Speaker 1: Welcome to How to Money. I'm Joel, and I am
Speaker 1: and today we're answering your listener questions.
Speaker 2: You you kind of jumped the gun on that one.
Speaker 2: I barely had time to swallow my little taste of beer.
Speaker 1: There time to get this train roll in my mouth
Speaker 1: was it.
Speaker 2: Was still still watering. But this is and ask how
Speaker 2: to Money Monday episode for folks out there. We've got
Speaker 2: five listener questions lined up for you. A listener is
Speaker 2: asking about diagnosable money disorders, whether or not Joel, you
Speaker 2: in particular, whether or not you've been that you discovered that.
Speaker 2: This probably sounds really confusing, but we will get to
Speaker 2: that one here. In this question itself is a hip
Speaker 2: a violation. I just want to know.
Speaker 1: I don't think we should be taking you after.
Speaker 2: You can sign off and allow us to talk about it. Right,
Speaker 2: it's but it's your right.
Speaker 1: I guess.
Speaker 2: Is that how it works out?
Speaker 1: Not to mesually.
Speaker 2: But somebody else is wanting to know what he should
Speaker 2: be doing with this unsustainable housing market the way prices
Speaker 2: have been going. And another listener is wanting to make
Speaker 2: the most of a ten thirty one exchange. What is
Speaker 2: that and how does it pertain to real estate. We'll
Speaker 2: get to that here in a second, and we'll answer
Speaker 2: to additional questions. Ten thirty one exchange one of those
Speaker 2: things not a lot of people know about, but as
Speaker 2: a real estate investor, if you're planning on swapping properties,
Speaker 2: it can save you a ton of money. We'll discuss that,
Speaker 2: along with a lot of other things on this episode.
Speaker 2: Right man, But some in laws I'll chatting with them,
Speaker 2: and they recently bought a new car. They're rich, so
Speaker 2: they've bought.
Speaker 1: In this market, a brand new car must be loaded.
Speaker 2: No, they are retired and they thought, you know what,
Speaker 2: it's time to get us a nice vehicle. That's you've
Speaker 2: never been owned by anybody else in.
Speaker 1: The world, like that could have been my inheritance.
Speaker 2: I'm hey, one day we might be driving that car.
Speaker 2: I don't know. We'll see how long you've been on
Speaker 2: a car last on the road. But they got a
Speaker 2: brand new Kia Sportage. And dude, that thing is I'll say,
Speaker 2: it's pretty stick and sweet. It's like a hybrid kind
Speaker 2: of suva, you know, it's like one of those one
Speaker 2: of those new types. It's not a hybrid, right, No,
Speaker 2: I'm sorry, No, Yes, it's not an actual hybrid. It's
Speaker 2: like a crossover.
Speaker 1: That's what I meant to say. But they've really enjoyed it.
Speaker 1: But what they have in he is are so hot
Speaker 1: right now? They are?
Speaker 2: They are?
Speaker 1: Yeah, we talk about that with.
Speaker 2: The car Dealership guide that tell you right in particular
Speaker 2: is I think that was the beginning of Kia just
Speaker 2: changing their image, changing their brand. And that's what I
Speaker 2: keep telling my in law, specifically my mother in law,
Speaker 2: is I'm curious to see if in ten fifteen years
Speaker 2: from now, if folks are gonna look at Kia's in
Speaker 2: the same light the same way that we look at
Speaker 2: Honda's and Toyota's.
Speaker 1: Yeah, I think they already kind of are.
Speaker 2: It seems like they're getting that way.
Speaker 1: I remember my brother in law had a Hyundai like
Speaker 1: twenty years ago, and Hyundai's were trash. They were just
Speaker 1: like nobody respected them. They were so cheap. They had
Speaker 1: these tenyure warranties. They're like, why why would you buy
Speaker 1: a Hyundai Instace. You should get yourself a Saturn. That
Speaker 1: was like the only way they could convince people to
Speaker 1: buy Hyundai's was this ridiculously incredible warranty and all of
Speaker 1: a sudden, like overtime, Hyundai Kia, they both just started
Speaker 1: to turn out better and better cars. Game Now, yeah,
Speaker 1: they rival with some of the better car manufacturers out there. Yeah,
Speaker 1: but that being said, they haven't up their game enough
Speaker 1: to for mind Lust to not have to take that
Speaker 1: thing back into the dealership multiple times.
Speaker 2: Now. They've had some issues with the electronics. Things aren't
Speaker 2: working the way that they're supposed to obviously. But yeah,
Speaker 2: So this raises the question, then, is it's a good
Speaker 2: idea to avoid the first model year after a car
Speaker 2: gets revamped.
Speaker 1: Basically that's been a baphorism for a long time.
Speaker 2: Something that you hear, and so I actually dug into
Speaker 2: the data, dug into the facts, and if you look
Speaker 2: at that, it actually shows so JD power They've got
Speaker 2: like a vehicle dependability study, and if you look at
Speaker 2: the past multiple years, actually the first model year, it
Speaker 2: doesn't perform any better or any worse when it comes
Speaker 2: to that particular make and model of the vehicle. Why
Speaker 2: has that been a thing then for so long? I
Speaker 2: wonder I think people just back in the day, I
Speaker 2: think it was more of a thing. But cars today
Speaker 2: and research kind of points this out. Cars just get
Speaker 2: tested so thoroughly. I mean they drive it like above
Speaker 2: twelve thousand feet for so many miles, and they take
Speaker 2: it to Death Valley and basically they're trying to break
Speaker 2: the car, and there is substantial testing that there truly
Speaker 2: shouldn't be anything like that. It doesn't mean that if
Speaker 2: you were to buy a new car that anecdotally there
Speaker 2: will be instances where something might go wrong with a vehicle,
Speaker 2: but generally speaking, that's not necessarily something you should worry about.
Speaker 2: Don't let that be what keeps you from buying a
Speaker 2: new vehicle or even when you're.
Speaker 1: Buying a used vehicle, like going back to be like, oh,
Speaker 1: well this was the model crossover year twenty thirteen. Maybe
Speaker 1: I shouldn't go for that, Maybe I should look for
Speaker 1: a twenty twelve or twenty fourteen instead.
Speaker 2: Well that doesn't really matter.
Speaker 1: Really good thing to know. And like you said, you
Speaker 1: can look back at stuff like JD Power, or you
Speaker 1: can look at consumer reports. Those reliability rankings are far
Speaker 1: superior than just kind of the first model year, the
Speaker 1: truthy non truth sort of way of thinking, kind of
Speaker 1: the gut reaction or the stories that you hear and
Speaker 1: actually and you can always especially and you're looking at
Speaker 1: use vehicles.
Speaker 2: I think it's the National Highway Institute or whatever, but
Speaker 2: there's a website where you can go and you can
Speaker 2: enter in your VEN number and it'll tell you some
Speaker 2: of the different recalls that are outstanding on that particular vehicle.
Speaker 2: So we can make sure to link to that in
Speaker 2: the show notes.
Speaker 1: Yeah, for this episode. Good resource for sure. Yeah. And
Speaker 1: by the way, it is always helpful to do a
Speaker 1: carfax report or to run some sort I think there's
Speaker 1: actually a free one too. Maybe I'll find that and
Speaker 1: link to that in the show notes as well. I
Speaker 1: think there's a free resource where you can kind of
Speaker 1: find out the vehicle's history, which is just all that's
Speaker 1: more helpful to know than whether it's the first model
Speaker 1: year or not, because I don't know what has happened
Speaker 1: to this specific car over its history. And you know,
Speaker 1: those are imperfect, but they're still helpful. But Matt, let's
Speaker 1: totally mention the beer we're having on this episode. This
Speaker 1: one is called Pyrotechnic Pleasantries. It's by Sour Sellers out
Speaker 1: of California, out of Rancho Cucamonga, which is just a fun,
Speaker 1: fun city to say that's not a real city. It
Speaker 1: truly is that, and I want to visit just so
Speaker 1: I can say Rancho Cucamonga while i'm there.
