1
00:00:00,080 --> 00:00:02,599
Speaker 1: Welcome to How the Money. I'm Joel and I am Matt.

2
00:00:02,880 --> 00:00:24,840
Speaker 1: Today we are answering your listener questions. Yeah, man, that's right.

3
00:00:24,880 --> 00:00:27,240
Speaker 1: It's Monday and we are answering the listener questions this week.

4
00:00:27,320 --> 00:00:30,160
Speaker 1: We've got a bunch of great ones, including one about

5
00:00:30,480 --> 00:00:32,559
Speaker 1: roth Ira a conversion, whether now is a good time

6
00:00:32,600 --> 00:00:34,520
Speaker 1: to do that. We've got a question about paying down

7
00:00:34,560 --> 00:00:37,479
Speaker 1: debts or you know, maybe she should invest that money instead,

8
00:00:37,680 --> 00:00:40,000
Speaker 1: we'll see. And then we've got a question too about

9
00:00:40,040 --> 00:00:43,720
Speaker 1: money to set aside for home repair, specifically for a

10
00:00:43,800 --> 00:00:45,840
Speaker 1: rental property. And we're gonna get to all those plus

11
00:00:45,840 --> 00:00:49,239
Speaker 1: two more within this episode. But first me, let's talk

12
00:00:49,240 --> 00:00:51,720
Speaker 1: about some investing. Yeah, before we get to all the questions,

13
00:00:51,720 --> 00:00:53,360
Speaker 1: I'm excited to get to them. I wanted to talk

14
00:00:53,400 --> 00:00:56,200
Speaker 1: about micro investing apps, and we talked about those a

15
00:00:56,320 --> 00:01:00,320
Speaker 1: long time ago, back in episode twenty nine. But but

16
00:01:00,360 --> 00:01:01,880
Speaker 1: I feel like some of the things that we talked

17
00:01:01,880 --> 00:01:04,360
Speaker 1: about in that episode actually have come to pass right

18
00:01:04,360 --> 00:01:06,920
Speaker 1: now in kind of how a lot of young people

19
00:01:06,959 --> 00:01:11,280
Speaker 1: specifically are handling investing inside of micro investing apps. And

20
00:01:11,520 --> 00:01:14,600
Speaker 1: I've just seen a lot of news about poor judgment

21
00:01:15,000 --> 00:01:16,880
Speaker 1: in regards to what they're investing in. I think we

22
00:01:16,920 --> 00:01:19,600
Speaker 1: talked about this just a little bit last week when

23
00:01:19,600 --> 00:01:22,160
Speaker 1: we were talking about investing in a vaultabule market. But

24
00:01:22,520 --> 00:01:25,640
Speaker 1: I think micro investing apps in particular make people more

25
00:01:25,680 --> 00:01:28,280
Speaker 1: prone to trade more frequently. And so if you're using

26
00:01:28,280 --> 00:01:30,039
Speaker 1: an app like robin Hood or in one, you know,

27
00:01:30,120 --> 00:01:31,720
Speaker 1: we like both of them. They've done a really good

28
00:01:31,760 --> 00:01:34,080
Speaker 1: job at lowering the costs and making it easier for

29
00:01:34,120 --> 00:01:36,840
Speaker 1: investors to get on on board to start investing. But

30
00:01:36,880 --> 00:01:38,679
Speaker 1: at the same time, I think a lot of young

31
00:01:38,680 --> 00:01:40,840
Speaker 1: people just feel the need to trade more frequently and

32
00:01:40,840 --> 00:01:42,920
Speaker 1: to trade when they don't need to, and it actually

33
00:01:43,040 --> 00:01:45,400
Speaker 1: can lessen your returns over time. You can create a

34
00:01:45,440 --> 00:01:48,720
Speaker 1: lot more stress, it can create an environment for poor investing.

35
00:01:49,040 --> 00:01:51,040
Speaker 1: So yeah, I mean that's something we did talk about

36
00:01:51,080 --> 00:01:53,640
Speaker 1: back in episode twenty nine, that micro investing apps. They

37
00:01:53,680 --> 00:01:56,520
Speaker 1: have all these great tools at your disposal, but then

38
00:01:56,520 --> 00:01:58,320
Speaker 1: if you use them too much, it turns out to

39
00:01:58,360 --> 00:02:00,200
Speaker 1: be a really bad idea. It's like they may get

40
00:02:00,280 --> 00:02:03,120
Speaker 1: too easy to trade. The interface is so slick. I

41
00:02:03,120 --> 00:02:04,680
Speaker 1: just want to hop on there and like spend some

42
00:02:04,720 --> 00:02:07,680
Speaker 1: money or make some sales whatever. Well, specifically to some

43
00:02:07,760 --> 00:02:10,280
Speaker 1: of the bigger online brokerages as well. The end of

44
00:02:10,360 --> 00:02:15,040
Speaker 1: last year, they started charging zero dollars for commissions, which

45
00:02:15,080 --> 00:02:17,840
Speaker 1: means that you could buy and sell stocks for free.

46
00:02:18,560 --> 00:02:20,679
Speaker 1: Before that, it was like what five bucks or six

47
00:02:20,720 --> 00:02:23,200
Speaker 1: bucks depending on who you're with. Ye, and Robin Hood

48
00:02:23,200 --> 00:02:26,919
Speaker 1: really really accelerated that change, that kind of started it, yes, exactly,

49
00:02:26,919 --> 00:02:28,680
Speaker 1: and so folks got used to that, and so now

50
00:02:28,720 --> 00:02:31,520
Speaker 1: pretty much everyone is doing that. And the downside though,

51
00:02:31,600 --> 00:02:34,080
Speaker 1: like you said, when it's so easy and when it

52
00:02:34,120 --> 00:02:36,480
Speaker 1: doesn't cost you any money, and when these apps look

53
00:02:36,600 --> 00:02:38,080
Speaker 1: so good on your phone, you kind of want to

54
00:02:38,120 --> 00:02:39,840
Speaker 1: dive in there and see what's going on with the market,

55
00:02:40,080 --> 00:02:42,480
Speaker 1: You're going to be more likely to sell. You're gonna

56
00:02:42,520 --> 00:02:45,440
Speaker 1: be more likely to make speculative moves like short term moves,

57
00:02:46,080 --> 00:02:49,359
Speaker 1: which goes against everything that we would recommend the date

58
00:02:49,400 --> 00:02:52,200
Speaker 1: trading kind of mindset. It just becomes a lot easier

59
00:02:52,480 --> 00:02:56,079
Speaker 1: to become kind of enthralled and and have that sort

60
00:02:56,080 --> 00:02:59,120
Speaker 1: of mindset. When it comes to investing. We're completely not

61
00:02:59,200 --> 00:03:01,520
Speaker 1: about that. We're about investing for the long haul. We're

62
00:03:01,520 --> 00:03:04,320
Speaker 1: about simple investing. And so, yeah, I just wanted to

63
00:03:04,320 --> 00:03:07,320
Speaker 1: caution people as I'm seeing more and more stories pop

64
00:03:07,400 --> 00:03:10,440
Speaker 1: up about young people investing in a speculative way. By

65
00:03:10,440 --> 00:03:12,399
Speaker 1: the way, I'm saying young people like we're really old

66
00:03:12,480 --> 00:03:16,040
Speaker 1: or something like that, like our generation, our generation exactly.

67
00:03:16,120 --> 00:03:18,400
Speaker 1: I hate seeing that because, like we've talked about again

68
00:03:18,400 --> 00:03:21,560
Speaker 1: and again, investing for the long haul, investing simply low

69
00:03:21,600 --> 00:03:24,519
Speaker 1: cost index funds in particular, and target date retirement funds,

70
00:03:24,680 --> 00:03:26,320
Speaker 1: those are going to be the best way to invest.

71
00:03:26,400 --> 00:03:28,560
Speaker 1: And I love some of these new apps we talked

72
00:03:28,560 --> 00:03:31,040
Speaker 1: about in one it's a fantastic app. They do a

73
00:03:31,120 --> 00:03:33,280
Speaker 1: really good job. But if you're using it to do

74
00:03:33,480 --> 00:03:37,200
Speaker 1: speculative or frequent trades, that is not a good idea.

75
00:03:37,240 --> 00:03:38,800
Speaker 1: That's not a good use of a good APPA. And

76
00:03:38,840 --> 00:03:41,280
Speaker 1: something else too, is, you know, with the lockdown and

77
00:03:41,320 --> 00:03:44,040
Speaker 1: with so many folks working from home, folks who are

78
00:03:44,120 --> 00:03:46,920
Speaker 1: used to maybe like checking their accounts like during lunch,

79
00:03:47,280 --> 00:03:48,960
Speaker 1: Well you can check it whenever you want. And so

80
00:03:49,040 --> 00:03:50,440
Speaker 1: I think a lot of folks who might be sitting

81
00:03:50,440 --> 00:03:52,400
Speaker 1: at home, you know, working on the laptop, sitting on

82
00:03:52,440 --> 00:03:54,840
Speaker 1: the couch, They've got their you know e trade to

83
00:03:55,000 --> 00:03:57,080
Speaker 1: TDA Merrior trade accounts open off to the side, and

84
00:03:57,080 --> 00:03:59,640
Speaker 1: they're they're watching the market, thinking is now a good

85
00:03:59,640 --> 00:04:01,120
Speaker 1: time to Is now a good time to sell? I

86
00:04:01,120 --> 00:04:03,880
Speaker 1: don't know. Folks are trying to time the marketing a

87
00:04:03,880 --> 00:04:05,880
Speaker 1: little too much, way too much. And you know, we

88
00:04:05,960 --> 00:04:08,600
Speaker 1: touched on this a little bit last week. I personally,

89
00:04:08,640 --> 00:04:10,240
Speaker 1: you know, I kind of shared my long, kind of

90
00:04:10,240 --> 00:04:13,200
Speaker 1: story about about how I go about making purchases. I

91
00:04:13,200 --> 00:04:16,320
Speaker 1: think it's totally fine to take advantage of dips if

92
00:04:16,360 --> 00:04:18,120
Speaker 1: you're going to purchase and hang onto that for the

93
00:04:18,160 --> 00:04:20,400
Speaker 1: long haul. But that is not how a lot of

94
00:04:20,440 --> 00:04:23,040
Speaker 1: folks are approaching the market right now. One of those

95
00:04:23,040 --> 00:04:25,160
Speaker 1: companies that I mentioned, they have seen the number of

96
00:04:25,240 --> 00:04:29,520
Speaker 1: daily trades skyrocket since they started offering those trades commission free,

97
00:04:29,640 --> 00:04:31,520
Speaker 1: and so they used to have one million daily trades

98
00:04:31,920 --> 00:04:33,640
Speaker 1: at the end of last year and at this point

99
00:04:33,680 --> 00:04:36,800
Speaker 1: now they're seeing three million trades every single day. So

100
00:04:36,880 --> 00:04:39,279
Speaker 1: I guess there is a downside to free Yeah, exactly,

101
00:04:39,279 --> 00:04:42,040
Speaker 1: it's increased threefold. So that's a bummer to see. Like

102
00:04:42,080 --> 00:04:44,159
Speaker 1: you said that, we don't like seeing that. That is

103
00:04:44,200 --> 00:04:46,599
Speaker 1: not what we recommend. We want folks to buy low

104
00:04:46,640 --> 00:04:49,560
Speaker 1: cost index funds and hang onto them forever, and we've

105
00:04:49,600 --> 00:04:52,000
Speaker 1: always been able to do that with Vanguard, with Fidelity,

106
00:04:52,440 --> 00:04:55,599
Speaker 1: blog intor accounts there, buy those funds and you're set. Yeah,

107
00:04:55,600 --> 00:04:58,280
Speaker 1: And like I said, it's not necessarily the micro investing

108
00:04:58,320 --> 00:05:01,239
Speaker 1: apps faults. Some of those micro investing apps are great.

