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

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Speaker 2: Today we're going to answer some of your listener questions.

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Speaker 1: And that's because if we answered all of your listener questions,

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Speaker 1: we'd be sitting here for at least another hour before

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Speaker 1: we run out of all.

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Speaker 2: The question the meaning of life, Matt, that question came in,

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Speaker 2: we were like, we'll pump that to a future episode.

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Speaker 1: Maybe we'll say that one for the Ask Me Anything,

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Speaker 1: which is an upcoming special episode. You can look forward

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Speaker 1: to that one. Where should we That's going to be

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Speaker 1: episode one thousand. I think now is a good time

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Speaker 1: start thinking.

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Speaker 2: If you're listening to this episode and you're like, I

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Speaker 2: have a random question for Matt and Joel, email it

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Speaker 2: over to us and it can just just type it

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Speaker 2: out even if you want, because I have a feeling

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Speaker 2: a lot of people are reticent to send voice my

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Speaker 2: most so if you just want to, like type that

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Speaker 2: question out anything perfectly not finance related.

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Speaker 1: Yeah, I want to. I want all the random questions,

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Speaker 1: but that of the episode one thousand. But today we

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Speaker 1: in fact are going to answer your financial questions. We're

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Speaker 1: going to talk about some special the special Wrath account

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Speaker 1: Joel that we rarely get to talk about looking forward

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Speaker 1: to that's we're going to talk about your personal fight.

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Speaker 1: Not you personally, but an individual's personal finances and specifically

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Speaker 1: investing whether or not she should change that during a sabbatical,

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Speaker 1: how that impacts her money. We're gonna talk about reverse

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Speaker 1: mortgages and more plenty to get to during today's episode. Joel,

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Speaker 1: you want to share your story about your dishwasher. I

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Speaker 1: think I should your dishwasher saga.

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Speaker 2: I so I saw a really incredible deal on this

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Speaker 2: website called costco dot com for heard of it, bosh dishwashers,

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Speaker 2: and I say dishwashers with an s mat because I

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Speaker 2: did not just buy one. I asked my wife ahead

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Speaker 2: of time if I should partake in this stunt. She

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Speaker 2: flat out said I don't think so, and yet I

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Speaker 2: did it anyway.

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Speaker 1: Well, the reason why is because she she pointed to

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Speaker 1: the fact that you've been partaking in this type of

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Speaker 1: behavior a lot in recent She's like, You've kind of

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Speaker 1: been stalking up on a lot of stuff recently. She

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Speaker 1: was like, Joel's he's got tariffs on the mine.

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Speaker 2: I'm going off to deepen. Okay, so here's why I

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Speaker 2: bought not one, not two, not three, but four dishwashers.

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Speaker 2: I didn't know it was four of the same variety.

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Speaker 2: Of those three, well, the fourth made every dishwasher a

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Speaker 2: little bit cheaper.

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Speaker 1: So was it? Was it a punch card and the

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Speaker 1: fourth ones on us something like that?

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Speaker 2: Okay, so I was I've not liked our dishwasher, Matt

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Speaker 2: since I moved in, and it doesn't clean the dishes

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Speaker 2: terribly well. And even though it's like a nice brand

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Speaker 2: or something, it's kitchenad. All the rest of our appliances

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Speaker 2: are kitchen aid. I don't care about matching appliances. I

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Speaker 2: just wanted a dishwasher that cleans my freaking dishes.

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Speaker 1: Just needs to work. Yes, So I'm with you, Bosh.

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Speaker 2: If you look at consumer reports, if you look anywhere,

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Speaker 2: the best, everybody says they're the greatest, easily the best.

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Speaker 2: Costco had Bosh dishwashers on clearance. The price centered in

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Speaker 2: ninety seven. You know it's you know, yeah, you know

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Speaker 2: that it's the cheapest price you're gonna get. On top

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Speaker 2: of that, Costco said, hey, if you buy multiple appliances,

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Speaker 2: we'll give you a hundred books off per appliance. Basically,

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Speaker 2: and on top of that, they said, Bosh is also

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Speaker 2: offering a deal basically something like two fifty off an

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Speaker 2: appliance once you get past too, so the deal like

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Speaker 2: stacked on top, and so the more dishwashers you bought,

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Speaker 2: the more you saved. Triple word score baby, right. It

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Speaker 2: was very very much like that. So and free installation,

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Speaker 2: so that's also pretty nice. I sold my old dishwasher,

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Speaker 2: get four dishwashers and installed at your house. You're said,

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Speaker 2: so clearly, I don't need that many dishwashers. So what

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Speaker 2: I did was I asked friends and family, Hey, do

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Speaker 2: you want an inexpensive dishwasher? Do you want to go

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Speaker 2: in with me on this?

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Speaker 1: You I thought you might be backed out. I was

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Speaker 1: just fine. I will say, I didn't know how serious

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Speaker 1: you work, but like, oh, I let's set the stage,

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Speaker 1: which was serious. I think I had made some cocktails

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Speaker 1: where I was were sitting around on the back patio.

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Speaker 1: The breeze is blowing. It's a Friday, and you had

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Speaker 1: mentioned that, and I was just like, oh, yeah, dude,

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Speaker 1: we could. I can totally see us stick in one

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Speaker 1: of those in I got a like, if not at

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Speaker 1: our own, at the very least at a rental perhaps,

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Speaker 1: but I'll.

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Speaker 2: Just hold on to it for the future.

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Speaker 1: Well that's the problem. I feel bad because I feel

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Speaker 1: like I kind of left you in the lurch a

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Speaker 1: little bit. But you're like, hey, this is still available

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Speaker 1: to you, and I was just like, well, if I

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Speaker 1: don't take it, what are you gonna do with it?

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Speaker 1: Because I would only take it. I would only take

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Speaker 1: it to flip it because I don't currently have any

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Speaker 1: rentals that need a dishwasher, so a, so I'm not

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Speaker 1: taking advantage of the free install And I also did

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Speaker 1: some more digging and this was a three hundred series,

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Speaker 1: you said, and by all means a great dishwasher, but

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Speaker 1: evidently it's the five eight hundred series of Bosh dishwashers

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Speaker 1: that have the ability to dry the dishes really well.

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Speaker 1: And that is the number one thing that we hate

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Speaker 1: about our dishwasher really well, specifically plastics, because the dishes

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Speaker 1: are fine, but the kids we always packed their lunch,

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Speaker 1: and the plastic containers it's like those little subdivided little

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Speaker 1: tupperware sort of there are a pain in the butt

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Speaker 1: to get to a to clean, but then them to

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Speaker 1: dry the dishwashers, so that that's been the whole impetus

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Speaker 1: behind us thinking about getting another.

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Speaker 2: So you abandoned me, Yeah, yeah, I left you. My

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Speaker 2: dad he was looking for a new dish washer anyway,

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Speaker 2: so this was perfect. So he got like a bargain

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Speaker 2: basement price to us a four also free cost come

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Speaker 2: installation for him too, which is awesome. And so then

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Speaker 2: now I've just got to sell two dish washers, two

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Speaker 2: of them. And honestly, considering the price per dishwasher I paid,

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Speaker 2: so what was I should be able to profit?

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Speaker 1: Yeah?

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Speaker 2: What was the final price? Was like fourteen thirty four dishwashers.

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Speaker 1: Per okay, so what is that? Come on? Like, it's

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Speaker 1: like three sixty something? Three sixty per dishwasher, right, and

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Speaker 1: this is like a nine hundred dollars dishwasher.

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Speaker 2: It's like a it's like a seven hundred dollars okaylasher,

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Speaker 2: but tax also right, so that's literally after tax installation everything, right.

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Speaker 2: So yeah, I'm going to be able to sell these

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Speaker 2: on Facebook marketplace for more than what I paid for them.

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Speaker 1: I was doing you a favor because economies of scale, Joel,

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Speaker 1: I was thinking, well, that's why I had mentioned that

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Speaker 1: I would just flip it. And I was like, well,

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Speaker 1: if he's going to go through the hassle of creating

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Speaker 1: the listening take in the picture making it sound like

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Speaker 1: a legit posting, that's half the battle. That's true. So

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Speaker 1: I may as well be able to roll in some

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Speaker 1: additional profit off that second dishwasher dog true story. So

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Speaker 1: let me help you, help me help you.

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Speaker 2: So it's uh, this is the kind of thing. I

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Speaker 2: think most people see that and they balk at it,

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Speaker 2: and I'm the kind of guy who says, I don't know,

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Speaker 2: this sounds like a fun challenge and also of a deal.

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Speaker 2: It's like a win win where I essentially get this

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Speaker 2: this free dishwasher put in, and my dishwasher troubles were

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Speaker 2: over over because I've just had this really fraud relationship, had.

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Speaker 1: Enough of it. It was tough.

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Speaker 2: My wife was like, it's not that bad, and I

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Speaker 2: was like, I'm the one who does the dishes.

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Speaker 1: It sucks. I yeah, I hate it.

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Speaker 2: So I'm happy and hopefully my wallet will be happy

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Speaker 2: at the end of the day too, because like, fourteen

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Speaker 2: hundred dollars for four dishwashers, Yeah, that's incredible. Well, in

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Speaker 2: today's America, mat well, a the fact that you sold

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Speaker 2: your old one. B. The fact that you're going to

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Speaker 2: be able to Yeah, I mean you're gonna make Yeah,

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Speaker 2: I think you. I don't think you're gonna come out

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Speaker 2: ahead necessarily.

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Speaker 1: I think I am. Let's wait and see, but you

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Speaker 1: might get close. I think I think you're going to

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Speaker 1: come out ahead.

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Speaker 3: Yah.

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Speaker 1: Fourteen, Well, how much did you get for your your

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Speaker 1: use dishwasher? Like hundred bucks?

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Speaker 2: One hundred and twenty five dollars?

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Speaker 1: Okay, so fourteen down to thirteen? So can you get

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Speaker 1: six fifty or more? Well?

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Speaker 2: No, because my dad's gonna pay for one, but he's

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Speaker 2: gonna pay the actual price I paid.

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Speaker 1: But I think I can, so I gets it down

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Speaker 1: to thousand. Yeah.

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Speaker 2: So I think if I make five hundred bucks each

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Speaker 2: on Facebook, say, if you make more than five hundred,

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Speaker 2: you're coming out ahead.

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Speaker 1: I'll report back. But I hate to be the boozie

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Speaker 1: want here, but I'm the one that's holding out for

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Speaker 1: the super fancy dishwasher that's got crystal dry technology, which

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Speaker 1: I didn't realize I needed until I did some research.

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Speaker 2: It does sound fancy. Yeah, I don't care as much

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Speaker 2: about that, but yeah, I just the finer things, those

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Speaker 2: Ideo secrecies. This is something I used to do a

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Speaker 2: lot more of back in the day, this kind of

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Speaker 2: weird stuff, find a deal, buy in bulk, sell off

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Speaker 2: the rest, that kind of thing. Remember, we used the

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Speaker 2: advantage of the deal to an Urban Outfitters auction and

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Speaker 2: we would buy stuff that was severely discounted Urban Outfitters

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Speaker 2: slash anthrow yeah, and we would we would sell that

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Speaker 2: stuff on Facebook and make a decent buck after even

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Speaker 2: after transportation costs on it.

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Speaker 1: Slash outfit our new house we have any furniture at

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Speaker 1: the time. So for us, it was just a great

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Speaker 1: way to again to be able to afford the nicer

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Speaker 1: things the life.

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Speaker 2: Right, So this was my modern version of that ice,

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Speaker 2: although I realize it makes me sound crazy.

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Speaker 1: All right, let's move on.

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Speaker 2: Matt. Let's mention the beer we're having on this episode.

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Speaker 2: This is a ddH refreshing by Tired Hands out of Pennsylvania.

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Speaker 2: We'll give our thoughts on this IPA at the end

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Speaker 2: of the episode, and if you have a money question,

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Speaker 2: whether it's about a weirdo purchase here thinking about making,

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Speaker 2: we'd love to help you out. Just send your voice

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Speaker 2: memo over to us if you want the full instructions.

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Speaker 2: You go to how tomoney dot com, slash ask, or

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Speaker 2: literally just record your question on the voicement map of

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Speaker 2: your phone and email it over to us. Matt, let's

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Speaker 2: get to a real money question a conundrum here, specifically

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Speaker 2: from a listener who wants to know how or the

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Speaker 2: details about opening a wrath for a kid.

