00:00:00
Speaker 1: Welcome to Had of Money. I'm Joel and I am Matt. Today we're answering your listener questions. That's right, buddy, Happy Monday. And you know what I just realized looking over some of the listener questions we're taking today, is that we're talking about all these things that I've never personally experienced. We're talking about vehicle reimbursements and employee stock purchase plan, a large inheritance. These are all things that I have not that I do not have firsthand knowledge or experience with. Well, it makes me a little bit somebody, because a big inheritance means that you lost someone that you love. That's bad news. And I have lost someone that I love but didn't come with any sort of financial plus side. I wouldn't mind receiving all of these one ful things. And we'll get some some other aspects of personal finance during our episode today. But hey, I wanted to share a lot of times at the beginning of the episodes, we share a little personal story. A lot of times we'll share money wins, like a deal that we got or was it last week I talked about the air conditioning fixed. Oh, that's right, it's been holding up so well, so great. Have you had any issues with yours? No, not yet, Okay, all right, I was gonna say. The reason I'm asking is because I didn't use the entire bottle of the stuff, So you ought to stick it on your van, and just to see where your gauge is at h and if so, you can preempt just a little, a little top off, top it off. All right, I'll tek it out anyway, enough of the good news. It's time for some bad news. Throw yourself under the bus real quick. Yes, we were driving out of town and it was just me and Kate and I, you know, were cruising along talking with her, and I look up in the rearview and you know what I saw?

00:01:54
Speaker 2: Oh?

00:01:54
Speaker 1: No blue lights? Yes, yes, I knew what she was going. Yeah. I wasn't rooting for it, don't you cheer the police officer on. Now, of course I got a speeding ticket. Uh, And I swear that I was. I was just going along with the flow. That's just how I drive by defaults. And evidently he had to make an example of somebody, and he chose the gray Honda Odyssey. I don't know why. He was just like, let's uh let's go after that, Like, let that yellow Corvette go and grab this guy driving was there not a Porsche or a beam right zooming passed as well. But of course it doesn't really matter if you're breaking the law. If you're going above the speed limit, there's no excuse. I can get a ticket, of course. But I do think he felt bad for me, so he pulled me over. And I mean truly, like I even drove for a little bit because I didn't think he was coming after me. I was like, surely he's not coming after me get arrested for abating. And then he asked me to step out of the vehicle. No, actually he did because I think he kind of knew that maybe he was maybe barely going faster than any of the other cars, but I don't know. He's pulled me over, told me off speed, and knock the speed down a little bit so that it wasn't a super expensive speeding ticket. Was like ninety five bucks. Oh it's not bad, not bad at all, I mean compared to what I hear other speeding tickets cant. Yes, Yes, this was honestly the most affordable moving violation I think I've ever heard of it. But it's not that that I'm concerned about. Of course, I'm concerned about the comprehensive loss underwriting exchange report, the tick mark, the demerit that's going to go on my clue report, And I am like shaking in my boots a little bit as to how that's going to impact my car insurance. Man, I'm so I'm not looking forward to it. It makes me want to preemptively, proactively go out well see if they've got any courses I can take online, because give me all the trackers you want to you want to track me while I drive, so I can prove to you that I'm responsible, that I come to a slow stop whenever there's a stoplight, that I accelerate slowly, that I don't speed well. In some insurance companies, they don't automatically raise your rates immediately upon that one moving balance, and especially it's under a certain like auto. What about auto owners, because that's why I don't know. I don't know exactly how they respond, but we'll see. Yeah, I'll keep folks post you know it. Also, that kind of stuff, it damages your ability to go out there and get to shop around, because if you get the more stuff on your clue report, the more other insurance carriers are like, yeah, no, we don't, we want to quatch your policy right now. Because I had that problem because I've had two homeowners insurance claims oh in the last like six years. The beg one the tree. Yeah, and then when we were renovating our home, there was like, remember someone broke into our basement and they stole the hack, they stole the HVAC and so your old house mate's right, that's right. And so because of that, I have two claims and so I had reached out to someone and they're like, you know, you're a call me in six months when this one falls through, falls off your clue report. And I was like, oh, okay, good to know. Well at least you're getting closer to CLO that was a while ago. Yeah, the HVAC issue. Yeah, Anyway, I wanted to share that because a lot of times when we share these little stories, we're like, hey, you can do this too, you too can change the springs what do you call the suspension springs on your dryer and keep it from wow wow, wow, you know getting out Now. This is one of those instances where I'm like don't be like me. Drive slower. It was also in a construction zone, okay, and I think that had something to do with it too. But slow down, drive safer. Not only are you going to save money because you're your gas mileage is better, Yeah, but then on top of that, you've got the ability to avoid a moving violation. It's like a speeding ticket. Worse feeling too. I can't think of many feelings that are worth than just like a sink. What a sinking in the stomach? Yeah, your something just like falls down to your feet, You're like, oh, when you see the lights of it, it's like, what was I thinking? It was so stupid of me. But ten or fifteen minutes faster, you know. But yeah, sure a lot of folks getting ready to do some driving maybe over the fourth uh huh uh yeah, slow it down a little low down. Yeah. Anyway, that's my story. All right, Well, thanks for sharing. Sorry that happened to you. Yeah, fun how it goes? The beer Joel that you and I are going to enjoy today is a sixty minute ipa by dogfish Head, one of the ogs classic have we never had this on the show before. Maybe I should look it up. Well, it's all right, maybe we have. It's been a long long time, all right, have we? I think one of our my friends gave us like one one hundred and twenty minute back in the day. How we had that on the show? Was it one twenty or was it ninety? It was one of the two. I don't know, like and one twenty is like, oh, you know what else he gave me? I still remember the www though, So there's some sort of worldwide stout that's why he gave us as well. That was insane. That was off the check, right. Uh, it was a really big one. We've had some good so this is kind of the They sell the sixty minute in six packs, so if you're looking for it, you can find it wherever your finer beers are sold. But let's get to listener questions. Matt, if for for anybody out there who's like, I've got a question for Matt and Joel, we'd love to hear from you. How to money dot com slash ask has the simple instructions, or you just say your question into the voicemaan map on your phone and email it back over to us. Let's get by the way, I just looked it up. I couldn't resist. We have not had any of the minutes. Okay, so we haven't had a sixty ninety and I guess we didn't have that one twenty. That's some price show either. Maybe maybe we just enjoyed that on the Maybe that was the burner of an episode. I think we've only had two of those that we never not Actually that was the one stuck out there. I don't know back in the day, but we did have that worldwide stuf so bad we couldn't release it. Yes, we've been there, which early on it had to have been really really bad because we've put we put out some growth episodes. Let's be honest. I know when people say, oh, I've been listening to the pod, I love it. I'm going back to the early episodes, I'm always like, stop, no, no, you can maybe go back one hundred episodes if you're so inclined, don't go back a thousand episodes. So let's just do it. That's just brutality to yourself. Although, do hit play and and just put on repeat and walk away because that helps the numbers. That's right, Yeah, that's good. Help your boys out. All right, Let's get to our first question. This one is about money falling into your lap.