Speaker 2: I love it. But yeah, this is a cho kuka
Speaker 2: mundo cua manga manga. Yeah, pardon me.
Speaker 1: This is a beer I picked up when I was
Speaker 1: in California a couple months ago. And did you you
Speaker 1: didn't actually go to sourseller? No? No, Actually, the guy
Speaker 1: at the beer store he recommended it, highly recommended it.
Speaker 1: So I'm super excited to check this one out today
Speaker 1: on the show. But let's get on to listener questions.
Speaker 1: And if you have a question you want to Matt
Speaker 1: and I to tackle on an upcoming episode, just go
Speaker 1: to howdomoney dot com slash ask. You'll find the simple
Speaker 1: instructions there so you can record a voice memo send
Speaker 1: it our way hopefully we can take it in a
Speaker 1: couple of weeks on the show. But Matt, let's get
Speaker 1: to our first question of this episode. This one is
Speaker 1: about whether or not I'm diagnosably insane.
Speaker 3: Hey there, this is Keith from the Organ Coast again
Speaker 3: and I've got a question for you, Joel about how
Speaker 3: your relationship to money might have changed since your wife
Speaker 3: has started going to counseling school. My girlfriend is in
Speaker 3: counseling school, and it's sort of brought out a lot
Speaker 3: of questions about my relationship to money and insecurities I
Speaker 3: have around money, Why that came about, and her diagnosing
Speaker 3: me with lots of psychological issues related to money, and yeah,
Speaker 3: I'm just curious if you've had the same experience, if
Speaker 3: it's been a net positive for you, let me know
Speaker 3: your thoughts.
Speaker 1: I think this is the first time we've had a
Speaker 1: question directed at a specific host. So Joel, shall you
Speaker 1: take this away? My palms are sweating. Actually, I'm just
Speaker 1: going to kick back this one. Let's move on to
Speaker 1: are you feeling a little nervous? Keith? Why did you
Speaker 1: do this to me?
Speaker 2: You're on the hot seat. Yeah, I'm feeling the pressure
Speaker 2: a little bit right now. So I'll answer for Joel,
Speaker 2: which is always what you want to hear. Yeah, when
Speaker 2: someone asks you a question about nature, it hasn't changed
Speaker 2: your relationship to money, but it's completely changed your relationship
Speaker 2: to your wife. You two aren't saying out to I anymore,
Speaker 2: right exactly?
Speaker 1: Yes, No, she hasn't diagnosed me with anything formally, because
Speaker 1: I want to allow her because she's not actually a licensed
Speaker 1: professional at this point. She's just in school. Okay, No,
Speaker 1: I'm kidding, But this is actually a really good question,
Speaker 1: and it's it's fascinating that Keith is going through the
Speaker 1: same thing I'm going through to a certain extent, and
Speaker 1: it's helpful to hear that I'm not alone, I guess.
Speaker 1: And yeah, and she's she's really kind of halfway through
Speaker 1: her education and she's learned a lot, and I'm like,
Speaker 1: it's honestly, her going to the school to become a
Speaker 1: licensed therapist, she's going to become a marriage and family therapist.
Speaker 1: Has been really good for our relationship and although not
Speaker 1: always easy, as Keith has figured out, it's definitely opened
Speaker 1: up a can of worms at some at different points,
Speaker 1: different fun, interesting conversations and also difficult conversations, but overall
Speaker 1: a net positive. And I would say it's been good
Speaker 1: for me, it's been good for us. It's been good
Speaker 1: for our kids in a lot of ways. To see
Speaker 1: her dedication, to see her excel at something that's just
Speaker 1: really demanding. So yeah, I don't know. I think it's
Speaker 1: also fun to watch because it just very much feels
Speaker 1: like she was born to do this, which it's so
Speaker 1: fun for me to get to support her in that.
Speaker 2: And she's like at the top of her class right
Speaker 2: like literally she is maybe completely not only getting a's,
Speaker 2: but she's like acing tests. She was sharing that with
Speaker 2: Kate and the other night at dinner.
Speaker 1: And I was like, holy crap, you're you're gonna be
Speaker 1: really good at this.
Speaker 2: And I'm sure not just from a textbook standpoint, but
Speaker 2: so much of like the testing involves actual, like the
Speaker 2: kind of counseling work.
Speaker 1: It's not just like Scantron's. Yeah, it's not rote memorization
Speaker 1: right now, like one of the classes she's taking this semester,
Speaker 1: it's it's literally people pairing off and diagnosing each other
Speaker 1: with stuff essentially and working through issues. So it's like
Speaker 1: doing the practice of being a therapist. So why don't
Speaker 1: they do that with like heart surgery, And that's a
Speaker 1: good question. Yeah, you are, Mike a lot of cadavers.
Speaker 1: You two go off cadavers, that's true, Well, not on
Speaker 1: each other. That it's not like if you and I
Speaker 1: were going to med school that we operate on each
Speaker 1: reason for that, although when we were in Edinburgh recently
Speaker 1: we learned some interesting stuff about cadavers. Do you remember
Speaker 1: that with people were digging up bodies in order to
Speaker 1: sell them to the school in Edinburgh, and that's why
Speaker 1: they've got those greats over over the over the g
Speaker 1: plats or whatever. Yeah, exactly, all right, so crazy stuff.
Speaker 1: Let's continue talking about this for just a second. I
Speaker 1: will say that I've grown a lot as Emily's been
Speaker 1: in grad school, like and that I've done more self examination.
Speaker 1: And I do think that an unexamined life is kind
Speaker 1: of boring. That you have to kind of do some
Speaker 1: of this work in order to grow as a person.
Speaker 1: So she's helped me do that, to help help me
Speaker 1: unearth different things over the past couple of years, which,
Speaker 1: like I said, has been kind of a mixture of
Speaker 1: like fun, hard and enlightening and and it's not always
Speaker 1: easy to do that hard work, but I think it's valuable.
Speaker 1: I think, uh, leaving those stones unturned isn't helping anybody,
Speaker 1: and not recognizing maybe some of those patterns that lead
Speaker 1: you to a certain place sure isn't healthy. So yeah,
Speaker 1: growth as an individual, growth as a couple. But when
Speaker 1: it comes to specifically like money issues, I don't know
Speaker 1: I think I had actually done a lot of the
Speaker 1: hard work on that already. I think there are other
Speaker 1: things that we've probably unearthed more than the issues that
Speaker 1: I have with money, because honestly, if you've been listening
Speaker 1: to this podcast for a number of years, you probably
Speaker 1: heard our philosophy shift, morph and change and grow and
Speaker 1: hopefully become a little bit freer in some ways. I think,
Speaker 1: Matt like, we've talked about my journey with frugality and
Speaker 1: extreme frugality at times, and I think I've grown a
Speaker 1: lot in that way. I think a lot of what
Speaker 1: I experienced as in childhood and my parents' relationship with
Speaker 1: money and to each other about money was difficult and informative,
Speaker 1: but I've also had to grow past that because I
Speaker 1: think I had more like a too too secure of
Speaker 1: an attachment to money, or too insecure of an attachment
Speaker 1: to money, I guess, And so I've developed been able
Speaker 1: to kind of work through. I think some of those
Speaker 1: issues slowly, but surely it's not something that you do
Speaker 1: over night snap of a finger or anything like that.
