1 00:00:00,080 --> 00:00:02,920 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 2 00:00:03,000 --> 00:00:27,760 Speaker 1: and today we're discussing cashing in on the home equity explosion. Yeah. Actually, 3 00:00:27,800 --> 00:00:30,880 Speaker 1: anybody who owns a home and who has the app 4 00:00:31,240 --> 00:00:34,720 Speaker 1: redfin or Zello on their phone knows that they've seen 5 00:00:35,000 --> 00:00:38,199 Speaker 1: some dramatic increases on on their home value. We've seen 6 00:00:38,240 --> 00:00:40,040 Speaker 1: it for a while now. But the question we're asking 7 00:00:40,120 --> 00:00:42,040 Speaker 1: today is what should you be doing about that. I'm 8 00:00:42,040 --> 00:00:44,440 Speaker 1: looking forward to this episode. We're gonna tell you what 9 00:00:44,560 --> 00:00:46,879 Speaker 1: to do. But but Joel, you've got you've got like 10 00:00:46,920 --> 00:00:48,960 Speaker 1: some looks like you've got some junk boss. You always 11 00:00:48,960 --> 00:00:50,479 Speaker 1: telling people what to do. This is what we're gonna do. 12 00:00:50,560 --> 00:00:52,280 Speaker 1: You know, this is what you're gonna do. Dang it, 13 00:00:52,320 --> 00:00:54,640 Speaker 1: and you better like it. Uh way. We will tell 14 00:00:54,640 --> 00:00:56,160 Speaker 1: you what we think you should do with your home 15 00:00:56,160 --> 00:00:58,800 Speaker 1: equity after you know, just a little bit. But before 16 00:00:58,840 --> 00:01:01,840 Speaker 1: we get to talk about using using your return envelope mailers, 17 00:01:02,600 --> 00:01:04,320 Speaker 1: I've already done that. We've already mentioned that on the show. 18 00:01:04,360 --> 00:01:06,679 Speaker 1: I do occasionally do that. But no, I want to 19 00:01:06,680 --> 00:01:08,399 Speaker 1: talk about something I did get in the mail, and 20 00:01:08,440 --> 00:01:11,640 Speaker 1: this was from a loan servicer. They wanted to notify me. 21 00:01:11,720 --> 00:01:14,959 Speaker 1: I guess maybe I had either applied for a mortgage 22 00:01:15,000 --> 00:01:17,800 Speaker 1: with this company in the past, and they reached out 23 00:01:17,959 --> 00:01:20,400 Speaker 1: via snail mail to tell me that there's been some 24 00:01:20,440 --> 00:01:23,800 Speaker 1: sort of breach. Some of my information has been compromised 25 00:01:23,920 --> 00:01:27,720 Speaker 1: by an unauthorized person. And what information, you might ask, Well, 26 00:01:27,959 --> 00:01:30,720 Speaker 1: my name, my address, my loan number and so security 27 00:01:30,800 --> 00:01:33,480 Speaker 1: number were in these files. That's the one that matters 28 00:01:34,200 --> 00:01:36,560 Speaker 1: social that's the one you really Yeah. Unfortunately didn't say 29 00:01:36,560 --> 00:01:39,240 Speaker 1: anything about mother's name, but yeah, you know that could 30 00:01:39,240 --> 00:01:41,840 Speaker 1: have been in there too, So to me, like, the 31 00:01:42,080 --> 00:01:47,000 Speaker 1: interesting thing was, they offered me free credit monitoring, and uh, 32 00:01:47,120 --> 00:01:48,520 Speaker 1: you know, you and I we've talked on the show 33 00:01:48,600 --> 00:01:51,640 Speaker 1: about kind of how we feel about credit monitoring. It's 34 00:01:52,160 --> 00:01:54,760 Speaker 1: it's kind of overrated. It's kind of like I was 35 00:01:54,760 --> 00:01:56,640 Speaker 1: gonna let anybody know that it was your favorite thing. 36 00:01:57,240 --> 00:01:59,480 Speaker 1: Yeah right, well, no, craft beer is my favorite thing ever. 37 00:01:59,720 --> 00:02:02,760 Speaker 1: But uh, yes, so credit monitoring. I'm not going to 38 00:02:02,800 --> 00:02:04,440 Speaker 1: take them up on this offering. I'm not going to 39 00:02:04,480 --> 00:02:06,080 Speaker 1: sign up for this. It's like, even though it's free, 40 00:02:06,320 --> 00:02:09,280 Speaker 1: you're offering me, offering me monitoring, but you're the one 41 00:02:09,280 --> 00:02:12,679 Speaker 1: who actually compromise my information in the first place. It's 42 00:02:12,680 --> 00:02:14,680 Speaker 1: like your dog coming to you and being like, hey, 43 00:02:14,840 --> 00:02:17,239 Speaker 1: youn need guard that slice of pizza because the last 44 00:02:17,240 --> 00:02:19,760 Speaker 1: one got eaten by me. I'll make sure it doesn't 45 00:02:19,760 --> 00:02:23,000 Speaker 1: happen again, right right, Well. And the problem though, with 46 00:02:23,000 --> 00:02:25,680 Speaker 1: credit monitoring, the thing we've talked about forever, This is 47 00:02:25,760 --> 00:02:28,480 Speaker 1: classic in every breach scenario now which I think we 48 00:02:28,560 --> 00:02:31,600 Speaker 1: have all experienced breach fatigue, we kind of believe and 49 00:02:31,840 --> 00:02:34,240 Speaker 1: truthfully believe that all of our information is kind of 50 00:02:34,280 --> 00:02:38,280 Speaker 1: already out there. Thanks Equifax back in for that, but 51 00:02:38,360 --> 00:02:41,120 Speaker 1: we're not gonna let that one go never. We will 52 00:02:41,160 --> 00:02:43,760 Speaker 1: never let that one go. And and so you know this, 53 00:02:43,760 --> 00:02:47,000 Speaker 1: this just doesn't matter. This credit monitoring is kind of 54 00:02:47,160 --> 00:02:51,000 Speaker 1: sort of worthless. The problem isn't this free offer. The 55 00:02:51,040 --> 00:02:54,200 Speaker 1: problem is that people often pay for credit monitoring when 56 00:02:54,240 --> 00:02:56,400 Speaker 1: it is an inferior product. And so I just want 57 00:02:56,400 --> 00:02:57,840 Speaker 1: to remind people I saw this in the mail and 58 00:02:57,840 --> 00:02:59,800 Speaker 1: I kind of chuckled a little bit, ha ha, not 59 00:03:00,040 --> 00:03:02,880 Speaker 1: ending up for that because credit freeze are the best, 60 00:03:02,880 --> 00:03:06,040 Speaker 1: and credit freezes are free. Yeah, you guys are barking 61 00:03:06,120 --> 00:03:07,959 Speaker 1: up the wrong tree. That's that's sort of like if 62 00:03:08,360 --> 00:03:10,000 Speaker 1: if I got a coupon in the mail for like 63 00:03:10,040 --> 00:03:12,520 Speaker 1: Whole Foods. It's like, you guys know I don't go 64 00:03:12,560 --> 00:03:16,120 Speaker 1: to Whole Foods. You know that I love Aldi in 65 00:03:16,120 --> 00:03:19,160 Speaker 1: the Circular fil and I actually have a great article 66 00:03:19,320 --> 00:03:21,639 Speaker 1: on credit freezes, how you do it for free, how 67 00:03:21,919 --> 00:03:25,000 Speaker 1: how easy it is. By the way, federal law mandates 68 00:03:25,000 --> 00:03:27,520 Speaker 1: that you get acts have access to freezing your credit 69 00:03:27,560 --> 00:03:29,560 Speaker 1: for free, but there are a lot of pitfalls along 70 00:03:29,560 --> 00:03:31,880 Speaker 1: the way ways that you could get taking advantage of 71 00:03:31,919 --> 00:03:34,640 Speaker 1: by the credit bureaus, of course. And we'll put a 72 00:03:34,639 --> 00:03:37,480 Speaker 1: link to that article in the show notes for today's episode. Done, 73 00:03:37,560 --> 00:03:39,040 Speaker 1: But Matt, let's mention the be that we're having on 74 00:03:39,080 --> 00:03:41,360 Speaker 1: this episode. This one is called Let's do It Above 75 00:03:41,400 --> 00:03:45,720 Speaker 1: the Threshold of Hell by Burial Brewing. There's so melodramatic 76 00:03:45,760 --> 00:03:48,040 Speaker 1: with their beer names. For anybody who has heard us 77 00:03:48,320 --> 00:03:51,360 Speaker 1: mentioned the name of other Burial beers on this show, 78 00:03:51,480 --> 00:03:53,600 Speaker 1: all of the names are something like this. They're ridiculous. 79 00:03:53,800 --> 00:03:55,680 Speaker 1: But I am looking forward to enjoying this one, and 80 00:03:55,720 --> 00:03:58,440 Speaker 1: we will share our thoughts on the specific Asheville, North 81 00:03:58,440 --> 00:04:00,760 Speaker 1: Carolina Brewery at the end of the Yes. Well, but 82 00:04:00,840 --> 00:04:03,240 Speaker 1: let's get onto the subject at hand. Cashing in on 83 00:04:03,320 --> 00:04:07,200 Speaker 1: the home equity explosion. And I know this might be 84 00:04:07,240 --> 00:04:08,480 Speaker 1: hard for you to believe. It's not hard for you 85 00:04:08,520 --> 00:04:10,280 Speaker 1: to believe for my best friend, you know, you know everything, 86 00:04:10,320 --> 00:04:13,080 Speaker 1: But for everyone else out there, I was not popular 87 00:04:13,160 --> 00:04:16,480 Speaker 1: in school. Like they're shocked right now, their minds are blown. 88 00:04:17,000 --> 00:04:19,760 Speaker 1: I was at wasast not the popular kid, and randomly 89 00:04:19,800 --> 00:04:22,640 Speaker 1: actually in sixth grade, for just about a week and 90 00:04:22,640 --> 00:04:25,120 Speaker 1: a half, I was randomly popular at the beginning of 91 00:04:25,160 --> 00:04:27,240 Speaker 1: sixth grade. Why it was it was kind of a 92 00:04:27,240 --> 00:04:29,040 Speaker 1: week and a half. I don't know why. But before 93 00:04:29,040 --> 00:04:31,040 Speaker 1: they had you figured it out. They're like, I think 94 00:04:31,040 --> 00:04:33,080 Speaker 1: they were like, maybe that guy's cool, we'll include him. 95 00:04:34,160 --> 00:04:37,200 Speaker 1: Were wrong, he's pretty tall. Maybe he's just amazing on 96 00:04:37,360 --> 00:04:39,560 Speaker 1: the basketball court. Was that it had you like shot 97 00:04:39,640 --> 00:04:41,840 Speaker 1: up like a foot. Maybe that's it. Maybe maybe they 98 00:04:41,839 --> 00:04:44,400 Speaker 1: assumed I had can this guy dunk athletic talent? But 99 00:04:44,720 --> 00:04:46,279 Speaker 1: a last I did not. Then they watched you play, 100 00:04:46,320 --> 00:04:49,000 Speaker 1: they're like, oh, but in the end it didn't even 101 00:04:49,000 --> 00:04:50,800 Speaker 1: have the Scott It was. It was this mirrage, right. 102 00:04:50,839 --> 00:04:52,719 Speaker 1: It lasted for a short period of time and then 103 00:04:53,320 --> 00:04:54,760 Speaker 1: they figured me out and they were like, no, wait, 104 00:04:54,920 --> 00:04:57,840 Speaker 1: he's nerd material. No longer in the cool club, and 105 00:04:57,880 --> 00:05:00,680 Speaker 1: so it just it didn't last long. And uh, just 106 00:05:00,720 --> 00:05:03,640 Speaker 1: like middle school, Joel, something similar has actually kind of 107 00:05:03,640 --> 00:05:05,760 Speaker 1: happened to millions of Americans when it comes to their 108 00:05:05,800 --> 00:05:09,120 Speaker 1: home equity. They bought a house, they are thinking the foundation, 109 00:05:09,200 --> 00:05:12,440 Speaker 1: the walls, and the acreage that they purchased for shelter 110 00:05:13,080 --> 00:05:16,600 Speaker 1: that and and then for community too. Well, now that 111 00:05:16,880 --> 00:05:19,159 Speaker 1: starts to look more like a piggy bank thanks to 112 00:05:19,160 --> 00:05:21,520 Speaker 1: the rapid growth in home prices. I don't know if 113 00:05:21,560 --> 00:05:23,280 Speaker 1: that's a really good correlation. I think I just wanted 114 00:05:23,279 --> 00:05:26,080 Speaker 1: to tell everyone I was I'm a loser. But except 115 00:05:26,120 --> 00:05:29,280 Speaker 1: that in this case, we don't think that we're gonna 116 00:05:29,279 --> 00:05:31,000 Speaker 1: see values come back down. We'll actually talk a little 117 00:05:31,000 --> 00:05:33,360 Speaker 1: bit more about that later on in the show. It's right, yeah, 118 00:05:33,480 --> 00:05:36,120 Speaker 1: but the the average homeowner actually saw their homes value 119 00:05:36,200 --> 00:05:40,160 Speaker 1: jump dollars last year alone, like when one single year, 120 00:05:40,520 --> 00:05:44,479 Speaker 1: And uh so, yeah, what should you do with this information? 121 00:05:44,520 --> 00:05:47,920 Speaker 1: What should you do with this newfound riches with more money, 122 00:05:48,040 --> 00:05:50,320 Speaker 1: with their home being worth so much more. We're gonna 123 00:05:50,320 --> 00:05:52,880 Speaker 1: get to the bottom of that in this episode. Yes 124 00:05:53,120 --> 00:05:56,320 Speaker 1: we will. Yeah, home equity it normally moves that more 125 00:05:56,360 --> 00:05:59,080 Speaker 1: of a glacial pace, but you don't really need us 126 00:05:59,080 --> 00:06:01,280 Speaker 1: here to the point out that it's become more cheatah like, 127 00:06:01,400 --> 00:06:04,040 Speaker 1: over the past couple of years, there is over twenty 128 00:06:04,120 --> 00:06:09,000 Speaker 1: five trillion dollars in equity hanging out doing not much 129 00:06:09,000 --> 00:06:12,000 Speaker 1: of anything except for making recent home buyers feel like 130 00:06:12,120 --> 00:06:14,719 Speaker 1: they are real estate moguls. Like I'm of course brilliant 131 00:06:14,839 --> 00:06:16,839 Speaker 1: because I bought at the exact right time. I'm a genius. 132 00:06:17,000 --> 00:06:19,240 Speaker 1: I know exactly what I'm doing. But there's a problem here. 133 00:06:19,440 --> 00:06:22,159 Speaker 1: As you've seen your equity balloon, you might be tempted 134 00:06:22,200 --> 00:06:25,040 Speaker 1: to do something with those newly found funds. You might 135 00:06:25,080 --> 00:06:27,360 Speaker 1: starting to to get the itch to finally maybe buy 136 00:06:27,360 --> 00:06:30,200 Speaker 1: that boat or to go on a lavish vacation or something. 