00:07:44
Speaker 3: What big dogs? Is Brady's so a long entrepreneur, have a pretty healthy business, make a decent living with the small family. I've inherited some money after the past and family member that money has been with their wealth management team for quite some time now and chosen to keep it with these guys for several years. But I do I feel like they're under performing the market a little bit, which I know is pretty standard. They say it's best of diverse by the PORFOLI with stocks, bonds, T bills, dividendyealing stocks in anticipation of market volatility and to reduce risk, hence the lower performance compared to say the S and P five hundred. I know you guys say to drop financial advisors altogether, but I'm concerned about the stress I'm managing these investments myself, and that stress affecting the performance of my business. Is there such a thing as a peace of mind with a financial advisor. I've come back and forth of whether to go to the DIY approach or continue with the advisors. On a completely different note, have either of you guys entered all or some of your data into AI to get an analysis. I did, say with my robin Hood investments for advice and got some interesting feedback around sax loast, harvesting, redundancy, collecting gains while ahead, and reallocating. You're curious about your thoughts and using AI for financial advice and to be clear, by robin Hood Pope portfolio is completely separated from my inherited portfolio. And lastly, a frugal or cheap for you started roasting my own coffee beans, which I did that because I was tired of the price of coffee at the grocery store. Anyways, it's turned into a little bit of a slippery slope pain for the roasting machine spursing machine you know, will probably take a couple of years to break even. But I know how the sweet equipment and can make my own fun batches and give it to some friends, which is also pretty fun. Anyways, thanks to Allows.

00:09:40
Speaker 1: What a big dog. Oh we're going to call each other? Yeah? No, I like that. I was gonna say, speaking of helping your boys out, Brady hook your boys up. As far as like coffee, I would love to try some of Brady's coffee. So he's talking about you know, being able to gift it as to friends and family, but only if they're the finest Guatemalan bean. It's grown at fifty one hundred feet above sea level. Right, Oh, no, no, you can. You can get amazing beans from all over the world. Okay, yeah, you can get some incredible like African being like the Ethiopian, the Kenyon. You can get some great stuff from Central America as well. It's yeah, I personally don't discriminate. A lot of it comes down to Yeah, also how it's roasted. Yeah, yeah, anyway, it's and coffee is kind of like beer, right in terms of flavor profiles being all across the board depending on where it was grown. Okay, yeah, yeah, Yeah, I don't know. I don't know much. I know enough to be dangerous in a conversation, but I don't know. Yeah, and yeah, you're more familiar. You've had some of the stuff coming out of Hawaii, the ConA beans. Wait is it? Yeah? I think Cona's overrated though, you think so, Yeah, I think it's the I mean, the lore is that they keep all the good stuff for themselves, and so they're actually shipping out blends. Oh yeah, they sent almost anything you buy that's not that's sold in the mainland the United States. It is like ten percent ConA, which it says Cone on it. But if you actually go to Hawaii you can get the like one hundred percent cond of stuff. But it's really expensive. Yeah, but then again, coffee is expensive. It is except that. So this is what's really funny. So Brady's talking about like dabbling into coffee roasting. He's like, it's so expensive aout the store and I love that. He's just it is a slippery slope. And at this point you can't say that, well, I bought a separate roasting machine. Oh and I've also got the espressive like you're not doing that because you're saving money doing that, Like you're doing that because it's fun. Well, it's a hobby and you love it and you enjoy it. Okay, I mean that is true, but I will say, hear what you're saying that over time money. Yeah, Like I'm thinking about our little bread making endeavors at home. So we got like we literally go to this store and we buy the five gallon buckets worth of wheatberries and Emily, we've got a grinder, we've got a bread machine and she's like making fresh bread many times, many times a week, and the bread machine is unnecessary, but it makes it a lot, a lot easier if you want to make it regular. If you got to like actually fire up the oven, you're probably going to do it less, and so like it's a more efficient use of energy. From that standpoint, You're not getting the whole house super hot, but you are getting all all the good smells. So and I think you can say I'm doing it to save money, And the truth is maybe over the course of like a decade, you save money, but over the course of the first like two to three years, you definitely don't. Sure. Yeah, okay, So and what I was gonna I was gonna backtrack a little bit and say, maybe for my own person, in my own personal case, I can't justify that I'm saving money by the fact that I got the lemozuko or zoko I think is how you say it, espresso machine. I wasn't at all trying to justify it. I was just a splurge. It was a splurge, and now I was owning it. I'm like, hey, I think we would love this and enjoy it. So I literally did not even run the numbers on it ahead of time. But because Brady came in with his coffee roasting expertise or experience, the proogular cheap I did run the numbers, and it would take a year and a half of me ordering two drinks, two flat whites at our local coffee shop. That's really good, uh huh. I would have to do that every single day of the week or every day of the year. Yeah, two drinks in order for me to earn back the cost of the machine in a year and a half. A year and a half. But the thing is is that's totally absurd because that just feels like such a nice I'm not going to go to a coffee shop in order to go cough, like to to go coffees every single day of the year. Gosh, if you did, it does not just seem insane, it just seems crazy. And so in that sense, it's not like it would in reality, like I only go there once a week with you, but it's changed your coffee consumption habits and you drink more good coffee. It has changed it at home, and so in that case, it's not it's somewhat of a money when but it's more of like a lifestyle upgrade in that's in that sense because we are, in fact, even though I'm not going to go to the coffee shop every single day because guess what we're not. I'm not making I'm not pulling two drinks every morning. I'm pulling four. Like I make one for Kate and one for me first thing when we wake up, and then after I take the kids to school when I come back round two. Baby, I could be even more indulgent because yeah, yeah, and it's just it is very, very very good, and I love it and the summer year man with it being warmer outside doing I slattes, yeah, it's so good. Well do I mean this is so freaking great. Like not to highlight the thing that we talk about regularly on the show, but the craft beer equivalent, right, it's like, find what that is in you for you coffee is one of those things and you're willing to spend a lot. It's surpassed craft It feels like it feels like we don't drink nearly nearly as much beers we used to. I think it's against the law for me to say that that my craft beer equivalent is is espresso but you get some hate mail. What Kate and I enjoy him in the morning, Like we look at each other and I'm like, it doesn't feel like it should be legal to have this good of coffee.