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Speaker 4: Hey, guys, this is Mary from South Carolina. Joel recently said,

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Speaker 4: you guys need some great listener questions, and I think

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Speaker 4: I'm pretty great, So here we go. One of the

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Speaker 4: reasons that we like listening to y'all is because you're

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Speaker 4: kind of in the same ages and stages. Our oldest

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Speaker 4: is twelve, and she's starting to earn some money from

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Speaker 4: babysitting and pet sitting and stuff like that, and we

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Speaker 4: went over some compound interest calculators with her. She is

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Speaker 4: pretty excited about those. So wondering how detailed I need

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Speaker 4: to get with documentation. So far, I've just been putting

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Speaker 4: memos in the money I transfer into her youth account

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Speaker 4: with USAA. I don't know if I need to go

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Speaker 4: all in like Matt and do a spreadsheet. That sounds

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Speaker 4: pretty exhausting. Also, would you guys recommend Fidelity for a youth,

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Speaker 4: roth Ira. We already have our brokerage account for them.

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Speaker 1: Thank you, Joel. I feel called out sometimes, like you've

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Speaker 1: recently documented, you need to do the exhausting thing in

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Speaker 1: order to take get ahead with your money. That's true, no,

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Speaker 1: but not always, not always.

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Speaker 2: Sometimes there's a lot of low hang for when it

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Speaker 2: comes to personal fire.

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Speaker 1: Sure, Mary, we appreciate you as a listener. I can

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Speaker 1: certainly see why it would be fun to to having

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Speaker 1: a kid who's also in the same ages and stages

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Speaker 1: as us as well. We're you know, our oldest daughters

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Speaker 1: are going to be turning twelve this year as well.

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Speaker 2: That's right, yeah, this summer, and obviously Matt Mary's getting

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Speaker 2: her twelve year old started off on the right foot, right,

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Speaker 2: And it's really it's really fun to watch your kid

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Speaker 2: become kind of a micro entrepreneur. And twelve eleven, twelve

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Speaker 2: is kind of the perfect age, especially if you feel

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Speaker 2: like your kid's got some maturity. Like babysitting dollars, especially

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Speaker 2: in today's economy, they can add up, they can add

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Speaker 2: really quickly. Like my daughter has been babysitting the kids

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Speaker 2: across the street a little bit here and there, and

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Speaker 2: it's so exciting to her to see like money roll in,

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Speaker 2: to come back home and be like, I was over

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Speaker 2: there for like four hours. I made twenty bucks, you know,

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Speaker 2: and the parents are thrilled because babysitting costs a heck

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Speaker 2: of a lot more than that most of the time.

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Speaker 2: And so yeah, I think that.

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Speaker 1: If you're just the mother's helper though, right exactly is

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Speaker 1: more like that.

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Speaker 2: That's exactly what it is. Yeah, Like she hasn't been

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Speaker 2: left alone with him yet, but they can get a

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Speaker 2: lot of stuff done.

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Speaker 1: Cooking dinner for them, their laundry as well.

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Speaker 2: It's a Cinderella story really when it comes down to it.

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Speaker 2: But I think doing that getting them excited about like

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Speaker 2: making some money, then you know that enticing that excitement

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Speaker 2: about compounding, maybe even including a parent match if you're

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Speaker 2: up for it, Mary, and if you can, those are

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Speaker 2: ways to spur your child towards becoming a lifelong investor.

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Speaker 2: Just getting them excited about like what money can do

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Speaker 2: for them, and you want her to be able to

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Speaker 2: enjoy some of that money now, of course, But you know,

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Speaker 2: I think also getting excited about how those unspent dollars

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Speaker 2: ten and will grow. That's pretty neat too, you kind

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Speaker 2: of want to both end.

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Speaker 1: Yeah, that's the personal finance education that's taking place. But

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Speaker 1: at the same so you are instilling those values, which

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Speaker 1: is amazing Mary. But on top of that, I mean,

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Speaker 1: let's imagine a three thousand dollars contribution towards a roth

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Speaker 1: IRA for over fifty years. Let's say from age twelve

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Speaker 1: to sixty two. So for fifty years there, that's going

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Speaker 1: to result in over one point two million dollars just

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Speaker 1: in a roth IRA. Wow, tax free dollars. Incredible. And yeah,

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Speaker 1: by you helping her to get the experience by investing

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Speaker 1: some of the money that she's earning, it does both

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Speaker 1: she gets that financial head start, but also she's learning.

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Speaker 1: But to your question, how detailed do you need to

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Speaker 1: be on that record keeping front? I think having you

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Speaker 1: got to have something right, no matter what, you need

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Speaker 1: to have something. You don't necessarily need a super fancy

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Speaker 1: spreadsheet or anything like that. And I think the standard

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Speaker 1: is lower than it would be for an HSA, a

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Speaker 1: health savings account, for instance. But because your daughter can

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Speaker 1: only contribute earned money, you want to make sure that

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Speaker 1: you are not over contributing to that account. And so

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Speaker 1: because of that I still think it's really you know,

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Speaker 1: she Mary is mentioning the spreadsheet specifically. I still think

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Speaker 1: that is the easiest way, because you could create a

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Speaker 1: document where you're like, Okay, let me just write a

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Speaker 1: quick summary, like she's talking about in the memo of it.

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Speaker 1: Sounds like what she's doing are transfers with her online

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Speaker 1: savings account. Perhaps she's list the details within that. But

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Speaker 1: I think what's easier than that is just going into

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Speaker 1: your Google sheet, which is what I've got going on,

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Speaker 1: and literally just copy and pasting the previous line, changing

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Speaker 1: the date, and updating the hours so it doesn't have

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Speaker 1: to be the super complex It's been so long since

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Speaker 1: I've updated my spreadsheet formula. I'm into it, but I'm

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Speaker 1: not creating these complex functions. If then also, you know,

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Speaker 1: like all that sort of thing.

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Speaker 2: It's really two inputs. It's like the date that work

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Speaker 2: was accomplished. I've got four like literally i got four.

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Speaker 2: I've got four columns.

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Speaker 1: It's the dates, the number of hours, the rate that

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Speaker 1: she's being paid, and then the total okay, number of dollars.

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Speaker 2: Even that you could probably get by with a little

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Speaker 2: bit less information. But it's super easy though.

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Speaker 1: But especially that's the thing, like literally the ability to

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Speaker 1: just to copy and paste and then updating that. And

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Speaker 1: it's not like I do that. I'll be honest, I

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Speaker 1: forget sometimes like I always pay her pay my daughter.

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Speaker 1: But you're not perfect. I'm not perfect. But sometimes it'll

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Speaker 1: be a few weeks before I'm like, ohoot, I haven't

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Speaker 1: sat down an updated that, and I'll sit down and

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Speaker 1: essentially I just kind of batch update that sheet, and

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Speaker 1: what this actually looks like will be a work in progress. Again,

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Speaker 1: the whole point is to get them investing. I haven't

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Speaker 1: sat down yet, but I'm envisioning that will also down

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Speaker 1: with her at the end of the year and we'll say,

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Speaker 1: all right, this is how much you officially earned over

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Speaker 1: the course of the year. You can invest every single

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Speaker 1: one of those dollars in the account and tall you know,

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Speaker 1: run some compound interest calculators calculations Mary like you are,

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Speaker 1: and hopefully she will want to invest a lot. But

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Speaker 1: then making it clear that hey, I'm willing to provide

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Speaker 1: a parent match. It doesn't have to be this extraordinarily onerous,

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Speaker 1: heavy exhausting task that you need to do every single

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Speaker 1: time she earned my buck.

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Speaker 2: I think what you're trying to do by creating the spreadsheet.

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Speaker 2: And what Mary's probably trying to do too, or should

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Speaker 2: be trying to do, is to avoid putting money into

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Speaker 2: a ROTH I rate that wasn't earned income. So for instance,

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Speaker 2: your daughter's probably getting money from birthdays or holidays or

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Speaker 2: stuff like that. And like over Easter, my kids got

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Speaker 2: five bucks in their last Easter egg they found Matt,

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Speaker 2: but that money can't be contributed to a ROTH because

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Speaker 2: it wasn't earned and so you want to separate those

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Speaker 2: things out. And that's where the spreadsheet comes in handy.

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Speaker 2: It's not like, oh, every money or every dollar that's

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Speaker 2: in her account can be contributed to this ROTH. That

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Speaker 2: can't because if some of those were gift dollars, they're

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Speaker 2: excluded from that contribution ability. So true, that is why

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Speaker 2: I think you want at least some documentation. And I

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Speaker 2: do think Mary, you're right, like I'm not a spreadsheet.

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Speaker 1: Guy, just to make sure you're on the right side

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Speaker 1: of the law, right exactly.

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Speaker 2: Yeah, you don't want to be Jesse James in this thing.

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Speaker 2: And then when it comes to where you open it,

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Speaker 2: Fidelity is for sure a great place to open a

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Speaker 2: kid's ROTH. I mean, it's one of the few places

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Speaker 2: we would wholeheartedly recommend you can avoid fees and account minimums.

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Speaker 2: She'll have access to cheap, incredibly diversified funds. And then

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Speaker 2: wherever she starts investing, and this is I think one

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Speaker 2: of the lynch pins here, it's likely where she'll remain

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Speaker 2: as she enters adulthood. Like my first four one K

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Speaker 2: was with Vanguard, and so I ended up opening multiple

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Speaker 2: accounts with Vanguard over the years. Eventually I opened up

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Speaker 2: an account with Fidelity too, But it was one of

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Speaker 2: those things where like, hey, this is where I started,

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Speaker 2: It's probably where I'm gonna stick around, and that will

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Speaker 2: likely be true for your daughter. And I just can't

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Speaker 2: think of many better options than being with Fidelity over

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Speaker 2: the long haul, based on kind of all the things

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Speaker 2: that Fidelity prioritizes as a company exactly.

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Speaker 1: Yep.

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Speaker 2: And she's you know, she's not going to get a

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Speaker 2: match like she would with maybe some of the newer

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Speaker 2: brokerage firms, the betterments and the robin Hoods, those might

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Speaker 2: be worth considering. But I think the more boring nature

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Speaker 2: of Fidelity's website, it's actually like a pro in a

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Speaker 2: weird way actually.

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Speaker 1: To her long term and financial advantage.

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Speaker 2: Yeah, I mean, I think it might help her avoid

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Speaker 2: some of the perils of investing too, because if let's

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Speaker 2: say it is in a super flashy account and she's

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Speaker 2: checking her balanced a little more, and she's like, there's

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Speaker 2: all these pop ups about investing in crypto or individual

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Speaker 2: stocks or leverage ETFs or something like that margin investing, right, Yeah,

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Speaker 2: maybe as a seventeen, eighteen, nineteen year old investor, she

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Speaker 2: might be like, Oh, that looks like fun and get

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Speaker 2: kind of dissuaded from doing the normal boring thing that's

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Speaker 2: really going to build wealth over time. And our kids

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Speaker 2: are just a little bit younger than yours. They've just

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Speaker 2: their toes. I think into this world really of making money.

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Speaker 2: But I think kiddo rods. I don't know about you, Matt.

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Speaker 2: I'll be curious to see how that conversation goes with

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Speaker 2: your oldest. But yeah, I'm hoping that for my daughter

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Speaker 2: that I can do kind of a parental match and

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Speaker 2: incentivize her to get started investing really soon.

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Speaker 1: Heck, yeah, I think it's let's mention an app we

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Speaker 1: actually talked about on a recent episode that's called half

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Speaker 1: More like like mackelmore but half more. But their goal

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Speaker 1: is to help parents to find ways to pay their

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Speaker 1: kids for chores around the house so that they can

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Speaker 1: contribute even more to that roth Ira. But the problem

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Speaker 1: here is that there's this annual one hundred and forty

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Speaker 1: four dollars fee that's attached. It's not super unreasonable, I guess,

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Speaker 1: and it will help you to jump through the some

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Speaker 1: of the compliance hoops. I like what they're trying to do,

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Speaker 1: but the real winning part of the app is being

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Speaker 1: able to assign certain chores at home and paying your

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Speaker 1: kid in a very irs compliant way if she's making

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Speaker 1: money outside the house. Though, DI, why bookkeeping and just contributing,

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Speaker 1: you know, in that sort of manner. I think that

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Speaker 1: should suit y'all just fine.

