So I agree Matt.

731
00:33:03,440 --> 00:33:07,080
Speaker 2: The more she can funnel from that margin, specifically to

732
00:33:07,080 --> 00:33:09,760
Speaker 2: go towards credit card debt while retaining that minimum amount

733
00:33:09,840 --> 00:33:12,240
Speaker 2: in savings so that she has money on hand for

734
00:33:12,320 --> 00:33:14,400
Speaker 2: an emergency, I think that's okay. And then once that

735
00:33:14,480 --> 00:33:16,280
Speaker 2: CD matures, there's probably better things to do with that

736
00:33:16,320 --> 00:33:18,560
Speaker 2: money too. Like you and I, we want all how

737
00:33:18,560 --> 00:33:20,600
Speaker 2: to Money listeners to use credit cards wisely and to

738
00:33:20,680 --> 00:33:23,640
Speaker 2: avoid revolving credit card debt. That's of course that's a

739
00:33:23,640 --> 00:33:26,160
Speaker 2: wealth destroyer over time. But the truth is there are

740
00:33:26,160 --> 00:33:29,520
Speaker 2: probably better things that Don can do with that additional

741
00:33:29,560 --> 00:33:32,120
Speaker 2: forty K that she's gotten a CD as well. So

742
00:33:32,640 --> 00:33:34,680
Speaker 2: we should talk about that and Don. First, I just

743
00:33:34,760 --> 00:33:36,520
Speaker 2: want to say sorry to hear about your divorce. I mean,

744
00:33:36,600 --> 00:33:39,360
Speaker 2: we know that that can be tough emotionally and financially.

745
00:33:39,400 --> 00:33:43,320
Speaker 2: It's got ramifications in basically every realm of your life.

746
00:33:43,440 --> 00:33:45,080
Speaker 2: But based on what you've told us, I want to

747
00:33:45,080 --> 00:33:47,400
Speaker 2: tell you it sounds like you're heading into the right direction.

748
00:33:47,480 --> 00:33:49,080
Speaker 2: It sounds like you're making the right moves, and it

749
00:33:49,120 --> 00:33:51,440
Speaker 2: sounds like you know what you're doing too right, And

750
00:33:51,520 --> 00:33:54,520
Speaker 2: so I would think about like moves you need to

751
00:33:54,520 --> 00:33:56,720
Speaker 2: make and moves you should be making as more of

752
00:33:56,800 --> 00:34:00,400
Speaker 2: like tweaks instead of an overhaul. Like when you're going

753
00:34:00,440 --> 00:34:02,600
Speaker 2: in the right direction and you're going at the right speed,

754
00:34:02,960 --> 00:34:05,920
Speaker 2: but maybe the brakes are just a little squeaky, right,

755
00:34:05,960 --> 00:34:08,640
Speaker 2: it's like a tune up. It's a minor adjustment as

756
00:34:08,640 --> 00:34:11,800
Speaker 2: opposed to making big changes. And so once that CD matures,

757
00:34:11,800 --> 00:34:14,960
Speaker 2: I would say, keep a decent chunk around as additional savings.

758
00:34:15,000 --> 00:34:16,400
Speaker 2: Kind of like that three to six months worth of

759
00:34:16,400 --> 00:34:17,920
Speaker 2: the living expenses that we want people.

760
00:34:17,760 --> 00:34:18,279
Speaker 1: To save up.

761
00:34:18,600 --> 00:34:20,560
Speaker 2: And then after that, we suggest that you make it

762
00:34:20,600 --> 00:34:22,560
Speaker 2: a goal to max out your WROTH IRA each and

763
00:34:22,680 --> 00:34:24,880
Speaker 2: every year moving forward. Since you're over the age of

764
00:34:24,920 --> 00:34:27,600
Speaker 2: fifty five, you can contribute seventy five hundred dollars this year,

765
00:34:27,600 --> 00:34:28,560
Speaker 2: you contribute.

766
00:34:28,160 --> 00:34:29,800
Speaker 1: And got that those ketchup contributions.

767
00:34:29,840 --> 00:34:32,520
Speaker 2: Yeah, eight grand next year, right with that increased WROTH amount,

768
00:34:32,719 --> 00:34:35,520
Speaker 2: increased IRA amount, So make it your goal to max

769
00:34:35,520 --> 00:34:39,120
Speaker 2: that out. That is a great place for that additional savings,

770
00:34:39,160 --> 00:34:41,759
Speaker 2: which might be too much savings really when we're talking

771
00:34:41,760 --> 00:34:44,399
Speaker 2: about it, and we probably want more money growing for

772
00:34:44,440 --> 00:34:47,319
Speaker 2: your future. That's where we'd funnel some of that that

773
00:34:47,520 --> 00:34:50,759
Speaker 2: the CD money on once immatures.

774
00:34:50,360 --> 00:34:54,320
Speaker 1: That's right, Yeah, And don you also asked about buying

775
00:34:54,360 --> 00:34:58,000
Speaker 1: a rental property. It sounds like you move around a lot, right,

776
00:34:58,040 --> 00:35:00,359
Speaker 1: and so with that in mind, is probably not an

777
00:35:00,360 --> 00:35:03,080
Speaker 1: ideal investment for you. And on top of that, we

778
00:35:03,080 --> 00:35:04,960
Speaker 1: would want you to do a ton of research and

779
00:35:05,040 --> 00:35:07,600
Speaker 1: some due diligence before you consider going down that path,

780
00:35:07,640 --> 00:35:10,480
Speaker 1: because it's not like an investment per se, it's more

781
00:35:10,520 --> 00:35:13,160
Speaker 1: like a part time job. And you've already got a

782
00:35:13,160 --> 00:35:15,919
Speaker 1: full time job that it's going to have that nice

783
00:35:15,960 --> 00:35:17,879
Speaker 1: pension and a part time job on a edition what's

784
00:35:17,920 --> 00:35:20,759
Speaker 1: that side gig exactly. So with all that in mind,

785
00:35:20,880 --> 00:35:23,960
Speaker 1: like I mean, it could be an overwhelming endeavor, but

786
00:35:24,040 --> 00:35:26,600
Speaker 1: if you are super interested in it, certainly start reading

787
00:35:26,640 --> 00:35:28,600
Speaker 1: up on it. Just make sure you do a lot

788
00:35:28,640 --> 00:35:33,560
Speaker 1: of research there. But sticking to tax advantaged retirement accounts

789
00:35:33,719 --> 00:35:37,399
Speaker 1: and just funding those like clockwork and specifically what would

790
00:35:37,440 --> 00:35:39,879
Speaker 1: you invest in. I think a target date fund would

791
00:35:39,920 --> 00:35:43,560
Speaker 1: be smart as you are closer to retirement age those

792
00:35:43,600 --> 00:35:46,239
Speaker 1: funds automatically readjust it and make sure that you are

793
00:35:46,320 --> 00:35:49,520
Speaker 1: exposed to less volatility. That way, you're avoiding the sequence

794
00:35:49,520 --> 00:35:52,520
Speaker 1: of returns risk that's when were you to retire, you

795
00:35:52,520 --> 00:35:54,719
Speaker 1: start withdrawing on some of these funds. If there's a