00:14:29
Speaker 4: Ut.

00:14:30
Speaker 1: Yeah, like it's so great. We love it so freaking much, isn't it. It's just so fun to spend money on something Like we don't talk about the joys of spending money well very often. Yeah. Actually, we're gonna have some upcoming interviews about that, which I'm excited about. But yeah, okay, let's get to That's only one part of Brady's questions. That's only one part. Yeah, he stuck a three for winner. We'll get we'll get to all the good stuff. Brady specifically about this inheritance, I think it's the most pressing and as to it, man, I'm sorry to hear about the passing of a family member. That is obviously what precipitates an inheritance. And man, I gotta say this, I don't think bra did anything wrong by not making a huge change immediately upon receiving the inheritance. I think there's just a lot of wisdom and letting things stay the same for a little while. But that does settle. Yeah, yeah, I get that mixing grief and crucial investing decisions is just a bad idea. And it's not that you should let things stay the same or ride forever, just kind of like checking out of the finances of this inheritance. But taking a beat right is really smart and it's actually something that we tend to suggest in a situation like this. So I'm glad glad you're considering a change now, Brady, But I'm glad you also didn't rush into making meaningful changes in the heat of the moment. I'm totally yeah, I'm totally fine with thats. And Brady also touched on the underperformance that he has seen though with the management of those funds. Well, you know what, that's not illegal either. We're talking about a lot of different things that are legal and not legal, Jo, because it totally depends on what your goals are, right, So this underperformance could turn into reduced losses if the market were to enter correction territory if you're young enough and you're willing to take the risk underperforming like it does feel like a crime. But as you get closer to the wealth preservation stage, stead of your returns are going to be a higher priority than seeing massive gains, So when you've got time to recover from market drops. Yeah, that volatility is it's ultimately to your benefit as you continue to buy and if you want to continue with its advisor, I think it's important to have maybe a more frank conversation about what it is that you want and how your asset allocation is going to change over time, how that's going to help you to achieve your goals, and ultimately to discuss the tradeoffs that come with making those changes there to your portfolio. So it just again not only when it comes to life stage and what your future goals are, but just in what you were saying too, Joel, the fact that like taking a beat, hit and pause, I think that was a goal right then and there, was to make sure that you weren't making any sort of emotional knee jerk reactions. And you can just say, well, that's what allows you to do that, because you could have made much bigger mistakes had you made a decision that may not have been completely thought through. Yeah, in that moment, in the heat of the moment, always easier to look back and see things in retrospect. Let's say the market had had a port go of it, you'd be like, oh man, those more conservative investments serve me well as the market was going down. And so it's hindsight's twenty twenty and this is too. I want to get to Brady talked about Oh, well, you guys, I know you guys are all about ditching advisors. I want to say we're not like I think maybe we were earlier on more so at least in our podcasting days. I don't know if I would call us anti advisor. I think we would just say think we're still probably pretty balanced when it came to oh, it just depends on who you are, which you know, what you want to what kind of professional help you want to have alongside you, And I think personally we probably were much more like, yeah, you can get by without that well, and especially when you think about like who the head of money audience is, who the core had a money audiences, It's it's millennials and gen Z is the bulk, right, and so for those for that segment of for those individuals, it's just it makes more sense so often to di wyatt and not pay big fees. But as your investing decisions and your kind of life finance has become more complicated. You might want the input of somebody who has who knows what they're doing and so. And at the same time, I think even since we've started the podcast, Matt, the advisor offerings have improved. So the pitch I think that's true from advisors is less. Now I'm going to beat the market, which was like a pitch I think that you used to hear and now people are like, uh, okay, but I don't know, I've heard about this, and most advisors don't beat the market, So how are you actually going to beat the market? Tell me about that? And advisors are more pitching holistic planning, right, like thinking about taxes a decade or more into the future, thinking about your short term, your medium, your long term goals. Kind of in the trajectory of those things. What was it like to say, for a house and to invest for your future, like all sending your kids to college without going broke. Taking vacations are good for you, like they're going to create long lasting family memories. Maybe you're like, I want to I want to start my own business as well, Like those are the kind of things advisors can help you prioritize all of those goals, like trying to achieve all those goals simultaneously effectively. They can right Like, but again, most young how to money listeners, we be better off the DEI wying it because every dollar matters in those early years and your your life is just typically less complex. But as as you get older and as you accrue a bigger nest egg, more money, more problems, matt or or at least more complexity, right where an expert can offer a lot of help and I think some peace of mind. Yeah, I think so much of it. Like as I think about, like what it is that sets a younger investor apart, it's just the fact that what they're doing is just the same thing, rinse and repeat, as opposed to it's somewhat I think the complexity, yes, but I think it's also the drawing down of the portfolio that feels a little like, okay, how do we shift gears? How do we transition? Like it makes me think, okay, so I'm thinking about like a road trip. Imagine if you like, if I uh said, Okay, I'm just gonna get in the car and I'm gonna head west and I'm gonna drive for like twelve hours and I'm gonna go ninety five miles per hour because I'm at now, I'm gonna follow this bed the limit and not get his feeding ticket. But I can do that. Now. Equate that to me just being like, oh, all right, I'm gonna save and invest over the you know, over my lifetime. Now the amount of time that I'm spending on the interstate, I think you can equate that to investing in low cost index funds. Like you're just doing that mile after mile after state after state after state, and you don't need the turn by turn directions right, Like literally, I can just look at the big green signs and just generally head west and I'm probably gonna end up in Texas. I'm gonna end up Dallas Fort Worth by the end of the day if I just like, you know, keep on going. Now, when it comes to arriving at my actual airbnb, right that I've got, okay, well, I don't know, I don't know where exactly where it is, like, oh, at some point, I know I need to take this exit. But then you're dealing with like state highways and surface streets and oh, don't turn into this drive, which turned into like there's all these other fire sort of details where you know what, I am going to pull up the phone, I am going to punch in the address. But for the most