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Speaker 2: It's almost like bringing a bazooka to a knife fight, like, yeah,

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Speaker 2: you probably just seems unnecessary. Yeah, and it doesn't answer

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Speaker 2: like well, I remember during that conversation when a listener

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Speaker 2: brought that to our attention, one of my concerns was

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Speaker 2: the fact that is the data yours and this is

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Speaker 2: an app, and like a lot of businesses today, they

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Speaker 2: are reliant on subscribers, which means folks who are willing

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Speaker 2: to kind of continue to pay that fee even if

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Speaker 2: they're not fully utilizing that service. And I would certainly

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Speaker 2: want to make sure that you could at least export

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Speaker 2: that data to where you had some sort of record

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Speaker 2: of that, not feeling like you had to monthly fork

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Speaker 2: over the change in order to maintain the data that

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Speaker 2: you've accrued and built up over the previous years. It's

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Speaker 2: really unnecessary for most parents unless you're really trying to

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Speaker 2: jump through some hoops and pay your kids for chores,

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Speaker 2: and that app can help you do that. By the way,

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Speaker 2: you're the custodian of this account, Mary, and she'll be

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Speaker 2: given full control when she reaches what's known as the

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Speaker 2: age of majority, which is typically age eighteen some states

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Speaker 2: it's twenty one, just depends where you live. And hopefully

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Speaker 2: you're gonna be able to get her excited to contribute

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Speaker 2: a not insignificant amount over the coming years while she's

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Speaker 2: still under your roof, because gosh, you've got like what

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Speaker 2: probably five six more years with her, and then she'll

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Speaker 2: hopefully have this ingrained as a habit. She'll keep contributing

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Speaker 2: more when she's out on her own, maybe even when

432
00:19:26,560 --> 00:19:28,280
Speaker 2: she's got like a part time job in college or

433
00:19:28,320 --> 00:19:31,800
Speaker 2: something like that. That early start is so clutch, and

434
00:19:31,840 --> 00:19:34,320
Speaker 2: the kind of doing it together over a number of

435
00:19:34,359 --> 00:19:37,879
Speaker 2: years while you still have this significant influence over her

436
00:19:37,920 --> 00:19:42,600
Speaker 2: life is to me, it's invaluable, and it just means

437
00:19:42,640 --> 00:19:45,000
Speaker 2: she's not gonna have to contribute nearly as much of

438
00:19:45,040 --> 00:19:48,080
Speaker 2: her future income because of her diligence as a preteen

439
00:19:48,200 --> 00:19:48,960
Speaker 2: as a team.

440
00:19:48,760 --> 00:19:51,399
Speaker 1: But she probably will because not only do you have

441
00:19:51,440 --> 00:19:54,240
Speaker 1: this financial momentum going for you, she's got this identity,

442
00:19:54,359 --> 00:19:56,520
Speaker 1: this behavioral momentum going as well, because she all of

443
00:19:56,560 --> 00:19:58,240
Speaker 1: a sudden sees herself as that investment.

444
00:19:58,320 --> 00:20:00,600
Speaker 2: You mentioned the one point two million dollar number, Matt.

445
00:20:00,600 --> 00:20:04,399
Speaker 2: That was if she saved one hundred and fifty thousand

446
00:20:04,400 --> 00:20:07,520
Speaker 2: dollars essentially over fifty years. That's amazing how much that

447
00:20:07,600 --> 00:20:09,359
Speaker 2: amount of savings will grow into. But if she just

448
00:20:09,400 --> 00:20:11,880
Speaker 2: thinks about it, if she doubles that because she gets

449
00:20:11,880 --> 00:20:14,400
Speaker 2: so into investing, I mean, this guy is the limit.

450
00:20:14,400 --> 00:20:16,560
Speaker 1: When you start that young, that is a lot of money.

451
00:20:16,680 --> 00:20:18,040
Speaker 1: We've got more to get to. We're going to talk

452
00:20:18,040 --> 00:20:22,320
Speaker 1: about investing in a shaky economy. We've got uncertain times

453
00:20:22,359 --> 00:20:24,359
Speaker 1: a foot Joel, So we'll get to that plus more.

454
00:20:24,480 --> 00:20:33,200
Speaker 1: Right after this, we'll back.

455
00:20:33,280 --> 00:20:36,760
Speaker 2: We've got more money questions to get to. Let's get

456
00:20:36,800 --> 00:20:39,680
Speaker 2: to a question now, Matt, about someone who listens to

457
00:20:39,680 --> 00:20:43,600
Speaker 2: the show and they're worried about their parents potentially choosing

458
00:20:43,800 --> 00:20:45,000
Speaker 2: a bad financial product.

459
00:20:45,440 --> 00:20:47,960
Speaker 5: Hey, Matt and Joel, this is Hayden from Marlboro, New York.

460
00:20:48,480 --> 00:20:50,200
Speaker 5: You guys made a pass in comment in a recent

461
00:20:50,240 --> 00:20:54,080
Speaker 5: episode about the sky high fees associated with reverse mortgages,

462
00:20:54,119 --> 00:20:55,640
Speaker 5: and I was wondering if you could talk a little

463
00:20:55,640 --> 00:20:59,239
Speaker 5: bit about that. My parents have recently discussed that as

464
00:20:59,280 --> 00:21:02,719
Speaker 5: a big part of their future plans, recommended by their

465
00:21:03,040 --> 00:21:06,240
Speaker 5: financial advisor, and they gave me some articles to look

466
00:21:06,240 --> 00:21:09,160
Speaker 5: at and read, but I didn't see anything in there about,

467
00:21:09,200 --> 00:21:12,680
Speaker 5: you know, particularly high fees. So I was hoping you

468
00:21:12,720 --> 00:21:14,520
Speaker 5: guys could just touch upon that and maybe I could

469
00:21:14,560 --> 00:21:17,280
Speaker 5: send this episode along to them so they're informed enough

470
00:21:17,320 --> 00:21:19,359
Speaker 5: to make the decisions that they need to make, you know,

471
00:21:19,400 --> 00:21:22,680
Speaker 5: in their retirement. Thanks very much, Cheers, Joral.

472
00:21:22,720 --> 00:21:25,040
Speaker 1: Did Hayden say cheers because like us, he is a

473
00:21:25,080 --> 00:21:28,199
Speaker 1: fan of craft beer, or from a cultural standpoint, he

474
00:21:28,240 --> 00:21:31,399
Speaker 1: just likes to party. He's like cheers. Does he like

475
00:21:31,440 --> 00:21:34,760
Speaker 1: the old school television show Cheers with Norm oh Man.

476
00:21:34,760 --> 00:21:37,760
Speaker 1: I watched those. Yeah, my dad was a huge Cheers fan.

477
00:21:38,160 --> 00:21:40,400
Speaker 1: I was probably one of the few six year olds

478
00:21:40,400 --> 00:21:41,639
Speaker 1: that had seen like all this season.

479
00:21:43,240 --> 00:21:44,840
Speaker 2: I don't know if that's good parents, You're bad. But

480
00:21:45,520 --> 00:21:48,080
Speaker 2: there was more of a Gilligan's Island fan myself, So.

481
00:21:48,119 --> 00:21:50,960
Speaker 1: See, I watched a lot of Cheers as a kid.

482
00:21:51,280 --> 00:21:53,280
Speaker 1: Obviously a lot of jokes went over my head. But

483
00:21:53,720 --> 00:21:57,200
Speaker 1: also Dallas, did you? I never watched that. That was

484
00:21:57,240 --> 00:21:59,360
Speaker 1: the I can still hear the theme song in my head.

485
00:21:59,400 --> 00:22:03,200
Speaker 1: Think about how bum bum bump bump bump bum bum

486
00:22:03,240 --> 00:22:06,040
Speaker 1: bum bum bum bum bum bum there you go. Thank

487
00:22:06,040 --> 00:22:07,560
Speaker 1: you for serenading. I'm gonna keep going.

488
00:22:08,480 --> 00:22:11,080
Speaker 2: Think about how tedious it must have been to write

489
00:22:11,200 --> 00:22:13,640
Speaker 2: some of those shows, like taking place all in one

490
00:22:13,680 --> 00:22:16,160
Speaker 2: bar or all on a deserted island like it did?

491
00:22:16,560 --> 00:22:18,280
Speaker 2: Did it not just like wear thin after a while?

492
00:22:18,760 --> 00:22:21,480
Speaker 1: I'm sure did. Having limits and boundaries around what it

493
00:22:21,520 --> 00:22:24,800
Speaker 1: is that you're trying to do it can be even freeing. Perhaps. Yeah,

494
00:22:24,920 --> 00:22:27,199
Speaker 1: maybe I don't know. I've more creative writer to a

495
00:22:27,240 --> 00:22:28,919
Speaker 1: show I gotta imagine.

496
00:22:28,960 --> 00:22:29,440
Speaker 3: Maybe I don't know.

497
00:22:29,480 --> 00:22:32,199
Speaker 2: All right, let's talk about reverse mortgages. So, so, Hayden,

498
00:22:32,240 --> 00:22:34,280
Speaker 2: I love that you're wanting to help your folks out,

499
00:22:34,800 --> 00:22:37,280
Speaker 2: and let's just like maybe talk about what are reverse

500
00:22:37,280 --> 00:22:39,119
Speaker 2: mortgages real click because some of them might be saying,

501
00:22:39,160 --> 00:22:42,480
Speaker 2: I've never heard of this. What is this financial product? Well, basically,

502
00:22:42,520 --> 00:22:44,880
Speaker 2: instead of paying a monthly mortgage to own your home,

503
00:22:44,960 --> 00:22:47,440
Speaker 2: which is what most people are doing for fifteen or

504
00:22:47,480 --> 00:22:50,400
Speaker 2: thirty years, most people thirty, let's be honest, you're being

505
00:22:50,440 --> 00:22:54,000
Speaker 2: paid to access the equity that you built up. And

506
00:22:54,560 --> 00:22:58,280
Speaker 2: the upside is that for cash strapped seniors and I

507
00:22:58,320 --> 00:23:00,960
Speaker 2: say seniors because you have to be sixty two years

508
00:23:01,080 --> 00:23:03,119
Speaker 2: or older or you're not allowed to take out a

509
00:23:03,160 --> 00:23:06,120
Speaker 2: reverse mortgage, they are able to stay in their homes

510
00:23:06,359 --> 00:23:09,680
Speaker 2: while getting a steady stream of monthly income to cover

511
00:23:09,760 --> 00:23:12,320
Speaker 2: their bills. So it feels like for a lot of

512
00:23:12,320 --> 00:23:14,840
Speaker 2: senior citizens, this win win. If there's no other place

513
00:23:15,119 --> 00:23:17,400
Speaker 2: to grab cash, it's like, well, I get to stay

514
00:23:17,440 --> 00:23:19,960
Speaker 2: in my home and I have money to spend every

515
00:23:19,960 --> 00:23:23,280
Speaker 2: month that otherwise where would I have found that money?

516
00:23:23,640 --> 00:23:25,480
Speaker 2: And so in addition though to the fees that we're

517
00:23:25,480 --> 00:23:28,720
Speaker 2: going to discuss, a reverse mortgage comes with downsides. So

518
00:23:28,800 --> 00:23:30,639
Speaker 2: in particular, if your parents care about you and your

519
00:23:30,640 --> 00:23:33,919
Speaker 2: siblings inheriting the home at some point in the future,

520
00:23:34,200 --> 00:23:37,760
Speaker 2: a reverse mortgage limits that possibility. But Matt, we've got

521
00:23:37,760 --> 00:23:40,560
Speaker 2: to talk about the fees, and yeah, I feel like

522
00:23:40,600 --> 00:23:42,440
Speaker 2: I just made a reverse mortgage sound pretty great, stay

523
00:23:42,440 --> 00:23:43,960
Speaker 2: in the home, money coming in every month.

524
00:23:44,040 --> 00:23:46,600
Speaker 1: Yeah. No, let's set the context. Let's set the table

525
00:23:46,640 --> 00:23:49,040
Speaker 1: here a little bit, because it's interesting that Haydn's folks

526
00:23:49,040 --> 00:23:52,440
Speaker 1: are leaning towards a reverse mortgage and that their advisor

527
00:23:52,480 --> 00:23:55,679
Speaker 1: has suggested it as a smart approach, because it might be,

528
00:23:56,560 --> 00:23:58,960
Speaker 1: but if their advisor has helped them ahead of time

529
00:23:59,119 --> 00:24:01,200
Speaker 1: to build up anest egg over the years, it might

530
00:24:01,240 --> 00:24:05,400
Speaker 1: not be necessary. The advisor's goal should be that they

531
00:24:05,400 --> 00:24:08,560
Speaker 1: do not have to actually get a reverse mortgage, because

532
00:24:09,359 --> 00:24:14,480
Speaker 1: a combination of well timed tapping of social security, typically

533
00:24:14,920 --> 00:24:17,760
Speaker 1: by waiting longer, it's gonna lead to a better outcome,

534
00:24:17,800 --> 00:24:20,840
Speaker 1: at least for one of the parents. They're one of

535
00:24:20,880 --> 00:24:25,440
Speaker 1: the partners that plus tax advantage accounts, and in addition

536
00:24:25,480 --> 00:24:27,640
Speaker 1: to that, maybe some frugal living there on the side

537
00:24:27,680 --> 00:24:29,520
Speaker 1: that should hopefully be enough for them to live off

538
00:24:29,720 --> 00:24:33,000
Speaker 1: of for many decades. A reverse mortgage is almost always

539
00:24:33,040 --> 00:24:35,680
Speaker 1: considered an option of last resort in order to make

540
00:24:35,800 --> 00:24:38,760
Speaker 1: ends meet in the event that the combination that I

541
00:24:38,800 --> 00:24:42,560
Speaker 1: just mentioned of investments of social security if it falls

542
00:24:42,600 --> 00:24:45,040
Speaker 1: short of the type of spending that they're looking to

543
00:24:46,240 --> 00:24:49,480
Speaker 1: be able to perform and do in their retired years.

