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Speaker 1: Welcome to Had the Money.

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Speaker 2: I'm Joel and I am Matt, and today we're answering

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Speaker 2: your listener questions.

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Speaker 1: We hope everyone out there had a wonderful weekend, and

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Speaker 1: we're glad that you tuned in to Have the Money.

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Speaker 1: It's like a radio radio pitch. You don't tune in

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Speaker 1: on your podcatcher. You hit play, you hit play, but

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Speaker 1: you don't actually you don't tune in. You're just you're

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Speaker 1: looking for that little green square, the sea green. What

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Speaker 1: do you call our color? Sea green? Yeah, something like that.

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Speaker 1: It's like a sea phone green background.

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Speaker 2: Matt, do you remember back when we were getting our

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Speaker 2: getting it made and we almost were this close to

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Speaker 2: go with pink, Yeah, and it was it was like

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Speaker 2: a SALMONI color and it was you we're going to

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Speaker 2: share that.

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Speaker 1: How we ever talked about that, I don't know, but

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Speaker 1: maybe maybe we'll share they we should alternate because I'm

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Speaker 1: on Instagram. I'm sure I've still got it on my computer.

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Speaker 1: But we're because we liked it. It looked really cool. But

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Speaker 1: I think we we were going too far off the

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Speaker 1: beaten path. I guess like ultimately, it's like how the Money. Okay,

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Speaker 1: let's go with the more the green color, but we

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Speaker 1: really dug the whole pink look. It was a lot

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Speaker 1: of It would have been cool. It would have been cool.

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Speaker 1: It would have it would have felt like Miami, you know,

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Speaker 1: because like the uniform, yes, which is everybody once once

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Speaker 1: one of those jerseys. Right, certainly it fits really well

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Speaker 1: with Miami and kind of the what do you call

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Speaker 1: that art deco, you know, like just sort of like

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Speaker 1: that vibe. The whole thing that they got goes South

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Speaker 1: party vibe for sure. Yeah, exactly. But ultimately I'm glad

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Speaker 1: we didn't go it didn't come with a think. But

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Speaker 1: this is and ask how to Money episode. We're gonna

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Speaker 1: hear from a listener who is helping a loved one

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Speaker 1: with their personal finances. Another listener is mobile homing his

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Speaker 1: way to wealth, and we're also going to discuss how

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Speaker 1: tax loss harvesting is for everyone. Uh, we'll get to

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Speaker 1: those plus more during this episode and can potentially save

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Speaker 1: you a ton. In tacts, we got to talk about

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Speaker 1: that and it's something it just depends though. Yeah, like

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Speaker 1: there's as always with personal finding stuff, there's a lot

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Speaker 1: of nuanced involved in Yeah. Man, all right, I got

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Speaker 1: a quick frugal or cheap for you. So this is

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Speaker 1: the first time I've seen you all day, because earlier

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Speaker 1: today the power went out here at the office and

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Speaker 1: it was out for for hours basically, so you just

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Speaker 1: pieced to I was already at home doing something, and

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Speaker 1: I was like, oh, I'm not coming in, yeah yeah,

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Speaker 1: And so actually less I put in my letter of resignation,

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Speaker 1: I left to go home to work. But before I

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Speaker 1: did that, I thought, well, there's a chance it flips

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Speaker 1: back on here real shortly. So I want to get

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Speaker 1: your take if this is a frugal or cheap I

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Speaker 1: grab the iMac. I unplugged it, which is what like

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Speaker 1: a twenty four inch screen, twenty seven inch screen. It's huge. Yeah,

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Speaker 1: they're pretty big. Yeah. And I walked across to the

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Speaker 1: coffee shop that you know I always go to every

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Speaker 1: single Monday, because I thought, oh, there's a good chance

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Speaker 1: that they've got power. But I thought twice about it

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Speaker 1: because I was I didn't want to be judged. I

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Speaker 1: was afraid that folks.

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Speaker 2: Were gonna shame me for walking in with a giant

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Speaker 2: computer like a Laptop's okay, but sorry, sir, this is

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Speaker 2: too much.

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Speaker 1: It's not like back in the day where you would

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Speaker 1: show up with a giant What is it like see

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Speaker 1: our team monitors or whatever, you know, just like the

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Speaker 1: old blocks, which I remember seeing pictures of people doing

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Speaker 1: back in the mid two thousands. Yea, early two days

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Speaker 1: are heavy too, just like the two TV's. But what

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Speaker 1: are your thoughts? Was is that a frugal or cheap

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Speaker 1: move to be like I'm gonna go over there and

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Speaker 1: set up camp. I think if you did it a

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Speaker 1: couple of hours, that'd be one thing.

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Speaker 2: Because if I did it, what if you did it regularly,

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Speaker 2: like you know where you're like, hey, like four days

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Speaker 2: a week, I come in here and I just PLoP

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Speaker 2: down for five hours, and maybe I don't buy anything either.

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Speaker 2: I don't patronize this place, but it's a rare occurrence

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Speaker 2: right where we patronize that place fairly regularly, not daily,

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Speaker 2: of course, But.

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Speaker 1: They almost know our names. Yeah, yeah, I am.

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Speaker 2: Actually amazed at this point they still ask our names

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Speaker 2: when we ordered the same thing, the two of us

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Speaker 2: every Monday morning. But no, I think it's totally fine

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Speaker 2: because it is. It's our local coffee shop, man. And

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Speaker 2: if you go there for a few hours because the

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Speaker 2: power's out, I think they understand even if you are

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Speaker 2: dragging in some card issue and fancy screen.

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Speaker 1: Okay, I'm glad you feel that way. I did think

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Speaker 1: twice about it, but turns out they actually didn't have

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Speaker 1: power either, right, And so I showed up. I stood

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Speaker 1: there and I realized all the lights were off. I

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Speaker 1: was like, oh, man, y'all, are y'all lost power too?

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Speaker 1: And they're like yeah, And then they saw my computer

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Speaker 1: and started laughing. Actually, one of the girls took a

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Speaker 1: photo of me, or she she asked. She's like, hey,

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Speaker 1: do you mind if I take a photo? Because we

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Speaker 1: always joke about people showing up with her with their

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Speaker 1: IMAX did the coffee shops. So I guess it's like

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Speaker 1: an inside joke for baristas to see somebody walking up

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Speaker 1: with her with her iomac.

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Speaker 2: But again, I think if you did it in the

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Speaker 2: ray and you made that like your home base and

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Speaker 2: you play, you made it seem like that was your

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Speaker 2: coworking space, that's too much, right, right, Like yep, brought

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Speaker 2: in your filing cabinet too to sit next to you.

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Speaker 1: That's just overboard. Bringing your Ergo ergonomic chair and I

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Speaker 1: got your ball that you're sitting on to make sure

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Speaker 1: your posture is good. That would be that would feel

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Speaker 1: a little a little different too far. I do think

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Speaker 1: whether or not you buy something during a visit that

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Speaker 1: that goes a long ways. Because I was thinking about

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Speaker 1: this the other day. I feel like this is going long,

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Speaker 1: but I'll like it quick. You could save a ton

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Speaker 1: of money by just going to a coffee shop and

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Speaker 1: buying a coffee. Like think about the cost of these

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Speaker 1: coworking spaces. I mean that's what you just mentioned that

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Speaker 1: there are a lot of money and if you could

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Speaker 1: instead go to some of your favorite different coffee shops

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Speaker 1: kind of bounce around, keep things fresh. I think I

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Speaker 1: would much rather do that. Granted we have our little

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Speaker 1: space here because we record the podcast, but if I

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Speaker 1: was just like a programmer or something like that, dude,

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Speaker 1: I would a not have a co working membership, Yeah,

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Speaker 1: and b instead go to a coffee shop. You know

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Speaker 1: who else You know who took a page out of

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Speaker 1: that book JK.

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Speaker 2: Rowling, which when we visited Edinburgh, we rocked by the

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Speaker 2: coffee shop where she got our start, where she wrote

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Speaker 2: the first book, and it was because it was less

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Speaker 2: expensive to get a coffee that it was to pay

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Speaker 2: for heat at her apartment, and I'm like, dude, I

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Speaker 2: love that so much respect for the frugality of JK

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Speaker 2: early on, uh huh.

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Speaker 1: And I love it. She lost it pretty quickly.

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Speaker 2: I think she made considering her final book pulled up

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Speaker 2: in like the fanciest hotel, nicest suite in the nicest

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Speaker 2: hotel where we went and got drinks one time visit.

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Speaker 1: But yeah, I think a lot of folks are taking

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Speaker 1: a page out of Jk's but considering too we work bankruptcy. Yeah,

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Speaker 1: evidently a lot of people don't want to pay for

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Speaker 1: those membership Yeah.

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Speaker 2: Well yeah, lots changed on that. Go all right, Matt,

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Speaker 2: let's mention quickly. The beer we're having on this episode,

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Speaker 2: it's called broccoli by Other Half. We're drinking our veggies today,

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Speaker 2: which is the best way to do it. Oh yeah,

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Speaker 2: this big, big thanks to listener Jason, who sent over

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Speaker 2: just a plethora of good Other Half beers. Jason, we

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Speaker 2: really appreciate you, man, And what.

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Speaker 1: A care package. You can't one of the best. You

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Speaker 1: can't beat that for us to I mean, this was

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Speaker 1: I almost shed a tear opening that made my entire month,

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Speaker 1: almost month, maybe definitely made my week Yeah, that was really.

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Speaker 2: And and from one of our all time paper brewers too.

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Speaker 2: So by the way, if you if you have a

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Speaker 2: question you want Matt and I to tackle on an

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Speaker 2: upcoming Ask kind of Money episode, we'd love to take it.

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Speaker 2: Just record your question into your phone and then send

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Speaker 2: it our way via email. You can find the instructions

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Speaker 2: there the simple instructions for how to do that at

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Speaker 2: how to money dot com slash ask. But this first

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Speaker 2: question is about saving taxes when you're selling investments.

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Speaker 3: Hi Ethon Joel. This is from Hillsboro, Oregon. Love the show,

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Speaker 3: Thank you so much. My question is about tax loss harvesting.

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Speaker 3: So I understand that you're able to get the losses

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Speaker 3: back as tax reduction, but if you reinvest the money

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Speaker 3: then eventually you would have to pay capital gains tax.

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Speaker 3: If you don't reinvest the money, then obviously you're losing

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Speaker 3: money overall. So it seems like the value proposition is

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Speaker 3: pretty small, just in case you're in a very high

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Speaker 3: tax bracket, and even then it's just just about ten percent.

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Speaker 3: I'll be happy if you can explain a little bit

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Speaker 3: better what am I missing?

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Speaker 1: Thank you so much, all right, Rafael, good to hear

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Speaker 1: from you and thank you for that question. Is tax

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Speaker 1: loss harvesting really all that effective? There is a lot

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Speaker 1: of talk on this front. There are different different players

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Speaker 1: out there, different fintech companies that make this easier. But

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Speaker 1: let's go ahead and define it first. Tax loss harvesting

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Speaker 1: is basically when you sell an investment at a loss

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Speaker 1: in order to offset other capital gains that you might experience,

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Speaker 1: and if your losses exceed your gains, you can actually

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Speaker 1: deduct those losses up to three thousand dollars if you

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Speaker 1: are married filing jointly in a given year, to reduce

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Speaker 1: your ordinary income. And then on top of that, if

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Speaker 1: your losses are even larger than that, you can actually

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Speaker 1: carry them over and you can claim them to offset

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Speaker 1: not only ordinary income in future years, but also additional

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Speaker 1: capital gains that you might experience. There's so many layers

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Speaker 1: to this onion. You can carry those losses forward indefinitely.

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Speaker 1: So this is something where there is no there is

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Speaker 1: no cap essentially as to the number of times you

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Speaker 1: can kind of come back to this well and tap

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Speaker 1: it and so granted keeping up with it for multiple

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Speaker 1: years down the road. Yes, that does mean you're going

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Speaker 1: to have to keep up with that somewhere. But luckily

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Speaker 1: the IRS has a capital loss carryover worksheet nice and

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Speaker 1: make it nice and easy for you. It's something that

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Speaker 1: you can find in your I think it's in Schedule D.

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Speaker 1: That way you're able to stay organized and future deductions

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Speaker 1: you might take you can just reference that. Yeah, it's

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Speaker 1: really important, that's all. It's as simple as that.