109
00:05:01,360 --> 00:05:03,480
Speaker 1: They do a really good job. It's our behavior that

110
00:05:03,839 --> 00:05:06,520
Speaker 1: it leads us to do. Yeah, exactly, all right, So Matt,

111
00:05:06,600 --> 00:05:07,960
Speaker 1: let's get onto the beer that we're having on the

112
00:05:07,960 --> 00:05:11,040
Speaker 1: show today. We're drinking dank Bot by Insight Brewing. Big

113
00:05:11,040 --> 00:05:13,320
Speaker 1: thanks for listener Joe for sending this one in our way,

114
00:05:13,600 --> 00:05:14,960
Speaker 1: and we'll give our thoughts on this beer at the

115
00:05:15,000 --> 00:05:17,040
Speaker 1: end of the episode, but for now, onto the subject

116
00:05:17,080 --> 00:05:19,640
Speaker 1: at hand. We're taking listener questions, and for folks that

117
00:05:19,720 --> 00:05:23,040
Speaker 1: want to send us their voice question for consideration to

118
00:05:23,080 --> 00:05:24,839
Speaker 1: be on a future episode, we'd love to hear it.

119
00:05:25,000 --> 00:05:27,040
Speaker 1: Just go to how to money dot com slash ask.

120
00:05:27,279 --> 00:05:30,080
Speaker 1: There are simple instructions there for you to see how

121
00:05:30,160 --> 00:05:32,480
Speaker 1: to record your voice questions. Send it on over to us,

122
00:05:32,640 --> 00:05:34,920
Speaker 1: and hopefully we can take it on an upcoming episode.

123
00:05:35,120 --> 00:05:37,800
Speaker 1: I mean, I wanted to mention real quick that if

124
00:05:37,800 --> 00:05:39,560
Speaker 1: you had a guess how many listener questions have we

125
00:05:39,560 --> 00:05:42,679
Speaker 1: answered on our podcast, Because I was moving some files

126
00:05:42,680 --> 00:05:45,039
Speaker 1: around on my computer and I saw how many we

127
00:05:45,080 --> 00:05:47,360
Speaker 1: have in that folder. I'm gonna guess that we've answered

128
00:05:47,360 --> 00:05:49,760
Speaker 1: a hundred and eighty listener questions so far. Well, you

129
00:05:49,839 --> 00:05:51,760
Speaker 1: overshot it, so now it feels like that the number

130
00:05:51,760 --> 00:05:54,960
Speaker 1: I'm going to share isn't nearly worthy of praise. But

131
00:05:55,160 --> 00:05:58,000
Speaker 1: one fifty. We we've answered exactly a hundred and fifty

132
00:05:58,080 --> 00:06:00,800
Speaker 1: questions between the ask episode it is on Mondays as

133
00:06:00,800 --> 00:06:03,000
Speaker 1: well as some of those questions sprinkled in on Friday

134
00:06:03,000 --> 00:06:05,520
Speaker 1: episodes on my part because I know, like when my

135
00:06:05,560 --> 00:06:07,479
Speaker 1: wife's like, guess how much I spent on this, I

136
00:06:07,480 --> 00:06:09,839
Speaker 1: got a guess under. I even think she might have

137
00:06:09,880 --> 00:06:12,680
Speaker 1: gotten because I ruined it if I guess over. So yeah,

138
00:06:12,680 --> 00:06:15,600
Speaker 1: wet blanket Joel, that's your new nickname. But I mean

139
00:06:15,720 --> 00:06:17,280
Speaker 1: the reason I mentioned that, though, is because that's a

140
00:06:17,320 --> 00:06:19,480
Speaker 1: lot of questions, you know, And that's also a lot

141
00:06:19,480 --> 00:06:21,599
Speaker 1: of answers that we've provided. That's a lot of folks

142
00:06:21,600 --> 00:06:24,560
Speaker 1: who have maybe trusted our advice. And so we appreciate

143
00:06:24,600 --> 00:06:27,120
Speaker 1: all of our listeners out there who are listening to

144
00:06:27,160 --> 00:06:29,040
Speaker 1: our show, and if you've never submitted a question, we

145
00:06:29,080 --> 00:06:30,840
Speaker 1: would love to hear from you and and hopefully we

146
00:06:30,880 --> 00:06:33,160
Speaker 1: can take it on an upcoming episode. Yeah, alright, Matt,

147
00:06:33,200 --> 00:06:35,919
Speaker 1: we were just talking about micro investing apps. Well, we

148
00:06:36,000 --> 00:06:38,120
Speaker 1: have a listener here with a question about investing, but

149
00:06:38,200 --> 00:06:41,039
Speaker 1: specifically doing a ROTH conversion, So let's get to that

150
00:06:41,040 --> 00:06:44,240
Speaker 1: one first. Hey man, Joel, this is Jonathan in Ohio.

151
00:06:44,600 --> 00:06:47,400
Speaker 1: Thanks a lot for taking my question today. I'm trying

152
00:06:47,400 --> 00:06:49,760
Speaker 1: to make some predictions about US tax rates in the

153
00:06:49,839 --> 00:06:52,559
Speaker 1: year twenties sixties, so I thought, hey, who better task

154
00:06:52,640 --> 00:06:55,520
Speaker 1: than Matt and Joel. So here goes m My wife

155
00:06:55,520 --> 00:06:57,640
Speaker 1: and I are in our early thirties and we expect

156
00:06:57,720 --> 00:07:00,680
Speaker 1: ROSS to be our main retirement nest egg. But I

157
00:07:00,720 --> 00:07:03,560
Speaker 1: have twenty five tho dollars from an old traditional four

158
00:07:03,720 --> 00:07:06,920
Speaker 1: one K that I now have in a Vanguard traditional

159
00:07:07,000 --> 00:07:09,600
Speaker 1: I RA, and if I use a nine percent rate

160
00:07:09,600 --> 00:07:12,239
Speaker 1: of return as an estimate, this will grow to almost

161
00:07:12,320 --> 00:07:14,840
Speaker 1: eight hundred thousand dollars by that time I reached seventy

162
00:07:14,920 --> 00:07:17,760
Speaker 1: and I'm required to take r m DS. So my

163
00:07:17,840 --> 00:07:20,480
Speaker 1: dilema is should I convert this to a ROTH now

164
00:07:20,600 --> 00:07:24,840
Speaker 1: and pay taxes in a tax bracket, or should I

165
00:07:24,880 --> 00:07:27,640
Speaker 1: wait until we were retired if we don't have any

166
00:07:27,680 --> 00:07:31,200
Speaker 1: other ordinary income when we get to retirement, which obviously,

167
00:07:31,240 --> 00:07:33,960
Speaker 1: I don't know is the case. I wonder if we'd

168
00:07:34,000 --> 00:07:36,800
Speaker 1: be avoiding taxes on in anyway, because that eight hundred

169
00:07:36,800 --> 00:07:40,320
Speaker 1: thousand dollars is still under thirty thousand dollars each year,

170
00:07:40,320 --> 00:07:43,520
Speaker 1: and distributions. Obviously, I know that tax slaws will change

171
00:07:43,520 --> 00:07:45,520
Speaker 1: in many times between then and now, but I just

172
00:07:45,560 --> 00:07:48,800
Speaker 1: want to get a second opinion. Thanks well, Jonathan, you

173
00:07:48,840 --> 00:07:52,480
Speaker 1: know that that's an impossible question to I love the

174
00:07:52,480 --> 00:07:55,320
Speaker 1: impossible questions. Yeah, it's still fun to attempt to predict

175
00:07:55,360 --> 00:07:57,640
Speaker 1: the unpredictable. Though. In a quick note as well, you

176
00:07:57,680 --> 00:07:59,600
Speaker 1: don't have to take your R M D s. Those

177
00:07:59,640 --> 00:08:03,240
Speaker 1: require are minimum distributions until you are seventy two. Now.

178
00:08:03,560 --> 00:08:05,680
Speaker 1: That was the result of the Secure Act, which became

179
00:08:05,760 --> 00:08:08,080
Speaker 1: law at the end of last year. But honestly, Joel,

180
00:08:08,080 --> 00:08:10,720
Speaker 1: if you're seventy seventy two, what difference does two years

181
00:08:10,720 --> 00:08:13,520
Speaker 1: make a big difference if you're seventy if you don't

182
00:08:13,520 --> 00:08:15,080
Speaker 1: have to take the R and D. But when you're

183
00:08:15,120 --> 00:08:16,640
Speaker 1: that old, like two years, it's just like a blink

184
00:08:16,680 --> 00:08:19,240
Speaker 1: of an eye, Like the older I get now, like

185
00:08:19,360 --> 00:08:22,360
Speaker 1: time almost means nothing to me. It goes by so quickly.

186
00:08:22,760 --> 00:08:24,160
Speaker 1: Makes you think of that picture of you and I

187
00:08:24,480 --> 00:08:26,280
Speaker 1: from the face app when we're like, we look like

188
00:08:26,320 --> 00:08:27,960
Speaker 1: two seven year old guys. It's not gonna be that

189
00:08:28,000 --> 00:08:30,000
Speaker 1: long until we actually get there. Yeah, that's so true.

190
00:08:30,040 --> 00:08:31,840
Speaker 1: Now I understand that, but that but that is actually

191
00:08:31,840 --> 00:08:33,160
Speaker 1: a big deal for a lot of people who are

192
00:08:33,160 --> 00:08:35,480
Speaker 1: trying to play in their retirement with draws, and especially

193
00:08:35,480 --> 00:08:37,560
Speaker 1: as people are living longer, that extra two years to

194
00:08:37,640 --> 00:08:39,720
Speaker 1: not have to take with draws is a big deal

195
00:08:39,760 --> 00:08:42,280
Speaker 1: for people. That two years of compound growth, especially on

196
00:08:42,360 --> 00:08:44,920
Speaker 1: that back end, like that is massive. I don't want

197
00:08:44,920 --> 00:08:47,200
Speaker 1: to discount that. But at the same time, I'm also like,

198
00:08:47,440 --> 00:08:50,920
Speaker 1: when you're seventy what's seventy two, we'll be there before,

199
00:08:50,960 --> 00:08:53,319
Speaker 1: you know. Bunny, all right, well, let's talk about Jonathan's

200
00:08:53,400 --> 00:08:55,960
Speaker 1: question Roth conversions and Jonathan, I think the first thing

201
00:08:55,960 --> 00:08:58,760
Speaker 1: we need to address is predicting future tax rates, and

202
00:08:58,800 --> 00:09:00,880
Speaker 1: it's pretty impossible to do that kind of like Matt said,

203
00:09:01,200 --> 00:09:04,600
Speaker 1: it's hard to imagine them going lower though, because if

204
00:09:04,640 --> 00:09:06,840
Speaker 1: you look at kind of a history of tax rates

205
00:09:06,840 --> 00:09:09,520
Speaker 1: in this country, we're at a pretty low point ultimately,

206
00:09:09,880 --> 00:09:13,080
Speaker 1: and as federal deficits increase in the national debt expands,

207
00:09:13,320 --> 00:09:16,599
Speaker 1: taxes will likely have to rise to meet our increasing obligations.

