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Speaker 1: Welcome to Out of Money. I'm Joel hand I am mas,

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Speaker 1: and today we're going to answer some of your listener questions.

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Speaker 2: You know about it. It's Monday, which means we've got

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Speaker 2: listener money questions to get to. A listener is wanting

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Speaker 2: to know what he should be doing about higher property taxes,

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Speaker 2: about higher insurance premiums that are affecting his escrow payment

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Speaker 2: in particular. Another listener wants to know if a heelock

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Speaker 2: ever makes sense? Then do you ever get to a

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Speaker 2: point to where you should stop investing for your future

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Speaker 2: for your retirements? Like whoa, they're turbo You're going too hard.

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Speaker 2: We're gonna talk about that plus more. During today's episode,

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Speaker 2: you mentioned we were getting money questions. Do we ever

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Speaker 2: get any other kind of questions?

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Speaker 3: Matt?

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Speaker 1: Do people like ask you for for generic life advice?

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Speaker 1: Or we've had folks to see what ash questions? How

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Speaker 1: do you look so hip?

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Speaker 2: Somebody asked about like other parenting tips one time when

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Speaker 2: it came to financially preparing, but any other general advice

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Speaker 2: you might have. Remember that one I tuned I tune

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Speaker 2: into you for parenting tips. I really would, Okay, Well,

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Speaker 2: I appreciate that I'm not sure if you're being uh, well,

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Speaker 2: I don't know if this falls under a good advice

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Speaker 2: or bad advice, because I've got a frugal or cheap

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Speaker 2: for you, you know, like you at the expense of

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Speaker 2: your children. Yeah, so our kids, like they go to school,

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Speaker 2: they get their school portrait taken right, uh and then

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Speaker 2: the company they send you, they blash you NonStop with

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Speaker 2: the emails to buy this photo package. Here's a picture

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Speaker 2: of them with this background, hoping that one of those

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Speaker 2: is going to appeal to you. Eight wallets only thirty

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Speaker 2: nine to ninety nine. Yeah, exactly. So here's what I do, though.

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Speaker 2: I go on there and I find whatever setting allows

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Speaker 2: me to view the picture at its absolute largest, because

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Speaker 2: you know, you see the little tiny little thumbnail in

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Speaker 2: the email. But go ahead, click the link, go to

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Speaker 2: their pay the actualite and you've got the big version.

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Speaker 2: So I do that. I click and drag or you know,

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Speaker 2: control click, right click, save that image to the desktop,

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Speaker 2: and I've got three images of actually i've got six

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Speaker 2: images because I did this last year on through photoshop too. No,

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Speaker 2: although I hadn't eve thought about that with the AI,

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Speaker 2: well I don't. It doesn't even matter though, I don't

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Speaker 2: care if the watermark is on there because I'm not

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Speaker 2: looking it. It only makes your kids look better. I'm

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Speaker 2: not looking for some sort of like four K perfect

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Speaker 2: landscape giant image of them. I just want to be

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Speaker 2: able to see something that's a reminder of them, and

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Speaker 2: specifically for knowledge workers, right like for white collar workers

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Speaker 2: who are sitting at a computer all day. I think

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Speaker 2: the ability just to let it sit there on your desktop.

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Speaker 2: It's there to remind you of your family. It's there.

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Speaker 2: It's just a way for me to think about them

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Speaker 2: throughout the day. And it's funny you mentioned the wallets,

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Speaker 2: because that's sort of what that was back in the day.

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Speaker 2: Like we're old enough to remember. I bet you remember

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Speaker 2: in high school and for me, it was like the upperclassmen.

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Speaker 2: And if you're able to snag like a wallet of

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Speaker 2: someone senior pick, you know, like you've got your lady friends. Mit,

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Speaker 2: y'all were tight, huh it you guys exactly. There's a

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Speaker 2: nice little note with a little heart on the back

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Speaker 2: of it or something like that. Maybe it kind of

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Speaker 2: made you feel nice. It's not that you would take

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Speaker 2: that image and like frame it. It's sticking up on

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Speaker 2: the wall, but you would literally stick it in your wallet.

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Speaker 2: But what happens when you stick it in your wallet

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Speaker 2: It gets crushed, maybe gets folded. It's behind that plastic

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Speaker 2: that starts fading and you can't hardly barely see the

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Speaker 2: image anyway, But it's there as a reminder. And so

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Speaker 2: in the same way, I.

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Speaker 1: Feel like that this access a just a way to

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Speaker 1: kind of remember the kids. It also kind of feels

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Speaker 1: like a relic of a bygone era that the wallets. Well,

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Speaker 1: it was just a time when we didn't have great

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Speaker 1: photo technology with the palm of our hand, and so

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Speaker 1: we got the professional photos taken by the super professional person.

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Speaker 1: And now we can take pretty darn near professional photos

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Speaker 1: because we have even if like you suck with a

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Speaker 1: camera like I do, I can take good pictures of

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Speaker 1: my kids. Yeah, And so I think it's a It

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Speaker 1: can be a really expensive thing. I think a lot

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Speaker 1: of people feel guilted into it. Oh, I don't love

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Speaker 1: my kids if I don't buy the eighty five dollars

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Speaker 1: photo package through the school. And I just don't think

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Speaker 1: that's the case.

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Speaker 2: You think it's frugal or cheap to pull the watermarked

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Speaker 2: version I'm gonna say it's frugal. I think if you're

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Speaker 2: editing it, I think it's hurting it. Like, well, you're

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Speaker 2: the one that was just like, oh, you should be

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Speaker 2: using photoshop in AI.

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Speaker 1: Well, just knowing your skills, your former profession, being a

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Speaker 1: professional photographer. I was just thinking, if anybody could do it,

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Speaker 1: it's probably Matt, But I think that might be a

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Speaker 1: little over the topic humans.

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Speaker 2: So I just made it to where you can see

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Speaker 2: the desktop b se. I'm sitting up there like the dorms,

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Speaker 2: So those are that's last year's right there.

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Speaker 4: I like it.

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Speaker 2: Yeah, I will say last year we did. We did

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Speaker 2: actually buy the photos because we're like, it's they went

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Speaker 2: to a new school, first year at the new school.

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Speaker 2: So but even still we haven't printed them out. It's

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Speaker 2: not like we've got these prints in our house and

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Speaker 2: so you abought to like the CDUs forty dollars download

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Speaker 2: or twenty Yeah, maybe it's like twenty dollars. But anyway,

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Speaker 2: all that to say, I think it's worth thinking through

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Speaker 2: the application. How are you going to be using those photos?

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Speaker 2: If you do want to print a large enlargement or

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Speaker 2: whatever and hang it up in your house, sure, go

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Speaker 2: ahead and order the dayg thing.

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Speaker 1: Let's be honest to way most best that what I'm

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Speaker 1: doing follow your family now, it's not through the annual

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Speaker 1: photos done by the school. It's by whatever you post

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Speaker 1: on social media.

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Speaker 2: That's true.

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Speaker 1: Not that I'm great at that. I post like once

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Speaker 1: a year. So my family rarely gets updates, at least

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Speaker 1: my extended family. He lives on the West Coast.

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Speaker 2: They're like, oh, oh, you got another kid.

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Speaker 1: Yeah good, no, congratulations. All right, Mat, Let's mention the

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Speaker 1: beer we're having on this episode. This is called Double

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Speaker 1: Duck Pin by union Craft Brewing. Big thanks to listener

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Speaker 1: Luke for sending us this double IPA. We'll give our

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Speaker 1: thoughts at the end of the episode.

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Speaker 2: Luke G specifically Luke G. I don't want to say

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Speaker 2: your last name. He is just in case your concern

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Speaker 2: privacy standpoint, but you know who you are. He s

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Speaker 2: Then all these other people reaching out to you, can

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Speaker 2: you send me some beer? Luke The other Luke G

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Speaker 2: is like, what right, Let's move on.

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Speaker 1: Though, Matt. Let's get the listener questions and if you

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Speaker 1: have a money question for us, or really any kind

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Speaker 1: of question, if you have a parenting question, Matt, please

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Speaker 1: submit it, but you can go to Hotta money dot

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Speaker 1: com slash ask for the simple instructions. It's basically just

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Speaker 1: recording a voice memo on your phone sending it our

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Speaker 1: way via email. Matt, let's get to the first question.

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Speaker 1: This one is from listener Corey, who wants to know

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Speaker 1: about whether or not he can raise rates on his tenant.

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Speaker 4: Hi, Matt and Joel, this is Corey and Durham, North

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Speaker 4: Carolina Brewery. I'd like to recommend to you guys is

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Speaker 4: high Wire. I love their IPAs, but I have a

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Speaker 4: bit of a question. I have a property and on

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Speaker 4: that property, my scrow has increased by about two hundred dollars,

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Speaker 4: which significantly cuts into the profits from that property. I

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Speaker 4: was curious what you guys opinion would be on either

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Speaker 4: increasing the price for the rent or would I have

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Speaker 4: to wait until the end of our current lease in

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Speaker 4: order to do that. Thanks for all you do and

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Speaker 4: I appreciate you taking my question.

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Speaker 2: Bye, Corey. Thank you so much for that brewery recommendation.

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Speaker 2: It's been a minute since I've had some high Wire.

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Speaker 2: That's they're out of Asheville, North Carolina, and I think

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Speaker 2: the reason why beer Mecca of the South, basically Beer

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Speaker 2: City USA. If you like IPA's Corey, check out Burials

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Speaker 2: IPS as well, which is also originally based at Oh

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Speaker 2: didn't they open a location in Durham like another I

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Speaker 2: think they announced a second location, but I love their

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Speaker 2: beers super good. High Wire is also great. But there

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Speaker 2: is a lot to talk about with Corey's question here.

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Speaker 2: First off, you know, one of the great things about

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Speaker 2: home ownership is that your monthly payment essentially stays the same. Obviously,

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Speaker 2: that's not completely set in stone, and that's because property

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Speaker 2: tax and insurance increases, they still come down the pike

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Speaker 2: and two hundred dollars a month increase that is not

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Speaker 2: easy a month. That is not easy to stomach, but

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Speaker 2: it is not unheard of, especially in the current economic

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Speaker 2: environment where property values have gone up significantly across much

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Speaker 2: much of the country, and then insurance rates they're also

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Speaker 2: moving up at a rapid clip as well. Both of

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Speaker 2: those things are leading to higher escrow. They're leading to

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Speaker 2: escro shortages and receiving this bad news envelope showing up

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Speaker 2: in your mail saying, oh, there has been a shortage

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Speaker 2: and we actually had to front you some money. If

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Speaker 2: there was a negative balance. Oh my gosh, you're going

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Speaker 2: to see your scrow go up.

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Speaker 1: Signif we were down in Florida for a second last

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Speaker 1: week and the property appraiser drove up to my father

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Speaker 1: in law's property.

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Speaker 2: And it was like, quick, splash, some plane paying all

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Speaker 2: over the door. Make this place look like trash real quick.

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Speaker 2: You know.

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Speaker 1: That's the kind of thing where you're shaking into your

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Speaker 1: boots right now, depending on what state you live in,

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Speaker 1: because I believe in California those increases are capped at

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Speaker 1: two percent a year, but in a lot of states

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Speaker 1: there is no cap to how much their property, the

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Speaker 1: property valuation can go up, and so you might see

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Speaker 1: like a twenty percent increase and that's going to of

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Speaker 1: course affect your mortgage PAYMENTMAC. And that's one of the

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Speaker 1: selling points typically of buying versus renting, is, hey, your

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Speaker 1: payment's going to stay the same, And that's kind of

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Speaker 1: mostly true, but it's yes.

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Speaker 2: But yeah, you're still going to see a portion of

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Speaker 2: that effected by what's going on in the market.

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Speaker 1: And specifically, this is exactly why landlords need to have

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Speaker 1: breathing room built built in to be able to handle

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Speaker 1: increased expenses like that. Because you just have to plan

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Speaker 1: for the unexpected, whether it's a repair, replacement of something

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Speaker 1: at the house, but all so, if it's just a

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Speaker 1: higher mortgage payment because of rising insurance costs or something

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Speaker 1: like that. But the question that Corey asks is like,

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Speaker 1: can he raise rent to help cover that increased expense. Yeah,

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Speaker 1: let's talk about that first. You got to know the market, right,

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Speaker 1: because you can't charge more than the market will bear,

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Speaker 1: no matter how high your individual costs are. Let's say

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Speaker 1: you just talked about budgeting for replacing stuff. Let's say

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Speaker 1: you need a roof replacement that costs ten thousand bucks.

