WEBVTT - Retirement Account Rule Changes and Stimulus Check Details #186 0:00:00.080 --> 0:00:02.600 Welcome to How the Money. I'm Joel and I and Matt. 0:00:02.759 --> 0:00:06.800 Today we're discussing retirement account rule changes in stimulus check details. 0:00:26.160 --> 0:00:28.400 Chedel it's write some things have changed when it comes 0:00:28.440 --> 0:00:31.040 to taking money out of our four owing case when 0:00:31.040 --> 0:00:34.159 it comes to tapping those retirement accounts. We'll get to 0:00:34.280 --> 0:00:37.360 that's We're gonna answer some coronavirus related questions, and we're 0:00:37.360 --> 0:00:40.040 gonna get to some of the details regarding the stimulus checks, 0:00:40.080 --> 0:00:43.040 which should be coming out really soon, man, like next week. 0:00:43.080 --> 0:00:45.440 I think that's the hope, right that, Yeah, that is 0:00:45.440 --> 0:00:46.960 the hope because so many of the things in this 0:00:47.040 --> 0:00:49.520 Care's Act have been delayed to people when it comes 0:00:49.560 --> 0:00:52.400 to unemployment benefits, when it comes to the p p 0:00:52.520 --> 0:00:55.080 P and small businesses being able to get funding to 0:00:55.120 --> 0:00:58.840 sustain to sustain themselves and to sustain that payroll. Right now, 0:00:59.080 --> 0:01:01.840 those things have in time and um and yes, so 0:01:01.840 --> 0:01:04.800 I'm hoping the stimulus checks are delivered as promised, whereas 0:01:04.959 --> 0:01:07.800 some of those other things just haven't been I was right, man. 0:01:07.840 --> 0:01:10.319 So it's week four the quarantine. How are you guys doing, 0:01:10.319 --> 0:01:11.720 By the way, I wanted to check in, We're doing 0:01:11.760 --> 0:01:14.320 pretty good. Yeah, I think our families holding up reasonably 0:01:14.319 --> 0:01:16.440 well overall. How about you guys. Yeah, same here, man, 0:01:16.440 --> 0:01:18.560 We're doing pretty good. Obviously, we're spending way more time 0:01:18.600 --> 0:01:20.600 at home, way more time kind of out in our 0:01:20.600 --> 0:01:23.360 front yard, working in the garden, that kind of stuff, 0:01:23.400 --> 0:01:25.920 waving at people from a distance. Yeah. Well, on that note, man, 0:01:25.959 --> 0:01:28.240 I installed a ceiling fan actually on our front porch 0:01:28.400 --> 0:01:30.520 because Kate and I kind of looked ahead and into 0:01:30.520 --> 0:01:32.400 the next few months and we realized we're going to 0:01:32.520 --> 0:01:35.000 spend a lot of time on this front porch, probably 0:01:35.360 --> 0:01:37.679 many as will make it super comfortable. Keep the bugs 0:01:37.680 --> 0:01:39.600 away with that exactly. Yes, So we got one of 0:01:39.600 --> 0:01:41.200 those ones with like all the fan blades. They can 0:01:41.280 --> 0:01:43.880 kind of really whip up some mare. But actually, while 0:01:43.920 --> 0:01:45.479 I was out there the other day putting that up, 0:01:45.680 --> 0:01:47.200 some friends of us walked by, and so we were 0:01:47.240 --> 0:01:48.800 kind of out there having one of those six ft 0:01:48.960 --> 0:01:52.280 front yard conversations, and I was looking at our friend David, 0:01:52.400 --> 0:01:55.520 and I didn't realize that he had gray hair. Since 0:01:55.560 --> 0:01:58.000 he hasn't been getting his haircut regularly, it was getting 0:01:58.000 --> 0:01:59.880 a little bit bushy around the ears, and so you 0:02:00.000 --> 0:02:02.720 started to rag him about it. Of course, with that 0:02:02.800 --> 0:02:05.840 gray hair comes lots of wisdom. I'm all about gray hair. 0:02:05.840 --> 0:02:08.359 By the way, I would much rather have any hair 0:02:08.360 --> 0:02:10.720 at all and how to be gray or white than 0:02:10.960 --> 0:02:13.200 have no hair. You know, what about you? Yeah, you know, 0:02:13.240 --> 0:02:15.960 I think I prefer grays well like Evans, some hair, 0:02:16.160 --> 0:02:17.760 even if it is gray. But you know, with a 0:02:17.800 --> 0:02:20.200 lot of us working from home, I think now is 0:02:20.200 --> 0:02:22.560 is like the perfect time to figure out how to 0:02:22.639 --> 0:02:24.120 maybe cut your own