137 00:06:30,520 --> 00:06:32,120 Speaker 1: Or maybe you're just more of a money nerd right 138 00:06:32,160 --> 00:06:34,880 Speaker 1: and you just hate to see that equity sitting there 139 00:06:35,040 --> 00:06:37,839 Speaker 1: under utilized. Either way, though, you might be facing a 140 00:06:37,880 --> 00:06:41,000 Speaker 1: money decision with a number of zeros after it, and 141 00:06:41,000 --> 00:06:42,760 Speaker 1: we want to help you to think about it well. 142 00:06:42,800 --> 00:06:44,840 Speaker 1: We want you to make the right decision that's right. 143 00:06:44,880 --> 00:06:47,680 Speaker 1: And essentially, everyone who purchased a home in the last 144 00:06:47,680 --> 00:06:49,880 Speaker 1: ten to twelve years has done really well for himself. 145 00:06:49,920 --> 00:06:51,520 Speaker 1: It's not just the last two years. It's like the 146 00:06:51,600 --> 00:06:54,960 Speaker 1: last decade, but in particular the last you know, twelve 147 00:06:55,040 --> 00:06:57,919 Speaker 1: to fifteen months have been outside. We've seen outside gains. 148 00:06:58,120 --> 00:06:59,760 Speaker 1: But really, if you've owned a home for the last 149 00:06:59,800 --> 00:07:02,320 Speaker 1: dey gate, you're doing great. And and then anyone who 150 00:07:02,360 --> 00:07:04,239 Speaker 1: hasn't bought a home, then Matt on the flip side 151 00:07:04,400 --> 00:07:06,400 Speaker 1: but wanted to buy a home, they're just bumped. They're 152 00:07:06,400 --> 00:07:08,880 Speaker 1: sitting on the sidelines and they're probably fuming. They're a 153 00:07:08,880 --> 00:07:11,200 Speaker 1: little piss that they've missed out on some of these games, 154 00:07:11,240 --> 00:07:14,520 Speaker 1: which I understand because they're on the outside looking in 155 00:07:14,720 --> 00:07:18,400 Speaker 1: at an abundance of what we call tappable home equity, 156 00:07:18,520 --> 00:07:20,720 Speaker 1: which you mentioned the overall amount of home equity, but 157 00:07:20,880 --> 00:07:23,600 Speaker 1: the tappable amount is just hit a record of nine 158 00:07:23,600 --> 00:07:26,640 Speaker 1: point nine billion dollars last year. And what do we 159 00:07:26,680 --> 00:07:29,400 Speaker 1: mean when we say tappable, Well, that means the amount 160 00:07:29,400 --> 00:07:32,880 Speaker 1: that you can snag while still keeping equity in your home. 161 00:07:33,160 --> 00:07:35,760 Speaker 1: And that means that the average homeowner has access to 162 00:07:35,800 --> 00:07:38,440 Speaker 1: something like a hundred and eighty five thousand dollars in 163 00:07:38,480 --> 00:07:41,440 Speaker 1: home equity, which is astounding. That's a lot of money 164 00:07:41,480 --> 00:07:43,960 Speaker 1: that you have access to. So um and you wonder 165 00:07:44,120 --> 00:07:47,000 Speaker 1: our homes for most Americans are the number one asset 166 00:07:47,000 --> 00:07:50,040 Speaker 1: where they have most of their net worth stocked away. Yeah, 167 00:07:50,080 --> 00:07:51,400 Speaker 1: and that's not what we want to see for folks. 168 00:07:51,440 --> 00:07:53,040 Speaker 1: We want to see folks have more money in their 169 00:07:53,040 --> 00:07:54,960 Speaker 1: retirement accounts than they have in a home equity. But 170 00:07:54,960 --> 00:07:57,360 Speaker 1: you're right, most people, that's why, are in a situation 171 00:07:57,360 --> 00:07:59,200 Speaker 1: where they've got more money in home equity than they 172 00:07:59,240 --> 00:08:01,720 Speaker 1: have in their former one case in i RAS. And 173 00:08:02,000 --> 00:08:04,800 Speaker 1: how much you you have access to obviously depends on 174 00:08:04,840 --> 00:08:07,360 Speaker 1: your specific situation, how long you've owned your home, and 175 00:08:07,600 --> 00:08:10,320 Speaker 1: what's been happening in your specific market. For instance, if 176 00:08:10,360 --> 00:08:13,000 Speaker 1: you live in Denver or Miami, two of the hottest 177 00:08:13,040 --> 00:08:15,160 Speaker 1: real estate markets of the past couple of years, uh, 178 00:08:15,200 --> 00:08:17,840 Speaker 1: the average home equity increase you saw was in the 179 00:08:17,840 --> 00:08:21,280 Speaker 1: neighborhood of dollars in just one year. If you live 180 00:08:21,280 --> 00:08:24,160 Speaker 1: in l A or San Francisco, it's closer to ten 181 00:08:24,280 --> 00:08:28,120 Speaker 1: thousand dollars. So, um, yeah, where you live. If you 182 00:08:28,160 --> 00:08:31,960 Speaker 1: live in let's say Huntsville, Alabama, you've probably seen decent 183 00:08:32,000 --> 00:08:34,959 Speaker 1: appreciation to but but nowhere in that ballpark. And this 184 00:08:35,120 --> 00:08:37,280 Speaker 1: this abundance of equity has led to I think some 185 00:08:37,320 --> 00:08:40,040 Speaker 1: of our friends and neighbors talking about selling their homes 186 00:08:40,040 --> 00:08:42,800 Speaker 1: as well, you know, like cashing out, Why not sell 187 00:08:42,840 --> 00:08:44,920 Speaker 1: when the market is near the top, right, Well, the 188 00:08:44,960 --> 00:08:47,880 Speaker 1: thing is this strategy is going to create some problems, namely, 189 00:08:48,080 --> 00:08:50,160 Speaker 1: where are you gonna live If you end up selling 190 00:08:50,160 --> 00:08:52,360 Speaker 1: your house, chances are that you've locked in a pretty 191 00:08:52,400 --> 00:08:54,720 Speaker 1: low mortgage rate, and if you want to buy another 192 00:08:54,760 --> 00:08:58,000 Speaker 1: property with a mortgage, you'll be doing so at today's rates, 193 00:08:58,120 --> 00:09:00,679 Speaker 1: which have arisen quite a bit, and that could be 194 00:09:00,720 --> 00:09:03,600 Speaker 1: a tough pill to swallow. So it's it's obviously okay 195 00:09:03,640 --> 00:09:05,640 Speaker 1: to downsize, to move to a new city or you know, 196 00:09:05,720 --> 00:09:07,240 Speaker 1: or if you have other good reasons to do so, 197 00:09:07,679 --> 00:09:11,200 Speaker 1: but it is not necessarily a smart idea to move 198 00:09:11,360 --> 00:09:13,840 Speaker 1: with the main purpose of grabbing some of that home equity. 199 00:09:14,080 --> 00:09:16,680 Speaker 1: There are other just so many more important factors to consider. 200 00:09:16,920 --> 00:09:20,640 Speaker 1: For instance, what will selling your house due to relationship 201 00:09:20,720 --> 00:09:22,880 Speaker 1: with your partner or to your family, you know, like 202 00:09:22,920 --> 00:09:25,280 Speaker 1: what kind of opportunities are going to be available for 203 00:09:25,320 --> 00:09:27,760 Speaker 1: your kids, what kind of lifestyle do you want to live, 204 00:09:27,840 --> 00:09:30,960 Speaker 1: or like, if you are someone who is more religious, 205 00:09:31,120 --> 00:09:33,120 Speaker 1: there are factors of faith that you probably also want 206 00:09:33,120 --> 00:09:35,000 Speaker 1: to consider as well. There are. I don't know, it's 207 00:09:35,280 --> 00:09:37,280 Speaker 1: what you do. Want to consider the numbers and see 208 00:09:37,320 --> 00:09:39,200 Speaker 1: how things actually end up shaking up, But there are 209 00:09:39,240 --> 00:09:41,720 Speaker 1: so many other important considerations that you want to keep 210 00:09:41,760 --> 00:09:43,560 Speaker 1: in mind as well. Yeah, the numbers are one thing, 211 00:09:43,600 --> 00:09:46,200 Speaker 1: but then yeah, loving where you live and being attached 212 00:09:46,200 --> 00:09:47,840 Speaker 1: to a place. There's a great article in The Atlantic 213 00:09:47,880 --> 00:09:51,280 Speaker 1: recently about that how homeownership can provide a deep attachment 214 00:09:51,280 --> 00:09:53,880 Speaker 1: to a place that's hard to come by in other ways, 215 00:09:54,040 --> 00:09:56,040 Speaker 1: and I was like, Yeah, that's exactly what I feel, 216 00:09:56,440 --> 00:09:59,400 Speaker 1: because we've been in the same neighborhood for thirteen years 217 00:09:59,400 --> 00:10:03,120 Speaker 1: now and we feel deeply rooted here and that means 218 00:10:03,160 --> 00:10:06,800 Speaker 1: something well. And similarly, you might decide to sell and 219 00:10:06,840 --> 00:10:09,480 Speaker 1: then rent in order to snag those dollars for other purposes. 220 00:10:09,480 --> 00:10:11,240 Speaker 1: So let's say you're like, listen, I want to cash 221 00:10:11,240 --> 00:10:14,200 Speaker 1: out take advantage of this home equity by selling my house, 222 00:10:14,480 --> 00:10:16,120 Speaker 1: and I'm just gonna go down the street. I'm gonna say, 223 00:10:16,120 --> 00:10:18,320 Speaker 1: in the same neighborhood, but I'm gonna rent something instead, 224 00:10:18,559 --> 00:10:21,360 Speaker 1: wait for the market to maybe correct, and then maybe 225 00:10:21,360 --> 00:10:23,480 Speaker 1: swoop in and grab a deal. That's definitely in the 226 00:10:23,480 --> 00:10:27,599 Speaker 1: mind what some folks have in mind and that sounds reasonable, 227 00:10:28,040 --> 00:10:30,640 Speaker 1: but we all know that rents have sword in the 228 00:10:30,640 --> 00:10:32,960 Speaker 1: past year across the country too. If you have a 229 00:10:33,000 --> 00:10:36,560 Speaker 1: fixed rate mortgage, that's not gonna budge except for those 230 00:10:36,600 --> 00:10:40,160 Speaker 1: annual changes to your property tax rate and homeowners insurance 231 00:10:40,240 --> 00:10:43,920 Speaker 1: rate hikes. But your rent is of course far less predictable. 232 00:10:44,160 --> 00:10:47,120 Speaker 1: And again, if this is a lifestyle decision, then it 233 00:10:47,160 --> 00:10:49,480 Speaker 1: can be a reasonable choice if you're just tired of 234 00:10:49,480 --> 00:10:52,240 Speaker 1: the maintenance and you'd prefer to live in a home 235 00:10:52,280 --> 00:10:55,880 Speaker 1: that requires less effort, or you're downsizing because the kids 236 00:10:55,880 --> 00:10:58,040 Speaker 1: are getting older and they're going off to college. I 237 00:10:58,080 --> 00:11:00,640 Speaker 1: get it, But doing it in order to take equity 238 00:11:00,640 --> 00:11:04,280 Speaker 1: dollars off the table, uh, Thinking that you're gonna save 239 00:11:04,360 --> 00:11:07,680 Speaker 1: money in the long haul by becoming a renter instead 240 00:11:07,720 --> 00:11:11,839 Speaker 1: of an owner, that doesn't necessarily make the most sense. Um, 241 00:11:12,440 --> 00:11:14,800 Speaker 1: it's so much of it depends on your particular market 242 00:11:15,160 --> 00:11:17,360 Speaker 1: as well, and how much cheaper maybe it is to 243 00:11:17,480 --> 00:11:20,200 Speaker 1: rent them to own or vice versa. But those are 244 00:11:20,200 --> 00:11:21,520 Speaker 1: the kind of things you're gonna want to take into 245 00:11:21,520 --> 00:11:24,200 Speaker 1: consideration before you just say I'm gonna, you know, all 246 00:11:24,240 --> 00:11:26,160 Speaker 1: my home equity back and I'm gonna start becoming a renter, 247 00:11:26,240 --> 00:11:29,360 Speaker 1: because that's going to be the better financial decision. Exactly. Yeah, 248 00:11:29,360 --> 00:11:32,360 Speaker 1: it's It's also important to mention that the housing market overall, 249 00:11:32,440 --> 00:11:35,160 Speaker 1: that it's a pretty healthy place at the moment. Like 250 00:11:35,240 --> 00:11:37,520 Speaker 1: we think that it's a good thing that rising rates 251 00:11:37,520 --> 00:11:40,320 Speaker 1: are mellowing out the different bidding wars that we've heard 252 00:11:40,320 --> 00:11:44,080 Speaker 1: of this pass spring, creating a less frothy environment, But 253 00:11:44,160 --> 00:11:47,400 Speaker 1: that doesn't mean that there's gonna be a meaningful downward 254 00:11:47,520 --> 00:11:50,840 Speaker 1: home price correction in store for us. We still just 255 00:11:50,880 --> 00:11:53,120 Speaker 1: don't have enough supply of homes for all other folks 256 00:11:53,160 --> 00:11:55,480 Speaker 1: who want to buy one, and that problem it is 257 00:11:55,520 --> 00:11:57,560 Speaker 1: not going to get fixed overnight. There's just no way 258 00:11:57,559 --> 00:12:00,280 Speaker 1: of knowing what will happen in the future, and the 259 00:12:00,400 --> 00:12:03,080 Speaker 1: housing market it might continue to cool a little bit, 260 00:12:03,400 --> 00:12:05,280 Speaker 1: uh compared to what we've seen over the past year. 261 00:12:05,720 --> 00:12:08,840 Speaker 1: A massive supply increase combined with a massive decrease in 262 00:12:08,880 --> 00:12:12,120 Speaker 1: demand leading to significant decline and prices. This isn't something 263 00:12:12,160 --> 00:12:14,840 Speaker 1: that we expect to happen. I feel like, just generally speaking, dude, 264 00:12:14,840 --> 00:12:17,640 Speaker 1: this is one of the most common conversations I have 265 00:12:17,720 --> 00:12:19,800 Speaker 1: with my neighbors. It is like, it's like, when this 266 00:12:19,840 --> 00:12:22,040 Speaker 1: bubble gonna burst, yeah exactly. It's like, is this actually 267 00:12:22,040 --> 00:12:24,040 Speaker 1: gonna happen? I'm like, no, I don't think it is. 268 00:12:24,080 --> 00:12:27,200 Speaker 1: And I start talking through just the demographics of