796
00:35:54,760 --> 00:35:57,000
Speaker 1: big drop in the stock market, that would have a

797
00:35:57,480 --> 00:36:00,520
Speaker 1: major impact on the amount of money us left there

798
00:36:00,520 --> 00:36:03,239
Speaker 1: in your nest egg. And so by switching over to

799
00:36:03,520 --> 00:36:06,680
Speaker 1: less risky, less volatile investments within that target date fund,

800
00:36:06,760 --> 00:36:09,319
Speaker 1: that keeps that from happening. So we would recommend that

801
00:36:09,400 --> 00:36:11,440
Speaker 1: it allows you to pick a date and you can

802
00:36:11,480 --> 00:36:15,160
Speaker 1: start working towards that retirement year, but a solid decade

803
00:36:15,200 --> 00:36:18,319
Speaker 1: of that, plus your pension and plus social security, that's

804
00:36:18,320 --> 00:36:21,000
Speaker 1: not even something that we even talked about. In addition

805
00:36:21,080 --> 00:36:23,600
Speaker 1: to a continued frugal lifestyle, I think that's going to

806
00:36:23,800 --> 00:36:25,920
Speaker 1: easily be able to get you where it is that

807
00:36:25,960 --> 00:36:28,080
Speaker 1: you want to be. Yeah, and don hopefully our comments

808
00:36:28,080 --> 00:36:30,280
Speaker 1: help you feel good about where you're going. Comments always

809
00:36:30,280 --> 00:36:32,799
Speaker 1: make me feel good, Joe, Well, thank you, that's the goal.

810
00:36:32,920 --> 00:36:34,400
Speaker 1: Oh right, sorry, I thought you meant I thought you

811
00:36:34,440 --> 00:36:36,520
Speaker 1: said compliments. Well, but the.

812
00:36:37,239 --> 00:36:40,680
Speaker 2: One thing we might suggest if you're interested is to

813
00:36:41,560 --> 00:36:44,799
Speaker 2: talk to a fee only financial advisor, and so you

814
00:36:44,840 --> 00:36:48,200
Speaker 2: could find one at xy Planning Network or NAPFA dot org.

815
00:36:48,200 --> 00:36:50,479
Speaker 2: Those are those are two places where you could find

816
00:36:50,480 --> 00:36:53,000
Speaker 2: somebody who meets kind of the standards for a financial

817
00:36:53,040 --> 00:36:56,040
Speaker 2: advisor that Matt and I think are important. And if

818
00:36:56,040 --> 00:36:58,200
Speaker 2: you really wanted someone to kind of like pour over

819
00:36:58,280 --> 00:37:00,400
Speaker 2: all of your financials at once, it might be worth

820
00:37:00,760 --> 00:37:04,120
Speaker 2: right paying a flat fee to somebody to do that.

821
00:37:04,360 --> 00:37:06,520
Speaker 2: A few hours of their time would likely be enough

822
00:37:06,560 --> 00:37:08,480
Speaker 2: to kind of go over some of these details and

823
00:37:08,560 --> 00:37:11,040
Speaker 2: help give you even more reassurance and maybe some more

824
00:37:11,040 --> 00:37:13,440
Speaker 2: direction too. But Matt, we got a couple more questions

825
00:37:13,520 --> 00:37:16,200
Speaker 2: to get to including yeah, whether or not someone going

826
00:37:16,200 --> 00:37:18,120
Speaker 2: back to school as an adult should be socking money

827
00:37:18,120 --> 00:37:20,840
Speaker 2: aside into a five twenty nine account.

828
00:37:20,920 --> 00:37:23,239
Speaker 1: Isn't that just for kids? Maybe not. We'll get to

829
00:37:23,280 --> 00:37:34,759
Speaker 1: that and more right after this, Joel, everyone knows that

830
00:37:34,800 --> 00:37:38,160
Speaker 1: tricks are for kids. Silly rabbit. That's that's that's what

831
00:37:38,320 --> 00:37:40,960
Speaker 1: you're comment about five twenty nine. Before the break, maybe

832
00:37:41,040 --> 00:37:44,000
Speaker 1: think of do you remember that this commercial? Of course? Okay, yeah, classic.

833
00:37:44,560 --> 00:37:46,640
Speaker 1: We will get to that question about five twenty nine's

834
00:37:46,640 --> 00:37:49,600
Speaker 1: here in a second, but first let's hear a question

835
00:37:49,880 --> 00:37:53,440
Speaker 1: about the main bank that I actually used me personally.

836
00:37:54,000 --> 00:37:57,719
Speaker 3: Hey, Juelan Matt, this is Massa from Boston. Again. Recently,

837
00:37:57,840 --> 00:38:01,200
Speaker 3: I read that the financial ratings agency Moody gave Alli

838
00:38:01,280 --> 00:38:05,279
Speaker 3: Financial a negative outlook. In past episodes, you'll have sung

839
00:38:05,320 --> 00:38:08,600
Speaker 3: the praises of Ally Bank. I have a couple of questions.

840
00:38:09,840 --> 00:38:12,400
Speaker 3: Is the Ally Financial that Moodies gave a negative outlook

841
00:38:12,440 --> 00:38:15,080
Speaker 3: to the same Ally Bank that you really like for

842
00:38:15,120 --> 00:38:18,960
Speaker 3: personal banking? And if so, should I be concerned that

843
00:38:19,640 --> 00:38:22,240
Speaker 3: even if my deposits are wholly insured by the FDIIC

844
00:38:22,880 --> 00:38:25,240
Speaker 3: because I have less than a quarter million dollars with them,

845
00:38:25,640 --> 00:38:28,920
Speaker 3: if Alli Bank goes under, I may have difficulty getting

846
00:38:28,920 --> 00:38:31,640
Speaker 3: my money back out. Thanks again for all you do

847
00:38:31,719 --> 00:38:35,920
Speaker 3: to educate and inform us. Oh in confession time, I

848
00:38:36,000 --> 00:38:38,920
Speaker 3: first learned about credit ratings for companies by selling bonds

849
00:38:39,080 --> 00:38:41,560
Speaker 3: in the video game Railroad Tycoon three.

850
00:38:42,080 --> 00:38:44,239
Speaker 2: Okay, man, that's kind of cool and it made me

851
00:38:44,280 --> 00:38:46,760
Speaker 2: I think. Actually was talking to somebody I know recently

852
00:38:47,080 --> 00:38:49,239
Speaker 2: and he was saying that he plays the Nintendo game

853
00:38:49,280 --> 00:38:50,000
Speaker 2: Animal Crossing.

854
00:38:50,000 --> 00:38:51,640
Speaker 1: Have you heard of it? Maybe?

855
00:38:51,719 --> 00:38:54,080
Speaker 2: Okay, I have not. I've never played it. I probably

856
00:38:54,080 --> 00:38:55,920
Speaker 2: haven't played video games in like ten years ago ago.

857
00:38:55,920 --> 00:38:57,479
Speaker 2: It sounds like a video game to me, Yeah, it does.