Speaker 1: Sure's I think some of the conversations Emily and I've
Speaker 1: had have you know, not necessarily any diagnosis I knew
Speaker 1: I was weird, and I knew that impacted me, but
Speaker 1: definitely has helped me work through some of those things
Speaker 1: even more.
Speaker 2: Yeah, well, I like what you said about working through
Speaker 2: it too, because I think it is like, yes, it
Speaker 2: is important to do the work right and to dig
Speaker 2: in and phrase right, figure out what Yeah, figure out
Speaker 2: what it is that has impacted you. But simultaneously, I
Speaker 2: think it's important to make sure that you're not completely
Speaker 2: living in the past. You are not necessarily like yeah,
Speaker 2: you shouldn't be defined by your previous actions. What are
Speaker 2: you doing today? What are you going to do in
Speaker 2: the future as you're moving forward? And this isn't to
Speaker 2: say bear your past ignore those feelings, like no, it
Speaker 2: is worth shove it deep down. It is worth paying
Speaker 2: attention to that and seeing truly how it has impacted
Speaker 2: specifically how it has impacted how you view things I
Speaker 2: guess in the past. But then to take that information
Speaker 2: and then move forward. Like we've all seen folks who
Speaker 2: they just have certain hang ups, different things that have
Speaker 2: happened to them in their lives and they just can't
Speaker 2: seem to get past that, and it tends to come
Speaker 2: up in conversations as like an excuse for why they're
Speaker 2: choosing to not move forward. And I think that eliminates
Speaker 2: a whole lot of agency that we have as individuals
Speaker 2: to make the best of what it is that we've
Speaker 2: learned from those hard, very hard and painful at times experiences.
Speaker 1: Yeah, but I think we lose some of our agency
Speaker 1: if we don't do the work of seeing where we've
Speaker 1: come from and how it's influenced us.
Speaker 2: So you're just flying blind all this. You don't understand
Speaker 2: how it was that this, how the plane was put
Speaker 2: together that you're flying.
Speaker 1: You know, Oh, yeah, you're treating symptoms instead of the
Speaker 1: root problem, right for the root cost and so sometimes
Speaker 1: you got you really do have to go back and
Speaker 1: look at some of that stuff. And it makes me
Speaker 1: think about how we talk about money here on the show.
Speaker 1: Numbers in math are obviously important when we talk about money,
Speaker 1: but even that is not as important as our own
Speaker 1: psychology kind of what we're bringing to the table. Money behaviors,
Speaker 1: ingrained money behaviors, ingrained ways of relating to and thinking
Speaker 1: about money that have really been instilled in us over
Speaker 1: the course of a few decades. And so it's one
Speaker 1: of the like it does of course, take time to
Speaker 1: overcome some of those hang ups that we have with
Speaker 1: money and really to even kind of put a finger
Speaker 1: on how we got there. So I think that's why
Speaker 1: we try to talk about the psychological side of things.
Speaker 1: We try to bring on financial therapists something like that.
Speaker 1: I mean, we really do want people to the whole
Speaker 1: gamut of a healthy approach to money. We want people
Speaker 1: to consider that, not just know the maximount you're allowed
Speaker 1: to contribute to a roth Ira this year and the
Speaker 1: mechanics of doing it.
Speaker 2: Like, not just about the mechanics. Yeah, absolutely, Yeah, if
Speaker 2: we were just a bunch of automatons, then what's the
Speaker 2: point of even like having a podcast, because well, here
Speaker 2: is on a single sheet everything you need to know.
Speaker 2: Follow these steps, and you will be wealthy right by
Speaker 2: the time you hit fifty years old.
Speaker 1: And there's some of that, right. Some people need to
Speaker 1: you need to know about compounding, You need to be
Speaker 1: kind of have your imagination open to how it works
Speaker 1: and what it can produce. But that's why the behavioral
Speaker 1: element is so crucial, so crucial to understanding. So I guess, yeah,
Speaker 1: I don't know. I guess over time I realized that
Speaker 1: money was like a security blanket for me, and that
Speaker 1: it was unhealthy and I had to kind of work
Speaker 1: through that. I will also say it's something that I
Speaker 1: continue to wrestle with and I continue to think about
Speaker 1: it like that because those experiences from childhood still loom large.
Speaker 1: And so, yeah, I still worry and I have to
Speaker 1: run like worst case scenario things in my head, realizing
Speaker 1: that well, the worst case scenario really isn't as bad,
Speaker 1: and sometimes it's just catastrophizing in my own brain and
Speaker 1: it's like, well, really, come on, that's unlikely to happen,
Speaker 1: and even if it did, we'd still be okay.
Speaker 2: Still be okay. Well, and I mean this is a
Speaker 2: part of why we have the podcast. We are saying
Speaker 2: these things not because we don't know them, but because
Speaker 2: we forget them. We have you know, when it leaders
Speaker 2: talk about Mission leak, right and how you kind of
Speaker 2: lose sight of what it is you're striving after the
Speaker 2: same thing happens when it comes to some of these
Speaker 2: different personal finance tenets that we need to make sure
Speaker 2: that we're living.
Speaker 1: By as well.
Speaker 2: But okay, so one other things you said too is
Speaker 2: that it takes time, which I completely agree like it's
Speaker 2: something that you know, it's something that you need to
Speaker 2: work on over time. You're not just like healed, right, Like, yeah,
Speaker 2: you can't just snap your finger, snap your fingers. But okay,
Speaker 2: so my brain's kind of go in multiple directions here.
Speaker 2: I think a takeaway maybe for a lot of folks
Speaker 2: out here who unlike Keith and yourself who you know,
Speaker 2: you both have girlfriends or wives that are going through
Speaker 2: who are becoming counselors. But there's a lot of folks
Speaker 2: out there who don't have that. Yeah, but I still
Speaker 2: think and this I'm not saying that these are the
Speaker 2: same thing, but when it comes to talking about money
Speaker 2: with your partner, I think you can do a lot
Speaker 2: of some of this work with your partner by just
Speaker 2: being very intentional about some of the conversations that you
Speaker 2: have and specifically just carving out time on your calendar
Speaker 2: to have some of these deeper conversations, which do take time.
Speaker 2: Its relationship, right, and relationships are messy and they're not efficient,
Speaker 2: but that's oftentimes how you're able to draw out a
Speaker 2: deeper fear or a bigger goal out of a life
Speaker 2: partner that maybe you didn't even realize that they had,
Speaker 2: or maybe you'd heard them mention it before, but you're
Speaker 2: now realizing for the first time after talking about this
Speaker 2: and that they're serious in this way a second that
Speaker 2: makes you tick. Yeah, yeah, exactly, And so I don't know,
Speaker 2: I just wanted to mention that because I know we
Speaker 2: can be awkward sometimes to talk about some of these
Speaker 2: It's like, oh man, we've never talked about money this way.
Speaker 2: This is this is brand new, and it's going to
Speaker 2: feel real clumsy. But I think it's really important to
Speaker 2: have some of these conversations, especially when you're when you're
Speaker 2: trying to get a partner on board financially.
Speaker 1: Yeah. All right, One last thing I want to say
Speaker 1: too on this one. And I'm not sure if I'm
Speaker 1: reading into this or not Keith, but it sounded like
Speaker 1: maybe you were like somewhat slightly just annoyed at maybe
Speaker 1: the diagnoses that your girlfriend is like bringing down on
Speaker 1: your head or.
Speaker 2: Maybe taking aback a little bit by like oh man,
Speaker 2: which I didn't know I had all this going on.
Speaker 1: He's totally understandable. And I will say, like, I am
Speaker 1: kind of one of those people who's like instantly defensive
Speaker 1: at times, and I don't want to Necessarizy. I don't
Speaker 1: want to be told who I am, what I like.