our country, right, 269 00:12:27,240 --> 00:12:30,280 Speaker 1: like the millennials are coming into home buying age or 270 00:12:30,360 --> 00:12:32,360 Speaker 1: they're looking to upgrade their homes, right, And so you 271 00:12:32,360 --> 00:12:34,480 Speaker 1: have this entire generation looking to buy homes, by the way, 272 00:12:34,520 --> 00:12:37,160 Speaker 1: a generation that's larger than Gen X, it's the generation 273 00:12:37,240 --> 00:12:39,920 Speaker 1: that's larger than the Baby Boomers. Uh. And they all 274 00:12:40,160 --> 00:12:42,800 Speaker 1: want homes and so that demand is there. They've got 275 00:12:42,920 --> 00:12:45,280 Speaker 1: high paying jobs. Uh. And then you can look at 276 00:12:45,320 --> 00:12:48,640 Speaker 1: the different stats that the FED provides and they're showing 277 00:12:48,760 --> 00:12:51,640 Speaker 1: that just the quality that the credit quality of new 278 00:12:51,720 --> 00:12:54,760 Speaker 1: mortgage borrowers, it's sky high. This this is nothing like 279 00:12:54,800 --> 00:12:57,320 Speaker 1: the Great Recession back in you know oh six or 280 00:12:57,320 --> 00:13:00,000 Speaker 1: seven oh eight, when you look at the credit score 281 00:13:00,320 --> 00:13:03,200 Speaker 1: from back then and they were in the dumps compared 282 00:13:03,240 --> 00:13:05,440 Speaker 1: to what we're seeing today. And combined with just the 283 00:13:05,480 --> 00:13:08,160 Speaker 1: overall shortage of homes we have in the country and 284 00:13:08,520 --> 00:13:10,880 Speaker 1: a larger supply of people who want to buy them, 285 00:13:10,920 --> 00:13:13,040 Speaker 1: and and this is something that doesn't get corrected overnight 286 00:13:13,040 --> 00:13:16,280 Speaker 1: because homes take time to build, especially in an era 287 00:13:16,400 --> 00:13:20,240 Speaker 1: of supply shortages and increased lumber costs. This is not 288 00:13:20,800 --> 00:13:22,920 Speaker 1: something that's going to get corrected overnight, and so this 289 00:13:23,000 --> 00:13:25,480 Speaker 1: is not something that we see. You and I aren't 290 00:13:25,600 --> 00:13:28,120 Speaker 1: fortune tellers, although I don't even think those people are 291 00:13:28,120 --> 00:13:30,360 Speaker 1: accurate most of the time. You've got imagine Gate Bob 292 00:13:30,360 --> 00:13:32,000 Speaker 1: and New Crystal Ball, and there's certainly a chance that 293 00:13:32,080 --> 00:13:35,200 Speaker 1: rates escalate so quickly that it does actually start to 294 00:13:35,200 --> 00:13:39,160 Speaker 1: bring home prices down, not just moderating them. But yeah, 295 00:13:39,320 --> 00:13:41,920 Speaker 1: all of all the signs point to the fact that 296 00:13:41,960 --> 00:13:43,679 Speaker 1: this is not some sort of bubble that we're in. 297 00:13:43,920 --> 00:13:47,400 Speaker 1: We might continue to see sustained prices over the near 298 00:13:47,480 --> 00:13:50,520 Speaker 1: term future. So what should your reaction be, though, If 299 00:13:50,559 --> 00:13:52,960 Speaker 1: you're the recipient of some of this new found wealth, 300 00:13:53,520 --> 00:13:55,360 Speaker 1: if you've got more home equity than you know what 301 00:13:55,400 --> 00:13:57,240 Speaker 1: to do with, well we're gonna talk about how to 302 00:13:57,320 --> 00:14:00,000 Speaker 1: use it wisely in just a bit, but we gotta 303 00:14:00,000 --> 00:14:03,640 Speaker 1: get to the downsides actually of this this extra money 304 00:14:03,840 --> 00:14:06,840 Speaker 1: that that you've got on hand. And that might sound surprising, 305 00:14:06,840 --> 00:14:08,800 Speaker 1: but no, there are some real downsides to having more 306 00:14:08,920 --> 00:14:11,400 Speaker 1: it's home equity, and we'll get to the reasons why 307 00:14:11,440 --> 00:14:22,920 Speaker 1: that's the case, right after this break. Alright, we're back 308 00:14:22,960 --> 00:14:24,920 Speaker 1: from the break and we're gonna continue our conversation about 309 00:14:24,920 --> 00:14:27,360 Speaker 1: home equity. Uh. So you're listening to us right now. 310 00:14:27,560 --> 00:14:29,760 Speaker 1: You own a home. You purchased it in order to 311 00:14:29,800 --> 00:14:31,600 Speaker 1: have a place to live, to write a family. That's great, 312 00:14:31,760 --> 00:14:33,640 Speaker 1: But now you're in this position where you've got that 313 00:14:33,680 --> 00:14:36,480 Speaker 1: home equity that you didn't bank on having. Well, I 314 00:14:36,480 --> 00:14:38,280 Speaker 1: hate to break it to you, but there are actually 315 00:14:38,320 --> 00:14:41,200 Speaker 1: some downsides to your home increasing in value. And you 316 00:14:41,240 --> 00:14:43,320 Speaker 1: might be you maybe saying to yourself, like, sure, Matt, 317 00:14:43,520 --> 00:14:45,720 Speaker 1: I just made fifty dollars just for owning this home 318 00:14:45,800 --> 00:14:49,240 Speaker 1: last year. I see no downside. You're an idiot, dude. 319 00:14:49,520 --> 00:14:51,600 Speaker 1: Uh And I promised like, like, we're not trying to 320 00:14:51,600 --> 00:14:53,840 Speaker 1: take the wind out of your sales here. I actually 321 00:14:53,960 --> 00:14:55,960 Speaker 1: might be an idiot, but we should still talk about 322 00:14:56,000 --> 00:15:00,360 Speaker 1: the potential pitfalls of owning a more valuable home. That's right, Okay, 323 00:15:00,360 --> 00:15:02,160 Speaker 1: So let's dig in and talk about some of the 324 00:15:02,200 --> 00:15:06,120 Speaker 1: downsides now that come along with that home price Inflation 325 00:15:06,280 --> 00:15:09,240 Speaker 1: and property taxes are at the top of the list, 326 00:15:09,280 --> 00:15:11,200 Speaker 1: because that's one of the main things you need to 327 00:15:11,200 --> 00:15:13,600 Speaker 1: watch out for as your home is increased in value. 328 00:15:13,720 --> 00:15:16,320 Speaker 1: And and from from everything I've read, Matt, actually, it 329 00:15:16,360 --> 00:15:19,520 Speaker 1: seems like most counties around the country they haven't actually 330 00:15:19,600 --> 00:15:23,160 Speaker 1: raised tax rates commensurate with your current home value. And 331 00:15:23,200 --> 00:15:25,560 Speaker 1: so your home might have gone up value, but your 332 00:15:25,600 --> 00:15:27,840 Speaker 1: taxes might have only gone up six or seven percent, 333 00:15:28,120 --> 00:15:32,160 Speaker 1: which is fortunate for you. They're they're lagging behind, but 334 00:15:32,680 --> 00:15:35,680 Speaker 1: trust us, uh, they're gonna catch up quickly because the 335 00:15:35,720 --> 00:15:39,560 Speaker 1: tax man cometh he or she always cometh. And so yeah, 336 00:15:39,600 --> 00:15:42,240 Speaker 1: depending on where you live and how in tune your 337 00:15:42,240 --> 00:15:44,960 Speaker 1: county has been to value changes, you might see a 338 00:15:45,040 --> 00:15:48,400 Speaker 1: rapid increase in the amount of tax you're paying every 339 00:15:48,400 --> 00:15:51,720 Speaker 1: single year for on your home. And and here's the thing. 340 00:15:51,760 --> 00:15:54,560 Speaker 1: If you feel like your local municipality has given your 341 00:15:54,560 --> 00:15:57,200 Speaker 1: home too higher value, maybe maybe they haven't been lagging 342 00:15:57,200 --> 00:15:59,440 Speaker 1: in You're like, wait a second, that's more than it's 343 00:15:59,440 --> 00:16:02,400 Speaker 1: actually worth. It makes sense to challenge that tax bill. 344 00:16:02,640 --> 00:16:05,440 Speaker 1: The process. It's not the exact same everywhere, but there 345 00:16:05,480 --> 00:16:07,280 Speaker 1: are ways to fight a bill if you believe that 346 00:16:07,360 --> 00:16:10,280 Speaker 1: it's inaccurate, and and sometimes winning that case can actually 347 00:16:10,320 --> 00:16:12,520 Speaker 1: lock in a lower tax rate for future years too, 348 00:16:12,520 --> 00:16:15,360 Speaker 1: which can save you a ton in taxes. I I 349 00:16:15,440 --> 00:16:17,920 Speaker 1: just recently did this on a couple of rental properties, 350 00:16:18,120 --> 00:16:19,720 Speaker 1: Matt and I could. You could do it yourself. You 351 00:16:19,720 --> 00:16:21,680 Speaker 1: can hire someone else to do it on your behalf. 352 00:16:22,000 --> 00:16:24,560 Speaker 1: But either way you you swing it. Typically there can 353 00:16:24,560 --> 00:16:27,480 Speaker 1: be substantial tax savings if you feel like the assessor 354 00:16:27,600 --> 00:16:30,360 Speaker 1: has has it wrong and they're overvaluing your home. But 355 00:16:30,400 --> 00:16:32,520 Speaker 1: that is definitely one downside is that you might be 356 00:16:32,560 --> 00:16:36,920 Speaker 1: paying a thousand dollars extra a year um in taxes 357 00:16:37,120 --> 00:16:39,600 Speaker 1: because your home just went up in value. That's right. 358 00:16:39,600 --> 00:16:41,480 Speaker 1: And the thing is this, I mean, not all taxes 359 00:16:41,520 --> 00:16:43,240 Speaker 1: are bad, right, Like, we're not the ones out here 360 00:16:43,280 --> 00:16:45,480 Speaker 1: saying that you should not pay any of your taxes. 361 00:16:45,520 --> 00:16:49,520 Speaker 1: They're necessary in order to make society functions, specifically property 362 00:16:49,560 --> 00:16:51,840 Speaker 1: tax that they're used to fund schools, public schools in 363 00:16:51,840 --> 00:16:53,920 Speaker 1: your city. And so we don't want you to think 364 00:16:53,960 --> 00:16:56,920 Speaker 1: that we're completely against taxes. But that's definitely something to 365 00:16:56,960 --> 00:16:58,840 Speaker 1: keep in mind, Joel. Something else we touched on this 366 00:16:58,920 --> 00:17:02,240 Speaker 1: briefly earlier, but a legit downside of home equity that's 367 00:17:02,280 --> 00:17:04,800 Speaker 1: just off the charts is that you might find this 368 00:17:04,920 --> 00:17:07,359 Speaker 1: money burning a hole in your pocket. This is when 369 00:17:07,400 --> 00:17:09,160 Speaker 1: you feel like that you have to do something with it. 370 00:17:09,520 --> 00:17:12,240 Speaker 1: But of course you don't. Luckily, pulling that equity out 371 00:17:12,240 --> 00:17:14,080 Speaker 1: of your house isn't as easy as like, you know, 372 00:17:14,119 --> 00:17:16,320 Speaker 1: like just transferring funds around using an app on your 373 00:17:16,320 --> 00:17:19,520 Speaker 1: phone something like that. But there's also something called the 374 00:17:19,560 --> 00:17:23,040 Speaker 1: wealth effect, which basically means that as your assets go 375 00:17:23,119 --> 00:17:26,159 Speaker 1: up in value, you start to feel much wealthier. You 376 00:17:26,200 --> 00:17:28,359 Speaker 1: feel like a baller who has way more cash on 377 00:17:28,400 --> 00:17:30,000 Speaker 1: hand than you can actually spend. I always feel like 378 00:17:30,040 --> 00:17:33,359 Speaker 1: a ball that It's just it's a it's that mentality, 379 00:17:33,480 --> 00:17:35,919 Speaker 1: you know, like if you believe it, it'll spend like one. 380 00:17:35,960 --> 00:17:37,960 Speaker 1: But I always feel like one. But even though that 381 00:17:38,000 --> 00:17:40,439 Speaker 1: money isn't super liquid, it's there in theory. And so 382 00:17:40,520 --> 00:17:43,639 Speaker 1: you start spending you know, your your actual liquid cash, 383 00:17:43,680 --> 00:17:45,959 Speaker 1: as though your home equity dollars we're currently in your 384 00:17:46,000 --> 00:17:48,960 Speaker 1: savings account. It's kind of like counting your chickens before 385 00:17:48,960 --> 00:17:51,400 Speaker 1: they've hatched. Um. And so we mentioned that because it's 386 00:17:51,400 --> 00:17:53,640 Speaker 1: great that your home is now worth more. But don't 387 00:17:53,720 --> 00:17:57,159 Speaker 1: start spending like a maniac, because you just feel like 388 00:17:57,200 --> 00:18:01,000 Speaker 1: your newfound home equity has made you like warm buffet wealth. 389 00:18:01,119 --> 00:18:03,600 Speaker 1: It's like, oh man, I've got like hundreds of thousands 390 00:18:03,600 --> 00:18:07,160 Speaker 1: of dollars more now I can afford take out every 391 00:18:07,200 --> 00:18:09,840 Speaker 1: night of the week. Whatever. Whatever it is that you 392 00:18:09,880 --> 00:18:13,560 Speaker 1: might mindlessly spend grow hub in perpetuity just because you 393 00:18:13,680 --> 00:18:15,440 Speaker 1: feel like that you've got more wealth on hand. Yeah, 394 00:18:15,440 --> 00:18:17,200 Speaker 1: you know, that wealth effect is real. It's almost kind 395 00:18:17,200 --> 00:18:19,680 Speaker 1: of like I liken it to just having made a 396 00:18:19,720 --> 00:18:21,520 Speaker 1: Costco run. And you know, I've talked about this before. 