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Speaker 2: It's well, I guess, yeah, there is a little bit

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Speaker 2: of nuance here, right, it's not crazy simple that we're

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Speaker 2: talking about or potential to offset not just capital gains

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Speaker 2: taxes a significant amount of those, but also ordinary income

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Speaker 2: tax a small amount of that. And it's also really

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Speaker 2: important to mention that tax loss harvesting it doesn't work

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Speaker 2: inside of a tax advantage account. You don't know tax

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Speaker 2: loss harvesting inside of a four oh one K or

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Speaker 2: a roth iray, let's say, because the reason is you're

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Speaker 2: not creating a taxable event when you're buying and selling stocks,

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Speaker 2: ETFs or mutual funds or whatever inside of those tax

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Speaker 2: advantage accounts that we talk about all the time, Right,

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Speaker 2: tax loss harvesting it's only really possible when you're buying

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Speaker 2: and selling inside of your taxable brokerage account, which does

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Speaker 2: result in a taxable event when you're doing that buying

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Speaker 2: and selling. So I just want to point this out

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Speaker 2: because for a lot of how to money listeners who

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Speaker 2: are sticking fully with those accounts for the time being,

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Speaker 2: who are like, hey, I'm getting the match in my

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Speaker 2: four one K and i just started getting putting money

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Speaker 2: in the wroth, they're not. The taxable brokerage isn't really

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Speaker 2: on their radar. That's right, Well, this isn't of much

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Speaker 2: consequence to them. This is for ballers really who have

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Speaker 2: done a great job not only maxing those out, but

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Speaker 2: sticking significant sums into their taxable brokerage account over.

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Speaker 1: The years too. That's right. Yeah, that's important context to

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Speaker 1: keep in mind. But Raphael, like the heart of his

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Speaker 1: question is is it really all that beneficial? Well, the

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Speaker 1: goal isn't to lose money when you are investing your money, right,

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Speaker 1: you want to make money. But there are ways to

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Speaker 1: use tax loss harvesting during a market downturn as a

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Speaker 1: way to help save at least a little bit that

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Speaker 1: otherwise would have gone to Uncle Sam. It's most helpful

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Speaker 1: for folks who find themselves in a higher tax bracket

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Speaker 1: if you're making bank that three thousand dollars that you're

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Speaker 1: able to off set from your ordinary income by selling

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Speaker 1: investments that haven't done so hot, that can help you

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Speaker 1: to avoid some potentially higher rates of tax that you

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Speaker 1: would otherwise have to pay. I think that's what Raphael

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Speaker 1: is kind of referencing are in his question. The less

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Speaker 1: you make, the less tax that you're skipping out on,

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Speaker 1: which makes this maneuver less advantageous overall. So, like what

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Speaker 1: you were saying, Yeah, if you're a low earner with

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Speaker 1: who does have some money in a taxable brokerage account

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Speaker 1: and you're like, oh, should I sell this stock at

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Speaker 1: a loss to get the tax break, Well, that's probably

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Speaker 1: not the right way to think about it. You're letting

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Speaker 1: the tax consequence wag the investing dog, which is not

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Speaker 1: the way you want to precede it, right, And tax

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Speaker 1: loss harvesting is most effective when you invest in single

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Speaker 1: stocks or sector specific ets, which isn't really our jam.

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Speaker 1: That's not the way we advocate for most people to invest,

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Speaker 1: because simple is better for the vast majority of armchair investors,

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Speaker 1: which is I think a lot of how to money listeners. Yeah,

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Speaker 1: that's often I mean that's really that's probably why we

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Speaker 1: don't spend a whole lot of time talking about this,

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Speaker 1: because we want to make sure that the initial eighty

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Speaker 1: percent is taken care of first, which is oftentimes that

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Speaker 1: we're discussing. Yeah the show.

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Speaker 2: Yeah, this is a back end last five to ten

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Speaker 2: percent sort of question. Right, But let's say you do

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Speaker 2: the index fund investing thing like we do. Right, you're

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Speaker 2: at that point where you're investing in a brokerage account

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Speaker 2: and you want to use tax lost harvesting to your advantage. Well,

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Speaker 2: you can actually use this tax saving method to get

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Speaker 2: a tax break without shaking up your investment allocation all

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Speaker 2: that much, which is kind of cool. So let's say

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Speaker 2: you could You could sell out of your S and

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Speaker 2: P five hundred fund when the market is down, for instance,

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Speaker 2: and then purchase a total stock market fund instead, which

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Speaker 2: allows you to reap those tax savings without changing your

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Speaker 2: investing strategy much at all. Right, because those those funds

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Speaker 2: are similar but not identical, you can go this route

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Speaker 2: in order to snag that helpful little tax break for yourself.

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Speaker 2: So yeah, even if you do the index fund investing

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Speaker 2: route inside of your brokerage account, you can use tax

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Speaker 2: loss harvesting. You're just probably not using it to shield

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Speaker 2: yourself from like, you know, millions of dollars or even

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Speaker 2: hundreds of thousands of dollars in tax. It's just like

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Speaker 2: a way at the edges to minimize your tax bill, yeah,

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Speaker 2: for most people. And this is something that so literally

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Speaker 2: the example you gave, that's something I did. So it

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Speaker 2: was back in June of last year. I don't know

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Speaker 2: if you remember, Like, yeah, the market around that time

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Speaker 2: it had declined significantly.

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Speaker 1: I think it was down like twenty percent or something

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Speaker 1: like that. And I literally sold a big goal chunk

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Speaker 1: of VOO, which is Vanguard's S and P five hundred ETF,

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Speaker 1: and instead bought VTI, which is the Vanguard's total stock

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Speaker 1: market ETF. And they're like cousins, yeah, or almost like

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Speaker 1: siblings from a different other. And in the eyes of

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Speaker 1: the irs, they are substantially different enough that you can

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Speaker 1: completely avoid the wash sale rules. So like that's the

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Speaker 1: whole point of going with something that's substantially different is

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Speaker 1: because wash sale rule states that were you to sell

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Speaker 1: something and if you were to rebuy that within thirty days,

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Speaker 1: oh guess what, you don't get to deduct those losses anymore.

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Speaker 1: But you don't want that time out of the market

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Speaker 1: of waiting thirty days. So instead what you do you

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Speaker 1: buy something a little bit different, but from a performance standpoint,

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Speaker 1: you are often looking at something that for most investors

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Speaker 1: is pretty dang identical funds that correlate in a lot

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Speaker 1: of ways. Yeah, exactly, Yeah, but that's so that example

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Speaker 1: you gave, like that is how it would practically look

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Speaker 1: for someone who is specifically in the wealth building stage

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Speaker 1: of their life, right, who isn't selling many of their investments,

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Speaker 1: specifically within a brokerage account. But for an investor who

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Speaker 1: might be let's say in the draw down stage of

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Speaker 1: their investments, theoretically tax lost harvesting could save you hundreds

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Speaker 1: of thousands of dollars, right, like or like an infinite

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Speaker 1: not an infinite a mount I guess, like even millions

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Speaker 1: of dollars. So imagine you were kind of talking about

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Speaker 1: like a baller investor earlier. Imagine there is such a

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Speaker 1: person in this Let's say they have a fund that's

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Speaker 1: up nine hundred thousand dollars. Let's say he sells it. Well,

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Speaker 1: he's gonna owe a ton in taxes on those gains.

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Speaker 1: But then Let's say there's another investor who has the

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Speaker 1: same fund that's up nine hundred thousand dollars, she sells it,

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Speaker 1: but she also sells a fund that happens to be

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Speaker 1: down let's say eight hundred thousand dollars. Well, she's gonna

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Speaker 1: owe a lot less in taxes. She's only gonna owe

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Speaker 1: on the one hundred thousand dollars in gains. Because of

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Speaker 1: tax loss harvesting, she's able to apply that drawdown of

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Speaker 1: eight hundred thousand to that gain of nine hundred, netting

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Speaker 1: one hundred thousand dollars. So, for multiple reasons, that's less

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Speaker 1: likely to be the case for most folks, but it

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Speaker 1: is technically possible for this to be a massive way

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Speaker 1: for in particular high net worth individuals who have a

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Speaker 1: lot of money, specifically in progridge accounts, to avoid significant

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Speaker 1: amounts of tax I think it's.

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Speaker 2: Important to mention that this is kind of like a

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Speaker 2: maybe not a black belt move. But if you are

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Speaker 2: a novice investor and you're like, oh, I'm going to

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Speaker 2: read up everything on tax loss harvesting and I'm gonna

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Speaker 2: try to use this to my advantage to save on taxes, again,

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Speaker 2: you might be short sighted, and there's a chance that

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Speaker 2: you can screw this maneuver up in a way that

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Speaker 2: actually harms your future investing abilities. Right, So you've got

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Speaker 2: to be careful when you're attempting to implement kind of

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Speaker 2: like a pro level move when you're still a novice,

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Speaker 2: and so it just kind of want to put that

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Speaker 2: warning out there. One cool thing that we haven't talked

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Speaker 2: about much but Betterment, which is our favorite Roboa advising platform.

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Speaker 2: It's also not something we talked about a ton, but

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Speaker 2: we really do like what Betterment does, and their fees

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Speaker 2: are incredibly low given what they offer. Well, Betterment has

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Speaker 2: a tax loss harvesting plus strategy, so if you do

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Speaker 2: have significant amounts of money in a taxable brokerage account,

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Speaker 2: Betterment's algorithm can actually do some tax loss harvesting on

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Speaker 2: your behalf without you really having to know what you're doing.

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Speaker 2: You can just kind of trust them to handle that

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Speaker 2: and basically save you money on when it comes to

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Speaker 2: your taxes most years because they're able to do this

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Speaker 2: automatically and do this kind of avoid the wash sale rule,

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Speaker 2: and they're able to buy a like kind investment when

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Speaker 2: the market's down basically thanks to their superior technology. So

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Speaker 2: that's that's kind of cool. If you're saying, oh, I

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Speaker 2: want to get get in on some of that tax

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Speaker 2: loss harvesting, that's actually been on kind of my radar

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Speaker 2: right as I've as I'm looking into doing more in

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Speaker 2: my broke taxable brokerage account, I'm like, oh, maybe betterment's

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Speaker 2: actually the best place for me to have that, even

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Speaker 2: better than a fidelity or a Vanguard because of that

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Speaker 2: extra added perk. Again, like for most investors, it takes

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Speaker 2: a lot of work to completely even just max out

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Speaker 2: your tax advantaged accounts first, and so really our biggest

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Speaker 2: scripe about tax loss harvesting is that it can muddy

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Speaker 2: the waters and it can steer and attention away from

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Speaker 2: the more favorable accounts that they should have been investing

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Speaker 2: in or like.

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Speaker 1: That initial eighty percent. Yeah, instead folks are focused on

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Speaker 1: like what is this exotic maneuver? The YEA one is like, well,

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Speaker 1: that is something that is good to know about, but

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Speaker 1: are you at that level?

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Speaker 2: It can cause you to sell an investment that is

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Speaker 2: down temporarily where you're saying, and it can change your

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Speaker 2: investing strategy based on trying to get a tax break

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Speaker 2: and that's not how you want to use it either. Like,

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Speaker 2: just because your TESTLA stock is down, you could sell

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Speaker 2: it and buy General Motors, right, but you're like they're

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Speaker 2: very different sorts of companies and is that the best

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Speaker 2: move for you? Well, don't do it just because of

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Speaker 2: the tax break that you might be able to achieve.

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Speaker 1: That's right, But we've got plenty more to get to

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Speaker 1: during this episode. We're going to talk about authorized users,

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Speaker 1: We're going to talk about five twenty nine accounts. We'll

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Speaker 1: talk about all that more right after this our Matt

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Speaker 1: We're back.

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Speaker 2: Are still taking listener questions, and this next one comes

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Speaker 2: from a listener who wants to upgrade his home.

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Speaker 4: Hey, guys, I'm a big fan of the show. I

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Speaker 4: always love listening to you guys and learn about all

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Speaker 4: the money apps. My question is I have a mobile

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Speaker 4: home that I bought for six thousand, the land for

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Speaker 4: eighty five hundred and about five thousand dollars worth of renovation,

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Speaker 4: so twenty grand total. The house is worth fifty three thousand,

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Speaker 4: so I got equity immediately. But my question is for

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Speaker 4: my next house, that one at actual brick house, would

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Speaker 4: it be better to establish a home equity line of credit,

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Speaker 4: get a loan with my equity to put a down

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Speaker 4: payment on the next house, or should I go ahead

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Speaker 4: and pay this house off. I can do that within

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Speaker 4: a year, pay this trailer house off, save the twenty

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Speaker 4: percent down, and then do it that way.