hair. This is something you and 0:02:24.160 --> 0:02:26.000 I've talked about before. A lot of people have that 0:02:26.080 --> 0:02:28.000 question now and they're starting to get a little shaggy 0:02:28.000 --> 0:02:30.480 and there because I gotta, I gotta, I gotta be 0:02:30.520 --> 0:02:31.799 honest with you. In a couple of weeks, I'm gonna 0:02:31.840 --> 0:02:33.480 get too close to a wearing a ball cap every day. 0:02:33.480 --> 0:02:34.880 But I don't get my hair cut. That's kind of 0:02:34.880 --> 0:02:36.720 why I've been wearing I had recently since weddings have 0:02:36.840 --> 0:02:38.480 slowed down. I don't really have a need to cut 0:02:38.520 --> 0:02:40.400 my hair, except that, you know, I don't know when 0:02:40.400 --> 0:02:41.680 I hang out with other people, a kind of feeling 0:02:41.639 --> 0:02:44.079 the need to tame it down a little bit. But 0:02:44.080 --> 0:02:46.120 but seriously, with a lot of folks not going to 0:02:46.120 --> 0:02:49.160 get their hair cut, I think folks should look to Amazon, 0:02:49.200 --> 0:02:51.760 maybe getting up here of hair clippers investing a little 0:02:51.760 --> 0:02:54.360 bit of money into something like that. There are lots 0:02:54.400 --> 0:02:57.240 of different tutorials as well online like YouTube is definitely 0:02:57.280 --> 0:02:59.959 gonna be your friend if you've never cut your hair before. 0:03:00.000 --> 0:03:02.079 Are But I think that, like I was saying, though, 0:03:02.080 --> 0:03:04.200 this is a perfect time to experiment a little bit. 0:03:04.360 --> 0:03:06.120 And you know what, if you bought it a little bit, 0:03:06.160 --> 0:03:08.040 no big deal, Like it'll grow out in two three 0:03:08.040 --> 0:03:09.960 weeks and nobody's gonna see you. You can try again, 0:03:11.360 --> 0:03:12.800 or even this might even be a great time to 0:03:12.800 --> 0:03:14.440 try out buzzing your hair. I don't know if you've 0:03:14.440 --> 0:03:15.960 ever Did you ever buzz your hair? Like while you're 0:03:15.960 --> 0:03:18.359 in high school? No? Middle school? It was bad. Why 0:03:18.360 --> 0:03:20.120 did every guy in middle school decided to buzz their hair? 0:03:20.160 --> 0:03:21.440 I did that in middle school as well. Can I 0:03:21.440 --> 0:03:24.440 admit this too? I wore a headgear in middle school? Uh, 0:03:25.280 --> 0:03:27.600 really cool. I was really really cool, obviously, And then 0:03:27.600 --> 0:03:29.480 we're making indentions in my head and so you could 0:03:29.560 --> 0:03:31.440 see the lines where the headgear had been at night, 0:03:31.600 --> 0:03:33.160 where it sit there all night long. I should not 0:03:33.200 --> 0:03:37.200 have just admitted that, but I did. Oh you're such 0:03:37.240 --> 0:03:39.280 a nerd. Oh man, I would have left to know 0:03:39.360 --> 0:03:41.920 middle school Joel that middle school Joel in middle school, 0:03:41.920 --> 0:03:44.040 mat would have totally gotten along, or we would have 0:03:44.120 --> 0:03:46.040 been just so embarrassed of each other that would have 0:03:46.080 --> 0:03:48.200 just like gone to our separate rooms like at our 0:03:48.200 --> 0:03:51.560 parents house exactly. Anyway, I wanted to mention that because 0:03:51.560 --> 0:03:53.400 I think a lot of people don't consider cutting their 0:03:53.400 --> 0:03:55.400 own hair, and I think that's something that you and 0:03:55.480 --> 0:03:57.680 I were definitely not afraid to do that ourselves, but 0:03:57.840 --> 0:03:59.440 a lot of people are. Yeah, I'm definitely not afraid 0:03:59.440 --> 0:04:00.880 to look in like an We take a lot of 0:04:00.880 --> 0:04:03.400 stuff seriously, but you know, luckily we don't take ourselves 0:04:03.680 --> 0:04:05.960 all that seriously. Also, I'll put a little YouTube video 0:04:06.000 --> 0:04:07.960 that I came across that I think might help some 0:04:08.000 --> 0:04:09.800 folks out there who have never done this before. It 0:04:09.880 --> 0:04:11.760 might give you a little bit of confidence. Nice, all right, 0:04:11.800 --> 0:04:13.920 that sounds perfect. All right, Matt, let's get onto the 0:04:13.960 --> 