208
00:09:16,960 --> 00:09:19,320
Speaker 1: And Matt, there's a recent two trillion dollar stimulus bill

209
00:09:19,559 --> 00:09:22,080
Speaker 1: is likely going to cost all of us some money

210
00:09:22,160 --> 00:09:25,280
Speaker 1: in increased taxes over the coming years. I don't think

211
00:09:25,320 --> 00:09:27,280
Speaker 1: that the federal government should operate like a household and

212
00:09:27,320 --> 00:09:29,360
Speaker 1: should have to have like the balanced budget. But at

213
00:09:29,360 --> 00:09:31,400
Speaker 1: the same time, I do think the increased federal spending

214
00:09:31,400 --> 00:09:34,520
Speaker 1: the increased deficit will lead to higher tax rates for

215
00:09:34,559 --> 00:09:37,280
Speaker 1: us in the coming years. But again, it's impossible to predict.

216
00:09:37,360 --> 00:09:40,240
Speaker 1: How can I actually know that it does influence at

217
00:09:40,280 --> 00:09:42,720
Speaker 1: least a little bit of how we answer this question, though, Yeah,

218
00:09:42,720 --> 00:09:45,480
Speaker 1: for sure, man, And so another consideration is where the

219
00:09:45,480 --> 00:09:48,480
Speaker 1: market is currently right, making a roth conversion in a

220
00:09:48,520 --> 00:09:50,559
Speaker 1: down market makes a whole lot of sense if you're

221
00:09:50,600 --> 00:09:53,120
Speaker 1: in a lower tax bracket, and in particular, if you

222
00:09:53,160 --> 00:09:55,640
Speaker 1: do it right now while the market is down, as

223
00:09:55,640 --> 00:09:58,600
Speaker 1: stock prices have fallen, your tax bill on that conversion

224
00:09:58,760 --> 00:10:00,280
Speaker 1: is going to be lower than it would have been

225
00:10:00,440 --> 00:10:03,400
Speaker 1: just a few months ago. It's especially ideal if you

226
00:10:03,440 --> 00:10:05,839
Speaker 1: can make that conversion in a year in which your

227
00:10:05,880 --> 00:10:09,760
Speaker 1: income doesn't exceed the marginal twelve percent tax bracket. Yeah, Basically,

228
00:10:09,760 --> 00:10:12,080
Speaker 1: the lowerer a GI, the lower your taxable income, the

229
00:10:12,120 --> 00:10:14,880
Speaker 1: more it actually makes sense to do a Roth conversion. Now, Jonathan,

230
00:10:14,880 --> 00:10:16,880
Speaker 1: don't wait ten years when your tax rate's gonna be

231
00:10:16,920 --> 00:10:19,440
Speaker 1: twice is what it is now. That's me predicting the future,

232
00:10:20,280 --> 00:10:22,480
Speaker 1: which is impossible. Yeah, that's a bad move, Matt, don't

233
00:10:22,480 --> 00:10:24,400
Speaker 1: do that, and I think too. It's important to note

234
00:10:24,440 --> 00:10:26,680
Speaker 1: for Jonathan that in order for this to even be

235
00:10:26,720 --> 00:10:29,120
Speaker 1: on the table, you really have to make sure that

236
00:10:29,160 --> 00:10:31,000
Speaker 1: you have the cash on hand to pay the tax

237
00:10:31,360 --> 00:10:33,560
Speaker 1: on the conversion and at the same time make sure

238
00:10:33,559 --> 00:10:36,040
Speaker 1: you aren't depleting your emergency fund in order to make

239
00:10:36,080 --> 00:10:39,839
Speaker 1: this move. Especially with rampant job insecurity of contracting economy,

240
00:10:40,080 --> 00:10:42,720
Speaker 1: it makes sense to hold on to that emergency fund.

241
00:10:42,920 --> 00:10:45,520
Speaker 1: And if you don't have enough money on hand to

242
00:10:45,640 --> 00:10:48,360
Speaker 1: keep that intact as well as paying the tax bill

243
00:10:48,400 --> 00:10:51,240
Speaker 1: that you're going to incur next year, then don't do

244
00:10:51,280 --> 00:10:53,520
Speaker 1: it because that puts you it undue risk. So, while

245
00:10:53,559 --> 00:10:56,200
Speaker 1: we love the idea of making a Roth conversion, you

246
00:10:56,240 --> 00:10:57,600
Speaker 1: have to be able to pay the taxes that you're

247
00:10:57,640 --> 00:10:59,920
Speaker 1: gonna incur in order to make it. Is still us

248
00:11:00,040 --> 00:11:03,559
Speaker 1: mark move and Jonathan, another advantage of making that conversion

249
00:11:03,920 --> 00:11:07,240
Speaker 1: is you have the potential to spread out your tax liability.

250
00:11:07,240 --> 00:11:09,360
Speaker 1: You didn't really mention this, but if you do have

251
00:11:09,640 --> 00:11:11,839
Speaker 1: happen to have a four O win K through maybe

252
00:11:11,880 --> 00:11:15,559
Speaker 1: a current employer, converting to a rath with that old money,

253
00:11:15,679 --> 00:11:16,920
Speaker 1: like that makes sense to go ahead and do that now,

254
00:11:17,000 --> 00:11:19,800
Speaker 1: because it's helpful to have both pre tax and post

255
00:11:19,840 --> 00:11:23,959
Speaker 1: tax buckets in retirement. Essentially you're diversifying your tax liability

256
00:11:24,120 --> 00:11:26,600
Speaker 1: when the time does come for you to retire. Yeah,

257
00:11:26,679 --> 00:11:29,360
Speaker 1: at those different tax buckets so helpful. Having both pre

258
00:11:29,440 --> 00:11:31,760
Speaker 1: tax and post tax just gives you even more flexibility

259
00:11:31,760 --> 00:11:34,680
Speaker 1: in retirement to basically dictate what your income is gonna

260
00:11:34,720 --> 00:11:37,200
Speaker 1: look like and dictate what your tax rate is going

261
00:11:37,240 --> 00:11:39,160
Speaker 1: to be because you don't know what the actual tax

262
00:11:39,240 --> 00:11:40,560
Speaker 1: rate is going to be in the future. Yeah, so

263
00:11:40,559 --> 00:11:41,960
Speaker 1: that's kind of a good way. I think a lot

264
00:11:42,000 --> 00:11:43,640
Speaker 1: of answers that we give on the show sometimes are

265
00:11:43,640 --> 00:11:45,480
Speaker 1: split it down the middle. That's a way to split

266
00:11:45,480 --> 00:11:47,360
Speaker 1: it down the middle to have some pre tax some

267
00:11:47,440 --> 00:11:50,160
Speaker 1: post tax money. You're you're splitting the difference and you're

268
00:11:50,160 --> 00:11:53,840
Speaker 1: giving yourself more flexibility in the future while ensuring some

269
00:11:53,880 --> 00:11:56,480
Speaker 1: tax breaks now. Right, And it really comes down to

270
00:11:56,600 --> 00:11:59,360
Speaker 1: ultimately us not knowing the future. Like I said at

271
00:11:59,360 --> 00:12:01,240
Speaker 1: the beginning of your question, Jonathan, we are in a

272
00:12:01,240 --> 00:12:04,680
Speaker 1: pretty historically low tax environment. I'm kind of keen to

273
00:12:04,679 --> 00:12:07,160
Speaker 1: take the burden the hand on this one and make

274
00:12:07,200 --> 00:12:10,760
Speaker 1: the conversion, especially if most of your retirement account exposure

275
00:12:11,320 --> 00:12:13,559
Speaker 1: is in those accounts that have already offered you at

276
00:12:13,559 --> 00:12:16,040
Speaker 1: tax benefit. I would jump at the chance to have

277
00:12:16,240 --> 00:12:18,360
Speaker 1: some of my money in a post tax rath account

278
00:12:18,600 --> 00:12:20,480
Speaker 1: because it does add to some of the flexibility you're

279
00:12:20,480 --> 00:12:22,240
Speaker 1: gonna be able to have. Of course, it's hard to

280
00:12:22,280 --> 00:12:24,600
Speaker 1: know whether you'll actually be in a lower tax bracket

281
00:12:24,600 --> 00:12:27,080
Speaker 1: in retirement, so just do your best and either way,

282
00:12:27,160 --> 00:12:29,240
Speaker 1: keep investing for the long haul. That's really what it

283
00:12:29,240 --> 00:12:31,400
Speaker 1: comes down to you. I mean, these sorts of decisions

284
00:12:31,400 --> 00:12:33,800
Speaker 1: about whether to convert to a roth ira from a

285
00:12:33,840 --> 00:12:37,160
Speaker 1: traditional ira, they're good questions to have. But more than anything,

286
00:12:37,440 --> 00:12:40,080
Speaker 1: growing that nest egg, putting more into it and making

287
00:12:40,120 --> 00:12:43,080
Speaker 1: sure you're going to have enough in retirement, that is

288
00:12:43,200 --> 00:12:45,120
Speaker 1: the bigger part of the equation. All Right, man, We've

289
00:12:45,160 --> 00:12:47,000
Speaker 1: got a couple more questions that we're gonna get to,

290
00:12:47,200 --> 00:12:58,920
Speaker 1: but first let's take a quick break. All right, That

291
00:12:58,960 --> 00:13:00,360
Speaker 1: we're back to the break. We're you get to a

292
00:13:00,440 --> 00:13:03,040
Speaker 1: question about employees stacked purchase plans in just a second,

293
00:13:03,200 --> 00:13:04,720
Speaker 1: but before that, let's get to a question that's on

294
00:13:04,720 --> 00:13:06,720
Speaker 1: a lot of listeners minds. Do I pay off debt

295
00:13:07,160 --> 00:13:10,360
Speaker 1: or do I invest with the extra money that I've got? Hi,

296
00:13:10,440 --> 00:13:13,080
Speaker 1: Joel and Matt. My name is Kate and I currently

297
00:13:13,120 --> 00:13:16,920
Speaker 1: live in Pittsburgh, Pennsylvania. UM. I love the show and

298
00:13:16,960 --> 00:13:20,160
Speaker 1: I found it to be a very valuable motivational tool

299
00:13:20,200 --> 00:13:23,040
Speaker 1: for me. UM, I'm coming a bit late to the game.

300
00:13:23,360 --> 00:13:27,920
Speaker 1: I'm thirty five with married with two kids twelve ages

301
00:13:27,960 --> 00:13:31,000
Speaker 1: twelve and four. We're a single income family, and I

302
00:13:31,080 --> 00:13:34,560
Speaker 1: unfortunately haven't given much thought to my finances until recently.

303
00:13:35,840 --> 00:13:38,920
Speaker 1: I pretty much let life get carried away, assuming I

304
00:13:38,920 --> 00:13:42,560
Speaker 1: would take care of things later. So now is later,

305
00:13:42,960 --> 00:13:45,760
Speaker 1: and I'm working on making sure that I'm in more

306
00:13:45,800 --> 00:13:48,960
Speaker 1: control of my finances and making better decisions for the future.