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Speaker 1: That's on you, no matter how much you'd like your

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Speaker 1: tenant to participate in that cost. Sorry, that's not how

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Speaker 1: it works. They have assigned lease and you're the landlord.

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Speaker 1: You are in charge of providing a habitable place, and

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Speaker 1: you've got that roof repair. That cost solely comes under

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Speaker 1: your jurisdiction. It's one of the toughest parts about being

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Speaker 1: a landlord because remaining profitable while maintaining the property and

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Speaker 1: funneling dollars into renovations along the way as they're needed,

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Speaker 1: that can be that's not always easy, right, and so

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Speaker 1: many landlords decide that it's not for them because it

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Speaker 1: requires more work and more money than they first assumed.

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Speaker 1: And Matt, I don't know about you. Like the cherry

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Speaker 1: on top for me is appreciation. Oftentimes with the property,

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Speaker 1: the year over year profit can sometimes be meager if

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Speaker 1: you're keeping the property up in.

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Speaker 2: The way that you need to. Yeah, But going back

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Speaker 2: to what you said initially, the market is going to

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Speaker 2: decide as to what you can charge your tenant. And Corey,

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Speaker 2: this is where you actually you don't have to worry

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Speaker 2: about it. Like on one hand, like it sucks that

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Speaker 2: you are paying more every month and you know towards

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Speaker 2: your whoever is servicing your mortgage, But on the other hand,

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Speaker 2: you don't have to stress about it because the market

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Speaker 2: is going to decide. This is the what Adam Smith

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Speaker 2: caused the invisible hand. You can attempt to list it

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Speaker 2: for more than what going rates are, the market will

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Speaker 2: let you know that, oh, that actually is not going

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Speaker 2: to work. And so I know, on one hand it sucks,

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Speaker 2: but on the other hand, it's also not the end

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Speaker 2: of the world because you will most likely quickly be

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Speaker 2: able to figure out what it is that the market

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Speaker 2: can sustain.

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Speaker 1: Yeah, Basically, if you try to charge more than market rate,

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Speaker 1: a level headed tenant will find another place. You'll lose

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Speaker 1: even more money because your property will be sitting vacant.

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Speaker 1: So it's really important to kind of and the best

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Speaker 1: way to really figure out what the market rate is

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Speaker 1: for your rental property is I think to look at

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Speaker 1: zillo and see what similar bed bathquare footage homes, similar location, like,

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Speaker 1: what they're going for, what other people are asking. That's

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Speaker 1: a really good way to hone in and see, well

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Speaker 1: what can I ask And Corey, he asked about raising

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Speaker 1: rents in the middle of the lease, Is that possible? Well,

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Speaker 1: the answer to that is also typically no, not doable.

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Speaker 1: The lease protects you in a whole lot of ways,

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Speaker 1: Corey as the landlord, but it also protects a tenant

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Speaker 1: in other ways. And the tenant, for instance, can't bail

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Speaker 1: in the middle leave you in the lurch without incurring

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Speaker 1: financial ramifications that you're due. But it also protects them

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Speaker 1: from rent increases coming out of left field too. It

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Speaker 1: gives them a fixed monthly cost for the duration of

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Speaker 1: the lease, so you're likely going to have to eat

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Speaker 1: these increased monthly costs until that lease is up. At

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Speaker 1: that point, you can renegotiate with your current tenants, or

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Speaker 1: you can put it back on the market and hopes

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Speaker 1: that you're going to find another tenant who's willing to

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Speaker 1: pay more. But again that comes back to market factors,

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Speaker 1: and rents have been softening, So I don't know, maybe

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Speaker 1: you're already at the top. Depends on how much you're

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Speaker 1: charging and what the market will currently bear. But raising

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Speaker 1: rent in the middle of the least is typically an impossibility.

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Speaker 2: No point, Yeah, you can't do that. Well, so you

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Speaker 2: said rents have been softening, the increases have been softening.

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Speaker 2: So there's data from core Logic, and they showed that

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Speaker 2: the national year over year rent increases that they have

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Speaker 2: actually returned to pre pandemic levels. They're more at a

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Speaker 2: reasonable rate. Although some markets have seen actual rent decreases,

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Speaker 2: there are some markets where it's slightly under I think

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Speaker 2: like Miami, like some of the Sun Belt. Miami isn't

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Speaker 2: Sun Belt, but I saw that Miami was one of

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Speaker 2: the markets. But regardless, unless you are charging your current

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Speaker 2: tenants a below market rate, you might find that you're

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Speaker 2: actually not able to raise the rent when it comes

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Speaker 2: time for them to renew and that the price that

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Speaker 2: you're charging and the rate that they're paying is actually fair.

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Speaker 2: And so this is when looking to Zillo to see what, again,

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Speaker 2: what similar properties are going for in the area. That'll

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Speaker 2: give you a good idea of what it is that

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Speaker 2: you might be able to charge. But so much of

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Speaker 2: it also comes down to the specific property you might have.

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Speaker 2: This might be a place that you used to live in.

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Speaker 2: Congrats by the way you said that this is like

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Speaker 2: a I think your first rental, or maybe this is

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Speaker 2: the first time you've rented your home, so maybe you

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Speaker 2: used to live here. Maybe this thing is like, I

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Speaker 2: don't know, decked out and it's got incredible amenities, it's

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Speaker 2: in a killer location. Maybe it's like the crown jewel

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Speaker 2: of the entire neighborhood. Well if so, heck, you can

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Speaker 2: charge a ten twenty percent premium perhaps on that property

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Speaker 2: compared to surrounding properties. But again, the market will let

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Speaker 2: you know via this invisible hand that will lower the

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Speaker 2: price for you and no harm, no foul, except that

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Speaker 2: I don't know, there might be some renters who see

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Speaker 2: the price drop and maybe they're thinking, oh, maybe there's

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Speaker 2: something wrong with that house, Like there might be a

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Speaker 2: stigma attached to it. I know when it comes to

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Speaker 2: houses that are being sold, realtors really don't like having

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Speaker 2: dropped the price. Yet. Yeah, houses that have a high

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Speaker 2: days on market number there next to the property, and

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Speaker 2: I don't know. It comes down to the individual whoever

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Speaker 2: it is that is looking to rent the property, because

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Speaker 2: I don't know it'll it only takes one renter to

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Speaker 2: say that is perfect, that is exactly what we need.

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Speaker 2: You never know individual circumstances and what it is that

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Speaker 2: they're what they're willing to pay. And that's all a

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Speaker 2: part of the just the overall average. There might be

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Speaker 2: an employer who's putting the bill when it comes to

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Speaker 2: housing costs because they've relocated somebody to your market, and

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Speaker 2: there may be a little less price sensitive when it

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Speaker 2: comes to rents. There are so many different factors, and

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Speaker 2: so I wouldn't worry too much about charging slightly high

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Speaker 2: or at least going for slightly higher rent in order

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Speaker 2: to try to maximize process.

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Speaker 1: Anecdotal over here trying to run out of property right now,

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Speaker 1: and I might have my first month of vacancy. Ever, Yeah, sadly,

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Speaker 1: so it does appear that there's there's less demand at

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Speaker 1: least in the spicing neighborhood in Atlanta.

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Speaker 2: Trying to un now Atlanta is one of the markets.

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Speaker 2: It hasn't decreased, but it was almost a flat line. Yeah,

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Speaker 2: there's like a it's just a softer six percent increase

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Speaker 2: year over year right now from last year, which is.

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Speaker 1: A very it feels slight, but I think that reflects

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Speaker 1: just a weakening demand in a lot of markets, and

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Speaker 1: particularly in the Atlanta market. But I think, more than anything,

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Speaker 1: what this points to for Corey just you have to

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Speaker 1: have more cash on hand. As a real estate mogul

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Speaker 1: that you are, Corey, you have to be more able

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Speaker 1: to stomach a two hundred dollars a month increase in

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Speaker 1: your mortgage payment, and hopefully that's just a one time thing,

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Speaker 1: right It's unlikely that property taxes and insurance rates are

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Speaker 1: going to continue to increase it the same rapid clip.

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Speaker 1: But you have to have that built in additional money

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Speaker 1: so that you can handle swings like this and then

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Speaker 1: it doesn't kind of undo your investing goals right totally.

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Speaker 2: I think what you said is true, which is, don't

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Speaker 2: expect these increases to continue in future years, but do

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Speaker 2: take this into account and especially given the fact that

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Speaker 2: this might be a relatively new venture for you. Don't

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Speaker 2: forget that maybe if this isn't something that you want

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Speaker 2: to do, you can always sell the property. As long

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Speaker 2: as you've lived in it too out of the past

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Speaker 2: five years, you can avoid paying capital gains on that

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Speaker 2: property when the time comes to sell, and so keep

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Speaker 2: that in mind as well. You've got perhaps options. Yeah, yeah,

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Speaker 2: it sounds like the impression I get he said this

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Speaker 2: is he's at one and a half years of a

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Speaker 2: two year lease or something like that, and it's a

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Speaker 2: nice trial period to figure out whether or not this

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Speaker 2: is something that Corey, that you actually want to continue

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Speaker 2: or not.

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Speaker 1: Because, like we always say, there's so many real estate

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Speaker 1: influencers out there, and they want to make it sound

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Speaker 1: like investing in real estate is the only way to

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Speaker 1: make big bucks in this world, and they kind of

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Speaker 1: want to make it sound like it's this passive income

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Speaker 1: play too. The truth is a lot murkier than that,

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Speaker 1: and we like real estate investing as a way to

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Speaker 1: build wealth, but there's there's also there's a lot of

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Speaker 1: education you have to go through, in a lot of

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Speaker 1: trial and error they have to go through as well.

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Speaker 1: It's a part time job more than just a passive

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Speaker 1: investment exactly our Matt. Speaking of investing, we've got more

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Speaker 1: to get to, including a listener wants to know whether

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Speaker 1: he can just stop investing altogether. We'll get to that

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Speaker 1: question and more right after this.

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Speaker 2: We are back from the break and Joel, let's hear

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Speaker 2: from a listener who is completely killing it when it

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Speaker 2: comes to his personal finances.

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Speaker 5: Hey, Matt and Joel. My name is Nick from Upstate

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Speaker 5: New York. My wife and I have been diligently saving

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Speaker 5: and investing for about twenty five years and we are

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Speaker 5: firmly in money Gear seven. We have no debt, including

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Speaker 5: no mortgage. We've managed to save one point five million

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Speaker 5: between four H one K, four H three B and

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Speaker 5: roth iras. We have also saved enough to provide college

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Speaker 5: educations to our two kids so they have no debt

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Speaker 5: when they graduate. We have a great relationship with money

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Speaker 5: and we use it to fund our passions and save

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Speaker 5: for the future, but have always lived well below our means.

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Speaker 5: And Matt, I'm an Excel guy too. My favorite day

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Speaker 5: of the quarter is our quarterly financial review.

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Speaker 2: I just love it.

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Speaker 5: I'm forty five. My wife is fifty and we have

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Speaker 5: always both planned to retire at fifty five. My question

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Speaker 5: is can we stop saving for retirement? When do we

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Speaker 5: know when we have enough? When I run the projections,

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Speaker 5: even at a conservative return rate, the base we have

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Speaker 5: built would appear to grow substantially and exceeds our need

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Speaker 5: in retirement. That doesn't need to count Social Security or

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Speaker 5: my wife's pension. Any thoughts would be welcome. Thank you

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Speaker 5: for a great podcast, Matt.

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Speaker 1: It would be adorable to watch you to pour over

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Speaker 1: Excel spreadsheets. Yeah, I would That could be be like

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Speaker 1: a reality TV show that I would tune in for.

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Speaker 2: So you wouldn't find it interesting because it's not your money,

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Speaker 2: But when it's your money, it is interesting. And what's

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Speaker 2: like what I like about what it's Nick? So Mike,

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Speaker 2: like Kate and I we do like throughout the month,

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Speaker 2: I'll send her updates and at the end of the month,

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Speaker 2: I'll send her like a big update, and then other

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Speaker 2: than that, like we only talk about money, like at

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Speaker 2: the end of the year or at the very beginning

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Speaker 2: of the year as we're kind of setting out laying

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Speaker 2: out our goals for the year.