0:04:16.320 subjective hand. We're talking about the retirement account rule changes 0:04:16.400 --> 0:04:18.440 in stimulus check details. But first let's talk about some 0:04:18.480 --> 0:04:20.599 of the good news. It's happening this time, the good news, 0:04:20.680 --> 0:04:22.720 the good news. We're trying to hit that first thing 0:04:22.880 --> 0:04:25.000 on these Friday episodes and kind of tout some of 0:04:25.040 --> 0:04:28.000 the good things that are happening in our communities around 0:04:28.040 --> 0:04:30.560 our nation during a time where there's just a lot 0:04:30.600 --> 0:04:32.960 of difficulty going on. So, yeah, the first thing we 0:04:33.000 --> 0:04:35.120 want to mention is that BP is offering fifty cents 0:04:35.160 --> 0:04:38.239 a gallon discounts to first responders, nurses, doctors, and hospital 0:04:38.279 --> 0:04:41.040 workers on their next trip to the gas station. So 0:04:41.200 --> 0:04:43.200 if that's you, you'll have until the end of April 0:04:43.240 --> 0:04:45.560 to get your discount code. For more info, go to 0:04:45.720 --> 0:04:48.279 BP dot com slash Local Heroes. You're gonna have to 0:04:48.440 --> 0:04:51.320 identify yourself through that through a website the VP has 0:04:51.360 --> 0:04:53.360 set up. But then you can get fifty cents off 0:04:53.360 --> 0:04:55.440 a gallon of gas. That's pretty sweet, yea, And with 0:04:55.480 --> 0:04:57.880 gas prices as low as they already are, this might 0:04:57.880 --> 0:05:02.560 be able to take you back to those middle school days. Seriously, 0:05:02.600 --> 0:05:04.560 I think in some states it might get you under 0:05:04.600 --> 0:05:07.320 a dollar per gallon, depending on where you live, So 0:05:07.760 --> 0:05:10.080 there's not applying in California, yeah, seriously, but that's definitely 0:05:10.120 --> 0:05:13.279 something worth checking out. And all the note of car expenses. 0:05:13.400 --> 0:05:15.680 On this past Wednesday's episode, we talked about going to 0:05:15.839 --> 0:05:18.160 your insurer seeing if you can get a discount when 0:05:18.160 --> 0:05:21.600 it comes to your auto insurance. Well, some auto insurers 0:05:21.600 --> 0:05:25.760 are offering rebates proactively. American Family Insurance, they are returning 0:05:25.800 --> 0:05:29.280 about fifty dollars per insured vehicle as they estimate that 0:05:29.320 --> 0:05:33.520 policy holders drove about fewer miles during the last three 0:05:33.560 --> 0:05:36.400 weeks in March, and all state they say that they'll 0:05:36.400 --> 0:05:39.120 be sending out around six hundred million dollars in shelter 0:05:39.240 --> 0:05:43.840 in place payback checks and so claims are oftentimes correlated 0:05:43.839 --> 0:05:46.520 directly with the number of miles driven. So obviously when 0:05:46.600 --> 0:05:49.040 less people are driving, there are going to be fewer 0:05:49.080 --> 0:05:51.279 fender benders, which you know, obviously saves us money in 0:05:51.279 --> 0:05:53.760 the short term. It saves the insurer money because they're 0:05:53.760 --> 0:05:55.920 not having to meet those claims. But in this case, 0:05:55.920 --> 0:05:58.279 it's also saving us even more money because we're you know, 0:05:58.279 --> 0:06:00.719 we're getting some of that money back ourselves, you know, 0:06:00.720 --> 0:06:02.680 we're kind of sharing in the profit. So I think 0:06:02.720 --> 0:06:04.560 that's really cool that some of these bigger insurers are 0:06:04.600 --> 0:06:07.360 doing that. Yeah, I sent an email earlier this week 0:06:07.400 --> 0:06:09.400 to my insurance company to see if they were doing 0:06:09.400 --> 0:06:11.200 the same, and at first the reply for my agent 0:06:11.279 --> 0:06:13.719 was kind of like, uh, no, not yet at least, 0:06:13.920 --> 0:06:17.120 but thanks for checking. And then the very next day, 0:06:17.640 --> 0:06:20.800 my agent sent me a link to the presser from 0:06:20.839 --> 0:06:23.560 from Liberty Mutual that's who I'm with, and she said, 0:06:23.600 --> 0:06:27.000 you know what, we're rebating people, you know fifteen I 0:06:27.040 --> 0:06:29.719 think of their March and April bills. So that's good 0:06:29.720 --> 0:06:32.120 to see. I love seeing that more insurers are following suit. 0:06:32.320 --> 0:06:34.560 On another good note, Matt, we've been talking about all 0:06:34.600 --> 0:06:36.760 the good news, all the good news we know, of 0:06:36.800 --> 0:06:38.560 course due to the Cares Act, and we've talked about 0:06:38.560 --> 0:06:40.480 this that if you have federal student loans, well you 0:06:40.480 --> 0:06:42.159 don't have to pay your monthly pay it for six months. 