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

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Speaker 1: and today we are answering your listener questions. That's right, Chel.

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Speaker 1: This episode, we have some listener questions. Specifically, we have

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Speaker 1: five listener questions. We always have five listener questions. But

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Speaker 1: we're gonna be talking about whether or not you should

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Speaker 1: pay down your mortgage faster. We're gonna talk about opening

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Speaker 1: accounts for your kids, as well as investing in gold,

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Speaker 1: which is something we've never talked about, is the precious metals.

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Speaker 1: I'm precious. Do you have a gold tooth? Did you

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Speaker 1: ever have any cavities as a kid and grown up?

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Speaker 1: I think I had my first one maybe in my teens,

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Speaker 1: but by then they were just using kind of the

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Speaker 1: filling that they used now, like the basic filling. Yeah,

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Speaker 1: but no no gold gold teeth. I'm lucky I didn't

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Speaker 1: have any cavities. I don't. Actually, I take that back.

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Speaker 1: I may have had like one or two cavities as

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Speaker 1: a kid, but since i've been a grown adults brush

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Speaker 1: twice a day, and I've always said if you start

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Speaker 1: to feel the cavity coming in, that you can just

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Speaker 1: brush it out. But I've been told that that's not accurate. Yeah,

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Speaker 1: I don't think it is. I I definitely think you

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Speaker 1: should stay away from giving dental advice. I actually remember

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Speaker 1: that one time where you basically talked about how you

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Speaker 1: never go to the dentist, and we got multiple emails

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Speaker 1: talking about how own wise that was. And you know what,

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Speaker 1: I have to side with our listeners on that one.

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Speaker 1: You should probably go get a check up at some point.

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Speaker 1: You know, this is an example of me being cheap,

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Speaker 1: but it hasn't come back to bite me in the

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Speaker 1: butt yet yet. So when it does, though, that's me

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Speaker 1: being cheap. For now though, I'm just being pretty frugol. Okay,

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Speaker 1: all right, Oh but dude, I don't want to talk

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Speaker 1: about teeth. Let's talk about the iOS, which is the

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Speaker 1: Apple operating software for phones. I heard there was just

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Speaker 1: an update. I don't know. I'm an Android guy, so

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Speaker 1: I prefer not to care. Yeah it was. It was

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Speaker 1: last month. You're a little behind the times, but we

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Speaker 1: haven't talked about this, the new iOS update. It came

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Speaker 1: with swipe text whish man. That was one of the

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Speaker 1: only things that was sort of pulling me towards the

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Speaker 1: uh Android side of things. Texting in a quarter of

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Speaker 1: the time that it takes you to text, you're like

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Speaker 1: waving your finger around like a wand you're just gonna

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Speaker 1: like sliding all of your screen and a Harry Potter

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Speaker 1: of texting. Yes, exactly. Well, I've been doing that now

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Speaker 1: and I completely agree. Man, it is amazing. I'm a

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Speaker 1: huge fan of that. And the thing with Apple that

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Speaker 1: it surprises me that they are oftentimes years behind the

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Speaker 1: curve when it comes to just kind of certain basic

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Speaker 1: things that make it so much easier to use the phone.

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Speaker 1: So I'm glad that Apple's finally gotten with the times

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Speaker 1: are doing swipe text. But that was something they should

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Speaker 1: have done I don't know, four or five years ago.

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Speaker 1: It's one of those things where when they don't come

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Speaker 1: up with it themselves, I think they like seriously vet

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Speaker 1: it and make sure that it's not just like some

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Speaker 1: passing fat or something. Right. But I also wanted to

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Speaker 1: mention too, does your phone do the droids allow you

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Speaker 1: to block unknown callers? Yes, tang it. That's like another

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Speaker 1: thing that Apple I think they had just released with

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Speaker 1: that iOS update. But I have the option to block

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Speaker 1: all calls if it's a number that is not recognized

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Speaker 1: on my phone shud. Let me tell you that says

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Speaker 1: my phone from buzzing so many times during the day

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Speaker 1: because all these telemarketers have the number on my phone

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Speaker 1: because of the different businesses, and it rings NonStop if

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Speaker 1: I have it on silent mode, and so honestly before

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Speaker 1: I had it completely off to where it wouldn't buzz

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Speaker 1: at all, but then I'm missing calls or text from

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Speaker 1: people I want to hear from. But now being able

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Speaker 1: to completely silence unknown numbers, man, it is completely changed

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Speaker 1: my life, all right. So I think this is actually

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Speaker 1: different from from what Android offers, and I think, actually,

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Speaker 1: I really like this new update from Apple because I

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Speaker 1: love that idea of basically saying, if it's a number

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Speaker 1: I don't know, don't bother me at all, don't bother

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Speaker 1: me at all. Yes, that is a great way for

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Speaker 1: a phone to perform, especially with all the unwanted spam

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Speaker 1: calls so we get these days. What I was referring

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Speaker 1: to is that if if I do get a call

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Speaker 1: from a number that I don't know, I can then

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Speaker 1: add it to my block number list right like that.

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Speaker 1: That's what I'm allowed to do. And yeah, so I

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Speaker 1: like the idea that I can block somebody after the fact.

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Speaker 1: But what's even better is just shutting them all down

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Speaker 1: from the get go, because I completely agree it is

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Speaker 1: such an annoyance and there are so many more unwanted

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Speaker 1: robo calls that we deal with. It's astronomical the percentage

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Speaker 1: of its grown of the amount of robo calls we're receiving,

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Speaker 1: and so anything that kind of keeps it out of sight,

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Speaker 1: out of mind, I think it's a good thing, and

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Speaker 1: I hope Android follows suit with something similar that That

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Speaker 1: is groundbreaking stuff for Apple and a good thing for

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Speaker 1: anybody who's using an iPhone. So if you have an

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Speaker 1: iPhone and you don't have that option turned on yet,

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Speaker 1: just go to your settings, go to your phone app,

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Speaker 1: and you can swipe that and turn that on right

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Speaker 1: there and voila, no more unknown callers. Man. Sounds so nice.

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Speaker 1: Lucky you, all right, Matt, and also lucky us because

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Speaker 1: we're drinking a homebrew beer from some of our friends

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Speaker 1: at Yeast Atlanta Brewers. Big thanks our friend John for

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Speaker 1: donating this beer to the show today. This beer is

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Speaker 1: called six A. It's a New England style, says on

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Speaker 1: pale Ale, which is like throwing in the kitchen sink there. Man,

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Speaker 1: it's like everything all in one. I think we've had

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Speaker 1: a beer from the East Atlanta Brewers on the show before.

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Speaker 1: It was really good. I'm excited to have this one,

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Speaker 1: and we'll let folk you know what we think about

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Speaker 1: it at the end of the show. All right, Matt,

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Speaker 1: onto the subject at hand. We are answering listener questions

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Speaker 1: on the show today, and if someone out there listening

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Speaker 1: has a question of their own that they want to

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Speaker 1: submit to be on the show, we'll just go to

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Speaker 1: how to money dot com slash asked. There are super

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Speaker 1: simple directions there for you to submit your question. Takes

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Speaker 1: just a few seconds, and we'd love to have your

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Speaker 1: question on a show in the near future. With that

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Speaker 1: being said, let's get to the first one. Hey, Matt

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Speaker 1: and Joel, this is Danny and Frederick Maryland. I just

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Speaker 1: wanted to say thank you for your episode on mortgage refinancing.

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Speaker 1: I had never truly considered refinancing in the past. Back

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Speaker 1: in I had purchased my first home during the time

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Speaker 1: of year when rates became super unstable and I was

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Speaker 1: forced to lock in my thirty year mortgage at four

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Speaker 1: and a half percent. Did some shopping around, and I

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Speaker 1: currently have a rate lock at three point two five

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Speaker 1: for a twenty year term, so a lower rate, shorter term.

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Speaker 1: My mortgage payments are about the same. However, when I

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Speaker 1: look at my ammortas station table, I'm able to see

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Speaker 1: that the portion of my payment going towards principle is

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Speaker 1: significantly higher than my original mortgage, so hopefully that's a

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Speaker 1: good reason to be excited. Technically I could have afforded

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Speaker 1: a fifteen year term, however, it just would have brought

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Speaker 1: my bottom line up to an uncomfortable level, so I

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Speaker 1: stuck with the twenty year term. I'm considering making principal

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Speaker 1: payments towards my mortgage when I can, as a way

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Speaker 1: to lessen interest paid over the life of the loan

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Speaker 1: while not affecting my bottom line, so kind of as

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Speaker 1: a happy medium. Do you think principal payments are a

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Speaker 1: good idea? Where are your thoughts on principal payments in general?

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Speaker 1: Let me know alright, guys, if you're ever in the

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Speaker 1: Frederick area, hit me up. We'll do a tour of

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Speaker 1: Flying Dog or something. Take it easy, guys, and thanks

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Speaker 1: again for all you do. Danny nice Man. What I

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Speaker 1: love hearing is that you have made a change to

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Speaker 1: your life and we get to hear about it. Right,

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Speaker 1: Like you heard something on the show and you're actually

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Speaker 1: making changes. The robber is meeting the road and that

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Speaker 1: makes me really excited. Man, action the most important thing, Right.