858
00:38:57,800 --> 00:39:00,600
Speaker 2: But he was saying, like, man, there's so many personal

859
00:39:00,600 --> 00:39:03,080
Speaker 2: finance tidbits. As he's been listening to the show. He's like,

860
00:39:03,120 --> 00:39:04,920
Speaker 2: I've been learning, but I'm also kind of putting it

861
00:39:04,920 --> 00:39:07,319
Speaker 2: into action in the video game that I'm playing. And

862
00:39:07,520 --> 00:39:09,319
Speaker 2: I think that's kind of cool. The video games can

863
00:39:09,320 --> 00:39:13,520
Speaker 2: connect like real life truths to the stuff we're playing.

864
00:39:13,560 --> 00:39:16,799
Speaker 2: It's obviously playing stupid stuff like Halo and NBA Jam,

865
00:39:16,840 --> 00:39:19,879
Speaker 2: but it's like, it's cool to see that that some

866
00:39:19,960 --> 00:39:22,040
Speaker 2: games are actually kind of helping teach us secually. Nintendo

867
00:39:22,080 --> 00:39:23,160
Speaker 2: in particular doesn't well.

868
00:39:23,040 --> 00:39:27,040
Speaker 1: It doesn't, Halo, there's some sort of market capacity, right,

869
00:39:27,239 --> 00:39:29,680
Speaker 1: like don't you have a limited A lot of death.

870
00:39:29,719 --> 00:39:33,120
Speaker 1: I don't remember the other stuff, but if that's the case, yeah,

871
00:39:33,239 --> 00:39:35,880
Speaker 1: video games in some cases don't do as good of it.

872
00:39:35,920 --> 00:39:38,600
Speaker 1: Like that's why we love nerdy board games because oftentimes

873
00:39:38,640 --> 00:39:42,360
Speaker 1: the mirror real life when you're presented with a limited

874
00:39:42,400 --> 00:39:43,920
Speaker 1: resource and you have to find a way to make

875
00:39:43,920 --> 00:39:46,200
Speaker 1: the best of those limited resources. That is life, at

876
00:39:46,280 --> 00:39:50,600
Speaker 1: least ancient real life. You know, like wheat tobacco. Well

877
00:39:50,600 --> 00:39:52,600
Speaker 1: that's Puerto Rico right there. We haven't played that on

878
00:39:52,719 --> 00:39:55,799
Speaker 1: in a while. But even like some video games do

879
00:39:55,880 --> 00:39:58,560
Speaker 1: that like makes me think of the classics, like Zelda.

880
00:39:59,080 --> 00:40:01,400
Speaker 1: You are gathering resources and you have to you know,

881
00:40:01,400 --> 00:40:03,080
Speaker 1: you go into the shop. You got the three things

882
00:40:03,080 --> 00:40:05,080
Speaker 1: that you can buy, and you got to decide which

883
00:40:05,120 --> 00:40:07,160
Speaker 1: one am I gonna buy the bomb? Am I gonna

884
00:40:07,840 --> 00:40:10,200
Speaker 1: buy the red candle? Or upgrade to the blue candle?

885
00:40:10,840 --> 00:40:13,239
Speaker 1: You know, you've got all these things that you got

886
00:40:13,360 --> 00:40:16,719
Speaker 1: to make decisions on. So it's not just nerdy board games. Yeah,

887
00:40:16,760 --> 00:40:19,800
Speaker 1: you can actually learn from video games. Yeah, which I appreciate.

888
00:40:19,880 --> 00:40:22,160
Speaker 2: I agreed, especially since you know, we're not learning about

889
00:40:22,200 --> 00:40:24,320
Speaker 2: this stuff in school really, so at least if the

890
00:40:24,400 --> 00:40:27,160
Speaker 2: video games have an educational element to it, I'm all

891
00:40:27,200 --> 00:40:28,960
Speaker 2: for it. But that's thanks for sharing that, Massa. And

892
00:40:29,040 --> 00:40:32,000
Speaker 2: let's get to the heart of Massa's question about bank downgrades.

893
00:40:32,280 --> 00:40:35,279
Speaker 2: I'm sure, Matt, some listeners have seen these headlines and

894
00:40:35,840 --> 00:40:38,439
Speaker 2: maybe they're either worried or they feel like they've got

895
00:40:38,440 --> 00:40:41,640
Speaker 2: to change bank stats something like that. And we talked

896
00:40:41,640 --> 00:40:45,279
Speaker 2: about the recent downgrade to credit down grade to our

897
00:40:45,320 --> 00:40:47,120
Speaker 2: country and what we think that means.

898
00:40:47,200 --> 00:40:49,759
Speaker 1: Right, well, you know, not just a bank. The US

899
00:40:49,840 --> 00:40:51,759
Speaker 1: event yes, got downgraded.

900
00:40:51,880 --> 00:40:54,640
Speaker 2: Literally the country we live in got downgraded from a

901
00:40:54,640 --> 00:40:58,080
Speaker 2: credit standpoint, and Moody's they actually recently downgraded ten banks

902
00:40:58,080 --> 00:41:01,080
Speaker 2: and they gave negative outlooks to others, ally being one

903
00:41:01,120 --> 00:41:03,480
Speaker 2: of them. And then Fitch, the agency who did give

904
00:41:03,520 --> 00:41:07,040
Speaker 2: our country credit rating down grade, they said that they're

905
00:41:07,160 --> 00:41:09,200
Speaker 2: likely to down grade dozens of banks too, And so

906
00:41:09,680 --> 00:41:12,160
Speaker 2: part of that's because of multiple bank collapses that have

907
00:41:12,160 --> 00:41:15,120
Speaker 2: happened throughout twenty twenty three. It has folks on edge

908
00:41:15,120 --> 00:41:16,680
Speaker 2: when it comes to where they're putting their savings. So

909
00:41:16,960 --> 00:41:18,840
Speaker 2: a little nervous, yeah, and a lot of individuals have

910
00:41:18,880 --> 00:41:22,640
Speaker 2: moved their deposits not to better banks, but to the

911
00:41:22,640 --> 00:41:25,120
Speaker 2: biggest banks, believing that that's a safer place for them

912
00:41:25,160 --> 00:41:28,279
Speaker 2: to be. We want to reiterate, as always, that is

913
00:41:28,360 --> 00:41:31,440
Speaker 2: not necessarily the case. The truth is the big banks

914
00:41:31,480 --> 00:41:35,000
Speaker 2: offer much worse service alongside higher fees and non existent

915
00:41:35,040 --> 00:41:37,719
Speaker 2: interest rates on your savings. So no, the big banks

916
00:41:37,719 --> 00:41:41,560
Speaker 2: are not safer, and they're worse on basics, actually worse, not.

917
00:41:41,680 --> 00:41:44,920
Speaker 1: To mention all the shenanigans. That's like Wells Fargo a

918
00:41:44,920 --> 00:41:47,640
Speaker 1: bank of America, which is a kind way of putting it,

919
00:41:47,840 --> 00:41:50,719
Speaker 1: just more like fraud, right, yeah, yeah, she need their

920
00:41:50,760 --> 00:41:52,600
Speaker 1: customers out of actual dollars.