0:06:42.400 --> 0:06:44.040 But we didn't have great news to share for people 0:06:44.040 --> 0:06:46.360 who have a private student loan, and so we wanted 0:06:46.360 --> 0:06:48.279 to let you know that that seems to be changing. 0:06:48.279 --> 0:06:50.679 A lot of the private student lenders are also offering 0:06:50.880 --> 0:06:54.520 at least a ninety day UH forbearance time limit for you. 0:06:54.720 --> 0:06:56.640 So if you do have a private student loan and 0:06:56.800 --> 0:06:59.160 you do find yourself unable to pay right now, well 0:06:59.240 --> 0:07:01.479 there's a good chance to your private student lender is 0:07:01.520 --> 0:07:03.560 willing to work something out. You're not going to get 0:07:03.600 --> 0:07:06.400 the interest holiday that federal student loans have in all likelihood, 0:07:06.440 --> 0:07:07.640 but at least you want to pay your bill for 0:07:07.720 --> 0:07:10.080 ninety days and you won't go into delinquency. So yeah, 0:07:10.080 --> 0:07:12.200 we would encourage you to go to your private lenders 0:07:12.200 --> 0:07:14.880 and website and see what briefing they have available. If 0:07:14.880 --> 0:07:17.000 they don't have anything listed up there, they give him 0:07:17.000 --> 0:07:18.960 a call and see what they can offer you. Nice man. 0:07:19.080 --> 0:07:20.760 You know. One of the other changes we've seen since 0:07:20.800 --> 0:07:23.880 our last Friday episode is that the CDC has announced 0:07:24.200 --> 0:07:26.640 that they recommend that we all wear face coverings when 0:07:26.640 --> 0:07:28.280 we go out in public, especially when we go to 0:07:28.320 --> 0:07:31.160 places like grocery stores, pharmacies, things like that. And so 0:07:31.200 --> 0:07:34.400 we're starting to see local small businesses making like good 0:07:34.400 --> 0:07:37.600 looking face masks, and not surprisingly we've seen Etsy. They've 0:07:37.600 --> 0:07:40.480 become a hub for small businesses to sell the different masks. 0:07:40.920 --> 0:07:43.160 I have a feeling that these, you know, these masks 0:07:43.160 --> 0:07:45.760 will look more and more like accessories for us, not 0:07:45.840 --> 0:07:49.640 necessarily a health precaution, as they even become more and 0:07:49.680 --> 0:07:51.160 more a part of our life, you know, in our 0:07:51.240 --> 0:07:52.840 day to day. So, oh, you've got that dope new 0:07:52.880 --> 0:07:55.040 Tommy Hill Figer mask. I don't know if Tommy Hill 0:07:55.040 --> 0:07:57.280 fagre stoke cool or not. Probably not. Again, you're you're 0:07:57.320 --> 0:07:59.880 really throwing it back to the middle school days. So 0:08:00.080 --> 0:08:03.400 we would recommend that you follow the CDC's guidelines, take 0:08:03.440 --> 0:08:05.880 those health precautions, wear a mask, and at the same time, 0:08:06.280 --> 0:08:08.760 you can support a local business. So there's a local 0:08:08.760 --> 0:08:11.480 bike shot that we have here in town, Spindle and 0:08:11.520 --> 0:08:13.960 they normally, you know, they sell bike parts and accessories 0:08:14.000 --> 0:08:16.360 and stuff, but they also make their own bike bags 0:08:16.400 --> 0:08:18.400 that kind of attached to the frame of your bike. 0:08:18.800 --> 0:08:21.880 Maybe if you're listening, you've seen these before, but they 0:08:21.960 --> 0:08:26.560 have transitioned to making these masks themselves, uh and selling 0:08:26.600 --> 0:08:28.840 those along with what they normally sell. Some other friends 0:08:28.880 --> 0:08:31.440 of ours as well, Three Toes Thread Works, they're actually 0:08:31.480 --> 0:08:33.520 up