part, there's not a whole lot of complexity, and because you're just doing the same thing, like those interstate miles, to me are like investing in low cost index funds, where there's not much change or any sort of variables that you really need to think about because you're just doubling that's all you're doing. In a similar way. I think that's maybe al I think that could be a helpful way for folks to think about financial advisors. It's a lot of times there towards the end where they're thinking, Okay, you know, we've been going the right direction to help us land this plane, like help us to arrive at the desired final destination in a way that's not going to completely derail the entire trip. Yeah, yeah, yeah. And I just want to mention too that just because an advisor might make sense given the added kind of complexity and nuanced that Brady's facing. And I don't know how much money this inheritance is in whether like he feels comfortable kind of managing on his own and funding some of those short term, medium term, and long term goals that he has kind of divving it up in some ways, or if he's like, no, I really do feel like I need to a pro because this is a substantial amount and I want to make sure from a tax perspective, from like an optimization perspective, I'm I'm including somebody who knows more than I do. To me, that feels like it's not just you. If it's a lot of money, all right, I'm going to really extend the metaphor here. Yeah, if it's a lot of money, then that's you driving a whole bus float of your family members. Whereas if it's just you, it's like, Okay, it's no big deal. It's just me. There's not a whole lot at stake. But if there's more people counting on you, it feels like you're driving a tour bus full of your relatives relatives, and you're also trying to get to this air dage. And truly, when it comes down to it, some of the like making an incorrect like non advantageous tax move just has a bigger impact in terms of them on it's exact perspective, right, it impacts everybody on the trip, So it's a little more costly. Yeah, and so like getting that right, it's it's more work. The cost you can justify it more than if you're early on and you're just like in those early miles of that road trip. And so yeah, I just want to mention to Brady that, like, you don't have to stick with the advisor that the inheritance is currently with, Like you might want to go out there and you probably do want to find an advisor you feel comfortable, not just because this this current advisor has underperformed the market, but because you're like, I want to find the person that I trust that kind of thinks about money the way I think about it. And so I would say, like a fee only fiduciary. That's paramount when you're looking at advisors, and then you can decide, you know, whether the cost is worth the reduced headaches of delegating some of these bigger financial decisions that you have coming up the you know, we've got the site how to money dot com slash advisor. It's pulling from vetted, fee only fiduciary advisor. So that's where we recommend people turn if they're looking for an advisor. But it's just it's one of those things where whether or not you're ready for it depends on a whole lot of personal factors, and then hiring the right one becomes important, and it's okay to break up with the old financial advisor you didn't choose to move to one that you did on purpose. Yeah, yep. It's for that reason that I find his question about using ai for to direct his investments incredibly interesting, because because on one of end, it seems like he's like, oh, I'm not totally sure. I think I need need to have somebody here to kind of guide me along. But then on the other hand, he's just like, I feels like shoot from the hip a little bit when it comes. And maybe it's because there's fewer passengers on the robin Hood train, which is his brokerage account. He doesn't have a whole lot of dollars in there. That being said, I mean, I'm not I'm not turning too ai for or any large language model any I'm not looking at Chat, I'm not looking at Claude when it comes to directing where my dollars go. I would Brady use it to engage in thoughts and conversations that could give you the type of questions to help you to vet your financial advisor or whoever it is that you have punch them scenarios into there, and I think that that could give you some maybe even a better understanding to understand why it is they're doing what they're doing. Why maybe in fact, hey, I'm going to push back against that a little bit. I don't think we need we should be we should be doing this, and yeah, in that way, I think it can be another tool for you to help you to partner with some of those advisors. Well, but I'm definitely not going to be upload you know, he said something about uploading his info. Oh that that's a no, no no man, Like I'm gonna delegate or I'm going to dictate what it is that I've got going on. But you know what that reminds me of It feels a little Yeah, I don't I don't like the integration just yet. I'll just say, just giving away your some personal data information that you really should probably keep private. It makes me think of the like ancestry dot com and stuff like that, and how it's really kind of fun to look into your family history. I never did it, not I'm not even like a privacy freak, but I was like, golly, it seems like you're giving up a lot of information in this company. And then didn't one of the companies go bankrupt and we talk about it, and then they were like selling some of the information to third party companies and I think it's twenty three and so that feels a little more innovasion of privacy to me, because that's like your literal physical genetic material versus like the family ancestry thing. I don't know, if it's a little outside of you. It's like, Okay, these people could also give that information, but there's only one person who can give my DNA information. Yeah. Like if I'm going to put a swab in my mouth and send it and mail it off and they're gonna I don't know what's it called where they map out your the matt genome projects, Yeah, Like, I don't think I want to engage in that any like for real. That's something I'm going to think twice about. I'm also going to think twice about uploading or giving direct access to any sort of large language model my investing logins or anything like that. I agree, Yeah, I would not upload everything and ask it for a plan, use it as a tool. I think that's great. But personally, I yeah, maybe it's fun to upload some or to manually upload some of the information just to see what it would say. But again, it's for you to engage in a sort of dialogue with yourself, with your family, business partners, and ultimately, I think your financial advisor as well. I was going to say, I guarantee a great financial advisor asks a lot of questions. They're trying to get a lot of information from you about who you are, what you want, where you're headed, and if you're just like uploading something to a large language model, they're making a lot of assumption. They're making a lot. Yeah, exactly exactly. They're treating you like a stock American individual, and you are not. You're Brady. So that's right. We got more to get to, Matt, including we're going to talk about leasing a car. Does it make sense, especially when the business you work for reimburses that expense. We'll get to that and more right after this. All right, buddy, we are back, and yes, we will get to that car leasing question. We'll also cover some mortgage hacks or some quote unquote air quotes mortgage hacks. We're still using the term hacks. We are okay. But before that, let's hear from a listener who has a question about his ESPP.