921
00:41:52,600 --> 00:41:54,360
Speaker 2: It's like someone murder someone and you're like, he's just

922
00:41:54,360 --> 00:41:55,880
Speaker 2: not nice. Yeah, and you're like, wait a second, No,

923
00:41:56,080 --> 00:41:57,719
Speaker 2: that was a mean thing to do, so much worse

924
00:41:57,719 --> 00:42:01,040
Speaker 2: than that. But that doesn't mean, of course, that you've

925
00:42:01,080 --> 00:42:03,719
Speaker 2: got to go bank with Ally like I do, because.

926
00:42:03,480 --> 00:42:06,560
Speaker 1: There are other great online banks. So should you switch

927
00:42:06,640 --> 00:42:09,560
Speaker 1: to one of those? Should you completely ditch Ally? Well,

928
00:42:09,600 --> 00:42:12,200
Speaker 1: if that's not necessarily the case either here, I still

929
00:42:12,200 --> 00:42:15,920
Speaker 1: think Ally is a great choice. When all this news hit,

930
00:42:16,000 --> 00:42:18,879
Speaker 1: like I literally didn't think twice about what this meant

931
00:42:18,920 --> 00:42:21,839
Speaker 1: for all the saving. I mean literally, my emergency fund

932
00:42:21,880 --> 00:42:23,880
Speaker 1: is sitting there in ALLY, and I am not concerned

933
00:42:23,920 --> 00:42:25,520
Speaker 1: about it at all. Is that just because you're a

934
00:42:25,560 --> 00:42:29,680
Speaker 1: homer though, maybe? But so I will say, if I

935
00:42:29,840 --> 00:42:32,120
Speaker 1: was choosing a new bank, would I go with Ally?

936
00:42:32,480 --> 00:42:34,759
Speaker 1: I might go with one that is offering a slightly

937
00:42:34,840 --> 00:42:37,360
Speaker 1: higher rate, but Ally offers a really competitive rate, and

938
00:42:37,360 --> 00:42:39,239
Speaker 1: they're always up there in the top tier, even if

939
00:42:39,239 --> 00:42:40,800
Speaker 1: they're not there the very best. And they've got the

940
00:42:41,400 --> 00:42:43,279
Speaker 1: no penalty CDs, which I'm a huge fan of, and

941
00:42:43,320 --> 00:42:44,680
Speaker 1: so you just plug that away and that gets you

942
00:42:44,760 --> 00:42:47,720
Speaker 1: really dang close. So that keeps me from rate chasing,

943
00:42:47,800 --> 00:42:50,400
Speaker 1: which can always change on a dime. It depends on

944
00:42:50,400 --> 00:42:52,600
Speaker 1: what it is that if the different banks are offering,

945
00:42:52,600 --> 00:42:55,839
Speaker 1: you don't want to constantly be yeah, floating, bouncing from

946
00:42:55,880 --> 00:42:56,399
Speaker 1: one to the next.

947
00:42:56,400 --> 00:42:57,920
Speaker 2: But I think it's interesting that you said that you

948
00:42:57,920 --> 00:43:01,040
Speaker 2: would maybe not go with Ally because other banks offer

949
00:43:01,080 --> 00:43:04,080
Speaker 2: better rates, but not because of this credit downgrade threat.

950
00:43:04,360 --> 00:43:06,480
Speaker 1: That is not the reason that that would keep me

951
00:43:06,560 --> 00:43:08,920
Speaker 1: from going with ALI, for sure. Yeah, I mean I

952
00:43:09,000 --> 00:43:10,680
Speaker 1: like a lot that they offer. I like their interface,

953
00:43:10,719 --> 00:43:14,600
Speaker 1: I like their app on the phone, and masa if

954
00:43:14,640 --> 00:43:17,319
Speaker 1: it's not obvious, Ally Bank, it is the banking arm

955
00:43:17,520 --> 00:43:21,640
Speaker 1: of Ally Financial, who is who actually received that negative outlook,

956
00:43:21,920 --> 00:43:25,120
Speaker 1: And so the risk of Allied defaulting it's still relatively low,

957
00:43:25,160 --> 00:43:27,680
Speaker 1: and just given the tough times within the banking sector

958
00:43:27,719 --> 00:43:30,320
Speaker 1: in general here, not just here in the US, honestly,

959
00:43:30,400 --> 00:43:33,520
Speaker 1: just globally, and that has largely been caused by rising

960
00:43:33,560 --> 00:43:37,359
Speaker 1: interest rates, stiffer competition for your savings dollars. With all

961
00:43:37,400 --> 00:43:39,440
Speaker 1: that in mind, I don't see this as a reflection

962
00:43:39,560 --> 00:43:41,799
Speaker 1: of an ally specific problem. It just seems like it's

963
00:43:41,840 --> 00:43:44,520
Speaker 1: more of just the It's like it's the rising tide

964
00:43:44,560 --> 00:43:47,000
Speaker 1: as opposed to like a singular beach. So that's got

965
00:43:47,000 --> 00:43:49,799
Speaker 1: a rising tide right right. It's something that's impacting not

966
00:43:49,880 --> 00:43:52,760
Speaker 1: only the US, but I'll I mean, it's a global

967
00:43:52,800 --> 00:43:56,080
Speaker 1: issue that we're all going to be facing here. A

968
00:43:56,120 --> 00:43:58,560
Speaker 1: lot of experts are saying maybe early twenty twenty four

969
00:43:58,600 --> 00:44:01,200
Speaker 1: that we're going to see that small rep session yet

970
00:44:01,200 --> 00:44:01,640
Speaker 1: to be seen.

971
00:44:01,719 --> 00:44:03,480
Speaker 2: Yeah, banks for having a tough time right now, they're

972
00:44:03,520 --> 00:44:05,840
Speaker 2: having a tougher time than they were in years past.

973
00:44:05,840 --> 00:44:08,200
Speaker 2: And on top of that, I think the heart of

974
00:44:08,640 --> 00:44:12,000
Speaker 2: the reason we would feel totally comfortable having our savings

975
00:44:12,000 --> 00:44:14,680
Speaker 2: at Ally, you do feel comfortable having your savings at Ally, Matt,

976
00:44:15,520 --> 00:44:17,480
Speaker 2: I do more business with Discovered. That's kind of my

977
00:44:17,560 --> 00:44:19,440
Speaker 2: main bank. But basically, if you have less than two

978
00:44:19,480 --> 00:44:21,320
Speaker 2: hundred and fifty thousand dollars in that account, there's no

979
00:44:21,360 --> 00:44:22,279
Speaker 2: reason to worry.

980
00:44:22,120 --> 00:44:24,320
Speaker 1: Right, that would be me. Yeah, not that loaded.

981
00:44:24,400 --> 00:44:28,919
Speaker 2: So we would tell you to make decision about which

982
00:44:28,920 --> 00:44:32,319
Speaker 2: bank that you use or don't use based on other factors, right,

983
00:44:32,480 --> 00:44:34,000
Speaker 2: Like you were talking about like the interest rate, like

984
00:44:34,000 --> 00:44:36,400
Speaker 2: the interface, like the customer service, and so if you

985
00:44:36,560 --> 00:44:39,080
Speaker 2: like all those features about the bank you're currently with

986
00:44:39,160 --> 00:44:44,040
Speaker 2: about Ally, don't let this credit downgrade reality or potential

987
00:44:44,160 --> 00:44:48,320
Speaker 2: future credit downgrade, you know, threats make you nervous, right.