in Grand Rappings. They're friends of the show and 0:08:33.559 --> 0:08:35.600 they're doing something similar. I think it's cool that we're 0:08:35.600 --> 0:08:38.400 starting to see these smaller businesses switch things up a 0:08:38.400 --> 0:08:40.680 little bit and catered to some of the health needs 0:08:40.760 --> 0:08:44.120 that have come up. Yeah, totally, Pivoting is huge for 0:08:44.160 --> 0:08:47.520 small businesses right now because of slowdown in business has 0:08:47.760 --> 0:08:50.920 kind of hit almost everybody across the board. Almost every 0:08:50.960 --> 0:08:52.880 business has seen at least a slow down, and so 0:08:52.920 --> 0:08:55.440 pivoting is crucial in a time like this. Man, I 0:08:55.440 --> 0:08:58.160 saw this article just the other day in CNBC. They 0:08:58.240 --> 0:09:01.160 talked about a swag company and obviously swag in this 0:09:01.240 --> 0:09:04.320 economy just way less of a need and there's no 0:09:04.400 --> 0:09:06.719 conferences going on. There's no pins to give out a 0:09:06.880 --> 0:09:10.520 conference slag. Okay, like like the pins and stuff, Yeah exactly. Yeah, Like, 0:09:10.840 --> 0:09:14.560 how do you sell swag? If you make out the swagger, 0:09:14.600 --> 0:09:16.400 you can't buy it. You sell swag in a bottle, 0:09:16.480 --> 0:09:17.680 like you just like you take that and apply it 0:09:17.679 --> 0:09:19.240 to your neck and on your wrists and something like that. 0:09:19.240 --> 0:09:21.240 It's like a potion you take something like that. Yeah, 0:09:21.320 --> 0:09:24.520 but no, but this company has completely changed gears and 0:09:24.640 --> 0:09:28.040 they started using their existing contacts and resources, and they 0:09:28.120 --> 0:09:31.160 launched a website selling medical necessities. And they could have 0:09:31.200 --> 0:09:33.200 kind of stayed put and said, woe is me, and 0:09:33.360 --> 0:09:35.120 you know what, our swag business is going to go 0:09:35.200 --> 0:09:37.360 under or we're at least going to have just a 0:09:37.400 --> 0:09:39.760 really hard time at a minimum for the next three 0:09:39.760 --> 0:09:42.760 to six months. But no, they said, we're gonna proactively 0:09:42.800 --> 0:09:44.559 make a decision to do something different. And I know 0:09:44.840 --> 0:09:47.440 not every business can do that, but there's a lesson 0:09:47.440 --> 0:09:49.080 to be learned. In that and the more we can 0:09:49.120 --> 0:09:51.679 pivot in this time as individuals and as businesses, it's 0:09:51.679 --> 0:09:53.200 gonna help us out. And it was really cool to 0:09:53.200 --> 0:09:57.960 see that conference swag company doing something proactively to actually 0:09:58.160 --> 0:10:01.040 kind of pivot and create a new business for themselves. Yeah, 0:10:01.120 --> 0:10:04.280 resilient businesses look for opportunities. Right, Let's go ahead now 0:10:04.320 --> 0:10:06.400 and kind of dive into retirement accounts that we mentioned 0:10:06.400 --> 0:10:09.079 this at the top of the episode, but the details 0:10:09.080 --> 0:10:11.600 and some of the rules surrounding retirement accounts has changed 0:10:11.679 --> 0:10:13.840 due to the CARES Act. We mentioned this briefly a 0:10:13.840 --> 0:10:15.640 couple of weeks ago in response to a listener question 0:10:16.200 --> 0:10:18.480 who was interested in tapping a four own K to 0:10:18.640 --> 0:10:21.560 use that money for other investments. But the CARES Act 0:10:21.600 --> 0:10:24.840 has a provision that allows people to tap their traditional 0:10:24.840 --> 0:10:27.600 I ras or their four O one case early and 0:10:27.640 --> 0:10:29.679 you can make a withdrawal of up to one hundred 0:10:29.720 --> 0:10:33.240 thousand dollars and avoid the normal ten percent penalty. However, 0:10:33.520 --> 0:10:35.360 you'll still pay tax on the amount that you've taken 0:10:35.400 --> 0:10:37.240 out though, but of course that's going to be at 0:10:37.240 --> 0:10:40.760 your ordinary income tax rate. However, you can choose to 0:10:40.800 --> 0:10:43.280 pay that tax over the next three years instead of 0:10:43.280 --> 0:10:45.880 being forced to pay that all in one single year 0:10:46.200 --> 0:10:48.960 as you typically would. Yeah, so that's an interesting provision 0:10:48.960 --> 0:10:50.600 mat As people have heard more and more about it, 0:10:50.640 --> 0:10:52.960 there's more and more questions. But I think the ultimate 0:10:53.000 --> 0:10:55.760 question is should you do it, And we would say 0:10:55.760 --> 0:10:59.600 the answer is in almost every situation no, mostly due 0:10:59.600 --> 0:11:01.960 to the fact that you'll be locking in your losses. 