544
00:24:49,520 --> 00:24:52,040
Speaker 1: There So, again, decent planning should allow folks to avoid

545
00:24:52,040 --> 00:24:55,800
Speaker 1: this product altogether. But assuming based on the fact that

546
00:24:55,840 --> 00:24:58,120
Speaker 1: they're talking about it, sounds like maybe that's not quite

547
00:24:58,200 --> 00:24:59,879
Speaker 1: the case, and so they're looking at what they have

548
00:25:00,080 --> 00:25:02,280
Speaker 1: on hand to be able to satisfy the type of

549
00:25:02,680 --> 00:25:03,879
Speaker 1: retirement that they're looking to live.

550
00:25:03,960 --> 00:25:06,240
Speaker 2: You might also see by the way a reverse mortgage

551
00:25:06,280 --> 00:25:09,119
Speaker 2: referred to as a home equity conversion mortgage, that's just

552
00:25:09,200 --> 00:25:10,919
Speaker 2: a fancy way of saying the same thing. It's just

553
00:25:10,920 --> 00:25:13,480
Speaker 2: a different name for the same beast. But basically, yeah,

554
00:25:13,520 --> 00:25:15,439
Speaker 2: you're grabbing money from that property instead of paying it

555
00:25:15,440 --> 00:25:19,560
Speaker 2: off and then gaining liquidity from in the liquid asset.

556
00:25:19,600 --> 00:25:23,680
Speaker 2: As we all know, that's not easy. So the fees

557
00:25:23,800 --> 00:25:26,400
Speaker 2: are high as they are with the traditional mortgage. We're

558
00:25:26,400 --> 00:25:31,919
Speaker 2: talking origination fees, closing costs, appraisals, tidle search, all the above.

559
00:25:31,920 --> 00:25:35,440
Speaker 2: It's very has similar characteristics to taking out a mortgage

560
00:25:35,440 --> 00:25:38,160
Speaker 2: on a primary home, and you can typically have those

561
00:25:38,200 --> 00:25:40,399
Speaker 2: fees taken out of the loan amount, so maybe it

562
00:25:40,400 --> 00:25:43,399
Speaker 2: doesn't feel as bad, but they're still getting paid. And

563
00:25:43,400 --> 00:25:46,600
Speaker 2: when your parents are still the ones paying the fees,

564
00:25:47,119 --> 00:25:51,080
Speaker 2: they beginning charged interest in servicing fees as well as

565
00:25:51,320 --> 00:25:52,920
Speaker 2: a mortgage insurance premium, so.

566
00:25:52,880 --> 00:25:55,800
Speaker 1: It all gets rolled into the Essentially it gets papered over,

567
00:25:55,960 --> 00:25:58,000
Speaker 1: so it feels nice and tidy. Yeah, like, where are

568
00:25:58,000 --> 00:26:00,119
Speaker 1: those fees at that the boys we're talking about, And

569
00:26:00,160 --> 00:26:04,639
Speaker 1: it turns out they're in there. It's minimizing the amount

570
00:26:04,680 --> 00:26:06,560
Speaker 1: of money they can take out of the house. And

571
00:26:06,600 --> 00:26:09,360
Speaker 1: so one of the tough things about a reverse mortgage

572
00:26:09,400 --> 00:26:12,280
Speaker 1: is that when there's this litany of fees being assessed

573
00:26:12,280 --> 00:26:14,760
Speaker 1: in different ways, it's just hard to get an accurate

574
00:26:14,840 --> 00:26:17,719
Speaker 1: account of exactly exactly what it's going to cost you.

575
00:26:18,280 --> 00:26:21,639
Speaker 1: But when you read the fine print, you might be

576
00:26:21,680 --> 00:26:24,680
Speaker 1: shocked to realize just how many thousands and thousands of

577
00:26:24,760 --> 00:26:27,879
Speaker 1: dollars are coming out of this asset. As it's like

578
00:26:27,920 --> 00:26:29,760
Speaker 1: you're trying to get blood from a stone or something

579
00:26:29,800 --> 00:26:31,760
Speaker 1: like that, Matt, and that's hard to do. And the

580
00:26:31,800 --> 00:26:35,000
Speaker 1: same thing is true with a home. Yeah, it's always

581
00:26:35,040 --> 00:26:38,600
Speaker 1: expensive to tap that home for money. Yeah, it's just

582
00:26:38,640 --> 00:26:41,040
Speaker 1: hard to gauge because of the fact that it's all

583
00:26:41,119 --> 00:26:44,040
Speaker 1: getting rolled into one. But it is still happening. By

584
00:26:44,080 --> 00:26:46,119
Speaker 1: the way, let's look at some stats here. Close to

585
00:26:46,280 --> 00:26:49,240
Speaker 1: one in five reverse mortgages, they actually end in foreclosure,

586
00:26:49,600 --> 00:26:52,160
Speaker 1: often because the senior citizen there was unable to pay

587
00:26:52,200 --> 00:26:56,119
Speaker 1: property taxes. So this often works out poorly, which should

588
00:26:56,160 --> 00:27:00,520
Speaker 1: throw up an immediate red flag. So Hayden, for your

589
00:27:00,640 --> 00:27:03,760
Speaker 1: folks man, prior to getting a reverse mortgage, I would

590
00:27:03,760 --> 00:27:06,960
Speaker 1: carefully assess the costs, specifically the fees there, Joel, you

591
00:27:07,000 --> 00:27:10,560
Speaker 1: mentioned so home equity conversion mortgage. That's the term specifically

592
00:27:10,560 --> 00:27:16,200
Speaker 1: given to the FHA backed reverse mortgages. But there's also

593
00:27:16,720 --> 00:27:19,919
Speaker 1: private reverse mortgages out there as well, which might be

594
00:27:19,960 --> 00:27:22,240
Speaker 1: even more appealing to some folks because they're saying, Oh,

595
00:27:22,560 --> 00:27:24,800
Speaker 1: I can go through this private lender and I can

596
00:27:24,960 --> 00:27:26,920
Speaker 1: get a reverse mortgage at the age of fifty five.

597
00:27:26,920 --> 00:27:29,040
Speaker 1: I don't have to wait another seven years live like

598
00:27:29,040 --> 00:27:31,680
Speaker 1: a popper in the meantime. But guess what that comes

599
00:27:31,680 --> 00:27:35,399
Speaker 1: with even higher fees, even worse rates, even worse aprs.

600
00:27:35,480 --> 00:27:37,640
Speaker 1: Especially that's where it starts really getting ugly.

601
00:27:37,760 --> 00:27:41,600
Speaker 2: Yeah, agreed. So I would say suggest considering other alternatives

602
00:27:41,640 --> 00:27:43,600
Speaker 2: if I was your folks and they were like, we

603
00:27:43,680 --> 00:27:46,399
Speaker 2: just can't afford to live in this house anymore. We

604
00:27:46,440 --> 00:27:48,520
Speaker 2: want to, but we can't afford to live in it

605
00:27:48,520 --> 00:27:51,320
Speaker 2: anymore with what we've saved and with the social security

606
00:27:51,320 --> 00:27:54,119
Speaker 2: that's coming in and live the lifestyle that we want.

607
00:27:54,320 --> 00:27:58,800
Speaker 2: So consider selling or downsizing, or even a cash out refinance.

608
00:27:59,160 --> 00:28:02,439
Speaker 2: Could be better. Could be better, I say, because that

609
00:28:02,800 --> 00:28:04,880
Speaker 2: isn't a great option either, but it could be better

610
00:28:04,920 --> 00:28:09,520
Speaker 2: than a reverse mortgage. They can invest cash, that cash infusion.

611
00:28:09,520 --> 00:28:11,760
Speaker 2: They could draw it down over the coming decades potentially,

612
00:28:12,000 --> 00:28:14,040
Speaker 2: or turn it into like a monthly stream of income

613
00:28:14,160 --> 00:28:17,200
Speaker 2: with what's known as a single premium annuity, which does

614
00:28:17,280 --> 00:28:19,920
Speaker 2: it's like also known as an immediate income annuity, which

615
00:28:20,040 --> 00:28:22,800
Speaker 2: is one of the cheaper annuities out there. There aren't

616
00:28:22,800 --> 00:28:25,640
Speaker 2: many good annuities out there. A reverse mortgage just isn't

617
00:28:25,640 --> 00:28:28,640
Speaker 2: the only viable option. It's just the one that gets

618
00:28:28,720 --> 00:28:32,040
Speaker 2: the most press because it's the easiest. But the easiest

619
00:28:32,040 --> 00:28:35,920
Speaker 2: thing isn't always what's best. And then you know, if

620
00:28:35,920 --> 00:28:37,720
Speaker 2: they do decide to go in this direction, they're going

621
00:28:37,800 --> 00:28:39,360
Speaker 2: to have to meet with a HUD counselor if they're

622
00:28:39,400 --> 00:28:43,880
Speaker 2: going with one of those HUD initiated reverse mortgages. Matt right,

623
00:28:43,880 --> 00:28:49,000
Speaker 2: the Consumer Financial Protection Bureau still around the heartbeat, barely beating,

624
00:28:49,120 --> 00:28:52,200
Speaker 2: but they have a list of questions that your parents

625
00:28:52,240 --> 00:28:53,920
Speaker 2: should be asking that will link to in the show

626
00:28:53,920 --> 00:28:56,720
Speaker 2: notes at how tomoney dot com. Make sure they take

627
00:28:56,720 --> 00:28:58,800
Speaker 2: a look at that. They to be armed with the

628
00:28:58,840 --> 00:29:01,960
Speaker 2: right questions is really important before they do this. And

629
00:29:03,120 --> 00:29:05,400
Speaker 2: just know too that inheriting a property with reverse mortgage

630
00:29:05,440 --> 00:29:07,160
Speaker 2: that can be a nightmare as well. So again, not

631
00:29:07,240 --> 00:29:09,040
Speaker 2: sure if that's in the car or if that's a

632
00:29:09,080 --> 00:29:11,360
Speaker 2: hope for you or your siblings, but no, that's a

633
00:29:11,400 --> 00:29:13,360
Speaker 2: pain of the butt if they are in the middle

634
00:29:13,360 --> 00:29:16,840
Speaker 2: of a reverse mortgage. These complex products, Matt, they remind

635
00:29:17,160 --> 00:29:19,400
Speaker 2: they remind me of like some of the commercials for

636
00:29:19,440 --> 00:29:22,600
Speaker 2: fancy new pharmaceutical drugs. I like the idea if I

637
00:29:22,640 --> 00:29:24,720
Speaker 2: had restless leg syndrome of getting rid of it, right,

638
00:29:24,760 --> 00:29:28,720
Speaker 2: but the cure often rests we're talking about, right exactly, Yeah,

639
00:29:28,760 --> 00:29:31,120
Speaker 2: I mean, fortunately, my legs not restless at all. But

640
00:29:31,400 --> 00:29:33,040
Speaker 2: when you hear the side effects for some of those things,

641
00:29:33,120 --> 00:29:37,000
Speaker 2: like it's it's like, man, the cure is worse than

642
00:29:37,040 --> 00:29:39,560
Speaker 2: the disease. The side effects can be truly awful on

643
00:29:39,600 --> 00:29:41,520
Speaker 2: some of those drugs, and I don't know what percentage

644
00:29:41,720 --> 00:29:44,400
Speaker 2: of the population develops like a face rash or something

645
00:29:44,440 --> 00:29:46,800
Speaker 2: like that after taking that drug, or or something even worse.

646
00:29:47,160 --> 00:29:49,920
Speaker 2: But it's important to know that a reverse mortgage. I

647
00:29:49,960 --> 00:29:52,360
Speaker 2: think of it like some of those pharmaceuticals where it's like, yeah,

648
00:29:52,360 --> 00:29:54,040
Speaker 2: it'd be nice to get rid of that problem, but

649
00:29:54,120 --> 00:29:56,880
Speaker 2: is it creating other problems that are are even more nefarious?

