WEBVTT - Ask HTM - Utilizing Roth Contributions in a Pinch, SAVE Plan for High Earners, & Buying a Home to Save Money #847 0:00:00.080 --> 0:00:01.440 Welcome to Head of Money. 0:00:01.440 --> 0:00:03.600 I'm Joel and I am Matt. 0:00:03.400 --> 0:00:05.480 And today we're answering your listener questions. 0:00:24.720 --> 0:00:27.400 That's right, buddy. Happy Monday to everyone out there. We 0:00:27.440 --> 0:00:30.480 hope you had a wonderful weekend. We've got list of 0:00:30.520 --> 0:00:32.599 our questions to get to. This is again more we're 0:00:32.680 --> 0:00:37.880 able to hear directly from listeners their specific financial quandaries 0:00:37.920 --> 0:00:39.960 that they find themselves in. We've got a listener asking 0:00:40.000 --> 0:00:44.000 about utilizing some rough contributions in a pinch. How to 0:00:44.040 --> 0:00:47.280 go about doing that? Another listener is asking about the 0:00:47.440 --> 0:00:51.320 save plan for student loans, but he's also a high earner, 0:00:51.520 --> 0:00:54.960 so we'll discuss that. And another listener is asking about 0:00:55.320 --> 0:00:58.360 purchasing a home in order to save money every single month. 0:00:58.480 --> 0:01:00.120 Is that even possible? Is that something that you do? 0:01:00.120 --> 0:01:02.760 It's something that she has heard folks talking about, so 0:01:02.840 --> 0:01:05.000 we'll get to that one and more during this episode. 0:01:05.120 --> 0:01:09.080 Yeah, I don't know. It feels a different math these 0:01:09.120 --> 0:01:12.440 days in twenty twenty four than it was in twenty eleven. 0:01:12.520 --> 0:01:15.280 Right, and maths, the math is broken, the matha math 0:01:15.319 --> 0:01:17.520 Andjrol that's true. All right, We've got yeah, like you said, 0:01:17.560 --> 0:01:18.640 a lot to get to on this one. But Matt, 0:01:18.640 --> 0:01:20.200 before we get to that, I just wanted to quit 0:01:20.280 --> 0:01:22.360 a bit. My dad sadly was My dad and mom 0:01:22.360 --> 0:01:23.720 were driving in town the other day. 0:01:23.760 --> 0:01:27.040 They were rear ended. They're smashed by the truck in 0:01:27.080 --> 0:01:28.560 the in the back end of their car and so 0:01:28.640 --> 0:01:31.880 their car like shattered glass. They are okay, they were okay. 0:01:32.040 --> 0:01:34.240 Fortunately they were okay on the way the doctor's appointment. 0:01:34.240 --> 0:01:35.959 My mom was able to walk to her doctor's appointment. 0:01:36.400 --> 0:01:38.680 So what's crazy is you know how I learned about this? 0:01:38.959 --> 0:01:41.600 My wife told me he didn't. He didn't tell me 0:01:41.640 --> 0:01:42.119 about this. 0:01:42.200 --> 0:01:46.360 Yeah, so okay, our friendship still matters, it does. 0:01:46.440 --> 0:01:48.640 But that we talk about so many different things. I 0:01:48.640 --> 0:01:51.120 think sometimes we forget. Yeah, but it's true. So they 0:01:51.120 --> 0:01:52.880 got shared it with me though, and I was like, wait, 0:01:52.920 --> 0:01:55.000 when did this happen? And she's like, no, that's why 0:01:55.000 --> 0:01:57.200 he's driving a Jeep. Why is he driving a Jeep? 0:01:58.400 --> 0:01:59.400 Because it's a rental car. 0:01:59.440 --> 0:02:01.360 You can share that say that for some other parts. 0:02:01.400 --> 0:02:03.120 Will Their Toyota is being repaired, right, and so they're 0:02:03.520 --> 0:02:05.840 that thing's being fixed up. But the thing I talked 0:02:05.840 --> 0:02:07.640 to my dad about, and the thing that I think 0:02:07.760 --> 0:02:11.000 most people forget is that when you're in an accident 0:02:11.040 --> 0:02:12.400 like that. Well one, I mean, there's so many things 0:02:12.440 --> 0:02:13.760 we could talk about about, what to do in the 0:02:13.800 --> 0:02:16.120 aftermath of an accident, how to document things, how to 0:02:16.120 --> 0:02:18.640 make sure that you are getting taken care of and 0:02:18.680 --> 0:02:20.320 you're getting your car fixed in the way that it 0:02:20.320 --> 0:02:22.400 needs to be, that you deserve. 