Speaker 1: Don't reveal that about me, like cause it hurts or
Speaker 1: it's or it's just a tough thing to hear. And
Speaker 1: sometimes I would rather just like close my ears and
Speaker 1: go lah la la la la la and not hear it.
Speaker 1: And but it's it's important too. As much as you
Speaker 1: can kind of lean into those conversations because I think
Speaker 1: they're good for you, they're good for her and she
Speaker 1: to be able for her to be able to share
Speaker 1: that with you, and you to be able to have
Speaker 1: those conversations with her, I think it's going to be
Speaker 1: mutually beneficial if you enter into those conversations with like
Speaker 1: a willingness to learn and a willingness to grow. Again,
Speaker 1: easier says said than done. But the more you can,
Speaker 1: the more you can do that, I think the better
Speaker 1: it's going to be for both of Yeah, totally.
Speaker 2: Yeah, And Keith, you are not alone. I think for
Speaker 2: those who are like I never have to deal with that.
Speaker 2: I think a lot of those folks just haven't spent
Speaker 2: the time, they haven't been left alone with their thoughts,
Speaker 2: or they haven't worked through it with a partner before.
Speaker 2: I think there's a lot more folks out there that
Speaker 2: do have issues when it comes to money and how
Speaker 2: much individuals are relying on that money to feel a
Speaker 2: sense of security.
Speaker 1: And it's just one of those more socially acceptable ways
Speaker 1: of being insecure in this world.
Speaker 2: Right.
Speaker 1: It's like you.
Speaker 2: Dress it up as like success or ambition.
Speaker 1: Or workaholism is another one of those things where it's like, oh,
Speaker 1: look at that person, they get stuff done, but really, yeah,
Speaker 1: it doesn't look the same and it's not nearly as
Speaker 1: devastating in some ways as a drug addiction or something else,
Speaker 1: but it's still just very much comes from the same
Speaker 1: root source.
Speaker 2: Totally.
Speaker 1: Yep, Keith, best of bluck to youse. You guys continue
Speaker 1: to have these conversations. We've got more questions to get
Speaker 1: to on this episode, less personal in nature, hopefully, but
Speaker 1: we are going to specifically gonna kind of zero in
Speaker 1: on one listener and his holistic financial situation. Will get
Speaker 1: to that and more right after this.
Speaker 2: All right, Jill, we are back from the break and
Speaker 2: we will get to that listener question from the guy
Speaker 2: who wants us to take a look behind the curtain
Speaker 2: of all of his finance like everything he owns. Honestly,
Speaker 2: I feel like he's he's more typical. I know, it's
Speaker 2: sort of like Keith's question. I feel like a lot
Speaker 2: of times we think that we're alone in our situations,
Speaker 2: are just just so weird and dysfunctional or whatever it is.
Speaker 2: We're all the songs you might you might think, but
Speaker 2: yes we are all. We are all that way, And
Speaker 2: in particular we're talking about Sean. We're gonna get to
Speaker 2: him in a second, but.
Speaker 1: I'm just trying to function dysfunction mat.
Speaker 2: His his financial situation is. I think it's more typical
Speaker 2: than he would actually think it is. But we'll get
Speaker 2: to him here in a second. But first let's hear
Speaker 2: from a listener who's asking about a crazy housing market.
Speaker 4: Hey, Matt and Joel Steve from Boston. Long time, first time.
Speaker 4: Your recent podcast on home ownership got me thinking about
Speaker 4: my own goals of owning a home one day. But
Speaker 4: as someone in my late twenties, especially in my local market,
Speaker 4: it seems like home ownership is a long ways away,
Speaker 4: and there might be some truth to that. In your podcast,
Speaker 4: you shared a stat that over the past thirty years,
Speaker 4: the average growth rate of real estate was five point
Speaker 4: three percent. Well, I did some of my own research
Speaker 4: and I found that over the same period of time,
Speaker 4: the average wage growth rate was three point thirty nine percent.
Speaker 4: To me, this comparison doesn't seem sustainable for younger generations
Speaker 4: to buy homes at the same point of life as
Speaker 4: their parents or grandparents. But I want to get your
Speaker 4: take on it. Is this concerning to you too, especially
Speaker 4: since we know the power of compounding returns, But in
Speaker 4: this case, compounding returns doesn't work in our favor.
Speaker 1: Thanks aw Matt. Let's take a macro question here, put
Speaker 1: on our point to economy.
Speaker 2: Wages versus housing.
Speaker 1: Yeah, so usually values, Usually we're more in the micro
Speaker 1: personal finance space. But I think this is really interesting
Speaker 1: because I think the macro often impacts the micro. Right,
Speaker 1: We talk about that on the show. So we'll do
Speaker 1: our best here to answer this one, Steve. And it
Speaker 1: is true that living in a market like Boston, yes,
Speaker 1: it's going to be more difficult to become a homeowner
Speaker 1: there than it would be in Let's say, I don't
Speaker 1: know Mississippi or parts of Ohio, right that they're just
Speaker 1: there are a lot of cheaper places in the country
Speaker 1: to buy a house than Boston, depends on where you're
Speaker 1: at in Boston as well. Right, sure, yeah, real estate
Speaker 1: markets are hyper local. But as we said in that episode,
Speaker 1: you're referring to that specific market matters even inside of
Speaker 1: a city, even specific locations within that city, or sometimes
Speaker 1: it's even street to street like that's how real estate functions,
Speaker 1: that's how it works. There's just thousands of markets really
Speaker 1: across the country, not just a handful, which is surprising,
Speaker 1: I think to a lot of people. It is obviously
Speaker 1: hyper local. And here's the thing though, the longer you
Speaker 1: own a home, no matter where you end up buying,
Speaker 1: the more likely it is to be a solid financial
Speaker 1: move as well. Time is really key on the home
Speaker 1: lining front. That's something we maybe didn't we talked about
Speaker 1: we touched on on that episode, but that is one
Speaker 1: way in which buyers can be helped over time. As
Speaker 1: rents continue to increase, if you've locked in, in particular
Speaker 1: a lot of those folks who locked in low rates
Speaker 1: on thirty year mortgages, it is a hedge against inflation.
Speaker 1: But you're right, at the same time, home prices continue
Speaker 1: to outpace wage growth. So Matt, what do you think
Speaker 1: how do we tackle that as individuals?
Speaker 2: Well, I think that's the key point, is what can
Speaker 2: we do as individuals, because obviously there's nothing that we
Speaker 2: can do from a macro level, but as individuals we
Speaker 2: have a lot of control over our lives. But I
Speaker 2: think maybe the best way to discuss this might be
Speaker 2: to give an example, so Toronto. It turns out that
Speaker 2: unsustainable housing prices can be sustained for quite a long time.
Speaker 2: Home prices in Toronto they have kadrupled in just about
Speaker 2: fifteen years or so, but only in the past year
Speaker 2: have prices started to correct, and they're actually plunging pretty rapidly.
Speaker 2: We don't know exactly how far it will be that
Speaker 2: they'll fall. But what I'm pointing out here is the
Speaker 2: fact that markets go through cycles, and it is difficult
Speaker 2: to predict when those cycles will occur, how it is
Speaker 2: that they will evolve. But at some point, any sane
Speaker 2: individual is going to opt to rent in an environment
Speaker 2: like Toronto's when it's vastly more affordable and when it
Speaker 2: just becomes financially impossible to buy. The thing is that
Speaker 2: all those micro decisions eventually does have an impact on
Speaker 2: the macro because when enough people do that. When enough
Speaker 2: people choose to rent, over time, prices do start to correct. Essentially,
Speaker 2: it's just supply and demand. And with housing in particular,
Speaker 2: like housing it's a freight train. It's this massive industry,
Speaker 2: and it takes a long time for things to slow down.