0:11:02.040 --> 0:11:05.280 Right the market is down currently about from its peak 0:11:05.360 --> 0:11:08.400 right now. Depending on your asset allocation, whether you're heavily 0:11:08.400 --> 0:11:11.360 invested in stocks or whether you have a more balanced portfolio, 0:11:11.400 --> 0:11:14.160 you'll be taking that money out while the economy is 0:11:14.240 --> 0:11:17.640 in recession territory, and those shares that you sell well, 0:11:17.679 --> 0:11:20.600 they will never be able to experience that inevitable recovery 0:11:20.880 --> 0:11:23.240 inside of that retirement account. So we would say the 0:11:23.280 --> 0:11:25.400 only reason to take that early withdrawal is if you 0:11:25.440 --> 0:11:27.360 need that money to put food on the table or 0:11:27.400 --> 0:11:29.880 to keep the lights on, or if you need even 0:11:29.920 --> 0:11:32.840 more than the current loan amounts that you have available 0:11:32.880 --> 0:11:35.800 to you through the paycheck protection plan to be able 0:11:35.800 --> 0:11:38.520 to keep your small business afloat. If it means folding 0:11:38.520 --> 0:11:41.200 altogether or tapping your retirement account, I mean, I think 0:11:41.360 --> 0:11:43.640 then it might make sense to tap your retirement account 0:11:43.640 --> 0:11:45.960 to to keep your business going. But for the most part, 0:11:46.120 --> 0:11:48.240 this is not something to be done flippantly, to start 0:11:48.280 --> 0:11:51.600 tapping your retirement accounts, pulling money out while the market's 0:11:51.679 --> 0:11:54.360 down just because you can and you're not gonna have 0:11:54.360 --> 0:11:56.480 to pay the penalty. Yeah, it's so important for us 0:11:56.480 --> 0:11:59.360 to not lock in those losses. And on a related note, 0:11:59.400 --> 0:12:03.600 let's talk about required minimum distributions. Individuals of retirement age 0:12:03.720 --> 0:12:07.840 are not required this year to take the minimum required distribution. 0:12:08.000 --> 0:12:11.720 By not requiring these distributions, retirees are not forced to 0:12:11.760 --> 0:12:15.240 sell investments that have declined significantly. Again, if they did, 0:12:15.240 --> 0:12:18.319 they'd be locking in those losses. So I think you know, 0:12:18.400 --> 0:12:20.640 luckily most of our listeners are under the age of 0:12:20.640 --> 0:12:23.679 seventy two and are hopefully in a position to continue 0:12:23.840 --> 0:12:26.400 investing while the market is on sale. But if you 0:12:26.440 --> 0:12:28.720 do happen to be an older listener, or maybe you're 0:12:28.720 --> 0:12:31.760 talking to a parent who doesn't need that retirement money 0:12:32.160 --> 0:12:35.479 this year, tell them to forego the required minimum distributions 0:12:35.559 --> 0:12:38.320 this year so that they don't take those losses. Especially 0:12:38.400 --> 0:12:42.200 for new retirees. Matt, a big down swing in the 0:12:42.240 --> 0:12:45.480 amount of money you have overall invested. Starting to pull 0:12:45.520 --> 0:12:48.240 that money out has long term effects over your withdraw 0:12:48.280 --> 0:12:51.080 strategy in retirement. And so yeah, if you can leave 0:12:51.120 --> 0:12:53.360 that money in not have to pull it out, that's 0:12:53.360 --> 0:12:55.080 the best case scenario for you. So yeah, I would 0:12:55.080 --> 0:12:57.160 say to anybody who can afford to not take their 0:12:57.240 --> 0:12:59.720 rm D, you're not forced to, so leave it in. 0:13:00.000 --> 0:13:01.360 And Matt on one of the note before we get 0:13:01.400 --> 0:13:04.440 to some listener questions, We've been sent a few emails 0:13:04.440 --> 0:13:07.640 and I've seen some people having questions about F S 0:13:07.679 --> 0:13:10.520 A S and h S A S and they're wondering 0:13:10.559 --> 0:13:13.320 whether the Cares Act addresses this because things have changed, 0:13:13.640 --> 0:13:16.200 and they're wondering if there have been any provisions in 0:13:16.320 --> 0:13:18.439 the Cares Act for F S A and h s 0:13:18.520 --> 0:13:20.400 AS in particular. And what we can tell you is 0:13:20.440 --> 0:13:24.080 that not much has changed legally yet on these accounts. 