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Speaker 1: But I like what Nick laid the groundwork for so

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Speaker 1: many years, you just don't need to be approaching it

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Speaker 1: like on a weekly.

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Speaker 2: But then I hear how Nick is totally killing it,

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Speaker 2: and I think, well, maybe if we move to a

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Speaker 2: quarterly system and maybe, uh, you know, we'd be in

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Speaker 2: such a great financial position like him and his family.

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Speaker 1: Don't like he and his family. I want to say

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Speaker 1: it proper. Don't do yourself in disservice like you're you're

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Speaker 1: well underway there. Nick is crushing it. Crushing it might

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Speaker 1: even be an understatement, consider considering all he's been able

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Speaker 1: to acomplish and front loading the sacrifice. That's the term

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Speaker 1: that our friend doc G has used on this podcast before,

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Speaker 1: and I think that's exactly what Nick has done. But

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Speaker 1: he also has deprived himself along the way. He says

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Speaker 1: they're using those funds to be able to enjoy life

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Speaker 1: at the same time. So, but it does sound like

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Speaker 1: Nick and his wife have been able to save and

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Speaker 1: invest more money than they.

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Speaker 2: Actually needed to.

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Speaker 1: There's nothing wrong with that, nothing wrong with having more

434
00:19:21,280 --> 00:19:23,760
Speaker 1: money set aside than you're actually likely going to need.

435
00:19:24,119 --> 00:19:26,320
Speaker 1: I'm actually working towards the same goal, Matt, like I

436
00:19:26,359 --> 00:19:28,640
Speaker 1: want to keep my desires in check. But I want

437
00:19:28,640 --> 00:19:31,280
Speaker 1: to continue saving and investing for the future so that

438
00:19:31,320 --> 00:19:34,200
Speaker 1: I can fund bigger so they've got even more flexibility

439
00:19:34,200 --> 00:19:37,600
Speaker 1: and potentially more ability to be philanthropic at some point

440
00:19:37,880 --> 00:19:40,520
Speaker 1: in the future as well. I love the idea of

441
00:19:40,560 --> 00:19:44,200
Speaker 1: investing for independence and maximum flexibility, which is exactly where

442
00:19:44,280 --> 00:19:46,639
Speaker 1: Nick is going to end up. And having more money

443
00:19:46,840 --> 00:19:50,560
Speaker 1: in those retirement accounts than is actually necessary offers both

444
00:19:50,560 --> 00:19:53,080
Speaker 1: of those things as long as it isn't causing you

445
00:19:53,119 --> 00:19:54,960
Speaker 1: to deprive yourself, right. That is the balance we need

446
00:19:54,960 --> 00:19:58,960
Speaker 1: to strike here as diligent savers and investors. But it

447
00:19:59,000 --> 00:20:01,840
Speaker 1: obviously sounds like Nick in the Coast Fire camp, which

448
00:20:01,880 --> 00:20:04,600
Speaker 1: means he really doesn't need to invest any more dollars

449
00:20:04,640 --> 00:20:06,399
Speaker 1: if he doesn't want to. I think I'm going to

450
00:20:06,440 --> 00:20:08,800
Speaker 1: sign off on his plan here mat of ceasing his

451
00:20:08,880 --> 00:20:11,680
Speaker 1: investments altogether if he wants to, no need to contribute

452
00:20:11,680 --> 00:20:12,719
Speaker 1: another dime, totally.

453
00:20:12,800 --> 00:20:14,640
Speaker 2: Yeah, And I think so much of it comes down

454
00:20:14,680 --> 00:20:16,919
Speaker 2: to what whether or not he's got a plan for

455
00:20:17,000 --> 00:20:19,760
Speaker 2: those additional dollars, because that's what's so great about investing.

456
00:20:19,840 --> 00:20:23,760
Speaker 2: It's one thing to halt investing altogether. It's another thing

457
00:20:23,840 --> 00:20:26,879
Speaker 2: to halt investing for retirement, because if you've got goals

458
00:20:26,880 --> 00:20:28,600
Speaker 2: that are a number of years off, it still makes

459
00:20:28,640 --> 00:20:30,919
Speaker 2: sense to invest that money just to make sure that

460
00:20:30,960 --> 00:20:33,520
Speaker 2: a is not getting eroded by inflation, but be because

461
00:20:33,520 --> 00:20:35,320
Speaker 2: you're going to see higher returns with that money actually

462
00:20:35,400 --> 00:20:37,879
Speaker 2: invested in the market. But I think there's like a

463
00:20:37,920 --> 00:20:41,400
Speaker 2: psychological component to this too, where you are so used

464
00:20:41,440 --> 00:20:43,800
Speaker 2: to setting money aside to saving and investing that it's

465
00:20:43,800 --> 00:20:47,119
Speaker 2: difficult to remove that discipline. Just like I bet with

466
00:20:47,160 --> 00:20:49,200
Speaker 2: for him, for me to say, hey, you got to

467
00:20:49,200 --> 00:20:53,280
Speaker 2: give up that quarterly financial review, he'd be like, no, no, no, no,

468
00:20:54,040 --> 00:20:56,919
Speaker 2: that's something that I'm going to do because it is

469
00:20:56,960 --> 00:20:59,560
Speaker 2: a practice and it's a discipline that has allowed him

470
00:20:59,560 --> 00:21:01,840
Speaker 2: to get where he is. But in this case, when

471
00:21:01,840 --> 00:21:04,639
Speaker 2: it comes to investing, it might be something. It might

472
00:21:04,680 --> 00:21:06,640
Speaker 2: be a challenge, I guess, is what I'm saying here

473
00:21:06,680 --> 00:21:09,280
Speaker 2: to stop doing that or even to kind of like

474
00:21:09,320 --> 00:21:12,119
Speaker 2: crank the dial down a little bit when before he

475
00:21:12,240 --> 00:21:14,639
Speaker 2: was going like full throttle. Well, it almost becomes like

476
00:21:14,640 --> 00:21:16,600
Speaker 2: baked into your nature, right exactly. You're like, oh, I'm

477
00:21:16,640 --> 00:21:17,080
Speaker 2: an investor.

478
00:21:17,119 --> 00:21:18,960
Speaker 1: I invest something like twenty five percent of my money

479
00:21:19,000 --> 00:21:21,119
Speaker 1: every single year, and look where it's gotten me. It's

480
00:21:21,119 --> 00:21:23,280
Speaker 1: the default knee jerk reaction, right, Yeah, And so I

481
00:21:23,320 --> 00:21:27,320
Speaker 1: think transitioning from frugal investor to smart spender can be

482
00:21:27,359 --> 00:21:29,560
Speaker 1: really hard, and that's something that Nick's going to have

483
00:21:29,640 --> 00:21:31,639
Speaker 1: to confront as he And so maybe it is a

484
00:21:31,640 --> 00:21:34,320
Speaker 1: slower process of dialing back how much you're investing and

485
00:21:34,359 --> 00:21:37,720
Speaker 1: maybe prioritizing taxble brokerage accounts for more near term goals

486
00:21:37,760 --> 00:21:41,720
Speaker 1: than retirement accounts. But maybe let's talk about the specifics

487
00:21:41,720 --> 00:21:45,159
Speaker 1: too of why investing more does it actually need to

488
00:21:45,720 --> 00:21:46,560
Speaker 1: be the case for Nick?

489
00:21:46,600 --> 00:21:46,800
Speaker 2: Why?

490
00:21:47,359 --> 00:21:49,600
Speaker 1: By the way, this is not advice for I think

491
00:21:49,800 --> 00:21:52,720
Speaker 1: the vast majority of our listeners, Matt, should you be investing?

492
00:21:52,760 --> 00:21:54,800
Speaker 1: Probably right, It's just I guess when you're at the

493
00:21:54,800 --> 00:21:57,480
Speaker 1: point Knicks at, when you've been investing diligently for a long,

494
00:21:57,480 --> 00:21:59,520
Speaker 1: long period of time, this is when you have the

495
00:21:59,560 --> 00:22:02,040
Speaker 1: option to stop investing if you don't want to anymore.

496
00:22:02,760 --> 00:22:05,800
Speaker 1: No debt, including no mortgage. This contributes to the fact

497
00:22:05,800 --> 00:22:09,439
Speaker 1: that Nick doesn't necessarily need to be investing anymore because

498
00:22:09,600 --> 00:22:11,800
Speaker 1: guess what, He's not gonna have a mortgage payment during

499
00:22:11,800 --> 00:22:15,360
Speaker 1: those retirement years, and he's already amassed one point five

500
00:22:15,440 --> 00:22:18,000
Speaker 1: mili in his investment accounts, and on average that's going

501
00:22:18,080 --> 00:22:20,679
Speaker 1: to double every seven to eight years if invested mostly

502
00:22:20,720 --> 00:22:23,360
Speaker 1: in the stock market. So by the time Nick retires,

503
00:22:23,359 --> 00:22:25,560
Speaker 1: he's going to have more than three million dollars based

504
00:22:25,600 --> 00:22:29,280
Speaker 1: on historical return assumptions. Right, And so you're not even

505
00:22:29,359 --> 00:22:32,600
Speaker 1: factoring in, by the way, guaranteed monthly checks from pension

506
00:22:32,600 --> 00:22:35,080
Speaker 1: and Social Security, which you can delay even further till

507
00:22:35,119 --> 00:22:37,800
Speaker 1: age seventy getting the maximum amount every month. I mean,

508
00:22:38,160 --> 00:22:40,320
Speaker 1: I'd be curious to know how much those two fixed

509
00:22:40,359 --> 00:22:42,439
Speaker 1: amounts are and whether they're going to cover all of

510
00:22:42,480 --> 00:22:43,920
Speaker 1: your monthly needs or not, but I would imagine that

511
00:22:43,920 --> 00:22:46,320
Speaker 1: they're going to get close, especially given how frugal you are.

512
00:22:46,400 --> 00:22:48,920
Speaker 1: So it just seems like you're covered here on all fronts.

513
00:22:48,920 --> 00:22:50,959
Speaker 1: And even most of what you've been able to amass

514
00:22:51,000 --> 00:22:53,760
Speaker 1: in retirement accounts is kind of gravy on top. So

515
00:22:53,800 --> 00:22:56,800
Speaker 1: I think you can feel comfortable reducing what you're funneling

516
00:22:56,800 --> 00:22:59,960
Speaker 1: into investment accounts and actually bring forward some of that consumption.

517
00:23:00,680 --> 00:23:03,159
Speaker 1: And that's typically what investing is, it's deferred consumption. Right,

518
00:23:03,200 --> 00:23:05,080
Speaker 1: at some point you want to use those dollars, Well,

519
00:23:05,320 --> 00:23:07,480
Speaker 1: you don't need to defer consumption anymore. You can actually

520
00:23:07,480 --> 00:23:09,119
Speaker 1: bring some of that more into your life right now.

521
00:23:09,240 --> 00:23:11,439
Speaker 2: Yeah, you know, I think one of the criticisms for

522
00:23:11,680 --> 00:23:16,440
Speaker 2: starting to shift away from investing in saving for retirement

523
00:23:16,680 --> 00:23:20,159
Speaker 2: is the fact that's he's looking to retire earlier. I

524
00:23:20,200 --> 00:23:22,119
Speaker 2: think he said fifty five is the age that him

525
00:23:22,160 --> 00:23:24,560
Speaker 2: and his wife had always planned on retiring. So like,

526
00:23:24,640 --> 00:23:26,640
Speaker 2: especially if you were to go see a financial advisor,

527
00:23:26,680 --> 00:23:28,560
Speaker 2: that would be something that they would be like, Oh,

528
00:23:28,880 --> 00:23:30,719
Speaker 2: don't you want to work a little bit longer and

529
00:23:31,119 --> 00:23:33,760
Speaker 2: just build a little more of a buffer, a little

530
00:23:33,800 --> 00:23:36,800
Speaker 2: bit more of a padding there into your finances. But

531
00:23:36,840 --> 00:23:38,879
Speaker 2: the fact is he's an excel nerd. I mean, he

532
00:23:38,960 --> 00:23:41,040
Speaker 2: knows the numbers. And if you've crunched the numbers and

533
00:23:41,080 --> 00:23:42,680
Speaker 2: you know that you've got more than enough on hand.