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Speaker 1: You can hear a bunch of stuff, but if you

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Speaker 1: don't take action on it, it's it's pretty meaningless. Yeah,

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Speaker 1: it's sort of like a little success story that we've

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Speaker 1: got here. But but yeah, Danny, this is great. You know,

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Speaker 1: your payments are staying roughly the same and you're able

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Speaker 1: to knock off about four years of your mortgage and

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Speaker 1: you're saving bookoos of interest. This is a fantastic way

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Speaker 1: to go. But you're asking whether or not paying additional

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Speaker 1: principle payments if that's a good idea, And the fact

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Speaker 1: is is that kind of depends, right. Prepaying on a

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Speaker 1: mortgage is a great idea, but it just might not

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Speaker 1: be the best course of action for you. You You know,

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Speaker 1: maybe if you're in a situation where you had p

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Speaker 1: m I, where you had private mortgage insurance, making principle

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Speaker 1: payments is an excellent idea in this situation in order

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Speaker 1: to get that in equity to completely drop p m I. Yeah,

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Speaker 1: that p m I can be a drag on your

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Speaker 1: monthly expenses. So if you're making additional principle payments in

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Speaker 1: order to vacate pm I more quickly, well, then it

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Speaker 1: can make sense. But ultimately it comes down to your priorities,

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Speaker 1: and we would say that it's more important to prioritize

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Speaker 1: a solid emergency fund and then next to make sure

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Speaker 1: that you're saving well for retirement. You specifically want to

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Speaker 1: make sure that you're taking advantage of an employer match

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Speaker 1: if you have one, and then max out those tax

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Speaker 1: advantaged accounts like hs A S and i RAS. Basically,

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Speaker 1: what it comes down to is that you don't get

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Speaker 1: to redo those years of investing in an IRA. You

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Speaker 1: can never put that six thousand dollars in that IRA

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Speaker 1: in the future. Except small caveat is that you have

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Speaker 1: until April to contribute to the previous years, So you

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Speaker 1: technically can be in the future and contribute to the past,

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Speaker 1: but only for four months, very limited window there. And Matt,

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Speaker 1: it's totally important as well to know your own personal

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Speaker 1: risk tolerance. So much of this question, the answer to

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Speaker 1: this question depends on your individual money psychology, So personally,

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Speaker 1: I don't know about you, Matt, I straddled the middle here.

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Speaker 1: I personally prefer to use a strategy that involves less

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Speaker 1: leverage in the process. So, Danny, as you're thinking through this,

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Speaker 1: you want to know what your risk tolerance is. And

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Speaker 1: if you're just completely anti debt and ready to pay

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Speaker 1: it off as quickly as possible, and you just can't

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Speaker 1: stand the idea of having it longer than you need

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Speaker 1: to have it, well, then you know what, for you, behaviorally,

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Speaker 1: it might make more sense to actually start prepaying principle.

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Speaker 1: But even as someone like me who's fairly conservative, fairly

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Speaker 1: middle of the road, I still am unwilling to to

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Speaker 1: prepay principle on my mortgages because when you've got a

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Speaker 1: lot rate, man, I love sticking with it. And did

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Speaker 1: you you know you mentioned dedication, Like that's something else

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Speaker 1: I think that's worth considering. Is your dedication? Like, no,

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Speaker 1: your dedication know the amount of discipline that you're gonna

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Speaker 1: bring to the table were you to not pay that

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Speaker 1: additional money towards principle. If you are going to invest

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Speaker 1: that money and you know you're gonna be disciplined about

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Speaker 1: that money, well then that's a completely different story versus

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Speaker 1: if you know that you're probably just gonna spend that

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Speaker 1: money on a really nice trip, if you know that

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Speaker 1: you're just gonna blow that money on lifestyle, well, paying

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Speaker 1: down extra on your principle can be a way to

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Speaker 1: kind of do some force savings, some forced investing where

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Speaker 1: you know that you've got to guarantee rate of return. Injil,

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Speaker 1: you mentioned low interest rates. That's certainly something else to

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Speaker 1: consider right now. It's really important to note that we

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Speaker 1: are in a very interesting time with mortgage interest rates.

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Speaker 1: They are at near all time lows right now, and

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Speaker 1: we don't know where they're going to go from here.

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Speaker 1: But I'll keep the known quantity of a low fixed

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Speaker 1: interest rate in exchange for the ability to invest more

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Speaker 1: for my future and avoid taxes too with those tax benefits.

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Speaker 1: It's just knowing whether or not I'm going to be

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Speaker 1: committed enough to actually channel that money towards those investments.

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Speaker 1: I gotta know myself. Yeah, no, completely. I think if

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Speaker 1: you're looking at it like one of those scales, like

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Speaker 1: the scales of justice. But these scales can I think,

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Speaker 1: really help us weigh the proper decision. And so yeah,

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Speaker 1: if you are weighing prepaying principle versus investing in a

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Speaker 1: four oh one K or an I ra A, well,

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Speaker 1: then I think it makes more sense to do the investing.

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Speaker 1: In particular given the low interest rate environment that we're in.

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Speaker 1: If you're weighing the idea of prepaying principle with taking

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Speaker 1: an extra suite vacation every year, I want to get

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Speaker 1: it to Hiti. Yeah, I would say, you know what

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Speaker 1: I mean, Not that vacations aren't important. You should have

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Speaker 1: a great vacation that go for it. But I would say,

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Speaker 1: if you're weighing those two against each other, then clearly

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Speaker 1: the better financial decision is to prepay principle. So yeah,

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Speaker 1: it's important to take all that into account, but ultimately

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Speaker 1: it's just really hard to recommend that someone prepay on

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Speaker 1: a mortgage when we're talking about interest rates potentially in

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Speaker 1: the low three percent range. But Danny, hopefully that gives

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Speaker 1: you what you need to know to make an informed

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Speaker 1: decision that works for you. All Right, we're gonna talk

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Speaker 1: some about five nine plans as well as buying a

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Speaker 1: home in foreclosure. We're gonna get to those right after

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Speaker 1: the break. All right, we're back to the break we're

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Speaker 1: answering listener questions, and this next question comes from a

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Speaker 1: listener who is attempting to save for the future for

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Speaker 1: his daughters. Hi guys, my name is Matt and I'm

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Speaker 1: from Massachusetts. I have been a listener to your show

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Speaker 1: from the very beginning. I'm so thankful for how approachable

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Speaker 1: and helpful your podcast has been. My question is in

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Speaker 1: regards to opening account for my daughters. My wife and

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Speaker 1: I have two young daughters, and I'm trying to find

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Speaker 1: the best way to put money aside for them to

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Speaker 1: use when they are older. My goal for this money

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Speaker 1: would be an account that they could use flexibly, so

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Speaker 1: if all of it goes to paying off student loan debt,

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Speaker 1: they could, or if they hopefully opt to not having

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Speaker 1: heard much student loan debt, to be able to use

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Speaker 1: towards a down payment on a home or help with

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Speaker 1: wedding expenses. I have hesitations when it comes to a

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Speaker 1: five twenty nine plan, as there is a ten percent

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Speaker 1: penalty if it doesn't get used towards education, and I

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Speaker 1: have heard it can directly affect scholarships. A custodial account

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Speaker 1: seems like a good idea, but again I don't want

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Speaker 1: to affect scholarships when they reach their age of maturity

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Speaker 1: if they do go to college, and also fidelities. WROTH

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Speaker 1: for kids account looks like a really great idea, but

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Speaker 1: I would have to wait until they are of age

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Speaker 1: to have an income, and as this would be coming

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Speaker 1: from my income, I believe that may be an ethical

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Speaker 1: to mamma. Any help in this matter would be greatly appreciated.

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Speaker 1: Thank you, Matt, Thanks so much for the question, and

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Speaker 1: thank you for listening since the very beginning. That takes

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Speaker 1: some dedication, because you know, we've refined the show since

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Speaker 1: the beginning, and I think it's much better. I hope so.

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Speaker 1: But Mat, let's go ahead to answer your question. You're

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Speaker 1: asking about setting aside money saving money for your daughters. Specifically,

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Speaker 1: you mentioned five real quickly. I'm glad that you are

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Speaker 1: considering five swine plans, but it is important to consider

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Speaker 1: the fact that they could affect your eligibility when it

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Speaker 1: comes to receiving student aid. Keep in mind, though, that

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Speaker 1: this largely has to do with who owns the account.

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Speaker 1: Make sure that the plan is in your name and

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Speaker 1: not in the name of say like a grandparent for example.

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Speaker 1: Is that would have a much larger impact. This could

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Speaker 1: be the difference in reducing your potential aid for one

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Speaker 1: of your daughters from five percent even up to fifty percent. Yeah, Matt,

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Speaker 1: and you seem to have a reluctance to put your

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Speaker 1: money into a plan, And honestly, I feel the same way.

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Speaker 1: If you go back and listen to an episode that

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Speaker 1: we did a long while back about plans, Matt and

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Speaker 1: I kind of came down on the same spot. At

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Speaker 1: least where we're at right now, we're not really prioritizing

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Speaker 1: five plans for our kids. You have multiple kids, and

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Speaker 1: and since you can transfer funds from one beneficiary to

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Speaker 1: the other, a five twenty nine plan could make solid

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Speaker 1: sense for you. And that ten percent fee, well it stinks.