0:13:24.120 --> 0:13:26.440 There was a provision in the Cares Act that made 0:13:26.480 --> 0:13:29.800 feminine hygiene products and h S A eligible expense. So 0:13:30.000 --> 0:13:32.600 that's an upside for our female listeners. But what about 0:13:32.840 --> 0:13:34.920 f says, These are of course the accounts that you 0:13:34.920 --> 0:13:37.600 can put money aside and shelter from taxes, but it's 0:13:37.679 --> 0:13:39.679 a use it or lose it situation, you have to 0:13:39.760 --> 0:13:42.080 use it this year or at the very latest by 0:13:42.160 --> 0:13:45.520 early next year. And there is talk of another stimulus bill, 0:13:45.720 --> 0:13:48.200 and we're hoping that Congress at a minimum extends a 0:13:48.280 --> 0:13:50.520 deadline for us to use these funds to still get 0:13:50.520 --> 0:13:52.840 that tax benefit. Because let's say, Matt, somebody has a 0:13:52.880 --> 0:13:55.400 dependent care f s A for daycare for the kids, 0:13:55.480 --> 0:13:58.880 but that daycare is shut down. Well, they're not spending 0:13:58.920 --> 0:14:01.120 the money that they had allocated in their f s A, 0:14:01.520 --> 0:14:03.120 and in all likelihood it looks like they're gonna be 0:14:03.120 --> 0:14:05.320 taxed on that due to no fault of their own. 0:14:05.520 --> 0:14:07.480 So there's not much that we can share at this point, 0:14:07.480 --> 0:14:09.920 but do know that we'll keep our ears open, we'll 0:14:10.000 --> 0:14:12.960 keep looking and hopefully some sort of changes made to 0:14:12.960 --> 0:14:15.360 help people with an v s A that can't use 0:14:15.400 --> 0:14:17.480 it all this year. Now, that's right, man, So we're 0:14:17.480 --> 0:14:21.000 gonna take a few coronavirus related listener questions as well 0:14:21.040 --> 0:14:23.720 as cover some of those stimulus check details. We're gonna 0:14:23.720 --> 0:14:34.640 get to that right after the break. All right, we're 0:14:34.640 --> 0:14:35.960 back from the break. We just covered some of the 0:14:35.960 --> 0:14:39.120 retirement account rule changes that are in effect now because 0:14:39.320 --> 0:14:41.680 of the cares act, and it's time to get into 0:14:41.720 --> 0:14:43.800 some listener questions and then we'll talk about stimulus checks 0:14:43.800 --> 0:14:45.960 in a second. To David and the Facebook group had 0:14:46.000 --> 0:14:47.880 a question Matt that I thought we should cover because 0:14:48.080 --> 0:14:51.600 it's probably one that other people have thought. He said, 0:14:51.720 --> 0:14:54.240 in this recent economic downturn, would it be wise to 0:14:54.280 --> 0:14:57.200 take out a personal loan and invest that money? Because 0:14:57.200 --> 0:14:59.520 I think I might be able to make more? And Matt, 0:14:59.600 --> 0:15:02.440 you and I not risk averse, but this is pretty risky. 0:15:02.480 --> 0:15:05.040 Like we think a certain amount of risk is healthy 0:15:05.120 --> 0:15:08.240 and necessary to be a good investor, but taking on 0:15:08.320 --> 0:15:11.320 debt to invest, it's not typically a great move, right man. Yeah, man, 0:15:11.360 --> 0:15:14.280 When you look at the historic returns of the stock market, 0:15:14.440 --> 0:15:16.360 like from a number standpoint, it seems like it would 0:15:16.400 --> 0:15:18.600 make sense in our brain that taking on a lower 0:15:18.640 --> 0:15:20.960 interest rate debt in order to invest and now a 0:15:21.040 --> 0:15:23.600 higher return like that seems smart. That seems really intelligent. 0:15:23.920 --> 0:15:28.720 But borrowing costs are certain and investment results are not certain. 