0:02:22.480 --> 0:02:24.120 What you're supposed to say is immediately you just get 0:02:24.120 --> 0:02:25.919 out of the vehicle and you just start saying, it's 0:02:25.919 --> 0:02:28.960 my fault, it's my fault. Yeah, don't worry about it. 0:02:29.000 --> 0:02:29.880 Make sure you get it on video. 0:02:29.919 --> 0:02:32.760 So yeah, yeah, exactly, start recording me. Yeah, it's totally 0:02:32.760 --> 0:02:33.200 my fault. 0:02:33.280 --> 0:02:35.080 Right, it's all good. Say, oh, no need to involve 0:02:35.160 --> 0:02:37.480 any sort of the police here, any sort of documentation. 0:02:37.639 --> 0:02:40.480 Yeah you don't want you know what. Just kidding obviously, 0:02:40.520 --> 0:02:41.760 But yeah, there's a lot we can say on that. 0:02:41.800 --> 0:02:43.640 But the one thing I feel like that almost nobody 0:02:43.919 --> 0:02:46.480 knows about, or a lot of people have forgotten about. 0:02:46.800 --> 0:02:48.920 And the thing I had to remind my data is 0:02:49.160 --> 0:02:51.920 that something known as diminished value and the fact that 0:02:51.919 --> 0:02:54.000 when your car is in an accident, the nicer, the 0:02:54.040 --> 0:02:56.639 newer your car is, the more money you're gonna be 0:02:56.639 --> 0:03:00.480 able to get from the offending insured person from that 0:03:00.560 --> 0:03:04.639 insurance company, because not only are is the insurance company 0:03:04.680 --> 0:03:07.040 responsible for fixing your car up and bringing you back 0:03:07.080 --> 0:03:09.880 to the state that it was, but because of the 0:03:09.919 --> 0:03:12.040 fact that car has now been in an accident, it 0:03:12.080 --> 0:03:15.399 is worthless by that, just by that one metric. 0:03:15.280 --> 0:03:17.639 By the fact that it has been involved in IRAQ. 0:03:17.760 --> 0:03:19.720 That's right. So I was like looking up to figure 0:03:19.760 --> 0:03:21.799 out for my dad, Okay, how much are you owed 0:03:21.800 --> 0:03:24.040 from the insurance company, and there's like a there's a 0:03:24.080 --> 0:03:26.080 calculator you can find online, there's things you can do 0:03:26.160 --> 0:03:28.160 to kind of try to figure out. There's not a 0:03:28.200 --> 0:03:30.000 lot out there, but there's there's a little bit at least, 0:03:30.080 --> 0:03:32.040 And it was like, Okay, you probably deserve somewhere in 0:03:32.080 --> 0:03:34.760 the eighteen hundred to twenty four hundred dollars range. Push 0:03:34.800 --> 0:03:36.800 for something in this and if they try to say, oh, 0:03:36.840 --> 0:03:38.800 we'll give you five hundred bucks, well that's clearly a 0:03:38.840 --> 0:03:41.240 low ball value based on the calculations you can run. 0:03:41.840 --> 0:03:44.200 And so it's just one of those things most people 0:03:44.200 --> 0:03:45.400 don't think about that if you've been in a car 0:03:45.400 --> 0:03:48.400 accident that wasn't your fault, that is a term you 0:03:48.440 --> 0:03:49.840 need to know, you need to bring up with the 0:03:49.840 --> 0:03:53.640 insurance company, with the agent who you're working with, so 0:03:53.680 --> 0:03:55.320 that you can get paid for the fact that your 0:03:55.320 --> 0:03:57.360 car is now worth less than it was before it's 0:03:57.680 --> 0:04:00.320 I think Nebraska is the only state that maybe doesn't 0:04:00.320 --> 0:04:02.160 have the minish value. In the other forty nine states, 0:04:02.480 --> 0:04:04.400 you can ask for that and you are entitled to it. 0:04:04.520 --> 0:04:07.160 Yeah, that's one good reason to not live in Nebraska. 0:04:07.200 --> 0:04:09.760 This is I'm kidding, one of the other good reasons. Kidding. 0:04:09.800 --> 0:04:13.080 By the way, no hate all the Nebraska's out there 0:04:13.240 --> 0:04:14.520 where they driving the Toyota. 0:04:14.600 --> 0:04:17.640 They were what, what's the other call? They both have toyos. Yeah, well, 0:04:17.720 --> 0:04:19.360 yeah with a Highlander and a Prius. 