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Speaker 1: But if you think at least one kid is likely

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Speaker 1: to go to college, well it it's not going to

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Speaker 1: apply to you. Even if your kids get great scholarship help,

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Speaker 1: you will still find yourself needing to make other college

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Speaker 1: related expenses like paying for housing, meal plans on campus,

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Speaker 1: and computers. The list goes on for college related expenses

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Speaker 1: that aren't just tuition based. So if you've written off

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Speaker 1: a five plan for those reasons, I think it can

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Speaker 1: make sense to contribute at least something, and in particular

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Speaker 1: if your state offers some sort of tax incentive for

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Speaker 1: you to contribute to their state sponsor plan. Yeah, Joel,

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Speaker 1: you know you mentioned that transfer ability right, like being

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Speaker 1: able to realize the benefits of a plan not just

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Speaker 1: in one kid, but the option to shift that over

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Speaker 1: to another kid. That basically tells you that if you

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Speaker 1: have multiple kids, like a five twenty nine is a

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Speaker 1: better option. And you know, myself, like having four kids. Now,

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Speaker 1: I think I am more seriously considering a five plan.

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Speaker 1: You know, it's not necessarily going to become a priority

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Speaker 1: for me, but it is something that I think I

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Speaker 1: might kind of ramp up here in the future. Yeah, man,

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Speaker 1: I think the reason why you and I both haven't

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Speaker 1: contributed yet is because we prioritize working towards maxing out

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Speaker 1: retirement accounts before you contribute to a five nine plan.

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Speaker 1: So if you can't do that, if you're not contributing,

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Speaker 1: Let's say you have a four oh one K through

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Speaker 1: work and the also the ability to contribute to a

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Speaker 1: roth ira or traditional ira, and you're not contributing the

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Speaker 1: full amount that you can. I feel like plans are

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Speaker 1: only worth considering if if you're doing really well at

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Speaker 1: those primary tax advantage accounts that you have access to. Yeah,

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Speaker 1: and Matt mentioned those kind of roth IRA for kids accounts.

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Speaker 1: While it's true that you can't contribute to your kids

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Speaker 1: roth IRA when they're not earning an income, make sure

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Speaker 1: that you are prioritizing that when they do start earning

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Speaker 1: an income. As long as the contribution is don't exceed

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Speaker 1: what they earn, they're good. And that's honestly, it's the

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Speaker 1: single best way to kind of give them that nest

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Speaker 1: egg for the future that isn't tied specifically to education,

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Speaker 1: and it's flexible enough so that they can pull some

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Speaker 1: of that out when they need it for a major purchase,

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Speaker 1: like you know, graduate school or buying that first home. Yeah.

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Speaker 1: I love the idea of as your kids do get older, Matt,

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Speaker 1: and and as our kids get older to actually when

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Speaker 1: they do start earning income, whether it's neighborhood jobs and

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Speaker 1: filing taxes on their behalf and then contributing to a

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Speaker 1: wrath or whether it's an actual job right down the

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Speaker 1: street at an actual place of business, to kind of

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Speaker 1: help them and teach them to to save for the

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Speaker 1: future by putting some of our own money into a

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Speaker 1: wrath for them. And that's a great way to kind

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Speaker 1: of incentivize them to to put some of theirs in.

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Speaker 1: We put some rs in. I love that idea, but

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Speaker 1: our kids aren't there yet. And it sounds like Matt's

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Speaker 1: kids aren't there yet either. Someone not earning enough money

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Speaker 1: from her eliminate stand to start contributing. You know, she

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Speaker 1: did set one up the other day. She was selling

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Speaker 1: her own artwork, or she wanted to, and I was like, actually,

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Speaker 1: some I love you, but you actually have to give

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Speaker 1: your artwork away. Like if you want to do that,

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Speaker 1: you can't be charging our neighbors for your artwork. So

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Speaker 1: she she ended up giving it away and it was

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Speaker 1: super fun. But yeah, so I wanted to mention to

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Speaker 1: Matt two that actually his own wrath can be this

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Speaker 1: awesome vehicle because if you aren't maxing out, your own

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Speaker 1: wrath will start doing that first, and you kind of

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Speaker 1: avoid this dilemma altogether. That the beauty of your own

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Speaker 1: roth ira is that you can withdraw those contributions tax

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Speaker 1: free as you see fit to give your kids money

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Speaker 1: for college or other life events. Oh and if six

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Speaker 1: k a year isn't enough. If you're looking to save more, well,

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Speaker 1: don't forget contributing for your partner as well, even if

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Speaker 1: they aren't working outside the home. Well, they qualify for

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Speaker 1: espousal wrath. And if you're thinking about twelve, fifteen, eighteen

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Speaker 1: years of contributing to to this roth Ira, well you're

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Speaker 1: gonna have a large sum of money to be able

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Speaker 1: to to pull out at any time for any reason

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Speaker 1: as gifts for your kids and whether it's for college

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Speaker 1: or anything else. Yeah, Jill, that's bousel roth that's so clutch.

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Speaker 1: Being able to essentially double the amount of money that

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Speaker 1: you could flexibly withdraw without tax consequence is huge, right,

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Speaker 1: Taking that from six thousand dollars to twelve tho dollars

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Speaker 1: that's a lot of money. Yeah, and it's flexible money,

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Speaker 1: which which is why when we talked about the roth

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Speaker 1: Ira in our The Glories of roth Ira episode, it

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Speaker 1: was that's a huge reason for silly name good. Right,

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Speaker 1: But but that's a huge reason for why it's so good.

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Speaker 1: It is just the ultimate flexibility of that money. So yeah,

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Speaker 1: if Matt is looking for accounts for his kids, actually

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Speaker 1: the best idea might be his own account and then

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Speaker 1: just being eventually generous with it. All Right, Joe, We've

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Speaker 1: got another question. Let's hear from Aaron about possibly purchasing

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Speaker 1: a foreclosure. Hello and good morning. This is Aaron from

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Speaker 1: New Jersey. I want to thank you all for making

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Speaker 1: a podcast in which has turned money into more of

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Speaker 1: a hobby rather than something I used to be scared of,

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Speaker 1: So thank you for that. My question today has to

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Speaker 1: do with foreclosure. My husband and I are looking into

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Speaker 1: purchasing a home um in the near future, and we

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Speaker 1: have two friends that have succeeded with buying properties in

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Speaker 1: pre foreclosure. I've been researching online and most sites say

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Speaker 1: that buying homes in pre foreclosure or foreclosure as the

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Speaker 1: first time HomeBuyer is a really bad idea. I would

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Speaker 1: love for you all to go into the different vocabulary,

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Speaker 1: what the different stages of this process mean, and possibly

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Speaker 1: if you have any insight or any experience in these

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Speaker 1: states of a home's existence. Thank you so much. I

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Speaker 1: really appreciate it. Aaron, thanks for your question, and I

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Speaker 1: gotta say before anything else, money has turned into a

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Speaker 1: hobby and it's not something you're scared of anymore. That

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Speaker 1: is the coolest thing I've heard today. I'm so glad

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Speaker 1: that you've been able to kind of change the script

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Speaker 1: and then you're able to think about money differently, Like

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Speaker 1: what an awesome way to go through life where where

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Speaker 1: money can be more of a hobby. That's so neat.

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Speaker 1: But when it comes to your question buying a foreclosure

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Speaker 1: or pre foreclosure, well, congrats also on being in the

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Speaker 1: position to be able to purchase a home. How shopping

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Speaker 1: can be really exciting and it can be tempting to overspend.

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Speaker 1: So we're glad that you're looking for a way to

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Speaker 1: find a deal and buying a foreclosed home. Well, that

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Speaker 1: is one way that some people do end up finding

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Speaker 1: a deal in a home. Yeah. Well, quick question to you, Jill,

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Speaker 1: have you ever purchased a foreclosure or pre foreclosure? Well,

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Speaker 1: I have purchased a short sale, which is basically pre

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Speaker 1: pre foreclosure. It's it's basically, uh, the bank and the

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Speaker 1: current owner trying to come up with terms that they

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Speaker 1: can offer in order to entice a buyer before the

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Speaker 1: house actually starts going down that foreclosure process. And I

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Speaker 1: gotta say for me, at that point in time, it

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Speaker 1: ended up being a good experience. Nice man. Yeah, So

430
00:20:35,200 --> 00:20:36,720
Speaker 1: let's go ahead and kind of define it right, you

431
00:20:36,760 --> 00:20:39,840
Speaker 1: just touched on short sales. Before we make any recommendations,

432
00:20:39,880 --> 00:20:43,000
Speaker 1: let's kind of discuss the differences specifically between a foreclosure

433
00:20:43,320 --> 00:20:47,000
Speaker 1: and a pre foreclosure. Home is in pre foreclosure when

434
00:20:47,040 --> 00:20:49,639
Speaker 1: a homeowner is at least three months late paying their

435
00:20:49,680 --> 00:20:52,160
Speaker 1: mortgage in the lender, you know, that's when they file

436
00:20:52,240 --> 00:20:54,960
Speaker 1: a default notice saying to basically like pay up what

437
00:20:55,000 --> 00:20:57,159
Speaker 1: we're gonna take the house. A home can be in

438
00:20:57,160 --> 00:21:00,440
Speaker 1: this pre foreclosure process from six months to a year,

439
00:21:00,680 --> 00:21:03,200
Speaker 1: depending on the lender and your states, and a pre

440
00:21:03,280 --> 00:21:07,479
Speaker 1: foreclosure home might be listed on websites like zillo, different

441
00:21:07,520 --> 00:21:10,360
Speaker 1: directories like foreclosure dot com if you are getting more

442
00:21:10,400 --> 00:21:13,200
Speaker 1: serious about purchasing a pre foreclosure, or you can even

443
00:21:13,200 --> 00:21:15,000
Speaker 1: search the public records, which you're going to be the

444
00:21:15,000 --> 00:21:19,320
Speaker 1: most accurate. If the owner doesn't make up those late payments,

445
00:21:19,480 --> 00:21:21,560
Speaker 1: then at the end of that period, the lender or

446
00:21:21,600 --> 00:21:24,920
Speaker 1: the bank they foreclose on the home and they take ownership.