307
00:13:49,880 --> 00:13:52,960
Speaker 1: We have a large amount of debt, including consumer debt,

308
00:13:53,480 --> 00:13:57,400
Speaker 1: student loans, a personal loan, and a mortgage. I am

309
00:13:57,440 --> 00:14:00,079
Speaker 1: a teacher and contribute twelve percent of my income to

310
00:14:00,120 --> 00:14:03,160
Speaker 1: my four oh one k annually. Currently my four oh

311
00:14:03,160 --> 00:14:06,120
Speaker 1: one k, though is it in terms of my savings

312
00:14:06,160 --> 00:14:09,160
Speaker 1: for the future. I know I need to emphast up,

313
00:14:09,559 --> 00:14:14,600
Speaker 1: but my debt is absolutely crushing currently and we're working

314
00:14:14,600 --> 00:14:16,600
Speaker 1: on a plan to pay it off as soon as possible.

315
00:14:17,800 --> 00:14:19,400
Speaker 1: But if you have no if you have debt, you

316
00:14:19,400 --> 00:14:23,200
Speaker 1: have no money, and that includes money for savings. But

317
00:14:23,400 --> 00:14:26,080
Speaker 1: if I only focus on the debt, it will be

318
00:14:26,200 --> 00:14:29,560
Speaker 1: years before I can begin saving for the future beyond

319
00:14:29,600 --> 00:14:32,480
Speaker 1: my four o one k. My concern is that that

320
00:14:32,520 --> 00:14:35,080
Speaker 1: would be years of not being able to benefit from

321
00:14:35,120 --> 00:14:39,000
Speaker 1: compounding interests with investments. So I'm not sure what to do.

322
00:14:39,560 --> 00:14:42,000
Speaker 1: Focus only on the debt and put off savings until

323
00:14:42,080 --> 00:14:45,160
Speaker 1: at least most of my desk taken care of, or

324
00:14:45,760 --> 00:14:48,320
Speaker 1: take some amount of money, even if it's small, and

325
00:14:48,360 --> 00:14:51,480
Speaker 1: begin investing into another retirement account such as a rath

326
00:14:51,560 --> 00:14:55,280
Speaker 1: I array while working at the same time to pay

327
00:14:55,280 --> 00:14:58,880
Speaker 1: off the debt. I would appreciate any advice you may

328
00:14:58,920 --> 00:15:01,520
Speaker 1: have to help me figure out of solid path going forward.

329
00:15:02,040 --> 00:15:04,760
Speaker 1: Thank you so much for the help and for all

330
00:15:04,800 --> 00:15:09,000
Speaker 1: of your work on the podcast. Cheers. Kate thinks so

331
00:15:09,080 --> 00:15:11,200
Speaker 1: much for listening to the podcast, and we are glad

332
00:15:11,280 --> 00:15:13,760
Speaker 1: that it's been motivational for you. Honestly though, like you're

333
00:15:13,760 --> 00:15:17,680
Speaker 1: not getting started all that late at age thirty five. Yeah,

334
00:15:17,680 --> 00:15:19,560
Speaker 1: thirty five is not that late in the game. I

335
00:15:19,560 --> 00:15:21,320
Speaker 1: think Kate's giving herself a little bit of a hard

336
00:15:21,320 --> 00:15:23,680
Speaker 1: time here, and I think we all understand the realities

337
00:15:23,760 --> 00:15:26,160
Speaker 1: of like pushing something off a little bit further down

338
00:15:26,160 --> 00:15:27,760
Speaker 1: the road. You know, she was kind of mentioning how

339
00:15:27,960 --> 00:15:29,960
Speaker 1: she's like, I'm gonna say that for later. We've all

340
00:15:30,000 --> 00:15:32,160
Speaker 1: been there, like we don't want to do the harder,

341
00:15:32,320 --> 00:15:34,520
Speaker 1: difficult things in life, but you know you're there now.

342
00:15:34,680 --> 00:15:36,560
Speaker 1: We understand that you're ready to make some decisions. So

343
00:15:36,560 --> 00:15:37,880
Speaker 1: that makes me happy though that we can kind of

344
00:15:37,880 --> 00:15:39,720
Speaker 1: guide you along in the stage of life. And didn't

345
00:15:39,760 --> 00:15:42,360
Speaker 1: Kate say too that her investment rate, her savings rate

346
00:15:42,400 --> 00:15:45,880
Speaker 1: was twelve. I think that's pretty good. That's that's solid. Again,

347
00:15:46,200 --> 00:15:48,880
Speaker 1: Kate raking herself over the coals and when it's unnecessary. Kate,

348
00:15:48,920 --> 00:15:50,840
Speaker 1: you're doing a great job. Keep it up. I want

349
00:15:50,840 --> 00:15:52,400
Speaker 1: to say that you didn't mention whether or not you're

350
00:15:52,440 --> 00:15:55,080
Speaker 1: getting an employer match. If you do, then you should

351
00:15:55,120 --> 00:15:57,600
Speaker 1: at a minimum keep investing up until that match amount,

352
00:15:57,640 --> 00:16:00,120
Speaker 1: no matter what. When it comes to investing more or

353
00:16:00,120 --> 00:16:02,440
Speaker 1: paying down debt. For instance, if your employers putting in

354
00:16:02,440 --> 00:16:04,640
Speaker 1: three percent, if you put in six, if they're essentially

355
00:16:04,680 --> 00:16:06,920
Speaker 1: matching fifty cents on the dollar, well, then stop at

356
00:16:06,920 --> 00:16:09,200
Speaker 1: six percent of your money and start funneling that extra

357
00:16:09,240 --> 00:16:12,080
Speaker 1: money towards your high interest rate debts. Then you're able to,

358
00:16:12,400 --> 00:16:14,680
Speaker 1: like we're talking about earlier, Matt, kind of splitting the difference.

359
00:16:14,840 --> 00:16:17,520
Speaker 1: You're doing both simultaneously, and I think that's always a

360
00:16:17,520 --> 00:16:19,800
Speaker 1: good place to be, especially if you do have high

361
00:16:19,800 --> 00:16:22,480
Speaker 1: interest rate debts that you want to get rid of. Yeah,

362
00:16:22,560 --> 00:16:24,520
Speaker 1: and on that note, we've we've talked before about the

363
00:16:24,560 --> 00:16:28,120
Speaker 1: debt snowball and the avalanche. Student loans and mortgages aren't

364
00:16:28,160 --> 00:16:31,200
Speaker 1: typically the highest priority for us to don't want to

365
00:16:31,200 --> 00:16:34,680
Speaker 1: pay off, especially your mortgage, But you should funnel all

366
00:16:34,800 --> 00:16:37,640
Speaker 1: your extra money towards getting rid of that personal loan,

367
00:16:37,840 --> 00:16:41,080
Speaker 1: a SAP any of that consumer spending. And then once

368
00:16:41,120 --> 00:16:43,640
Speaker 1: that is taken care of, you can increase your four

369
00:16:43,640 --> 00:16:46,640
Speaker 1: O n K contribution amounts. Yeah, once you've been able

370
00:16:46,640 --> 00:16:48,800
Speaker 1: to make good progress on the debt, you can start

371
00:16:48,840 --> 00:16:51,880
Speaker 1: investing again. But super high interest rate debt does take

372
00:16:51,880 --> 00:16:56,240
Speaker 1: priority over investing typically at least after that match amount. Yeah,

373
00:16:56,280 --> 00:16:58,360
Speaker 1: So tackling the high interest rate debt like that's more

374
00:16:58,400 --> 00:17:01,160
Speaker 1: along the lines of taking the that avalanche approach, right

375
00:17:01,160 --> 00:17:03,400
Speaker 1: because you're gonna start with the higher interest rates, but

376
00:17:03,760 --> 00:17:06,199
Speaker 1: because you're already saving within your four own k and

377
00:17:06,240 --> 00:17:08,200
Speaker 1: you already have a plan to knock out your debt.

378
00:17:08,520 --> 00:17:10,520
Speaker 1: I think the decision really comes down to taking the

379
00:17:10,640 --> 00:17:13,199
Speaker 1: route that will be the most effective for motivating you.

380
00:17:14,040 --> 00:17:16,720
Speaker 1: If the snowball appeals to you, then maybe, like that

381
00:17:16,800 --> 00:17:19,480
Speaker 1: laser like focus on purely paying off debt is the

382
00:17:19,480 --> 00:17:21,040
Speaker 1: way to go. Like, maybe you just want to focus

383
00:17:21,040 --> 00:17:23,120
Speaker 1: on one item at a time and then once you've

384
00:17:23,160 --> 00:17:26,359
Speaker 1: eliminated that completely, then focus on investing. But you know,

385
00:17:26,400 --> 00:17:28,639
Speaker 1: if you are going to look at the numbers and

386
00:17:28,680 --> 00:17:31,199
Speaker 1: take more of a mathematical approach, then that's when the

387
00:17:31,200 --> 00:17:33,400
Speaker 1: debt avalanche might be for you. Yeah, Matt. So much

388
00:17:33,520 --> 00:17:37,880
Speaker 1: of our personal finance lives are emotionally based and trying

389
00:17:37,880 --> 00:17:40,439
Speaker 1: to split the difference, which sometimes really does work and

390
00:17:40,480 --> 00:17:42,560
Speaker 1: it can be the best way to go, it doesn't

391
00:17:42,560 --> 00:17:45,040
Speaker 1: always work for our mindset. Our brains have such an

392
00:17:45,040 --> 00:17:48,600
Speaker 1: easier time handling a singular goal, and if that singular

393
00:17:48,640 --> 00:17:51,080
Speaker 1: goal is going all in and investing as much as

394
00:17:51,080 --> 00:17:54,080
Speaker 1: we can or funneling as much money as we can

395
00:17:54,080 --> 00:17:57,120
Speaker 1: towards HIE interest rate debts. Well, having just one goal

396
00:17:57,480 --> 00:17:59,879
Speaker 1: makes it so much easier to accomplish, and so if

397
00:18:00,040 --> 00:18:02,360
Speaker 1: at is what works best for Kate, then I think

398
00:18:02,359 --> 00:18:04,320
Speaker 1: she should do that, because, Yeah, we like talking about

399
00:18:04,320 --> 00:18:06,080
Speaker 1: the numbers, we like talking about what makes the most

400
00:18:06,080 --> 00:18:08,720
Speaker 1: sense and how take advantage of the match and then

401
00:18:08,760 --> 00:18:11,760
Speaker 1: putting everything else towards high interest rate. That that's probably

402
00:18:11,760 --> 00:18:13,400
Speaker 1: the best way to go, but it's not the best

403
00:18:13,400 --> 00:18:14,760
Speaker 1: way to go if it's not a plan you can

404
00:18:14,760 --> 00:18:17,080
Speaker 1: stick to. So whatever it is, the Cake can stick

405
00:18:17,119 --> 00:18:20,280
Speaker 1: to and can continue to feel in control of that,

406
00:18:20,320 --> 00:18:22,520
Speaker 1: I would, says her best bet nice man. Alright, our

407
00:18:22,600 --> 00:18:25,600
Speaker 1: next listener question is about an employee stock purchase plan.