0:15:28.840 --> 0:15:30.280 And the other thing is that personal loans are going 0:15:30.360 --> 0:15:32.360 to have higher rates, and so we're not fans of 0:15:32.400 --> 0:15:34.840 those at all. The best rate possible that we're seeing 0:15:34.920 --> 0:15:36.520 right now is like five to six percent and that's 0:15:36.520 --> 0:15:39.760 on a site like so FI or credible, and you know, 0:15:40.040 --> 0:15:42.440 there's no guarantee that you're gonna get anything close to that. 0:15:42.760 --> 0:15:44.760 In the stock market. You might, you might get a 0:15:44.760 --> 0:15:46.560 lot higher than that. But the fact is is we 0:15:46.600 --> 0:15:48.160 just don't know. We don't know that the state of 0:15:48.160 --> 0:15:49.920 our economy, we don't know where things are gonna be 0:15:50.160 --> 0:15:52.040 later this year, all right, man. So that brings up 0:15:52.040 --> 0:15:55.200 the question should you ever borrow money to invest? Are 0:15:55.200 --> 0:15:58.120 you thinking about housing? Well, yeah, real estate. If you're 0:15:58.280 --> 0:15:59.880 if you're gonna invest in real estate, that's something you 0:15:59.920 --> 0:16:02.720 and I've done. We have become leveraged real estate buyers. 0:16:02.760 --> 0:16:06.520 We put money down, typically on an investment property. That's 0:16:06.520 --> 0:16:09.800 how you get the best terms. But we have done that, right, 0:16:09.840 --> 0:16:12.520 We have taken on debt in order to invest. So 0:16:12.760 --> 0:16:15.480 we would say that, yeah, there are some times where 0:16:15.520 --> 0:16:18.440 it makes sense to take on debt for investment purposes. 0:16:18.760 --> 0:16:20.640 But I think there are a couple of things that 0:16:20.680 --> 0:16:22.640 you need to note before you do take on debt 0:16:22.840 --> 0:16:26.080 for investment purposes. And one is the reason it is 0:16:26.080 --> 0:16:28.000 different for real estate than for just investing in the 0:16:28.000 --> 0:16:30.640 stock market is because your cash flow increases every month. 0:16:30.680 --> 0:16:33.360 When you're a landlord, right, You're getting an actual return 0:16:33.360 --> 0:16:36.280 on your investment every single month while you're paying down 0:16:36.280 --> 0:16:39.600 your mortgage. And also housing is just a more stable investment. 0:16:39.600 --> 0:16:42.040 It just doesn't fluctuate nearly as much as the stock 0:16:42.080 --> 0:16:45.600 market does. With the stock market, borrowed money could increase 0:16:45.640 --> 0:16:47.360 your net worth over time, right, but it's this far 0:16:47.480 --> 0:16:50.800 riskier endeavor because you don't have any sort of assurance 0:16:51.160 --> 0:16:53.760 of cash flow to pay on the debt like right now. 0:16:54.120 --> 0:16:56.760 And so, yeah, borrowing to invest when it comes to 0:16:56.960 --> 0:16:59.480 putting more of your money in the stock market in 0:16:59.520 --> 0:17:01.680 hopes that it will go up in the next three 0:17:01.800 --> 0:17:05.879 five years, that's an incredibly, incredibly risky move. While buying 0:17:06.000 --> 0:17:09.280 investment properties and doing it well with proper leverage and 0:17:09.359 --> 0:17:12.960 proper underlying you know, personal finance habits in your own life, 0:17:13.240 --> 0:17:15.880 you're investing with borrowed money, but you're doing it wisely 0:17:15.920 --> 0:17:18.280 and judiciously. Yeah. So, in another way to kind of 0:17:18.280 --> 0:17:21.000 look at this problem is if you already own a property, 0:17:21.119 --> 0:17:23.240 right like, so, say you have extra cash on hand, 0:17:23.560 --> 0:17:25.639 and so the question then comes up, you know, should 0:17:25.640 --> 0:17:27.679 I pay off that mortgage or should I take that 0:17:27.720 --> 0:17:31.000 money and invest it more into the markets, and when 0:17:31.000 --> 0:17:33.040 it comes to the numbers, we are going to tend 0:17:33.040 --> 0:17:36.040 to side with investing more. And so someone listening might 0:17:36.040 --> 0:17:38.960 ask the question like, like, what is the difference here, Well, 0:17:39.000 --> 0:17:42.400