Speaker 2: It takes a long time for things to ramp up,
Speaker 2: in particular when it comes to new developments. And we've
Speaker 2: seen it depends on who, like what research you're citing,
Speaker 2: but I think there's something like seven million. We have
Speaker 2: a shortage of something like seven million homes here in
Speaker 2: the US, And it depends on the statute read, depends
Speaker 2: on someone's say four mil. Some would say yeah, whatever,
Speaker 2: But but bottom line, like, there is a shortage. And
Speaker 2: since the Great Recession, like that knocked out a lot
Speaker 2: of homebuilders and we didn't see that rebound right after that,
Speaker 2: and so we've been underproducing as a country, we've been
Speaker 2: underproducing homes and there just is a shortage. And so eventually,
Speaker 2: as money continues to flow into housing in the industries
Speaker 2: that support it, it will correct. But again we're not
Speaker 2: totally sure when well.
Speaker 1: And like we said in that episode, one of the
Speaker 1: things you have to consider along that big long timeline
Speaker 1: of how wages haven't kept up with home price growth, Well,
Speaker 1: homes have changed over that period of time. Homes have
Speaker 1: gotten bigger home price growth. Of course it's going to
Speaker 1: outpace wage growth because it's not just inflation. They're fancier products, yes, right, yep.
Speaker 1: And at the same time, COVID changed what a lot
Speaker 1: of people wanted in a home, and so especially with
Speaker 1: work from home, that has really I think that is
Speaker 1: people have a lot of Americans have placed more of
Speaker 1: a premium on their home, willing to fork over more
Speaker 1: of their take home pay to pay for lodging because
Speaker 1: now it works as office space.
Speaker 2: Too, right, So it's been a shift in priorities as
Speaker 2: to what it is that we're spending our money on exactly. Yeah,
Speaker 2: So what should people do about this like a housing
Speaker 2: market that yes, it's more expensive than ever to buy
Speaker 2: a home and it's going to take more of your
Speaker 2: higher percentage of your income. Well, one the first thing
Speaker 2: you could do, I think is cry. You could just
Speaker 2: be devastated. And I get that.
Speaker 1: I get that impulse because it is it's disappointing for
Speaker 1: if you want to buy a home and you're like,
Speaker 1: this has become prohibitively expensive. I don't know how long
Speaker 1: it's going to take for me to be able to
Speaker 1: afford it.
Speaker 2: Yeah, and we're kind of joking, but we're also kind
Speaker 2: of not joking, like like truly, I think it's worth
Speaker 2: like mourning the fact that, dang it, the market does
Speaker 2: truly look a lot different than it used to. It's
Speaker 2: okay to face the it's sort of like going back to.
Speaker 1: Its require some patience.
Speaker 2: Yeah, Keith's question, like, recognize that this is the facts
Speaker 2: on the ground, but also don't let that this large
Speaker 2: your macro trend perhaps be a distraction as to what
Speaker 2: it is that you can do as an individual.
Speaker 1: Yeah, and you can say, listen, I really want to
Speaker 1: buy a house, and you can force it, but you
Speaker 1: wouldn't want to do that at the expense of making
Speaker 1: a decision that's not in your best financial erst. So
Speaker 1: let's get maybe some more helpful suggestion that cry. And also,
Speaker 1: you know, knowing that wage increases on average won't keep
Speaker 1: up with home price growth, it's important for you as
Speaker 1: an individual to find ways to grow your income at
Speaker 1: a faster clip. So you know, whether that's moving up
Speaker 1: the ladder at your current job, going down the street
Speaker 1: for a sweet pay bump that's going to help you
Speaker 1: stock away more money for that down payment. And another
Speaker 1: important move money move you need to make if you
Speaker 1: want to buy a house at some point is to
Speaker 1: be an investor, because you know, if you're still a
Speaker 1: ways out from being able to purchase a home, from
Speaker 1: being in the market, it could make sense to invest
Speaker 1: some of those dollars in an effort to outpace home
Speaker 1: price escalation with you know, stock market returns from the
Speaker 1: money that you're able to stock away. So I think
Speaker 1: those are a couple of things to consider. It's like, hey,
Speaker 1: grow your income, find ways to grow the money that
Speaker 1: you're bringing in so that home, you know, buying that
Speaker 1: home becomes more of reality. And hopefully if the market
Speaker 1: stalls out, which it's doing in lots of the country
Speaker 1: we are seeing home price corrections in a whole lot
Speaker 1: of places, well then you have the opportunity, the ability
Speaker 1: to pounce because you've been paying attention to your finances
Speaker 1: for years leading up to that point.
Speaker 2: That's right, but we don't necessarily know that that's going
Speaker 2: to happen specifically there in Boston as well. What will
Speaker 2: actually happen with us home prices moving forward. I think
Speaker 2: that's going to be I mean, that's anyone's guess, because
Speaker 2: it is just again, such a complex market. And the
Speaker 2: truth is that there are thousands of many little markets
Speaker 2: around the country, and prices are declining in some of
Speaker 2: those markets and they continue to rise in others. But again,
Speaker 2: that lack of supply is keeping prices higher than many
Speaker 2: folks have predicted. But then interest rates, they factor into
Speaker 2: the price of homes more than they impact any other
Speaker 2: purchase these days. But even as it's become more difficult
Speaker 2: to afford a home and a lot of the country,
Speaker 2: we just don't see signs of Toronto esque bubble from
Speaker 2: what it is that we read and see, primarily due
Speaker 2: to the supply and demand that we're seeing. A price
Speaker 2: plateau could certainly happen given the factors, the more recent
Speaker 2: factors that we've seen in the past twelve eighteen months,
Speaker 2: but ultimately, markets go through cycles and shifts, and no
Speaker 2: market can defy the laws of gravity forever. Another issue too,
Speaker 2: with looking at very large pieces like macro data, looking
Speaker 2: at average wages and average home prices home values too,
Speaker 2: is that you're going to talking about this early on,
Speaker 2: but that ignores the fact that there are certain neighborhoods
Speaker 2: within a city and certain streets within that neighborhood. And
Speaker 2: when you buy a home, you're not buying the quote
Speaker 2: unquote average home like you are buying a specific home.
Speaker 2: It's kind of like the opposite of what we're talking
Speaker 2: about the beginning with new cars and how anecdotally, Yes, unfortunately,
Speaker 2: there might be a time when you have to take
Speaker 2: your car in and get it fixed, even though it's
Speaker 2: brand new. So even though the data points to the
Speaker 2: fact that home values have been rising faster than ways,
Speaker 2: just doesn't mean that you have to buy a home
Speaker 2: that is more expensive than you would like to purchase.
Speaker 1: That's why Kelly Blue Book estimates are so much more
Speaker 1: accurate than zestimates. Sure, like cars are from car to
Speaker 1: Carter car, they don't change really very much, but from
Speaker 1: home to home to home they're pretty consistent. Yeah, but
Speaker 1: those are the opposite of condes.
Speaker 2: Yes, yeah, I mean I don't know. I mean, I
Speaker 2: know Back Bay, that's one neighborhood in Boston because that's
Speaker 2: where Kate and I stayed when we visited there. We
Speaker 2: stayed in airbnb. Is very nice, But I don't know,
Speaker 2: besides that other neighborhood's there in Boston, but like here
Speaker 2: in Atlanta, it makes me think of like the difference
Speaker 2: between some nice Intewl neighborhoods like inmand Park or Buckhead
Speaker 2: or Midtown. Those neighborhoods are so much different than East Point,
Speaker 2: than Capitol View.
Speaker 1: Even those neighborhoods you mentioned are different from one another.