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Speaker 1: I really appreciate it. Answer all right, And he didn't

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Speaker 1: mention it. But that's actually from James. We know that

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Speaker 1: because that's what it said on his email. But James

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Speaker 1: got to mention his name. They're at the beginning. But James, dude,

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Speaker 1: you paid twenty thousand dollars for a home that is

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Speaker 1: now worth fifty three thousand dollars. It sounds like it

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Speaker 1: was almost like an instant equity gain that he was

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Speaker 1: able to realize. They're nicely done and depending on I

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Speaker 1: don't know how long he's he's owned it. Did you

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Speaker 1: say how long? I don't think he did, but it didn't.

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Speaker 1: Like the way he's talking about it, it does not

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Speaker 1: sound like he's had it for too long.

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Speaker 2: That happened to really a lot of folks who bought

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Speaker 2: twenty nineteen, twenty twenty. It's like, pretty soon overnight your

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Speaker 2: home was worth quite a bit more than what you

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Speaker 2: bought it for.

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Speaker 1: Which is which is a nice feeling.

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Speaker 2: You're you don't necessarily want to tap the equity, but

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Speaker 2: it's also one of those things where it nice.

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Speaker 1: To know that it's there. Yeah, exactly's nice to know. Well,

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Speaker 1: and when the time comes for him to sell it,

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Speaker 1: which we'll get to. But for an individual, two hundred

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Speaker 1: fifty thousand dollars of gains are not going to be

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Speaker 1: subject to tax, assuming this was your primary residence, James,

433
00:19:57,160 --> 00:19:59,680
Speaker 1: just like the standard rules that apply to a traditional

434
00:20:00,040 --> 00:20:02,600
Speaker 1: I don't what do you call it a traditional single family

435
00:20:02,600 --> 00:20:04,600
Speaker 1: home as opposed to a mobile home, But I do

436
00:20:04,640 --> 00:20:06,760
Speaker 1: love that you are working to move from a mobile

437
00:20:06,760 --> 00:20:10,600
Speaker 1: home to a traditional single family I think most stats

438
00:20:10,600 --> 00:20:14,200
Speaker 1: show that mobile homes don't appreciate as quickly as single

439
00:20:14,240 --> 00:20:16,679
Speaker 1: family homes Doah, so move up the property ladder.

440
00:20:16,680 --> 00:20:18,879
Speaker 2: I think is it's not a bad goal here for

441
00:20:18,960 --> 00:20:21,280
Speaker 2: jameson and it sounds like he's done his financial due

442
00:20:21,280 --> 00:20:22,440
Speaker 2: diligence to pull it off.

443
00:20:22,480 --> 00:20:25,160
Speaker 1: But should he get a he lock because he does

444
00:20:25,200 --> 00:20:28,040
Speaker 1: have that equity there? Should he tap the equity within

445
00:20:28,160 --> 00:20:30,720
Speaker 1: that home in order to help you to finance the

446
00:20:30,760 --> 00:20:35,240
Speaker 1: next one? That's the question, and the TLDR is probably not.

447
00:20:35,880 --> 00:20:38,639
Speaker 1: He would rather, we would rather you not take the

448
00:20:38,640 --> 00:20:40,640
Speaker 1: approach that you mentioned where you are using a helock

449
00:20:40,680 --> 00:20:41,719
Speaker 1: in order to tap that equity.

450
00:20:41,800 --> 00:20:44,800
Speaker 2: Yeah, exactly. The latter approach that you mentioned is a

451
00:20:44,840 --> 00:20:47,680
Speaker 2: better approach. It's a little more conservative, but it leaves

452
00:20:47,760 --> 00:20:51,240
Speaker 2: you in a less vulnerable position and just protects you,

453
00:20:51,280 --> 00:20:54,480
Speaker 2: I would say, protect your finances. And let's discuss why

454
00:20:54,560 --> 00:20:56,240
Speaker 2: just a little bit mad he lock rates they're not

455
00:20:56,320 --> 00:20:58,760
Speaker 2: awesome right now. We're talking nine to ten percent these days.

456
00:20:58,760 --> 00:21:00,920
Speaker 2: I looked up our local credit union to see, oh,

457
00:21:00,960 --> 00:21:03,240
Speaker 2: what sort of rates are they offering on helocks. You know,

458
00:21:03,280 --> 00:21:05,719
Speaker 2: it depends on the specifics, but and it depends on

459
00:21:05,760 --> 00:21:08,280
Speaker 2: your credit score too, of course, but we could be

460
00:21:08,320 --> 00:21:12,240
Speaker 2: talking easily double digits for for helocks at and that's

461
00:21:12,240 --> 00:21:14,399
Speaker 2: at a credit union, So imagine kind of what some

462
00:21:14,440 --> 00:21:16,400
Speaker 2: of the crummier banks are offering and stuff like that

463
00:21:16,440 --> 00:21:19,800
Speaker 2: on helocks. Probably not very good. That's a far cry

464
00:21:19,920 --> 00:21:21,919
Speaker 2: from where we were just a few years ago, when

465
00:21:21,960 --> 00:21:26,080
Speaker 2: people are getting those sweet, delicious, candy like helocks that

466
00:21:26,200 --> 00:21:29,000
Speaker 2: were in the three ish percent range. Right and we've

467
00:21:29,040 --> 00:21:31,600
Speaker 2: just heard way too many horror stories recently of people

468
00:21:31,600 --> 00:21:34,720
Speaker 2: who tap their home equity via a helock homemke we

469
00:21:34,760 --> 00:21:36,199
Speaker 2: line of credit, again by the way, which comes with

470
00:21:36,240 --> 00:21:38,760
Speaker 2: a variable interest rate. Unlike a home equity loan where

471
00:21:38,800 --> 00:21:40,400
Speaker 2: you lock in that interest rate for a certain period

472
00:21:40,400 --> 00:21:42,439
Speaker 2: of time. The home equity line of credit and that

473
00:21:42,560 --> 00:21:46,119
Speaker 2: rate can of course change on a monthly basis, which

474
00:21:46,400 --> 00:21:49,040
Speaker 2: in an era of rapidly rising interest rates like we've

475
00:21:49,080 --> 00:21:51,840
Speaker 2: been in, strikes fear into your heart right as a borrower,

476
00:21:52,080 --> 00:21:54,920
Speaker 2: like kind of scary to be like, Oh, I'm locking

477
00:21:55,000 --> 00:21:56,480
Speaker 2: in this thing, I'm going to get I'm going to

478
00:21:56,560 --> 00:21:59,720
Speaker 2: make maybe make a bathroom renovation or something like that.

479
00:22:00,000 --> 00:22:01,760
Speaker 2: I would try to pay the selock off, you know,

480
00:22:01,800 --> 00:22:03,520
Speaker 2: within two and a half years, three years or something

481
00:22:03,520 --> 00:22:05,720
Speaker 2: like that. Well, as interest rates rise, it's going to

482
00:22:06,240 --> 00:22:08,840
Speaker 2: mean more money out of your pocket and probably a

483
00:22:08,880 --> 00:22:12,040
Speaker 2: longer payback period, which sucks. And so yeah, I'm not

484
00:22:12,040 --> 00:22:13,800
Speaker 2: going to say that taking money out of home equity

485
00:22:13,840 --> 00:22:15,800
Speaker 2: is a complete no go and then it doesn't make

486
00:22:15,840 --> 00:22:18,359
Speaker 2: sense for anyone ever or anything like that, but it

487
00:22:18,400 --> 00:22:20,760
Speaker 2: definitely makes sense in far fewer cases. Given the current

488
00:22:20,800 --> 00:22:23,520
Speaker 2: financial climate we find ourselves in. We're always in favor

489
00:22:23,560 --> 00:22:26,080
Speaker 2: of homeowners having a home equity lineup credit at their

490
00:22:26,080 --> 00:22:30,360
Speaker 2: disposal kind of like a backup emergency fund. But tapping

491
00:22:30,440 --> 00:22:33,600
Speaker 2: your home equity is really a good idea. We'd rather

492
00:22:33,640 --> 00:22:35,560
Speaker 2: see you take a little more time actually to make

493
00:22:35,560 --> 00:22:38,280
Speaker 2: that leap to this brick house that you're wanting, instead

494
00:22:38,280 --> 00:22:41,880
Speaker 2: of taking out additional debt, especially at these higher interest

495
00:22:41,960 --> 00:22:45,640
Speaker 2: rates that could continue to go up, and that kind

496
00:22:45,640 --> 00:22:48,199
Speaker 2: of debt, it really really could haunt you actually in

497
00:22:48,240 --> 00:22:51,200
Speaker 2: the end if you're trying to accelerate that purchase by

498
00:22:51,200 --> 00:22:53,560
Speaker 2: taking on my semi nefarious debt.

499
00:22:53,600 --> 00:22:56,320
Speaker 1: Really yeah, yeah, just saving up the old fashioned way,

500
00:22:56,440 --> 00:22:59,760
Speaker 1: the cash in twenty percent down for a down payment.

501
00:23:00,119 --> 00:23:02,639
Speaker 1: That is a tried and true method of home buying.

502
00:23:02,920 --> 00:23:05,320
Speaker 1: It's certainly going to take longer, got to have some patience,

503
00:23:05,359 --> 00:23:07,720
Speaker 1: but that patience is going to pay off in so

504
00:23:07,840 --> 00:23:10,560
Speaker 1: many ways. Like there is a reason why twenty percent

505
00:23:10,680 --> 00:23:12,719
Speaker 1: is the magical number in order to get the best rate,

506
00:23:12,760 --> 00:23:15,159
Speaker 1: in order to get the best terms, because it shows

507
00:23:15,200 --> 00:23:17,800
Speaker 1: the bank, it shows the credit union that you are

508
00:23:17,840 --> 00:23:20,399
Speaker 1: putting enough skin in the game, right like you are,

509
00:23:21,280 --> 00:23:23,000
Speaker 1: like you're a partner with them. This is something that

510
00:23:23,040 --> 00:23:24,800
Speaker 1: y'all are working towards together. They want to see you

511
00:23:24,840 --> 00:23:28,240
Speaker 1: succeed and you're going in on that purchase together instead

512
00:23:28,280 --> 00:23:30,600
Speaker 1: of just completely relying on them to give you all

513
00:23:30,640 --> 00:23:33,400
Speaker 1: the money that you'll possibly need in order to pull

514
00:23:33,400 --> 00:23:35,879
Speaker 1: it off. Yeah, and on top of that, there are

515
00:23:35,920 --> 00:23:39,640
Speaker 1: some additional benefits too, like the ability to avoid additional

516
00:23:39,640 --> 00:23:42,800
Speaker 1: costs like PMI, which can increase your monthly payment for

517
00:23:43,200 --> 00:23:46,560
Speaker 1: years to come. And you'll have a smaller principal balance,

518
00:23:46,920 --> 00:23:49,280
Speaker 1: which is even more important these days given the higher

519
00:23:49,359 --> 00:23:51,320
Speaker 1: rates out there, and given too that you are no

520
00:23:51,359 --> 00:23:54,080
Speaker 1: longer going to be making payments on your current home,

521
00:23:54,160 --> 00:23:56,040
Speaker 1: and I think you're going to be able to quickly

522
00:23:56,080 --> 00:23:58,840
Speaker 1: find yourself with that twenty percent down in order to

523
00:23:58,880 --> 00:24:01,240
Speaker 1: purchase that home the next place that you want to

524
00:24:01,240 --> 00:24:04,480
Speaker 1: move into, potentially even before selling the current place that

525
00:24:04,480 --> 00:24:06,480
Speaker 1: you're in. It's not something he even asked about too,

526
00:24:06,480 --> 00:24:08,719
Speaker 1: but uh, yeah, puts you in a really strong position.

527
00:24:08,760 --> 00:24:10,520
Speaker 1: It puts you in a crazy strong position too. And

528
00:24:10,680 --> 00:24:13,439
Speaker 1: the ability, James, you didn't even mention this, but if

529
00:24:13,480 --> 00:24:16,800
Speaker 1: you wanted to potentially get into renting that property, that's

530
00:24:16,840 --> 00:24:18,879
Speaker 1: something that you could entertain as well, with the ability

531
00:24:18,880 --> 00:24:20,359
Speaker 1: for you to hang onto that for a couple of years.