988
00:44:48,280 --> 00:44:51,040
Speaker 1: Yeah, Yeah, that's the thing. It wasn't even an actual downgrade.

989
00:44:51,120 --> 00:44:53,160
Speaker 1: It was just a negative outlook, which means it has

990
00:44:53,200 --> 00:44:56,799
Speaker 1: the potential for there to be a downgrade. I guess, yeah,

991
00:44:56,800 --> 00:44:58,480
Speaker 1: off in the future. So it's just it's kind of

992
00:44:58,560 --> 00:45:01,279
Speaker 1: like they're just putting it on radar, just being like, hey,

993
00:45:01,760 --> 00:45:03,960
Speaker 1: we see your books, we see what's going on here,

994
00:45:04,000 --> 00:45:06,919
Speaker 1: and we're just gonna go ahead and preemptively say something. Yeah,

995
00:45:06,920 --> 00:45:10,839
Speaker 1: and if we saw material weakness. Yeah, if there were.

996
00:45:10,800 --> 00:45:14,440
Speaker 2: More like hard evidence that Ally in particular was doing

997
00:45:14,560 --> 00:45:17,880
Speaker 2: a poor job then and it was impacting their customers,

998
00:45:17,960 --> 00:45:20,040
Speaker 2: like and they were having to cut rates and stuff

999
00:45:20,040 --> 00:45:22,680
Speaker 2: like that, that would be one thing. But we haven't

1000
00:45:22,680 --> 00:45:25,080
Speaker 2: seen any evidence of that, and so so.

1001
00:45:25,120 --> 00:45:27,080
Speaker 1: We do we will say something, right, and I probably

1002
00:45:27,120 --> 00:45:28,200
Speaker 1: will move my money.

1003
00:45:27,960 --> 00:45:29,759
Speaker 2: Sure with that to be the case. And similar to

1004
00:45:30,040 --> 00:45:31,800
Speaker 2: kind of what we talked about with the US credit

1005
00:45:31,840 --> 00:45:34,720
Speaker 2: down grade, like, hey, this is one of those slow

1006
00:45:34,760 --> 00:45:37,560
Speaker 2: moving events that you should be aware of. It's not negligible,

1007
00:45:37,600 --> 00:45:39,440
Speaker 2: it's not nothing, but it's also not some sort of

1008
00:45:39,600 --> 00:45:42,080
Speaker 2: massive event that should cause you to take big changes

1009
00:45:42,120 --> 00:45:44,240
Speaker 2: with how you invest or what you're doing with your money.

1010
00:45:44,560 --> 00:45:46,799
Speaker 2: But I would say too for for other folks who

1011
00:45:46,800 --> 00:45:48,840
Speaker 2: have more than a quarter million dollars inn Ally or

1012
00:45:48,840 --> 00:45:50,840
Speaker 2: any other bank for that matter, they should fix that

1013
00:45:50,840 --> 00:45:51,440
Speaker 2: problem quickly.

1014
00:45:51,520 --> 00:45:52,320
Speaker 1: Right, you are loaded?

1015
00:45:52,400 --> 00:45:54,719
Speaker 2: Yeah, yeah, if you've got crazy amounts of cash on hand,

1016
00:45:54,960 --> 00:45:56,680
Speaker 2: One you might have too much cash on hand, and

1017
00:45:56,760 --> 00:45:58,880
Speaker 2: then two you got to make sure that it's between

1018
00:45:58,960 --> 00:46:00,719
Speaker 2: multiple banks. I talked to some but he recently Matt

1019
00:46:00,719 --> 00:46:02,360
Speaker 2: who inherited a ton of money. He never had a

1020
00:46:02,400 --> 00:46:04,200
Speaker 2: lot of money and it was hundreds and hundreds of

1021
00:46:04,239 --> 00:46:06,480
Speaker 2: thousands of dollars, so he was smart enough to split

1022
00:46:06,520 --> 00:46:09,399
Speaker 2: it up between multiple banks, and that is something that Yeah,

1023
00:46:09,480 --> 00:46:11,240
Speaker 2: if you have that cash on hand, why you're trying.

1024
00:46:11,080 --> 00:46:13,400
Speaker 1: To figure it out? It should be it should be

1025
00:46:14,040 --> 00:46:16,880
Speaker 1: under the umbrella of different banks so that you're getting

1026
00:46:16,880 --> 00:46:19,960
Speaker 1: full FDIC coverage for every dollar that you have. That's right.

1027
00:46:20,360 --> 00:46:22,120
Speaker 1: Let's get to our last question. This is from a

1028
00:46:22,160 --> 00:46:25,080
Speaker 1: listener who is looking to take advantage of a pretty

1029
00:46:25,080 --> 00:46:26,520
Speaker 1: sweet employer benefit.

1030
00:46:27,040 --> 00:46:29,760
Speaker 7: Hi, how to money? This is Hannah Tisher from Greenville,

1031
00:46:29,840 --> 00:46:33,080
Speaker 7: South Carolina. I'm going back to school to get my

1032
00:46:33,239 --> 00:46:37,799
Speaker 7: MBA part time with an employer sponsored program. However, if

1033
00:46:37,840 --> 00:46:40,640
Speaker 7: I want to complete the program in three years, I

1034
00:46:40,680 --> 00:46:44,239
Speaker 7: will have to pay between five and ten thousand dollars myself.

1035
00:46:44,680 --> 00:46:46,359
Speaker 7: Should I put this money in a five to twenty

1036
00:46:46,480 --> 00:46:49,400
Speaker 7: nine plan or continue saving it in my high yield

1037
00:46:49,400 --> 00:46:50,200
Speaker 7: savings account?

1038
00:46:50,880 --> 00:46:51,200
Speaker 4: Thanks?

1039
00:46:51,239 --> 00:46:52,239
Speaker 7: And I hope you guys have a.

1040
00:46:52,239 --> 00:46:54,000
Speaker 1: Great day, all right, Matt.

1041
00:46:54,080 --> 00:46:56,560
Speaker 2: Lots of cool stuff going on here with Hannah. Like, first,

1042
00:46:56,719 --> 00:46:59,000
Speaker 2: she's going back to school to gain more skills. Yeah,

1043
00:46:59,200 --> 00:47:01,560
Speaker 2: something we applaud, but it sounds like her employer is

1044
00:47:01,600 --> 00:47:04,360
Speaker 2: paying the bulk of this, which is also great. I

1045
00:47:04,440 --> 00:47:05,839
Speaker 2: love that if you can get someone else to put

1046
00:47:05,880 --> 00:47:07,720
Speaker 2: the bill for your education, you're doing something.

1047
00:47:07,560 --> 00:47:09,640
Speaker 1: Right at least most of the bill. Yeah, Which, so

1048
00:47:09,680 --> 00:47:11,759
Speaker 1: she said that in order to graduate early or to

1049
00:47:11,840 --> 00:47:14,560
Speaker 1: do the three year program, So that's one consideration. Is

1050
00:47:14,600 --> 00:47:16,000
Speaker 1: there a way that she could go more slowly? I

1051
00:47:16,000 --> 00:47:18,520
Speaker 1: guess to just take your time and not have to

1052
00:47:18,520 --> 00:47:20,720
Speaker 1: pay the five to ten thousand dollars, right, I'm sure

1053
00:47:20,760 --> 00:47:22,560
Speaker 1: there are other things that you are considering, Hannah.