0:04:19.600 --> 0:04:21.920 Oh I thought they used to have they used to 0:04:22.000 --> 0:04:24.640 have a rat for yes, right, a toy I don't 0:04:24.640 --> 0:04:27.200 think I knew that they Hey there's other Toyota's our 0:04:27.200 --> 0:04:30.600 words that when it comes to the hybrid drive train, 0:04:30.760 --> 0:04:33.120 I mean you're looking at gas mileage, you're looking at dependability. 0:04:33.680 --> 0:04:35.680 I kind of kicked myself that I don't have a 0:04:36.000 --> 0:04:38.760 ci Na. Yeah, I've been on the ads. We've both 0:04:38.760 --> 0:04:41.560 been on the Odyssey bandwagon now for quite a while. 0:04:41.560 --> 0:04:45.080 But the ability to have yeah, hybrid man, I'm trying 0:04:45.080 --> 0:04:47.640 to find a way to reduce our fuel costs. Yea, 0:04:47.960 --> 0:04:49.720 even though we still only have one vehicle. 0:04:49.760 --> 0:04:51.880 Keep trying to tell you go for the EV dog, 0:04:52.000 --> 0:04:53.040 but or a plug. 0:04:52.800 --> 0:04:55.000 In EV well. As prices continue to drop, Yes, that 0:04:55.000 --> 0:04:57.719 will be something I consider, because folks are there. I 0:04:57.720 --> 0:04:59.159 think a lot of folks are getting kind of scared 0:04:59.200 --> 0:05:01.320 off by the idea of like, oh no, like you know, 0:05:01.400 --> 0:05:03.919 the EV's aren't all what they're cracked up to be. 0:05:03.920 --> 0:05:06.400 Because of that, prices are dropping, and I think there 0:05:06.640 --> 0:05:09.040 could definitely be an opportunity there to snag some deals. 0:05:09.080 --> 0:05:11.880 I mean there already have been massive deals, specifically with Tesla, 0:05:12.000 --> 0:05:13.480 but then in the coming years more. 0:05:13.600 --> 0:05:13.800 Yeah. 0:05:13.839 --> 0:05:16.720 And have we talked about in China? How at their 0:05:16.760 --> 0:05:18.680 like latest auto show or this is a few weeks ago, 0:05:18.720 --> 0:05:21.320 I guess at this point, but they unveiled specifically is 0:05:21.360 --> 0:05:25.520 it bid? Is the Chinese evary. 0:05:24.800 --> 0:05:26.320 Are kicking butt making great rides. 0:05:26.120 --> 0:05:29.960 Twelve to thirteen hundred miles on a single charge from an. 0:05:29.920 --> 0:05:31.599 EV But we're not going to see those here in 0:05:31.600 --> 0:05:32.680 the States anytime soon. 0:05:32.800 --> 0:05:33.080 I know. 0:05:33.440 --> 0:05:35.760 But it's so messed up. Yeah, it just tells me 0:05:35.800 --> 0:05:38.119 there's more to do with I don't know, it seems 0:05:38.120 --> 0:05:40.200 like there's more politics involved as opposed to like doing 0:05:40.200 --> 0:05:42.960 what's green and what's best for the earth and ultimately 0:05:43.000 --> 0:05:45.080 what's going to make consumers the happiest of right, Oh 0:05:45.120 --> 0:05:47.440 my gosh about you. Imagine if you had a twelve 0:05:47.480 --> 0:05:48.120 hundred mile. 0:05:48.080 --> 0:05:50.680 Charge ev adoption would soar in this country if we 0:05:50.720 --> 0:05:54.720 had inexpensive, longer range EV's. But it doesn't seem like 0:05:54.720 --> 0:05:56.400 any politician right now wants to fight for that. 0:05:56.480 --> 0:06:00.479 So yeah, what is it mile anxiety or rangings? Yeah, 0:06:00.480 --> 0:06:03.680 that would completely disappe you go completely, Yeah, and we're 0:06:03.680 --> 0:06:05.320 headed in that. Actually I have more than a thousand 0:06:05.320 --> 0:06:06.080 miles in one day. 0:06:06.320 --> 0:06:09.280 Right, we're headed in that direction anyway. But sadly, we 0:06:09.520 --> 0:06:11.359 could be there sooner and we can have those options 0:06:11.400 --> 0:06:13.440 at our disposal. And I get some of the reasons 0:06:13.440 --> 0:06:15.840 for productionism, but you also can't have it both ways. 0:06:16.000 --> 0:06:17.760 You can't say that this is the future and we 0:06:17.800 --> 0:06:19.480 have to all go in this direction and then say, 0:06:19.520 --> 0:06:23.120 but we won't take the most low cost brand. We're 0:06:23.080 --> 0:06:25.120 going to essentially prevent them, bar them from entering the market. 