532
00:24:20,400 --> 00:24:23,280
Speaker 1: If you're going to be staying local and hopefully seeing

533
00:24:23,320 --> 00:24:25,600
Speaker 1: the value of that continuing to rise. I don't think

534
00:24:25,600 --> 00:24:29,040
Speaker 1: I would hang onto a long term again because of

535
00:24:29,160 --> 00:24:33,400
Speaker 1: home appreciation and how it's not quite as steep of

536
00:24:33,440 --> 00:24:35,640
Speaker 1: a return like you would see with a traditional single

537
00:24:35,640 --> 00:24:38,239
Speaker 1: family home. But man, I think I would totally hang

538
00:24:38,280 --> 00:24:40,000
Speaker 1: onto that for at least a couple of years, give

539
00:24:40,040 --> 00:24:42,399
Speaker 1: it a shot, and then sell it without having to

540
00:24:42,520 --> 00:24:46,000
Speaker 1: again having to pay those capital gains. You're at least trying,

541
00:24:46,040 --> 00:24:47,840
Speaker 1: like testing up the waters a little bit much.

542
00:24:48,080 --> 00:24:49,440
Speaker 2: If this is going to work for you so much,

543
00:24:49,440 --> 00:24:51,600
Speaker 2: that comes down to whether or not you feel compelled

544
00:24:51,720 --> 00:24:53,439
Speaker 2: or interested being a landlord. A lot of people say

545
00:24:53,520 --> 00:24:55,359
Speaker 2: that's a part time job I don't care about, or

546
00:24:55,359 --> 00:24:56,920
Speaker 2: I don't want don't want to do it, yeah, or

547
00:24:56,920 --> 00:24:59,800
Speaker 2: maybe you're minimizing your career potential and your day job

548
00:25:00,160 --> 00:25:02,120
Speaker 2: by kind of trying to do this on the side.

549
00:25:02,160 --> 00:25:04,760
Speaker 2: But if it does interest you, if it's like, oh,

550
00:25:04,800 --> 00:25:06,720
Speaker 2: I've thought about doing that and kind of kind of

551
00:25:06,760 --> 00:25:08,960
Speaker 2: having a couple rental properties someday, maybe that's a maybe

552
00:25:08,960 --> 00:25:11,040
Speaker 2: that's a dream of mine. Well, if you can save

553
00:25:11,119 --> 00:25:12,719
Speaker 2: up twenty percent for the next property and you can

554
00:25:12,760 --> 00:25:14,960
Speaker 2: hold on to the one that you've currently got. That's

555
00:25:15,000 --> 00:25:17,359
Speaker 2: a great strategy to help get you there. It's I

556
00:25:17,400 --> 00:25:19,440
Speaker 2: think it's the easiest way, Matt, for most people to

557
00:25:19,440 --> 00:25:21,840
Speaker 2: get into. It's either house hacking or it's that those

558
00:25:21,840 --> 00:25:24,760
Speaker 2: are the best two avenues to get into owning some

559
00:25:24,800 --> 00:25:27,320
Speaker 2: sort of rental real estate. And maybe the next best

560
00:25:27,359 --> 00:25:29,840
Speaker 2: is like an ADU accessory dwelling unit, which is kind

561
00:25:29,840 --> 00:25:31,320
Speaker 2: of like house hacking, So maybe we'll put it in

562
00:25:31,320 --> 00:25:34,160
Speaker 2: that category. But I love that as a way. That's

563
00:25:34,240 --> 00:25:36,280
Speaker 2: exactly how I got my first rental property. Was like

564
00:25:36,320 --> 00:25:37,639
Speaker 2: the home that I lived in for a while, a

565
00:25:37,680 --> 00:25:39,840
Speaker 2: house hacked it, rented out of room, and then guess what,

566
00:25:40,080 --> 00:25:42,600
Speaker 2: I moved out, rented that whole thing out, moved into

567
00:25:42,640 --> 00:25:45,159
Speaker 2: another house, and I did that again. And that's a

568
00:25:45,160 --> 00:25:47,240
Speaker 2: great that's a tried and true method I think that

569
00:25:47,240 --> 00:25:50,000
Speaker 2: people can follow. It just makes it easier to get

570
00:25:50,000 --> 00:25:52,159
Speaker 2: the financing you have to put less down, and it

571
00:25:52,160 --> 00:25:53,879
Speaker 2: helps you to build up that property portfolio.

572
00:25:53,960 --> 00:25:55,840
Speaker 1: That's right, So, James, we hope that gets you pointed

573
00:25:55,840 --> 00:25:58,159
Speaker 1: in the right direction. Joel Y's here from our next listener,

574
00:25:58,200 --> 00:26:01,800
Speaker 1: who is helping a loved one with their personal finances.

575
00:26:02,040 --> 00:26:03,920
Speaker 5: Hi, Matt and Joel My name is Alex and I'm

576
00:26:03,920 --> 00:26:06,159
Speaker 5: calling from Western New York. I've been listening to the

577
00:26:06,200 --> 00:26:08,919
Speaker 5: podcast for some time now and have loved the content

578
00:26:08,960 --> 00:26:11,919
Speaker 5: that you've shared with us. I'd love to get your

579
00:26:12,119 --> 00:26:15,840
Speaker 5: guys's opinion on a question I have regarding an authorized user.

580
00:26:16,960 --> 00:26:19,960
Speaker 5: I'm currently trying to help a family member get back

581
00:26:19,960 --> 00:26:23,040
Speaker 5: on their feet after their credit score had tanked to

582
00:26:23,160 --> 00:26:27,159
Speaker 5: about mid five hundreds due to medical debt. We have

583
00:26:27,200 --> 00:26:30,239
Speaker 5: tried to get the bills from their medical office in

584
00:26:30,320 --> 00:26:33,000
Speaker 5: order to verify them and move forward, but they have

585
00:26:33,040 --> 00:26:35,760
Speaker 5: been less than forthcoming, so now we're looking for a

586
00:26:35,800 --> 00:26:40,240
Speaker 5: temporary solution. I'm about to pay off all my credit

587
00:26:40,280 --> 00:26:42,560
Speaker 5: card debt, which would bring me up to about an

588
00:26:42,600 --> 00:26:47,080
Speaker 5: eight hundred credit score. I'm wondering if I make them

589
00:26:47,160 --> 00:26:49,719
Speaker 5: an authorized user, would that be enough to help them

590
00:26:49,800 --> 00:26:53,000
Speaker 5: qualify for a decent apartment or better yet, by their

591
00:26:53,040 --> 00:26:57,679
Speaker 5: first home. They're looking to move next year, So do

592
00:26:57,720 --> 00:27:01,480
Speaker 5: you think making them an authorized user will be enough

593
00:27:01,520 --> 00:27:06,480
Speaker 5: to help them well? Doing so effect my score? And

594
00:27:06,520 --> 00:27:09,560
Speaker 5: do you have any advice or suggestions for our situation?

595
00:27:10,600 --> 00:27:12,280
Speaker 5: Thanks again, guys, and stay safe.

596
00:27:13,320 --> 00:27:16,119
Speaker 2: All right, Matt, there's a lot in this question that

597
00:27:16,200 --> 00:27:18,479
Speaker 2: we have to talk about. Right, So Alex, thank you,

598
00:27:18,520 --> 00:27:20,720
Speaker 2: thank you for listening, thank you for sending this question

599
00:27:20,760 --> 00:27:23,919
Speaker 2: in our way, because at first it on its face

600
00:27:24,000 --> 00:27:26,640
Speaker 2: it appears like a simple authorized user question, but there's

601
00:27:26,680 --> 00:27:27,679
Speaker 2: actually a whole lot.

602
00:27:27,560 --> 00:27:29,719
Speaker 1: There's a few additional layers, yes, to discuss.

603
00:27:29,800 --> 00:27:31,960
Speaker 2: It's like an Onion's question, a little bit in a

604
00:27:32,000 --> 00:27:33,479
Speaker 2: good way, right, And there's a lot of time so

605
00:27:33,600 --> 00:27:36,480
Speaker 2: much of personal finances. Yes, one thing leads to another,

606
00:27:36,520 --> 00:27:38,680
Speaker 2: and when you want to help somebody out, it's admirable,

607
00:27:38,840 --> 00:27:40,560
Speaker 2: but you got to know how to go about doing

608
00:27:40,560 --> 00:27:42,880
Speaker 2: it the right way, so you don't throw yourself under

609
00:27:42,920 --> 00:27:45,119
Speaker 2: the bus while you're trying to do good. Right, And

610
00:27:45,200 --> 00:27:46,880
Speaker 2: so I would say, Alex, is the fact that you're

611
00:27:46,920 --> 00:27:49,320
Speaker 2: trying to help one of your family members out, that's admirable,

612
00:27:49,359 --> 00:27:50,040
Speaker 2: Like that's a good thing.

613
00:27:50,080 --> 00:27:51,240
Speaker 1: We should all strive to do that.

614
00:27:51,480 --> 00:27:54,560
Speaker 2: And medical debt is clearly a heinous problem in our

615
00:27:54,600 --> 00:27:58,200
Speaker 2: society these days. Fortunately, new rules ensure the medical debt

616
00:27:58,240 --> 00:28:00,960
Speaker 2: of less than five hundred bucks doesn't get to the bureaus,

617
00:28:01,280 --> 00:28:03,399
Speaker 2: which has been actually massively beneficial to a lot of

618
00:28:03,400 --> 00:28:05,760
Speaker 2: people helping raise their score taking some of those things

619
00:28:05,800 --> 00:28:09,080
Speaker 2: off of credit reports. But those larger bills, they still

620
00:28:09,119 --> 00:28:11,440
Speaker 2: get reported. Right if it's above that five hundred dollars level,

621
00:28:11,800 --> 00:28:13,720
Speaker 2: those are still going to hit the report, which then

622
00:28:13,840 --> 00:28:18,000
Speaker 2: impact the score. And so given how porous healthcare coverage

623
00:28:18,280 --> 00:28:20,600
Speaker 2: can be, there are still millions of folks similar to

624
00:28:20,640 --> 00:28:22,880
Speaker 2: what your family member is dealing with. And I would

625
00:28:22,920 --> 00:28:24,639
Speaker 2: just suggest please do go back and listen to our

626
00:28:24,640 --> 00:28:28,000
Speaker 2: episode with doctor Virgie, which we did in seven sixteen,

627
00:28:28,480 --> 00:28:31,639
Speaker 2: because you know, she offered a lot of information about

628
00:28:31,640 --> 00:28:35,080
Speaker 2: how to fight back against medical debt and how to

629
00:28:35,160 --> 00:28:37,320
Speaker 2: get some of that wiped off of your credit report.

630
00:28:37,320 --> 00:28:39,479
Speaker 2: At the same time, hopefully some of that infok can

631
00:28:39,520 --> 00:28:41,719
Speaker 2: help you challenge some of the medical bills that are

632
00:28:41,720 --> 00:28:44,360
Speaker 2: coming in and get a reduction or potentially full forgiveness

633
00:28:44,520 --> 00:28:47,680
Speaker 2: of the total amount owed. I think that I wish

634
00:28:47,680 --> 00:28:49,520
Speaker 2: it weren't the case, Matt, that we had to have

635
00:28:49,640 --> 00:28:52,800
Speaker 2: doctor Virgie's tactics. I wish wish the system was better

636
00:28:53,040 --> 00:28:57,160
Speaker 2: at making sure people didn't get relegated to second class

637
00:28:57,200 --> 00:29:00,400
Speaker 2: status as citizens because of some sort of adverse medical event.

638
00:29:00,640 --> 00:29:03,560
Speaker 2: But sadly, we have to know these tactics to fight

639
00:29:03,600 --> 00:29:05,840
Speaker 2: back if we're not going to be kind of victims

640
00:29:05,840 --> 00:29:08,240
Speaker 2: of a credit scoring model that that isn't really all

641
00:29:08,240 --> 00:29:09,200
Speaker 2: that great, as.

642
00:29:09,040 --> 00:29:13,120
Speaker 1: Well as the medical billing complex right that exists out there.