Speaker 2: Yes, absolutely, but generally speaking, I mean you're talking about
Speaker 2: if you're taking the average Atlanta home, it's incorporating all
Speaker 2: of those prices, but that doesn't necessarily mean that you
Speaker 2: are considering living in some of those much much much
Speaker 2: nicer neighborhoods. So just something to keep in mind that
Speaker 2: it's good to see some of these averages, but when
Speaker 2: it comes to purchasing a home, you're not buying the
Speaker 2: average home. You are buying a deal. You're looking for
Speaker 2: a deal, and you're going to buy a specific home
Speaker 2: that's going.
Speaker 1: To work for you. And I think that's we've seen
Speaker 1: a lot of migratory shifts and where people are moving
Speaker 1: and the kind of homes are looking for, and they're
Speaker 1: moving to more suburban and rural areas in order to
Speaker 1: get more house or in order to save more money
Speaker 1: on that purchase, and so sometimes you have to look
Speaker 1: and see where the opportunity is and it might not
Speaker 1: be in the neighborhood you're currently living in. And if
Speaker 1: you really if home ownership trump's location for you or
Speaker 1: those are all things to be taken into consideration as
Speaker 1: you're kind of starting to think about purchasing a home.
Speaker 1: It's a massive difficult purchase to consider, and the market,
Speaker 1: the current market in particular, makes it even more difficult
Speaker 1: for a lot of people. I totally get it. I
Speaker 1: think there are things you can do as an individual
Speaker 1: on all these levels, though, to prepare yourself, including kind
Speaker 1: of preparing financially and hopefully you're able to increase your
Speaker 1: income and increase your returns being savvy with your career
Speaker 1: and with the money that flows into you every paycheck.
Speaker 2: Yeah, the ability to make those right decisions and have
Speaker 2: the money on hand to pounce when you see that deal.
Speaker 2: All right, Let's hear from a new listener and he
Speaker 2: is wanting to know what he should be doing with
Speaker 2: his money.
Speaker 5: Hey, Matt and Jowel, this is Sean from Salt Lake City, Utah.
Speaker 5: So I need your assessment on my money.
Speaker 2: Situation.
Speaker 5: So I'm forty years old. I make about three thousand
Speaker 5: dollars a month, netting twenty four hundred roughly. I invest
Speaker 5: three hundred to five hundred and fifty per month, kind
Speaker 5: of depending on what bills are coming out of that
Speaker 5: check and how much the check is and whatnot. I
Speaker 5: don't currently have a retirement plan at my job, although
Speaker 5: I hear that upgraded benefits might be on the way. Recently,
Speaker 5: I started a rough IRA and I have thirty two
Speaker 5: hundred dollars in NI. Roughly, in robinhood, I have about
Speaker 5: twenty six hundred with a sixty four split between ETFs
Speaker 5: and stocks, and from listening to your guys's suggestions, I've
Speaker 5: started dumping some money into the S and P five
Speaker 5: hundred the last few times i've put money in. I
Speaker 5: also have twenty seven hundred dollars in crypto. Currently, I
Speaker 5: have no savings. Let's see debt wise, I have about
Speaker 5: thirty five hundred dollars in credit card debt and I
Speaker 5: owe about eighty five hundred dollars towards a camper asset. Wise,
Speaker 5: I have a car that's worth about eight thousand, which
Speaker 5: I plan on driving into the ground and I take
Speaker 5: good care of it, and maybe a few thousand dollars
Speaker 5: elsewhere in smaller things. Yeah, So just wondering what you
Speaker 5: guys's suggestion would be on where to transfer my money
Speaker 5: to or to change it at all, just to make
Speaker 5: sure my money is working the best for me and
Speaker 5: that I'm doing the smartest thing I can with it.
Speaker 1: Thanks all right, Matt, lots still aid through here. I
Speaker 1: feel like Sean kind of bore his soul, his financial soul.
Speaker 1: Thanks for all the info. Sean will do our best
Speaker 1: to give the most robust advice that we can. But
Speaker 1: and one thing, Matt. First. Thing's first, Sean is saving
Speaker 1: sounds like between ten and fifteen percent of his pay. Yeah,
Speaker 1: that's really great. That's really good. Right, And by the way,
Speaker 1: fingers crossed, right, that your employer starts offering better benefits soon,
Speaker 1: because that can make a massive difference when you think
Speaker 1: about like something like a three percent match and how
Speaker 1: that can add up over years and decades. That is,
Speaker 1: that's not nothing. So I sure hope that that your
Speaker 1: employer moves in that direction. If not, I don't know,
Speaker 1: it might be time to start looking for a place
Speaker 1: where they have better benefits. Those benefits can add a
Speaker 1: significant amount to kind of your total comp totally.
Speaker 2: Yeah, So okay, The biggest concerns that I have with
Speaker 2: what Sean has said is that he doesn't have any
Speaker 2: savings on hand, and that he's still got some credit
Speaker 2: card debt lingering around. We want every how the money
Speaker 2: listener out there to be investing, definitely, but only when
Speaker 2: they've taken care of these two things first, only once
Speaker 2: they've taken care of some of the basics. And so
Speaker 2: what I would do if I were you, I would
Speaker 2: take your robin Hood holdings, the crypto money that you've got,
Speaker 2: sell that in order to save up that basic emergency
Speaker 2: fund that we always talk about, and that means getting
Speaker 2: to at least two thousand, four hundred and sixty seven
Speaker 2: dollars in savings. We didn't pull that number out of
Speaker 2: thin air. That's a number that economists, that researchers have
Speaker 2: landed on. That is enough to have on hand to
Speaker 2: handle most kind of small emergencies that the majority of
Speaker 2: folks are faced with in life that tend to derail
Speaker 2: them on their quest to financial freedom. That should be
Speaker 2: enough for you to weather a bunch of financial storms.
Speaker 2: It's at least the starting point that you need to
Speaker 2: hit yeah, but then use the rest of any additional
Speaker 2: money that you have on hand to crush that credit
Speaker 2: card debt. And by the way, just moving forward, we
Speaker 2: only want you to use credit cards if you can
Speaker 2: pay them off on time, if you can pay off
Speaker 2: that balance in full every single month. We love taking
Speaker 2: advantage of some of the different benefits we've been talking
Speaker 2: about that recently that credit cards have to offer, but
Speaker 2: make sure that you are receiving. You don't want to
Speaker 2: pay for those benefits right in the form of interest.
Speaker 1: Only take them if they're free, and they're only free
Speaker 1: to you if you use credit cards properly the way
Speaker 1: we describe in the show. And also, Matt, the money
Speaker 1: that that Shawn's invested in crypto goes against another principle
Speaker 1: we have, which is to invest in the basic boring
Speaker 1: stuff with ninety five percent of your funds. We only
Speaker 1: want crypto or single stocks and I think to be
Speaker 1: five percent of your overall portfolio. And since you're just
Speaker 1: getting percent max five percent.
Speaker 2: Max like you do, if you don't want to even
Speaker 2: mess with five percent, you can keep it at totally
Speaker 2: two and a half.
Speaker 1: You can keep it at one one hundred percent boring. Yeah, yeah,
Speaker 1: there's nothing wrong with that, but you this, considering where
Speaker 1: you're at in your investing journey, it's just too early
Speaker 1: to have any exposure to alternative asset classes like crypto
Speaker 1: when you're just getting started, and so at basic index
Speaker 1: funds or target date funds are where you should be
Speaker 1: laser focused. Sean and I wouldn't stake any more money
Speaker 1: in that Robinhood account either. That brokerage account, it's just
Speaker 1: not as tax efficient as the WROTH that you're sticking
Speaker 1: money in. Robinhood does offer a roth IRA and they're
Speaker 1: they're actually the only brokerage out there that's offering a match,
Speaker 1: so that's kind of cool. If you're going to invest
Speaker 1: in a ROTH and you're gonna do it with Robinhood,
Speaker 1: that's fine, But just don't invest in the brokerage account
Speaker 1: right now, because you want to make sure you're maxing
Speaker 1: out the WROTH before you do any other types of investing.