650
00:29:56,920 --> 00:30:03,360
Speaker 1: Potentially That's true. Joel's new X handle Maha Jole just kidding.

651
00:30:03,440 --> 00:30:05,280
Speaker 1: Jill doesn't have anything again. It's big pharma. No.

652
00:30:05,480 --> 00:30:08,560
Speaker 2: Yeah, we're all excited about our new fruit loops with

653
00:30:08,560 --> 00:30:09,280
Speaker 2: blueberry dyes.

654
00:30:09,360 --> 00:30:09,520
Speaker 4: Right.

655
00:30:09,640 --> 00:30:11,920
Speaker 1: Oh yeah, Oh, I need to tell you about this.

656
00:30:12,640 --> 00:30:15,200
Speaker 1: I had some algae the other day in this like

657
00:30:15,280 --> 00:30:17,960
Speaker 1: this smoothie bowl that was it was like crazy blue.

658
00:30:18,000 --> 00:30:20,080
Speaker 1: I'm just like, what is in this to make it

659
00:30:20,120 --> 00:30:24,160
Speaker 1: that blue? And evidently it's this blue blue something and

660
00:30:24,200 --> 00:30:26,920
Speaker 1: they pulverize it, grind it up into this powder and

661
00:30:26,960 --> 00:30:28,920
Speaker 1: they sprinkle it on or they mix it into smoothie

662
00:30:29,000 --> 00:30:31,560
Speaker 1: blue something. It gives it this crazy bright blue. It

663
00:30:31,600 --> 00:30:34,280
Speaker 1: does not look natural, but evidently it is. Is it?

664
00:30:34,320 --> 00:30:36,760
Speaker 1: We can expect more of that because it blue number sixteen.

665
00:30:37,560 --> 00:30:39,960
Speaker 1: I want to say blue spirillina or something like that,

666
00:30:40,000 --> 00:30:42,600
Speaker 1: but it's like a blue green. It's yeah, okay, naturally

667
00:30:42,720 --> 00:30:45,520
Speaker 1: carrying an algae. I guess it comes out of the ocean.

668
00:30:45,520 --> 00:30:45,600
Speaker 3: Here.

669
00:30:45,640 --> 00:30:47,480
Speaker 1: We can look forward to more stuff like that.

670
00:30:47,520 --> 00:30:48,880
Speaker 2: What a spectacular world we live in.

671
00:30:48,920 --> 00:30:51,480
Speaker 1: All right, Let's get to another listener question. Joel is

672
00:30:51,520 --> 00:30:53,960
Speaker 1: here from a return collar. That's what they call it

673
00:30:54,000 --> 00:30:56,920
Speaker 1: in the business, a return collar. This is so old

674
00:30:56,920 --> 00:30:59,520
Speaker 1: school a listener, which is funny because I never listened

675
00:30:59,520 --> 00:31:02,640
Speaker 1: to it. But this is a listener who has prepared

676
00:31:02,680 --> 00:31:05,440
Speaker 1: for a sabbatical. She's got this plan break coming up

677
00:31:05,480 --> 00:31:07,160
Speaker 1: and wants to know how she should be investing.

678
00:31:07,520 --> 00:31:09,680
Speaker 3: I met and Joel, this is Yessel from New York City.

679
00:31:09,760 --> 00:31:13,000
Speaker 3: I'm calling in with another question. Thanks again for everything

680
00:31:13,040 --> 00:31:15,920
Speaker 3: you've been doing for the how to Money community. So

681
00:31:15,960 --> 00:31:18,560
Speaker 3: we all know that the stock market indexes are falling

682
00:31:18,760 --> 00:31:21,000
Speaker 3: and the financial future is pretty shaky for a lot

683
00:31:21,080 --> 00:31:24,640
Speaker 3: of us. I've considered myself someone who can pretty much

684
00:31:24,680 --> 00:31:27,720
Speaker 3: keep my emotions out of my investing and saving strategies,

685
00:31:28,200 --> 00:31:31,200
Speaker 3: and I've been continuously investing a set amount twice a

686
00:31:31,240 --> 00:31:34,720
Speaker 3: month to my brokerage account, and last year I maxed

687
00:31:34,760 --> 00:31:38,080
Speaker 3: out my traditional IRA and my set IRA. I have

688
00:31:38,120 --> 00:31:40,840
Speaker 3: a fully funded emergency savings account and a fund for

689
00:31:40,880 --> 00:31:44,880
Speaker 3: the sabbatical which I've just started. So obviously, pausing on

690
00:31:44,920 --> 00:31:47,520
Speaker 3: making money while thinking of investing is kind of making

691
00:31:47,560 --> 00:31:50,880
Speaker 3: me nervous. Now, I'd like to hear your thoughts about

692
00:31:50,880 --> 00:31:53,760
Speaker 3: how I should go about contributing to my investment accounts

693
00:31:53,800 --> 00:31:56,840
Speaker 3: for the time being. What are your thoughts about how

694
00:31:56,840 --> 00:31:59,720
Speaker 3: to invest wisely? So should I pause for a period

695
00:31:59,720 --> 00:32:03,320
Speaker 3: of time while not touching the accounts? Should I continue

696
00:32:03,320 --> 00:32:06,280
Speaker 3: to invest just as I have been, or should I

697
00:32:06,320 --> 00:32:10,120
Speaker 3: continue to invest but maybe with less money. Just for context,

698
00:32:10,160 --> 00:32:13,479
Speaker 3: I have a Fidelity brokerage account that's invested in the

699
00:32:13,480 --> 00:32:17,479
Speaker 3: total US stock market at sixty percent, total international market

700
00:32:17,600 --> 00:32:21,400
Speaker 3: at twenty percent, and small cap index twenty percent, and

701
00:32:21,440 --> 00:32:24,080
Speaker 3: I have the same allocation breakdown for my step IRA

702
00:32:24,280 --> 00:32:27,120
Speaker 3: and traditional IRA. Thanks for your help, guys.

703
00:32:28,000 --> 00:32:31,160
Speaker 2: Yes, we always good to hear from you, and I

704
00:32:31,200 --> 00:32:33,960
Speaker 2: love that you've been able to mostly keep your emotions

705
00:32:34,240 --> 00:32:37,760
Speaker 2: out of your investing and that is something. I don't

706
00:32:37,800 --> 00:32:39,440
Speaker 2: know how often we talk about that map, but that's

707
00:32:39,480 --> 00:32:44,040
Speaker 2: like so important, right, And sometimes that looks like checking

708
00:32:44,200 --> 00:32:47,040
Speaker 2: your investments a whole lot less if you're keen to

709
00:32:47,120 --> 00:32:49,320
Speaker 2: like opening that for one case statement every month. I

710
00:32:49,360 --> 00:32:51,400
Speaker 2: don't know, if you follow the news and you're like, Eh,

711
00:32:51,800 --> 00:32:53,680
Speaker 2: doesn't seem like it was a great month. Maybe I

712
00:32:53,720 --> 00:32:57,800
Speaker 2: shouldn't look at the potentially substantial lower big number at

713
00:32:57,800 --> 00:33:02,240
Speaker 2: the very bottom of that statement minute, right, because recoveries

714
00:33:02,440 --> 00:33:06,080
Speaker 2: are always a reality. How long it takes to get there,

715
00:33:06,640 --> 00:33:09,840
Speaker 2: that's anybody's guess. But yeah, I think it is easier

716
00:33:09,840 --> 00:33:12,480
Speaker 2: said than done, but it's a really important thing to do,

717
00:33:12,880 --> 00:33:15,080
Speaker 2: basically trust the process, right.

718
00:33:14,920 --> 00:33:18,120
Speaker 1: It's not easy. But like I think that that's I

719
00:33:18,160 --> 00:33:20,240
Speaker 1: feel like there's two there's a couple questions going on here,

720
00:33:20,280 --> 00:33:23,440
Speaker 1: and that's one of them. Because she's like citing the

721
00:33:23,840 --> 00:33:27,960
Speaker 1: unsteady economy and market fluctuations as causing her to second

722
00:33:28,000 --> 00:33:30,760
Speaker 1: guess it. And while you might rationally know that you

723
00:33:30,800 --> 00:33:34,560
Speaker 1: should be continuing to invest like you normally would, what

724
00:33:34,600 --> 00:33:37,200
Speaker 1: are you actually doing in reality? Right? Like, Like A,

725
00:33:37,400 --> 00:33:39,960
Speaker 1: that doesn't mean it's easy, you know, you rashally know

726
00:33:40,000 --> 00:33:41,280
Speaker 1: what it is that you should be doing. But then

727
00:33:41,280 --> 00:33:42,720
Speaker 1: the emotions kind of kick in a little bit. You

728
00:33:42,760 --> 00:33:46,640
Speaker 1: start getting a little bit nervous, especially as she's I guess,

729
00:33:46,680 --> 00:33:49,960
Speaker 1: experiencing some other life change that she has planned for.

730
00:33:50,360 --> 00:33:52,520
Speaker 1: But still it's I guess it's sort of the confluence

731
00:33:52,560 --> 00:33:55,120
Speaker 1: of these multiple things that are taking place that I

732
00:33:55,120 --> 00:33:57,040
Speaker 1: think is causing her to second guess her investing. And

733
00:33:57,040 --> 00:33:57,800
Speaker 1: I think it's I think.

734
00:33:57,680 --> 00:34:01,320
Speaker 2: It's helpful to look at history because I get kind

735
00:34:01,360 --> 00:34:03,320
Speaker 2: of someone might say, well, what if someone was coming

736
00:34:03,400 --> 00:34:05,120
Speaker 2: up to your face with a and then we're gonna

737
00:34:05,320 --> 00:34:08,080
Speaker 2: swing it at you, swing a baseball bat at you,

738
00:34:08,080 --> 00:34:10,560
Speaker 2: you would duck pretty quickly, like you would react. And

739
00:34:10,600 --> 00:34:12,440
Speaker 2: so I think a lot of times when something fearful

740
00:34:12,440 --> 00:34:15,440
Speaker 2: appears to be happening, action seems like the best thing

741
00:34:15,480 --> 00:34:17,399
Speaker 2: to do, right, It's like, I'm gonna avoid the bad thing.

742
00:34:17,719 --> 00:34:18,480
Speaker 1: But when you look at the.

743
00:34:18,480 --> 00:34:20,520
Speaker 2: History of the stock market, the bad thing, how long

744
00:34:20,600 --> 00:34:24,799
Speaker 2: does it impact the stock market? Sometimes it's for years, right,

745
00:34:25,040 --> 00:34:27,640
Speaker 2: but even just look at the COVID bounce back, or like,

746
00:34:28,080 --> 00:34:31,440
Speaker 2: it didn't take that long for markets to correct after

747
00:34:31,560 --> 00:34:34,759
Speaker 2: a substantial drop. So and the thing is that the

748
00:34:34,800 --> 00:34:37,799
Speaker 2: worst possible reality is that you're missing out because you

749
00:34:37,880 --> 00:34:40,880
Speaker 2: try to avoid the pain. You're missing out on the comeback,

750
00:34:41,080 --> 00:34:44,360
Speaker 2: right that stocks will eventually get around to.

751
00:34:44,560 --> 00:34:46,839
Speaker 1: And aside from even because somebody might hear you say

752
00:34:46,840 --> 00:34:48,320
Speaker 1: that and be like, well, yeah, that's because the government

753
00:34:48,320 --> 00:34:51,080
Speaker 1: pumped tons of money into the economy to facilitate that

754
00:34:51,120 --> 00:34:53,520
Speaker 1: bounce back. But even like looking further back into history,

755
00:34:53,719 --> 00:34:56,640
Speaker 1: even looking back to like this is a world that

756
00:34:56,680 --> 00:35:01,760
Speaker 1: has endured the dropping of an atomic bomb, multiple atomic bombs, yeah,

757
00:35:01,800 --> 00:35:05,719
Speaker 1: and then decades beyond that the threat of like nuclear annihilation,

758
00:35:06,160 --> 00:35:08,799
Speaker 1: like on a global level, But what did the stock

759
00:35:08,840 --> 00:35:10,560
Speaker 1: market continue to do? Like these are things that we

760
00:35:10,640 --> 00:35:13,080
Speaker 1: continue to move past. It has a lot to do

761
00:35:13,120 --> 00:35:14,880
Speaker 1: with I guess who you're reading, like the headlines that

762
00:35:14,880 --> 00:35:17,120
Speaker 1: you're looking at, Because there's some folks who say that like, no, man,

763
00:35:17,160 --> 00:35:19,960
Speaker 1: it's different this time, But I think that's always the case,

764
00:35:20,120 --> 00:35:22,120
Speaker 1: like just the classic first it's the classic line, it's

765
00:35:22,120 --> 00:35:24,640
Speaker 1: different this time, But I don't think it's actually different

766
00:35:24,680 --> 00:35:27,759
Speaker 1: this time. That's that's I guess the more positive, optimistic spin.