643
00:29:13,400 --> 00:29:15,959
Speaker 1: But trying to help this individual by adding them as

644
00:29:15,960 --> 00:29:18,720
Speaker 1: an authorized user, is that going to do the trick? Well,

645
00:29:18,760 --> 00:29:20,800
Speaker 1: it'll help, but it's not going to be able to

646
00:29:20,800 --> 00:29:25,200
Speaker 1: overcome just a mountain of negative information on their credit report.

647
00:29:25,280 --> 00:29:27,560
Speaker 1: If that's what we're talking about. If your score is

648
00:29:27,560 --> 00:29:30,920
Speaker 1: in the five hundreds, man, improvements like seeing their score

649
00:29:31,080 --> 00:29:36,240
Speaker 1: get to a level that most creditors or lenders or landlords.

650
00:29:36,280 --> 00:29:37,680
Speaker 1: We'll talk about that here in a second. What they

651
00:29:37,760 --> 00:29:41,120
Speaker 1: see as decent is going to take some time. And

652
00:29:41,200 --> 00:29:43,400
Speaker 1: so the most important thing is going to be to

653
00:29:43,440 --> 00:29:46,640
Speaker 1: get that negative information off of the credit report. And

654
00:29:46,720 --> 00:29:50,040
Speaker 1: so what would recommend is to pull their credit report

655
00:29:50,040 --> 00:29:51,840
Speaker 1: from Annual Credit report dot com.

656
00:29:51,600 --> 00:29:55,000
Speaker 2: Totally this like for them, like help them understand it, right,

657
00:29:55,000 --> 00:29:57,880
Speaker 2: You're going to walk through this, walk them through this

658
00:29:58,080 --> 00:29:59,560
Speaker 2: sort of like we're talking about the James, Like you

659
00:29:59,640 --> 00:30:01,800
Speaker 2: are now on a team and y'all are working together. Yeah,

660
00:30:01,840 --> 00:30:05,239
Speaker 2: but challenge anything that isn't accurate and again, see if

661
00:30:05,240 --> 00:30:07,800
Speaker 2: they can get that medical debt forgiven, because that's going

662
00:30:07,880 --> 00:30:09,760
Speaker 2: to have a massive impact as well to have that

663
00:30:09,800 --> 00:30:12,440
Speaker 2: completely wiped. Yeah, the truth is they might qualify for

664
00:30:12,480 --> 00:30:14,680
Speaker 2: full forgiveness and they just don't know it, right, because

665
00:30:15,080 --> 00:30:19,000
Speaker 2: a massive chunk of Americans. Because of the way these

666
00:30:19,000 --> 00:30:22,800
Speaker 2: nonprofit hospitals work and the forgiveness abilities for people who

667
00:30:22,800 --> 00:30:25,560
Speaker 2: don't make enough money, they don't necessarily advertise it, right,

668
00:30:25,600 --> 00:30:27,520
Speaker 2: and they don't tell people who come in there, Hey,

669
00:30:27,520 --> 00:30:28,880
Speaker 2: guess what how much money do you make?

670
00:30:28,920 --> 00:30:29,080
Speaker 5: Oh?

671
00:30:29,080 --> 00:30:31,440
Speaker 2: Wait, oh really, we'll apply right here and you'll get

672
00:30:31,480 --> 00:30:33,280
Speaker 2: full forgiveness for your this medical bill. It won't cost

673
00:30:33,280 --> 00:30:35,320
Speaker 2: you a time. They don't tell people that. But the

674
00:30:35,320 --> 00:30:38,440
Speaker 2: truth is forgiveness exists for a decent chunk of people

675
00:30:38,640 --> 00:30:41,320
Speaker 2: who have a medical debt, who rack up medical debt.

676
00:30:41,520 --> 00:30:44,320
Speaker 2: But Matt, yeah, that is the first step. And after that,

677
00:30:44,600 --> 00:30:46,760
Speaker 2: you know, adding them as an authorized user because of

678
00:30:46,880 --> 00:30:49,560
Speaker 2: how well you handle credit, Well, that'll help, right because

679
00:30:49,720 --> 00:30:53,640
Speaker 2: they'll get like a little bump from having your credit

680
00:30:53,680 --> 00:30:56,680
Speaker 2: and information showing up on their credit file. But I'd

681
00:30:56,720 --> 00:30:59,040
Speaker 2: have them look into more than just that. I would say,

682
00:30:59,080 --> 00:31:01,800
Speaker 2: look into a service line self as well, which is

683
00:31:02,200 --> 00:31:04,240
Speaker 2: kind of cool. It used to be called self lender.

684
00:31:04,480 --> 00:31:06,800
Speaker 2: It's basically this way where where they if they have

685
00:31:06,880 --> 00:31:08,680
Speaker 2: a certain amount of cash on hand, they can make

686
00:31:08,720 --> 00:31:11,200
Speaker 2: a loan to themselves and pay it through self. Self

687
00:31:11,200 --> 00:31:14,400
Speaker 2: reports those payments on their credit report, and that helps

688
00:31:14,440 --> 00:31:17,440
Speaker 2: people score significantly. I would just be taking like an

689
00:31:17,480 --> 00:31:20,240
Speaker 2: all of the above approach, because if I was attempting

690
00:31:20,280 --> 00:31:22,680
Speaker 2: to raise that score meaningfully in short order, I would

691
00:31:22,680 --> 00:31:25,120
Speaker 2: want the help of an authorized user from a family member,

692
00:31:25,160 --> 00:31:27,560
Speaker 2: which is which is awesome that one of those loans

693
00:31:27,560 --> 00:31:29,480
Speaker 2: through self. I would want to challenge those in accuracies.

694
00:31:29,480 --> 00:31:31,120
Speaker 2: I want to want to do all of the above,

695
00:31:31,360 --> 00:31:34,080
Speaker 2: and doing this credit builder loan via self it could

696
00:31:34,080 --> 00:31:36,160
Speaker 2: improve your score by something like thirty points over the

697
00:31:36,160 --> 00:31:38,040
Speaker 2: course of the next six months. So we are talking

698
00:31:38,040 --> 00:31:42,160
Speaker 2: about a significant improvement. But you really want to want

699
00:31:42,200 --> 00:31:44,480
Speaker 2: to do all of these things and help them see

700
00:31:44,480 --> 00:31:46,520
Speaker 2: the many ways in which they can benefit their score.

701
00:31:46,640 --> 00:31:48,320
Speaker 2: It's not just the one thing. And if you try

702
00:31:48,480 --> 00:31:51,480
Speaker 2: just the authorized user thing, you're probably gonna see a

703
00:31:51,560 --> 00:31:53,040
Speaker 2: little bump, but not nearly as much.

704
00:31:52,920 --> 00:31:54,720
Speaker 1: As you're hoping for. Yeah, it makes me think of

705
00:31:54,840 --> 00:31:56,880
Speaker 1: was it last week that we're talking about the experience

706
00:31:56,960 --> 00:31:59,760
Speaker 1: boost to oh yes, to your credit. I mean like

707
00:32:00,200 --> 00:32:02,520
Speaker 1: we're making fun of the savings account, or the debit card,

708
00:32:02,760 --> 00:32:04,920
Speaker 1: the smart money account. That's right, but again you have

709
00:32:05,000 --> 00:32:07,880
Speaker 1: access to that without having to open that account. That

710
00:32:08,000 --> 00:32:10,600
Speaker 1: is worth looking at, so you get the experience boost

711
00:32:10,840 --> 00:32:13,240
Speaker 1: as well as the alex boost. There's all of these

712
00:32:13,240 --> 00:32:16,280
Speaker 1: smile boosts along the way which could hopefully move the

713
00:32:16,320 --> 00:32:18,560
Speaker 1: needle in a significant way. Because you talked about this

714
00:32:18,760 --> 00:32:22,240
Speaker 1: family member wanting to potentially move, I think sometime next year,

715
00:32:22,520 --> 00:32:24,920
Speaker 1: if we're talking about renting, or even if we're talking

716
00:32:24,920 --> 00:32:27,960
Speaker 1: about buying, their credit score being in a healthier place

717
00:32:28,000 --> 00:32:30,360
Speaker 1: is going to be integral to them being able to

718
00:32:30,400 --> 00:32:33,160
Speaker 1: do either of those things, whether to buy or to rent,

719
00:32:33,440 --> 00:32:36,720
Speaker 1: because landlords and mortgage brokers they will both want to

720
00:32:36,760 --> 00:32:41,120
Speaker 1: see a decent score, and aside from just improving that

721
00:32:41,120 --> 00:32:44,600
Speaker 1: credit score, practically speaking, I think their other focus should

722
00:32:44,640 --> 00:32:46,800
Speaker 1: be to save up some more money to have that

723
00:32:46,880 --> 00:32:50,080
Speaker 1: on hand, because if you are talking about renting, well,

724
00:32:50,080 --> 00:32:53,520
Speaker 1: a landlord might ask for a higher security deposit because

725
00:32:53,640 --> 00:32:57,600
Speaker 1: of that lower credit score if it hasn't rebounded enough

726
00:32:57,720 --> 00:32:59,640
Speaker 1: by the time that they start looking for a place.

727
00:33:00,200 --> 00:33:03,520
Speaker 1: That's literally something I've done with some recent renters. They

728
00:33:04,360 --> 00:33:06,280
Speaker 1: had some hard times in their past when it came

729
00:33:06,320 --> 00:33:09,080
Speaker 1: to their ability to pay some debt. Both of their

730
00:33:09,080 --> 00:33:12,000
Speaker 1: credit scores were in a really rough place, but they

731
00:33:12,000 --> 00:33:13,840
Speaker 1: were super upfront about it and said, hey, this is

732
00:33:13,880 --> 00:33:16,160
Speaker 1: what we've had some of the challenges that we faced

733
00:33:16,160 --> 00:33:18,120
Speaker 1: in the past, this is what we're willing to do.

734
00:33:18,400 --> 00:33:21,640
Speaker 1: And we were totally able to negotiate a higher deposit

735
00:33:21,800 --> 00:33:24,200
Speaker 1: which allowed them to one percent to get the place

736
00:33:24,200 --> 00:33:26,760
Speaker 1: that they were excited about. And oftentimes that would not

737
00:33:26,840 --> 00:33:29,880
Speaker 1: have been the options been an option for especially like

738
00:33:30,040 --> 00:33:34,560
Speaker 1: I guess, a larger property management or an apartment complex,

739
00:33:35,280 --> 00:33:37,520
Speaker 1: and that provides you protection as well, right just in

740
00:33:37,560 --> 00:33:41,720
Speaker 1: case they haven't necessarily reformed some of their ways, so

741
00:33:41,800 --> 00:33:43,120
Speaker 1: they're not paying their bills on time, and they're not

742
00:33:43,120 --> 00:33:46,160
Speaker 1: paying their rent on time. Well, that additional security deposit

743
00:33:46,280 --> 00:33:48,040
Speaker 1: puts you in a better position and allows you to

744
00:33:48,080 --> 00:33:52,040
Speaker 1: accept a tenant that doesn't have as great of credit exactly.

745
00:33:52,080 --> 00:33:53,719
Speaker 1: And so that's when it comes to renting. But if

746
00:33:53,720 --> 00:33:56,360
Speaker 1: we're talking about buying, I would say, without knowing anything

747
00:33:56,400 --> 00:33:58,280
Speaker 1: else about their finances, I'm going to kind of go

748
00:33:58,320 --> 00:34:00,880
Speaker 1: out on a limb and say that for the near

749
00:34:00,960 --> 00:34:03,640
Speaker 1: term future is likely going to be their best bet

750
00:34:03,720 --> 00:34:07,600
Speaker 1: without taking on any additional undue risk by purchasing a home.

751
00:34:08,239 --> 00:34:10,839
Speaker 1: We don't want them to have very little on hand

752
00:34:10,880 --> 00:34:13,120
Speaker 1: to put down and to end up financing a home

753
00:34:13,160 --> 00:34:15,960
Speaker 1: at a higher interest rate than what they would need to.

754
00:34:16,160 --> 00:34:17,560
Speaker 1: So it sounds like like you said, and there might

755
00:34:17,600 --> 00:34:21,360
Speaker 1: be some more time in the coming years for reform

756
00:34:21,440 --> 00:34:24,360
Speaker 1: to happen. And once they are in a really strong

757
00:34:24,400 --> 00:34:26,839
Speaker 1: financial position, that's in your saving, like we were talking

758
00:34:26,880 --> 00:34:28,680
Speaker 1: about the chance, once you're saving up that solid twenty

759
00:34:28,680 --> 00:34:30,880
Speaker 1: percent down, that's when we want to see them starting

760
00:34:30,880 --> 00:34:32,400
Speaker 1: to see what's out there on the market.