397 00:18:21,640 --> 00:18:23,080 Speaker 1: What if you load up on top, do you do 398 00:18:23,119 --> 00:18:25,520 Speaker 1: you over eat or over consumed just because yes, you 399 00:18:25,520 --> 00:18:27,760 Speaker 1: get that fresh bounty. And you know, we've had so 400 00:18:27,800 --> 00:18:29,920 Speaker 1: many groceries on and I found that to be true 401 00:18:29,920 --> 00:18:32,040 Speaker 1: in my own life at times. So I always think 402 00:18:32,080 --> 00:18:33,600 Speaker 1: back to when I was a teenager and I would 403 00:18:33,640 --> 00:18:36,800 Speaker 1: always drive terribly after I filled up the car. I 404 00:18:36,840 --> 00:18:38,520 Speaker 1: would swear that anytime I filled up the jeep, it 405 00:18:38,560 --> 00:18:41,080 Speaker 1: just felt like it just went faster, which doesn't make sense, right, 406 00:18:41,080 --> 00:18:43,840 Speaker 1: because when you've got twenty gallons of gasoline slashing around 407 00:18:43,840 --> 00:18:46,080 Speaker 1: in the tank, technically the car should be much heavier. 408 00:18:46,280 --> 00:18:48,119 Speaker 1: But it's just because of that lead foot. Dude, Like 409 00:18:48,200 --> 00:18:50,919 Speaker 1: I knew mentally that that tank was just full of gas. 410 00:18:51,119 --> 00:18:53,640 Speaker 1: I didn't need to conserve gas at all. But these days, man, 411 00:18:53,640 --> 00:18:58,160 Speaker 1: we're all driving like a Grandma, just like slowly accelerating. Yeah, well, 412 00:18:58,160 --> 00:18:59,960 Speaker 1: I think the wealth effect is real. It's worth mention 413 00:19:00,200 --> 00:19:03,080 Speaker 1: ng And sometimes yeah, just just feeling like you have 414 00:19:03,119 --> 00:19:05,600 Speaker 1: access to more money makes you start spending in a 415 00:19:05,640 --> 00:19:08,520 Speaker 1: way that you didn't before. And and let's talk about too, 416 00:19:08,880 --> 00:19:11,040 Speaker 1: you know, a sizeable chunk of home equity just another 417 00:19:11,080 --> 00:19:13,240 Speaker 1: downside to having more of it. It might mean that 418 00:19:13,280 --> 00:19:16,840 Speaker 1: your finances are now a little more unbalanced, right, you 419 00:19:17,000 --> 00:19:19,560 Speaker 1: might now have an inordinate amount of your wealth tied 420 00:19:19,640 --> 00:19:21,840 Speaker 1: up in one single asset, which is your home. And 421 00:19:21,840 --> 00:19:24,520 Speaker 1: we talked about this just a little bit earlier. How 422 00:19:24,920 --> 00:19:27,080 Speaker 1: that's not actually the best thing ever, even though that 423 00:19:27,200 --> 00:19:30,040 Speaker 1: is the reality for so many Americans, Um, that's not 424 00:19:30,080 --> 00:19:32,000 Speaker 1: something that we want to see happen for how the 425 00:19:32,040 --> 00:19:34,280 Speaker 1: money listeners. So even if your home is in a 426 00:19:34,280 --> 00:19:37,359 Speaker 1: location that's likely to appreciate further and you're planning to 427 00:19:37,400 --> 00:19:40,320 Speaker 1: own it for the long haul, it's still important to 428 00:19:40,400 --> 00:19:43,520 Speaker 1: stay diversified. And and that means that we want to 429 00:19:43,560 --> 00:19:46,600 Speaker 1: see you not just banking on your home as a 430 00:19:46,640 --> 00:19:49,800 Speaker 1: wealth building asset, but investing in other other ways at 431 00:19:49,800 --> 00:19:52,680 Speaker 1: the same time, investing in the stock market through tax 432 00:19:52,680 --> 00:19:55,199 Speaker 1: advantaged retirement accounts. I mean, that's I mean, that's the 433 00:19:55,280 --> 00:19:58,359 Speaker 1: number one way we suggest doing that. There obviously other 434 00:19:58,400 --> 00:20:00,879 Speaker 1: ways too, but just note that your scales might be 435 00:20:00,880 --> 00:20:03,119 Speaker 1: getting a little out of whack if you're heavy on 436 00:20:03,119 --> 00:20:06,480 Speaker 1: the home equity, light on the IRA funds or roth 437 00:20:06,520 --> 00:20:09,080 Speaker 1: IRA funds for instance. Exactly. And there's a difference to 438 00:20:09,160 --> 00:20:11,840 Speaker 1: what we'll say, between investing in real estate, for in 439 00:20:11,880 --> 00:20:14,720 Speaker 1: specific properties that you have as rentals or as you 440 00:20:14,720 --> 00:20:16,679 Speaker 1: know that where you're actually investing in it, as opposed 441 00:20:16,680 --> 00:20:18,560 Speaker 1: to a home that you are living in. Because the 442 00:20:18,600 --> 00:20:21,560 Speaker 1: more properties that you have from an investment standpoint, obviously 443 00:20:21,640 --> 00:20:25,440 Speaker 1: that diversifies your portfolio overall. It's also important to mention 444 00:20:25,480 --> 00:20:28,480 Speaker 1: the tax consequences of grabbing your home equis. Were already 445 00:20:28,480 --> 00:20:31,040 Speaker 1: talking about property taxes, but there there's another tax angle 446 00:20:31,080 --> 00:20:32,720 Speaker 1: we have to mention. Exactly. Yeah, if if you're doing 447 00:20:32,720 --> 00:20:35,320 Speaker 1: a cash out refinance, there are no real negative tax 448 00:20:35,359 --> 00:20:37,800 Speaker 1: consequences that you need to consider that cash is not 449 00:20:37,920 --> 00:20:41,199 Speaker 1: considered income and you're able to deduct the mortgage interest 450 00:20:41,280 --> 00:20:43,480 Speaker 1: of that new loan if that's something that you want 451 00:20:43,480 --> 00:20:46,199 Speaker 1: to do. But if you're pulling money out in the 452 00:20:46,240 --> 00:20:48,879 Speaker 1: form of a helock of a home equity line of 453 00:20:48,920 --> 00:20:51,280 Speaker 1: credit or in the form of a home equity loan. 454 00:20:51,920 --> 00:20:54,600 Speaker 1: Whether or not that money is tax deductible depends on 455 00:20:54,680 --> 00:20:56,879 Speaker 1: how it is that you use it. Uh. And so 456 00:20:56,920 --> 00:20:59,600 Speaker 1: according to the i R S, if those funds are 457 00:20:59,720 --> 00:21:03,600 Speaker 1: used to quote unquote by build or substantially improve the 458 00:21:03,640 --> 00:21:07,560 Speaker 1: property that you're taking the equity out of, then you're 459 00:21:07,600 --> 00:21:10,720 Speaker 1: able to deduct the interest paid on that loan or 460 00:21:10,840 --> 00:21:14,240 Speaker 1: on that line of credit. Otherwise no deduction is allowed. 461 00:21:14,280 --> 00:21:15,919 Speaker 1: And so keep in mind that this is on the 462 00:21:16,000 --> 00:21:19,600 Speaker 1: financing of that money that you are considering taking out, 463 00:21:19,640 --> 00:21:22,560 Speaker 1: not the entire amounts itself, but the interest paid on 464 00:21:22,560 --> 00:21:24,920 Speaker 1: that loan. Yeah, and those those rules changed to back 465 00:21:25,240 --> 00:21:27,760 Speaker 1: during the Trump administration when the tax cuts and Job 466 00:21:27,840 --> 00:21:30,439 Speaker 1: Act cut passed. And so this is one of those 467 00:21:30,440 --> 00:21:31,560 Speaker 1: things where you used to be able to pull that 468 00:21:31,560 --> 00:21:33,720 Speaker 1: money out willy nilly, take a vacation, buy a boat, 469 00:21:33,840 --> 00:21:36,919 Speaker 1: and you could still deduct that interest. But that's not 470 00:21:37,000 --> 00:21:39,080 Speaker 1: the case anymore, only if it's used for those specific 471 00:21:39,080 --> 00:21:42,359 Speaker 1: purposes at least until right And we'll see if that 472 00:21:42,440 --> 00:21:44,920 Speaker 1: gets extended or if that's something that gets reversed very 473 00:21:45,000 --> 00:21:48,080 Speaker 1: much that that will depend on who who our president 474 00:21:48,119 --> 00:21:49,720 Speaker 1: is like, who's in Congress? Do you want to make 475 00:21:49,760 --> 00:21:51,600 Speaker 1: any calls? No, I don't think I'm gonna make any 476 00:21:51,720 --> 00:21:54,520 Speaker 1: political predicted predictions, no other predictions at this point in 477 00:21:54,520 --> 00:21:57,200 Speaker 1: our age of insanity. But let's let's talk about the 478 00:21:57,200 --> 00:21:59,280 Speaker 1: smart uses of home equities. So we talked about the downside. 479 00:21:59,520 --> 00:22:01,800 Speaker 1: You've accrued more home equity in this in this home. 480 00:22:01,840 --> 00:22:03,600 Speaker 1: Your your home is worth more than you thought it 481 00:22:03,640 --> 00:22:06,359 Speaker 1: would be, even just two years after buying it. Well, 482 00:22:06,640 --> 00:22:10,560 Speaker 1: how can you use it intelligently? Well, before we specifically 483 00:22:10,560 --> 00:22:12,760 Speaker 1: start talking about how and why you might use those 484 00:22:12,760 --> 00:22:15,800 Speaker 1: dollars for other purposes, I think we should match stress 485 00:22:16,240 --> 00:22:19,360 Speaker 1: that you should probably think of your home equity dollars 486 00:22:19,400 --> 00:22:22,280 Speaker 1: similar to the way you think about something like taking 487 00:22:22,320 --> 00:22:25,880 Speaker 1: on debt for college, Because using a little in an 488 00:22:25,880 --> 00:22:28,600 Speaker 1: intentional way can be great. It's like adding a little 489 00:22:28,600 --> 00:22:30,600 Speaker 1: bit of salt to a dish, like while you're cooking, Well, 490 00:22:30,640 --> 00:22:33,480 Speaker 1: a little bit of spice. Smart use of college debt 491 00:22:33,520 --> 00:22:35,760 Speaker 1: can get you a degree that then allows you to 492 00:22:36,200 --> 00:22:39,960 Speaker 1: massively increase your income and provide you a joyful career 493 00:22:40,200 --> 00:22:43,600 Speaker 1: that maybe you get to pursue for decades. It enhances 494 00:22:43,640 --> 00:22:47,679 Speaker 1: the flavor, but too much of it. Nobody likes that 495 00:22:47,880 --> 00:22:49,919 Speaker 1: except for my mom. My mom loves salt like you 496 00:22:49,920 --> 00:22:51,840 Speaker 1: could put so much, like you could put a mountain 497 00:22:51,840 --> 00:22:53,080 Speaker 1: of it and she would still eat it. She is 498 00:22:53,320 --> 00:22:56,000 Speaker 1: oh g, just got called out. She's a rare bird. 499 00:22:56,280 --> 00:22:59,760 Speaker 1: But uh, but cashing it all out can lead to 500 00:23:00,560 --> 00:23:03,600 Speaker 1: future financial hartshat. It's right, especially if we you know, 501 00:23:03,720 --> 00:23:05,879 Speaker 1: do experience let's say, a pull back in home prices, 502 00:23:06,040 --> 00:23:08,720 Speaker 1: one that we're not predicting, but that is possible. And 503 00:23:08,760 --> 00:23:11,159 Speaker 1: so yeah, pulling pulling money out of your home is 504 00:23:11,200 --> 00:23:13,720 Speaker 1: something you want to do very cautiously. You only want 505 00:23:13,720 --> 00:23:15,920 Speaker 1: to tap home equity if you can do it wisely, 506 00:23:16,080 --> 00:23:18,000 Speaker 1: that's right. Yeah, And that means not taking out more 507 00:23:18,040 --> 00:23:21,160 Speaker 1: than you need and also not using it for dumb stuff. Right, 508 00:23:21,200 --> 00:23:23,240 Speaker 1: And so like what do we mean by dumb stuff? Well, 509 00:23:23,520 --> 00:23:25,480 Speaker 1: our homes, Like we we do not need to treat 510 00:23:25,480 --> 00:23:27,560 Speaker 1: our own like piggy banks. Uh. And if you use 511 00:23:27,600 --> 00:23:30,640 Speaker 1: it as such, you're putting yourself in a potentially difficult situation. 512 00:23:30,720 --> 00:23:33,240 Speaker 1: Let's say, Uh, let's say rates continue to rise and 513 00:23:33,320 --> 00:23:35,800 Speaker 1: that actually does make home prices contract a little bit, 514 00:23:36,080 --> 00:23:38,879 Speaker 1: and you've borrowed against your home, maybe to buy some 515 00:23:38,920 --> 00:23:41,399 Speaker 1: fun toys and you know, to take cool vacations. You 516 00:23:41,480 --> 00:23:43,440 Speaker 1: might be underwater if you have to sell that home, 517 00:23:43,760 --> 00:23:46,719 Speaker 1: putting you in a financial bind. Of course, sure like 518 00:23:46,720 --> 00:23:49,119 Speaker 1: you've you've had some great experiences with that money, but 519 00:23:49,320 --> 00:23:52,240 Speaker 1: using your home to fund trips and goofy purchases is 520 00:23:52,320 --> 00:23:55,000 Speaker 1: just financially stupid. In short, we want you to use 521 00:23:55,040 --> 00:23:58,320 Speaker 1: that money, not to consume h We want you to 522 00:23:58,400 --> 00:24:01,959 Speaker 1: use that money to invest wisely, because basically, right now 523 00:24:02,000 --> 00:24:04,840 Speaker 1: that equity is tied up in your home right and essentially, 524 00:24:05,040 --> 00:24:07,600 Speaker 1: since you're not making payments on that equity right, you 525 00:24:07,600 --> 00:24:10,480 Speaker 1: have not borrowed it. Basically, it's saving you money. But 526 00:24:10,800 --> 00:24:12,760 Speaker 1: once you take that money out and you start paying 527 00:24:12,760 --> 00:24:15,520 Speaker 1: a premium for access to those funds, a premium being 528 00:24:15,520 --> 00:24:17,359 Speaker 1: the interest that you're paying on the money, you need 529 00:24:17,400 --> 00:24:19,280 Speaker 1: to make sure that you're going to see return that's 530 00:24:19,600 --> 00:24:21,919 Speaker 1: much higher than what it is that you're currently paying 531 00:24:21,920 --> 00:24:24,240 Speaker 1: on that mortgage or on that home equity loan, or 532 00:24:24,320 --> 00:24:26,480 Speaker 1: on that helock. But even still, just because you're making 533 00:24:26,520 --> 00:24:28,480 Speaker 1: a little bit more, that does not make that a 534 00:24:28,520 --> 00:24:30,880 Speaker 1: slam dunk decision. But just generally speaking, I think that's 535 00:24:31,080 --> 00:24:33,560 Speaker 1: a good way to think about ways that you use 536 00:24:33,600 --> 