534
00:23:43,000 --> 00:23:45,400
Speaker 2: Plus we're talking about other accounts he's talking about. He's

535
00:23:45,400 --> 00:23:49,159
Speaker 2: got fully funded accounts for his kids for college. He

536
00:23:49,240 --> 00:23:53,280
Speaker 2: has thought through all the different potential places where he

537
00:23:53,480 --> 00:23:57,120
Speaker 2: might see increased demand on his finances. And so with that,

538
00:23:57,560 --> 00:24:00,720
Speaker 2: I wouldn't say, hey, you need to like quit tomorrow, Nick,

539
00:24:00,840 --> 00:24:02,479
Speaker 2: But it does sound like that you've got a good

540
00:24:02,480 --> 00:24:04,320
Speaker 2: plan put together and that you will be able to

541
00:24:05,000 --> 00:24:08,000
Speaker 2: rely on the amount that you've set aside and social

542
00:24:08,000 --> 00:24:10,320
Speaker 2: security in your wife's pension. Like, you've got all these

543
00:24:10,400 --> 00:24:12,240
Speaker 2: multiple streams of income as well, and that takes the

544
00:24:12,400 --> 00:24:16,240
Speaker 2: risk off of having to tap those traditional retirement accounts

545
00:24:16,280 --> 00:24:16,680
Speaker 2: as well.

546
00:24:16,760 --> 00:24:19,200
Speaker 1: And they're not only multiple streams of income at these

547
00:24:19,200 --> 00:24:22,600
Speaker 1: are multiple streams of highly predictable income when you don't

548
00:24:22,600 --> 00:24:24,200
Speaker 1: know what the return of the market's going to be.

549
00:24:24,280 --> 00:24:28,399
Speaker 1: Let's say the market has a downturn for a few years,

550
00:24:28,440 --> 00:24:32,040
Speaker 1: and that could make it more difficult at least psychologically,

551
00:24:32,080 --> 00:24:34,520
Speaker 1: but even it just ultimately reduces your capital too that

552
00:24:34,560 --> 00:24:37,280
Speaker 1: you can draw down on when you have multiple fixed

553
00:24:37,280 --> 00:24:40,480
Speaker 1: income sources, significant fixed income sources and no mortgage. At

554
00:24:40,520 --> 00:24:42,280
Speaker 1: the same time, it just offers you a whole lot

555
00:24:42,280 --> 00:24:43,840
Speaker 1: more flexibility than most people are going.

556
00:24:43,840 --> 00:24:46,680
Speaker 2: To have, so much optionality to basically choose your adventure

557
00:24:46,720 --> 00:24:48,119
Speaker 2: as to what it is that you want to do.

558
00:24:48,200 --> 00:24:52,080
Speaker 2: And you mentioned too how he's got passions and hobby

559
00:24:52,280 --> 00:24:54,960
Speaker 2: just ever things that he is pursuing. I would say, man,

560
00:24:55,200 --> 00:24:56,959
Speaker 2: think through and I don't know if this would like

561
00:24:57,080 --> 00:24:59,600
Speaker 2: taint those fun things that you do, but it's even

562
00:24:59,600 --> 00:25:02,280
Speaker 2: worthnsidering it all, right, are there ways that I could start,

563
00:25:02,600 --> 00:25:07,240
Speaker 2: like pursuing some like side gigs or something like in

564
00:25:07,280 --> 00:25:09,960
Speaker 2: the direction of the things that you enjoy, because I

565
00:25:09,960 --> 00:25:11,960
Speaker 2: don't know what's what's more fun than actually earning a

566
00:25:12,000 --> 00:25:14,240
Speaker 2: little bit of income from something that you also love

567
00:25:14,680 --> 00:25:18,000
Speaker 2: spending time talking about or doing. And I don't know.

568
00:25:18,040 --> 00:25:21,240
Speaker 2: I think there might be folks who have exactly I

569
00:25:21,280 --> 00:25:22,840
Speaker 2: don't want it to like, like I said, I don't want

570
00:25:22,880 --> 00:25:26,040
Speaker 2: it to taint your enjoyment of that thing. Maybe you're like, Nope,

571
00:25:26,119 --> 00:25:28,120
Speaker 2: I just like to go play golf. Like I don't

572
00:25:28,119 --> 00:25:29,919
Speaker 2: want to be a golf instructor. I don't want to

573
00:25:29,920 --> 00:25:31,800
Speaker 2: work at the golf club or the clubhouse. You mean

574
00:25:31,800 --> 00:25:34,159
Speaker 2: disc golf, right, No, like like real golf. Okay, I

575
00:25:34,640 --> 00:25:36,080
Speaker 2: grew up. It sounds like a slight. I grew up

576
00:25:36,359 --> 00:25:39,560
Speaker 2: washing golf carts and uh being a fore caddy when you.

577
00:25:39,600 --> 00:25:42,479
Speaker 1: Live in Augusta, Georgia. That is that's kind of what

578
00:25:42,520 --> 00:25:44,840
Speaker 1: you the typical to do teenage job.

579
00:25:45,000 --> 00:25:46,720
Speaker 2: All right, Nick, we hope that gets you pointed in

580
00:25:46,760 --> 00:25:49,000
Speaker 2: the right direction. And yeah, it sounds like you have

581
00:25:49,119 --> 00:25:52,119
Speaker 2: done an incredible job. But Joel, let's get to a

582
00:25:52,160 --> 00:25:54,320
Speaker 2: subject that we haven't It's been a minute since we've

583
00:25:54,400 --> 00:25:57,320
Speaker 2: talked about this. Listener's got a question about eebonds.

584
00:25:58,160 --> 00:26:01,600
Speaker 3: Hi, guys, love the podcast. I had a question about

585
00:26:01,600 --> 00:26:05,760
Speaker 3: my eyebonds. My wife and I hold three ten thousand

586
00:26:05,760 --> 00:26:12,439
Speaker 3: dollars eyebonds for less than five years. The eyebonds have

587
00:26:12,560 --> 00:26:18,359
Speaker 3: had various interest rates throughout their life, from down below

588
00:26:18,400 --> 00:26:23,840
Speaker 3: three percent to now nine point five percent. I know

589
00:26:23,920 --> 00:26:27,439
Speaker 3: you've said in the past that you forfeit one quarter

590
00:26:27,600 --> 00:26:32,080
Speaker 3: of interest from the eyebonds if you catch them, either

591
00:26:32,119 --> 00:26:37,040
Speaker 3: partially or fully before five years is up. So my

592
00:26:37,160 --> 00:26:41,560
Speaker 3: question is what quarter do they use as far as

593
00:26:41,640 --> 00:26:46,360
Speaker 3: forfeiting that. Is it the most recent quarter, the oldest quarter,

594
00:26:46,840 --> 00:26:50,200
Speaker 3: or could I choose my own quarter? Look forward to

595
00:26:50,280 --> 00:26:51,320
Speaker 3: your answer. Thanks.

596
00:26:52,000 --> 00:26:54,640
Speaker 1: Oh, Matt, you're right, we have not talked about eyebonds

597
00:26:54,680 --> 00:26:57,720
Speaker 1: in quite a while, and they're not completely off my radar.

598
00:26:57,960 --> 00:27:00,000
Speaker 1: But man, I remember when the nine point sixty two

599
00:27:00,000 --> 00:27:01,720
Speaker 1: two percent ie bond came out and it was like

600
00:27:02,000 --> 00:27:02,680
Speaker 1: kind of mind blowing.

601
00:27:02,760 --> 00:27:05,760
Speaker 2: They're very much on my radar for like one year. Yeah, yeah,

602
00:27:05,760 --> 00:27:07,160
Speaker 2: then after that they've kind of fallen off.

603
00:27:07,160 --> 00:27:09,840
Speaker 1: They were like the sexy thing of the moment, and

604
00:27:09,880 --> 00:27:12,440
Speaker 1: then that kind of went away. Although, and we'll talk

605
00:27:12,480 --> 00:27:15,239
Speaker 1: about this, new ibond buyers are actually getting a rate

606
00:27:15,280 --> 00:27:18,120
Speaker 1: of five point two seven percent, which includes a fixed

607
00:27:18,200 --> 00:27:20,560
Speaker 1: rate I think of one point three percent, which is.

608
00:27:20,480 --> 00:27:22,320
Speaker 2: Pretty good, so shabby.

609
00:27:22,400 --> 00:27:22,600
Speaker 3: Yeah.

610
00:27:22,640 --> 00:27:25,800
Speaker 1: The downside of opting for that over a savings account

611
00:27:26,000 --> 00:27:28,720
Speaker 1: is that inflation is likely to continue moderating. I mean

612
00:27:29,200 --> 00:27:32,240
Speaker 1: I say likely to like there's a lot of pressure

613
00:27:32,280 --> 00:27:34,840
Speaker 1: being put to reduce the rate of inflation, and that

614
00:27:34,840 --> 00:27:37,760
Speaker 1: would mean that despite the fixed rate being decent, the

615
00:27:37,840 --> 00:27:40,880
Speaker 1: overall rate is likely to decline. But it does make

616
00:27:40,920 --> 00:27:43,440
Speaker 1: eebonds a little more enticing. Even though the overall headline

617
00:27:43,480 --> 00:27:45,760
Speaker 1: rate is it's certainly not close to ten percent like

618
00:27:45,760 --> 00:27:48,040
Speaker 1: it was before, like five point two seven with that

619
00:27:48,119 --> 00:27:51,000
Speaker 1: fixed guaranteed rate attached to it, it's pretty good right now.

620
00:27:51,080 --> 00:27:52,880
Speaker 2: Yeah, yeah, so I think a lot of folks are thinking,

621
00:27:52,920 --> 00:27:55,840
Speaker 2: but I can get something virtually identical to that by

622
00:27:55,840 --> 00:27:58,480
Speaker 2: going with a high yield savings account, and by doing

623
00:27:58,520 --> 00:28:00,800
Speaker 2: that you wouldn't have to jump through any hoops or

624
00:28:00,880 --> 00:28:03,159
Speaker 2: risk losing interest if you just stick that money there

625
00:28:03,240 --> 00:28:06,000
Speaker 2: in that online account. That's true, but again you've got

626
00:28:06,000 --> 00:28:07,760
Speaker 2: something else you got to consider, and that's that the

627
00:28:07,840 --> 00:28:10,120
Speaker 2: FED is likely to cut rates this year, and that's

628
00:28:10,119 --> 00:28:12,320
Speaker 2: going to have a direct impact on savers and SO

629
00:28:12,520 --> 00:28:15,040
Speaker 2: and I bonds alike. Right, yeah, Like I'm thinking of

630
00:28:15,040 --> 00:28:18,160
Speaker 2: CI and Betterment, Like maybe they are currently paying north

631
00:28:18,200 --> 00:28:20,240
Speaker 2: of five percent right now, Well they might not be

632
00:28:20,400 --> 00:28:23,600
Speaker 2: in November if rate cuts actually happen as many folks

633
00:28:23,720 --> 00:28:25,560
Speaker 2: think they will, which in my mind it kind of

634
00:28:25,600 --> 00:28:30,480
Speaker 2: highlights the value proposition that CD Certificates of deposits that

635
00:28:30,520 --> 00:28:33,359
Speaker 2: they offer right now. The ability to lock that money

636
00:28:33,440 --> 00:28:36,160
Speaker 2: up in an account where you're earning like over five

637
00:28:36,200 --> 00:28:39,440
Speaker 2: percent for twelve to eighteen months, that could actually be

638
00:28:39,480 --> 00:28:41,800
Speaker 2: a pretty smart way to go. So something to consider, Scott,

639
00:28:41,960 --> 00:28:44,800
Speaker 2: maybe not just completely pulling out of eyebonds, but maybe

640
00:28:44,920 --> 00:28:46,800
Speaker 2: kind of shuttling some of that money over to CDs.

641
00:28:47,040 --> 00:28:49,600
Speaker 1: Yeah, yeah, I think CDs could make more sense than

642
00:28:49,640 --> 00:28:52,640
Speaker 1: ibonds now, especially, And so much depends on when you

643
00:28:52,640 --> 00:28:54,520
Speaker 1: got into eyebonds and when you should ditch them, and

644
00:28:54,520 --> 00:28:58,959
Speaker 1: so Scott specifically asked about, well, what it's true if

645
00:28:58,960 --> 00:29:00,920
Speaker 1: you don't hold onto an eyebond for at least five years,

646
00:29:00,960 --> 00:29:04,000
Speaker 1: you forfeit three months of interest. Well, what what interests

647
00:29:04,040 --> 00:29:06,920
Speaker 1: are you forfeitting? You're actually forfeiting the most recent three

648
00:29:06,920 --> 00:29:09,400
Speaker 1: months of interest and when you look at your balance.