Speaker 1: And so reah, regardless of where you've got your roth ira,
Speaker 1: preferably with one of the low cost companies that we love,
Speaker 1: plow all of your investable dollars into that WROTH instead.
Speaker 1: Of the brokerage account in order for you to basically
Speaker 1: avoid unnecessary taxation later on.
Speaker 2: Totally. Yeah, ROTH always comes first before any other investible account.
Speaker 2: But Sean also loved just how you talked about your car,
Speaker 2: you know, taking care of that thing, keeping that puppy
Speaker 2: running for as long as you can, running it into
Speaker 2: the ground, keeping that expense low, which is this is
Speaker 2: a major expense transportation. This is going to allow you
Speaker 2: to then funnel more towards paying off your credit card
Speaker 2: debt and then ramping up that emergency fund. But once
Speaker 2: you've done those those two things, you should resume those
Speaker 2: regular contributions to the WROTH at that point. And also,
Speaker 2: I'm not totally sure what the interest rate is on
Speaker 2: the camper. You didn't mention that, but if it is
Speaker 2: north of seven percent, that's that's kind of our dividing line.
Speaker 2: If it is that, then it would be a good
Speaker 2: idea to start paying that off more quickly as well. Basically,
Speaker 2: the quicker that you can pay that off, the more
Speaker 2: flexibility you're going to have to save and invest moving forward.
Speaker 2: And the balance actually on your trailer is actually pretty high,
Speaker 2: and so that tells me that it's pretty sweet which
Speaker 2: is great and hopefully you're getting a lot of value
Speaker 2: out of it, but not just you know, we're not
Speaker 2: just talking about financing a car. We also want to
Speaker 2: make sure that you're not financing any additional fun toys essentially,
Speaker 2: So maybe you've got the sweet camper and you're also thinking,
Speaker 2: I need a sweet electric mountain bike to go with ethnically,
Speaker 2: but man, those things run like eight thousand dollars, but
Speaker 2: I could finance it, And no, we don't want you
Speaker 2: to do that at all. It's okay, Like we've all
Speaker 2: got different goals and different things that we're saving up for.
Speaker 2: It's okay to save up and maybe achieve that as
Speaker 2: a goal sooner than later. But I think ideally you
Speaker 2: would also have a fully funded emergency fund before you're
Speaker 2: dumping more money into things that are going to depreciate
Speaker 2: in value rather than maintain a solid foundation of financial stability.
Speaker 1: Yeah, and once you pay off the credit card debt,
Speaker 1: hopefully you never have any again moving forward, and hopefully
Speaker 1: you're able to also just grow that gap so that
Speaker 1: you can save up more for those purchases math that
Speaker 1: you're talking about.
Speaker 2: That's the fun stuff.
Speaker 1: That's the goal, is that you're not financing stuff like that,
Speaker 1: especially in today's environment where interest rates have gone up.
Speaker 1: It's like the less the more you can pay in cash,
Speaker 1: the better, right, So saving up for whatever you're trying
Speaker 1: to buy. But Sean, it sounds like you're well in
Speaker 1: your way. You're getting the information, and you're making the changes.
Speaker 1: So we wish you continued success.
Speaker 2: Man.
Speaker 1: All right, we got more to get to on this episode,
Speaker 1: including a listener who wants to know whether he should
Speaker 1: sell a car in order to pay off some of
Speaker 1: his debts. We'll get to that and more right after this.
Speaker 2: We're back in. Before we get to that question about
Speaker 2: whether or not a listener should sell his car, let's
Speaker 2: hear from a listener who's looking for he's considering this
Speaker 2: sweet way to avoid the tax man when it comes
Speaker 2: to real estate.
Speaker 1: Let's hear it.
Speaker 6: Hey, Matt Jeel, this is Neil from Texas. I'm selling
Speaker 6: my home and an investment property in order to purchase
Speaker 6: a four plex. One of my sales closed a week ago.
Speaker 6: The other sale is closing in a few weeks. I'm
Speaker 6: going to be a nomad for a while, so I
Speaker 6: don't need the funds for a new home. I want
Speaker 6: to do a ten thirty one exchange, but I don't
Speaker 6: know where to start. What do I need to do
Speaker 6: to make sure that I follow the rules. My follow
Speaker 6: up has to do with realtor fees. I found the
Speaker 6: four plex on my own, and I think I can
Speaker 6: handle the negotiating process. It's selling for five thousand dollars,
Speaker 6: so the realtor fees would be substantial. Is it common
Speaker 6: to make a deal with a realtor to work for
Speaker 6: a flat fee? Since I've done most of the legwork
Speaker 6: myself and I only need help with the closing process,
Speaker 6: I was thinking that if my offer stated that my
Speaker 6: realtor fee is only two thousand dollars or whatever it
Speaker 6: is agreed upon, it might be a more attractive offer.
Speaker 1: What do you think?
Speaker 6: Thanks for your help and for all the great content.
Speaker 1: Love the show, all right, man, this is a good question,
Speaker 1: and there's a lot to a lot that we can
Speaker 1: learn about real estate investing in this one. First off, though,
Speaker 1: I think Neil said that he was buying this four
Speaker 1: plex or five grand. I bet that's not the case.
Speaker 1: My guest is at five hundred grand, right, five hundred k.
Speaker 1: That's what the hell we'll think of it.
Speaker 2: That's my assumption.
Speaker 1: Five thousand dollars four plex would be amazing. You'd be
Speaker 1: financially independent immediately. I'd buy it same here, no matter
Speaker 1: the condition, no out of the location. Well, it depends
Speaker 1: on the location a little bit. But Neil, we love
Speaker 1: that you're upgrading through a four plexure. You're like legit
Speaker 1: big time landlord now, which is great, and even more
Speaker 1: so because you're looking to do this ten thirty one exchange,
Speaker 1: which can be an awesome move when done properly, allowing
Speaker 1: real estate investors to sell a property snag another one
Speaker 1: while avoiding any sort of taxation. But I said when
Speaker 1: done properly, and that's because the devil's in the details.
Speaker 1: When we're talking about a ten thirty one exchange and
Speaker 1: the price of messing it up, it can be steep.
Speaker 2: Right.
Speaker 1: It means paying capital gains tax on the sale of
Speaker 1: at home fifteen percent of the proceeds for the average
Speaker 1: person basically of all the games you've accrued on that property.
Speaker 1: So it is it is worth dotting your eyes, crossing
Speaker 1: your t's and kind of getting a little more familiar
Speaker 1: with the ten thirty one exchange that you can proceed
Speaker 1: properly totally.
Speaker 2: A big aspect of making sure that you perform at
Speaker 2: ten thirty one exchange properly is the timing. A ten
Speaker 2: thirty one exchange is an incredibly time sensitive procedure. Specifically,
Speaker 2: you've got to know the forty five day and the
Speaker 2: one and eighty day rule, and so within forty five
Speaker 2: days of the sale of your current property you need
Speaker 2: to have designated a property that you want to purchase
Speaker 2: a new property basically, So what that means is that
Speaker 2: the clock is ticking and you can't actually be in
Speaker 2: possession of the excess funds from closing when you make
Speaker 2: the sale on your current investment property because that money
Speaker 2: actually it has to be held by a qualified intermediary.
Speaker 2: It's typically a law firm.
Speaker 1: And ORKI me me just reach out. I'll hold on
Speaker 1: to a point.