0:06:25.160 --> 0:06:26.159 It's pretty messed up, yeap. 0:06:26.240 --> 0:06:27.919 Maybe what we need to do is like ramp up 0:06:27.920 --> 0:06:31.480 our espionage, like maybe maybe we need to steal more. 0:06:31.520 --> 0:06:35.400 Point more trade secrets Matt. Matt doubles as an FBI informant, 0:06:35.440 --> 0:06:37.360 So yeah, that's a side hustle. 0:06:37.880 --> 0:06:39.360 A little, the ways she makes some extra money. 0:06:39.360 --> 0:06:41.120 That's right, alright, midlistisch And the beer we're having on 0:06:41.120 --> 0:06:44.400 this episode, it's called Duchess Red. It's a sour cherry 0:06:44.400 --> 0:06:47.360 beer that we've had before, but never on this never 0:06:47.400 --> 0:06:49.360 on the podcast. So yeah, one of your wife's favorite beers. 0:06:49.360 --> 0:06:50.559 In fact, one of my favorite beers. 0:06:50.640 --> 0:06:51.159 I love it as well. 0:06:51.200 --> 0:06:52.600 All right, we'll give our thoughts at the end of 0:06:52.600 --> 0:06:54.800 the episode, but Matt loves it, all right. So let's 0:06:54.839 --> 0:06:56.800 get to listener questions. If you have a question, a 0:06:56.839 --> 0:06:58.880 money question, go to how to money dot com slash ask. 0:06:58.960 --> 0:07:01.000 Or if you just want to know that's deepest darket secrets, 0:07:01.000 --> 0:07:02.920 you can record that question too and send it our 0:07:02.960 --> 0:07:06.600 way they tell you, but you got to record it 0:07:06.800 --> 0:07:08.440 and send it over that's the only way you get 0:07:08.440 --> 0:07:10.360 the information. Just go to how to money dot com 0:07:10.400 --> 0:07:13.200 slash ask for the simple instructions, but basically record a 0:07:13.240 --> 0:07:15.680 voice memo sending it to us via email. Now let's 0:07:15.680 --> 0:07:17.680 get to the first question for this episode. This one 0:07:17.760 --> 0:07:19.400 is about student loan payoff. 0:07:19.800 --> 0:07:26.680 Hello, Matthew and Joel Sith. This is Shakatron from Benuda, California. 0:07:27.080 --> 0:07:31.320 I'm calling in with a question about student loans. My 0:07:31.480 --> 0:07:35.680 question is, at what point or what are the drawbacks 0:07:35.680 --> 0:07:38.920 of the new SAVE program. I guess it's not super 0:07:38.960 --> 0:07:45.239 new anymore, especially for high income earners. I am fortunate 0:07:45.320 --> 0:07:49.640 enough to make three hundred thousand dollars a year, but unfortunately, 0:07:49.720 --> 0:07:51.240 to get to that point, I had to take out 0:07:51.280 --> 0:07:54.160 a lot of student loans, and I have roughly one 0:07:54.240 --> 0:07:57.239 hundred and fifty thousand dollars in student loans right now 0:07:57.600 --> 0:08:02.160 that I'm chipping away at. I have a six percent 0:08:03.360 --> 0:08:07.880 interest on those graduate student loans. I currently am in 0:08:07.960 --> 0:08:13.800 the pay program that PAYE program. Everyone in their mom 0:08:14.320 --> 0:08:17.280 says that the new Save program online and that I 0:08:17.360 --> 0:08:21.480 talk to is the best thing since sliced bread. But 0:08:21.560 --> 0:08:23.760 when I read into the fine print, it seems like 0:08:23.800 --> 0:08:29.360 there's no cap on the amount of payments that you'd 0:08:29.440 --> 0:08:35.000 have every month versus my current plan, and so I 0:08:35.040 --> 0:08:38.599 get a little bit confused with all of these different options. 0:08:39.280 --> 0:08:43.200 Is it just a gimmick? And so I think in 0:08:43.240 --> 0:08:46.600 my situation it might not be beneficial. And I think 0:08:47.320 --> 0:08:50.920 I'm trying to push out my student loans as much 0:08:50.960 --> 0:08:54.959 as possible and try and get some help from Uncle 0:08:55.000 --> 0:08:59.520 Sam with different government programs for student loan forgiveness. But 0:09:00.080 --> 0:09:03.800 any thoughts you guys have would be much appreciated. And 0:09:04.240 --> 0:09:08.280 thank you for your show. It is very interesting and 0:09:08.600 --> 0:09:13.360 has kept me on the right path financially, So thank. 