649
00:29:09,240 --> 00:29:11,280
Speaker 2: Like we should have a special being or we actually

650
00:29:11,320 --> 00:29:14,520
Speaker 2: answer someone's questions. Right, yeah, i'del like so much. A

651
00:29:14,520 --> 00:29:16,480
Speaker 2: lot of times we always just talk about other aspects

652
00:29:16,560 --> 00:29:18,680
Speaker 2: of it, making sure that everyone is informed because we

653
00:29:18,760 --> 00:29:21,239
Speaker 2: take these questions as a way to teach folks well,

654
00:29:21,240 --> 00:29:23,960
Speaker 2: and when you let we have actually finally answered Scott's question,

655
00:29:24,200 --> 00:29:25,400
Speaker 2: the most recent three months.

656
00:29:25,200 --> 00:29:27,040
Speaker 1: Scott, most recent three months And when you go to

657
00:29:27,040 --> 00:29:29,880
Speaker 1: treasurydirect dot gov, you log in to that really crummy

658
00:29:29,920 --> 00:29:33,680
Speaker 1: website into your account to see your eyebonds and you'll see, Okay,

659
00:29:33,720 --> 00:29:35,600
Speaker 1: I put ten thousand in and it's you know right now,

660
00:29:35,640 --> 00:29:38,280
Speaker 1: it's it's worth ten eight hundred and something dollars if

661
00:29:38,320 --> 00:29:40,720
Speaker 1: I were to cash out today. Well, that is actually

662
00:29:40,800 --> 00:29:44,320
Speaker 1: showing you with the most recent three months interest forfeited.

663
00:29:44,360 --> 00:29:46,280
Speaker 1: So that is the amount you'll cash out as the

664
00:29:46,680 --> 00:29:49,320
Speaker 1: cash out at It's important to mention that that's how

665
00:29:49,320 --> 00:29:53,080
Speaker 1: they kind of keep score. So what do you want

666
00:29:53,120 --> 00:29:54,520
Speaker 1: to do should you get out of these eyebonds and

667
00:29:54,520 --> 00:29:56,360
Speaker 1: get into a CD. Well, you might want to do

668
00:29:56,400 --> 00:29:58,920
Speaker 1: different things depending on the purchase date. Right, You actually

669
00:29:59,080 --> 00:30:00,920
Speaker 1: might want to hold on to eyebonds that you bought,

670
00:30:00,960 --> 00:30:04,960
Speaker 1: let's say in twenty twenty one, and if you bought

671
00:30:05,000 --> 00:30:07,640
Speaker 1: them more recently in twenty twenty three, well, those you

672
00:30:07,720 --> 00:30:09,720
Speaker 1: might want to sell. And so so much depends on

673
00:30:09,760 --> 00:30:11,520
Speaker 1: the three month penalty, how close you are to that

674
00:30:11,560 --> 00:30:14,400
Speaker 1: five year mark, because you do forfeit those three months

675
00:30:14,400 --> 00:30:16,040
Speaker 1: of interesting. If you're getting closer to hitting that five

676
00:30:16,120 --> 00:30:17,760
Speaker 1: year mark, well you might just want to hold on

677
00:30:17,880 --> 00:30:20,600
Speaker 1: a little longer with your twenty twenty one eyebonds. You're

678
00:30:20,600 --> 00:30:23,120
Speaker 1: basically more than three years into a five year term, right,

679
00:30:23,120 --> 00:30:26,959
Speaker 1: And so if rates remain reasonably competitive in the fourst

680
00:30:27,000 --> 00:30:30,240
Speaker 1: percent range, then holding on to avoid that penalty it

681
00:30:30,320 --> 00:30:33,280
Speaker 1: might make sense. But the outcomes are honestly, honestly are

682
00:30:33,360 --> 00:30:36,240
Speaker 1: likely to be fairly similar. So I would just probably

683
00:30:36,240 --> 00:30:38,240
Speaker 1: suggest taking this simple route whatever simpler to.

684
00:30:38,200 --> 00:30:42,040
Speaker 2: You totally and just to completely avoid the inner treasurydirect

685
00:30:42,040 --> 00:30:45,360
Speaker 2: dot gov and the headache that companies that.

686
00:30:45,160 --> 00:30:47,320
Speaker 1: That might be another reason just to cash how completely

687
00:30:47,440 --> 00:30:49,080
Speaker 1: be done with it and move into a which is

688
00:30:49,120 --> 00:30:49,920
Speaker 1: easier saving.

689
00:30:49,760 --> 00:30:51,720
Speaker 2: Which seems silly, but I think for a lot of folks,

690
00:30:51,760 --> 00:30:55,040
Speaker 2: the ability to streamline your personal finances is is huge,

691
00:30:55,080 --> 00:30:56,920
Speaker 2: and I think this actually could be the best move,

692
00:30:56,960 --> 00:30:58,920
Speaker 2: you know, just sell all of your eyebonds, get into

693
00:30:58,960 --> 00:31:02,320
Speaker 2: a higher interest vehicle like a CD, because we are

694
00:31:02,480 --> 00:31:05,800
Speaker 2: talking about a fairly small amounts of difference in what

695
00:31:05,880 --> 00:31:08,920
Speaker 2: you'll earn by selling and forfeiting a portion of interest

696
00:31:08,960 --> 00:31:11,560
Speaker 2: in order to get a higher rate vehicle versus staying

697
00:31:11,600 --> 00:31:13,480
Speaker 2: put and writing it out. And so if you do

698
00:31:13,560 --> 00:31:16,160
Speaker 2: decide to sell all of your eyebonds, which I probably

699
00:31:16,160 --> 00:31:18,560
Speaker 2: would if I were you, then I think one way

700
00:31:18,560 --> 00:31:21,200
Speaker 2: to kind of time it is by pulling the trigger

701
00:31:21,200 --> 00:31:24,800
Speaker 2: and doing that after a recent bout of lower interest payouts.

702
00:31:24,960 --> 00:31:27,959
Speaker 2: So basically sell after three straight months of low interest

703
00:31:28,360 --> 00:31:31,160
Speaker 2: and just after the first day of the fourth month, so.

704
00:31:31,240 --> 00:31:34,240
Speaker 1: Day two of the month, maybe after those those interests

705
00:31:34,280 --> 00:31:35,640
Speaker 1: pay there are really weird.

706
00:31:35,480 --> 00:31:37,360
Speaker 2: To play safe and wait, wait till day three, make

707
00:31:37,360 --> 00:31:39,200
Speaker 2: sure you're fully into Q whatever.

708
00:31:39,320 --> 00:31:42,520
Speaker 1: Yeah, So there is there's someone on YouTube, Jennifer I

709
00:31:42,520 --> 00:31:45,560
Speaker 1: believe for channels called Diamond Nest Egg, and she dives

710
00:31:45,600 --> 00:31:47,680
Speaker 1: deep on eyebonds. And so if you want to know

711
00:31:47,760 --> 00:31:51,640
Speaker 1: like everything about eyebonds more than maybe you even planned

712
00:31:51,640 --> 00:31:54,320
Speaker 1: on encountering, like I would suggest her as a resource.

713
00:31:54,480 --> 00:31:56,000
Speaker 1: We try to kind of hit the high points and

714
00:31:56,040 --> 00:31:59,680
Speaker 1: eyebonds were great. They're still pretty solid, but not for

715
00:31:59,720 --> 00:32:02,600
Speaker 1: every one. And again, especially if we're talking about eebonds

716
00:32:02,680 --> 00:32:05,160
Speaker 1: versus investing, Investing is the way to go if you've

717
00:32:05,160 --> 00:32:07,400
Speaker 1: got a long time horizon, Yes, well, so much of

718
00:32:07,440 --> 00:32:09,640
Speaker 1: this has to do with how what it is that

719
00:32:09,680 --> 00:32:11,400
Speaker 1: you want to do with this money, and if you

720
00:32:11,440 --> 00:32:14,160
Speaker 1: are just sticking it in eyebonds because you're.

721
00:32:13,960 --> 00:32:15,720
Speaker 2: Like, well, I just want to kind of want a

722
00:32:15,800 --> 00:32:18,480
Speaker 2: more guaranteed rate of return. But this is something for

723
00:32:19,120 --> 00:32:20,760
Speaker 2: a goal of yours that you have that's like ten

724
00:32:20,840 --> 00:32:23,800
Speaker 2: years out and even five years out, you probably should

725
00:32:23,840 --> 00:32:26,680
Speaker 2: be avoiding these more fixed income products and instead actually

726
00:32:26,680 --> 00:32:27,800
Speaker 2: be investing get dollars.

727
00:32:27,840 --> 00:32:29,840
Speaker 1: Okay, but let's say we are going from eyebonds to

728
00:32:30,000 --> 00:32:32,440
Speaker 1: a CD. Then start shopping for CDs, right, and bank

729
00:32:32,520 --> 00:32:35,080
Speaker 1: rate does a good job listing those. Marcus by Goldman

730
00:32:35,120 --> 00:32:37,000
Speaker 1: Sacks seems to have the best rate at this moment

731
00:32:37,000 --> 00:32:39,760
Speaker 1: in time. I think they've got like a fourteen month

732
00:32:40,240 --> 00:32:42,200
Speaker 1: CD in the five and a quarter five and a

733
00:32:42,240 --> 00:32:44,640
Speaker 1: half range, so I would look into that. And by

734
00:32:44,680 --> 00:32:46,240
Speaker 1: the way, it's important to mention that even if you

735
00:32:46,280 --> 00:32:48,520
Speaker 1: sold your eyebonds now and you opted to stick your

736
00:32:48,520 --> 00:32:51,400
Speaker 1: money in eyebonds with the higher fixed rate right now.

737
00:32:51,600 --> 00:32:53,880
Speaker 1: Let's say you just traded in some of those older

738
00:32:53,880 --> 00:32:56,760
Speaker 1: eyebonds and you said, listen, I want the higher fixed

739
00:32:56,800 --> 00:32:59,200
Speaker 1: rate and the higher overall rate that I'm making right

740
00:32:59,240 --> 00:33:01,719
Speaker 1: now because the ibon's ibond didn't come with a fixed rate.

741
00:33:02,120 --> 00:33:04,120
Speaker 1: You'd make up for the interest lost in just about

742
00:33:04,160 --> 00:33:06,840
Speaker 1: eight months time. So that can even be another strategy

743
00:33:06,840 --> 00:33:09,400
Speaker 1: if you still want the inflation protection that comes from

744
00:33:09,440 --> 00:33:11,720
Speaker 1: having eyebonds as part of your savings portfolio. You like

745
00:33:11,760 --> 00:33:14,280
Speaker 1: the comfort of an ibon, Yeah, if you're like, oh, man,

746
00:33:14,400 --> 00:33:16,520
Speaker 1: I don't think they've tamped down this inflation thing. I

747
00:33:16,520 --> 00:33:18,720
Speaker 1: think it's going to continue to or I just want

748
00:33:18,720 --> 00:33:23,080
Speaker 1: that downside protection against potentially higher consistent inflation. That's what

749
00:33:23,160 --> 00:33:26,000
Speaker 1: ibonds provide for a lot of people. Is it necessary

750
00:33:26,040 --> 00:33:26,920
Speaker 1: for the average person?