00:27:47
Speaker 2: Hey, Matt Joel. This is also Matt's calling from Medford, Massachusetts. My question is related to my employee stock purchase plan. I have a pretty typical ESPP. It gives me fifteen percent of a discount my company stock. There is no holding period after the purchase date, and I have the look back provision as well. My question is it seems like from the research I'm doing that doing a quick sale of the ESPP is a no brainer that I get a I think it's like a seventeen percent return on investment no matter what, and that assumes that the stock does not perform well between now and the purchase states. It doesn't seem like the tax implications of this are anything to be worried about, So I'm just curious what your thoughts are. What else do I need to consider or should I utilize a ESPP and just hold the stock. I think it's important to note that I do believe in my company stock. I think I'm in a good industry and a good company with great growth projections. But I just don't like having all of my eggs in one basket or one stock. So I'd rather get the guaranteed ROI cash that, out sell it, and potentially consider putting that money into a well diversified index fine or RETF. So I'm to know your thoughts and really enjoy the show.

00:29:14
Speaker 1: Thanks Matt. Did farmers back in the day really take two baskets out to get their eggs just in case they dropped one?

00:29:20
Speaker 2: Oh?

00:29:21
Speaker 1: Maybe they stored them in multiple baskets once they got them back to the farmhouse. Yeah, I don't know. Well, I mean I guess that's like, wait, that's why they that's why they created the double the basket that's got the two lobes. Have you seen those? They kind of looks like a butt. They'll talk about it like it kind of comes up in the middle a little bit. Huh. Maybe that's because in case one side falls out, there you go, you're diversified. That's right. Original farmer wisdom, Yeah, is applicable to personal finances. It is. I love that we're like still using aphorisms. Like that, because I mean, dude, that's that wisdom still holds, right, and and so yeah, that's that's a plug for diversification there and and this is kind of part of Matt's question, is like can I use an ESPP effectively without essentially having like too much tied up in my company because I get a paycheck there and then I also like have I'm investing in that company stock and so yeah, also a lot of my friends are at my company as well. Right, let's talk about social like there's other ways, right, you know, it's like good point. Just think about all the things that our jobs do for us. So I don't know, he's not asking about that, but but yeah, that's that can be a weird tangent if you go done that. So I don't feel the need. But that is where the risk of like, hey, I think things are good at my company, but maybe there's some things I'm not privy to and maybe yeah, who knows, maybe there's leadership change and the like the next course over the next five years is not gonna be good for the company. I sure hope that's not the case, Matt, But like you never know, you never know, And this is the reason to not like over index right into one one one company and uh tying not just your livelihood but also your future investments to their performance. And but espps are great. So if I was in Matt shoes, I would take full advantage of the ESPP. Oh yeah, despite what I just said about the versification. And I'll explain, we can, we'll explain why. But you know, let's just first highlight how good this ESPP is. Matt mentioned a look back provision in the question, so nice, which means he gets like a not only like a fifteen percent discount on the stock that he's buying, but he also gets a lower price than the general public is able to get, right because he can get the stock price at the beginning or the end of a six month window. And so yeah, like which whichever one's the lowest, exactly, Yeah, you're getting the best stinking deal, which is awesome. So you get a fifteen percent discount on potentially and even much more discounted price. Must be nice, That's all I'm going to say. Well, public, we'll offer that same thing to ever had ESPP. Yeah sounds awesome for the folks who work here. But yeah, so this makes the deal look even better, could potentially substantially better than just a straight fifteen percent discount, which is already a nice perk. So I guess I I just want to say I'm with you, Matt, Like it's a no brainer to take advantage of this ESPP option. We just want you to use it wisely, that's right. And part of using it wisely is dialing in your specific strategy so that you are not taking on too much risk. So you would take the quick flip strategy. This is something that I think I would do were I in your situation, and basically sell your stocks as soon as you're able. Essentially you're taking advantage of the discount that you're you are immediately getting, but then you are getting out. But this is known as a disqualifying disposition, so you're gonna have to pay tax on that, depending on your income. It's likely not the best move from a tax standpoint, although from a mental standpoint, from a diversification standpoint, a future well standpoint, I think it is. And you mentioned not want to put all your eggs in one basket, right, this is why you would take this approach, the sort of flip approach, and it's why a generous ESPP like this is worth taking advantage of. But again, if you hold onto companies stock too long, you are definitely amping up your risk and in other ways, yeah yeah, because if you if you hold on too long, you're just that's right, you're just like the indexing in a riskier direction. Even if you believe in the upside of the company, which what you do. It's just unwise to own too much company stock ever, and that that goes matt not just for individual companies right investing in individual stocks, but it's even it's even riskier to invest in invest heavily into the individual stock of the company that employs you. So I think that your belief in the company's future will shake out already in like steady employment and promotions and raises, and just be thankful for that, like you don't have to try to capitalize on the upside of the stock as well. Like the the only real reason to own this stock is is because the optimization play you're able to make, not to buy a low price and to hold on for many years or even decades in hopes that you're going to outperform a total stock market or S and P five hundred index fund. And I think some people Matt, think that it's this way to support your company, to be a team player, But I think like you can be a team player a whole lot of other ways. You don't have to put your your future investments at greater risk in order to do that. So I'm speaking as an outsider yet again, I'm highlighting how this is not something ever ever had available to me, and it must be nice, right, Like I was kind of joking about that, and I was literally thinking through that. I bet it does feel nice. Like there's something about it that feels like you maybe that you're privy to information that like the rest of the market doesn't have. Like it feels like maybe you've got the inside scoop. And by over indexing on your company stock and the fact that you're getting it for a discount, I think in a way, I think it kind of plays into the endowment effect, right, Like you're like, oh, this is my stock, and what did you see with that stock? Your company stock, and you've got the name, you got the security badge and whatever, all the accolades that come with that particular it's like salesforce or something, you know, So like like you've got the briefcase and the the you might even have the brand ZIP or the three quarters for three quarters zip. But because you've seen that immediate sort of discount, the fact that you're getting it on sale, I think maybe what happens is it puts it in a better