408
00:18:25,760 --> 00:18:30,680
Speaker 1: Let's here. Hello guys, my name is Adish, I'm from Philadelphia.

409
00:18:31,160 --> 00:18:33,840
Speaker 1: I hope you and your families are safe and doing

410
00:18:33,880 --> 00:18:37,000
Speaker 1: with thanks not for your podcast and especially for the

411
00:18:37,040 --> 00:18:40,760
Speaker 1: Friday episodes. They're helping me to keep up with all

412
00:18:40,800 --> 00:18:44,560
Speaker 1: the covidnant and related updates. I have a question related

413
00:18:44,600 --> 00:18:48,359
Speaker 1: to employee share purchase plan. I have enrolled in the

414
00:18:48,600 --> 00:18:52,800
Speaker 1: SPP program with my employer and I was going to

415
00:18:52,840 --> 00:18:56,760
Speaker 1: sell some of the acquired stocks around February as market

416
00:18:56,760 --> 00:19:00,600
Speaker 1: crashed afterwards, I'm holding the stocks right now. I might

417
00:19:00,760 --> 00:19:03,960
Speaker 1: need the cash in next one or two years for

418
00:19:04,160 --> 00:19:07,920
Speaker 1: a real estate investment. So my first question is should

419
00:19:07,920 --> 00:19:11,239
Speaker 1: I continue to hold my employer stocks or should I

420
00:19:11,240 --> 00:19:14,879
Speaker 1: sell them at loss? And my second question is should

421
00:19:14,920 --> 00:19:18,160
Speaker 1: I continue to enroll in the esp program? Take care

422
00:19:18,280 --> 00:19:22,080
Speaker 1: and stasive my Adash, thank you so much for your question.

423
00:19:22,600 --> 00:19:25,200
Speaker 1: We're doing great. We're staying pretty safe, I think, right, Matt. Yeah, Man,

424
00:19:25,240 --> 00:19:28,160
Speaker 1: I only do safe things. I've got kids, exactly. We've

425
00:19:28,160 --> 00:19:29,600
Speaker 1: got to make sure we keep our kids away from

426
00:19:29,640 --> 00:19:32,080
Speaker 1: other people more than more than even ourselves. Yeah, actually

427
00:19:32,160 --> 00:19:35,240
Speaker 1: that is true. Yeah, but hope you're doing well to Dash.

428
00:19:35,600 --> 00:19:37,200
Speaker 1: And this is a great question because e s p

429
00:19:37,280 --> 00:19:39,879
Speaker 1: p s are awesome if used correctly. And Matt, we

430
00:19:39,920 --> 00:19:43,800
Speaker 1: went into some detail on ESPPS, in particular on episode

431
00:19:43,800 --> 00:19:47,040
Speaker 1: one fifty six inside of a nask HTM episode. But

432
00:19:47,160 --> 00:19:50,320
Speaker 1: a Dash's question gets into even some more ESPP nuance,

433
00:19:50,560 --> 00:19:52,439
Speaker 1: So let's get into it. Yeah, there's so much of

434
00:19:52,440 --> 00:19:54,840
Speaker 1: your decision to sell, and when the cell comes down

435
00:19:54,880 --> 00:19:57,600
Speaker 1: to like really a couple of things, A like what

436
00:19:57,720 --> 00:19:59,680
Speaker 1: you will be doing with that money down the road,

437
00:20:00,080 --> 00:20:03,479
Speaker 1: and be the tax consequences of selling it sooner. If

438
00:20:03,520 --> 00:20:06,159
Speaker 1: you held your es PP shares for more than two

439
00:20:06,240 --> 00:20:08,679
Speaker 1: years from the offering date and one year from your

440
00:20:08,720 --> 00:20:12,440
Speaker 1: purchase date, it's called a qualifying position, and you're able

441
00:20:12,520 --> 00:20:15,440
Speaker 1: to report more of your profit as capital gains rather

442
00:20:15,560 --> 00:20:18,719
Speaker 1: than as earned income. And capital gains tax rates right

443
00:20:18,720 --> 00:20:21,399
Speaker 1: now are pretty favorable. They are, so to avoid poor

444
00:20:21,480 --> 00:20:25,000
Speaker 1: tax treatment, make sure that you reach those thresholds before selling,

445
00:20:25,280 --> 00:20:27,119
Speaker 1: and then make that sell happen at that point. But

446
00:20:27,160 --> 00:20:28,960
Speaker 1: either way, you don't want to sell those stocks right now,

447
00:20:29,040 --> 00:20:31,360
Speaker 1: especially at a loss so much the answer comes down

448
00:20:31,359 --> 00:20:34,280
Speaker 1: to not what the stock is worth right now, but

449
00:20:34,359 --> 00:20:36,520
Speaker 1: what's the tax treatment, because that is just as big

450
00:20:36,520 --> 00:20:39,080
Speaker 1: of a consideration, if if not an even bigger consideration

451
00:20:39,320 --> 00:20:42,320
Speaker 1: to make when you're buying and selling shares. So, just

452
00:20:42,359 --> 00:20:44,320
Speaker 1: what Matt said, if you can hit those timetables to

453
00:20:44,359 --> 00:20:46,520
Speaker 1: give yourself preferred tax treatment, that's gonna be a big

454
00:20:46,560 --> 00:20:49,040
Speaker 1: reason to actually hold onto these shares for now. And

455
00:20:49,080 --> 00:20:52,200
Speaker 1: we would say to you asked about continuing to participate

456
00:20:52,240 --> 00:20:54,520
Speaker 1: in your ESPP, well, yeah, if you have the money

457
00:20:54,520 --> 00:20:57,640
Speaker 1: to invest in your ESPP as well as making meaningful

458
00:20:57,640 --> 00:21:00,320
Speaker 1: contribution to your four oh one K and H s

459
00:21:00,400 --> 00:21:02,159
Speaker 1: A if you have access to one, and if your

460
00:21:02,160 --> 00:21:06,120
Speaker 1: employer stock discount is really really generous, that we would say, yeah,

461
00:21:06,160 --> 00:21:09,040
Speaker 1: you should totally be participating because it is a major

462
00:21:09,119 --> 00:21:11,880
Speaker 1: benefit that an employer offers that you should be taking

463
00:21:11,880 --> 00:21:14,640
Speaker 1: advantage of. Just be sure that the amount of employer

464
00:21:14,680 --> 00:21:17,840
Speaker 1: stock that you have doesn't exceed five percent of your

465
00:21:17,880 --> 00:21:20,600
Speaker 1: investment holdings. Investing through your e s P P should

466
00:21:20,640 --> 00:21:23,560
Speaker 1: be a tiny amount of your overall portfolio. So while

467
00:21:23,560 --> 00:21:25,840
Speaker 1: it is this awesome perk, you can purchase company stock

468
00:21:26,040 --> 00:21:28,240
Speaker 1: at a super sweet discount, hold onto it for that

469
00:21:28,320 --> 00:21:31,000
Speaker 1: minimum time period, sell and get great tax treatment. Will

470
00:21:31,000 --> 00:21:33,320
Speaker 1: make sure that you're widely diversified and that most of

471
00:21:33,320 --> 00:21:35,439
Speaker 1: your investments are an index funds inside of your four

472
00:21:35,440 --> 00:21:36,919
Speaker 1: O one K or an I RA A or an

473
00:21:37,040 --> 00:21:38,879
Speaker 1: H s A, and that this e s PP is

474
00:21:39,119 --> 00:21:42,479
Speaker 1: just a tiny percentage of the overall investing that you're doing. Yeah, man.

475
00:21:42,520 --> 00:21:44,439
Speaker 1: And the reason for that is because of the inherent

476
00:21:44,520 --> 00:21:48,399
Speaker 1: risk involved with investing in a specific company single stock investing.

477
00:21:48,400 --> 00:21:50,439
Speaker 1: It's why we do not recommend that. And on the

478
00:21:50,480 --> 00:21:53,880
Speaker 1: note of diversification dust. You know, he mentioned his upcoming

479
00:21:53,920 --> 00:21:56,639
Speaker 1: real estate endeavors as well. Best of luck. They're uh

480
00:21:56,680 --> 00:21:59,639
Speaker 1: until speaking of real estate, our next question is about

481
00:21:59,680 --> 00:22:02,240
Speaker 1: budget for a rental property, and so we'll get to

482
00:22:02,280 --> 00:22:13,159
Speaker 1: that one right after the break. All right, Matt, we'll

483
00:22:13,160 --> 00:22:15,200
Speaker 1: back from break. We've got more listener questions to get

484
00:22:15,200 --> 00:22:17,159
Speaker 1: to and just a second, we're gonna get to a

485
00:22:17,240 --> 00:22:19,520
Speaker 1: question about going to medical school. Is that a good idea?

486
00:22:19,720 --> 00:22:21,520
Speaker 1: But first let's get to our next question, which is

487
00:22:21,560 --> 00:22:25,320
Speaker 1: about budgeting to buy a rental property. Hi. There, my

488
00:22:25,400 --> 00:22:29,280
Speaker 1: name is Hannah. I live in Montana. I know it's

489
00:22:29,359 --> 00:22:32,720
Speaker 1: very funny. I was hoping you could give a quick

490
00:22:32,760 --> 00:22:38,000
Speaker 1: recap about budgeting for a good rental property. I think

491
00:22:38,040 --> 00:22:41,119
Speaker 1: in that episode you might have said something like you

492
00:22:41,200 --> 00:22:46,399
Speaker 1: should set aside the equivalent of ten of your mortgage

493
00:22:47,040 --> 00:22:53,000
Speaker 1: for maintenance expenses, another ten percent for capital expenses like

494
00:22:53,040 --> 00:22:57,760
Speaker 1: a roof, and maybe another ten percent for vacancy. I

495
00:22:57,880 --> 00:23:02,040
Speaker 1: had questions about that because it's seems like the amount

496
00:23:02,080 --> 00:23:06,240
Speaker 1: you would then set aside could vary based on the

497
00:23:06,359 --> 00:23:10,480
Speaker 1: term of your loan. My other question was when can

498
00:23:10,520 --> 00:23:13,399
Speaker 1: you stop saving for vacancy? Do you have any advice

499
00:23:13,480 --> 00:23:18,640
Speaker 1: on that if we don't anticipate a very high vacancy rate,

500
00:23:19,720 --> 00:23:23,879
Speaker 1: maybe is there a number of months we should shoot

501
00:23:23,960 --> 00:23:28,480
Speaker 1: for having saved up? Thanks? Oh, Matt, it must be

502
00:23:28,520 --> 00:23:30,359
Speaker 1: tough to live in Montana and have that name. At

503
00:23:30,359 --> 00:23:31,639
Speaker 1: this point in time, I knew you were going to

504
00:23:31,680 --> 00:23:35,160
Speaker 1: bring that up. She brought it about your nature. Speaking

505
00:23:35,160 --> 00:23:37,160
Speaker 1: of Miley Cyrus, did you happen to see her performance

506
00:23:37,200 --> 00:23:40,000
Speaker 1: on SNL at home? You know, they've still been doing SNL,

507
00:23:40,119 --> 00:23:42,840
Speaker 1: but like an at home version version. I haven't watched

508
00:23:42,880 --> 00:23:45,119
Speaker 1: SNL in like five years. I mean, yeah, we're recording

509
00:23:45,119 --> 00:23:47,159
Speaker 1: this at a time. But she did a cover of