1054
00:47:22,600 --> 00:47:25,319
Speaker 2: Sure, just the thought and sometimes graduating more quickly makes sense,

1055
00:47:25,360 --> 00:47:27,640
Speaker 2: and you don't mind funneling some of your own dollars

1056
00:47:27,640 --> 00:47:29,960
Speaker 2: into that. Yeah, And my guess is that this NBA

1057
00:47:30,239 --> 00:47:33,000
Speaker 2: should lead to increased opportunities and bigger pay bumps in

1058
00:47:33,000 --> 00:47:35,360
Speaker 2: the future. Yeah, with not too much out of pocket

1059
00:47:35,360 --> 00:47:38,279
Speaker 2: from Hannah, which is awesome. And so yeah, way to

1060
00:47:38,320 --> 00:47:41,280
Speaker 2: take advantage of this additional perk that so many other people,

1061
00:47:41,320 --> 00:47:43,680
Speaker 2: so many other employees just kind of leave on the table.

1062
00:47:43,719 --> 00:47:46,000
Speaker 1: But let's talk about how it is that Hannah is

1063
00:47:46,040 --> 00:47:48,880
Speaker 1: going to fund the amount that she's gonna need to contribute,

1064
00:47:49,280 --> 00:47:52,320
Speaker 1: or that she's choosing to contribute. At least she's wondering

1065
00:47:52,360 --> 00:47:54,799
Speaker 1: if she should have that money there in a high

1066
00:47:54,840 --> 00:47:57,960
Speaker 1: old savings account, or if she if she should consider

1067
00:47:58,080 --> 00:48:01,960
Speaker 1: using the five twenty nine education account, the account that's

1068
00:48:01,960 --> 00:48:04,600
Speaker 1: offered by her state of South Carolina. There, So which

1069
00:48:04,600 --> 00:48:07,160
Speaker 1: one do you use? The answer to this is going

1070
00:48:07,200 --> 00:48:11,440
Speaker 1: to be both of them. So, yeah, this sounds crazy,

1071
00:48:11,600 --> 00:48:14,360
Speaker 1: kind of weird, but stick with me here, Hannah, South Carolina.

1072
00:48:14,360 --> 00:48:17,720
Speaker 1: They've got a state income tax and the top rate

1073
00:48:18,200 --> 00:48:20,719
Speaker 1: is six and a half percent. Some folks pay zero.

1074
00:48:21,280 --> 00:48:23,320
Speaker 1: It all depends on your current income, but most.

1075
00:48:23,480 --> 00:48:25,319
Speaker 2: Zero percent tax rate, by the way, is for people

1076
00:48:25,360 --> 00:48:27,960
Speaker 2: who make very little, very very little, so you probably

1077
00:48:27,960 --> 00:48:28,399
Speaker 2: aren't in there.

1078
00:48:28,400 --> 00:48:31,040
Speaker 1: The vast, vast majority of folks pay that top rate

1079
00:48:31,480 --> 00:48:34,919
Speaker 1: because the sliding scale it only, yeah, truly benefits folks

1080
00:48:34,920 --> 00:48:37,760
Speaker 1: who make next to nothing. And so given that reality,

1081
00:48:37,800 --> 00:48:40,440
Speaker 1: any money that you contribute to a five twenty nine account,

1082
00:48:40,680 --> 00:48:43,440
Speaker 1: it's going to reduce your taxable income at the state level.

1083
00:48:43,840 --> 00:48:45,839
Speaker 1: So with that in mind, we definitely want you to

1084
00:48:46,200 --> 00:48:48,760
Speaker 1: sock the specific amount that you know that you're gonna

1085
00:48:48,760 --> 00:48:53,080
Speaker 1: need to pay for an upcoming qualified educational expense into

1086
00:48:53,400 --> 00:48:54,960
Speaker 1: that five to twenty nine plan.

1087
00:48:55,120 --> 00:48:57,000
Speaker 2: That's right, But here's the thing, you don't actually have

1088
00:48:57,040 --> 00:48:59,520
Speaker 2: to keep the money in the five twenty nine plan

1089
00:48:59,600 --> 00:49:01,919
Speaker 2: for all that long. Right. One of the biggest selling

1090
00:49:01,960 --> 00:49:04,239
Speaker 2: points to these accounts is that you can invest and

1091
00:49:04,280 --> 00:49:06,680
Speaker 2: grow those dollars for future educational expenses.

1092
00:49:06,800 --> 00:49:08,799
Speaker 1: Sounds like a nice thing. Yeah, why wouldn't I want

1093
00:49:08,840 --> 00:49:11,239
Speaker 1: to invest this money that's going to go towards my

1094
00:49:11,360 --> 00:49:14,600
Speaker 1: kids college in fifteen years from now?

1095
00:49:14,600 --> 00:49:16,800
Speaker 2: Exactly, You've got plenty of time to let that money

1096
00:49:16,840 --> 00:49:20,160
Speaker 2: grow for their future. But Hannah, given your need, Hannah's

1097
00:49:20,160 --> 00:49:22,759
Speaker 2: not two years old, No she's not, and so she's

1098
00:49:22,800 --> 00:49:24,879
Speaker 2: got to use this money really soon in the near

1099
00:49:24,960 --> 00:49:28,000
Speaker 2: term future. We don't want you investing money that's going

1100
00:49:28,040 --> 00:49:29,839
Speaker 2: into the five twenty nine account. Stock it in there,

1101
00:49:29,840 --> 00:49:31,320
Speaker 2: but we don't want you to invest it. We instead

1102
00:49:31,360 --> 00:49:33,840
Speaker 2: want you to keep it in the cash equivalent. But

1103
00:49:34,000 --> 00:49:36,640
Speaker 2: in that account, right, the cash account in the Saving

1104
00:49:36,680 --> 00:49:39,760
Speaker 2: for College plan, it only pays two point seventy five percent.

1105
00:49:40,040 --> 00:49:42,200
Speaker 2: So once you've got it in there and you have

1106
00:49:42,280 --> 00:49:46,359
Speaker 2: the qualified expense that year, pull it back out, put

1107
00:49:46,360 --> 00:49:49,280
Speaker 2: it in your HYSA, your high heeled savings account once

1108
00:49:49,440 --> 00:49:51,600
Speaker 2: you've got to make the payment, So the money will

1109
00:49:51,640 --> 00:49:53,560
Speaker 2: be in there for a relatively short period of time

1110
00:49:53,600 --> 00:49:56,200
Speaker 2: could be days, could be weeks, maybe even a couple months,

1111
00:49:56,440 --> 00:49:58,719
Speaker 2: but then you pull it back into your life and

1112
00:49:58,960 --> 00:50:02,440
Speaker 2: really what you've done is you've continued to maximize the

1113
00:50:02,480 --> 00:50:05,480
Speaker 2: yield of those savings dollars, but you've also gotten a

1114
00:50:05,480 --> 00:50:09,040
Speaker 2: sweet little tax break. We've done something very similar. Emily

1115
00:50:09,080 --> 00:50:10,719
Speaker 2: of course, is in grad school studying to become a

1116
00:50:10,719 --> 00:50:14,000
Speaker 2: licensed therapist, and that we've taken advantage of the five

1117
00:50:14,120 --> 00:50:17,600
Speaker 2: twenty nine account in order to basically get some state

1118
00:50:17,640 --> 00:50:20,480
Speaker 2: tax savings. But we're not using it in the same

1119
00:50:20,520 --> 00:50:22,879
Speaker 2: way as we are for money that we're investing for.