447
00:21:25,320 --> 00:21:27,280
Speaker 1: So technically, at that point the house is not in

448
00:21:27,359 --> 00:21:30,959
Speaker 1: pre foreclosure anymore. It has been foreclosed on, and in

449
00:21:31,000 --> 00:21:33,560
Speaker 1: both cases you can get a great deal, but it's

450
00:21:33,560 --> 00:21:35,440
Speaker 1: not like it used to be, you know, like nine

451
00:21:35,520 --> 00:21:38,479
Speaker 1: to ten years ago during the housing crisis. Because housing

452
00:21:38,560 --> 00:21:41,680
Speaker 1: man right now it is hot in most markets. Yeah,

453
00:21:41,760 --> 00:21:44,800
Speaker 1: aaron for for most folks looking to buy their first home.

454
00:21:45,240 --> 00:21:49,240
Speaker 1: We wouldn't recommend a pre foreclosure or foreclosure because there

455
00:21:49,240 --> 00:21:52,040
Speaker 1: can be a lot of pitfalls involved. These are typically

456
00:21:52,080 --> 00:21:55,400
Speaker 1: distressed properties which are being sold as is, so there

457
00:21:55,400 --> 00:21:57,439
Speaker 1: can be a lot of repairs involved. Like Matt mentioned,

458
00:21:57,480 --> 00:21:59,320
Speaker 1: nine or ten years ago, there were a lot of

459
00:21:59,359 --> 00:22:01,639
Speaker 1: foreclosure on the market, and there were a lot of

460
00:22:01,640 --> 00:22:04,560
Speaker 1: these foreclosures that weren't snake mitten with a lot of

461
00:22:04,560 --> 00:22:07,879
Speaker 1: these problems because it was basically an overall economic issue

462
00:22:08,080 --> 00:22:10,280
Speaker 1: and a lot of people couldn't afford their homes because

463
00:22:10,440 --> 00:22:13,960
Speaker 1: of lost jobs are under employment. But if someone has

464
00:22:14,000 --> 00:22:17,880
Speaker 1: fallen into foreclosure in the current market, well then there

465
00:22:17,920 --> 00:22:21,120
Speaker 1: are likely lots of other issues. There can be additional

466
00:22:21,200 --> 00:22:24,040
Speaker 1: leans on the property, back taxes that are owed, or

467
00:22:24,080 --> 00:22:26,960
Speaker 1: just a property that's in disrepair, and if it's gone

468
00:22:26,960 --> 00:22:30,199
Speaker 1: all the way into foreclosure, well banks typically sell these

469
00:22:30,240 --> 00:22:32,840
Speaker 1: at auction and the cash buyers are the ones snatching

470
00:22:32,840 --> 00:22:35,040
Speaker 1: those up. Yes, you might be able to get a

471
00:22:35,080 --> 00:22:37,879
Speaker 1: great deal, but it takes a lot of work. Buying

472
00:22:37,920 --> 00:22:40,520
Speaker 1: a home by traditional methods takes lots of time and

473
00:22:40,640 --> 00:22:44,399
Speaker 1: energy already, but buying a distressed home that's like a

474
00:22:44,440 --> 00:22:46,760
Speaker 1: part time job. And that's why most of the folks

475
00:22:46,800 --> 00:22:50,080
Speaker 1: making these purchases are investors. It actually is their jobs.

476
00:22:50,119 --> 00:22:53,320
Speaker 1: So they're the folks that are at the courthouse steps

477
00:22:53,320 --> 00:22:56,480
Speaker 1: buying a foreclosure. They know neighborhood street levels, they have

478
00:22:56,560 --> 00:23:00,159
Speaker 1: done their best to assess the actual specific property that

479
00:23:00,200 --> 00:23:02,960
Speaker 1: they're looking to buy in the case of a distress sale.

480
00:23:03,200 --> 00:23:05,280
Speaker 1: And so as someone looking to buy a home, like

481
00:23:05,440 --> 00:23:07,959
Speaker 1: a home to actually live in, competing against people who

482
00:23:07,960 --> 00:23:10,520
Speaker 1: have greater expertise and knowledge than you is going to

483
00:23:10,600 --> 00:23:12,920
Speaker 1: make it hard for you to actually end up getting

484
00:23:12,920 --> 00:23:16,719
Speaker 1: a deal on a foreclosed home. Yeah, however, Aaron, if

485
00:23:16,760 --> 00:23:19,159
Speaker 1: you are still interested and you have the time in

486
00:23:19,160 --> 00:23:22,119
Speaker 1: the cash on hand, know that you also need to

487
00:23:22,200 --> 00:23:25,359
Speaker 1: have some of that experience, right, like that expertise that

488
00:23:25,400 --> 00:23:27,399
Speaker 1: the folks who do this for a living that they have.

489
00:23:28,000 --> 00:23:30,640
Speaker 1: We would highly recommend hiring an agent who is very

490
00:23:30,680 --> 00:23:34,000
Speaker 1: experienced with foreclosures and making short sale offers. You know,

491
00:23:34,080 --> 00:23:36,560
Speaker 1: you can try and google to find one online in

492
00:23:36,600 --> 00:23:39,920
Speaker 1: your area who's well reviewed, but we would recommend asking

493
00:23:39,960 --> 00:23:43,280
Speaker 1: around for a personal recommendation. You mentioned that you've got

494
00:23:43,280 --> 00:23:46,359
Speaker 1: two friends who have had some success with the pre foreclosures.

495
00:23:46,800 --> 00:23:49,080
Speaker 1: They are going to be an incredible resource for you. You

496
00:23:48,840 --> 00:23:51,240
Speaker 1: You know, ask them, ask about the agents that they

497
00:23:51,320 --> 00:23:53,800
Speaker 1: worked with, um ask them how much of a deal

498
00:23:54,040 --> 00:23:57,320
Speaker 1: they got, because you might find that after all the

499
00:23:57,359 --> 00:24:01,200
Speaker 1: expenses associated with you know, that agent, the time involved

500
00:24:01,240 --> 00:24:03,280
Speaker 1: as well, that it may not be worth it. Yeah,

501
00:24:03,280 --> 00:24:05,119
Speaker 1: and it's really important to note here to Aaron that

502
00:24:05,160 --> 00:24:07,800
Speaker 1: it doesn't necessarily have to be a foreclosure or a

503
00:24:07,800 --> 00:24:11,439
Speaker 1: pre foreclosure in order to be a distress sale in

504
00:24:11,560 --> 00:24:14,119
Speaker 1: order for you to get an actual deal. Sometimes a

505
00:24:14,119 --> 00:24:17,000
Speaker 1: distress sale can happen because a couple is going through

506
00:24:17,040 --> 00:24:19,239
Speaker 1: a rough time and they're splitting up and they just

507
00:24:19,560 --> 00:24:21,640
Speaker 1: have to get rid of this house and it has

508
00:24:21,680 --> 00:24:24,439
Speaker 1: to happen soon. There can be a death in the family,

509
00:24:24,840 --> 00:24:29,160
Speaker 1: and this family just can't deal with the idea of

510
00:24:29,200 --> 00:24:31,199
Speaker 1: holding onto the home. They they have to sell it

511
00:24:31,240 --> 00:24:33,480
Speaker 1: and they want to do it immediately. So it doesn't

512
00:24:33,480 --> 00:24:35,600
Speaker 1: have to be a case in which you're looking at

513
00:24:35,640 --> 00:24:38,760
Speaker 1: a foreclosure in order to get the best possible deal

514
00:24:38,760 --> 00:24:41,399
Speaker 1: on a home. I think sometimes that's what's in people's minds. Well,

515
00:24:41,440 --> 00:24:43,240
Speaker 1: if I get a foreclosure, I'm gonna get the best deal.

516
00:24:43,520 --> 00:24:45,199
Speaker 1: And that can be the case if you know what

517
00:24:45,200 --> 00:24:47,840
Speaker 1: you're doing in particular, but it doesn't have to be

518
00:24:48,080 --> 00:24:49,880
Speaker 1: the way that you get the best deal. There are

519
00:24:49,960 --> 00:24:53,520
Speaker 1: other ways to to find a good deal on the market,

520
00:24:53,720 --> 00:24:55,800
Speaker 1: even listed on the MLS, like what you can find

521
00:24:55,880 --> 00:24:58,720
Speaker 1: right now on Zillo or redfin. Buyers are motivated to

522
00:24:58,800 --> 00:25:00,920
Speaker 1: sell for different reasons, and if you can find out

523
00:25:01,119 --> 00:25:04,480
Speaker 1: what that buyer's motivation is, that can help you assess

524
00:25:04,600 --> 00:25:06,160
Speaker 1: whether or not you're going to be able to get

525
00:25:06,160 --> 00:25:08,080
Speaker 1: that home for the price you want. All Right, We've

526
00:25:08,119 --> 00:25:10,840
Speaker 1: got a couple more questions, including our question about gold

527
00:25:10,960 --> 00:25:12,960
Speaker 1: as well as one about house tacks, and we'll get

528
00:25:12,960 --> 00:25:24,960
Speaker 1: to those right after the break. All right, Matt, we're back,

529
00:25:25,119 --> 00:25:26,840
Speaker 1: and you know what, I just want to know where

530
00:25:26,880 --> 00:25:30,240
Speaker 1: the gold at? All right? Do you remember that YouTube video? Yeah?