510
00:23:47,200 --> 00:23:50,320
Speaker 1: Wish You Were Here, that Pink Floyd song. That's pretty cool. Nice. Yeah,

511
00:23:50,359 --> 00:23:52,000
Speaker 1: it's a cool way for them to continue the show

512
00:23:52,000 --> 00:23:54,520
Speaker 1: even though they're not really live, so you kind of

513
00:23:54,560 --> 00:23:57,400
Speaker 1: miss out on some of that audience interaction a little bit. Personally,

514
00:23:57,600 --> 00:24:00,720
Speaker 1: it's more like a podcast. I'm sure Hannah struggled with

515
00:24:00,760 --> 00:24:02,480
Speaker 1: that throughout the years, depending on how long she's lived

516
00:24:02,480 --> 00:24:05,560
Speaker 1: in Montana, which is a wonderful state. But yeah, let's

517
00:24:05,560 --> 00:24:07,040
Speaker 1: try to offer a couple of rules with them. And

518
00:24:07,080 --> 00:24:10,200
Speaker 1: I know it can be overwhelming for new landlords to

519
00:24:10,200 --> 00:24:12,359
Speaker 1: to start to think about the costs they are gonna

520
00:24:12,359 --> 00:24:15,040
Speaker 1: incur when they are buying our rental property. That not

521
00:24:15,119 --> 00:24:19,040
Speaker 1: to mention the hassle of buying, renovating, and finding tenants

522
00:24:19,160 --> 00:24:21,320
Speaker 1: to live in the property that you're buying. That's why

523
00:24:21,359 --> 00:24:23,959
Speaker 1: a lot of people choose to forego real estate investing,

524
00:24:24,040 --> 00:24:25,840
Speaker 1: or at least mom and popular estate investing. But but but

525
00:24:26,000 --> 00:24:27,679
Speaker 1: we're big fans of it because we do think it

526
00:24:27,800 --> 00:24:30,880
Speaker 1: can have outsized returns over the years. Man. I think

527
00:24:30,880 --> 00:24:33,199
Speaker 1: on that episode we said that one percent of the

528
00:24:33,200 --> 00:24:36,560
Speaker 1: original purchase price was what you should budget for annual

529
00:24:36,600 --> 00:24:39,160
Speaker 1: maintenance of a rental property, and I think that's still

530
00:24:39,160 --> 00:24:41,920
Speaker 1: a pretty helpful number to consider. Right an average two

531
00:24:42,600 --> 00:24:45,239
Speaker 1: dollar house will likely incur roughly two thousand dollars in

532
00:24:45,280 --> 00:24:48,720
Speaker 1: repairs every single year when averaged out over time. And granted,

533
00:24:48,720 --> 00:24:50,560
Speaker 1: there's a lot of advice we can share with Hannah

534
00:24:50,600 --> 00:24:52,679
Speaker 1: on this, but when it comes down to it, so

535
00:24:52,760 --> 00:24:54,479
Speaker 1: much of the answer when it comes to this question

536
00:24:54,880 --> 00:24:56,600
Speaker 1: is based in the kind of properties that you're buying,

537
00:24:56,960 --> 00:24:59,840
Speaker 1: is based in where you're buying, the condition that the

538
00:25:00,000 --> 00:25:02,280
Speaker 1: property is in. There are so many variables that it's

539
00:25:02,320 --> 00:25:04,879
Speaker 1: hard to give a precise answer to this question. But

540
00:25:04,880 --> 00:25:07,040
Speaker 1: but we're gonna do our best and je so you know,

541
00:25:07,080 --> 00:25:09,960
Speaker 1: like we're getting at here. Most beginner real estate investors

542
00:25:10,040 --> 00:25:13,040
Speaker 1: severely underestimate the cost that it takes to own a

543
00:25:13,119 --> 00:25:16,119
Speaker 1: rental property. So do take into account the fixed expenses

544
00:25:16,160 --> 00:25:18,480
Speaker 1: that you will incur every month, like insurance and trash.

545
00:25:18,600 --> 00:25:20,640
Speaker 1: Likely some of those expenses are already built into your

546
00:25:20,800 --> 00:25:23,240
Speaker 1: mortgage payment, but like we said, these costs tend to

547
00:25:23,320 --> 00:25:25,919
Speaker 1: level out over a longer period of time. But just

548
00:25:25,960 --> 00:25:27,720
Speaker 1: make sure that you have the cash on hand to

549
00:25:27,760 --> 00:25:31,359
Speaker 1: be able to make these important repairs from month one.

550
00:25:31,640 --> 00:25:33,760
Speaker 1: And I'm not sure exactly where you are on your

551
00:25:33,800 --> 00:25:36,520
Speaker 1: real estate journey, but if you are sitting aside ten

552
00:25:36,560 --> 00:25:39,399
Speaker 1: percent for each of those things you mentioned repairs, you mentioned,

553
00:25:39,400 --> 00:25:43,080
Speaker 1: capital expenses, and vacancies, you might even be setting aside

554
00:25:43,080 --> 00:25:44,679
Speaker 1: too much money. So maybe you're kind of on the

555
00:25:44,680 --> 00:25:47,440
Speaker 1: other end of the spectrum. However, for most folks that

556
00:25:47,560 --> 00:25:50,639
Speaker 1: that's not the case. Most folks underestimate, uh, the amount

557
00:25:50,640 --> 00:25:52,280
Speaker 1: of money that is going to need to go into

558
00:25:52,320 --> 00:25:54,199
Speaker 1: the home just to keep it up and running. Yeah, man,

559
00:25:54,240 --> 00:25:56,720
Speaker 1: I think in particular with real estate investing, I'm okay

560
00:25:56,800 --> 00:26:01,040
Speaker 1: with overestimating the costs you're gonna incur, because what happens

561
00:26:01,040 --> 00:26:02,760
Speaker 1: when you own a property and you have tenants in

562
00:26:02,760 --> 00:26:04,840
Speaker 1: it and you don't have the money to cover a

563
00:26:04,920 --> 00:26:08,719
Speaker 1: necessary expense. That's how you sell it and you make

564
00:26:08,720 --> 00:26:11,120
Speaker 1: it somebody else's problem. Yeah. I like that, That's that's

565
00:26:11,119 --> 00:26:13,600
Speaker 1: one option, but really it stinks if you don't have

566
00:26:13,640 --> 00:26:15,920
Speaker 1: the cash on hand to repair a broken water heater

567
00:26:16,400 --> 00:26:18,080
Speaker 1: or an h fact that goes bad in the summer.

568
00:26:18,280 --> 00:26:20,560
Speaker 1: Those are repairs that you have to make in order

569
00:26:20,600 --> 00:26:22,520
Speaker 1: to keep your tenant happy and in order to keep

570
00:26:22,560 --> 00:26:24,640
Speaker 1: the property in good shape. But let's keep talking about

571
00:26:24,680 --> 00:26:26,959
Speaker 1: rules of thumb, because especially when we're talking about real

572
00:26:27,040 --> 00:26:29,920
Speaker 1: estate investing, I think other rules of thumb can be helpful.

573
00:26:30,119 --> 00:26:32,160
Speaker 1: And again, these are rules of thumb because they're good

574
00:26:32,160 --> 00:26:34,680
Speaker 1: general things to think about. They don't apply to every

575
00:26:34,720 --> 00:26:38,000
Speaker 1: specific situation, right. But another decent one is that fifty

576
00:26:38,359 --> 00:26:40,520
Speaker 1: of your rental profits will likely go to repairs on

577
00:26:40,560 --> 00:26:42,439
Speaker 1: the home, and I think that can be a helpful

578
00:26:42,480 --> 00:26:45,520
Speaker 1: gauge when you're thinking about how much money to stock away.

579
00:26:45,680 --> 00:26:47,600
Speaker 1: So the biggest takeaway from that is, don't take all

580
00:26:47,600 --> 00:26:50,280
Speaker 1: the profit that you're taking all the monthly rent that's

581
00:26:50,280 --> 00:26:52,840
Speaker 1: above the mortgage. Don't take that and spend it. Save

582
00:26:52,920 --> 00:26:54,760
Speaker 1: a good bit of that, at least fifty of it

583
00:26:54,880 --> 00:26:58,040
Speaker 1: for upkeep of the property. Real estate investing is something

584
00:26:58,080 --> 00:27:00,560
Speaker 1: that you're doing for for the long haul to continue

585
00:27:00,560 --> 00:27:03,199
Speaker 1: to attract good tenants and to continue to keep the

586
00:27:03,200 --> 00:27:05,399
Speaker 1: good tenants that you already have. You really do need

587
00:27:05,440 --> 00:27:08,080
Speaker 1: to maintain the property well, and so putting that money

588
00:27:08,119 --> 00:27:11,399
Speaker 1: back into the property for repair costs and upkeep is

589
00:27:11,440 --> 00:27:14,359
Speaker 1: really crucial throughout the whole process. Then, Hannah, you're the

590
00:27:14,440 --> 00:27:16,080
Speaker 1: last bit of your question there had to do with

591
00:27:16,160 --> 00:27:19,239
Speaker 1: when you can stop saving for for vacancy. Once you

592
00:27:19,520 --> 00:27:22,120
Speaker 1: have that full ten percent amount in the savings account

593
00:27:22,400 --> 00:27:25,720
Speaker 1: for vacancy, you can stop saving for that potential vacancy. Obviously,

594
00:27:25,760 --> 00:27:27,800
Speaker 1: you don't need to continue to say for that. By

595
00:27:27,800 --> 00:27:31,600
Speaker 1: the way, you said you don't anticipate a high vacancy rate. Luckily,

596
00:27:31,640 --> 00:27:34,640
Speaker 1: I've been pretty fortunate to avoid vacancies, but only due

597
00:27:34,720 --> 00:27:36,400
Speaker 1: to a lot of hard work to get a new

598
00:27:36,400 --> 00:27:39,960
Speaker 1: tenant in on a short and tight timeline. And additionally,

599
00:27:40,000 --> 00:27:42,720
Speaker 1: in a contracting economy, it's even more important to plan

600
00:27:43,080 --> 00:27:45,720
Speaker 1: for some of those potential vacancies and to be maybe

601
00:27:45,760 --> 00:27:48,760
Speaker 1: a little more conservative with the budget numbers for this property.

602
00:27:48,800 --> 00:27:51,800
Speaker 1: It's better to be safe than sorry. I think traditionally

603
00:27:51,880 --> 00:27:53,520
Speaker 1: we would have said that, like, oh, that that sounds

604
00:27:53,520 --> 00:27:56,040
Speaker 1: really conservative, just to have your money sitting around like

605
00:27:56,080 --> 00:27:59,080
Speaker 1: that in cash, But especially given the current crisis that

606
00:27:59,119 --> 00:28:01,160
Speaker 1: we're in, is are such thing to have too much

607
00:28:01,160 --> 00:28:03,239
Speaker 1: cash on hand? And I think the answer to that

608
00:28:03,359 --> 00:28:05,439
Speaker 1: is cash is keen. You know, it's important to have

609
00:28:05,560 --> 00:28:08,640
Speaker 1: enough cash on hand to handle some of these storms

610
00:28:08,800 --> 00:28:12,440
Speaker 1: because there are a lot of unforeseen circumstances that we're

611
00:28:12,440 --> 00:28:13,960
Speaker 1: gonna be faced with. Yeah, Matt, I think if I

612
00:28:14,000 --> 00:28:16,840
Speaker 1: were to calculate the vacancy rate for all five properties

613
00:28:16,880 --> 00:28:19,560
Speaker 1: that I own, it's probably something like two percent. It

614
00:28:19,600 --> 00:28:23,119
Speaker 1: almost never happens. I'm really really good about getting people

615
00:28:23,160 --> 00:28:24,960
Speaker 1: in there to do the painting, to do the necessary

616
00:28:24,960 --> 00:28:27,280
Speaker 1: repairs in between tenants in like a day or two

617
00:28:27,520 --> 00:28:29,400
Speaker 1: to keep it looking good, to get somebody else in there.