767
00:35:27,920 --> 00:35:30,120
Speaker 2: Yeah, well okay, so you know, we want most people

768
00:35:30,160 --> 00:35:32,400
Speaker 2: to continue to invest when markets aren't doing so great,

769
00:35:32,560 --> 00:35:35,759
Speaker 2: And I say most people, maybe not everyone, and maybe

770
00:35:35,760 --> 00:35:36,759
Speaker 2: not yesl and I'll tell you why.

771
00:35:36,840 --> 00:35:38,520
Speaker 1: Yes, Well, the average.

772
00:35:38,120 --> 00:35:40,279
Speaker 2: Person is buying shares at a lower price. They're buying

773
00:35:40,320 --> 00:35:43,120
Speaker 2: stocks on sale when the market is down, which is great.

774
00:35:43,360 --> 00:35:46,120
Speaker 2: And we think that most people shouldn't change a thing,

775
00:35:46,280 --> 00:35:48,959
Speaker 2: like most people listening out there right now, if nothing

776
00:35:48,960 --> 00:35:51,080
Speaker 2: has changed in your life, you should probably be investing

777
00:35:51,719 --> 00:35:54,080
Speaker 2: in the same way that you always have been, you know,

778
00:35:54,239 --> 00:35:56,520
Speaker 2: keep on dollar cost averaging into those low cost index

779
00:35:56,520 --> 00:35:58,920
Speaker 2: funds or the target date retirement fund of your choice.

780
00:35:59,120 --> 00:36:01,440
Speaker 2: But Matt, I think Yessel is in a little bit

781
00:36:01,440 --> 00:36:04,279
Speaker 2: of a different scenario. She's about to take a sabbatical,

782
00:36:04,640 --> 00:36:08,120
Speaker 2: which means no income, right, That's typically what a sabbatical

783
00:36:08,160 --> 00:36:09,719
Speaker 2: means is like, Hey, I'm not gonna get paid for

784
00:36:10,080 --> 00:36:12,480
Speaker 2: potentially an extended period of time, and so I get

785
00:36:12,520 --> 00:36:16,040
Speaker 2: the desire to keep investing, especially if you yes, I'll

786
00:36:16,040 --> 00:36:19,239
Speaker 2: identify yourself as an investor, I'm gonna keep doing the

787
00:36:19,239 --> 00:36:21,160
Speaker 2: thing like that's that's what I'm doing. I'm building wealth

788
00:36:21,160 --> 00:36:24,040
Speaker 2: for my future. But with no income coming your way

789
00:36:24,040 --> 00:36:26,720
Speaker 2: for a little while, investing out of your excess savings,

790
00:36:26,760 --> 00:36:29,400
Speaker 2: it might not be the best choice. It could truncate

791
00:36:29,440 --> 00:36:33,319
Speaker 2: your sabbatical timeline or cause undue worry and unstress. Right

792
00:36:33,360 --> 00:36:35,600
Speaker 2: that it could even prompt you to feel like you

793
00:36:35,640 --> 00:36:38,279
Speaker 2: had to find a new job quickly when you're you

794
00:36:38,320 --> 00:36:40,440
Speaker 2: are ready to re enter the workforce, and you might

795
00:36:40,480 --> 00:36:43,240
Speaker 2: have to settle for something that's not ideal, maybe even

796
00:36:43,280 --> 00:36:45,839
Speaker 2: that pays less than you could have got if you'd

797
00:36:45,880 --> 00:36:49,760
Speaker 2: been able to hold out. I think investing on savings

798
00:36:49,800 --> 00:36:51,560
Speaker 2: that you might need to live off, I just don't

799
00:36:51,560 --> 00:36:52,920
Speaker 2: know that's a great idea.

800
00:36:53,360 --> 00:36:55,320
Speaker 1: Yeah, But I think that's the difference then, too, between

801
00:36:55,320 --> 00:36:57,000
Speaker 1: because what she was saying though, is that she not

802
00:36:57,040 --> 00:37:00,000
Speaker 1: only has maxed out her retirement accounts, which is great,

803
00:37:00,719 --> 00:37:04,120
Speaker 1: not only does she have a fully funded emergency fund,

804
00:37:04,120 --> 00:37:06,319
Speaker 1: but then she also has a separate fund for the

805
00:37:06,360 --> 00:37:09,279
Speaker 1: actual sabbatical. And that's where I feel like that this

806
00:37:09,400 --> 00:37:12,680
Speaker 1: feels to me more like an emotional response as opposed

807
00:37:12,719 --> 00:37:14,960
Speaker 1: to the actual dollars, because it looks like it sounds

808
00:37:15,000 --> 00:37:17,799
Speaker 1: like she's investing for her future, way off, way off

809
00:37:17,800 --> 00:37:19,720
Speaker 1: into the future, in which case you see the market

810
00:37:19,760 --> 00:37:21,160
Speaker 1: like you said, on sale, and it's just like this

811
00:37:21,200 --> 00:37:24,640
Speaker 1: is a great opportunity as opposed to somebody who might

812
00:37:24,680 --> 00:37:27,960
Speaker 1: be nearing actual retirement right, not in many retirement, but

813
00:37:28,040 --> 00:37:31,600
Speaker 1: like the full blown, real, fully fledged retirement. That's the

814
00:37:31,640 --> 00:37:35,040
Speaker 1: kind of scenario where I think someone getting nervous about

815
00:37:35,080 --> 00:37:38,120
Speaker 1: the market and finding ways to diversify even more makes

816
00:37:38,320 --> 00:37:40,319
Speaker 1: a little bit more sense as opposed to I think

817
00:37:40,360 --> 00:37:43,080
Speaker 1: the situation that Yessel finds herself in, which so I

818
00:37:43,160 --> 00:37:44,719
Speaker 1: guess at the end of the day, for me, like,

819
00:37:44,760 --> 00:37:47,000
Speaker 1: I don't see you needing to make any sort of

820
00:37:47,080 --> 00:37:49,040
Speaker 1: change to how it is that you're investing, assuming that

821
00:37:49,080 --> 00:37:51,839
Speaker 1: you've planned to invest because of the fact that you

822
00:37:51,880 --> 00:37:54,279
Speaker 1: have had those funds set aside. Yeah, if you truly

823
00:37:54,320 --> 00:37:57,480
Speaker 1: have enough money to do d all the above, then

824
00:37:57,960 --> 00:38:00,480
Speaker 1: keep on truck. I mean, don't let the current state

825
00:38:00,480 --> 00:38:02,839
Speaker 1: of things freak you out to not do exactly That's

826
00:38:03,160 --> 00:38:05,000
Speaker 1: I think that's I don't know, at least that's what

827
00:38:05,040 --> 00:38:07,000
Speaker 1: I'm picking up from Yesla's question.

828
00:38:07,080 --> 00:38:09,160
Speaker 2: We throw out another option, though, Matt, and this might

829
00:38:09,200 --> 00:38:12,200
Speaker 2: be something. It didn't sound like Yesselhead considered this, but

830
00:38:12,280 --> 00:38:15,320
Speaker 2: I think this might be an even better use of

831
00:38:15,560 --> 00:38:19,040
Speaker 2: some of those dollars right now. What if instead of

832
00:38:19,040 --> 00:38:23,080
Speaker 2: investing new dollars, Yessel consider doing strategic groth conversions instead.

833
00:38:23,680 --> 00:38:27,000
Speaker 2: So when you're taking a sabbatical, that means again that

834
00:38:27,040 --> 00:38:29,400
Speaker 2: you're not making money. Your income is dropped off a cliff,

835
00:38:29,800 --> 00:38:31,759
Speaker 2: which means that any money you do make is going

836
00:38:31,800 --> 00:38:35,399
Speaker 2: to be taxed at a much lower rate in all

837
00:38:35,440 --> 00:38:39,680
Speaker 2: likelihood than it was the year prior. So you know,

838
00:38:39,680 --> 00:38:42,200
Speaker 2: if your single income up to forty eight thousand dollars

839
00:38:42,280 --> 00:38:44,160
Speaker 2: is going to be taxed at the twelve percent rate,

840
00:38:44,480 --> 00:38:46,520
Speaker 2: that's on top of the standard deduction. If you're married

841
00:38:46,560 --> 00:38:49,640
Speaker 2: filing jointly, any income up to ninety six thousand dollars

842
00:38:49,800 --> 00:38:52,920
Speaker 2: is going to receive that more favorable tax treatment. We'll

843
00:38:53,000 --> 00:38:55,040
Speaker 2: link to an article that we have on our website

844
00:38:55,040 --> 00:38:58,960
Speaker 2: about this. But this is one of those situations where

845
00:38:59,520 --> 00:39:03,760
Speaker 2: investing more is one way to go, but investing less,

846
00:39:03,960 --> 00:39:07,759
Speaker 2: doing strategic Wroth conversions and recategorizing that money and never

847
00:39:07,800 --> 00:39:10,600
Speaker 2: having to pay tax on it in the future could

848
00:39:10,600 --> 00:39:13,440
Speaker 2: be could be a better move than just continuing to

849
00:39:13,440 --> 00:39:15,000
Speaker 2: throw more dollars into those accounts.

850
00:39:15,120 --> 00:39:16,759
Speaker 1: Yeah, and especially in a year where you're going to

851
00:39:17,120 --> 00:39:19,680
Speaker 1: pay less to Uncle Sam, that is a brilliant strategy.

852
00:39:19,719 --> 00:39:21,160
Speaker 2: And so the money that would have gone into that

853
00:39:21,200 --> 00:39:23,359
Speaker 2: account is now going to go to pay taxes, which

854
00:39:23,360 --> 00:39:26,959
Speaker 2: feels really unsatisfying. But when you think about holistic tax

855
00:39:26,960 --> 00:39:30,600
Speaker 2: planning strategy, the whole goal is to pay tax at

856
00:39:30,600 --> 00:39:33,160
Speaker 2: the lowest rate possible. And that's what you're doing right

857
00:39:33,200 --> 00:39:35,680
Speaker 2: when when you're doing a Roth conversion in a year

858
00:39:35,680 --> 00:39:40,120
Speaker 2: where your income is paltry, you're taking advantage of that

859
00:39:40,120 --> 00:39:43,520
Speaker 2: that long view tax planning, and you're saying, no, no, I'm

860
00:39:43,520 --> 00:39:46,720
Speaker 2: going to prioritize ROTH in this year because it means

861
00:39:46,800 --> 00:39:48,640
Speaker 2: less taxes for Yessel in the future.

862
00:39:48,800 --> 00:39:51,359
Speaker 1: Yeah. Future, Yeslo, I think is going to be very thankful. Yeah,

863
00:39:51,400 --> 00:39:53,000
Speaker 1: And I think future Yessl's gonna be thankful that you

864
00:39:53,040 --> 00:39:55,279
Speaker 1: took a sabbatical as well. We're big fans of taking

865
00:39:55,400 --> 00:39:59,640
Speaker 1: these many retirements along the way instead of just the

866
00:39:59,719 --> 00:40:03,719
Speaker 1: tip nose to the grind stone approach, where someday, way

867
00:40:03,760 --> 00:40:06,719
Speaker 1: off in the future, you will retire highly underrated. Let

868
00:40:06,840 --> 00:40:08,759
Speaker 1: us know how it goes, and we wish you the best.

869
00:40:09,000 --> 00:40:10,759
Speaker 1: But Joel, we've got more to get to. We're gonna

870
00:40:10,800 --> 00:40:13,520
Speaker 1: hear from a listener who is having a tough time

871
00:40:13,640 --> 00:40:16,000
Speaker 1: letting go of the idea of having a brick and

872
00:40:16,160 --> 00:40:21,080
Speaker 1: mortar banking institution at his or hers fingertips. We'll get

873
00:40:21,080 --> 00:40:31,120
Speaker 1: to that and more right after this. All right, we're back.

874
00:40:31,200 --> 00:40:33,080
Speaker 2: We've got more money questions to get to. For now,

875
00:40:33,200 --> 00:40:34,880
Speaker 2: let's get to the Facebook question of the week. This

876
00:40:34,960 --> 00:40:38,720
Speaker 2: one comes from Matthew, who said, my wife was about

877
00:40:38,800 --> 00:40:42,040
Speaker 2: to make a contribution to her roth ira, but she

878
00:40:42,160 --> 00:40:44,920
Speaker 2: didn't make any money herself, as she stays at home

879
00:40:45,040 --> 00:40:47,800
Speaker 2: with our son. Does my income count as her income?