light than it actually is, and you feel some sort of like emotional attachment to it, and so because of that, that indomitant effect kicks in and you I wouldn't I am curious if there's no data or studies here, I'm just like making this up. But I'm just again trying to picture myself in his shoes, and I could see myself falling into that where I'm like, oh, no, no, this is a winner, Like why would I want to get rid of this? Are you kidding me? I want to grow my wealth, man, And I've seen it grow not only because of the discount, but oh because he mentioned seventeen percent, and so maybe it's gone up like a little bit over the course of the quarter. And let's just say you see it improve like five percent or something like that over the period, Like you're seeing over twenty percent in gain, And it would be very easy to talk yourself into saying I want to let my winners ride, Like why would I get rid of this? You a dummy? But the wind was in the buying, in the special deal, in the holding, and that's what you have to But I think just by holding it for a second, there's something that takes place mentally where you're like, no, no, no, no, no, these are my stocks. You can't have these. I'm not going to sell these to you. Why would I want to do that? Yeah, So you want to avoid that sort of trap instead, look to market some look to what history shows us, which is being diversified as the way to win. Yep. I do see that as like a potential mistake, like to kind of I get too attached to something that man, really this is this is a benefit, a straight up benefit that you should take advantage of and not something it's like a one time benefit versus like this ongoing relationship. Right. Yeah, And I guess at worst you mentioned the flip strategy. The maybe most risky thing you could do if you wanted to try to reduce tax implications is to hold on for a year post purchase, because that's when you cross like essentially a threshold you receive superior tax treatment, Like you'd still be taxed on the discount you received at your ordinary income tax rate, but the gains that you experienced would be taxed at a superior capital gains tax rate. Again, though this ramps up your risk level. I'm not sure we're talking about high enough dollar amount to really merit holding on to it longer, but it just kind of wanted to throw that out there that, yes, that does change the tax implications at least a little bit, that's right. And then what should you do once you sell, Well, take that money, put it in more diversified investments. That's the uh, that's the name of the game here. That's the answer we're giving. If you are WROTH eligible, right, if you're, if your income is low enough, make sure to max out your wroth IRA and invest in more diversified assets like you mentioned. But if not, either contribute more to your tax advantage plan there at work. That's like next on the order of operations here, and then after that consider a taxable brokerage account. But ultimately, the best way to think about your ESPP again is like as this compensation enhancements, not as a long term investment strategy. You this is a relationship. You're not marrying these stocks. You can unload them as as soon as you'd like. It's a part of your total compensation plan here. It's a kin to your four win k or even to like a solid health care plan. So make sure to use it properly. Set a calendar reminder too, that way you don't forget. It's one thing to intentionally do it, it's another. It's a whole other thing to fall into that. Oh, I forgot to unsubscribe to Netflix after the seven day trial. Yeah, I actually did that recently with what was it? They still do free trials on the Peacock No, I did it recently Peacock three Prime. We were looking for oh, the Mario movie, okay, and they had it there, so I'm like, we can rent it for four dollars or we can I can set a calendar reminder, just kind of actually sure, you got to make sure to do it, so, Matt, just make sure that you're not letting that one slip through the cracks. Jewels get to another listener. This is the lease that the car least question, and this one is specifically from Jesse.

00:38:42
Speaker 4: My question is about cars. I currently own a twenty twenty two or have four prime. I have no payments. My company utilizes the Favor program or the fixed and Variable rate Reimbursement program, allowing tax free reimbursement. I am currently incompliance with the program, but at the beginning of twenty twenty seven, my vehicle will pass out of the compliance window. Of a vehicle being four years old or less, a monthly payment is calculated based on location, and then a variable rate is paid out for each mile driven. Have you worked with the Favor program before in twenty twenty seven? Does the math say, take the decrease in monthly payments to keep using a vehicle owned outright? Do I sell the vehicle and buy a new or used car and keep me in compliance for another a year or two? Or lease based on the rolling nature of the program. Leasing has always been a bad choice for me financially, But based on my new situation, could it make sense? Car brand does not matter to me in the least. I look forward to hearing your opinion, and I love the show.

00:39:49
Speaker 1: Oh man, have we just found the rare exception to the leasing cars is a really dumb idea advice that we typically Let's unpack it yeah, let's tell let Jesse know. Yeah, we'll find out like it's it's actually in this situation depends what you're trying to optimize. It does. It does if you're optimizing for that new car, smell get it at least that car. Well in this in this circumstance, it's maybe less bad right than it would for somebody who's not getting any sort of reimburse in but it's still not the bad, but still bad, still bad. Still have the best decision. So let's mention quick Favor, which Jesse mentioned with stands for fixed and variable rates. This is a tax free reimbursement program for your vehicle if you drive one for work, and if your employer subscribes to the Favor method. It's it's pretty great for people who drive their own car for work. It's it's the most accurate system too, because it has this like two bucket approach. One bucket covers the fixed costs that you incur like insurance premiums and depreciation, and the other is for variable costs like gas, maintenance, and tires. And so the flat monthly check approach to car allowance. It might sound like it's going to be easier but it's not necessarily and it doesn't come with those same tax benefits. So I think this is this is a good perk for Jesse to be in this favor program. He had another one of these sweet employee Yea offered perks that we've never Maybe this is one we can do, Joel. Although we always talk about how we walk in bike to the r so there's no I don't think there's any favor benefits being paid out legally. At least maybe we can pay for my new running shoes or something. What's great too about this program is it takes into account local conditions. So it's a federal program, but it's administered it takes into account local information. Basically, Jesse, he didn't say this, but in his email he included that he's from was it like Tacoma or spoking to Washington? Yea, somewhere up there. But he's in Washington State and the gas prices are higher out there, which means you're going to be reimbursed out a higher rate, which is pretty cool. I once point this out though, Jesse, just because you are getting reimbursed does not mean that you have to actually spend that reimbursement. There on the vehicle. So most folks think that because it's their quote unquote car allowance, that oh, okay, well I'm gonna spend that entire amount on a car payment or just on the like the total cost of car ownership. You can. But instead, I would rather like to think of this reimbursement as just sort of like we're talking about the ESPP and the previous question, this is just a part of