0:09:13.240 --> 0:09:13.600 You for that. 0:09:14.240 --> 0:09:16.080 Oh, Matt, you hear that you have been like the 0:09:16.080 --> 0:09:18.760 bumpers in the bowling lane for I was going to 0:09:18.800 --> 0:09:20.320 do which. 0:09:20.120 --> 0:09:22.960 By the way, that's it's worth mentioning. Maybe Shakatron I'm guessing, 0:09:23.040 --> 0:09:27.280 isn't his birth name given to him name? He's not 0:09:27.400 --> 0:09:31.120 an evil robot. No, you kind of gravitated towards it 0:09:31.240 --> 0:09:34.440 that my real name is joelseph it is. Yeah, I 0:09:34.480 --> 0:09:36.920 wanted to jump on the exact same thing that you did, 0:09:37.320 --> 0:09:39.480 which is the fact that he's I think what he 0:09:39.520 --> 0:09:42.800 said was that he is on the right financial path, which, dude, 0:09:42.800 --> 0:09:45.280 that is one hundred percent what it's about right there. Like, 0:09:45.320 --> 0:09:48.760 you might be listening to the podcast and you might 0:09:48.840 --> 0:09:50.920 not have much in common with Joel or I you 0:09:51.000 --> 0:09:54.800 might workron, but the fact is, like, what we're trying 0:09:54.840 --> 0:09:56.559 to do here with the show is just normalize these 0:09:56.600 --> 0:10:00.439 conversations around personal finances and money and delaying that immediate 0:10:00.480 --> 0:10:03.560 gratification and instead planning for your future. And the more 0:10:03.640 --> 0:10:06.480 that we're able to present that as normal and the 0:10:06.520 --> 0:10:10.000 more widely accepted. And it's not ever, I don't think 0:10:10.120 --> 0:10:12.760 going to be widely accepted as this is the path forward, 0:10:12.880 --> 0:10:15.560 not in this country. Not no, because we're constantly being 0:10:15.600 --> 0:10:18.800 fed but oh no, it's owed to you, like you 0:10:18.800 --> 0:10:20.720 need to live your life now, you don't need to 0:10:20.720 --> 0:10:24.120 plan for the future. But the fact that Shakatron is 0:10:24.400 --> 0:10:26.600 thinking about his future, I love that, and I mean 0:10:26.880 --> 0:10:29.760 honestly like that is like hearing that part of his 0:10:29.800 --> 0:10:32.080 comment there may be the happiest the fact that he's 0:10:32.280 --> 0:10:33.719 just proactively thinking about it. 0:10:33.840 --> 0:10:36.200 It's going to take some willingness to be countercultural. And 0:10:36.280 --> 0:10:38.800 it's also important to mention that that it doesn't happen overnight. 0:10:39.559 --> 0:10:42.319 Progress is slow and steady, but like man turning that 0:10:42.400 --> 0:10:45.280 rudder just a little bit, think about how quickly that's 0:10:45.280 --> 0:10:46.760 going to pivot you in a new direction over the 0:10:46.800 --> 0:10:49.280 coming weeks and months. That is the goal of the show. 0:10:49.360 --> 0:10:51.520 Get you on the right financial path. Some of that, too, 0:10:51.760 --> 0:10:54.640 is overarching advice, and some of it gets really specific too, 0:10:54.679 --> 0:10:57.240 rit like talking about diminished value or now talking about 0:10:57.240 --> 0:11:00.200 something like specific student on payment programs. Those are all 0:11:00.200 --> 0:11:02.920 worth discussing, and they're all kind of part of what 0:11:02.960 --> 0:11:05.320 it looks like to have a healthy financial life. And 0:11:05.400 --> 0:11:08.560 so let's specifically get to Chakatron's question here. Matt he 0:11:09.000 --> 0:11:10.800 by the way, he's got a big salary, which is huge. 0:11:10.840 --> 0:11:14.400 I mean, that's gonna help you pivot and continue along 0:11:14.400 --> 0:11:18.760 that healthy financial path much better than if your salary was, like, 0:11:19.160 --> 0:11:20.959 got quite a bit