761
00:34:32,480 --> 00:34:34,560
Speaker 2: Yeah, And I just want to say too, I think

762
00:34:34,600 --> 00:34:36,480
Speaker 2: this is kind of teaching your family member to fish,

763
00:34:36,520 --> 00:34:39,480
Speaker 2: as opposed to handing them fish. And so when you're

764
00:34:39,560 --> 00:34:40,880
Speaker 2: kind of saying, hey, this is kind of how the

765
00:34:40,880 --> 00:34:42,640
Speaker 2: credit scoring model works, and I'm willing to do this

766
00:34:42,680 --> 00:34:44,600
Speaker 2: one thing on your half. But if you do this, this,

767
00:34:44,680 --> 00:34:47,600
Speaker 2: and this, this will actually help you meaningfully improve your

768
00:34:47,600 --> 00:34:52,080
Speaker 2: score in not too too long, maybe six months to

769
00:34:52,120 --> 00:34:53,720
Speaker 2: a year, we should be able to see an improvement

770
00:34:53,760 --> 00:34:57,839
Speaker 2: of triple digits. And if we're taking all of these

771
00:34:57,840 --> 00:34:59,440
Speaker 2: steps and so, I think you can help teach them.

772
00:34:59,520 --> 00:35:01,960
Speaker 2: You can even take them to annual credit report dot

773
00:35:02,000 --> 00:35:03,719
Speaker 2: com and say this is how you pull the credit report,

774
00:35:03,719 --> 00:35:05,240
Speaker 2: and this is how you see if there's something inaccurate

775
00:35:05,239 --> 00:35:06,759
Speaker 2: on there, and this is how you reach out to

776
00:35:06,760 --> 00:35:08,759
Speaker 2: the hospital to see if there's any forgiveness for that bill.

777
00:35:08,960 --> 00:35:10,200
Speaker 2: But don't do it for them.

778
00:35:10,480 --> 00:35:12,120
Speaker 1: And this this can be you can take them directly

779
00:35:12,120 --> 00:35:14,200
Speaker 1: to the credit bureau location here in Atlanta. Is it

780
00:35:14,280 --> 00:35:18,600
Speaker 1: Equifax right on Peachtree. Yeah, if you go there in person,

781
00:35:18,800 --> 00:35:21,560
Speaker 1: it's like farm to table. But no, I don't think

782
00:35:21,560 --> 00:35:22,800
Speaker 1: they let you in. I don't think of it. You

783
00:35:22,800 --> 00:35:24,719
Speaker 1: can get it directly from the source, right, Yes, No,

784
00:35:24,760 --> 00:35:26,480
Speaker 1: it's definitely not. That's not how it works together. And

785
00:35:26,880 --> 00:35:27,880
Speaker 1: you've gotten to do it through the internet.

786
00:35:27,960 --> 00:35:31,200
Speaker 2: Their customer service is lacks of day's a clot best.

787
00:35:31,440 --> 00:35:33,759
Speaker 2: But yeah, there's there's so much that you can help

788
00:35:33,800 --> 00:35:36,360
Speaker 2: them figure out. Just make sure that this is a

789
00:35:36,440 --> 00:35:38,600
Speaker 2: learning process so they can continue to do these things

790
00:35:38,600 --> 00:35:40,960
Speaker 2: and work on their credit. It makes me think of

791
00:35:41,040 --> 00:35:43,719
Speaker 2: like a parent who does a kid's assignment for them

792
00:35:43,760 --> 00:35:44,839
Speaker 2: for school or something like that.

793
00:35:44,960 --> 00:35:46,200
Speaker 1: They don't do them any good.

794
00:35:46,280 --> 00:35:48,120
Speaker 2: No, they don't learn to buckle down because there's gonna

795
00:35:48,120 --> 00:35:50,000
Speaker 2: be many more assignments and you don't want to have

796
00:35:50,040 --> 00:35:52,680
Speaker 2: to be doing those assignments for them in perpetuity. It's

797
00:35:52,800 --> 00:35:54,160
Speaker 2: it's one of those things where it's like you have

798
00:35:54,239 --> 00:35:56,319
Speaker 2: to kind of stick with them through that hard time,

799
00:35:56,840 --> 00:35:59,040
Speaker 2: through the through the writer's block or whatever it is,

800
00:35:59,320 --> 00:36:01,520
Speaker 2: and kind of push them forward so they can have

801
00:36:01,560 --> 00:36:05,160
Speaker 2: success in future assignments as well. And last, but not least, Alex,

802
00:36:05,200 --> 00:36:06,759
Speaker 2: I just want to say congrats on paying off all

803
00:36:06,840 --> 00:36:07,799
Speaker 2: your credit card debt.

804
00:36:08,120 --> 00:36:08,520
Speaker 1: That's huge.

805
00:36:08,600 --> 00:36:10,319
Speaker 2: On what do you mention that we're thinking so much

806
00:36:10,320 --> 00:36:13,360
Speaker 2: about your family member's financial situation credit score?

807
00:36:13,400 --> 00:36:14,960
Speaker 1: It's got a score where she set up up in

808
00:36:15,000 --> 00:36:15,640
Speaker 1: the eight hundreds.

809
00:36:15,680 --> 00:36:18,360
Speaker 2: Yeah, that's super solid, amazing. I feel like this is

810
00:36:18,400 --> 00:36:21,640
Speaker 2: awesome worthy of celebration for you for sure, and of course,

811
00:36:21,640 --> 00:36:23,360
Speaker 2: as you know, it's not easy to get there, but

812
00:36:23,400 --> 00:36:25,279
Speaker 2: you made it happen. And your family member, I think

813
00:36:25,320 --> 00:36:27,279
Speaker 2: they can do the same. And I think that can

814
00:36:27,320 --> 00:36:30,719
Speaker 2: provide just hope and inspiration for that family member to say, hey, look,

815
00:36:30,760 --> 00:36:31,839
Speaker 2: I wasn't looking how far off come?

816
00:36:32,000 --> 00:36:33,920
Speaker 1: Yeah, I was kind of in a similar boat. And

817
00:36:34,160 --> 00:36:36,719
Speaker 1: by taking these dots, by listening to this podcast, it's

818
00:36:36,760 --> 00:36:38,319
Speaker 1: a little plug for the How to Money show.

819
00:36:38,400 --> 00:36:40,279
Speaker 2: Yeah, you should force them to listen to us three

820
00:36:40,320 --> 00:36:43,360
Speaker 2: days a week, but I think it could most definitely

821
00:36:43,400 --> 00:36:44,719
Speaker 2: improve their finances.

822
00:36:44,840 --> 00:36:48,040
Speaker 1: The fact that you're walking alongside them is incredible. But Joel,

823
00:36:48,080 --> 00:36:49,720
Speaker 1: we've got more to get to. We're going to discuss

824
00:36:50,080 --> 00:36:53,120
Speaker 1: paying for higher education. We'll get to that right after

825
00:36:53,239 --> 00:36:54,000
Speaker 1: this break.

826
00:37:02,239 --> 00:37:04,399
Speaker 2: All right, Matt, let's keep going. Let's get to our

827
00:37:04,480 --> 00:37:07,000
Speaker 2: Facebook question of the week. By the way, if you're

828
00:37:07,000 --> 00:37:08,640
Speaker 2: not a member of the how to Money Facebook group

829
00:37:08,719 --> 00:37:11,560
Speaker 2: and you're on Facebook regularly, it's the best part of

830
00:37:11,640 --> 00:37:13,799
Speaker 2: being on that social media site. I actually don't use

831
00:37:13,840 --> 00:37:16,719
Speaker 2: Facebook for anything else except Facebook Marketplace or the how

832
00:37:16,800 --> 00:37:19,759
Speaker 2: to Money Facebook the only two things I use it for,

833
00:37:20,040 --> 00:37:22,120
Speaker 2: so be sure to go check that out. It's how

834
00:37:22,120 --> 00:37:24,920
Speaker 2: the money listeners helping each other out. Eleven thousand people strong.

835
00:37:24,960 --> 00:37:27,400
Speaker 2: This question comes from Brandon, who says I need a

836
00:37:27,440 --> 00:37:29,560
Speaker 2: recommendation on places to open a five to twenty nine

837
00:37:29,560 --> 00:37:32,479
Speaker 2: account for a kid's college fund by current credit union

838
00:37:32,480 --> 00:37:35,640
Speaker 2: and investment services don't seem to offer it. Last week,

839
00:37:35,680 --> 00:37:37,360
Speaker 2: we actually talked about how much to contribute to a

840
00:37:37,360 --> 00:37:39,600
Speaker 2: five to twenty nine It's possible to overdo it, but

841
00:37:39,680 --> 00:37:41,560
Speaker 2: something around one hundred dollars a month level is a

842
00:37:41,560 --> 00:37:44,360
Speaker 2: great goal to have, especially given you know that increased

843
00:37:44,400 --> 00:37:46,520
Speaker 2: level of flexibility that we talked about, or if you

844
00:37:46,640 --> 00:37:48,960
Speaker 2: overfund it, you can you know, siphon some of that

845
00:37:49,000 --> 00:37:52,960
Speaker 2: money into a roth ira over time for your kiddo,

846
00:37:53,000 --> 00:37:54,800
Speaker 2: typically is who you're saving money in a five to

847
00:37:54,800 --> 00:37:56,919
Speaker 2: twenty nine for. But where do you go to open

848
00:37:57,000 --> 00:37:59,080
Speaker 2: up a five to twenty nine account. That's not something

849
00:37:59,120 --> 00:38:01,239
Speaker 2: we've really talked about on the show, Matt, I guess

850
00:38:01,239 --> 00:38:03,160
Speaker 2: we have a little bit. There are really two routes

851
00:38:03,239 --> 00:38:05,920
Speaker 2: that you can go with this. There are Advisor sold

852
00:38:05,920 --> 00:38:08,839
Speaker 2: plans and there are direct sold plans. And so if

853
00:38:08,840 --> 00:38:10,760
Speaker 2: you've been listening to us for any length of time,

854
00:38:11,080 --> 00:38:15,480
Speaker 2: my guess is you can already intimate which one we prefer.

855
00:38:16,000 --> 00:38:18,440
Speaker 1: Matt. If you want to laborage talking about direct baby again,

856
00:38:18,480 --> 00:38:21,200
Speaker 1: you go directly to the five twenty nine building and

857
00:38:21,280 --> 00:38:23,040
Speaker 1: you get it straight fresh.

858
00:38:23,160 --> 00:38:25,680
Speaker 2: You know, farm to table style, just like with Equifax.

859
00:38:25,680 --> 00:38:27,239
Speaker 2: You want to show up in person, and that farm

860
00:38:27,320 --> 00:38:29,520
Speaker 2: to table style comes with far fewer fees.

861
00:38:29,920 --> 00:38:32,920
Speaker 1: No, it is true Advisor sold plans they end up

862
00:38:32,960 --> 00:38:36,359
Speaker 1: costing folks much more money over time, morning Star. They

863
00:38:36,400 --> 00:38:39,960
Speaker 1: actually found that point six percent that that is the

864
00:38:40,000 --> 00:38:43,200
Speaker 1: average gap, which surprisingly that sounds like the fee that

865
00:38:43,280 --> 00:38:45,719
Speaker 1: an advisor which charged you in order to manage manage

866
00:38:45,719 --> 00:38:46,080
Speaker 1: your stuff.

867
00:38:46,120 --> 00:38:48,120
Speaker 2: And that's that's average. So when we're talking about the

868
00:38:48,160 --> 00:38:50,440
Speaker 2: lowest that is true lowest cost funds, it's actually an

869
00:38:50,440 --> 00:38:53,439
Speaker 2: even bigger gap typically, So we'll get talk more about

870
00:38:53,440 --> 00:38:53,960
Speaker 2: that in a second.