618
00:28:29,400 --> 00:28:31,119
Speaker 1: But at the same time, when COVID hit, I had

619
00:28:31,119 --> 00:28:32,800
Speaker 1: a couple of tenants reach out saying they wouldn't be

620
00:28:32,840 --> 00:28:35,600
Speaker 1: able to pay rent for the month of May. And so,

621
00:28:35,800 --> 00:28:38,320
Speaker 1: no matter how proactive you are, there are certain things

622
00:28:38,360 --> 00:28:40,440
Speaker 1: that are unforeseen when it comes to being a landlord.

623
00:28:40,520 --> 00:28:44,320
Speaker 1: So having that vacancy built in to your savings, having

624
00:28:44,320 --> 00:28:47,480
Speaker 1: money set aside for the times when your property will

625
00:28:47,560 --> 00:28:52,240
Speaker 1: potentially be unoccupied is really smart because even if you're

626
00:28:52,280 --> 00:28:54,640
Speaker 1: a go getter, you're proactive, you're making sure that the

627
00:28:54,760 --> 00:28:56,840
Speaker 1: repairs are done in the right amount of time in

628
00:28:56,960 --> 00:28:59,880
Speaker 1: order to keep tenants in that property. That still doesn't

629
00:29:00,000 --> 00:29:04,120
Speaker 1: necessarily mean that it's going to be occupied all the time. So, Hannah,

630
00:29:04,120 --> 00:29:06,080
Speaker 1: it sounds like you're asking the right questions. I don't

631
00:29:06,080 --> 00:29:08,200
Speaker 1: mean to sound too conservative, but I think the more

632
00:29:08,280 --> 00:29:11,560
Speaker 1: money you can have set aside for potential vacancies and repairs,

633
00:29:11,800 --> 00:29:13,640
Speaker 1: the better off you'll be, and the less dress you'll

634
00:29:13,680 --> 00:29:16,040
Speaker 1: have as a landlord altogether. Nice man. All right, we've

635
00:29:16,040 --> 00:29:18,600
Speaker 1: got another question, and after this question, we're gonna dispense

636
00:29:18,680 --> 00:29:22,239
Speaker 1: some medical school advice. I'm Andel, my name is Rick,

637
00:29:22,280 --> 00:29:24,440
Speaker 1: and I currently live in Ancona, Iowa. I graduated with

638
00:29:24,480 --> 00:29:26,520
Speaker 1: my bachelor's last man and have spent the time since

639
00:29:26,560 --> 00:29:28,880
Speaker 1: then taking a gap here working in a hospital setting,

640
00:29:29,200 --> 00:29:31,560
Speaker 1: gaining healthcare experience, and trying to learn how to do

641
00:29:31,600 --> 00:29:33,880
Speaker 1: this whole adulting thing, which is actually how I ended

642
00:29:33,920 --> 00:29:36,360
Speaker 1: up Finding your Guys podcast. Come in August, I will

643
00:29:36,360 --> 00:29:38,440
Speaker 1: be starting medical school and I was looking for some

644
00:29:38,520 --> 00:29:41,080
Speaker 1: advice on how to navigate the financials of this massive

645
00:29:41,160 --> 00:29:44,440
Speaker 1: life life change I will be undergoing from taking on

646
00:29:44,560 --> 00:29:47,480
Speaker 1: massive loans to readjusting my budget and whatever else you

647
00:29:47,520 --> 00:29:49,120
Speaker 1: guys think would be helpful for me to know. I

648
00:29:49,160 --> 00:29:51,680
Speaker 1: welcome all the advice I can get. Thanks a munch,

649
00:29:52,120 --> 00:29:56,040
Speaker 1: keep giving out great advice and have a wonderful day. Rick, First,

650
00:29:56,080 --> 00:29:59,000
Speaker 1: congrats getting into medical school. Also, what a great idea

651
00:29:59,040 --> 00:30:00,840
Speaker 1: to take a gap here some of that real life

652
00:30:00,840 --> 00:30:03,480
Speaker 1: experience working in a hospital setting. That makes a whole

653
00:30:03,520 --> 00:30:05,400
Speaker 1: lot of sense. And I think that the first question

654
00:30:05,400 --> 00:30:07,520
Speaker 1: that we would typically ask that we typically have for

655
00:30:07,560 --> 00:30:10,200
Speaker 1: folks about the commit years of additional schooling and the

656
00:30:10,240 --> 00:30:13,520
Speaker 1: massive costs associated with that learning is are you sure

657
00:30:13,800 --> 00:30:15,880
Speaker 1: is that what you want to do? Not to dissuade

658
00:30:15,920 --> 00:30:18,360
Speaker 1: you from from something that you're passionate about or something

659
00:30:18,360 --> 00:30:20,479
Speaker 1: that you really do want to pursue, because because if

660
00:30:20,480 --> 00:30:22,680
Speaker 1: it is something that you've completely got your heart set on,

661
00:30:22,960 --> 00:30:24,720
Speaker 1: then you should definitely go for it. But it is

662
00:30:24,760 --> 00:30:27,200
Speaker 1: an important question to ask before you actually do make

663
00:30:27,200 --> 00:30:29,920
Speaker 1: the decision and start taking on debt because of that decision,

664
00:30:30,280 --> 00:30:33,120
Speaker 1: but because of your experience working in healthcare this past year,

665
00:30:33,440 --> 00:30:35,880
Speaker 1: it certainly seems like you shouldn't have any doubts because

666
00:30:36,160 --> 00:30:39,040
Speaker 1: because if you're still ready to proceed after that, then

667
00:30:39,160 --> 00:30:41,840
Speaker 1: go ahead, man, make it happen, especially given what we've

668
00:30:41,880 --> 00:30:44,840
Speaker 1: gone through over the past several months. Right. Uh, Yeah,

669
00:30:44,880 --> 00:30:47,320
Speaker 1: there so much we don't know until we've actually experienced it,

670
00:30:47,400 --> 00:30:49,640
Speaker 1: And it sounds like Rick is doing that experience things.

671
00:30:49,760 --> 00:30:52,440
Speaker 1: I love that, Uh and Rick. Most medical students may

672
00:30:52,480 --> 00:30:55,160
Speaker 1: not be thinking of scholarships, but there are lots of

673
00:30:55,160 --> 00:30:58,760
Speaker 1: them available for medical students. There's gonna be some specific

674
00:30:58,760 --> 00:31:01,440
Speaker 1: schools that will offer a full merit scholarship, but then

675
00:31:01,440 --> 00:31:04,000
Speaker 1: they're going to be groups like the American Medical Association

676
00:31:04,080 --> 00:31:07,680
Speaker 1: Foundation that has the Physicians of Tomorrow Award, which gives

677
00:31:07,680 --> 00:31:10,560
Speaker 1: students in their final year of medical school ten thousand dollars.

678
00:31:10,600 --> 00:31:12,480
Speaker 1: There are a lot of traditional resources on the web

679
00:31:12,520 --> 00:31:15,120
Speaker 1: that you would typically associate with undergrad scholarships, but be

680
00:31:15,160 --> 00:31:18,080
Speaker 1: sure to check out Scholey, fastweb Scholarships dot Com like

681
00:31:18,120 --> 00:31:19,960
Speaker 1: these are all going to be great sites for you

682
00:31:20,000 --> 00:31:22,960
Speaker 1: to check out and to see what offerings there are

683
00:31:23,000 --> 00:31:26,040
Speaker 1: for medical students. Yeah, pinching your budget is definitely an

684
00:31:26,080 --> 00:31:29,080
Speaker 1: important thing to do as a college student, but finding

685
00:31:29,120 --> 00:31:32,840
Speaker 1: scholarships is even better. Right, Don't cut your Netflix membership

686
00:31:32,880 --> 00:31:35,680
Speaker 1: and then not search for scholarships, because that one additional

687
00:31:35,680 --> 00:31:39,080
Speaker 1: scholarship can have such a huge impact, can massively outweigh

688
00:31:39,360 --> 00:31:41,680
Speaker 1: just those little cuts that you can make to your budget.

689
00:31:41,800 --> 00:31:43,800
Speaker 1: But at the same time, right, it is important to

690
00:31:43,840 --> 00:31:46,560
Speaker 1: think about your budget. Getting an advanced degree is often

691
00:31:46,600 --> 00:31:49,600
Speaker 1: a lean financial time in people's lives. There's not much

692
00:31:49,640 --> 00:31:51,840
Speaker 1: money coming in and you're living in kind of austere

693
00:31:51,880 --> 00:31:54,280
Speaker 1: quarters typically, and at the same time you're taking on

694
00:31:54,360 --> 00:31:56,000
Speaker 1: a good bit of debt, so you're forced to live

695
00:31:56,000 --> 00:31:57,880
Speaker 1: pretty cheaply. So I would say that the key is

696
00:31:57,920 --> 00:32:01,320
Speaker 1: to continue to live that way as your increases. Right,

697
00:32:01,360 --> 00:32:03,720
Speaker 1: as someone who is getting a medical degree, once you

698
00:32:03,800 --> 00:32:06,640
Speaker 1: hit residency, you'll start to see an increased income, and

699
00:32:06,640 --> 00:32:09,200
Speaker 1: once you start making an even bigger income as a doctor,

700
00:32:09,560 --> 00:32:12,600
Speaker 1: living like a resident is key to being able to

701
00:32:12,640 --> 00:32:14,680
Speaker 1: pay off those student debts and as quick a time

702
00:32:14,680 --> 00:32:17,239
Speaker 1: frame as possible. And Matt, there's a great website out there,

703
00:32:17,280 --> 00:32:19,880
Speaker 1: the White Coat Investor. Pretty sure his name is Jim Dolly,

704
00:32:20,040 --> 00:32:22,320
Speaker 1: but he has a site and a podcast, Like, dude

705
00:32:22,400 --> 00:32:25,160
Speaker 1: is smart, and he has helped so many physicians save money,

706
00:32:25,520 --> 00:32:29,720
Speaker 1: and his website and his podcaster particularly towards people in

707
00:32:29,800 --> 00:32:32,040
Speaker 1: the medical space. So I think he's got a lot

708
00:32:32,080 --> 00:32:34,480
Speaker 1: of great advice to offer. I would say that if

709
00:32:34,480 --> 00:32:36,440
Speaker 1: you're becoming a doctor, if you're in medical school, if

710
00:32:36,440 --> 00:32:39,280
Speaker 1: you're working towards that, his site in his podcast are

711
00:32:39,360 --> 00:32:41,719
Speaker 1: are great ones to follow because they're gonna be able

712
00:32:41,760 --> 00:32:43,360
Speaker 1: to help you along the way. But if you can

713
00:32:43,360 --> 00:32:45,960
Speaker 1: continue to live like a resident all the way through,

714
00:32:46,280 --> 00:32:48,320
Speaker 1: if you can get those additional scholarships and also cut

715
00:32:48,360 --> 00:32:50,120
Speaker 1: your costs at the same time, you'll be in a

716
00:32:50,200 --> 00:32:52,480
Speaker 1: much different place than a lot of people that graduate

717
00:32:52,520 --> 00:32:54,360
Speaker 1: medical school. And we gotta reach out to him and

718
00:32:54,400 --> 00:32:56,080
Speaker 1: see if we can have him on the show. Sometimes

719
00:32:56,080 --> 00:32:57,920
Speaker 1: he would be a great guest. He would be. Let's

720
00:32:57,960 --> 00:32:59,920
Speaker 1: kind of back it up to to to actually, you know,

721
00:33:00,040 --> 00:33:03,320
Speaker 1: you're assuming that we're gonna get student loans, but you know, Rick,

722
00:33:03,360 --> 00:33:05,120
Speaker 1: we would recommend for you to try to take out

723
00:33:05,120 --> 00:33:07,400
Speaker 1: as few student loans as you possibly can, if you

724
00:33:07,400 --> 00:33:10,040
Speaker 1: can bootstrap your way through medical school as much as possible,

725
00:33:10,280 --> 00:33:12,880
Speaker 1: Like that's you know what we would recommend. But when

726
00:33:12,880 --> 00:33:14,760
Speaker 1: the time does come for you to take out some loans,

727
00:33:15,080 --> 00:33:17,200
Speaker 1: be sure and start by filling out the FAFSA. UH.