lower. But a high salary, of 0:11:20.960 --> 0:11:23.560 course doesn't mean that why choices aren't still necessary, right, 0:11:24.040 --> 0:11:26.439 I think some people that's the problem. As you tick 0:11:26.480 --> 0:11:28.240 up the income scale, you still see a lot of 0:11:28.240 --> 0:11:31.360 people in those upper echelons living paycheck to paycheck. You 0:11:31.400 --> 0:11:33.880 can make more progress, but you can also continue the 0:11:33.880 --> 0:11:37.320 same bad habits that led you to poor financial decisions 0:11:37.400 --> 0:11:40.040 when you were making half as much. Sure, and so yeah, 0:11:40.320 --> 0:11:42.920 but we want Chocatron to pick the right payback plan 0:11:43.160 --> 0:11:44.680 that gives him of the most bang for his buck, 0:11:44.840 --> 0:11:46.640 because every dollar he doesn't have to put towards his 0:11:46.640 --> 0:11:49.240 student loans is a dollar that he can say that 0:11:49.280 --> 0:11:51.560 he can invest or that he can just spend in 0:11:51.640 --> 0:11:54.280 other ways that are more fulfilling, that are more joyful. 0:11:54.600 --> 0:11:56.559 And by the way, I think that that one hundred 0:11:56.559 --> 0:11:59.000 and fifty thousand dollars of student loan debt, I don't 0:11:59.040 --> 0:12:01.800 see it as an anvil weighing him down, but I 0:12:01.800 --> 0:12:04.080 see it actually the reason he's able to command such 0:12:04.120 --> 0:12:07.520 an income right that it's catapulted him into a higher 0:12:07.520 --> 0:12:11.200 earning stratusphere. I know, of course, it's not fun to 0:12:11.280 --> 0:12:14.480 owe that much, to have this a debt amount that's 0:12:14.520 --> 0:12:16.800 this high, But that mindset shift, I think is an 0:12:16.800 --> 0:12:19.160 important one to say, Hey, listen, this was the thing 0:12:19.200 --> 0:12:21.880 that got me here. This isn't necessarily the thing holding 0:12:21.920 --> 0:12:24.319 me back. It's propelling me. Although now I got to 0:12:24.320 --> 0:12:26.120 figure out a way it's kind of eradicated so I 0:12:26.120 --> 0:12:26.880 can run even faster. 0:12:26.960 --> 0:12:29.560 Yeah. I guess what we don't know is how long 0:12:29.600 --> 0:12:32.560 he's been working since he graduated, because if you let's 0:12:32.640 --> 0:12:34.840 just say he just graduated, Hey, this seems like a 0:12:34.840 --> 0:12:38.199 perfectly a perfectly reasonable student loan amount. Rule of thumb 0:12:38.200 --> 0:12:40.760 being to not borrow more than what you earn in 0:12:40.800 --> 0:12:43.880 your first year after you graduate. But maybe it's been 0:12:43.920 --> 0:12:46.360 like five years. I don't know, but either way, I 0:12:46.360 --> 0:12:48.719 think there is he's he's climbed the ladder and he's 0:12:48.720 --> 0:12:49.000 doing it. 0:12:49.200 --> 0:12:49.360 Yeah. 0:12:49.360 --> 0:12:51.000 I think there's a lot of progress that you can 0:12:51.040 --> 0:12:52.920 make with an income that high. But you're asking about 0:12:52.920 --> 0:12:55.680 a topic with some real nuance here, and for most 0:12:55.679 --> 0:12:59.880 folks who aren't in your upper echelon earning stratosphere, Shakat, 0:13:00.559 --> 0:13:02.199 I think we're gonna both try to save this day 0:13:02.520 --> 0:13:05.520 as often as possible because it's so awesome. But for 0:13:05.559 --> 0:13:10.000 other folks out there, usnormis the Safe Plan, it really 0:13:10.040 --> 0:13:12.400 will be a massive help for them, which is why 0:13:12.600 --> 0:13:14.920 you hear all those great headlines, you hear all that 0:13:14.920 --> 0:13:17.280 that feverish support from almost everywhere. 0:13:17.360 --> 0:13:19.120 He specifically asked for it was a gimmick, and the 0:13:19.160 --> 0:13:21.280 answer is it's not a gum not for a lot. 0:13:21.160 --> 0:13:24.200 Of people exactly. Yeah, the average student loan netter is 0:13:24.200 --> 0:13:26.839 going to be able to see their payment reduced significantly 0:13:26.920 --> 0:13:28.960 because of the Safe Plan. That's ton of folks are 0:13:29.000 --> 0:13:31.640 gonna pay zero dollars a month thanks to the like 0:13:31.679 --> 0:13:36.679 specifically the more generous poverty line deduction. But for you shaka. 