your overall compensation, which means that every dollar that you eradicate from spending on car stuff is more of this tax free money that it's come in your way that you get to keep it it. Actually, it makes me think back to speaking of car stuff. I remember getting hit as a teenager. Somebody can kind of seise wipe me a little bit. I was like, I don't know was this I'm sixteen, I don't know how to do any of this whatever. And my dad's like, all right, we you know, got the police report, they were ticketed, got quoted out, and send it over to they're insured, and got the check. And I remember my dad telling me, he's like, great, that check is there to you. You don't have to fix the car if you don't want to because it wasn't that big of a thing. And of course, young foolish, not money savvy, Matt was like, no, I want to. I don't want to have a busted up ride. I'm sixteen sixteen, this matters. Whereas now I would one hundred percent just keep the money. Yeah a SMP wait for someone else to talk it yet again. Anyway, just wanted to mention that Jesse that you don't have to necessarily spend this money that's coming your way. No, that's right, that's right, Like that you can think of this as the gap that you can grow between what you're spending and what the car allowance you receive. Is is free money, right, Like it's additional pay, just coming from essentially a different direction. And so I would think of this as a business expense, and the goal is to minimize this business expense to keep more money in your pocket. It's kind of similar how we talk about ride offs. Matt like, yeah, you can buy a more expensive computer and you can write off a bigger amount, but you also spend more money on the computer. And so if you don't need the fancy, high end laptop, don't get it. Because you're like I'm doing it to get that sweet larger tax benefit. That's just self defeating, right, you still have more money and you don't want a crappy car that's gonna have problems regularly. I mean, and in fact, Jesse's kind of forced to have a new ish car and you're just not allowed to drive a ten or fifteen year old car if he could, man like, think about how big he could grow that gap if he could, if he could drive something older. But leasing will almost inevitably cost more every month. Yeah, I mean, could you lease a car and pay less each month because of your reimbursement, Sure, I guess, but it still wouldn't be as financially optimized as driving a slightly older car that gets the job done. Oh that's so what's going to keep more money in your pocket? Yeah? I like that you said newish because I think what he's doing now is pretty ideal. By the way, he mentioned the twenty twenty two year alf four prime man, So I saw one in one of those yes a few years ago. But that being said, I'm glad I don't actually, But then, and when you're thinking about ideal cars to have a solid gap on like that's that's a great car right to have into this reimbursement program. Yeah, but again going back to new Ish, I like that approach. I think folks who are keen on wealth building should opt to make sort of a more calculated upgrade in order to keep the car compliant. And because of the depreciation piece of favor, it's based on a car's new value. So if you keep that mind buying a generally used car that has already taken that massive depreciation hit, it puts you ahead financially. So yes, you know, if you lose lease every three years, you wouldn't have to worry about saying in compliance at all. But you're not going to reap the massive financial benefit of buying a very nice newsh vehicle that's very fuel efficient, that's only a year or two two years old, just something pretty dang new. I think that's how I would do it. Well. I guess the other place that a lease could come back to bite you as well is if you drive a ton of miles and you go over the mileage amount that the lease says you can do. So if it's twelve thousand miles a year, let's say, on your lease, and you're a heavy driver, because you're driving all over the state or all over the region. Yep. Then think about how much of an over mileage penalty you could pay right and that could be that could put you in the penalty box even more from a financial standpoint, just sucking up maybe the whole you know, car reimbursement and more. I don't know, so I guess I would say hold on to this wrap four as long as you can, until you can't anymore, until it literally falls out of compliance, and look for something right at that line for that's that's a few years newer, that's similar, it's comfortable, gets good gas mileage. The leasing is not going to be the most financially advantageous choice. I think you're right, Matt. The one year old car, do that, you're reaping some of those depreciation benefits, and then just wash, rinse, and repeat. Do that every three years, because you know the one you bought just a few years ago is going out of compliance. It's kind of sad like that you have to recycle cars like that in some ways. But if those are the rules and you got to abide by them, so abide by them, but do them in the way that's gonna like be the most financially advantageous for you. That's right, Joe. We've got more to get to. We're gonna hear from a listener who's got an insurance win. We'll hear from that one. We'll get to that one and more. Right after this, we're back. We got more of your questions to get to. This is of course, we've gotta get to the Facebook question of the week. Man, this is more of a statement, but I was like, Oh, this is worth sharing and we could talk about it for a second. This one was from an anonymous listener posting in the how to Money Facebook group, who said I wanted to share a money win. Several years ago, I bought a thirty year term life insurance, but my premium was surcharged because I was overweight. Over the last two years, I've lost the extra weight and was able to re quote my existing policy and obtain a quote for a new one that's about five hundred dollars a year cheaper. He says, I'm still not getting the best rates because of the history, but I was told that if I could maintain a healthy weight for two more years, I could ask them to rerate me again for a further discount noise. So if you've had a positive change in your health, consider requoting or asking for a rerating for your life insurance policy. Nowice. I love this and to this anonymous poster, congrats on losing the weight because I've you know, it takes a lot of hard work, takes some dedication, and it also makes sense so that your insurance company is going to charge more if your BMI is too high, right, Like, it makes me think about if you're underwriting a smoker, you are ensuring a higher risk individual, but over time, yeah, reducing those risk factors. Man, I love that this poster is really saving money by yeah, you know, not only decreasing their risk and exposure to that insurance company, but by keeping that in mind and then reshopping with a different provider. So like you were saying earlier too, like you get some of those claims rolling off the back end of your clue report, now's the time to take advantage. So I love that this person. I've not heard someone doing that when it comes to life insurance, So I think it's great and that's smart. So cool. Yeah, it's only I don't know how long it's been, right since the original policy was written, said what several years ago? I think, So if it's only been let's say a few years, you might still want to shop the open market again, right, because if it's been a lot longer and you're much older, getting a requote on your existing policy that might be the best bet in terms of saving money. But you know, if if you're you know, just been a couple of years, you might find that going back to a site like policy Genius, checking with Costco if you're a Costco member and their life and term life insurance program, that you might save even more by getting a