00:24:35,160 Speaker 1: the money that you pull out of a home. Yeah, 537 00:24:35,520 --> 00:24:38,600 Speaker 1: meaningful guaranteed rates of return are hard to come by 538 00:24:38,680 --> 00:24:41,080 Speaker 1: right now in this current interest rate environment, right, and 539 00:24:41,119 --> 00:24:43,480 Speaker 1: so at the same time, while saving these accounts are 540 00:24:43,520 --> 00:24:45,879 Speaker 1: earning next to nothing, we know that it's getting actually 541 00:24:45,960 --> 00:24:49,320 Speaker 1: more expensive to borrow against our home. So you know, 542 00:24:49,320 --> 00:24:51,399 Speaker 1: our advice might have even changed a little bit from 543 00:24:51,440 --> 00:24:53,520 Speaker 1: what people would have done four or five months ago 544 00:24:53,800 --> 00:24:56,320 Speaker 1: when interest rates were closer to three percent. So, yeah, 545 00:24:56,320 --> 00:24:58,520 Speaker 1: now that we've talked about what would generally be a 546 00:24:58,520 --> 00:25:01,159 Speaker 1: smart use of home equity funds, how to think about it, next, 547 00:25:01,200 --> 00:25:03,639 Speaker 1: we're gonna discuss some of the specific ways that you 548 00:25:03,680 --> 00:25:06,560 Speaker 1: can use that money that might actually make sense. There 549 00:25:06,600 --> 00:25:09,800 Speaker 1: are already a few specific purposes where home equity dollars 550 00:25:09,920 --> 00:25:11,800 Speaker 1: makes sense to actually pull out and start to start 551 00:25:11,880 --> 00:25:14,240 Speaker 1: using them. We'll talk about those specific instances and in 552 00:25:14,359 --> 00:25:16,760 Speaker 1: the best ways to actually withdraw those funds, because there 553 00:25:16,760 --> 00:25:18,520 Speaker 1: are a few different methods of doing so we'll talk 554 00:25:18,520 --> 00:25:30,040 Speaker 1: about all that right after this. All right, we're back 555 00:25:30,040 --> 00:25:31,600 Speaker 1: from the break and Joel, like you said here, in 556 00:25:31,600 --> 00:25:33,439 Speaker 1: a second, we're gonna talk about how you actually do it, 557 00:25:33,680 --> 00:25:35,520 Speaker 1: how to cash out, how to get that money. This 558 00:25:35,600 --> 00:25:37,240 Speaker 1: was like a one long setup. And you know what 559 00:25:37,320 --> 00:25:38,720 Speaker 1: the name of our show is how to Money, so 560 00:25:38,720 --> 00:25:40,480 Speaker 1: we should probably get We will tell you how to 561 00:25:40,520 --> 00:25:42,520 Speaker 1: do it, but first I do think it is important 562 00:25:42,520 --> 00:25:45,160 Speaker 1: to talk about some of the specific situations where when 563 00:25:45,200 --> 00:25:47,199 Speaker 1: it makes the most sense. Uh So, let's cover a 564 00:25:47,200 --> 00:25:50,080 Speaker 1: few scenarios when it's smart to use your home equity. 565 00:25:50,359 --> 00:25:52,800 Speaker 1: And the first one we want to mention is renovating 566 00:25:53,040 --> 00:25:55,680 Speaker 1: your home, making an improvement on the home that you're 567 00:25:55,680 --> 00:25:58,880 Speaker 1: pulling equity from. This is the classic use of home equity, 568 00:25:59,080 --> 00:26:01,880 Speaker 1: putting that money from the increase in value directly back 569 00:26:01,920 --> 00:26:03,760 Speaker 1: into the property. That's what we're talking about here. It 570 00:26:04,080 --> 00:26:07,480 Speaker 1: is possible to overdo this, of course, Historically it's it's 571 00:26:07,560 --> 00:26:10,760 Speaker 1: pretty difficult to increase the value of your property dollar 572 00:26:10,840 --> 00:26:13,359 Speaker 1: for dollar as you make improvements. Though we are living 573 00:26:13,440 --> 00:26:16,560 Speaker 1: in some crazy times right now, but it is regardless, 574 00:26:16,600 --> 00:26:18,840 Speaker 1: it's going to be smart to pay attention to the 575 00:26:18,920 --> 00:26:21,440 Speaker 1: kind of return you might see as you consider how 576 00:26:21,480 --> 00:26:23,240 Speaker 1: to improve your house. You know, and doing some of 577 00:26:23,280 --> 00:26:26,000 Speaker 1: those renovations purely for your own enjoyment is is totally fine. 578 00:26:26,040 --> 00:26:28,760 Speaker 1: We want you to leave your life and enjoy uh. 579 00:26:28,960 --> 00:26:30,840 Speaker 1: Set a specific lifestyle that you think is going to 580 00:26:30,920 --> 00:26:34,080 Speaker 1: work for you. But again, borrowing too much can put 581 00:26:34,080 --> 00:26:36,120 Speaker 1: you in a bind. Uh, This isn't a terrible reason 582 00:26:36,160 --> 00:26:37,679 Speaker 1: to take out some of your home equity dollars, but 583 00:26:37,720 --> 00:26:39,600 Speaker 1: just make sure that you do not go overboard. Yeah, 584 00:26:39,880 --> 00:26:42,160 Speaker 1: you mentioned that this was the classic use of home equity, 585 00:26:42,200 --> 00:26:44,639 Speaker 1: which when I think classic, I think Chuck Taylor All Stars, 586 00:26:44,840 --> 00:26:48,000 Speaker 1: because that's the classics who choice of baby any millennial 587 00:26:48,000 --> 00:26:49,760 Speaker 1: these days, I think, and I still have a couple 588 00:26:49,760 --> 00:26:53,160 Speaker 1: of pairs, and really I've never actually seeded millennials too, 589 00:26:53,160 --> 00:26:55,760 Speaker 1: I think so Chuck Taylor's They're just people of all 590 00:26:55,800 --> 00:26:58,159 Speaker 1: ages can certainly enjoy them. Do they make also like 591 00:26:58,200 --> 00:27:00,159 Speaker 1: wide all Stars? Because I will say, I out of 592 00:27:00,160 --> 00:27:02,639 Speaker 1: Paara Chucks, uh maybe a decade ago, and I can 593 00:27:02,680 --> 00:27:06,080 Speaker 1: never wear them because my feet are too fat, They're 594 00:27:06,119 --> 00:27:09,000 Speaker 1: too wide, And whereas some tennis shoes like they break 595 00:27:09,040 --> 00:27:11,840 Speaker 1: in and they will widen with your foot, that never happened, 596 00:27:11,880 --> 00:27:15,040 Speaker 1: and instead my pinkytoe is just rubbing up against that tough, hard, 597 00:27:15,480 --> 00:27:17,600 Speaker 1: raw rubber on the inside of the shoe. I'm sorry, 598 00:27:17,720 --> 00:27:19,600 Speaker 1: I don't know what to say to that, but you 599 00:27:19,600 --> 00:27:21,320 Speaker 1: started us down this path I'll talk to the folks 600 00:27:21,359 --> 00:27:23,640 Speaker 1: at Nike who now own the truck Taylor brand. I believe, 601 00:27:23,680 --> 00:27:25,919 Speaker 1: do they really? Yeah, And so we'll see what they 602 00:27:25,920 --> 00:27:29,040 Speaker 1: can do. Um, I love Nikes. Make a wider a 603 00:27:29,040 --> 00:27:31,719 Speaker 1: wider truck tailor for you. But yes, brought to you 604 00:27:31,760 --> 00:27:34,720 Speaker 1: by Nike. But that is that is a classic use 605 00:27:34,920 --> 00:27:37,320 Speaker 1: is for home equity and it can be done well, 606 00:27:37,320 --> 00:27:39,639 Speaker 1: but it can also be done poorly. But but just 607 00:27:39,720 --> 00:27:43,520 Speaker 1: another another reason you might be willing to take home 608 00:27:43,520 --> 00:27:45,679 Speaker 1: equity dollars out of your home is to just do 609 00:27:45,800 --> 00:27:49,879 Speaker 1: some traditional investing. And we did a whole episode on arbitrage. 610 00:27:50,000 --> 00:27:51,880 Speaker 1: I don't remember the number of that episode rough top 611 00:27:51,880 --> 00:27:54,240 Speaker 1: of my head, but basically, there are ways to use 612 00:27:54,280 --> 00:27:56,879 Speaker 1: your money to make more money. There are ways that 613 00:27:56,960 --> 00:27:59,520 Speaker 1: you can find a deal and turn that into cash. 614 00:27:59,800 --> 00:28:02,919 Speaker 1: And so taking money from your home, let's say it's 615 00:28:02,960 --> 00:28:04,760 Speaker 1: at a super low interest rate, and then you know, 616 00:28:04,840 --> 00:28:07,840 Speaker 1: investing in the market for higher returns will that could 617 00:28:07,880 --> 00:28:10,400 Speaker 1: allow you to build wealth at a faster clip. And 618 00:28:10,720 --> 00:28:13,320 Speaker 1: here's the thing, though, this is our least favorite of 619 00:28:13,359 --> 00:28:16,120 Speaker 1: the potentially decent ways to use your home equity because 620 00:28:16,280 --> 00:28:19,680 Speaker 1: your monthly payments are going to increase while those investment 621 00:28:19,680 --> 00:28:23,680 Speaker 1: dollars are basically locked away for your future. And so 622 00:28:24,200 --> 00:28:26,000 Speaker 1: I guess the question is can this increase your net 623 00:28:26,040 --> 00:28:28,440 Speaker 1: worth over time? Well, yes, the answer would be yes, 624 00:28:28,560 --> 00:28:31,200 Speaker 1: But but it could also put you in a precarious situation. 625 00:28:31,320 --> 00:28:33,760 Speaker 1: If let's say your income drops and you've got this 626 00:28:34,000 --> 00:28:37,320 Speaker 1: higher loan payment and paying off that home equity loan 627 00:28:37,400 --> 00:28:40,280 Speaker 1: or line of credit, it just becomes more difficult. And yes, 628 00:28:40,360 --> 00:28:42,560 Speaker 1: maybe you you've got to spread on the interest rate 629 00:28:42,760 --> 00:28:44,560 Speaker 1: and you feel like you're gonna make more money in 630 00:28:44,680 --> 00:28:46,600 Speaker 1: I bonds let's say, which is guaranteed or in the 631 00:28:46,600 --> 00:28:49,760 Speaker 1: market over the decades, which is not guaranteed. You're you're 632 00:28:49,800 --> 00:28:52,000 Speaker 1: hoping at that point they're gonna make more money. It's 633 00:28:52,000 --> 00:28:54,960 Speaker 1: a little bit more of a gamble to take this 634 00:28:55,280 --> 00:28:57,000 Speaker 1: this route. Yeah, And the thing is too, is that 635 00:28:57,040 --> 00:28:59,360 Speaker 1: it depends this all counts and comes down to you 636 00:28:59,400 --> 00:29:03,160 Speaker 1: actually doing that investing right. And so that's where it 637 00:29:03,160 --> 00:29:06,080 Speaker 1: falls apart because basically, like at the core of arbitrage 638 00:29:06,240 --> 00:29:08,240 Speaker 1: or at the core of business is arbitrage, right, Like 639 00:29:08,280 --> 00:29:10,960 Speaker 1: you have found some sort of niche for you to 640 00:29:11,240 --> 00:29:14,239 Speaker 1: have your business. You're taking, uh, these different products, you're 641 00:29:14,240 --> 00:29:16,400 Speaker 1: piecing them together and you're able to sell them at 642 00:29:16,400 --> 00:29:18,480 Speaker 1: a profit at a premium. But you're doing that because 643 00:29:18,480 --> 00:29:20,400 Speaker 1: you've actually launched a business. And the problem with us 644 00:29:20,440 --> 00:29:23,360 Speaker 1: as individuals is, I think we could take that first step, right, 645 00:29:23,360 --> 00:29:25,400 Speaker 1: we take that money out thinking that we're gonna actually 646 00:29:25,400 --> 00:29:27,480 Speaker 1: see it through, but then we don't do that. Uh 647 00:29:27,480 --> 00:29:29,040 Speaker 1: and so so much of this depends on what you 648 00:29:29,080 --> 00:29:31,960 Speaker 1: actually end up doing with that money. It ultimately comes 649 00:29:32,000 --> 00:29:34,760 Speaker 1: down to the follow through. Yeah, it sounds nice when 650 00:29:34,880 --> 00:29:37,960 Speaker 1: your daydreaming about about that arbitrage, right, Yeah, we're just 651 00:29:37,960 --> 00:29:39,640 Speaker 1: gonna pay this money out at four and a half percent, 652 00:29:39,840 --> 00:29:41,880 Speaker 1: I'm gonna get nine percent in the market. But if 653 00:29:41,920 --> 00:29:43,479 Speaker 1: you withdraw the funds and then you take a long 654 00:29:43,520 --> 00:29:45,000 Speaker 1: time to stick any of it in, you sit on it, 655 00:29:45,080 --> 00:29:47,280 Speaker 1: maybe you get scared a little bit, and maybe you 656 00:29:47,360 --> 00:29:49,040 Speaker 1: do use some of that money since you would like 657 00:29:49,120 --> 00:29:50,440 Speaker 1: if I take a little bit, I'm still got the 658 00:29:50,440 --> 00:29:53,320 Speaker 1: sweet arbitrage deal going on, and and uh and then yeah, 659 00:29:53,360 --> 00:29:55,280 Speaker 1: you you can't predict the future and you can't know 660 00:29:55,360 --> 00:29:57,520 Speaker 1: what your personal financial situation is going to look like, 661 00:29:57,760 --> 00:29:59,280 Speaker 1: even just a few months down the road. There is 662 00:29:59,360 --> 00:30:02,120 Speaker 1: risk involved, and so there yeah, it is a risky scenario. 663 00:30:02,160 --> 00:30:04,400 Speaker 1: It is one that can and has worked for some folks, 664 00:30:04,600 --> 00:30:07,480 Speaker 1: but it's like proceed with caution sort of thing. Totally yeah, 665 00:30:07,520 --> 00:30:09,160 Speaker 1: And so investing in the market like that's one thing. 