1120
00:50:22,840 --> 00:50:25,200
Speaker 1: Our kids future education. You're not using it in the

1121
00:50:25,200 --> 00:50:27,440
Speaker 1: traditional means. You're really just jumping through a hoop in

1122
00:50:27,560 --> 00:50:30,800
Speaker 1: order to discord the tax break, which is totally illegal.

1123
00:50:30,880 --> 00:50:34,239
Speaker 1: This is totally legit, and because there are no requirements

1124
00:50:34,280 --> 00:50:37,440
Speaker 1: for how long that money needs to live inside of

1125
00:50:37,440 --> 00:50:39,520
Speaker 1: that five twenty nine account in order to achieve that

1126
00:50:39,600 --> 00:50:44,120
Speaker 1: tax exempt status, essentially you're just you're filtering that. It's

1127
00:50:44,200 --> 00:50:45,880
Speaker 1: it's almost like you're laundering your money, but it's like

1128
00:50:45,960 --> 00:50:48,799
Speaker 1: it's like a legal laundering. That's exactly what the money

1129
00:50:48,960 --> 00:50:51,000
Speaker 1: goes into it, but then you're immediately taking it out,

1130
00:50:51,160 --> 00:50:53,800
Speaker 1: But because you've stuck it in there, you get that TAXI.

1131
00:50:53,840 --> 00:50:55,400
Speaker 2: That's why I bought the nail salon Matt, so that

1132
00:50:55,440 --> 00:50:57,120
Speaker 2: I could launder and pay no tax.

1133
00:50:56,880 --> 00:50:58,479
Speaker 1: On all my earnings. I think you kind of hinted

1134
00:50:58,520 --> 00:51:00,480
Speaker 1: at this, but you do have to wait to withdraw

1135
00:51:00,520 --> 00:51:04,080
Speaker 1: the money until the year that the qualified educational expense

1136
00:51:04,160 --> 00:51:05,480
Speaker 1: is going to occur. And so what that means like,

1137
00:51:05,520 --> 00:51:07,279
Speaker 1: if there's this were me, I would go ahead and

1138
00:51:07,360 --> 00:51:09,239
Speaker 1: earmark the funds that you know you're gonna need to

1139
00:51:09,239 --> 00:51:13,319
Speaker 1: put towards tuition, right these qualified expenses, set that money

1140
00:51:13,360 --> 00:51:16,600
Speaker 1: aside within your high yield savings account, and then whenever

1141
00:51:16,640 --> 00:51:18,600
Speaker 1: it is that because it may not be that may

1142
00:51:18,600 --> 00:51:20,360
Speaker 1: not be a bill that comes due this year, that

1143
00:51:20,440 --> 00:51:23,919
Speaker 1: might happen next year, and so you want to keep

1144
00:51:23,960 --> 00:51:26,640
Speaker 1: that money as long as possible, earning your five four

1145
00:51:26,680 --> 00:51:29,239
Speaker 1: or five percent in your high yield and then once

1146
00:51:29,280 --> 00:51:30,920
Speaker 1: you know that, okay, this is the year that I'm

1147
00:51:30,920 --> 00:51:32,720
Speaker 1: going to incur that expense, that's when you go ahead

1148
00:51:32,719 --> 00:51:34,480
Speaker 1: and put that within the fight twenty nine account. And

1149
00:51:34,480 --> 00:51:36,640
Speaker 1: that's also when you're going to take it out, because

1150
00:51:36,680 --> 00:51:38,560
Speaker 1: when you take it out, it's that year it has

1151
00:51:38,600 --> 00:51:40,640
Speaker 1: to go towards that qualified extent.

1152
00:51:40,719 --> 00:51:43,040
Speaker 2: If you have like a longer timeline hand, if you're saying, oh,

1153
00:51:43,040 --> 00:51:44,920
Speaker 2: this is money I'm gonna have to pay towards the

1154
00:51:45,000 --> 00:51:46,879
Speaker 2: NBA in seven eight years from now, then I would

1155
00:51:46,960 --> 00:51:48,799
Speaker 2: would say like, oh no, maybe it's going to open

1156
00:51:48,840 --> 00:51:50,640
Speaker 2: it up and invest some of those dollars and grow it.

1157
00:51:51,000 --> 00:51:54,160
Speaker 2: But because we're on a more truncated timetable, I think

1158
00:51:54,200 --> 00:51:55,839
Speaker 2: it makes sense to do it this way the.

1159
00:51:55,760 --> 00:51:58,400
Speaker 1: Whole Yeah, exactly. The entire reason that we're talking about

1160
00:51:58,480 --> 00:52:00,799
Speaker 1: not investing it is because we want you to be

1161
00:52:00,840 --> 00:52:03,040
Speaker 1: able to avoid the sort of like we're talking about earlier,

1162
00:52:03,040 --> 00:52:05,319
Speaker 1: was it with Dawn. She's getting closer to retirement, and

1163
00:52:05,360 --> 00:52:07,879
Speaker 1: so we're looking to avoid that risk. That's what we're

1164
00:52:07,880 --> 00:52:09,320
Speaker 1: trying to get you to do here, Hannah, is to

1165
00:52:09,400 --> 00:52:12,960
Speaker 1: avoid the investment risk, the volatility, because you know you're

1166
00:52:13,000 --> 00:52:15,080
Speaker 1: going to need that money now, and so anytime you

1167
00:52:15,120 --> 00:52:18,759
Speaker 1: know you're going to need access to funds in a

1168
00:52:18,840 --> 00:52:21,359
Speaker 1: time period less than two or three years, we don't

1169
00:52:21,400 --> 00:52:23,319
Speaker 1: want you investing that money. And so this is how

1170
00:52:23,360 --> 00:52:25,640
Speaker 1: you can earn the most on that money without actually

1171
00:52:25,640 --> 00:52:28,520
Speaker 1: investing it, and it doesn't have to sit there for again,

1172
00:52:28,680 --> 00:52:31,080
Speaker 1: all that long. It doesn't need a season for a

1173
00:52:31,160 --> 00:52:33,160
Speaker 1: year or anything. So we want you to be able

1174
00:52:33,160 --> 00:52:35,000
Speaker 1: to get the best of both worlds here by taking

1175
00:52:35,080 --> 00:52:39,160
Speaker 1: this what we'd call a slightly more optimized route. But Hannah,

1176
00:52:39,320 --> 00:52:41,480
Speaker 1: best of luck to you as you're heading off there

1177
00:52:41,520 --> 00:52:44,680
Speaker 1: to grad school or specifically to get your MBA. So

1178
00:52:44,719 --> 00:52:46,480
Speaker 1: did Hannah say she was in South Carolina? Did she

1179
00:52:46,480 --> 00:52:48,960
Speaker 1: say she was in Greenville? I don't know if she said. Okay, well,

1180
00:52:49,200 --> 00:52:51,120
Speaker 1: if she is, she would easily be able to go

1181
00:52:51,200 --> 00:52:54,720
Speaker 1: and visit the brewery that we're enjoying on today's episode.