880
00:40:48,080 --> 00:40:50,560
Speaker 2: And can she invest in a roth ira? Or am

881
00:40:50,600 --> 00:40:52,600
Speaker 2: I the only one able to invest in a roth

882
00:40:52,640 --> 00:40:54,520
Speaker 2: ira as I have income and.

883
00:40:54,600 --> 00:40:58,480
Speaker 1: Not her classic I think Matthews isn't the only listener

884
00:40:58,600 --> 00:41:01,640
Speaker 1: Joel who's been confused by this, because you're told that

885
00:41:01,760 --> 00:41:04,160
Speaker 1: to invest into roth ira, we may have even said

886
00:41:04,200 --> 00:41:07,680
Speaker 1: this today, you have to have earned income, and so

887
00:41:08,600 --> 00:41:11,160
Speaker 1: your wife isn't currently working, she does not have earned income.

888
00:41:11,320 --> 00:41:13,919
Speaker 1: It seems like she would be ineligible, but of course

889
00:41:14,000 --> 00:41:17,040
Speaker 1: that is not the case, because these things are never

890
00:41:17,120 --> 00:41:20,120
Speaker 1: quite as straightforward as they seem. The IRS recognizes the

891
00:41:20,200 --> 00:41:24,120
Speaker 1: shortcomings of that rule. Your wife is eligible to contribute

892
00:41:24,120 --> 00:41:26,319
Speaker 1: to a roth ira in the form of what's called

893
00:41:26,400 --> 00:41:29,880
Speaker 1: a spousal wrath. So that's the wrath account that we

894
00:41:29,960 --> 00:41:32,360
Speaker 1: really rarely talk about. Joel, even if she didn't actually

895
00:41:32,440 --> 00:41:35,040
Speaker 1: personally earn a dime in that given year. True.

896
00:41:35,160 --> 00:41:39,000
Speaker 2: Yeah, that is specifically the perk when you are married

897
00:41:39,200 --> 00:41:43,680
Speaker 2: filing jointly. So just remember that your total agi your

898
00:41:43,880 --> 00:41:46,560
Speaker 2: justin gross income would have to be above what you

899
00:41:46,600 --> 00:41:49,880
Speaker 2: contribute to both accounts, which I'm assuming it is, assuming

900
00:41:49,920 --> 00:41:51,920
Speaker 2: that you're making more than fourteen thousand dollars a year,

901
00:41:52,200 --> 00:41:56,560
Speaker 2: seems reasonable, you know, making contributions to one for you

902
00:41:56,719 --> 00:41:59,600
Speaker 2: and one for her. That's obviously a really smart move.

903
00:42:00,120 --> 00:42:02,680
Speaker 2: We want couples across the country to continue striving towards

904
00:42:02,719 --> 00:42:05,399
Speaker 2: that goal of maxing out too wroth iras every single year.

905
00:42:05,880 --> 00:42:08,719
Speaker 2: And the fact is that even if one person in

906
00:42:08,840 --> 00:42:12,400
Speaker 2: the house stays home, they are they're doing a valuable

907
00:42:12,480 --> 00:42:16,040
Speaker 2: service to the family, and they also deserve to and

908
00:42:16,120 --> 00:42:19,600
Speaker 2: are allowed to legally contribute to that WROTH. So what

909
00:42:19,680 --> 00:42:22,279
Speaker 2: if it's a threatle Joel, Then that's a good question.

910
00:42:22,360 --> 00:42:24,839
Speaker 1: Is twenty one thousand dollars can you marry? I don't

911
00:42:24,840 --> 00:42:27,440
Speaker 1: think you can married filing multiples like no, No, I

912
00:42:27,480 --> 00:42:30,480
Speaker 1: don't think that rescounts that. Don't forget in the back

913
00:42:30,560 --> 00:42:33,040
Speaker 1: end of your brokerage account or in your brokerage where

914
00:42:33,120 --> 00:42:35,320
Speaker 1: you do your investing, not your brokerage acount. You're not

915
00:42:35,520 --> 00:42:38,200
Speaker 1: going to actually see something that's that's labeled or titled,

916
00:42:38,760 --> 00:42:40,000
Speaker 1: or there's not going to be a link that says

917
00:42:40,040 --> 00:42:44,000
Speaker 1: open spousal wrath. You just contribute to a regular old

918
00:42:44,280 --> 00:42:47,200
Speaker 1: wroth IRA for her like you would for yourself. There's

919
00:42:47,239 --> 00:42:50,120
Speaker 1: no actual special designation. This isn't some sort of special account.

920
00:42:50,160 --> 00:42:52,240
Speaker 1: It's that's how it's more of a process as opposed

921
00:42:52,280 --> 00:42:55,239
Speaker 1: to like an actual account. It's a colloquial way of

922
00:42:55,520 --> 00:42:56,160
Speaker 1: talking about it.

923
00:42:56,320 --> 00:42:57,880
Speaker 2: Even though when you go in the back end of

924
00:42:57,920 --> 00:42:59,800
Speaker 2: the account to open it or to contribute to it,

925
00:43:00,160 --> 00:43:01,000
Speaker 2: that's not how it's going to.

926
00:43:01,000 --> 00:43:02,399
Speaker 1: Be label now. You're not going to find that there.

927
00:43:02,480 --> 00:43:04,759
Speaker 1: So I agree that maxing out two roths year in,

928
00:43:04,960 --> 00:43:07,360
Speaker 1: year out, if possible, that's going to garnery you some

929
00:43:07,480 --> 00:43:11,560
Speaker 1: incredible financial freedom over the decades. Get at Matthew Joel.

930
00:43:11,680 --> 00:43:15,279
Speaker 1: Let's hear from another poster from anonymous who writes, one

931
00:43:15,320 --> 00:43:18,320
Speaker 1: of my financial fails is having my E fund in

932
00:43:18,360 --> 00:43:21,160
Speaker 1: a credit union savings account earning less than one percent.

933
00:43:21,880 --> 00:43:25,200
Speaker 1: I just threw up a little. I know I need

934
00:43:25,320 --> 00:43:27,880
Speaker 1: to move to a high yield savings account. But something

935
00:43:28,000 --> 00:43:30,880
Speaker 1: about an online bank versus a brick and mortar local

936
00:43:30,960 --> 00:43:34,960
Speaker 1: credit union seems scary for any emergency fund, even though

937
00:43:35,040 --> 00:43:37,799
Speaker 1: I know we could transfer as needed. Has anyone else

938
00:43:38,120 --> 00:43:40,719
Speaker 1: had this hesitancy? What do you think, Joel? Have you

939
00:43:40,760 --> 00:43:41,200
Speaker 1: ever felt this?

940
00:43:41,480 --> 00:43:44,920
Speaker 2: Honestly, now, I hae a roadblock. I have zero need

941
00:43:45,280 --> 00:43:49,320
Speaker 2: for brick and mortar institutions or some institutions, but not

942
00:43:49,440 --> 00:43:52,640
Speaker 2: banks in my life. And I guess I get why

943
00:43:52,719 --> 00:43:55,120
Speaker 2: some people might feel, especially like if you own a

944
00:43:55,160 --> 00:43:58,319
Speaker 2: small business, you're regularly making deposits of that physical bank

945
00:43:58,400 --> 00:44:01,759
Speaker 2: or something like that, you might be reticent to kind

946
00:44:01,800 --> 00:44:05,920
Speaker 2: of do away from that sort of Oh I go

947
00:44:06,080 --> 00:44:09,640
Speaker 2: to my bank to do things a relationship, But I

948
00:44:09,719 --> 00:44:12,360
Speaker 2: think most people don't have any need for it, And

949
00:44:12,480 --> 00:44:14,000
Speaker 2: so first off, I do want to stress that we

950
00:44:14,080 --> 00:44:17,840
Speaker 2: love credit unions right, but also they're better for borrowing

951
00:44:18,120 --> 00:44:19,680
Speaker 2: than they are for saving most of the time.

952
00:44:20,000 --> 00:44:20,680
Speaker 1: Need not alone.

953
00:44:20,920 --> 00:44:23,320
Speaker 2: Credit union is a great place to go mortgage or

954
00:44:23,520 --> 00:44:25,960
Speaker 2: a helock. I would look to a credit union first,

955
00:44:26,640 --> 00:44:29,480
Speaker 2: high old savings account that, though I would say is

956
00:44:29,600 --> 00:44:33,200
Speaker 2: best done at an online bank. They're different tools for

957
00:44:33,280 --> 00:44:35,439
Speaker 2: different purposes, and I want to use the right tool

958
00:44:35,480 --> 00:44:38,600
Speaker 2: for the right problem. Our favorite online banks are typically

959
00:44:39,040 --> 00:44:42,600
Speaker 2: although maybe not always, but typically better for savings purposes.

960
00:44:43,000 --> 00:44:45,160
Speaker 2: I would love to see folks you utilizing both of

961
00:44:45,239 --> 00:44:47,520
Speaker 2: these institutions for what they do best. I have a

962
00:44:47,560 --> 00:44:49,759
Speaker 2: relationship with a credit union, I have had one for

963
00:44:50,560 --> 00:44:53,360
Speaker 2: a decade and a half and I will continue to

964
00:44:53,440 --> 00:44:56,760
Speaker 2: have that relationship. I've had a relationship with an online

965
00:44:57,000 --> 00:44:58,960
Speaker 2: a high old savings account at an online bank for

966
00:44:59,760 --> 00:45:01,960
Speaker 2: a I didn't have to probably at this point, and

967
00:45:02,440 --> 00:45:04,640
Speaker 2: I maybe longer, and I will just continue to have

968
00:45:04,719 --> 00:45:07,400
Speaker 2: both those relationships and they will just serve me for

969
00:45:07,640 --> 00:45:08,480
Speaker 2: different needs that I have.

970
00:45:08,719 --> 00:45:12,719
Speaker 1: Totally. Yeah, it's also important that even in an emergency,

971
00:45:12,800 --> 00:45:15,359
Speaker 1: you don't typically need to pull cash out like right away,

972
00:45:15,480 --> 00:45:18,160
Speaker 1: like right now. Instead, you can use a credit card,

973
00:45:18,280 --> 00:45:20,960
Speaker 1: which buys you time right like you still have the

974
00:45:21,000 --> 00:45:22,880
Speaker 1: cash on hand in your account to back it up.

975
00:45:23,360 --> 00:45:26,680
Speaker 1: But I can't think of too many money financial emergencies

976
00:45:26,719 --> 00:45:28,399
Speaker 1: that I've encountered that required me to get a load

977
00:45:28,440 --> 00:45:30,880
Speaker 1: of cash from a bank as soon as humanly possible.

978
00:45:31,560 --> 00:45:33,600
Speaker 1: And then on top of that, our favorite online banks

979
00:45:33,640 --> 00:45:36,919
Speaker 1: they tend to have good fee free atm networks as well,

980
00:45:37,000 --> 00:45:39,120
Speaker 1: So if you actually are in a situation where you

981
00:45:39,160 --> 00:45:41,600
Speaker 1: do need the cash on the spot. You should be

982
00:45:41,680 --> 00:45:44,560
Speaker 1: able to access at the very least hundreds of dollars

983
00:45:44,800 --> 00:45:47,200
Speaker 1: in a day. The branch doesn't even need to be open,

984
00:45:47,320 --> 00:45:49,920
Speaker 1: like you just go to the ATM. That's a part

985
00:45:49,920 --> 00:45:53,000
Speaker 1: of the network. That being said, if you do, I

986
00:45:53,040 --> 00:45:55,239
Speaker 1: think another way to alleviate this problem would be just

987
00:45:55,280 --> 00:45:57,680
Speaker 1: to have some cash at home, because if you do

988
00:45:58,000 --> 00:46:00,480
Speaker 1: feel that there's some comfort in having that, I don't know,

989
00:46:00,640 --> 00:46:03,000
Speaker 1: like literally one thousand bucks, a couple thousand dollars hidden

990
00:46:03,040 --> 00:46:06,279
Speaker 1: away somewhere in a secure spot. If that allows you

991
00:46:06,400 --> 00:46:09,560
Speaker 1: to then move the thousands of dollars of your actual

992
00:46:09,600 --> 00:46:12,560
Speaker 1: emergency fund over to a highield savings account where you

993
00:46:12,760 --> 00:46:16,680
Speaker 1: are experiencing or earning interest. I think that could be

994
00:46:16,719 --> 00:46:18,480
Speaker 1: a way to hide your cake and eat it too.