0:13:36.960 --> 0:13:39.679 The safe plan is almost assuredly going to be a 0:13:39.720 --> 0:13:40.240 bad idea. 0:13:40.320 --> 0:13:43.000 Yeah, And it's no wonder that you're confused because the 0:13:43.679 --> 0:13:44.840 details can be hard to figure out. 0:13:44.880 --> 0:13:47.040 Yeah, exactly, it's it's it's worth noting too. That is 0:13:47.280 --> 0:13:49.600 he said he's an engineer. I means he's pretty smart. Right, 0:13:49.640 --> 0:13:52.840 he's commanding a pretty high salary. Yes, it's still really confusing, still. 0:13:52.640 --> 0:13:54.880 Confusing, and they're I think part of it's because there's 0:13:54.920 --> 0:13:58.120 these four letter acronyms. You're like, save, pay, repay, and 0:13:58.160 --> 0:14:01.240 you're like, I don't know, it's hard to parse the details, 0:14:01.240 --> 0:14:03.679 and you maybe read the it feels like reading a 0:14:03.720 --> 0:14:06.240 foreign language, almost, as you're perusing the specifics of each one, 0:14:06.240 --> 0:14:07.959 and you're like, so, how do I know which one 0:14:07.960 --> 0:14:09.400 of these is going to be best for me? Then? 0:14:09.760 --> 0:14:13.160 And we The save plan is an income driven repayment plan, right, 0:14:13.160 --> 0:14:15.320 which means the higher income, the more you pay each month. 0:14:15.559 --> 0:14:17.960 So if you make sixty thousand dollars, as you were 0:14:17.960 --> 0:14:19.880 alluding to, let's say you made sixty thousand dollars and 0:14:19.920 --> 0:14:22.000 you have four kids, your payment might go from hundreds 0:14:22.000 --> 0:14:24.040 of dollars a month to zero dollars a Yeah, and 0:14:24.080 --> 0:14:25.600 there's going to be a lot of people, depending on 0:14:25.920 --> 0:14:28.600 their income and how their family size, they might find 0:14:28.640 --> 0:14:31.640 themselves in that position. But if you are in Shaka 0:14:31.800 --> 0:14:34.120 territory and you're making hundreds of thousand dollars of dollars 0:14:34.160 --> 0:14:36.920 a year and you don't have like a dozen children 0:14:37.080 --> 0:14:40.120 to like qualify as a larger family size, which I 0:14:40.120 --> 0:14:42.280 didn't hear Shaka mention anything about having kids. If he's 0:14:42.560 --> 0:14:45.000 single and has an income that high, the Save plan 0:14:45.080 --> 0:14:47.400 is actually going to be more harmful than helpful. Right, 0:14:47.440 --> 0:14:50.440 So sticking with the pay plan that you're currently on 0:14:50.760 --> 0:14:53.240 is almost inevitably going to be the best financial decision 0:14:53.280 --> 0:14:57.080 to spite. Despite the laudatory things that you've heard about 0:14:57.080 --> 0:14:59.400 the Save plan, it just doesn't fit for your situation 0:14:59.640 --> 0:15:00.000 for year. 0:15:00.040 --> 0:15:02.320 You not a good plan for it. Yeah. The crux 0:15:02.400 --> 0:15:04.400 of the matter is that payment cap that you mentioned, 0:15:04.400 --> 0:15:07.240 Because if you sign up for Save and your income 0:15:07.240 --> 0:15:09.840 continues to increase, well, that payment can go up too. 0:15:10.320 --> 0:15:12.280 And here's the thing, the sky is the limit to 0:15:12.360 --> 0:15:14.120 how high it can go. Yeah, there is no cap 0:15:14.240 --> 0:15:17.200 that is not true for your pay plan. So you 0:15:17.200 --> 0:15:19.000 don't want to base your decision solely on what you're 0:15:19.040 --> 0:15:21.680 earning now, but you also want to think about what 0:15:21.720 --> 0:15:23.960 it is that you might be earning in the near future. 