751
00:33:27,360 --> 00:33:29,440
Speaker 2: Probably not. Yeah, But and then again, like I guess,

752
00:33:29,440 --> 00:33:31,440
Speaker 2: one of the downsides too of ibonds is you're still

753
00:33:31,440 --> 00:33:34,000
Speaker 2: limited to just ten thousand dollars and so if you

754
00:33:34,000 --> 00:33:37,480
Speaker 2: are looking to stash a higher, a larger sum of money,

755
00:33:37,520 --> 00:33:39,560
Speaker 2: you're still going to be limited to how much you

756
00:33:39,600 --> 00:33:42,400
Speaker 2: can sock away. And so with that mind, that's when

757
00:33:43,080 --> 00:33:44,760
Speaker 2: ten thousand bucks a year, right, ten thousand dollars a

758
00:33:44,840 --> 00:33:47,840
Speaker 2: year per individual, per Social Security number if you're married,

759
00:33:47,880 --> 00:33:49,240
Speaker 2: you can get twenty grand in there a year, which

760
00:33:49,240 --> 00:33:51,479
Speaker 2: is great. But I guess I find myself leaning more

761
00:33:51,480 --> 00:33:54,760
Speaker 2: and more towards CDs, especially the penalty free CDs, because

762
00:33:54,960 --> 00:33:57,000
Speaker 2: the rates on those are actually not that much less

763
00:33:57,360 --> 00:34:00,120
Speaker 2: than the ones that come with penalties, And so if

764
00:34:00,160 --> 00:34:03,400
Speaker 2: you find yourself in need of that money, you pull

765
00:34:03,480 --> 00:34:05,520
Speaker 2: that money out, you don't lose any interest that you've

766
00:34:05,520 --> 00:34:08,719
Speaker 2: earned all while earning. Like I think c I one

767
00:34:08,760 --> 00:34:11,200
Speaker 2: of our favorite online online banks. They are offering a

768
00:34:11,200 --> 00:34:14,560
Speaker 2: no penalty CD around five percent. Nice, same thing with

769
00:34:14,560 --> 00:34:18,080
Speaker 2: with Marcus with Goldmen sacks, flexibilities or something that it's huge.

770
00:34:18,360 --> 00:34:20,960
Speaker 2: So it's great, and I'm a huge fan of the

771
00:34:22,000 --> 00:34:22,879
Speaker 2: no penalty CD.

772
00:34:23,080 --> 00:34:25,239
Speaker 1: Yeah, because when you're your CDs and ibonds have a

773
00:34:25,239 --> 00:34:27,160
Speaker 1: similar sort of penalty attached to them when you take

774
00:34:27,320 --> 00:34:29,560
Speaker 1: I try to access your money before it's time, you know,

775
00:34:29,600 --> 00:34:30,600
Speaker 1: before it's fully baked in.

776
00:34:30,680 --> 00:34:33,120
Speaker 2: If you can find one that doesn't have, yeah, the penalty, oh,

777
00:34:33,160 --> 00:34:35,000
Speaker 2: I feel like you can have your cake and eat

778
00:34:35,000 --> 00:34:37,319
Speaker 2: it too. Yeah, So hopefully that gets you pointed in

779
00:34:37,360 --> 00:34:39,359
Speaker 2: the right direction, Scott. And again I like what Joe

780
00:34:39,440 --> 00:34:42,719
Speaker 2: said about investing. Don't keep the security and the I

781
00:34:42,760 --> 00:34:46,200
Speaker 2: guess maybe the safety that you receive with an eyebond,

782
00:34:46,200 --> 00:34:49,799
Speaker 2: don't let that keep you from investing, because three out

783
00:34:49,840 --> 00:34:52,480
Speaker 2: of four years the market goes up and on average

784
00:34:52,560 --> 00:34:53,839
Speaker 2: you're going to see a ten percent return.

785
00:34:53,880 --> 00:34:55,680
Speaker 1: And I'm going to confess, I think when the when

786
00:34:55,719 --> 00:34:58,080
Speaker 1: the number on eyebon's hit nine point six two, maybe

787
00:34:58,120 --> 00:34:59,520
Speaker 1: we talked about it too much. Maybe I was a

788
00:34:59,520 --> 00:35:02,040
Speaker 1: little upset, and maybe we didn't talk about.

789
00:35:01,800 --> 00:35:04,040
Speaker 2: It because that was guaranteed. Yeah, you know, and like

790
00:35:04,280 --> 00:35:06,840
Speaker 2: and obviously that's not guaranteed in the market, but on average,

791
00:35:06,880 --> 00:35:08,479
Speaker 2: that is what you were that is what you earned.

792
00:35:08,680 --> 00:35:10,560
Speaker 2: That is that's the kind of yield you're gonna.

793
00:35:10,440 --> 00:35:12,360
Speaker 1: I saw the dollar signs of the lollipops and eyeballs,

794
00:35:12,360 --> 00:35:14,360
Speaker 1: and so we talked about it quite a lot. And

795
00:35:14,400 --> 00:35:17,000
Speaker 1: it's not like it was a devastating move for anyone.

796
00:35:17,040 --> 00:35:19,600
Speaker 1: But if you did that instead of investing over time

797
00:35:19,680 --> 00:35:22,040
Speaker 1: and held on to it, you're experiencing, you know, not

798
00:35:22,320 --> 00:35:24,120
Speaker 1: quite as good returns with at least that portion of

799
00:35:24,160 --> 00:35:24,600
Speaker 1: your holding.

800
00:35:24,680 --> 00:35:25,560
Speaker 4: So totally all.

801
00:35:25,560 --> 00:35:28,160
Speaker 1: Right, man, we got more to get to, including what

802
00:35:28,160 --> 00:35:30,600
Speaker 1: do you do if your your your home has gone

803
00:35:30,680 --> 00:35:33,400
Speaker 1: up in value significantly? Should you take some money out?

804
00:35:33,480 --> 00:35:35,040
Speaker 1: We'll talk about that right after this.

805
00:35:43,680 --> 00:35:45,839
Speaker 2: Right, but we are back from the break and it's

806
00:35:45,960 --> 00:35:49,000
Speaker 2: now time for the Facebook Question of the Week. We've

807
00:35:49,160 --> 00:35:55,000
Speaker 2: talked through multiple different financial products like CDs, Eyebonds timed

808
00:35:55,000 --> 00:35:57,719
Speaker 2: out to talk about another financial product, the he lock.

809
00:35:58,160 --> 00:36:00,880
Speaker 2: This one's from Meg and she said, can someone direct

810
00:36:00,880 --> 00:36:03,640
Speaker 2: me to some episodes where they talk about when or

811
00:36:03,680 --> 00:36:06,560
Speaker 2: when not to use a helock, which is a home

812
00:36:06,600 --> 00:36:10,600
Speaker 2: equity line of credit. I'm considering this option instead of cash,

813
00:36:10,680 --> 00:36:12,560
Speaker 2: which you think about he locks, Joel, I think a

814
00:36:12,600 --> 00:36:14,239
Speaker 2: lot of things about helock, Matt. I think it's a

815
00:36:14,280 --> 00:36:16,200
Speaker 2: really lot of feelings, a lot of emotions.

816
00:36:16,640 --> 00:36:18,680
Speaker 1: Yeah, they do kind of like those whole Disney movies, right,

817
00:36:18,760 --> 00:36:19,680
Speaker 1: they stir something up in me.

818
00:36:20,400 --> 00:36:22,080
Speaker 2: No I did. There's just a lot that you feel

819
00:36:22,080 --> 00:36:24,319
Speaker 2: bad for, Like you're like, oh, oh, I don't remember that.

820
00:36:24,360 --> 00:36:26,080
Speaker 1: Think about Bamby what his mom got shot? Like I

821
00:36:26,120 --> 00:36:27,800
Speaker 1: know they don't actually show his mother getting shot, but

822
00:36:27,800 --> 00:36:28,480
Speaker 1: he knows what happened.

823
00:36:28,560 --> 00:36:29,080
Speaker 2: Super sad.

824
00:36:29,920 --> 00:36:30,000
Speaker 3: No.

825
00:36:30,280 --> 00:36:32,120
Speaker 1: I think there's a lot to talk about, and I

826
00:36:32,120 --> 00:36:35,959
Speaker 1: think they're especially potentially pernicious for a lot of people

827
00:36:36,040 --> 00:36:38,920
Speaker 1: right now, kind of given what's happened with home values.

828
00:36:39,400 --> 00:36:41,520
Speaker 1: We've talked about actually what to do with home equity.

829
00:36:41,760 --> 00:36:43,880
Speaker 1: Back in episode five oh six. We talked about this

830
00:36:43,960 --> 00:36:48,360
Speaker 1: in depth because yeah, there actually answered the question we're.

831
00:36:48,239 --> 00:36:48,680
Speaker 2: Trying to get this.

832
00:36:48,840 --> 00:36:50,719
Speaker 1: There was a previous episode more quickly, we'll link to

833
00:36:50,760 --> 00:36:52,000
Speaker 1: that in the show notes if you want, like a

834
00:36:52,080 --> 00:36:53,640
Speaker 1: forty five minute discussion about.

835
00:36:53,520 --> 00:36:55,400
Speaker 2: Should we include like a little sound effect, like a

836
00:36:55,400 --> 00:36:57,239
Speaker 2: little bell, or what if we actually keep have a

837
00:36:57,280 --> 00:36:59,520
Speaker 2: bell here on the table that when we know that

838
00:36:59,560 --> 00:37:01,880
Speaker 2: we've actually answered the question, we like ring it.

839
00:37:03,320 --> 00:37:04,960
Speaker 1: There's setup that needs to be involved because these are

840
00:37:05,000 --> 00:37:07,240
Speaker 1: complex questions. Now, we can't just always get straight.

841
00:37:07,040 --> 00:37:09,160
Speaker 2: To the answer. Meg episode five oh six we have

842
00:37:09,200 --> 00:37:11,080
Speaker 2: talked about but let's talk about it a little more.

843
00:37:11,120 --> 00:37:12,640
Speaker 1: Yeah, let's talk about it a little more. And if so,

844
00:37:12,680 --> 00:37:14,320
Speaker 1: if you want the end depth explanation, go there. But

845
00:37:14,360 --> 00:37:16,960
Speaker 1: we'll give kind of some thoughts real quick too. The

846
00:37:17,000 --> 00:37:19,319
Speaker 1: amount of home equity that folks are tempted to grab

847
00:37:19,360 --> 00:37:21,120
Speaker 1: now is bigger than it was even two years ago

848
00:37:21,160 --> 00:37:23,600
Speaker 1: when we did that episode. I think that the total

849
00:37:23,840 --> 00:37:26,200
Speaker 1: in home equity right now is something like thirty trillion dollars,

850
00:37:26,200 --> 00:37:28,920
Speaker 1: which means the average homeowner has like two hundred thousand

851
00:37:28,960 --> 00:37:32,640
Speaker 1: dollars in home equity. Not all of that is tappable,

852
00:37:32,640 --> 00:37:34,920
Speaker 1: because your lender wants you to maintain a certain percentage

853
00:37:34,920 --> 00:37:37,399
Speaker 1: of equity in your home. But still, that's a lot

854
00:37:37,400 --> 00:37:39,440
Speaker 1: of money that you could do things with. You could

855
00:37:39,480 --> 00:37:41,960
Speaker 1: tap a significant portion of that, and I don't know,

856
00:37:42,160 --> 00:37:43,919
Speaker 1: choose to do a lot of things. You could get

857
00:37:43,920 --> 00:37:45,680
Speaker 1: it by a jet ski, you could do home renovations.

858
00:37:45,719 --> 00:37:47,920
Speaker 1: There's a lot of options. I mean, really, that money

859
00:37:47,920 --> 00:37:51,960
Speaker 1: then becomes a kind of a nifty little fun fund

860
00:37:52,200 --> 00:37:54,480
Speaker 1: to live the life for your dreams, right, and it

861
00:37:54,520 --> 00:37:57,960
Speaker 1: could be Yeah, I'm not suggesting this is a good thing. Yeah, yeah, Okay,

862
00:37:58,000 --> 00:38:00,759
Speaker 1: I think it sounded like that. Okay, that's not what

863
00:38:00,800 --> 00:38:02,160
Speaker 1: we want you to do. Of course, if you listen

864
00:38:02,239 --> 00:38:04,239
Speaker 1: to the show for any period of time. In these

865
00:38:04,320 --> 00:38:07,040
Speaker 1: rising home values, Matt, they've given I think homeowners a

866
00:38:07,080 --> 00:38:09,120
Speaker 1: sense that they're wealthier than they actually are. It's something

867
00:38:09,120 --> 00:38:12,120
Speaker 1: we've talked about known as the wealth effect. It makes

868
00:38:12,160 --> 00:38:14,040
Speaker 1: it even more enticing to pull out some of those

869
00:38:14,080 --> 00:38:16,279
Speaker 1: funds for current spending because you're like, eh, a lot

870
00:38:16,360 --> 00:38:19,480
Speaker 1: richer than I was a few years ago. So you know,

871
00:38:19,560 --> 00:38:21,640
Speaker 1: now that I'm one hundred thousand dollars return home equity,

872
00:38:21,719 --> 00:38:23,800
Speaker 1: what if I just tap fifty grand of it? What's

873
00:38:23,800 --> 00:38:24,399
Speaker 1: the harm in that?