728
00:33:17,200 --> 00:33:20,640
Speaker 1: It's not just for undergrad as medical schools do use

729
00:33:20,680 --> 00:33:22,520
Speaker 1: this to determine how much aid that you're going to

730
00:33:22,600 --> 00:33:25,280
Speaker 1: be eligible for. UH. And the good news is that

731
00:33:25,320 --> 00:33:27,440
Speaker 1: you're interest rate for your first year loans are going

732
00:33:27,480 --> 00:33:30,520
Speaker 1: to be much lower because borrowing rates have gone down

733
00:33:30,560 --> 00:33:33,040
Speaker 1: a good bit. Yeah, that's one silver lining to kind

734
00:33:33,040 --> 00:33:35,719
Speaker 1: of the difficult times that we're experiencing right now. Lower

735
00:33:35,760 --> 00:33:38,160
Speaker 1: borrowing rates for students. And another thing I think it's

736
00:33:38,160 --> 00:33:41,240
Speaker 1: important for Rick to consider is where he's gonna work

737
00:33:41,280 --> 00:33:44,960
Speaker 1: post graduation. You can get medical school loan forgiveness by

738
00:33:44,960 --> 00:33:47,960
Speaker 1: taking a number of potential job choices once you're done.

739
00:33:48,280 --> 00:33:51,120
Speaker 1: For example, the National Health Service Core offers health providers

740
00:33:51,120 --> 00:33:54,680
Speaker 1: and professionals the opportunity to receive up the fifty dollars

741
00:33:54,760 --> 00:33:58,360
Speaker 1: in tactually for loan repayment for a two year commitment. Also,

742
00:33:58,440 --> 00:34:01,239
Speaker 1: medical students in their final year of school can get

743
00:34:01,320 --> 00:34:03,640
Speaker 1: up to a hundred and twenty thousand dollars in loan

744
00:34:03,720 --> 00:34:06,800
Speaker 1: repayment for a three year service commitment at an nh

745
00:34:07,000 --> 00:34:09,560
Speaker 1: SC site. Also, if you've ever been interested in a

746
00:34:09,600 --> 00:34:12,319
Speaker 1: military career, there are great benefits for those who choose

747
00:34:12,360 --> 00:34:14,759
Speaker 1: to serve. So depending on how much student loan debt

748
00:34:14,760 --> 00:34:17,120
Speaker 1: you have to take on, depending on that overall debt

749
00:34:17,120 --> 00:34:19,680
Speaker 1: load level, finding the jobs that are going to actually

750
00:34:19,680 --> 00:34:22,520
Speaker 1: help pay your student loans off, that's a big thing

751
00:34:22,560 --> 00:34:25,239
Speaker 1: to consider once you're done. And in particular, there are

752
00:34:25,280 --> 00:34:29,120
Speaker 1: so many needs for doctors rurally across the United States

753
00:34:29,160 --> 00:34:32,480
Speaker 1: of America. Looking for jobs in rural areas is actually

754
00:34:32,520 --> 00:34:34,000
Speaker 1: gonna be one of the best ways to be able

755
00:34:34,000 --> 00:34:36,279
Speaker 1: to get relief for some of those student loans. And

756
00:34:36,320 --> 00:34:38,080
Speaker 1: at the same time you're probably going to be serving

757
00:34:38,080 --> 00:34:41,640
Speaker 1: people who who need access to good physicians, so it

758
00:34:41,640 --> 00:34:43,960
Speaker 1: can be rewarding too. So Rick, best of luck to

759
00:34:44,040 --> 00:34:46,920
Speaker 1: you as you get through medical school. I'm sure it's

760
00:34:46,920 --> 00:34:49,960
Speaker 1: a long slog. Keep that budget under control, apply for

761
00:34:50,000 --> 00:34:52,360
Speaker 1: those scholarships, and then make sure you're looking to those

762
00:34:52,400 --> 00:34:55,640
Speaker 1: bigger opportunities that can pay off once you've actually got

763
00:34:55,680 --> 00:34:57,839
Speaker 1: your degree in hand. All right, Matt, let's get back

764
00:34:57,840 --> 00:34:59,640
Speaker 1: to the beer that we had on the show today.

765
00:34:59,840 --> 00:35:02,560
Speaker 1: We shared an i PA called dank Bot by Insight

766
00:35:02,640 --> 00:35:04,719
Speaker 1: Brewing Big thanks to listener Joe for sending this one

767
00:35:04,760 --> 00:35:06,440
Speaker 1: our way. What were your thoughts on this beer? Man?

768
00:35:06,719 --> 00:35:09,040
Speaker 1: Hey man, this was a solid beer. I'll describe how

769
00:35:09,080 --> 00:35:12,759
Speaker 1: it poured first, which was a nice golden orange. This

770
00:35:12,840 --> 00:35:15,160
Speaker 1: is definitely more of a traditional style I PA because

771
00:35:15,200 --> 00:35:16,719
Speaker 1: you could see through it. That's how you can tell

772
00:35:16,760 --> 00:35:20,480
Speaker 1: the difference between the New England style and more traditional

773
00:35:20,520 --> 00:35:22,560
Speaker 1: I p A. And I'm much into this one is

774
00:35:22,560 --> 00:35:25,319
Speaker 1: from Minnesota, and that's where Joe, who sent this one

775
00:35:25,320 --> 00:35:26,920
Speaker 1: to us, that's where he's from, so I think this

776
00:35:27,000 --> 00:35:29,719
Speaker 1: must be a local brewery there for him. I hate

777
00:35:29,719 --> 00:35:32,000
Speaker 1: saying this, but this beer is called dank Bot. I'm

778
00:35:32,000 --> 00:35:34,680
Speaker 1: want to describe it as dank way to take the

779
00:35:34,719 --> 00:35:37,760
Speaker 1: easy descriptor. It did have that piney kind of resid

780
00:35:37,800 --> 00:35:41,080
Speaker 1: the earthy flavor to it. Obviously it had some of

781
00:35:41,080 --> 00:35:43,399
Speaker 1: the hop edge to it, but at the same time

782
00:35:43,440 --> 00:35:46,080
Speaker 1: it was pretty multi as well, so due to that,

783
00:35:46,120 --> 00:35:48,160
Speaker 1: it did remind me more of maybe some of the

784
00:35:48,239 --> 00:35:51,400
Speaker 1: more traditional I p A s from yesteryear. But I

785
00:35:51,480 --> 00:35:53,480
Speaker 1: enjoyed it just as much reminded me when you and

786
00:35:53,520 --> 00:35:55,600
Speaker 1: I first started having beers together. But but yeah, I mean,

787
00:35:55,640 --> 00:35:57,239
Speaker 1: what were your thoughts on this one? Yeah. I think

788
00:35:57,360 --> 00:35:59,040
Speaker 1: the first thing that came to my mind was that

789
00:35:59,120 --> 00:36:02,080
Speaker 1: it had some abrasively happy notes. And I don't mean

790
00:36:02,120 --> 00:36:05,320
Speaker 1: that negatively. I think abrasive typically is a word that

791
00:36:05,360 --> 00:36:08,480
Speaker 1: we used to describe things that we don't like. But no,

792
00:36:08,600 --> 00:36:12,680
Speaker 1: abrasively brasive personality, right exactly. But abrasively happy is good

793
00:36:12,680 --> 00:36:14,520
Speaker 1: because I like hops. But yeah, I did have some

794
00:36:14,560 --> 00:36:17,400
Speaker 1: of those old school bitter pine notes. And while piney

795
00:36:17,440 --> 00:36:19,319
Speaker 1: i p a S aren't typically what you find on

796
00:36:19,360 --> 00:36:22,120
Speaker 1: store shelves these days, I still really enjoy getting to

797
00:36:22,160 --> 00:36:24,080
Speaker 1: have one every now and again. And I feel like

798
00:36:24,080 --> 00:36:26,600
Speaker 1: this was a really good representation of one of the

799
00:36:26,600 --> 00:36:29,440
Speaker 1: I pas of yesteryear. I think, as you just put so, Yeah,

800
00:36:29,520 --> 00:36:31,560
Speaker 1: thank a really really good beer. And again, this is

801
00:36:31,560 --> 00:36:33,759
Speaker 1: a beer by Insight Brewing, sent to us by a

802
00:36:33,760 --> 00:36:36,399
Speaker 1: friend of the show, Joe up there in Minnesota. Thanks Joe.

803
00:36:36,680 --> 00:36:38,640
Speaker 1: All right, buddy, that's gonna be it for this episode.

804
00:36:38,920 --> 00:36:41,000
Speaker 1: Listeners can find our show notes up on our website

805
00:36:41,000 --> 00:36:42,640
Speaker 1: at how the Money dot com. We'll include some of

806
00:36:42,680 --> 00:36:44,960
Speaker 1: those links to some of those different sites that include

807
00:36:44,960 --> 00:36:47,680
Speaker 1: all of that scholarship information, whether you're looking at undergrad

808
00:36:47,840 --> 00:36:50,640
Speaker 1: or education even beyond that, Yeah, and for anybody who's

809
00:36:50,680 --> 00:36:52,839
Speaker 1: been listening for a while, we would appreciate a five

810
00:36:52,840 --> 00:36:55,120
Speaker 1: star review on Apple Podcast. If you have a minute,

811
00:36:55,120 --> 00:36:57,000
Speaker 1: head over there, hit the five stars and leave a

812
00:36:57,080 --> 00:36:59,440
Speaker 1: nice little note. We'd really appreciate it, all right, man,

813
00:36:59,480 --> 00:37:02,279
Speaker 1: Well that's gonna be it until next time. Best friends Out,

814
00:37:02,440 --> 00:37:03,760
Speaker 1: Best Friends Out.