0:15:24.120 --> 0:15:26.360 The other thing I think worth mentioning is that the 0:15:26.400 --> 0:15:29.880 pay plan comes with a shorter timeline for forgiveness for 0:15:30.000 --> 0:15:33.640 graduate student loans, which is, I believe what Chaka said 0:15:33.840 --> 0:15:36.480 he had right, So twenty years versus twenty five years 0:15:36.520 --> 0:15:38.600 with a save plan, and that might seem like forever 0:15:38.640 --> 0:15:41.240 a way anyway, but with the size of your balance, 0:15:41.720 --> 0:15:44.800 you just might find that to be another compelling reason 0:15:44.880 --> 0:15:48.440 to choose pay oversave. Also, I wouldn't let that be 0:15:48.480 --> 0:15:52.480 a deciding factor because ultimately, especially given your income, we'd 0:15:52.480 --> 0:15:54.320 love to see you pay off that balance before you 0:15:54.400 --> 0:15:58.360 reach that endpoint. Anyway, Forgiveness is cool, but given yeah, 0:15:58.400 --> 0:16:00.520 how much money you're able to bring in the size 0:16:00.520 --> 0:16:02.720 of that balance, I think you should be able to 0:16:02.760 --> 0:16:04.840 get rid of those loans in years rather than decades. 0:16:04.880 --> 0:16:07.040 But that is at least one more fact or one 0:16:07.040 --> 0:16:09.360 more checkbox, and like maybe much just stick with pay 0:16:09.400 --> 0:16:12.400 because if it does take me longer, I'm that much 0:16:12.440 --> 0:16:15.360 closer to having at least part of my student loan 0:16:15.400 --> 0:16:15.920 debt forgiven. 0:16:16.000 --> 0:16:17.920 Yeah. For him, like we have to sort of interpret 0:16:17.920 --> 0:16:19.600 the question for the listener out there, because they're hearing 0:16:19.600 --> 0:16:21.600 one hundred and fifty K and they're thinking, oh my gosh, 0:16:21.640 --> 0:16:24.160 that's a substantial amount of money. But for those folks, 0:16:24.160 --> 0:16:26.080 it might only be earning you know, like sixty or 0:16:26.120 --> 0:16:29.440 seventy K, where yes, you do probably want to extend 0:16:29.680 --> 0:16:31.920 the payments as long as possible and not for that forgiveness. 0:16:31.960 --> 0:16:33.560 In that case, it feels like a grizzly bear sitting 0:16:33.640 --> 0:16:36.440 on your chest, whereas yeah, in the case of Shaka, 0:16:36.480 --> 0:16:38.920 it's like a baby cub, Yeah, trying to grab onto 0:16:38.960 --> 0:16:39.200 your back. 0:16:39.240 --> 0:16:40.280 It's like swatten away a fly. 0:16:40.440 --> 0:16:43.160 Yeah, all those costs hurt even though you're a baby. 0:16:43.520 --> 0:16:44.840 It's yeah, it's still uncomfortable. 0:16:44.840 --> 0:16:47.840 But there's But I think what you're saying is true 0:16:47.840 --> 0:16:50.720 because like so Shaka he was like chipping away at 0:16:50.720 --> 0:16:53.320 his student loans, and I think that's okay. It's a 0:16:53.320 --> 0:16:56.160 big balance. You know, it can be hard to maybe 0:16:56.200 --> 0:16:59.360 like mentally wrap your mind around that. We get it. 0:16:59.720 --> 0:17:02.200 You don't I want to put other financial goals on 0:17:02.240 --> 0:17:04.320 the back burner at the same time, right, Like, for instance, 0:17:04.320 --> 0:17:06.440 you don't want to avoid investing in order to pay 0:17:06.480 --> 0:17:09.160 it off immediately. In order to pay it off more quickly. 0:17:09.520 --> 0:17:10.720 I think a lot of years that you might be 0:17:10.720 --> 0:17:13.439 avoiding your roth irka if you made that choice. 0:17:13.760 --> 0:17:15.399 I just think it's a good idea to try to 0:17:15.440 --> 0:17:18.040 be doing both at the same time, eliminating that debt 0:17:18.040 --> 0:17:20.240 but also building up a nest egg for your future. 0:17:20.400 --> 0:17:23.600 And then plus those contributions will actually reduce your AGI, 0:17:23.680 --> 0:17:28.080 which reduces your required monthly payment. But the longer you 0:17:28.080 --> 0:17:31.239 can live a lean existence, the more quickly you're going 0:17:31.280 --> 0:17:34.359 to be able to eradicate that debt. And again, we 0:17:34.440 --> 0:17:36.880 know this is a massive sum, but your income, it's 0:17:36.920 --> 0:17:39.880