874
00:38:24,480 --> 00:38:26,760
Speaker 2: No harm, no foul. Yeah, if your home is doubled

875
00:38:26,800 --> 00:38:29,320
Speaker 2: in value, say in a span of just four or

876
00:38:29,360 --> 00:38:32,279
Speaker 2: five years, seven years, it might start to feel like

877
00:38:32,600 --> 00:38:34,880
Speaker 2: this idle cash should be put to use, might be

878
00:38:34,880 --> 00:38:37,400
Speaker 2: burning a hole in your pocket. But I think in

879
00:38:37,520 --> 00:38:42,960
Speaker 2: virtually most all cases that it should remain lying dormant.

880
00:38:43,040 --> 00:38:46,000
Speaker 2: There just aren't many cases we're taking out a loan

881
00:38:46,320 --> 00:38:49,399
Speaker 2: at nine percent, that's essentially what the averages these days,

882
00:38:49,600 --> 00:38:51,759
Speaker 2: where that makes a whole lot of sense, especially since

883
00:38:51,800 --> 00:38:55,239
Speaker 2: Meg mentioned doing this instead of using cash. If you've

884
00:38:55,239 --> 00:38:57,640
Speaker 2: got the cash on hand, man, avoid the helock altogether

885
00:38:57,680 --> 00:39:01,439
Speaker 2: and use it. Avoid paying a nearly ten percent loan,

886
00:39:01,600 --> 00:39:03,160
Speaker 2: you know, avoid taking out a ten percent loan where

887
00:39:03,200 --> 00:39:06,279
Speaker 2: you're paying interest on that. And the only hesitation I

888
00:39:06,320 --> 00:39:08,719
Speaker 2: have about episode five or six, we talk about a

889
00:39:08,719 --> 00:39:11,880
Speaker 2: lot of principles I think that that remain today, and

890
00:39:11,920 --> 00:39:14,120
Speaker 2: I do think it's worth listening. Yes, some me guess

891
00:39:14,120 --> 00:39:16,640
Speaker 2: you're but interest rates have changed, interest rates, the financial

892
00:39:16,680 --> 00:39:19,839
Speaker 2: landscape has changed, and so I so the takeaway might

893
00:39:19,880 --> 00:39:21,960
Speaker 2: be different. The principles remain the same, but the takeaway

894
00:39:22,000 --> 00:39:25,040
Speaker 2: in the end I feel like because back then rates

895
00:39:25,040 --> 00:39:27,080
Speaker 2: weren't were they. I don't think they were nearly as

896
00:39:27,120 --> 00:39:28,960
Speaker 2: high as they are now, and we'd essentially come off

897
00:39:28,960 --> 00:39:31,960
Speaker 2: of a pretty low rate environment where helocks were. It

898
00:39:32,040 --> 00:39:33,640
Speaker 2: was a little more common to do that, and it

899
00:39:33,719 --> 00:39:37,279
Speaker 2: was a smarter move, and there's a danger in that,

900
00:39:37,360 --> 00:39:40,120
Speaker 2: And I like what I fear is that folks, because

901
00:39:40,160 --> 00:39:41,840
Speaker 2: it was something that was more common in that they

902
00:39:41,920 --> 00:39:44,400
Speaker 2: got comfortable with that, they're a little too comfortable with it,

903
00:39:44,400 --> 00:39:46,360
Speaker 2: and they're like, oh yeah, I remember the old helock.

904
00:39:46,440 --> 00:39:48,480
Speaker 2: Let me, let me go do that, and they might

905
00:39:48,520 --> 00:39:52,880
Speaker 2: find themselves closer to the financial precipice because they haven't

906
00:39:53,000 --> 00:39:55,920
Speaker 2: necessarily considered what the rate is. They just know that, like, oh,

907
00:39:56,000 --> 00:39:57,960
Speaker 2: this is something that people do. Oh yeah, someone so

908
00:39:58,080 --> 00:40:00,160
Speaker 2: did this. Oh I remember when oh Matt talked about

909
00:40:00,200 --> 00:40:03,800
Speaker 2: this five years ago. And if you get too comfortable

910
00:40:03,800 --> 00:40:06,680
Speaker 2: with that, you might find yourself closer to living paycheck

911
00:40:06,719 --> 00:40:09,160
Speaker 2: to paycheck than you realize. And that's because you haven't

912
00:40:09,200 --> 00:40:10,720
Speaker 2: taken interest rates into account.

913
00:40:10,760 --> 00:40:12,520
Speaker 1: Yeah, And I think what you said too, If you

914
00:40:12,560 --> 00:40:15,600
Speaker 1: have the cash, why would you use the helock, Because

915
00:40:16,360 --> 00:40:18,920
Speaker 1: you're talking about taking money out of an account that's

916
00:40:18,920 --> 00:40:21,640
Speaker 1: turning you five percent and I'd rather do that, Yeah,

917
00:40:21,680 --> 00:40:24,080
Speaker 1: I'd rather do that than pay nine and so so

918
00:40:24,239 --> 00:40:26,640
Speaker 1: much of tapping a helock is dependent on whether or

919
00:40:26,680 --> 00:40:28,279
Speaker 1: not you have the cash to use instead, what you

920
00:40:28,280 --> 00:40:30,279
Speaker 1: want to do with those funds, and how long it's

921
00:40:30,320 --> 00:40:32,520
Speaker 1: going to take you to pay the helock off. So, Matt,

922
00:40:32,760 --> 00:40:34,759
Speaker 1: I think ninety percent of cases that people take money

923
00:40:34,760 --> 00:40:36,279
Speaker 1: out of their helock for it's.

924
00:40:36,200 --> 00:40:36,840
Speaker 2: A bad idea.

925
00:40:37,040 --> 00:40:40,279
Speaker 1: It's to buy a product or take a vacation or

926
00:40:40,320 --> 00:40:43,120
Speaker 1: something like that. That's using your helock like a piggybank,

927
00:40:43,160 --> 00:40:44,759
Speaker 1: and that's just a bad way to treat it. I

928
00:40:44,760 --> 00:40:46,920
Speaker 1: will say, I think there are some cases where where

929
00:40:47,160 --> 00:40:49,200
Speaker 1: taking out a helock can make sense. Let's say you

930
00:40:49,239 --> 00:40:50,960
Speaker 1: feel like you just have to renovate a portion of

931
00:40:50,960 --> 00:40:52,839
Speaker 1: your house because you're having twins or something like that,

932
00:40:53,000 --> 00:40:55,839
Speaker 1: and you don't have the cash. Being able to tap

933
00:40:55,880 --> 00:40:59,080
Speaker 1: your helock responsibly can allow you to do the work

934
00:40:59,120 --> 00:41:01,160
Speaker 1: before you have the cash on hand. But I would

935
00:41:01,160 --> 00:41:03,520
Speaker 1: say within reason, right, just like we talked about with

936
00:41:03,560 --> 00:41:05,839
Speaker 1: going to college. It's like, I think some student loan

937
00:41:05,880 --> 00:41:08,200
Speaker 1: debt can make sense. One hundred and fifty grand of

938
00:41:08,200 --> 00:41:10,319
Speaker 1: student loan debt for a silly degree. That's not going

939
00:41:10,360 --> 00:41:11,960
Speaker 1: to really bring you a whole bunch of burnings at

940
00:41:11,960 --> 00:41:13,879
Speaker 1: the end of the day. That's not a good way

941
00:41:13,920 --> 00:41:16,040
Speaker 1: of using your student loan debt. So it's only a

942
00:41:16,040 --> 00:41:18,720
Speaker 1: reasonable idea to tap a home equity line of credit

943
00:41:19,080 --> 00:41:21,040
Speaker 1: if it's for a good reason and you have a

944
00:41:21,080 --> 00:41:23,680
Speaker 1: reasonable timeline. I think like if you can, if you

945
00:41:23,719 --> 00:41:25,040
Speaker 1: have a way to be able to pay it back

946
00:41:25,280 --> 00:41:27,560
Speaker 1: in two years or less, if you've been responsible in

947
00:41:27,600 --> 00:41:31,040
Speaker 1: the other areas of your personal finances, then then and

948
00:41:31,120 --> 00:41:32,800
Speaker 1: you know that you can pay back what you borrowed.

949
00:41:33,280 --> 00:41:34,960
Speaker 1: Some people take out a hea lock and they're like, yeah,

950
00:41:35,200 --> 00:41:36,640
Speaker 1: probably eight years down the road, I'll be able to

951
00:41:36,680 --> 00:41:39,520
Speaker 1: get around to finish paying paying it off. That's a

952
00:41:39,560 --> 00:41:42,000
Speaker 1: recipe for disaster. That to me is almost akin to

953
00:41:42,040 --> 00:41:42,640
Speaker 1: credit card debt.

954
00:41:42,640 --> 00:41:44,319
Speaker 2: Well, because we don't know where rates are going, that's

955
00:41:44,360 --> 00:41:47,200
Speaker 2: the thing. We're closer to nine percent now, but I

956
00:41:47,200 --> 00:41:49,560
Speaker 2: mean we could see it closer to credit card levels

957
00:41:49,640 --> 00:41:51,759
Speaker 2: here in the future. So quite literally, it could likely,

958
00:41:51,840 --> 00:41:56,040
Speaker 2: but maybe y yeah, unlikely. Like in my mind, let

959
00:41:56,360 --> 00:41:58,879
Speaker 2: you spend the money on mentioning what credit card rates

960
00:41:58,880 --> 00:42:01,239
Speaker 2: would be got I think what you spend that money

961
00:42:01,280 --> 00:42:03,840
Speaker 2: on is a little bit less important than your personal

962
00:42:03,920 --> 00:42:05,920
Speaker 2: financial situation, because I think there might be a lot

963
00:42:05,960 --> 00:42:08,680
Speaker 2: of folks who would justify a heelock, like you said,

964
00:42:08,719 --> 00:42:10,920
Speaker 2: to renovate their home. Oh it's like, oh, it's a

965
00:42:11,000 --> 00:42:14,120
Speaker 2: kind of a dated kitchen, and they're thinking, well, yeah,

966
00:42:14,560 --> 00:42:17,000
Speaker 2: we're taking out a helock, but we're increasing the value

967
00:42:17,040 --> 00:42:20,120
Speaker 2: of our home. Well, I don't care that you've increased

968
00:42:21,120 --> 00:42:23,919
Speaker 2: your property value. You are still making a payment every

969
00:42:23,960 --> 00:42:25,440
Speaker 2: single month. That doesn't change that.

970
00:42:25,560 --> 00:42:27,200
Speaker 1: And you're not raising a dollar per dollar based on

971
00:42:27,239 --> 00:42:29,160
Speaker 1: what you put in. You're raising it sixty cents on

972
00:42:29,200 --> 00:42:30,680
Speaker 1: the dollar. And even still you can raise the.

973
00:42:30,680 --> 00:42:32,600
Speaker 2: Value of it. But how does that impact your income?

974
00:42:33,000 --> 00:42:35,480
Speaker 2: It does not, And so the ability for you to

975
00:42:35,560 --> 00:42:38,440
Speaker 2: service that debt, I think is so important. How many

976
00:42:38,480 --> 00:42:40,560
Speaker 2: other debts do you have? Do you have a fully

977
00:42:40,560 --> 00:42:42,840
Speaker 2: fund in emergency fund? You have six solid months of

978
00:42:42,840 --> 00:42:44,440
Speaker 2: living expenses set aside?

979
00:42:44,640 --> 00:42:46,400
Speaker 1: Is there an impact your ability to contribute to your

980
00:42:46,440 --> 00:42:47,960
Speaker 1: four one K and get the full company match?

981
00:42:48,080 --> 00:42:48,279
Speaker 3: Yeah?