1182
00:52:54,719 --> 00:52:57,400
Speaker 1: So again, this was the here you say it, let

1183
00:52:57,480 --> 00:52:59,399
Speaker 1: me read it. That's a silly name. Oh yeah, yes,

1184
00:53:00,160 --> 00:53:00,839
Speaker 1: silly saying it.

1185
00:53:00,840 --> 00:53:03,719
Speaker 2: Our depictions of yet another revolutionary absence.

1186
00:53:04,600 --> 00:53:07,719
Speaker 1: This is an imperial pastry stout, I believe. What were

1187
00:53:07,719 --> 00:53:11,640
Speaker 1: your thoughts on this thick bad boy that we enjoyed today, Yeah,

1188
00:53:11,640 --> 00:53:12,399
Speaker 1: I was the first things.

1189
00:53:12,440 --> 00:53:14,640
Speaker 2: First, it was thick, it was viscous, right, and then

1190
00:53:14,800 --> 00:53:18,120
Speaker 2: I tasted sweet vanilla and cinnamon combo, a little bit

1191
00:53:18,200 --> 00:53:24,080
Speaker 2: that toasted coconut coming through as well. It's just this big, burly, magnificent,

1192
00:53:24,239 --> 00:53:26,479
Speaker 2: magnanimous stout. I don't even know what other ad change

1193
00:53:26,640 --> 00:53:27,400
Speaker 2: just to throw in on this one.

1194
00:53:27,400 --> 00:53:29,680
Speaker 1: I would say chocolate as well. That's like the first

1195
00:53:29,719 --> 00:53:32,440
Speaker 1: thing that I noticed was it just was like chocolate.

1196
00:53:32,480 --> 00:53:34,680
Speaker 1: I felt like I was drinking like a hot chocolate,

1197
00:53:34,680 --> 00:53:36,520
Speaker 1: which is kind of the opposite or straight out of

1198
00:53:36,520 --> 00:53:38,920
Speaker 1: the Willy Wonka River. Oh my gosh. Yeah, just like

1199
00:53:39,000 --> 00:53:43,279
Speaker 1: Augusta snow drinking straight from the sacred fount But could

1200
00:53:43,360 --> 00:53:45,640
Speaker 1: you really imagine any heavier beer to enjoy it on

1201
00:53:46,160 --> 00:53:50,160
Speaker 1: quite possibly the hottest day? Seriously, we talked about how

1202
00:53:50,200 --> 00:53:52,759
Speaker 1: stouts are. Oh, you want to avoid these big, heaviestouts.

1203
00:53:52,800 --> 00:53:54,520
Speaker 1: It's a bad idea in the summer. It's a bad

1204
00:53:54,520 --> 00:53:57,399
Speaker 1: idea on ninety plus degree days. Well, okay, so here's

1205
00:53:57,400 --> 00:53:59,880
Speaker 1: what we're gonna give. If you're listening to the episode

1206
00:54:00,120 --> 00:54:02,200
Speaker 1: this deep into the episode, we're gonna go ahead and

1207
00:54:02,200 --> 00:54:05,000
Speaker 1: share something with you because it means that you're you're dedicated. Right. So,

1208
00:54:05,040 --> 00:54:08,520
Speaker 1: our little studio here, our little clubhouse, our ac unit

1209
00:54:08,600 --> 00:54:10,400
Speaker 1: is a window unit. And what that means is that

1210
00:54:10,440 --> 00:54:12,720
Speaker 1: when we record, we actually have to go and turn it.

1211
00:54:12,719 --> 00:54:15,080
Speaker 2: Off because it's loud. It's noisy, it's noisy. And so

1212
00:54:15,320 --> 00:54:18,640
Speaker 2: on these hot days with the ac turned off, it

1213
00:54:18,680 --> 00:54:21,600
Speaker 2: gets really warm and it starts to feel like we're

1214
00:54:21,640 --> 00:54:23,440
Speaker 2: like really towards the center of the Earth's court.

1215
00:54:24,040 --> 00:54:26,000
Speaker 1: What's the wind Hoff method whatever that is. This is

1216
00:54:26,040 --> 00:54:29,360
Speaker 1: the opposite. It's like we're basically like in Asana here,

1217
00:54:29,360 --> 00:54:31,080
Speaker 1: hey for yeah, I was gonna say, free Saunam. We've

1218
00:54:31,120 --> 00:54:33,640
Speaker 1: got a little thermometer over here and inside our office

1219
00:54:33,680 --> 00:54:36,480
Speaker 1: right now it is ninety two point eight degrees, so

1220
00:54:36,719 --> 00:54:39,680
Speaker 1: we're we're sweat movies dedication right there. It's one of

1221
00:54:39,719 --> 00:54:41,879
Speaker 1: the ways we're able to keep expenses low. Though, Joel.

1222
00:54:41,920 --> 00:54:46,080
Speaker 1: We've got this old carriage house that is not insulated,

1223
00:54:46,160 --> 00:54:47,960
Speaker 1: but man, we still love it.

1224
00:54:48,000 --> 00:54:48,200
Speaker 3: Though.

1225
00:54:48,760 --> 00:54:50,440
Speaker 2: You know what, we always say, what doesn't kill you

1226
00:54:50,520 --> 00:54:52,759
Speaker 2: makes you stronger, and so I think this makes us

1227
00:54:52,840 --> 00:54:55,400
Speaker 2: I feel stronger, better humans, better podcasters, let's hope. So

1228
00:54:56,080 --> 00:54:58,480
Speaker 2: if it doesn't make us hilarious, but that's gonna do

1229
00:54:58,480 --> 00:55:01,000
Speaker 2: it for you. This episode and listeners. You can find

1230
00:55:01,239 --> 00:55:03,319
Speaker 2: show notes up on our website as always at how

1231
00:55:03,320 --> 00:55:05,399
Speaker 2: to money dot com. We've got other resources there too,

1232
00:55:05,400 --> 00:55:07,839
Speaker 2: including the how to Money newsletter. How to Money dot

1233
00:55:07,880 --> 00:55:11,200
Speaker 2: Com slash newsletter comes out every Tuesday morning. It's a gem.

1234
00:55:11,360 --> 00:55:15,120
Speaker 2: It's of course, free provides a lot of encouragement alongside

1235
00:55:15,160 --> 00:55:15,880
Speaker 2: great money advice.

1236
00:55:16,040 --> 00:55:17,560
Speaker 1: That's right, so buddy, that's going to be it for

1237
00:55:17,560 --> 00:55:21,040
Speaker 1: this one. Until next time, Best friends Out, Best Friends Out,