completely new policy instead of sticking with the one that you got a couple of years ago. So, and I just want to say this too, Matt. Your insurance company isn't kindly going to ask if there's a reason they should reduce your premiums. That's not how it works in the real world, right, And so you this, this listener did it, you can do it other listeners. You need to make the formal request for reconsideration. Not all life insurance companies offer this either, And so if yours doesn't, I would check the market to see if you can score a better rate. We have a term life insurance shopping guide. We'll link to it in the show notes. But again, what we are like fans of term life for most people because it is dirt cheap and you can get a lot of coverage for your family if you were to pass away prematurely. It's one of those like adulting tasks that's really important, and most people put a off too long and then they shop around and they're like, oh, about five hundred thousand dollars policies like twenty four dollars a month, that's crazy. I would have done it earlier if I had known that it was, you know, roughly the cost of one or two of my streaming subscriptions in this right. Some would even call a shopping for life assurance a summer chore. Let's take that mortgage hack question here, because we teased to it earlier. Even though we're going along here. This is an anonymous poster as well, who wrote, my feed is full of mortgage hacks to save or cut years of payments over the years. Looks like I have to take my principal and my interest and then divide by six and then pay on the fifteenth of the month to get the benefit. Does anyone else do this. Mine looks like it would be an additional one hundred and ninety dollars a month. Part of me thinks I could do this, but then the other part of me is thinking I should put that money somewhere else. Also, if you stand on one foot and put your finger on your nose and hop three hops to the west, and what do you think? What does that do? What does that do? It magically makes your PMI go away? Ooh, that's fascinating. I didn't know that, which when I say like that makes it sound like be like health ailment. But that's not what we're talking about about, your referencing private mortgage insurance, which is different. But first I got to say I love the desire to get rid of debt. I mean, I think that is a good thing, and there is in terms of even when we're thinking about optimization, we also have to think about the negative realities that having too much debt on our plates comes along with right And so I guess the first question I would ask this listener is whether they have other forms of debt, because if so, chances are high that it's worth paying off those first, that the mortgage debt is just like the very least of your problems. Right, You're gonna free up more cash flow. You're gonna be eradicating these worst forms of debt that come with higher interest rates if you were to kind of start paying those off first instead of trying to like fully optimize your mortgage. Sometimes, Matt, you hear like a social media video about optimizing your mortgage payoff and you're like, oh, that's what I want to do, and you're just not thinking because you're like it got that tunnel vision. You're just not thinking about how imprudent it would be compared to some of the other, maybe Pescio kinds of debts you have hanging on, and getting rid of those sooner would be just so much more valuable. And so I think those mortgage tacts can be enticing. Just don't want to get the cart before the horse. Paying off the less nefarious mortgage then let's say credit card debt, personal loans, yeah, car loan, whatever else you might have going on, that's right. Yeah, So that's the debt side of the equation. On the other side of the equation is what else you could do with that money? And I'm talking about investing, right, like, I don't know if you are investing your dollars, but on the positive side of the ledger, if you don't already well even before that, if you don't have a really good emergency fund, well you need to do that. But then in addition to that, if you're not getting the full match from your employer on a four to one K, if you aren't maxing out your roth IRA, there's a lot of other options out there and that would be a better place for you to put your money. So I would agree with you there. You know, it's great to pay off a mortgage early. Going back to what Joel was saying, I love the desire, I love the general attitude there, but only if you've taken care of those other money gears first. And by the way, even if you do find yourself in money year seven, it's unlikely that paying more towards your mortgage principle is going to be the absolute best way to proceed, although there is going to be a lot more optionality to make, you know, a less optimized choice at that point in your money journey. At that point, what I'm saying is more about the emotional payoff as opposed to the financial payoff. So I'm not gonna totally knock on it, but for most people, there are other things, better things you can do with your money, including paying off higher interest debt, but then making sure you're investing to the to the hilt. So maybe find the social media content. It's like credit card hack for pay something like it. Turn your rize in that direction. Again, we don't know exactly where this listener stands as far as like debt and investing, but just hopefully that provides just a step back from that's what you need to do here. Yeah, exactly, it's a zoom out that needs to take place. All right, Let's get back to the beer. Matt sixty minute IPA by Doctor's Head A true classic. This one's probably been they've probably been ruining this for what, I don't know, twenty five plus years. You think you think that along five maybe twenty, But goodness, that's true. I guess I think I had my first IPA in two thousand and six, now that I say it out loud, twenty years ago. They weren't too far after Sierra Nevada and Sierra Nevada want to say it's been around for thirty So yeah, I remember my buddy just being like, IPA's it's an acquired taste because at the time I'd just being like, whoa, this is better well, and they were just so different back then, as evidence by drinking this today. Yeah, this is a classic. It's got much more of a malt presence, but very nicely balanced. Even though it's malty, it's not I don't know, is there some multi IPAs you get and they still taste bitter, whereas this one that's got it's just well balanced. It's it's got the sweetness going on as well, nice backbone. Yeah, very enjoyable. Yeah, I was gonna say multier, and I was also going to say the hops instead of being super citrusy or piny, they're more floral on this one too, which, Yeah, it's just kind of like a classic, you know, two thousand's ipa and it's a nice mid ots. It's like a blast from the early hots beer. Yeah, really enjoyed it, and I hope you enjoyed this episode. If so, leave us a solid review only I'm not gonna say it. Leave a positive review over there wherever it is you listen to your podcasts Apple podcast, wherever it is that you might listen. If you want to send you a secret message, that's the place to do it. He alway checks him right before it goes to bed, and so if you want to communicate, you can leave that message of the night time routine over there. But that's gonna be it for this episode with warm milk. Yeah, tart check. More people are doing that now, are they? Yeah. Evidently it's a It doesn't like put you to sleep, it's not like a sedative, but it does sort of partner with the body naturally shutting down. Evidently Kate just bought them recently and we're starting to do it. It's a nice sort of ritual, not unlike your warm milk at night and podcast reviews. Yeah, exactly, all right, that is gonna do it until next time. Best Friends Out, Best Friends Out. The specific creates time it has tripped philin