531
00:25:30,560 --> 00:25:32,520
Speaker 1: He's so good. All Right, we'll have to post a

532
00:25:32,520 --> 00:25:34,280
Speaker 1: link to that in our show notes. Dude, who hasn't

533
00:25:34,320 --> 00:25:36,040
Speaker 1: seen that? I don't know. If you haven't, you've been

534
00:25:36,040 --> 00:25:38,040
Speaker 1: living under a rock for the past ten years. Was

535
00:25:38,040 --> 00:25:40,959
Speaker 1: that even before YouTube? Know? Where would it have been?

536
00:25:41,000 --> 00:25:42,640
Speaker 1: It would have been like the bombs World or something

537
00:25:42,680 --> 00:25:44,399
Speaker 1: like that, Remember you bombs Like that's where all the

538
00:25:44,520 --> 00:25:46,960
Speaker 1: g I. Joe spoons were as well. That's true, that's true.

539
00:25:47,440 --> 00:25:50,120
Speaker 1: All right, But let's get to Peter's question about investing

540
00:25:50,200 --> 00:25:53,160
Speaker 1: in gold. Hi, guys, thank you for continuing to make

541
00:25:53,160 --> 00:25:57,280
Speaker 1: this show enjoyable as well as informational. My question is

542
00:25:57,320 --> 00:26:03,240
Speaker 1: regarding investing in like gold or other valuable physical investments.

543
00:26:03,359 --> 00:26:06,960
Speaker 1: Um Like, is it a good idea? How would someone

544
00:26:07,000 --> 00:26:11,000
Speaker 1: go about buying gold? When should you buy gold? And

545
00:26:11,359 --> 00:26:16,639
Speaker 1: like what form should you use? Do you buy coins, bars, nuggets?

546
00:26:17,359 --> 00:26:21,359
Speaker 1: Anything else? Should it be avoided altogether? Just kind of

547
00:26:21,359 --> 00:26:24,359
Speaker 1: curious about it. It's always been something I've been a

548
00:26:24,400 --> 00:26:27,639
Speaker 1: little intrigued by. Thank you bye. All right, Peter, I'm

549
00:26:27,640 --> 00:26:29,640
Speaker 1: glad you asked this question because this is not something

550
00:26:29,680 --> 00:26:31,840
Speaker 1: we've talked about. But like all things related to money,

551
00:26:31,880 --> 00:26:33,680
Speaker 1: when we don't talk about them, there's sort of this

552
00:26:33,840 --> 00:26:37,200
Speaker 1: shroud of mystery that surrounds it. Right, So let's go

553
00:26:37,240 --> 00:26:39,439
Speaker 1: ahead and kind of shine a lights on what we

554
00:26:39,520 --> 00:26:42,320
Speaker 1: think about gold. First of all, just know that investing

555
00:26:42,359 --> 00:26:45,640
Speaker 1: in gold it's a hedge. Investors they run too precious

556
00:26:45,680 --> 00:26:49,800
Speaker 1: metals when we are in uncertain economic times in order

557
00:26:49,840 --> 00:26:52,640
Speaker 1: to reduce the risk in their investments. You can own

558
00:26:52,680 --> 00:26:55,440
Speaker 1: funds that invest in physical gold, or you can own

559
00:26:55,480 --> 00:26:58,000
Speaker 1: stock in gold and mining companies. And even though it's

560
00:26:58,040 --> 00:27:01,960
Speaker 1: a hedge, investing in gold isn't credibly volatile. The swings

561
00:27:02,040 --> 00:27:04,600
Speaker 1: can be huge, They can even be larger than having

562
00:27:04,640 --> 00:27:07,480
Speaker 1: your funds in a total stock market index fund, and

563
00:27:07,520 --> 00:27:10,760
Speaker 1: the upside just isn't as good either. Last year, Warren

564
00:27:10,800 --> 00:27:13,800
Speaker 1: buffet He pointed out how ten thousand dollars invested in

565
00:27:13,840 --> 00:27:18,639
Speaker 1: gold would be worth about four thousand dollars today. That

566
00:27:18,680 --> 00:27:21,919
Speaker 1: sounds pretty good, right until you compare that to if

567
00:27:21,920 --> 00:27:24,400
Speaker 1: you invested that ten thousand dollars in an SMP five

568
00:27:24,480 --> 00:27:28,280
Speaker 1: hundred fund, which would be worth about fifty one million dollars.

569
00:27:28,440 --> 00:27:31,600
Speaker 1: Oh that's a big difference. Yeah, yeah, not even close.

570
00:27:31,840 --> 00:27:37,120
Speaker 1: Gold seriously underperforms actually investing in a widely diversified index fund,

571
00:27:37,240 --> 00:27:40,800
Speaker 1: which means you're investing in the American economy. Yeah. But so,

572
00:27:40,840 --> 00:27:42,760
Speaker 1: I guess that brings up the question, Matt, why do

573
00:27:42,880 --> 00:27:45,479
Speaker 1: folks talk about investing in gold so much? There are

574
00:27:45,480 --> 00:27:48,240
Speaker 1: lots of media ads and their dark corners of the Internet,

575
00:27:48,320 --> 00:27:50,480
Speaker 1: and there are email newsletters that want to talk about

576
00:27:50,560 --> 00:27:53,160
Speaker 1: gold and precious metals and how they're going to take

577
00:27:53,200 --> 00:27:55,920
Speaker 1: off because of a trade war or fears of recession,

578
00:27:56,320 --> 00:27:59,680
Speaker 1: but really that's all fear based marketing. Sure gold might

579
00:27:59,680 --> 00:28:02,400
Speaker 1: do nominally well for a little while, like we said,

580
00:28:02,440 --> 00:28:05,560
Speaker 1: in the short term, it can have a huge swings,

581
00:28:05,840 --> 00:28:08,680
Speaker 1: but you can't predict it, and I'd prefer to invest

582
00:28:08,760 --> 00:28:12,040
Speaker 1: my money rather than shelter it. But the reason investing

583
00:28:12,040 --> 00:28:14,040
Speaker 1: in gold gets a lot of buzz is because of

584
00:28:14,080 --> 00:28:17,760
Speaker 1: those potential wild swings and because people stand to benefit

585
00:28:18,119 --> 00:28:23,640
Speaker 1: monetarily from your investing in their particular gold strategy. Yeah, so, Joel,

586
00:28:23,640 --> 00:28:27,520
Speaker 1: on that note, we would not recommend investing in gold. However, Peter,

587
00:28:27,680 --> 00:28:29,760
Speaker 1: if you know you do really want to buy some gold,

588
00:28:30,080 --> 00:28:32,159
Speaker 1: just make sure that you don't go hog wild. You

589
00:28:32,200 --> 00:28:34,679
Speaker 1: know you asked about how to go about investing. You

590
00:28:34,680 --> 00:28:38,040
Speaker 1: don't want to own actual physical gold in your house.

591
00:28:38,400 --> 00:28:41,880
Speaker 1: There can be big premiums associated with purchasing actual coins

592
00:28:42,040 --> 00:28:45,959
Speaker 1: plus gold bars underneath your mattress. Super uncomfortable, yeah, not

593
00:28:46,040 --> 00:28:48,120
Speaker 1: cozy at all, And on top of that they can

594
00:28:48,120 --> 00:28:51,120
Speaker 1: be really hard to sell. So the most efficient way

595
00:28:51,160 --> 00:28:53,880
Speaker 1: to buy gold is in e t F form. So

596
00:28:53,920 --> 00:28:55,600
Speaker 1: look at some of the e t F offerings that

597
00:28:55,640 --> 00:28:59,280
Speaker 1: are out there. Spider gold Shares which is the ticker

598
00:28:59,280 --> 00:29:03,200
Speaker 1: symbol g D or I Shares Gold Trust have both

599
00:29:03,200 --> 00:29:05,640
Speaker 1: been around a long time and are are really solid

600
00:29:05,880 --> 00:29:08,560
Speaker 1: and you're actually buying physical gold when you own these funds,

601
00:29:08,640 --> 00:29:12,080
Speaker 1: as they own bullion. And so the smart recommendations that

602
00:29:12,120 --> 00:29:14,640
Speaker 1: are out there have always been to have maybe five

603
00:29:14,680 --> 00:29:17,239
Speaker 1: percent and definitely no more than ten percent of your

604
00:29:17,280 --> 00:29:20,600
Speaker 1: portfolio in precious metals. And Joe and I we would

605
00:29:20,640 --> 00:29:23,120
Speaker 1: both completely agree with this. Yeah, I'm partial to the

606
00:29:23,160 --> 00:29:26,600
Speaker 1: five percent or less potentially zero investment in gold. And

607
00:29:26,600 --> 00:29:28,640
Speaker 1: I think you know that that number, Matt, that you

608
00:29:28,720 --> 00:29:31,840
Speaker 1: mentioned about investing in gold in ninety two and what

609
00:29:31,920 --> 00:29:35,080
Speaker 1: you would have today is just kind of this really

610
00:29:35,120 --> 00:29:38,040
Speaker 1: great indicator of how little of our money we should

611
00:29:38,040 --> 00:29:41,320
Speaker 1: actually have invested in gold. Yeah, it doesn't perform. Yeah, Ultimately,

612
00:29:41,360 --> 00:29:44,240
Speaker 1: gold is a speculative investment and if you are a

613
00:29:44,240 --> 00:29:48,680
Speaker 1: long term investor, Peter, then steer clear. War Buffett also said,

614
00:29:48,760 --> 00:29:51,120
Speaker 1: let's go back to the Oracle of Omaha. Here he said,

615
00:29:51,120 --> 00:29:53,800
Speaker 1: gold is a terrible investment. Over time, it just sits

616
00:29:53,800 --> 00:29:57,120
Speaker 1: there and stares at you, which a little awkward, but

617
00:29:57,200 --> 00:30:00,280
Speaker 1: it's true. It's something that we completely agree you with.