982
00:42:48,280 --> 00:42:50,799
Speaker 2: Et cetera. F that Rother, I there are so many

983
00:42:50,880 --> 00:42:52,719
Speaker 2: of these other things, Like, you need to be in

984
00:42:52,760 --> 00:42:57,160
Speaker 2: an incredibly solid financial position to even consider taking out

985
00:42:57,440 --> 00:42:59,839
Speaker 2: a helock, in my opinion. And if that's the case,

986
00:43:00,160 --> 00:43:02,200
Speaker 2: if you are somebody who's like, yep, I don't have

987
00:43:02,239 --> 00:43:04,480
Speaker 2: any other debts, we just have a reasonable mortgage on

988
00:43:04,520 --> 00:43:06,879
Speaker 2: the property, We've got six months of living expenses, we've

989
00:43:06,920 --> 00:43:11,399
Speaker 2: got we're a dual income family. Well, if that's the case,

990
00:43:11,440 --> 00:43:13,879
Speaker 2: I bet you could probably like hold off and save

991
00:43:14,000 --> 00:43:16,360
Speaker 2: up and have cash on hand rather than pay the

992
00:43:16,440 --> 00:43:18,920
Speaker 2: nine percent nine plus percent. And so I guess that's

993
00:43:18,960 --> 00:43:22,000
Speaker 2: why I'm like, Oh, I think it's an incredibly rare

994
00:43:22,080 --> 00:43:25,640
Speaker 2: situation where where helock actually does make sense, because I

995
00:43:25,719 --> 00:43:28,560
Speaker 2: just don't want to see somebody paying like double digits

996
00:43:28,560 --> 00:43:32,160
Speaker 2: and interest in order to fund something that isn't completely necessary.

997
00:43:32,200 --> 00:43:35,080
Speaker 1: It's definitely a be careful tread lightly super careful. I

998
00:43:35,120 --> 00:43:37,919
Speaker 1: think we've kind of normalized helocks. I love the idea

999
00:43:37,920 --> 00:43:39,920
Speaker 1: of actually most home owners having a helock as a

1000
00:43:40,040 --> 00:43:42,799
Speaker 1: backup to the backup sort of emergency fund thing, but

1001
00:43:43,239 --> 00:43:45,600
Speaker 1: using that helock, oh man, it needs to be done

1002
00:43:45,719 --> 00:43:48,919
Speaker 1: with extreme intention and within some pretty strict card rails,

1003
00:43:49,120 --> 00:43:51,640
Speaker 1: so you don't find yourself, yeah, going off the rails,

1004
00:43:51,920 --> 00:43:54,000
Speaker 1: owing more money every month than you can actually afford.

1005
00:43:54,080 --> 00:43:57,919
Speaker 1: Especially man, we've I've heard from listeners who who got

1006
00:43:57,960 --> 00:44:00,960
Speaker 1: it a helock when rates were low, rates kept climbing

1007
00:44:00,960 --> 00:44:03,480
Speaker 1: and guess what, riding that thing up into the double digits, man, right,

1008
00:44:03,560 --> 00:44:05,120
Speaker 1: And I hate that now they're between a rock and

1009
00:44:05,160 --> 00:44:07,120
Speaker 1: a hard place trying to pay it off. So you

1010
00:44:07,360 --> 00:44:10,240
Speaker 1: definitely want to make sure you've got financial padding, financial

1011
00:44:10,280 --> 00:44:13,040
Speaker 1: breathing room before you take out a helock. And even

1012
00:44:13,080 --> 00:44:15,280
Speaker 1: then maybe you just hold off, maybe you post postpone

1013
00:44:15,320 --> 00:44:17,799
Speaker 1: those improvements so you can do it with cash. So Meg,

1014
00:44:17,880 --> 00:44:19,960
Speaker 1: I hope that's helpful. If everyone else out there who's

1015
00:44:20,000 --> 00:44:23,680
Speaker 1: like I in their home their home's value and they're like,

1016
00:44:23,760 --> 00:44:26,359
Speaker 1: there's a lot of cash shit in here. Well, kind

1017
00:44:26,360 --> 00:44:27,880
Speaker 1: of like you said, Matt, let most of it should

1018
00:44:27,880 --> 00:44:30,560
Speaker 1: remain lying dormant like you don't. For most people, tapping

1019
00:44:30,640 --> 00:44:31,440
Speaker 1: it is a bad idea.

1020
00:44:31,680 --> 00:44:35,800
Speaker 2: Yeah, And here's the other. Was it a Nick from earlier?

1021
00:44:36,200 --> 00:44:37,879
Speaker 2: Everyone who is still listening, you want to be more

1022
00:44:37,920 --> 00:44:40,160
Speaker 2: like Nick. You want to have a paid four house

1023
00:44:40,239 --> 00:44:41,880
Speaker 2: and you don't have a paidour house by taking out

1024
00:44:41,880 --> 00:44:44,799
Speaker 2: additional debt on that property. You want to be in

1025
00:44:44,840 --> 00:44:47,600
Speaker 2: a strong financial position. Think about how nice it would

1026
00:44:47,600 --> 00:44:48,319
Speaker 2: be to be Nick.

1027
00:44:48,520 --> 00:44:50,839
Speaker 1: Right, Oh yeah, we all want to be like Nick.

1028
00:44:50,840 --> 00:44:52,440
Speaker 1: Would you rather have the updated kitchen or do you

1029
00:44:52,480 --> 00:44:53,399
Speaker 1: want to live a life like Nick?

1030
00:44:53,520 --> 00:44:55,560
Speaker 2: Yeah? Let's I choose Nick. Yeah, I love it.

1031
00:44:55,920 --> 00:44:57,200
Speaker 1: Let's get back to the beer that we had on

1032
00:44:57,200 --> 00:44:59,440
Speaker 1: this episode. This was called double duck Pin. It's a

1033
00:44:59,480 --> 00:45:03,160
Speaker 1: double ip donated by listener Luke G. What were your

1034
00:45:03,160 --> 00:45:04,360
Speaker 1: thoughts on this one beer?

1035
00:45:04,520 --> 00:45:08,400
Speaker 2: Brewed by Union Craft Brewing? This was it was a

1036
00:45:08,400 --> 00:45:10,319
Speaker 2: good beer man. This is a it's more like a

1037
00:45:10,360 --> 00:45:15,040
Speaker 2: traditional American ipa. Even though this is out of let's

1038
00:45:14,640 --> 00:45:19,520
Speaker 2: see Maryland, Baltimore specifically, is that considered the northeast? Is

1039
00:45:19,560 --> 00:45:21,719
Speaker 2: that like New England? I think so? I guess so, yeah,

1040
00:45:21,880 --> 00:45:24,200
Speaker 2: Annapolis that feels like New England to me, probably like

1041
00:45:24,280 --> 00:45:27,040
Speaker 2: right on the border though. Yeah. So because of that,

1042
00:45:27,120 --> 00:45:29,680
Speaker 2: I think, well, all IPAs that come from New England

1043
00:45:29,719 --> 00:45:33,080
Speaker 2: must be New England hazes. But this is totally not

1044
00:45:33,160 --> 00:45:35,279
Speaker 2: a New England hazy. This is more like a traditional

1045
00:45:35,320 --> 00:45:39,400
Speaker 2: American in this case double ipa. It was good, nice

1046
00:45:39,400 --> 00:45:42,879
Speaker 2: citrus flavors, a lot of like strong malt backbones, got

1047
00:45:42,880 --> 00:45:43,759
Speaker 2: the hops going on.

1048
00:45:44,200 --> 00:45:47,239
Speaker 1: Yeah, more of the traditional IPA bitterness going on. So yeah, grapefruit,

1049
00:45:47,360 --> 00:45:49,759
Speaker 1: piney notes. I would say it reminds me of some

1050
00:45:49,800 --> 00:45:53,120
Speaker 1: of the classics here in Avana IPAs that we've been

1051
00:45:53,120 --> 00:45:56,400
Speaker 1: able to enjoy throughout the years. And it's nice because,

1052
00:45:56,440 --> 00:45:58,880
Speaker 1: like we're so used to drinking some of those hazy

1053
00:45:59,040 --> 00:46:01,600
Speaker 1: juice here versions. It's nice to kind of go back

1054
00:46:01,600 --> 00:46:04,200
Speaker 1: to the IPA roots. And I'm just reminded I still

1055
00:46:04,239 --> 00:46:06,320
Speaker 1: love a bitter one too. It's an Yeah, it's an OG's.

1056
00:46:06,320 --> 00:46:08,320
Speaker 2: It's funny that you mentioned like Sierra Tomodic because like,

1057
00:46:08,360 --> 00:46:10,200
Speaker 2: when's the last time we've actually had like a true

1058
00:46:10,200 --> 00:46:13,239
Speaker 2: West Coast i PA in our minds, We've I think

1059
00:46:13,280 --> 00:46:16,319
Speaker 2: we've like created a binary sort of set up here.

1060
00:46:16,320 --> 00:46:18,279
Speaker 2: It's like it's either a New England or it's everything else.

1061
00:46:18,640 --> 00:46:22,560
Speaker 2: But like West Coast IPAs are super piny pits, like

1062
00:46:22,600 --> 00:46:26,719
Speaker 2: you remember Green Flash, like like Palette Recer, like some

1063
00:46:26,760 --> 00:46:29,640
Speaker 2: of those beers. Man, those things were insane, Like in

1064
00:46:29,680 --> 00:46:32,120
Speaker 2: my mind those were like the West Coast. Maybe that's

1065
00:46:32,120 --> 00:46:33,000
Speaker 2: more like West Coast.

1066
00:46:32,840 --> 00:46:35,920
Speaker 1: Extreme, speaking of over extending yourself. Green Flash did just that.

1067
00:46:35,960 --> 00:46:38,440
Speaker 1: They built out another brewery on the East coast. Then

1068
00:46:38,480 --> 00:46:41,080
Speaker 1: they went busted, and I forget who took over that brewery.

1069
00:46:41,120 --> 00:46:42,319
Speaker 2: I want to say, well, they sold off a lot

1070
00:46:42,320 --> 00:46:44,759
Speaker 2: of their equipment and that's where man, we're getting super

1071
00:46:44,760 --> 00:46:47,080
Speaker 2: beer in nerve here during this episode New Realm which

1072
00:46:47,120 --> 00:46:49,839
Speaker 2: opened in Atlanta. What is this maybe six years ago?

1073
00:46:50,400 --> 00:46:53,120
Speaker 2: They're on the Atlanta beltline, but they bought a lot

1074
00:46:53,160 --> 00:46:56,320
Speaker 2: of their brewing equipment after they had a shutter that location.

1075
00:46:56,440 --> 00:46:58,920
Speaker 2: And this like going back to the one Mitch Steel

1076
00:46:59,040 --> 00:47:02,359
Speaker 2: and speaking of west Io, he came from Stone. Man,

1077
00:47:02,400 --> 00:47:05,759
Speaker 2: we're such inside Wes. Yeah, West Coast. He literally wrote

1078
00:47:05,800 --> 00:47:08,760
Speaker 2: the book on the West Coast. IPA, it's come full circle.

1079
00:47:09,880 --> 00:47:12,400
Speaker 1: Well yeah, and it just goes back to Usner. He like,

1080
00:47:12,400 --> 00:47:15,200
Speaker 1: don't over extend your shelf, folks, even though it seems

1081
00:47:15,239 --> 00:47:17,200
Speaker 1: like a great opportunity, it could come back to Mike

1082
00:47:17,320 --> 00:47:18,600
Speaker 1: just so you want to be a little conservative at

1083
00:47:18,680 --> 00:47:19,320
Speaker 1: least on that front.

1084
00:47:19,640 --> 00:47:22,000
Speaker 2: But man, I'm glad we got to enjoy a beer

1085
00:47:22,000 --> 00:47:25,520
Speaker 2: though from you what is it? Union Craft Brewing? Thanks

1086
00:47:25,520 --> 00:47:29,600
Speaker 2: again to Luke. Lukeg specifically appreciate you, Luke, our matth

1087
00:47:29,640 --> 00:47:30,600
Speaker 2: that's gonna do it for this one.

1088
00:47:30,880 --> 00:47:33,280
Speaker 1: We'll have show notes links to some of the resources

1089
00:47:33,320 --> 00:47:36,800
Speaker 1: we mentioned up on the website at howtomoney dot com.

1090
00:47:36,800 --> 00:47:37,719
Speaker 2: But I guess we'll.

1091
00:47:37,560 --> 00:47:40,320
Speaker 1: See folks back here on Wednesday for an interview episode.

1092
00:47:40,520 --> 00:47:44,280
Speaker 1: Until next time, best Friends Out and best Friends Out