871
00:38:53,960 --> 00:38:56,239
Speaker 1: That's right. Yeah, So because of that, most folks are

872
00:38:56,239 --> 00:39:00,319
Speaker 1: going to be better off taking the DIY approach, especially

873
00:39:00,440 --> 00:39:04,600
Speaker 1: given the array of inexpensive investment options inside many of

874
00:39:04,640 --> 00:39:07,480
Speaker 1: these five twenty nine accounts these days. And so what

875
00:39:07,640 --> 00:39:11,320
Speaker 1: investment options should you choose? Well, that kind of depends

876
00:39:11,320 --> 00:39:13,560
Speaker 1: on how old your kid is, because a straight up

877
00:39:13,600 --> 00:39:16,759
Speaker 1: low cost index fund can be a great choice, but

878
00:39:16,800 --> 00:39:20,200
Speaker 1: there are also age based options that get more conservative

879
00:39:20,320 --> 00:39:23,359
Speaker 1: as you get closer to needing those funds. Those are

880
00:39:23,360 --> 00:39:26,080
Speaker 1: well with worth considering. I know, for the Georgia five

881
00:39:26,120 --> 00:39:29,520
Speaker 1: twenty nine, which are it's a weird URL. It's like

882
00:39:29,640 --> 00:39:32,160
Speaker 1: path two five twenty nine, Path to college, Path to

883
00:39:32,160 --> 00:39:34,319
Speaker 1: college five twenty nine or something like that. It's like

884
00:39:34,360 --> 00:39:37,840
Speaker 1: four different things just like crammed into a URL. But

885
00:39:38,040 --> 00:39:41,359
Speaker 1: they've got options, and they are a lot of them

886
00:39:41,400 --> 00:39:43,560
Speaker 1: that are age based, are based on the date that

887
00:39:43,640 --> 00:39:45,760
Speaker 1: the or the year that your child is going to enroll.

888
00:39:46,200 --> 00:39:49,000
Speaker 1: You've got those, but then you've also got like preservation

889
00:39:49,080 --> 00:39:52,359
Speaker 1: of capital options, you've got balanced approach, and then you've

890
00:39:52,360 --> 00:39:54,880
Speaker 1: got the one hundred percent equities. Yeah, which is the

891
00:39:54,920 --> 00:39:57,279
Speaker 1: most it's the most aggressive option that they have, but

892
00:39:57,320 --> 00:39:58,960
Speaker 1: it's basically just one hundred percent.

893
00:39:58,800 --> 00:40:00,960
Speaker 2: Stocks and pure investing for something a newborn that can

894
00:40:01,000 --> 00:40:02,959
Speaker 2: make sense. That is totally the path that you're gonna

895
00:40:02,960 --> 00:40:05,280
Speaker 2: want to take. But if you are looking at funding,

896
00:40:05,400 --> 00:40:06,719
Speaker 2: let's he didn't say the age of.

897
00:40:07,000 --> 00:40:08,720
Speaker 1: His kid, but if let's say you've got like a

898
00:40:08,760 --> 00:40:11,359
Speaker 1: fourteen year old, fifteen year old, you are a lot

899
00:40:11,400 --> 00:40:14,040
Speaker 1: closer to that kid needing to tap this funds, then

900
00:40:14,160 --> 00:40:17,200
Speaker 1: you probably don't want to expose your kid to or

901
00:40:17,480 --> 00:40:21,359
Speaker 1: their money that's in the fights one too that much risk, Yeah, yeah, exactly.

902
00:40:21,120 --> 00:40:25,080
Speaker 2: You're you're being a little too cavalier likely in aunl

903
00:40:25,040 --> 00:40:27,440
Speaker 2: likelihood if you choose the most aggressive path when they're

904
00:40:27,680 --> 00:40:30,520
Speaker 2: that age. And so the first question is that sort

905
00:40:30,560 --> 00:40:32,800
Speaker 2: of direct soul versus advisor sold plan, which one do

906
00:40:32,800 --> 00:40:34,440
Speaker 2: you want to go with? Do you want the handholding

907
00:40:34,520 --> 00:40:36,840
Speaker 2: and the much higher fees or do you are you

908
00:40:36,880 --> 00:40:38,960
Speaker 2: down with the DIY approach, which is something that we

909
00:40:39,560 --> 00:40:42,200
Speaker 2: always encourage here on the show. And then the next

910
00:40:42,239 --> 00:40:44,359
Speaker 2: question is like, well, which state five twenty nine plan

911
00:40:44,400 --> 00:40:45,719
Speaker 2: do you go with? And a lot of people think, oh,

912
00:40:45,760 --> 00:40:47,640
Speaker 2: I guess I have to go with the state five

913
00:40:47,719 --> 00:40:51,200
Speaker 2: twenty nine plan for for where I live. Not that's

914
00:40:51,200 --> 00:40:53,120
Speaker 2: not actually the case, but for a lot of people,

915
00:40:53,160 --> 00:40:54,719
Speaker 2: it actually makes the most sense to go with the

916
00:40:54,760 --> 00:40:56,560
Speaker 2: five twenty nine plan in the state where they live,

917
00:40:57,000 --> 00:41:00,560
Speaker 2: especially if there's a tax break, a state tax break

918
00:41:00,640 --> 00:41:02,640
Speaker 2: associated with that account.

919
00:41:02,719 --> 00:41:02,919
Speaker 1: Right.

920
00:41:03,120 --> 00:41:07,120
Speaker 2: So, for instance, in Georgia where we live, if you

921
00:41:07,160 --> 00:41:10,120
Speaker 2: can put up to eight thousand dollars per beneficiary in

922
00:41:10,160 --> 00:41:12,120
Speaker 2: to your five twenty nine account, you can actually put

923
00:41:12,120 --> 00:41:13,920
Speaker 2: more in there, but every dollar you put in up

924
00:41:13,920 --> 00:41:17,640
Speaker 2: to eight thousand dollars per beneficiary shield you from state tax,

925
00:41:17,880 --> 00:41:20,200
Speaker 2: right if you're married filing jointly. So that is something

926
00:41:20,239 --> 00:41:22,680
Speaker 2: to note. Do you live in a state that offers

927
00:41:22,760 --> 00:41:25,760
Speaker 2: a state tax benefit and if so, up to what amount?

928
00:41:26,120 --> 00:41:28,000
Speaker 2: And that is kind of how you're going to want

929
00:41:28,040 --> 00:41:32,280
Speaker 2: to think about and decide where you decide to invest

930
00:41:32,280 --> 00:41:33,960
Speaker 2: your money. Let's say you live in a state though

931
00:41:34,000 --> 00:41:36,719
Speaker 2: without a state income tax well, you'll likely want to

932
00:41:36,760 --> 00:41:39,480
Speaker 2: opt for a direct sold plan from another state that

933
00:41:39,520 --> 00:41:41,760
Speaker 2: prioritizes low fees, which.

934
00:41:41,600 --> 00:41:44,279
Speaker 1: Is totally legit. That's totally an option. You do not

935
00:41:44,480 --> 00:41:47,080
Speaker 1: have to open a po box yea in that.

936
00:41:47,080 --> 00:41:48,879
Speaker 2: State because let's be honest, a lot of the five

937
00:41:48,880 --> 00:41:50,480
Speaker 2: twenty nine plans have gotten a whole lot better, but

938
00:41:50,520 --> 00:41:53,080
Speaker 2: in some states they still suck. And so if you

939
00:41:53,200 --> 00:41:55,480
Speaker 2: are in one of the states that has higher fees

940
00:41:55,520 --> 00:41:58,319
Speaker 2: on five twenty nine plans, you're going to want to

941
00:41:58,360 --> 00:42:01,839
Speaker 2: go with a lower cost state plan that's run by

942
00:42:01,840 --> 00:42:06,120
Speaker 2: another state, which is again doable, no problems. So Georgia

943
00:42:06,160 --> 00:42:08,319
Speaker 2: and Utah are two of the best. They've been great

944
00:42:08,320 --> 00:42:10,760
Speaker 2: for quite a while with some of the absolute rock bottom,

945
00:42:10,840 --> 00:42:13,200
Speaker 2: lowest fees, Matt, Like you said, we invest in the

946
00:42:13,200 --> 00:42:15,880
Speaker 2: Georgia Path to College program and it rocks. Like the

947
00:42:15,880 --> 00:42:19,520
Speaker 2: fees are literally right about point one percent on a

948
00:42:19,520 --> 00:42:22,240
Speaker 2: lot of these funds, which is close to non existent.

949
00:42:22,480 --> 00:42:25,400
Speaker 1: That's what we like to see. Yeah, path with number

950
00:42:25,440 --> 00:42:30,240
Speaker 1: two college five two nine dot com it's kind of ratchet.

951
00:42:30,280 --> 00:42:32,560
Speaker 1: But that being said, like this is the DIY approach,

952
00:42:32,600 --> 00:42:35,160
Speaker 1: but it's still a website, Like there's still somewhere for

953
00:42:35,200 --> 00:42:37,080
Speaker 1: you to go. It's not like you're having to cobble

954
00:42:37,080 --> 00:42:39,359
Speaker 1: this together and write some sort of charter at home.

955
00:42:39,680 --> 00:42:42,799
Speaker 1: Still easy, it's still relatively easy. It's just not quite

956
00:42:42,800 --> 00:42:45,360
Speaker 1: as easy if you were to let's say you've got

957
00:42:45,400 --> 00:42:47,680
Speaker 1: a Brokeridge account or an IRA first of all, So

958
00:42:47,800 --> 00:42:49,360
Speaker 1: like we're talking about earlier, right, the first thing you

959
00:42:49,400 --> 00:42:51,319
Speaker 1: need to have is an IRA. Then after that then

960
00:42:51,480 --> 00:42:53,200
Speaker 1: you look at it Brokeridge accounts. But a lot of

961
00:42:53,200 --> 00:42:55,600
Speaker 1: folks are gonna think, oh, the default thing I should

962
00:42:55,600 --> 00:42:57,759
Speaker 1: do is just go there. They're going to make it easy.

963
00:42:57,760 --> 00:43:00,759
Speaker 1: They administer five twenty nine accounts. The best path is

964
00:43:00,800 --> 00:43:03,520
Speaker 1: to go ahead and open a new account with whatever

965
00:43:03,760 --> 00:43:06,600
Speaker 1: state you choose. When it comes to the five twenty

966
00:43:06,680 --> 00:43:09,000
Speaker 1: nine account that you'd like to open saving for college,

967
00:43:09,080 --> 00:43:11,520
Speaker 1: that's actually I think the best site to do some

968
00:43:11,560 --> 00:43:14,360
Speaker 1: research about five twenty nine plans. We'll make sure to

969
00:43:14,400 --> 00:43:15,480
Speaker 1: link to that in the show notes. But you can

970
00:43:15,560 --> 00:43:18,239
Speaker 1: check to see if you are eligible for a tax

971
00:43:18,239 --> 00:43:20,279
Speaker 1: break via your state, and there are links to the

972
00:43:20,320 --> 00:43:24,759
Speaker 1: direct soul plans for every other state. Again, going through

973
00:43:24,800 --> 00:43:29,520
Speaker 1: an advisor intermediary is possible, and you know it's legit,

974
00:43:29,800 --> 00:43:32,160
Speaker 1: but it's going to eat into those returns, which means

975
00:43:32,160 --> 00:43:34,080
Speaker 1: you're going to have fewer dollars for your kids college

976
00:43:34,080 --> 00:43:36,000
Speaker 1: once the time comes. But if you pick one of

977
00:43:36,040 --> 00:43:39,000
Speaker 1: the best low cost plans, just keep dollar cost averaging

978
00:43:39,120 --> 00:43:42,279
Speaker 1: into that plan regularly, you're going to be just fine.

979
00:43:42,320 --> 00:43:43,880
Speaker 2: Yeah, I'm glad we went over this though, how to

980
00:43:43,960 --> 00:43:45,959
Speaker 2: choose the right five twenty nine plan, because most people

981
00:43:45,960 --> 00:43:47,759
Speaker 2: are like, okay, five twenty nine plans and then and

982
00:43:47,840 --> 00:43:50,000
Speaker 2: then we say, hey, yeah, if you're far along enough

983
00:43:50,000 --> 00:43:51,560
Speaker 2: in your own money journey, you've been saving for your

984
00:43:51,560 --> 00:43:53,640
Speaker 2: own retirement really well, yeah, maybe this is the next

985
00:43:53,680 --> 00:43:55,640
Speaker 2: step for you. And then people are like, great, what

986
00:43:55,680 --> 00:43:58,279
Speaker 2: do I do now? And so it's good to know, Hey,

987
00:43:58,360 --> 00:44:01,280
Speaker 2: direct Sold Save You for College has all these rankings

988
00:44:01,280 --> 00:44:03,839
Speaker 2: and ratings, know whether or not your state has some

989
00:44:03,880 --> 00:44:06,480
Speaker 2: sort of tax benefit for you. If not, go with

990
00:44:06,520 --> 00:44:09,040
Speaker 2: one of the low cost states in Utah and Georgia

991
00:44:09,040 --> 00:44:10,839
Speaker 2: are two of the best. To our faiths, this right,

992
00:44:10,880 --> 00:44:12,160
Speaker 2: and not just because we live here.