618
00:30:00,600 --> 00:30:03,160
Speaker 1: It's not something that you want to own. In particular,

619
00:30:03,480 --> 00:30:06,800
Speaker 1: you're young and you're looking to maximize your turns over time,

620
00:30:07,160 --> 00:30:10,720
Speaker 1: and having even five or ten of your portfolio in

621
00:30:10,800 --> 00:30:14,280
Speaker 1: gold can be really nice and maybe a one year span,

622
00:30:14,560 --> 00:30:16,760
Speaker 1: but if you're looking at a thirty year span, it's

623
00:30:16,760 --> 00:30:19,160
Speaker 1: going to have a huge drag on how well your

624
00:30:19,160 --> 00:30:21,720
Speaker 1: money is actually working for you. All right, man, And

625
00:30:21,720 --> 00:30:24,520
Speaker 1: our final question comes from someone who is interested in

626
00:30:24,560 --> 00:30:26,680
Speaker 1: house hacking. Let's hear it. Oh, you know we like

627
00:30:26,760 --> 00:30:29,200
Speaker 1: the house hacking we do. Hi, Matt and Joel, This

628
00:30:29,280 --> 00:30:32,360
Speaker 1: is Cheryl from upstate New York. I love your show

629
00:30:32,520 --> 00:30:35,200
Speaker 1: and I have a couple of follow up questions about

630
00:30:35,240 --> 00:30:38,840
Speaker 1: the house hacking episode. My husband and I are looking

631
00:30:38,880 --> 00:30:42,800
Speaker 1: to buy our first house and we're considering doing a

632
00:30:42,880 --> 00:30:45,800
Speaker 1: house hack with a very good friend of ours. Where

633
00:30:46,080 --> 00:30:48,640
Speaker 1: not sure what this would look like yet, whether it

634
00:30:48,680 --> 00:30:52,720
Speaker 1: would be a roommate situation and in law suite or

635
00:30:52,760 --> 00:30:56,920
Speaker 1: an apartment above the garage. So my first question is

636
00:30:57,000 --> 00:31:00,440
Speaker 1: when figuring out a budget for house shopping, should be

637
00:31:00,520 --> 00:31:04,480
Speaker 1: factor in the rent that our friend will be paying

638
00:31:05,120 --> 00:31:08,360
Speaker 1: or should our budget be based on what my husband

639
00:31:08,360 --> 00:31:12,440
Speaker 1: and I can afford by ourselves. My concern is that,

640
00:31:12,480 --> 00:31:15,160
Speaker 1: as first time homebuyers, I'm not sure that we can

641
00:31:15,200 --> 00:31:18,440
Speaker 1: afford a place with the extra living space for our

642
00:31:18,600 --> 00:31:22,360
Speaker 1: friend in order to make the house hack work. We

643
00:31:22,360 --> 00:31:28,520
Speaker 1: were planning on keeping our mortgage at of our take

644
00:31:28,560 --> 00:31:32,080
Speaker 1: home pay, and so I'm wondering if it would be

645
00:31:32,120 --> 00:31:35,880
Speaker 1: okay to increase this slightly in order to make the

646
00:31:35,880 --> 00:31:39,959
Speaker 1: house hack work. My second question is how do we

647
00:31:40,000 --> 00:31:43,600
Speaker 1: decide how much our friends should be paying each month?

648
00:31:44,240 --> 00:31:50,160
Speaker 1: Should we take all of the expenses and split it

649
00:31:50,360 --> 00:31:53,920
Speaker 1: so that our friend is paying one third? Should we

650
00:31:53,960 --> 00:31:57,320
Speaker 1: look up comparable rentals in the area. Should we also

651
00:31:57,400 --> 00:32:00,520
Speaker 1: be splitting all of the utilities? What would be the

652
00:32:00,520 --> 00:32:04,040
Speaker 1: best way to handle this so that it's fair for everyone?

653
00:32:04,800 --> 00:32:07,440
Speaker 1: And my third question is do you have any tips

654
00:32:07,520 --> 00:32:10,520
Speaker 1: or advice about renting to a friend versus renting to

655
00:32:10,560 --> 00:32:14,920
Speaker 1: a complete stranger for example? I'm guessing we should still

656
00:32:14,960 --> 00:32:19,040
Speaker 1: have a standard lease agreement, but I'm wondering if there

657
00:32:19,080 --> 00:32:22,480
Speaker 1: are any other nuances that we should be aware of.

658
00:32:23,120 --> 00:32:27,520
Speaker 1: I'm looking forward to hearing your answers. Thanks guys. All right, Cheryl,

659
00:32:27,600 --> 00:32:30,920
Speaker 1: let's get even more in depth in into the topic

660
00:32:30,960 --> 00:32:33,360
Speaker 1: of house hacking, which we did cover in a recent episode.

661
00:32:33,440 --> 00:32:35,720
Speaker 1: I'm glad I got you thinking outside the box. You said,

662
00:32:35,720 --> 00:32:38,120
Speaker 1: your first time home buyers. So many first time home

663
00:32:38,200 --> 00:32:40,440
Speaker 1: buyers this isn't even something that's on their radar, and

664
00:32:40,480 --> 00:32:42,960
Speaker 1: this is something that is going to have a huge

665
00:32:43,000 --> 00:32:46,640
Speaker 1: impact on your overall finances over time, because housing costs

666
00:32:46,680 --> 00:32:50,040
Speaker 1: are the number one expense in most people's monthly budgets.

667
00:32:50,160 --> 00:32:52,160
Speaker 1: All right, so let's get into the nitty gritty. I

668
00:32:52,200 --> 00:32:55,320
Speaker 1: love the idea of your take on pay being kind

669
00:32:55,320 --> 00:32:57,560
Speaker 1: of the cap on what you're willing to have as

670
00:32:57,600 --> 00:33:00,280
Speaker 1: a monthly mortgage. That's a great goal if we're talking

671
00:33:00,280 --> 00:33:02,840
Speaker 1: about a house hack, though, increasing that a little bit

672
00:33:03,040 --> 00:33:06,000
Speaker 1: that's not a bad idea. If it means increased income

673
00:33:06,520 --> 00:33:10,160
Speaker 1: basically house hacking and dramatically reducing your mortgage payment, well

674
00:33:10,200 --> 00:33:13,040
Speaker 1: that is overwhelmingly going to pay for that increase in

675
00:33:13,080 --> 00:33:16,320
Speaker 1: the monthly mortgage amount, and heck of a lot more so,

676
00:33:16,560 --> 00:33:19,479
Speaker 1: I think taking on that added risk for that massive

677
00:33:19,520 --> 00:33:22,080
Speaker 1: extra reward, well that's a good way to go, especially

678
00:33:22,160 --> 00:33:24,320
Speaker 1: with a built in tenant already kind of in hand.