666 00:30:09,200 --> 00:30:12,160 Speaker 1: But taking those dollars and then specifically using them to 667 00:30:12,240 --> 00:30:14,800 Speaker 1: invest in real estate instead, that can actually be a 668 00:30:14,840 --> 00:30:16,920 Speaker 1: bit less risky, especially if you have a lot of 669 00:30:16,960 --> 00:30:19,080 Speaker 1: experience and you're very familiar with rents and the market 670 00:30:19,120 --> 00:30:21,840 Speaker 1: that you're considering. If this is your first time, I 671 00:30:21,840 --> 00:30:23,560 Speaker 1: think it's best to be at a bit more cautious 672 00:30:23,560 --> 00:30:26,360 Speaker 1: and save up those dollars from your paycheck instead. And 673 00:30:26,400 --> 00:30:28,920 Speaker 1: the reason this form of investing isn't quite as risky 674 00:30:29,040 --> 00:30:31,160 Speaker 1: is because rental real estate allows you to reap some 675 00:30:31,200 --> 00:30:35,000 Speaker 1: of those financial rewards now in the form of unpick 676 00:30:35,040 --> 00:30:37,800 Speaker 1: cash flow. You're growing your your money for your future, 677 00:30:37,840 --> 00:30:41,040 Speaker 1: you're growing that equity, but you're also receiving dividends along 678 00:30:41,040 --> 00:30:42,640 Speaker 1: the way. And so sort of what I was saying 679 00:30:42,640 --> 00:30:44,800 Speaker 1: as far as like that follow through. If you are 680 00:30:44,840 --> 00:30:48,160 Speaker 1: committing to purchasing a home, I think it's much easier 681 00:30:48,320 --> 00:30:51,320 Speaker 1: to actually see those dollars do something good because you 682 00:30:51,360 --> 00:30:53,840 Speaker 1: have purchased a property, right you're basically going all in 683 00:30:53,920 --> 00:30:55,680 Speaker 1: there's no You're not like it gonna be on the 684 00:30:55,680 --> 00:30:57,560 Speaker 1: fence about like, oh, maybe I'll invest a little bit 685 00:30:57,600 --> 00:30:59,400 Speaker 1: of the money in the market and then I'll maybe 686 00:30:59,400 --> 00:31:01,720 Speaker 1: i'll dollar call savage. I see it as a it's 687 00:31:01,720 --> 00:31:05,040 Speaker 1: it's sort of like a form of accountability essentially, And 688 00:31:05,160 --> 00:31:06,560 Speaker 1: you know, I'll confess to I think one of the 689 00:31:06,600 --> 00:31:09,720 Speaker 1: reasons we we mentioned real estate specifically, it's because it's 690 00:31:09,760 --> 00:31:11,760 Speaker 1: something that's worked for us. Right, We've got a lot 691 00:31:11,760 --> 00:31:14,840 Speaker 1: of expertise, We've got a lot of experience in our 692 00:31:14,920 --> 00:31:18,520 Speaker 1: local real estate market. But at its core, uh, investing 693 00:31:18,520 --> 00:31:20,440 Speaker 1: in real estate it's a business, right, Like you are 694 00:31:20,480 --> 00:31:24,320 Speaker 1: looking for an opportunity, and for somebody else, their expertise, 695 00:31:24,360 --> 00:31:28,600 Speaker 1: their experience may be say less in real estate, and 696 00:31:28,640 --> 00:31:30,920 Speaker 1: maybe it's more in creating some sort of business. And 697 00:31:30,960 --> 00:31:32,360 Speaker 1: so I guess what I'm saying here is that I 698 00:31:32,360 --> 00:31:35,680 Speaker 1: think it's okay to consider some funds from a home 699 00:31:35,920 --> 00:31:39,040 Speaker 1: to fund another business that you are very proficient and 700 00:31:39,480 --> 00:31:41,200 Speaker 1: the thing is a man with real estate. It's just 701 00:31:41,520 --> 00:31:45,160 Speaker 1: such a proven way to invest your money. That's one 702 00:31:45,160 --> 00:31:46,480 Speaker 1: one of the other reasons why we like it. Like, 703 00:31:46,560 --> 00:31:48,440 Speaker 1: in my mind, it's like the difference between starting a 704 00:31:48,480 --> 00:31:51,240 Speaker 1: restaurant from scratch and you have to figure everything out 705 00:31:51,280 --> 00:31:53,840 Speaker 1: and who knows exactly what's going to happen, as opposed 706 00:31:53,880 --> 00:31:57,160 Speaker 1: to starting like joining a franchise or something right like 707 00:31:57,160 --> 00:31:58,920 Speaker 1: where it's just like, Okay, I want to be a 708 00:31:59,000 --> 00:32:01,320 Speaker 1: check Filo owner, or I'm gonn a starter taco Bell 709 00:32:01,400 --> 00:32:03,680 Speaker 1: or something like that. There's a proven model, which by 710 00:32:03,680 --> 00:32:05,240 Speaker 1: the way, Chick fil A, not the franchise model in 711 00:32:05,240 --> 00:32:08,280 Speaker 1: case you're wondering, well, that's right, Yeah, they choose you. 712 00:32:08,800 --> 00:32:10,280 Speaker 1: Uh so, let's make it a taco bell and a 713 00:32:10,320 --> 00:32:13,640 Speaker 1: dairy queen or something else else like that. But in 714 00:32:13,680 --> 00:32:17,760 Speaker 1: those instances, in those examples, there's a proven model, right like, 715 00:32:17,760 --> 00:32:20,000 Speaker 1: they have very specific items that are going to be 716 00:32:20,040 --> 00:32:22,040 Speaker 1: on the menu, they have name recognition, they have all 717 00:32:22,080 --> 00:32:24,240 Speaker 1: these things that are proven, and it's easy to slot 718 00:32:24,280 --> 00:32:27,160 Speaker 1: yourself into that formula, as opposed to just build something 719 00:32:27,200 --> 00:32:28,960 Speaker 1: from the ground up, which is what I feel like 720 00:32:28,960 --> 00:32:31,880 Speaker 1: starting your own business is more like yeah, so I agree. 721 00:32:31,880 --> 00:32:34,440 Speaker 1: I think there's a complete difference in putting that money 722 00:32:34,560 --> 00:32:36,560 Speaker 1: in the market and hope of future returns which are 723 00:32:36,640 --> 00:32:40,280 Speaker 1: likely to occur, whereas buying a piece of rental real estate, 724 00:32:40,320 --> 00:32:44,040 Speaker 1: you kind of have. There's more solid numbers behind your 725 00:32:44,040 --> 00:32:46,240 Speaker 1: ability to do that. And I gotta say, it's actually 726 00:32:46,240 --> 00:32:48,120 Speaker 1: harder to pull this off right now because it's harder 727 00:32:48,160 --> 00:32:50,400 Speaker 1: to find good deals right now. So even though this 728 00:32:50,480 --> 00:32:52,840 Speaker 1: might be a good use of home equity, it doesn't 729 00:32:52,920 --> 00:32:55,400 Speaker 1: necessarily mean that you should pull money out and be like, 730 00:32:55,440 --> 00:32:57,840 Speaker 1: all right, we're all in the real estate bandwagon, because 731 00:32:58,000 --> 00:33:00,120 Speaker 1: if you can't find a deal with that money, then 732 00:33:00,240 --> 00:33:03,240 Speaker 1: it's not worth pulling it out, right But I agree, 733 00:33:03,240 --> 00:33:04,840 Speaker 1: I think there is just a little more of a 734 00:33:04,880 --> 00:33:07,680 Speaker 1: known quantity when you're buying a rental property with those 735 00:33:07,720 --> 00:33:10,280 Speaker 1: funds than when you're trying to invest in other ways. 736 00:33:10,600 --> 00:33:14,080 Speaker 1: But so let's just quickly reiterate all these reasons, uh 737 00:33:14,560 --> 00:33:16,800 Speaker 1: that can make sense for for snagging some of your 738 00:33:16,880 --> 00:33:19,560 Speaker 1: home's equity. We talked about renovating your home, maybe investing 739 00:33:19,720 --> 00:33:22,800 Speaker 1: or buying our rental property. But but even if you're 740 00:33:22,800 --> 00:33:25,920 Speaker 1: taking out your home's equity for a quote unquote good reason, 741 00:33:26,000 --> 00:33:28,080 Speaker 1: some of these ones that we mentioned, you still need 742 00:33:28,160 --> 00:33:31,720 Speaker 1: to do it carefully because leveraging your home to make 743 00:33:31,760 --> 00:33:34,840 Speaker 1: improvements or investing to build more wealth, it's it's a 744 00:33:34,880 --> 00:33:39,320 Speaker 1: strategy that can increase your wealth generating abilities. But it's 745 00:33:39,400 --> 00:33:43,120 Speaker 1: crucial to use leverage judiciously. It is possible to overdo 746 00:33:43,160 --> 00:33:45,440 Speaker 1: it and so um, it can come back to bite 747 00:33:45,480 --> 00:33:48,240 Speaker 1: you in the butt. If you use it flippantly and 748 00:33:48,560 --> 00:33:51,440 Speaker 1: you haven't planned things out, you don't know what you're doing, 749 00:33:51,640 --> 00:33:54,280 Speaker 1: it's possible for leverage to eat you alive. That's right, dude, 750 00:33:54,280 --> 00:33:56,840 Speaker 1: All right, now, let's talk about how to tap your 751 00:33:56,840 --> 00:34:00,560 Speaker 1: home equity fly if it does makes sense for you 752 00:34:00,600 --> 00:34:03,680 Speaker 1: to take some some out cash out refis they these 753 00:34:03,680 --> 00:34:06,640 Speaker 1: were these were uh moves that were hot for a minute. 754 00:34:07,120 --> 00:34:09,560 Speaker 1: But now that rates they've you know, they've taken off 755 00:34:09,640 --> 00:34:13,279 Speaker 1: faster than a bottle rocket. Those are making lessons for 756 00:34:13,280 --> 00:34:16,080 Speaker 1: a lot of folks today. If you're currently sitting pretty 757 00:34:16,120 --> 00:34:17,480 Speaker 1: with a rate, you know, in the twos or in 758 00:34:17,520 --> 00:34:20,880 Speaker 1: the threes, you likely don't want to refinance out of 759 00:34:20,920 --> 00:34:23,400 Speaker 1: that into something that's closer to five percent just to 760 00:34:23,440 --> 00:34:24,719 Speaker 1: pull some cash out of that home. It's like an 761 00:34:24,760 --> 00:34:26,520 Speaker 1: itchy trigger finger when you're like, I want my home 762 00:34:26,560 --> 00:34:28,799 Speaker 1: equity so bad, I'm willing to sacrifice my two point 763 00:34:28,840 --> 00:34:31,439 Speaker 1: seven five right to go to five pc rate. Don't 764 00:34:31,440 --> 00:34:34,439 Speaker 1: do it, or actually potentially even higher, right, now don't 765 00:34:34,440 --> 00:34:36,960 Speaker 1: say any numbers. Yeah, seriously, in a few days, this 766 00:34:37,000 --> 00:34:40,239 Speaker 1: is gonna potentially be out a date. But you'd be 767 00:34:40,280 --> 00:34:42,160 Speaker 1: shooting yourself in the foot, you know, were you to 768 00:34:42,239 --> 00:34:44,600 Speaker 1: do this. And so the best options are likely going 769 00:34:44,640 --> 00:34:46,560 Speaker 1: to be that home equity line of credit, that helock, 770 00:34:47,360 --> 00:34:49,759 Speaker 1: or that home equity loan, like we mentioned earlier, on 771 00:34:50,040 --> 00:34:53,520 Speaker 1: which you opt for is it's mostly influenced by how 772 00:34:53,600 --> 00:34:56,799 Speaker 1: quickly you'll be able to pay that loan back. That's right, Yeah, 773 00:34:56,920 --> 00:34:59,560 Speaker 1: because the helock. Let's go into which one makes sense 774 00:34:59,640 --> 00:35:03,040 Speaker 1: in what's scenario? Well, yeah, cash out refis are rarely, 775 00:35:03,440 --> 00:35:05,640 Speaker 1: rarely makes sense for most folks right now who own 776 00:35:05,640 --> 00:35:07,840 Speaker 1: a home in order to tap that home equity, except 777 00:35:07,880 --> 00:35:11,479 Speaker 1: for Matt is actually messaging with a buddy of mine 778 00:35:11,719 --> 00:35:14,120 Speaker 1: who we go to the same church, and he was 779 00:35:14,160 --> 00:35:17,280 Speaker 1: talking about doing a cash out refinance and I was like, whoa, whoa, whoa, whoa, whoa, 780 00:35:17,600 --> 00:35:20,160 Speaker 1: slow your role. What's your current interest rate? And he 781 00:35:20,200 --> 00:35:22,839 Speaker 1: said six percent because my card it was trash went 782 00:35:22,960 --> 00:35:25,480 Speaker 1: up and I was like, Okay, you're one of the 783 00:35:25,560 --> 00:35:28,200 Speaker 1: rare folks where a cash out refinance actually might make 784 00:35:28,239 --> 00:35:30,160 Speaker 1: the most sense for you because you could potentially lower 785 00:35:30,200 --> 00:35:32,560 Speaker 1: your rate while you're pulling money out, and so I 786 00:35:32,640 --> 00:35:37,520 Speaker 1: bought fifteen years ago and never refinance. Well, that could be, 787 00:35:37,600 --> 00:35:39,120 Speaker 1: that could be the same to somebody else to be 788 00:35:39,120 --> 00:35:41,480 Speaker 1: in that scenario. But for him specifically, it was his 789 00:35:41,520 --> 00:35:43,799 Speaker 1: credit was wrecked and he's built it up, you know, 790 00:35:44,000 --> 00:35:46,560 Speaker 1: he's built it back into being decent, and so he 791 00:35:46,640 --> 00:35:49,080 Speaker 1: might be able to get a rate lower than six percent, 792 00:35:49,120 --> 00:35:51,480 Speaker 1: which is incredible. What what's crazy, though, is that my 793 00:35:52,200 --> 00:35:54,719 Speaker 1: natural reaction, in my natural inclination, is to hear six 794 00:35:54,719 --> 00:35:57,399 Speaker 1: percent and just like cringe, cringe. Yeah, like I WinCE 795 00:35:57,440 --> 00:36:00,200 Speaker 1: when I hear that. But what's nuts is that could 796 00:36:00,280 --> 00:36:03,439 Speaker 1: very well be in our future and that's still it's 797 00:36:03,480 --> 00:36:05,840 Speaker 1: not been great over the past decade, but it's still 798 00:36:06,080 --> 00:36:09,239 Speaker 1: historically a reasonable rate. It's yeah, historically great. But you know, 799 00:36:09,239 --> 00:36:11,279 Speaker 1: hopefully you listen to us last year, when I don't 800 00:36:11,280 --> 00:36:13,640 Speaker 1: know how many times we said, we said so many times, 801 00:36:13,719 --> 00:36:15,839 Speaker 1: please refinance if you have not already. I almost felt 802 00:36:15,840 --> 00:36:17,719 Speaker 1: like I was we were lying, and uh, We're like, 803 00:36:17,800 --> 00:36:20,560 Speaker 1: rates are gonna go We're gonna go up at some point. 