995
00:46:18,640 --> 00:46:20,360
Speaker 1: That's why you have all those gold bars buried in

996
00:46:20,400 --> 00:46:23,120
Speaker 1: the backyard exactly just in case. Right, Yes, no, you

997
00:46:23,200 --> 00:46:25,600
Speaker 1: never know what's going to happen. It's it's so unlikely

998
00:46:26,000 --> 00:46:28,239
Speaker 1: for that. Actually, the crazy emergers, if the Last of

999
00:46:28,320 --> 00:46:31,000
Speaker 1: Us becomes real life event to take place, it's far

1000
00:46:31,080 --> 00:46:36,320
Speaker 1: more dramatic, but very unlikely to happen. Whereas inflation and

1001
00:46:36,440 --> 00:46:39,440
Speaker 1: your savings getting eaten away by that inflation, it is

1002
00:46:39,840 --> 00:46:43,080
Speaker 1: much much less dramatic, but very likely. That is very

1003
00:46:43,200 --> 00:46:46,520
Speaker 1: likely to happen. So we want you to be prepared

1004
00:46:46,560 --> 00:46:48,759
Speaker 1: for both, I guess in a way, but for you

1005
00:46:48,840 --> 00:46:50,719
Speaker 1: to not pay the financial price for having all of

1006
00:46:50,760 --> 00:46:53,160
Speaker 1: your cash in a local credit union branch.

1007
00:46:53,280 --> 00:46:56,400
Speaker 2: It's an underconsidered fear, right is inflation, because it is

1008
00:46:56,440 --> 00:46:58,520
Speaker 2: that persistent reality that most people just don't pay any

1009
00:46:58,520 --> 00:47:00,640
Speaker 2: attention to. We have, of course paid more attention in

1010
00:47:00,760 --> 00:47:03,640
Speaker 2: recent years, and hopefully that's caused more people to think

1011
00:47:03,719 --> 00:47:07,040
Speaker 2: twice about where they bank and the rate of interests

1012
00:47:07,040 --> 00:47:09,200
Speaker 2: they are getting paid. But I do think you're right, Matt,

1013
00:47:09,239 --> 00:47:11,479
Speaker 2: Like for this poster, I don't want them to fret

1014
00:47:11,560 --> 00:47:15,560
Speaker 2: about instant access to all their money. What's I mean?

1015
00:47:15,920 --> 00:47:18,560
Speaker 2: In what case is that really necessary? The biggest thing

1016
00:47:18,640 --> 00:47:21,040
Speaker 2: is to make sure you've got enough saved and that

1017
00:47:21,120 --> 00:47:23,280
Speaker 2: you're getting paid close to market rate on your savings.

1018
00:47:23,360 --> 00:47:25,040
Speaker 2: That's three and a half to four percent these days.

1019
00:47:25,239 --> 00:47:27,960
Speaker 2: That's what I'd be looking for. CI is still paying

1020
00:47:28,000 --> 00:47:31,960
Speaker 2: top tier rates betterments. Cash account is fantastic too. Depending

1021
00:47:31,960 --> 00:47:33,840
Speaker 2: on how much you have saved, you know, we might

1022
00:47:33,920 --> 00:47:36,040
Speaker 2: only be talking about a couple hundred bucks this year

1023
00:47:36,080 --> 00:47:38,719
Speaker 2: in extra earnings, but up in your savings rate by

1024
00:47:38,760 --> 00:47:41,239
Speaker 2: going with a bank that pays those super high rates

1025
00:47:41,280 --> 00:47:43,960
Speaker 2: and consistently pays those high rates for years to come.

1026
00:47:44,719 --> 00:47:47,279
Speaker 2: That's not insignificant in the grand scheme of things. And

1027
00:47:47,360 --> 00:47:50,719
Speaker 2: the truth is, wow, brick and mortar might seem like, oh,

1028
00:47:50,800 --> 00:47:52,600
Speaker 2: I can like a relief of some sort. Oh I

1029
00:47:52,640 --> 00:47:54,120
Speaker 2: can go get my money in an instant when I

1030
00:47:54,160 --> 00:47:57,279
Speaker 2: need it. Well, money, there's so many other ways to

1031
00:47:57,320 --> 00:47:59,840
Speaker 2: tap money instantaneously, and even just having a little bit

1032
00:47:59,840 --> 00:48:02,200
Speaker 2: more in cash at home that if that can provide

1033
00:48:02,239 --> 00:48:03,839
Speaker 2: that relief. So you can do business with a better

1034
00:48:03,920 --> 00:48:06,800
Speaker 2: bank that pays you what you deserve on your savings.

1035
00:48:06,520 --> 00:48:08,719
Speaker 1: Do that, Yeah, And honestly, the kind of event that

1036
00:48:08,760 --> 00:48:10,680
Speaker 1: would cause you to rush to the bank and withdraw

1037
00:48:10,680 --> 00:48:12,600
Speaker 1: a bunch of cash, I don't think that necessarily means

1038
00:48:12,640 --> 00:48:13,680
Speaker 1: that you would be able to do that with a

1039
00:48:13,719 --> 00:48:17,600
Speaker 1: local branch. Yeah, because I think whatever unlikely but yes,

1040
00:48:17,760 --> 00:48:20,200
Speaker 1: terrible event that would take place would hinder something like

1041
00:48:20,320 --> 00:48:22,960
Speaker 1: that as well. I don't know. I just like focusing

1042
00:48:23,000 --> 00:48:24,360
Speaker 1: on the things that I think are more likely to

1043
00:48:24,440 --> 00:48:28,120
Speaker 1: take place. Like, because then your mind starts going to like, well, man,

1044
00:48:28,160 --> 00:48:29,920
Speaker 1: maybe we should have some bottled waters and the first

1045
00:48:29,960 --> 00:48:31,680
Speaker 1: aid kit and throw that in the bug out bag.

1046
00:48:31,880 --> 00:48:33,440
Speaker 1: And there's folks. I'm not a prepper, but I know

1047
00:48:33,560 --> 00:48:36,000
Speaker 1: certainly some folks do that. But for me, a few guns,

1048
00:48:36,200 --> 00:48:38,920
Speaker 1: you know. But you know what I have done in

1049
00:48:39,080 --> 00:48:41,920
Speaker 1: recent years, more often than not, is pull the old

1050
00:48:41,960 --> 00:48:43,960
Speaker 1: generator out of the garage. Fire that thing up so

1051
00:48:44,040 --> 00:48:45,840
Speaker 1: that I don't end up losing all my groceries in

1052
00:48:46,360 --> 00:48:48,400
Speaker 1: the fridge like that kind of I mean, that seems

1053
00:48:48,440 --> 00:48:51,960
Speaker 1: like a much more I guess, practical and likely outcome

1054
00:48:52,080 --> 00:48:54,759
Speaker 1: of the grid going down or even just getting hit

1055
00:48:54,840 --> 00:48:57,680
Speaker 1: by a big storm. Right Like you're saying zombie apocalypse

1056
00:48:57,800 --> 00:48:59,719
Speaker 1: is not likely to happen, Say, it's less likely as

1057
00:48:59,760 --> 00:49:02,160
Speaker 1: a a big storm hitting your town and then it

1058
00:49:02,320 --> 00:49:04,720
Speaker 1: takes several days before the power gets turned on. What's

1059
00:49:04,719 --> 00:49:06,680
Speaker 1: happened to a whole lot of folks. It's less interesting,

1060
00:49:06,760 --> 00:49:10,799
Speaker 1: but you're probably right makes for less entertaining TV, that's

1061
00:49:10,840 --> 00:49:13,920
Speaker 1: for sure. True story. Well hope that's helpful, Matt. Let's

1062
00:49:13,920 --> 00:49:15,279
Speaker 1: get back to the beer we had on the show.

1063
00:49:15,640 --> 00:49:18,480
Speaker 2: This was I picked this up when I was in Texas,

1064
00:49:18,840 --> 00:49:21,680
Speaker 2: and this is from a brewery that's actually in Pennsylvania

1065
00:49:21,760 --> 00:49:25,200
Speaker 2: that doesn't distribute to where we live, and it's called

1066
00:49:25,239 --> 00:49:28,960
Speaker 2: Tired Hands. This one is called double dry hopped Refreshing.

1067
00:49:29,120 --> 00:49:30,120
Speaker 1: Can't get these in Georgia.

1068
00:49:30,280 --> 00:49:33,680
Speaker 2: No, we've only had one of their beers before on

1069
00:49:33,760 --> 00:49:36,600
Speaker 2: the show, was the Sayson. I still remember that beer

1070
00:49:36,680 --> 00:49:39,799
Speaker 2: as being fantastic. What was your take on this IPA.

1071
00:49:39,920 --> 00:49:43,600
Speaker 1: Earthy had a nice bitter bite to it, but the

1072
00:49:43,680 --> 00:49:45,959
Speaker 1: hoppy flavors. It reminds me a lot of burial beers

1073
00:49:46,000 --> 00:49:47,560
Speaker 1: as well, which we've had a lot of those on

1074
00:49:47,640 --> 00:49:51,600
Speaker 1: the show recently, where it's more vegetable and less tropical,

1075
00:49:51,960 --> 00:49:54,759
Speaker 1: Like it's kind of got like this earthy. Oh, it's

1076
00:49:54,760 --> 00:49:58,520
Speaker 1: so funny. I feel are the brazil nuts. We've had

1077
00:49:58,520 --> 00:49:59,799
Speaker 1: some of those at our house recently. The kids are

1078
00:49:59,800 --> 00:50:02,920
Speaker 1: alway like, it tastes like dirt. I'm like, how do

1079
00:50:03,000 --> 00:50:05,759
Speaker 1: you know what dirt tastes like? It tastes like what

1080
00:50:05,840 --> 00:50:08,520
Speaker 1: you've seen your kids, what wet dirt smells like or

1081
00:50:08,560 --> 00:50:10,560
Speaker 1: wet earth smells like. And this kind of has that

1082
00:50:10,880 --> 00:50:12,800
Speaker 1: a similar vibe going on. It just it feels like

1083
00:50:12,920 --> 00:50:16,560
Speaker 1: it's a beer of the earth less floury for sure,

1084
00:50:16,719 --> 00:50:18,560
Speaker 1: but uh yeah, really really tasting really good.

1085
00:50:18,640 --> 00:50:20,239
Speaker 2: So this is gonna sound negative, but I mean it,

1086
00:50:20,280 --> 00:50:22,520
Speaker 2: it's a positive. Like if I was to rub some

1087
00:50:22,680 --> 00:50:25,239
Speaker 2: light sandpaper across my tongue, like this beer sticks to

1088
00:50:25,280 --> 00:50:26,680
Speaker 2: my tongue in that way. It's it's got this like

1089
00:50:26,880 --> 00:50:30,920
Speaker 2: sappy goodness, this dense, juicy vibe like you're licking a

1090
00:50:30,960 --> 00:50:34,120
Speaker 2: piece of felt. Yeah, but also this like chalky consistency.

1091
00:50:34,360 --> 00:50:36,239
Speaker 2: And I mean this in the best way where this

1092
00:50:36,440 --> 00:50:39,799
Speaker 2: this beer just has like these texture notes that are

1093
00:50:39,880 --> 00:50:42,279
Speaker 2: rare in an IPA just doesn't slide down your throat.

1094
00:50:42,320 --> 00:50:44,560
Speaker 2: It's like it's trying to wrap around every single one

1095
00:50:44,560 --> 00:50:46,560
Speaker 2: of my taste buds, and I get that.

1096
00:50:46,760 --> 00:50:47,400
Speaker 1: I'm down with that.

1097
00:50:47,640 --> 00:50:51,680
Speaker 2: Like I really enjoyed this beer. I would love love

1098
00:50:51,760 --> 00:50:53,799
Speaker 2: to try more beers by Tired Hands because the two

1099
00:50:53,840 --> 00:50:55,960
Speaker 2: I've had have been thoroughly enjoyable.

1100
00:50:56,000 --> 00:50:57,000
Speaker 1: So they've been top notch.

1101
00:50:57,120 --> 00:50:58,080
Speaker 2: Yeah, most def.

1102
00:50:58,080 --> 00:50:59,880
Speaker 1: Glad you and I got to enjoy this one today.

1103
00:51:00,080 --> 00:51:02,040
Speaker 1: That's gonna be it for this episode. Find our show

1104
00:51:02,080 --> 00:51:05,640
Speaker 1: notes over at howtomoney dot com. That's also where you

1105
00:51:05,719 --> 00:51:09,200
Speaker 1: will find lots of different resources over there. But Buddy,

1106
00:51:09,239 --> 00:51:11,160
Speaker 1: that's gonna be it for this episode until next time.

1107
00:51:11,440 --> 00:51:13,160
Speaker 1: Best Friends Out, best Friends Out,