679
00:33:24,760 --> 00:33:27,760
Speaker 1: And Cheryl, you mentioned your take on pay. That's a

680
00:33:27,760 --> 00:33:29,840
Speaker 1: great guideline, but sort of at the core of what

681
00:33:29,880 --> 00:33:31,840
Speaker 1: I think you're asking is is whether or not you

682
00:33:31,840 --> 00:33:34,480
Speaker 1: should consider the forecasted rent that you are going to

683
00:33:34,520 --> 00:33:36,800
Speaker 1: be able to bring in from your friend. And the

684
00:33:36,800 --> 00:33:40,240
Speaker 1: answer to that, I think is yes. You don't necessarily

685
00:33:40,240 --> 00:33:44,240
Speaker 1: want to increase the overall and percentage of your income

686
00:33:44,280 --> 00:33:46,840
Speaker 1: that will be going towards your mortgage, because if you

687
00:33:46,880 --> 00:33:49,680
Speaker 1: do this correctly, your mortgage payment will be offset by

688
00:33:49,680 --> 00:33:51,720
Speaker 1: that rent. In this way, I think it's good to

689
00:33:51,760 --> 00:33:53,760
Speaker 1: sort of treat this like a business. It's good to

690
00:33:53,800 --> 00:33:58,280
Speaker 1: forecast that income maybe conservatively right, You don't necessarily want

691
00:33:58,320 --> 00:34:00,960
Speaker 1: to count on the best possible rent that you would

692
00:34:00,960 --> 00:34:03,040
Speaker 1: be able to pull in from that house hack, but

693
00:34:03,080 --> 00:34:05,000
Speaker 1: I think you should definitely consider that when you are

694
00:34:05,000 --> 00:34:07,440
Speaker 1: looking at properties that might be a little more expensive

695
00:34:07,480 --> 00:34:10,800
Speaker 1: to allow for a house hack. Yeah, when we bought

696
00:34:10,920 --> 00:34:13,560
Speaker 1: the house that work currently in matt we qualified for

697
00:34:13,600 --> 00:34:16,799
Speaker 1: the mortgage easily, but it did stretch us past our

698
00:34:17,280 --> 00:34:20,560
Speaker 1: hopeful limits of what we would actually take on when

699
00:34:20,560 --> 00:34:23,160
Speaker 1: it came to a monthly mortgage payment. But it was

700
00:34:23,200 --> 00:34:25,319
Speaker 1: so worth it for us because we knew without a

701
00:34:25,320 --> 00:34:26,960
Speaker 1: doubt that we could rent out the back of the house,

702
00:34:27,000 --> 00:34:29,840
Speaker 1: and we could do so almost immediately. And similar to Cheryl,

703
00:34:29,920 --> 00:34:32,080
Speaker 1: it was a friend situation and it worked out really

704
00:34:32,120 --> 00:34:34,279
Speaker 1: well and she stayed there for almost five years. But

705
00:34:35,000 --> 00:34:37,120
Speaker 1: we also knew and I think this is an important

706
00:34:37,120 --> 00:34:40,160
Speaker 1: factor for Cheryl that even if our friend, even if

707
00:34:40,200 --> 00:34:42,600
Speaker 1: it hadn't worked out, even if our friend had left

708
00:34:42,640 --> 00:34:45,239
Speaker 1: pretty quickly after moved to another city taken another job,

709
00:34:45,320 --> 00:34:47,880
Speaker 1: you never know what's going to happen with a friend

710
00:34:48,239 --> 00:34:51,160
Speaker 1: and their living situation, and you know, maybe they find

711
00:34:51,200 --> 00:34:54,319
Speaker 1: something better, find a significant other, whatever it is, but

712
00:34:54,520 --> 00:34:56,719
Speaker 1: you want to make sure that the place that you

713
00:34:56,840 --> 00:35:00,360
Speaker 1: buy is easily rentable on the open market. You mentioned

714
00:35:00,360 --> 00:35:02,359
Speaker 1: that it could be a roommate type situation, and if

715
00:35:02,400 --> 00:35:05,200
Speaker 1: you're expanding the amount of a mortgage that you're willing

716
00:35:05,200 --> 00:35:08,000
Speaker 1: to take on for a roommate style situation, well you

717
00:35:08,080 --> 00:35:10,560
Speaker 1: might not be willing to rent that place out to

718
00:35:10,960 --> 00:35:13,600
Speaker 1: a random person that you find off of Zillo or

719
00:35:13,640 --> 00:35:17,000
Speaker 1: even better Craigslist or even better exactly, but you might

720
00:35:17,000 --> 00:35:19,439
Speaker 1: be forced into that situation if you've kind of taken

721
00:35:19,480 --> 00:35:21,720
Speaker 1: on a mortgage that's like too big for its own bridges,

722
00:35:21,760 --> 00:35:24,560
Speaker 1: like if you can't actually afford it without renting out

723
00:35:24,560 --> 00:35:26,960
Speaker 1: a room in your house, then that's a situation you

724
00:35:27,000 --> 00:35:29,239
Speaker 1: don't necessarily want to find yourself in. If it's a

725
00:35:29,280 --> 00:35:31,839
Speaker 1: mother in law suite, if it's an accessory dwelling unit,

726
00:35:31,960 --> 00:35:34,080
Speaker 1: if it's a basement apartment, that can be different, and

727
00:35:34,080 --> 00:35:36,279
Speaker 1: you might feel more comfortable with running that out to

728
00:35:36,320 --> 00:35:40,080
Speaker 1: a total stranger. But if this deal is completely contingent

729
00:35:40,520 --> 00:35:43,400
Speaker 1: on your friend staying put, that's when I would be

730
00:35:43,440 --> 00:35:46,840
Speaker 1: pretty nervous. I would want some flexibility in this house act,

731
00:35:46,880 --> 00:35:49,279
Speaker 1: and I think that's really important. Yeah, if it's a duplex, like,

732
00:35:49,360 --> 00:35:51,839
Speaker 1: that's gonna be no problem, right, Like most people would

733
00:35:51,840 --> 00:35:54,879
Speaker 1: probably consider renting a duplex. But yeah, like if it's

734
00:35:54,880 --> 00:35:57,959
Speaker 1: a room in your house and it's got a shared bathroom,

735
00:35:58,000 --> 00:36:01,120
Speaker 1: that's way less than ideal. Yeah, and Matt, let's talk

736
00:36:01,120 --> 00:36:05,440
Speaker 1: about actually renting to that friend. It is different from

737
00:36:05,520 --> 00:36:08,799
Speaker 1: renting to a complete stranger. And honestly, Matt, when when

738
00:36:08,840 --> 00:36:10,600
Speaker 1: we had our friend right out the back part of

739
00:36:10,640 --> 00:36:13,719
Speaker 1: our house, we didn't have a lease agreement signed. This

740
00:36:13,800 --> 00:36:15,759
Speaker 1: was a friendship that had been established over a lot

741
00:36:15,760 --> 00:36:18,279
Speaker 1: of years. We felt really comfortable just kind of going

742
00:36:18,360 --> 00:36:20,640
Speaker 1: month to month and letting our friends stay there kind

743
00:36:20,640 --> 00:36:22,799
Speaker 1: of at their whim. We never raised the rent. It

744
00:36:22,880 --> 00:36:26,400
Speaker 1: was just a super amiable situation. But honestly, that's not

745
00:36:26,440 --> 00:36:29,120
Speaker 1: what I would recommend. That's not what I would advise

746
00:36:29,239 --> 00:36:31,200
Speaker 1: Cheryl do, because it's just not the best way for

747
00:36:31,239 --> 00:36:34,279
Speaker 1: most people to go. Only you actually know what that

748
00:36:34,360 --> 00:36:37,400
Speaker 1: relationship is like, and ultimately, I think to to kind

749
00:36:37,400 --> 00:36:40,080
Speaker 1: of be able to maintain that friendship, you're gonna need

750
00:36:40,120 --> 00:36:42,839
Speaker 1: to approach it in a business like manner, at least

751
00:36:42,840 --> 00:36:45,080
Speaker 1: in part. Yeah, right, Like, that's kind of more how

752
00:36:45,080 --> 00:36:47,120
Speaker 1: I would approach it, man Like. I'm a more by

753
00:36:47,120 --> 00:36:50,160
Speaker 1: the book's nerd type, and I would totally have an

754
00:36:50,160 --> 00:36:54,440
Speaker 1: official lease that's that's signed. However, because it is a friend,

755
00:36:54,480 --> 00:36:57,040
Speaker 1: I'd likely be a bit more lenient right if things

756
00:36:57,120 --> 00:36:59,319
Speaker 1: came up, But that doesn't change the fact that I

757
00:36:59,320 --> 00:37:02,600
Speaker 1: would still want certain guidelines, certain expectations set on the

758
00:37:02,600 --> 00:37:05,360
Speaker 1: front end. So in this case, you can consider a modified,

759
00:37:05,680 --> 00:37:09,000
Speaker 1: maybe more friend friendly lease, especially since you are going

760
00:37:09,000 --> 00:37:11,680
Speaker 1: to give them a small discount, but having something signed

761
00:37:11,719 --> 00:37:13,719
Speaker 1: that everyone has agreed to that can kind of save

762
00:37:13,800 --> 00:37:16,520
Speaker 1: to a lot of uncertainty, maybe a lot of stress

763
00:37:16,520 --> 00:37:18,759
Speaker 1: and having to have some of those conversations. Yeah, you

764
00:37:18,760 --> 00:37:22,000
Speaker 1: want to avoid awkwardness with your friend. Know that renting

765
00:37:22,080 --> 00:37:24,239
Speaker 1: to your friend can be wrought with issues. They might

766
00:37:24,280 --> 00:37:27,680
Speaker 1: ask for lots of repairs, repairs that you deem unnecessary,

767
00:37:27,840 --> 00:37:30,600
Speaker 1: or they might be late in paying rent consistently. This

768
00:37:30,719 --> 00:37:33,319
Speaker 1: can create bad blood between the two of you. So

769
00:37:33,360 --> 00:37:35,279
Speaker 1: if this is a really good friend, talk through this

770
00:37:35,400 --> 00:37:37,960
Speaker 1: well on the front end or spell it out in

771
00:37:38,000 --> 00:37:40,719
Speaker 1: the lease. That can help you avoid some of those pitfalls.