804 00:36:20,640 --> 00:36:22,439 Speaker 1: And then finally they climbed and were like the Fed 805 00:36:22,520 --> 00:36:24,960 Speaker 1: finally got to it proven true. It's happening right now. 806 00:36:25,040 --> 00:36:27,120 Speaker 1: Yeah what Okay, So the cash our refine not doesn't 807 00:36:27,120 --> 00:36:29,920 Speaker 1: make sense in most scenarios. The helock is great because 808 00:36:29,920 --> 00:36:31,879 Speaker 1: you don't have to take all the cash at once, 809 00:36:31,920 --> 00:36:35,399 Speaker 1: whereas with the home equity line or with a cash 810 00:36:35,400 --> 00:36:37,520 Speaker 1: our refinance, that money gets stuck into your bank account. 811 00:36:37,520 --> 00:36:39,960 Speaker 1: You're paying interest from the moment that you close on 812 00:36:39,960 --> 00:36:42,239 Speaker 1: that loan. You're only going to pay interest, however, on 813 00:36:42,280 --> 00:36:44,279 Speaker 1: the funds that you take out when it comes to 814 00:36:44,320 --> 00:36:46,719 Speaker 1: a helock. So you might have a line worth of 815 00:36:46,719 --> 00:36:48,600 Speaker 1: a hundred thousand dollars worth of equity that you can 816 00:36:48,640 --> 00:36:50,759 Speaker 1: take out, but until you actually pull the money from 817 00:36:50,800 --> 00:36:53,320 Speaker 1: the line, you're not paying interest. And so that is 818 00:36:53,360 --> 00:36:55,520 Speaker 1: what makes that such a great vehicle. It's great. Yeah, 819 00:36:55,520 --> 00:36:56,600 Speaker 1: you don't even have to use the whole thing if 820 00:36:56,600 --> 00:36:58,279 Speaker 1: you don't want sends helock. Yeah, you might have a 821 00:36:58,320 --> 00:37:00,439 Speaker 1: hundred thousand dollars and you only pull ten ran out 822 00:37:00,560 --> 00:37:03,279 Speaker 1: for a specific purpose. But the rate is also going 823 00:37:03,320 --> 00:37:06,560 Speaker 1: to adjust, and that can happen as frequently as every month, 824 00:37:06,600 --> 00:37:09,399 Speaker 1: and so with with especially the way things are looking today. 825 00:37:09,440 --> 00:37:14,279 Speaker 1: When yeah, in a rising rate environment, that could potentially 826 00:37:14,600 --> 00:37:17,960 Speaker 1: mean that your rate is uh quite a bit in 827 00:37:18,000 --> 00:37:19,520 Speaker 1: just a year's time, and we're pretty sure we're only 828 00:37:19,560 --> 00:37:22,279 Speaker 1: going to see rates uh and continue to increase over 829 00:37:22,280 --> 00:37:24,759 Speaker 1: the course of the year. Yes, agreed, And so it 830 00:37:24,800 --> 00:37:27,759 Speaker 1: could get nasty pretty quick having a helock on hand. 831 00:37:28,120 --> 00:37:30,640 Speaker 1: But with a home equity loan, you take out the 832 00:37:30,760 --> 00:37:32,919 Speaker 1: entire amount in one fell swoop. So, like I said, 833 00:37:32,920 --> 00:37:36,160 Speaker 1: those interest charges they do begin immediately, but the interest 834 00:37:36,280 --> 00:37:38,400 Speaker 1: rate is locked in, so that's kind of a plus 835 00:37:38,400 --> 00:37:41,560 Speaker 1: of that product. So much of which one you decide 836 00:37:41,600 --> 00:37:43,719 Speaker 1: to go with depends on how quickly you feel like 837 00:37:43,760 --> 00:37:46,360 Speaker 1: you're gonna be able to pay that loan back, because 838 00:37:46,560 --> 00:37:48,759 Speaker 1: the helock is going to have a lower starting rate, 839 00:37:48,800 --> 00:37:50,640 Speaker 1: and so you might say, well, I'm gonna pay this 840 00:37:50,680 --> 00:37:52,520 Speaker 1: off in eighteen months, I know I can do it 841 00:37:52,760 --> 00:37:54,879 Speaker 1: well then, or if you know you'll need like you mentioned, 842 00:37:54,920 --> 00:37:56,640 Speaker 1: like if you only need to tap say ten thousand 843 00:37:56,680 --> 00:37:59,000 Speaker 1: dollars or a couple of thousand or five thousand, there's 844 00:37:59,040 --> 00:38:02,479 Speaker 1: no need in taking out an entirely new home equity loan. 845 00:38:02,800 --> 00:38:04,440 Speaker 1: So it also comes down to the amount that you 846 00:38:04,480 --> 00:38:06,000 Speaker 1: are needing access to you right now, that's right, and 847 00:38:06,080 --> 00:38:08,800 Speaker 1: home equity loan typically comes with some closing cost wars helocks. 848 00:38:08,840 --> 00:38:11,480 Speaker 1: You can find them with zero closing costs from a 849 00:38:11,520 --> 00:38:13,600 Speaker 1: lot of lenders. And by the way, when we're talking 850 00:38:13,600 --> 00:38:16,080 Speaker 1: about where to get one of these products, local credit 851 00:38:16,160 --> 00:38:18,560 Speaker 1: unions are are typically the best place to go. Yep, 852 00:38:18,719 --> 00:38:21,400 Speaker 1: best best rates, they offer the best products, and so 853 00:38:21,520 --> 00:38:23,719 Speaker 1: I would shop with a few credit unions in my 854 00:38:23,840 --> 00:38:26,239 Speaker 1: area if I were all. If you're if you're looking 855 00:38:26,320 --> 00:38:27,879 Speaker 1: to get one of these products and you are looking 856 00:38:27,880 --> 00:38:30,200 Speaker 1: to tap some of your home equity, check out two 857 00:38:30,280 --> 00:38:32,520 Speaker 1: or three credit unions. Oftentimes those rates are posted on 858 00:38:32,560 --> 00:38:34,759 Speaker 1: their website, so you don't even have to necessarily go 859 00:38:34,800 --> 00:38:36,480 Speaker 1: in and meet with somebody. You can kind of at 860 00:38:36,480 --> 00:38:39,200 Speaker 1: a glance figure out. You know what these products are 861 00:38:39,280 --> 00:38:41,520 Speaker 1: and which one is going to suit you best. Click 862 00:38:41,560 --> 00:38:45,880 Speaker 1: you that today's rates. Okay, So what about using home 863 00:38:45,920 --> 00:38:49,719 Speaker 1: equity to pay off higher interest rate debts. That's a 864 00:38:49,719 --> 00:38:52,200 Speaker 1: good question because a lot of people kind of think 865 00:38:52,200 --> 00:38:53,560 Speaker 1: about doing that from time and time to Like, I 866 00:38:53,560 --> 00:38:56,280 Speaker 1: got a credit card debt, can I consolidated exactly? And 867 00:38:56,280 --> 00:38:58,239 Speaker 1: you know, we totally we we get it all right, 868 00:38:58,280 --> 00:39:00,680 Speaker 1: Like I get this urge. But being said, there are 869 00:39:00,719 --> 00:39:03,080 Speaker 1: a lot of ways that taking out home equity to 870 00:39:03,080 --> 00:39:05,560 Speaker 1: pay off a credit card, let's say, can actually make 871 00:39:05,600 --> 00:39:08,359 Speaker 1: things worse. Why is that, Well, you know, let's talk 872 00:39:08,360 --> 00:39:11,279 Speaker 1: about secured versus unsecured debt. For a second. Part of 873 00:39:11,280 --> 00:39:13,000 Speaker 1: the reason that you get a better interest rate for 874 00:39:13,080 --> 00:39:15,880 Speaker 1: borrowing against your home is because you're borrowing against a 875 00:39:15,960 --> 00:39:18,920 Speaker 1: valuable assets your home, uh, and this is called a 876 00:39:18,960 --> 00:39:22,240 Speaker 1: secured debt. Credit cards are the opposite. You're not putting 877 00:39:22,280 --> 00:39:24,719 Speaker 1: up any collateral, and so that's why credit cards are 878 00:39:25,000 --> 00:39:28,040 Speaker 1: unsecured debt, and you have a higher interest rate associated 879 00:39:28,080 --> 00:39:31,000 Speaker 1: with those quote unquote loans. And so the downside of say, 880 00:39:31,160 --> 00:39:33,319 Speaker 1: not paying your credit card bill for months on end, 881 00:39:33,440 --> 00:39:35,520 Speaker 1: is that your debt is going to go to a 882 00:39:35,560 --> 00:39:38,440 Speaker 1: collections agency and it's going to wreck your credit. But 883 00:39:38,600 --> 00:39:40,719 Speaker 1: let's say you borrow against your home and you fail 884 00:39:40,800 --> 00:39:44,120 Speaker 1: to pay the credit union. The consequences here become much 885 00:39:44,160 --> 00:39:47,359 Speaker 1: more dire, potentially even losing your home, because you put 886 00:39:47,400 --> 00:39:50,480 Speaker 1: your home up as collateral for that loan. So that's 887 00:39:50,480 --> 00:39:53,200 Speaker 1: why we're trying to stress again, Joel, you said the 888 00:39:53,239 --> 00:39:55,839 Speaker 1: judicious use, and that's such a great way of saying it, 889 00:39:55,840 --> 00:39:58,359 Speaker 1: because that's how we want you to approach these types 890 00:39:58,400 --> 00:40:00,200 Speaker 1: of loans. That's how we want you to a coach 891 00:40:00,200 --> 00:40:02,560 Speaker 1: home equity. We don't want you to go overboard, and 892 00:40:02,640 --> 00:40:05,319 Speaker 1: that means while using home equity to pay off high 893 00:40:05,320 --> 00:40:08,359 Speaker 1: interest rate debt. It can work, but there's enough risk 894 00:40:08,400 --> 00:40:11,719 Speaker 1: involved that you might not want to try it. Yeah, exactly, 895 00:40:11,760 --> 00:40:15,359 Speaker 1: because the risks are just completely different. Losing your home 896 00:40:15,760 --> 00:40:19,680 Speaker 1: versus wrecking your credit those are two completely different outcomes. 897 00:40:19,719 --> 00:40:22,320 Speaker 1: One feels much more dire than the other. And I 898 00:40:22,360 --> 00:40:24,080 Speaker 1: don't want to play my risk at home just to 899 00:40:24,080 --> 00:40:27,000 Speaker 1: consolidate my credit card debt, whereas some people might recommend 900 00:40:27,040 --> 00:40:30,640 Speaker 1: that um and for some people in certain financial circumstances, 901 00:40:30,920 --> 00:40:32,960 Speaker 1: it can work out. It's just not a slam dunk, 902 00:40:33,000 --> 00:40:34,480 Speaker 1: and it's not something that we want to tell people 903 00:40:34,640 --> 00:40:37,640 Speaker 1: willy nilly, uh talking to two tens of thousands of 904 00:40:37,680 --> 00:40:39,960 Speaker 1: people like you, go go do it, no problem. It's 905 00:40:40,000 --> 00:40:42,080 Speaker 1: just a scary proposition. It depends a lot of It 906 00:40:42,080 --> 00:40:44,720 Speaker 1: depends on how you arrived with all of that credit 907 00:40:44,760 --> 00:40:46,520 Speaker 1: card debt as well. Right if it was just if 908 00:40:46,560 --> 00:40:48,560 Speaker 1: it's behavior and that's just how you've always been, and 909 00:40:48,800 --> 00:40:51,040 Speaker 1: it's what you're going to continue to do. What's gonna 910 00:40:51,239 --> 00:40:53,480 Speaker 1: change if you continue to go down this path. Uh, 911 00:40:53,520 --> 00:40:55,840 Speaker 1: it's likely that you will continue in those same behaviors, 912 00:40:55,840 --> 00:40:58,000 Speaker 1: within those you know, in those same actions. Uh. And 913 00:40:58,000 --> 00:41:00,000 Speaker 1: so I see that being a situation where you wouldn't 914 00:41:00,000 --> 00:41:02,719 Speaker 1: want to do it, versus a situation where maybe let's 915 00:41:02,760 --> 00:41:05,040 Speaker 1: say you didn't have an emergency fund set up, and 916 00:41:05,080 --> 00:41:07,200 Speaker 1: maybe you never carry a balance on your credit card, 917 00:41:07,200 --> 00:41:09,680 Speaker 1: but maybe you hit some rough patches over the past year. 918 00:41:10,080 --> 00:41:12,480 Speaker 1: You put a lot of expenses, you charge a lot 919 00:41:12,520 --> 00:41:15,200 Speaker 1: to your card. But things are turned around, You're on 920 00:41:15,239 --> 00:41:18,120 Speaker 1: the straight and narrow. You do now have some margin 921 00:41:18,160 --> 00:41:19,960 Speaker 1: in your life. You have some money set aside in 922 00:41:20,080 --> 00:41:22,200 Speaker 1: an emergency fund. I could see that being a situation 923 00:41:22,239 --> 00:41:24,160 Speaker 1: where you might want to tap some of that home 924 00:41:24,160 --> 00:41:26,279 Speaker 1: equity because that was sort of a blip. It was 925 00:41:26,280 --> 00:41:28,040 Speaker 1: a one time thing. You're never ever going to do 926 00:41:28,040 --> 00:41:30,120 Speaker 1: that do that again, and you just want to eliminate 927 00:41:30,280 --> 00:41:32,120 Speaker 1: like at that point it becomes a numbers game, right, 928 00:41:32,160 --> 00:41:33,799 Speaker 1: and you want to eliminate the high interest rate debt. 929 00:41:33,800 --> 00:41:35,000 Speaker 1: I think you need to have a plan to do 930 00:41:35,040 --> 00:41:38,000 Speaker 1: two things. Yeah, change your behavior, like plan like exactly, 931 00:41:38,040 --> 00:41:39,200 Speaker 1: that's the thing. You have to have a plan, but 932 00:41:39,239 --> 00:41:41,040 Speaker 1: it needs to be a plan to one change your behavior, 933 00:41:41,040 --> 00:41:42,759 Speaker 1: because you can't say I'm gonna take this money out 934 00:41:42,760 --> 00:41:44,360 Speaker 1: pay off the credit cards. You have to have a 935 00:41:44,360 --> 00:41:46,319 Speaker 1: plan to not use those credit cards again, to change 936 00:41:46,360 --> 00:41:48,520 Speaker 1: the way you treat them. And then you also have 937 00:41:48,600 --> 00:41:50,600 Speaker 1: to have a plan to then pay off the debt 938 00:41:50,600 --> 00:41:52,640 Speaker 1: that you've just incurred against your home and to do 939 00:41:52,680 --> 00:41:55,279 Speaker 1: that in short order as well. So, yeah, you want 940 00:41:55,280 --> 