993
00:44:12,640 --> 00:44:15,279
Speaker 1: We're not homework. We're just saying literally, there's several other

994
00:44:15,320 --> 00:44:17,640
Speaker 1: states that oftentimes I want to just off the top

995
00:44:17,640 --> 00:44:18,279
Speaker 1: of my head, I want to.

996
00:44:18,239 --> 00:44:21,080
Speaker 2: Say Ohio, Ohio sold always, but I just dug through again,

997
00:44:21,120 --> 00:44:23,360
Speaker 2: and Ohio is good, but not quite as low as Georgia.

998
00:44:23,440 --> 00:44:25,680
Speaker 2: Oh really, Georgia is like literally Georgia and Utah are

999
00:44:25,719 --> 00:44:27,600
Speaker 2: the top two. Oh nice, that was not the case

1000
00:44:27,680 --> 00:44:29,759
Speaker 2: as of like I would say, last year, And well

1001
00:44:29,760 --> 00:44:32,120
Speaker 2: it's something that they revisit and in their rank based

1002
00:44:32,200 --> 00:44:35,040
Speaker 2: on oftentimes fees and some of the different investing options

1003
00:44:35,080 --> 00:44:36,960
Speaker 2: that are available to you. So what that tells me

1004
00:44:37,040 --> 00:44:39,279
Speaker 2: is that Georgia said, Hey, we're going to make sure

1005
00:44:39,400 --> 00:44:42,319
Speaker 2: that the different options that we are that we are

1006
00:44:42,400 --> 00:44:45,280
Speaker 2: offering folks, that they're affordable, that there's plenty of choices,

1007
00:44:45,560 --> 00:44:47,560
Speaker 2: because in the end, that's going to mean the ability

1008
00:44:47,560 --> 00:44:49,160
Speaker 2: for those kids to have more.

1009
00:44:49,040 --> 00:44:50,160
Speaker 1: To go towards college.

1010
00:44:50,160 --> 00:44:51,759
Speaker 2: So lots of folks who live in a state no

1011
00:44:51,840 --> 00:44:54,000
Speaker 2: state income tax benefit, George is the place to go.

1012
00:44:54,239 --> 00:44:54,920
Speaker 1: Really nice.

1013
00:44:55,000 --> 00:44:59,600
Speaker 2: Yeah, we're number one. We can cheer our homestate on

1014
00:44:59,680 --> 00:45:01,239
Speaker 2: that one for sure. All right, But let's get back

1015
00:45:01,239 --> 00:45:02,520
Speaker 2: to the beer mat that you and I had on

1016
00:45:02,520 --> 00:45:05,520
Speaker 2: this episode. This one's called Broccoli. It's a double dry

1017
00:45:05,520 --> 00:45:08,600
Speaker 2: hopped IPA or your thoughts on this one from.

1018
00:45:08,520 --> 00:45:10,560
Speaker 1: Other half man. This is such a delicious beer. I

1019
00:45:10,600 --> 00:45:13,000
Speaker 1: wish I can. Honestly, I wish I could compare some

1020
00:45:13,080 --> 00:45:16,319
Speaker 1: other half IPAs to Burial, because in my mind they're

1021
00:45:16,520 --> 00:45:17,320
Speaker 1: they're pretty similar.

1022
00:45:17,360 --> 00:45:21,080
Speaker 2: They're both very kind of earthy and like vegetable. It's

1023
00:45:21,120 --> 00:45:23,640
Speaker 2: got hops out the wazoo. There's a reason they're using

1024
00:45:23,719 --> 00:45:26,200
Speaker 2: vegetables for their branding. Yes, because it does have like

1025
00:45:26,239 --> 00:45:30,680
Speaker 2: this herbal vegetable like earthiness to it, but it's super hazy.

1026
00:45:30,719 --> 00:45:32,800
Speaker 2: It's kind of got those orange notes. And what I

1027
00:45:32,840 --> 00:45:34,320
Speaker 2: would say about this beer.

1028
00:45:34,680 --> 00:45:37,319
Speaker 1: Though, as much as you and I, I'm sure you're

1029
00:45:37,320 --> 00:45:39,359
Speaker 1: gonna have nothing but nice, nice things to say about

1030
00:45:39,360 --> 00:45:42,880
Speaker 1: it as well. This is the pro level IPA. We

1031
00:45:42,920 --> 00:45:45,319
Speaker 1: were talking about tax loss harvesting earlier and how it's like,

1032
00:45:45,760 --> 00:45:47,360
Speaker 1: we don't want you to get overly obsessed with that

1033
00:45:47,680 --> 00:45:50,200
Speaker 1: too early on, but at eventually, at some point you

1034
00:45:50,239 --> 00:45:52,160
Speaker 1: can kind of work your way up to that. That's

1035
00:45:52,160 --> 00:45:54,239
Speaker 1: how I feel about this beer. As somebody who's never

1036
00:45:54,320 --> 00:45:56,840
Speaker 1: had an IPA where they'd go straight to this, I

1037
00:45:56,880 --> 00:46:00,359
Speaker 1: think they might say, are you sure this is a beer?

1038
00:46:00,480 --> 00:46:03,480
Speaker 1: Like they're not necessarily going to know even what they're drinking,

1039
00:46:04,000 --> 00:46:07,600
Speaker 1: as opposed to having kind of progressed through the craft

1040
00:46:07,600 --> 00:46:09,960
Speaker 1: beer offerings yeah, and you find yourself kind of at

1041
00:46:09,960 --> 00:46:10,319
Speaker 1: this point.

1042
00:46:10,360 --> 00:46:11,919
Speaker 2: You don't want to go from two to ten, right,

1043
00:46:11,960 --> 00:46:14,080
Speaker 2: and this is this is a ten beer. It's like

1044
00:46:14,080 --> 00:46:15,920
Speaker 2: like an eleven. Yeah, it's gonna it's gonna give you

1045
00:46:15,920 --> 00:46:18,560
Speaker 2: a little mouth kick. And if you're if you can

1046
00:46:18,560 --> 00:46:20,880
Speaker 2: handle it. Like Matt and I, we've many years of

1047
00:46:20,880 --> 00:46:22,440
Speaker 2: training have led us to this point where we can

1048
00:46:22,520 --> 00:46:25,200
Speaker 2: drink a beer like this and admire it and appreciate

1049
00:46:25,239 --> 00:46:26,000
Speaker 2: it and enjoy it.

1050
00:46:26,239 --> 00:46:28,720
Speaker 1: But yeah, if you're a newbie something to behold, Yeah.

1051
00:46:28,920 --> 00:46:31,200
Speaker 2: You might not be quite ready for the depth and

1052
00:46:31,239 --> 00:46:33,239
Speaker 2: the glory that is this beer. But yeah, no, I

1053
00:46:33,960 --> 00:46:36,839
Speaker 2: love this one. I have nothing negative to say, only positives,

1054
00:46:36,920 --> 00:46:38,920
Speaker 2: and I don't have really much to add except for

1055
00:46:39,000 --> 00:46:42,680
Speaker 2: it's freaking delicious, so good. It's top notch, just like

1056
00:46:42,760 --> 00:46:44,680
Speaker 2: I've come to expect from from Other Half. When actually,

1057
00:46:44,680 --> 00:46:46,040
Speaker 2: when Emily and I were in New York, we stopped

1058
00:46:46,040 --> 00:46:48,960
Speaker 2: by Other Half has uh they've got a little bar

1059
00:46:49,280 --> 00:46:52,640
Speaker 2: in Rockefeller Center. Now, oh yeah, a little tasting uh

1060
00:46:52,719 --> 00:46:54,759
Speaker 2: huh bar. I actually brought a couple of beers. Some

1061
00:46:54,840 --> 00:46:56,160
Speaker 2: got him in the fridge, so we've got tons of

1062
00:46:56,160 --> 00:46:58,359
Speaker 2: other half the fridge right now. Thanks to Jason and

1063
00:46:58,360 --> 00:47:00,520
Speaker 2: thanks to my New York City trip. But this one

1064
00:47:00,560 --> 00:47:03,920
Speaker 2: again comes from Jason. Thank you Jason and J's bar.

1065
00:47:04,080 --> 00:47:06,160
Speaker 2: We had a broccoli I believe it was like a

1066
00:47:06,239 --> 00:47:08,640
Speaker 2: cheesy broccoli or something like that. They they do some

1067
00:47:08,680 --> 00:47:11,920
Speaker 2: sort of variation and that was delicious too. But man,

1068
00:47:11,960 --> 00:47:12,960
Speaker 2: I'm a big fan of this one.

1069
00:47:13,040 --> 00:47:16,359
Speaker 1: Yeah, roasted broccoli, perhaps maybeard broccoli. You know we've talked

1070
00:47:16,400 --> 00:47:18,080
Speaker 1: about I love that what was his name? That was

1071
00:47:18,080 --> 00:47:22,560
Speaker 1: the Frankie salon Frankie where he talked about meals. That's right, Well,

1072
00:47:22,600 --> 00:47:25,080
Speaker 1: link to that episode as well. If you happen to think, oh, yeah,

1073
00:47:25,080 --> 00:47:26,600
Speaker 1: I would like to find a way to spend less

1074
00:47:26,600 --> 00:47:29,239
Speaker 1: on groceries. How do I reduce my grocery budget every

1075
00:47:29,239 --> 00:47:30,960
Speaker 1: single month? We just listen to Frankie's interview.

1076
00:47:31,040 --> 00:47:32,920
Speaker 2: Yeah, maybe maybe I'll teach you how to cook some

1077
00:47:32,960 --> 00:47:35,680
Speaker 2: basic stuff that you maybe had an otherwise thought to

1078
00:47:35,719 --> 00:47:38,880
Speaker 2: try those cruciferous vegetables.

1079
00:47:39,160 --> 00:47:41,279
Speaker 1: But yeah, that's gonna be it for this episode. You

1080
00:47:41,320 --> 00:47:44,200
Speaker 1: can find links to some of the different episodes and

1081
00:47:44,520 --> 00:47:46,840
Speaker 1: resources that we mentioned during this episode up in our

1082
00:47:46,840 --> 00:47:48,959
Speaker 1: show notes at how the Money dot Com. No doubt

1083
00:47:49,040 --> 00:47:50,840
Speaker 1: he's actually got a whole resources page.

1084
00:47:50,960 --> 00:47:52,719
Speaker 2: If you're like I know, Matt and Joel have talked

1085
00:47:52,760 --> 00:47:54,560
Speaker 2: about a whole lot of good stuff over the years,

1086
00:47:54,560 --> 00:47:56,680
Speaker 2: and I should go back and see what the top

1087
00:47:56,880 --> 00:47:59,239
Speaker 2: URL they've mentioned, or what the top resources are they've got.

1088
00:47:59,480 --> 00:48:01,359
Speaker 2: How do I need complash resources? You can find them

1089
00:48:01,360 --> 00:48:02,760
Speaker 2: all in one location.

1090
00:48:02,840 --> 00:48:04,880
Speaker 1: It makes it easy as opposed to digging through the

1091
00:48:04,880 --> 00:48:07,760
Speaker 1: show notes, because let's be honest, folks are listening, maybe

1092
00:48:08,400 --> 00:48:11,080
Speaker 1: slightly delayed, and they're thinking, I'm gonna have to go

1093
00:48:11,160 --> 00:48:13,120
Speaker 1: digging for that. Nah, Just go to how the Money

1094
00:48:13,160 --> 00:48:15,399
Speaker 1: dot Com forward slash resources. You'll find it all there.

1095
00:48:15,440 --> 00:48:17,320
Speaker 1: Oh Steph, all right man, that's gonna be it until

1096
00:48:17,320 --> 00:48:20,040
Speaker 1: next time. Best Friends Out, Best Friends Out.