772
00:37:41,280 --> 00:37:43,840
Speaker 1: Maybe even schedule at time, like every three months or

773
00:37:43,880 --> 00:37:45,560
Speaker 1: so for you guys to have a beer and chat

774
00:37:45,560 --> 00:37:48,080
Speaker 1: about how things are going. Nice man, Yeah, Like put

775
00:37:48,080 --> 00:37:50,399
Speaker 1: it on the calendar and actually do it. That way,

776
00:37:50,440 --> 00:37:53,440
Speaker 1: you don't have to ask for an uncomfortable conversation. It's

777
00:37:53,440 --> 00:37:55,800
Speaker 1: already there for both of you, Like, all right, December

778
00:37:55,800 --> 00:37:58,880
Speaker 1: twenty two, and every three months thereafter, we're having a

779
00:37:58,920 --> 00:38:01,600
Speaker 1: beer together and we're specifically talking about how things are going.

780
00:38:01,880 --> 00:38:03,880
Speaker 1: That gives you both a chance to kind of in

781
00:38:03,920 --> 00:38:06,760
Speaker 1: an easy atmosphere talk about things and share your thoughts.

782
00:38:06,760 --> 00:38:08,400
Speaker 1: I kind of I love that as a way for

783
00:38:08,440 --> 00:38:10,960
Speaker 1: you to connect as friends, but then also talk about

784
00:38:11,040 --> 00:38:13,520
Speaker 1: kind of this business relationship that you have, but on

785
00:38:13,600 --> 00:38:15,919
Speaker 1: friendly terms. Yeah, Plus if you're gonna kind of boot

786
00:38:15,960 --> 00:38:17,680
Speaker 1: them to the curb, it's always better to do that

787
00:38:17,800 --> 00:38:19,799
Speaker 1: over a beer. Yeah. Hey, I'm gonna need you out

788
00:38:19,840 --> 00:38:23,319
Speaker 1: by tomorrow, at least by them a beer. Yeah. Yeah, Yeah. Well,

789
00:38:23,320 --> 00:38:25,359
Speaker 1: I think Cheryl's ultimately onto something. I mean, I think

790
00:38:25,400 --> 00:38:28,319
Speaker 1: house hacking is clutch, and I know for us, our

791
00:38:28,400 --> 00:38:31,160
Speaker 1: friend Slash Tenant was able to pay almost half the

792
00:38:31,160 --> 00:38:33,200
Speaker 1: mortgage for us for a lot of years, and then

793
00:38:33,239 --> 00:38:35,680
Speaker 1: we kind of grew into using the whole house more

794
00:38:35,760 --> 00:38:38,879
Speaker 1: recently and it's just been awesome for us. So yeah,

795
00:38:38,880 --> 00:38:41,680
Speaker 1: house hacking or fans of it? Right, Matt, I'm a fan.

796
00:38:41,880 --> 00:38:43,640
Speaker 1: You're like the house hacking pro though. Man, you've been

797
00:38:43,680 --> 00:38:45,200
Speaker 1: doing it for a number of years now. Well you know,

798
00:38:45,400 --> 00:38:47,680
Speaker 1: I'm getting into it via the Airbnb side of things,

799
00:38:47,800 --> 00:38:51,080
Speaker 1: but you've got some experience. Well it's just awesome, dude.

800
00:38:51,120 --> 00:38:53,040
Speaker 1: It really is. Like it's like the biggest game changer.

801
00:38:53,120 --> 00:38:55,880
Speaker 1: It really is. It's huge. So yeah, Cheryl, best of

802
00:38:55,960 --> 00:38:57,880
Speaker 1: luck with your house hack and Matt, what else are

803
00:38:57,880 --> 00:39:00,319
Speaker 1: we fans? O? By the way, we are fans of beer. Yeah,

804
00:39:00,360 --> 00:39:02,480
Speaker 1: and so let's go ahead segue to our beer this

805
00:39:02,520 --> 00:39:05,200
Speaker 1: episode and it was called six A This is by

806
00:39:05,400 --> 00:39:08,400
Speaker 1: Yeast Atlanta Brewers, and this is a New England style,

807
00:39:08,480 --> 00:39:11,920
Speaker 1: says On pale Ale. Yeah, East Atlanta, there are friends

808
00:39:12,000 --> 00:39:15,040
Speaker 1: local homebrewers. They make super fun beers and and so yeah,

809
00:39:15,040 --> 00:39:17,040
Speaker 1: this one was a pleasure to get to try. Matt,

810
00:39:17,080 --> 00:39:19,160
Speaker 1: I'll give you my tasting notes really quickly. Tell me

811
00:39:19,280 --> 00:39:22,480
Speaker 1: it was definitely a nice little hoppy, says On from

812
00:39:22,480 --> 00:39:25,239
Speaker 1: our neighborhood homies. I thought it was a touch earthy.

813
00:39:25,280 --> 00:39:28,240
Speaker 1: There was some nice floral hop notes at the same time,

814
00:39:28,680 --> 00:39:31,560
Speaker 1: and it just had this like balanced quality. I love

815
00:39:31,760 --> 00:39:34,200
Speaker 1: like hops and assays on, like the when you can

816
00:39:34,239 --> 00:39:37,000
Speaker 1: get kind of those two separate kinds of styles, like

817
00:39:37,000 --> 00:39:39,279
Speaker 1: a pale Ale and assays On to meet together in

818
00:39:39,320 --> 00:39:42,080
Speaker 1: perfect harmony. And the guys from East Atlanta did a

819
00:39:42,160 --> 00:39:43,920
Speaker 1: great job on this one. I mean, let's touch on

820
00:39:43,960 --> 00:39:46,480
Speaker 1: the name six A, right. I'd reached out to John

821
00:39:46,520 --> 00:39:48,439
Speaker 1: because I wasn't sure if that was the actual name

822
00:39:48,520 --> 00:39:50,600
Speaker 1: of the beer, But it turns out it is six

823
00:39:50,680 --> 00:39:54,400
Speaker 1: A is actually a highway. It's Root six A up

824
00:39:54,400 --> 00:39:57,920
Speaker 1: in Massachusetts and it runs along Cape Cod That's where

825
00:39:58,000 --> 00:40:00,960
Speaker 1: John's folks live. So it's gonna digging down into his roots.

826
00:40:00,960 --> 00:40:03,839
Speaker 1: A little bit giving this New England, says On a

827
00:40:03,920 --> 00:40:05,920
Speaker 1: proper name, So I like that about the beer man.

828
00:40:05,960 --> 00:40:08,120
Speaker 1: I like it when there are names that means something

829
00:40:08,160 --> 00:40:10,200
Speaker 1: to a specific beer. But let me tell you my

830
00:40:10,239 --> 00:40:11,799
Speaker 1: thoughts on it real quick. To me, it had that

831
00:40:11,920 --> 00:40:13,880
Speaker 1: lights kind of funkiness that you kind of find and

832
00:40:13,920 --> 00:40:16,640
Speaker 1: says On's right, but it's not like a stinky farmhouse.

833
00:40:16,640 --> 00:40:20,160
Speaker 1: It wasn't overwhelming. I agree. It definitely had kind of

834
00:40:20,160 --> 00:40:21,759
Speaker 1: some of that happiness going on, but it to me

835
00:40:21,800 --> 00:40:24,600
Speaker 1: it get drink like a smoother sort of says On

836
00:40:24,680 --> 00:40:26,359
Speaker 1: and almost drink like a Belgian beer. Kind of had

837
00:40:26,400 --> 00:40:29,640
Speaker 1: some of those sort of sweeter yeasts. Definitely an enjoyable beer.

838
00:40:29,800 --> 00:40:31,960
Speaker 1: I'm very thankful that John donated this one to the

839
00:40:32,000 --> 00:40:34,520
Speaker 1: show man. Yeah, well you know the yeast Atlantic guys,

840
00:40:34,600 --> 00:40:37,080
Speaker 1: they know how to use a proper Belgian yeast. You

841
00:40:37,080 --> 00:40:39,239
Speaker 1: know it's in their name. So yeah, thanks to our

842
00:40:39,280 --> 00:40:41,600
Speaker 1: friends over there for donating this beer to the show

843
00:40:41,960 --> 00:40:44,600
Speaker 1: and Matt. It's always fun to tackle the listener questions.

844
00:40:44,600 --> 00:40:47,520
Speaker 1: I look forward to doing it again two weeks from today.

845
00:40:47,840 --> 00:40:50,400
Speaker 1: And for folks that want to submit their question to

846
00:40:50,440 --> 00:40:52,799
Speaker 1: the show, well it's super easy to do that. And

847
00:40:52,840 --> 00:40:56,319
Speaker 1: the instructions are available on our website. Just go to

848
00:40:56,480 --> 00:40:59,520
Speaker 1: how to money dot com slash ask to submit your

849
00:40:59,600 --> 00:41:02,680
Speaker 1: question for an upcoming episode. And if you enjoy this

850
00:41:02,760 --> 00:41:05,040
Speaker 1: podcast and have found this episode helpful, we would love

851
00:41:05,080 --> 00:41:08,160
Speaker 1: for you to subscribe wherever it is that you listen

852
00:41:08,200 --> 00:41:11,279
Speaker 1: to your podcast and head over to Apple Podcasts, rate

853
00:41:11,320 --> 00:41:13,680
Speaker 1: and review us over There is that helps others to

854
00:41:13,760 --> 00:41:16,399
Speaker 1: find this show, So Joel, that's going to be yet

855
00:41:16,400 --> 00:41:19,600
Speaker 1: for this episode. Man. Until next time, Best Friends Out,

856
00:41:19,840 --> 00:41:20,680
Speaker 1: Best Friends Out,