00:41:57,319 Speaker 1: to make sure you're doing you have a plan to 941 00:41:57,320 --> 00:42:00,600 Speaker 1: do both quickly or else this could un awl and 942 00:42:01,239 --> 00:42:04,239 Speaker 1: it could end up in really, really crappy circumstances for you. 943 00:42:04,239 --> 00:42:06,800 Speaker 1: And by the way, if you need help with your money, 944 00:42:07,080 --> 00:42:09,080 Speaker 1: if you need to talk to somebody and you feel 945 00:42:09,080 --> 00:42:11,000 Speaker 1: like you're in that situation we're tapping home equity to 946 00:42:11,000 --> 00:42:14,040 Speaker 1: pay off high interest rate credit card debt because it's overwhelming, 947 00:42:14,480 --> 00:42:16,760 Speaker 1: is the only solution for you, Well, I would suggest 948 00:42:16,880 --> 00:42:21,319 Speaker 1: speaking to a nonprofit credit counselor at NFCC or Money 949 00:42:21,360 --> 00:42:24,160 Speaker 1: Management International. Will post links to both of those in 950 00:42:24,200 --> 00:42:26,319 Speaker 1: our show notes. But those are places I would turn 951 00:42:26,320 --> 00:42:29,320 Speaker 1: because sometimes they are able to work with your creditors 952 00:42:29,320 --> 00:42:31,799 Speaker 1: to give you lower rates that you can't get on 953 00:42:31,840 --> 00:42:33,640 Speaker 1: your own. And and by the way, here's the thing, 954 00:42:33,840 --> 00:42:36,440 Speaker 1: there's almost no upside. Back to the home equity thing, 955 00:42:36,440 --> 00:42:38,960 Speaker 1: Matt to dwelling on the increased value of your home. 956 00:42:39,000 --> 00:42:42,839 Speaker 1: I think sometimes people keep refreshing Zillo or red Fin 957 00:42:42,920 --> 00:42:44,480 Speaker 1: every day and they're like, just for that little pick 958 00:42:44,520 --> 00:42:47,040 Speaker 1: me up. Yeah, let's see how much this estimate has 959 00:42:47,080 --> 00:42:51,040 Speaker 1: increased my value. What's what's the redfin estimate? Exactly? There By, 960 00:42:51,040 --> 00:42:53,640 Speaker 1: the way is always more, it's always higher, the red 961 00:42:53,640 --> 00:42:55,560 Speaker 1: Fins always higher. Yeah, I really have you found that? No, 962 00:42:55,640 --> 00:42:57,680 Speaker 1: I don't check enough, to be honest, I've noticed that. 963 00:42:57,800 --> 00:42:59,480 Speaker 1: But I know that some people love checking, and they're like, 964 00:42:59,600 --> 00:43:01,439 Speaker 1: I've been I've been just sitting here eating bond monds 965 00:43:01,440 --> 00:43:04,520 Speaker 1: and I just made three k uh and that feels good. 966 00:43:04,760 --> 00:43:07,279 Speaker 1: That makes people feel pretty swell that they didn't have 967 00:43:07,320 --> 00:43:09,640 Speaker 1: to do anything and they just made some money. But 968 00:43:09,640 --> 00:43:12,600 Speaker 1: but here's the thing, doing nothing is actually the best 969 00:43:12,600 --> 00:43:14,680 Speaker 1: course of action in so many circumstances. I'm not I'm 970 00:43:14,680 --> 00:43:17,000 Speaker 1: not saying sitting on your couch, but but um, if 971 00:43:17,040 --> 00:43:19,160 Speaker 1: you're in great financial shape, if you're if you're living 972 00:43:19,280 --> 00:43:21,239 Speaker 1: life how the money way, the way Matt and I 973 00:43:21,239 --> 00:43:23,640 Speaker 1: talked about your saving and investing for your future in 974 00:43:23,640 --> 00:43:26,000 Speaker 1: a meaningful way, Well then we would say tapping your 975 00:43:26,000 --> 00:43:29,680 Speaker 1: home equity wisely in order to pursue a renovation or 976 00:43:29,719 --> 00:43:31,920 Speaker 1: some of these other financial goals that you've got. It 977 00:43:31,960 --> 00:43:35,680 Speaker 1: could make sense because his home equity has skyrocketed. More 978 00:43:35,680 --> 00:43:37,920 Speaker 1: folks are thinking the exact same thing. But but as 979 00:43:38,000 --> 00:43:40,680 Speaker 1: rates have gone up, it's not necessarily a slam dunk decision. 980 00:43:40,880 --> 00:43:42,560 Speaker 1: There's a lot that you need to consider, and if 981 00:43:42,560 --> 00:43:46,040 Speaker 1: you're kind of doing it out of desperation, the consequences 982 00:43:46,320 --> 00:43:48,640 Speaker 1: could be severe. They could be bad. And so there's 983 00:43:48,680 --> 00:43:51,400 Speaker 1: just a lot that goes into thinking through whether or 984 00:43:51,440 --> 00:43:53,920 Speaker 1: not you're going to cash in on some of that 985 00:43:53,960 --> 00:43:56,440 Speaker 1: home equity or not. We want people to be careful, 986 00:43:56,560 --> 00:43:59,560 Speaker 1: proceed with caution, and in some situations you could further 987 00:43:59,640 --> 00:44:02,400 Speaker 1: your nutual goals. In other ways, it could end up 988 00:44:02,400 --> 00:44:04,920 Speaker 1: harming you. This whole conversation, it kind of reminds me 989 00:44:05,000 --> 00:44:06,759 Speaker 1: like we've our kids are a little bit younger, but 990 00:44:06,840 --> 00:44:08,799 Speaker 1: we we have folks who have kids who are older 991 00:44:08,840 --> 00:44:10,920 Speaker 1: and they're starting to have the big talk with their kids, 992 00:44:11,280 --> 00:44:15,359 Speaker 1: and it's sort of like, wait about investing. If only 993 00:44:15,360 --> 00:44:20,080 Speaker 1: it was that easy. Here's what a four one heay is, sweetie, um, 994 00:44:20,160 --> 00:44:22,560 Speaker 1: But basically what I'm saying, I'll have that one. I'll 995 00:44:22,600 --> 00:44:24,680 Speaker 1: let my wife handle. Like I'm thinking about the fact 996 00:44:24,680 --> 00:44:26,480 Speaker 1: that there may have been some folks who weren't even 997 00:44:26,560 --> 00:44:28,839 Speaker 1: aware that this was something that they should be paying 998 00:44:28,840 --> 00:44:30,640 Speaker 1: attention to, or it's something that it may not have 999 00:44:30,680 --> 00:44:32,840 Speaker 1: even been on the radar, but by talking about it, 1000 00:44:32,840 --> 00:44:34,279 Speaker 1: all of a sudden, you've thrust in front of them 1001 00:44:34,320 --> 00:44:35,839 Speaker 1: and you're like, hey, this is something that you gotta 1002 00:44:35,880 --> 00:44:37,960 Speaker 1: watch out for, and now we hope you make the 1003 00:44:38,000 --> 00:44:40,160 Speaker 1: best decision possible. Right Like in the same way with 1004 00:44:40,160 --> 00:44:41,840 Speaker 1: with home equity, It's like, I bet there were some 1005 00:44:41,840 --> 00:44:43,960 Speaker 1: folks were it wasn't even on their radar at all 1006 00:44:44,000 --> 00:44:45,719 Speaker 1: that this was an option for them, And now they've 1007 00:44:45,760 --> 00:44:48,440 Speaker 1: gone to Zello and they're like, they're like, look what's available. 1008 00:44:48,840 --> 00:44:51,359 Speaker 1: Uh now they've got those Uh they got the dollar 1009 00:44:51,440 --> 00:44:54,000 Speaker 1: signs and their eyes. But it's still we think it's 1010 00:44:54,000 --> 00:44:56,439 Speaker 1: still important to talk about it and just be something 1011 00:44:56,520 --> 00:45:00,080 Speaker 1: in Vegas with this to be something that you're aware of. 1012 00:45:00,239 --> 00:45:02,319 Speaker 1: We want this to be something that you're thinking through 1013 00:45:02,360 --> 00:45:04,160 Speaker 1: in a healthy way. That is what we do here 1014 00:45:04,160 --> 00:45:05,640 Speaker 1: on the show. We talk about money in a way 1015 00:45:05,680 --> 00:45:07,480 Speaker 1: that it's where you know where it's not ABU. We 1016 00:45:07,520 --> 00:45:09,240 Speaker 1: want to help you through some of these different financial 1017 00:45:09,280 --> 00:45:11,680 Speaker 1: seasons of your life, and hopefully we were able to 1018 00:45:11,680 --> 00:45:13,640 Speaker 1: do that today. And this is of course just a 1019 00:45:13,800 --> 00:45:16,640 Speaker 1: top of mind discussion as you're seeing these headline numbers 1020 00:45:16,640 --> 00:45:19,000 Speaker 1: and you're you're wondering if you're a homeowner, like, well, 1021 00:45:19,040 --> 00:45:21,440 Speaker 1: what do I do with this newfound money? Well, for 1022 00:45:21,480 --> 00:45:24,920 Speaker 1: most people, nothing is the best best course of action. 1023 00:45:25,160 --> 00:45:26,880 Speaker 1: So are Matt. Let's move back. Let's get back to 1024 00:45:26,880 --> 00:45:28,239 Speaker 1: the beer that we had on this episode. This one 1025 00:45:28,360 --> 00:45:32,080 Speaker 1: is called Above the Threshold of Hell by Burial Brewing Company. 1026 00:45:32,120 --> 00:45:37,279 Speaker 1: That was a pretty good metal voice, just that's how 1027 00:45:37,280 --> 00:45:40,240 Speaker 1: it's written out on here with its super metal design. 1028 00:45:40,480 --> 00:45:42,719 Speaker 1: Is just kind of a ridiculous name, but for a 1029 00:45:42,719 --> 00:45:44,239 Speaker 1: great I p A. Yeah, what were your thoughts on 1030 00:45:44,239 --> 00:45:46,759 Speaker 1: this one? It was fantastic. I don't think we've ever 1031 00:45:46,800 --> 00:45:49,520 Speaker 1: had an I p A from Burial that wasn't amazing. 1032 00:45:49,600 --> 00:45:52,239 Speaker 1: This was a double dry Hops I p A. And 1033 00:45:52,280 --> 00:45:54,319 Speaker 1: I will say a lot of times some of their 1034 00:45:54,360 --> 00:45:57,120 Speaker 1: beers can be kind of thick, difficult to drink, but 1035 00:45:57,160 --> 00:46:00,400 Speaker 1: I felt like this one was a little bit lighter. Um, 1036 00:46:00,440 --> 00:46:02,000 Speaker 1: it was lighter. I think in the Hops and the 1037 00:46:02,000 --> 00:46:05,359 Speaker 1: flavor it was nuanced. It wasn't just like you know, 1038 00:46:05,440 --> 00:46:07,600 Speaker 1: they weren't smashing the guitar on the stage. They were 1039 00:46:07,640 --> 00:46:10,120 Speaker 1: just up there playing like a normal person. And for 1040 00:46:10,160 --> 00:46:12,200 Speaker 1: them specifically, I feel like that's a nice change of pace. 1041 00:46:12,320 --> 00:46:13,799 Speaker 1: You know, like like a lot of times it's like 1042 00:46:13,800 --> 00:46:15,960 Speaker 1: to be abrasive. They've always got it cranked to eleven. 1043 00:46:16,280 --> 00:46:18,920 Speaker 1: And it's really cool to see a brewery like Burial 1044 00:46:19,040 --> 00:46:21,000 Speaker 1: dial it back just a little bit. Sometimes you want 1045 00:46:21,000 --> 00:46:22,960 Speaker 1: to bear that's a little bit easier to drink, that 1046 00:46:23,000 --> 00:46:25,160 Speaker 1: doesn't smash you over the head nearly as much. Maybe 1047 00:46:25,239 --> 00:46:27,520 Speaker 1: got some more of the hop nuance that's going on 1048 00:46:27,600 --> 00:46:29,919 Speaker 1: in this beer because it wasn't over the top, because 1049 00:46:29,960 --> 00:46:32,759 Speaker 1: it wasn't just like hopped to the gills. It was like, oh, 1050 00:46:32,800 --> 00:46:34,920 Speaker 1: I feel like I can taste the flavor profile of 1051 00:46:34,920 --> 00:46:36,520 Speaker 1: the hops a little more because it was a little 1052 00:46:36,520 --> 00:46:38,480 Speaker 1: more laid back, so in my mind was a touch 1053 00:46:38,480 --> 00:46:40,319 Speaker 1: more like fruity. I feel like you could taste more 1054 00:46:40,320 --> 00:46:42,560 Speaker 1: of the fruit flavors with within the hops that they 1055 00:46:42,560 --> 00:46:44,480 Speaker 1: tend to evoke. I dug this one, and I dig 1056 00:46:44,520 --> 00:46:46,920 Speaker 1: pretty much everything Burial makes. They're awesome, all right, that's 1057 00:46:46,960 --> 00:46:48,520 Speaker 1: gonna do it for this episode. For folks who want 1058 00:46:48,520 --> 00:46:50,520 Speaker 1: the show notes will have links to some of the 1059 00:46:50,520 --> 00:46:52,640 Speaker 1: resources we mentioned. You can find those up on our 1060 00:46:52,640 --> 00:46:54,759 Speaker 1: website at how to money dot com. That's right, and 1061 00:46:54,800 --> 00:46:57,080 Speaker 1: don't forget if you have not signed up for our 1062 00:46:57,200 --> 00:47:00,680 Speaker 1: weekly newsletter comes out every Tuesday morning. Our first one, 1063 00:47:00,760 --> 00:47:04,319 Speaker 1: actually our first legit newsletter, came out yesterday, So all 1064 00:47:04,360 --> 00:47:06,920 Speaker 1: of you listeners out there there who are already subscribed, 1065 00:47:06,960 --> 00:47:09,480 Speaker 1: you got to enjoy that. But if you're listening and 1066 00:47:09,560 --> 00:47:13,239 Speaker 1: you maybe you're sending some of that poo uh it's real, 1067 00:47:13,440 --> 00:47:15,040 Speaker 1: make sure you make sure you had to have the 1068 00:47:15,120 --> 00:47:18,200 Speaker 1: money dot com forward slash newsletter, or you can just 1069 00:47:18,200 --> 00:47:20,320 Speaker 1: scroll down to the bottom of the homepage. Best newsletter 1070 00:47:20,360 --> 00:47:23,120 Speaker 1: in the history of money, Newsletters in the history of money, 1071 00:47:23,160 --> 00:47:26,640 Speaker 1: and we just started. Uh it's a tall claim, but 1072 00:47:26,680 --> 00:47:28,560 Speaker 1: we're gonna stand by it. That's gonna be it for 1073 00:47:28,640 --> 00:47:31,400 Speaker 1: today though, until next time, Joel, best Friends Out, Best 1074 00:47:31,440 --> 00:47:32,160 Speaker 1: Friends Out,