Speaker 2: Well, it can be an individual as long as so.
Speaker 2: There are actually pretty strict requirements as to what the
Speaker 2: IRS allows to be a QI a qualified intermediary. So
Speaker 2: it can't be someone that you have financial ties with,
Speaker 2: it can't be family. It also can't be an agent.
Speaker 2: It can't be somebody who you've employed in the past
Speaker 2: two years. So it can't be like your broker, real
Speaker 2: estate agent. It can't be a closing attorney. It needs
Speaker 2: to be somebody that's completely new.
Speaker 1: And typically there's a fee for holding these funds.
Speaker 2: Exactly because they want to make a little bit of
Speaker 2: spread on doing all the work. Because there is work involved,
Speaker 2: you have to you can actually become it's almost, I
Speaker 2: don't know, it's not quite like becoming a notary, but
Speaker 2: you like you get a qualified intermediary ei N and
Speaker 2: that's basically like a Social Security number for employers, an
Speaker 2: employer identification number. So there is some work involved with
Speaker 2: the reporting that they provide the IRS to make sure
Speaker 2: that there is a clean paper trail and that truly
Speaker 2: that money has gone to the right person and that
Speaker 2: you haven't that you weren't in possession of it. But
Speaker 2: then the one hundred and eighty day rule, it stipulates
Speaker 2: that you must close out on this new property within
Speaker 2: one hundred and eighty day of the sale of the
Speaker 2: old one. And so it sounds like you've already identified
Speaker 2: that new quadplex, that four plex, so you might be
Speaker 2: able to make it happen within this tight window. And
Speaker 2: if so, congrats kudos to you man.
Speaker 1: Yeah, you just avoided tax or at least kick the
Speaker 1: can down the road for a little while, which is great.
Speaker 1: That's the whole point, yeah, is to avoid that all together.
Speaker 1: And for everyone else out there, by the way, Matt,
Speaker 1: ten thirty one exchanges, they're pretty cool and they're a
Speaker 1: great tool really in the tool belt of the experienced
Speaker 1: real estate investor, allowing them to kick that taxation can
Speaker 1: down the road, sometimes even forever, because in particular, I
Speaker 1: mean forever if you die owning that home and you
Speaker 1: leave it to let's say a child, that they get
Speaker 1: what's known as a stepped up basis, and so taxation
Speaker 1: can be avoided almost in perpetuity with the use of
Speaker 1: ten thirty one exchanges and just real estate in general,
Speaker 1: which is kind of one of the things that makes
Speaker 1: it cool. But I would say this too, don't let
Speaker 1: the tax tail wag the dog. If you can't find
Speaker 1: the right property, let's say, you know, don't force something
Speaker 1: just in order to avoid taxation, right potentially buying the
Speaker 1: wrong property that doesn't make sense for you. So I
Speaker 1: think ten thirty one exchanges are helpful when used properly.
Speaker 1: I think if you allow the ten thirty one exchange
Speaker 1: to be the goal instead of a means to the goal.
Speaker 1: Then you might be enticed into using it in a
Speaker 1: way that's not in your best interest.
Speaker 2: Yeah, hopefully for everyone else out there who might have
Speaker 2: an investment property, you're not just learning about the ten
Speaker 2: thirty one and now thinking I've got to find a
Speaker 2: way to use this tax loophole. We don't want that
Speaker 2: to be the case. But then, on the subject of
Speaker 2: realtor fees, I think those are most definitely negotiable. I've
Speaker 2: certainly had realtors offer their services at a discount just
Speaker 2: because they'll know that I'm going to give them more
Speaker 2: business in the future than the average person who's playing
Speaker 2: to just live in their primary residence for the next
Speaker 2: ten years.
Speaker 1: Real estate, and that's sure that kind of thing can
Speaker 1: often get a better rate just because that agent knows, well,
Speaker 1: I might be helping this person buy three or four
Speaker 1: houses in the next.
Speaker 2: Three or four years exactly. Yeah. But I also say this,
Speaker 2: I've been more than happy to pay agents full price,
Speaker 2: full commission, because the great ones they're well worth that
Speaker 2: three percent.
Speaker 1: But it's worth.
Speaker 2: Asking if they'll be willing to take a reduced commission
Speaker 2: just based on a reduced workload and the likelihood of
Speaker 2: more purchases. With you being an investor, you're going to
Speaker 2: be able to provide them with more business off there
Speaker 2: in the future. I know that if I was a realtor,
Speaker 2: I would most definitely be willing to cut an investor
Speaker 2: a break. Joe, Let's move on. Let's get to our
Speaker 2: last questions for this.
Speaker 1: Becoming the costco of realtors.
Speaker 2: Last question has to do with whether or not a
Speaker 2: listener should sell his car in order to pay off
Speaker 2: some credit card debt.
Speaker 7: Hello, Matt and Joel, this is Armuu. I'm calling from
Speaker 7: Los Angeles, California. I'm a pretty new listener to the podcast.
Speaker 7: I was wanting to know is it a good idea
Speaker 7: for me to sell my car to pay off my
Speaker 7: credit card debt? A little background is through a pandemic.
Speaker 7: I use my credit cards quite a bit out of necessity,
Speaker 7: just because they're everything that was going on. I wasn't
Speaker 7: working as much, and so now I find myself in
Speaker 7: a situation where my credit card balances are pretty high
Speaker 7: and I'm having a hard time paying them off. I'm
Speaker 7: basically paying the minimum every month just to make sure
Speaker 7: that they stay in good standing, but of course, due
Speaker 7: to that they're not being there, the balances aren't going down,
Speaker 7: and of course my credit has taken a hit for
Speaker 7: that reason. So I have a twenty nineteen Nissan Ultimate,
Speaker 7: I owe about eleven four hundred dollars, and I have
Speaker 7: about six thousand dollars in credit card debt to payoff,
Speaker 7: and through Carvana, my car is currently worth eighteen thousand,
Speaker 7: seven hundred dollars. So what I was considering doing is
Speaker 7: selling my car, paying off the remainder of my car loan,
Speaker 7: paying off my credit card debt, and using what's left
Speaker 7: of what I sell my car for along with another
Speaker 7: few one hundred dollars I have saved to put as
Speaker 7: a down payment on a new car. My only apprehension
Speaker 7: about doing so is car prices are pretty high, interest
Speaker 7: rates aren't very low, and of course I'm a little
Speaker 7: worried about what I would.
Speaker 2: Get approved for.
Speaker 7: My score is currently around five seventy. Is it a
Speaker 7: good idea for me to sell my car and pay
Speaker 7: off my debt based on the factors that are outlined previously?
Speaker 2: Arman, thank you so much for being a new How
Speaker 2: to Money podcast listener. By the way, we used to
Speaker 2: call it poor, not poor, But I'm glad we don't
Speaker 2: do that anymore because it made it hard to find. Yes,
Speaker 2: but we are glad to have you on board. But
Speaker 2: let's talk about what you've got going on here. It's
Speaker 2: a you know, we're bummed here. We're sorry to hear
Speaker 2: that the pandemic and messed up your finances. And yet again,
Speaker 2: you are not alone on that front. I think a
Speaker 2: lot of folks went through the tough season of life
Speaker 2: back in starting in twenty twenty. So don't beat yourself up.
Speaker 2: You know that's not helpful at a time right now
Speaker 2: when you're trying to basically write the ship, when you're
Speaker 2: trying to take the correct steps moving forward. But at
Speaker 2: the same time, it's crucial to find a way out
Speaker 2: of this. You can't continue to make those minimum payments
Speaker 2: and selling a car that is a pretty big step.
Speaker 2: It's one that we have encouraged folks to do in
Speaker 2: the past, for sure, and it could work if you
Speaker 2: went about it the right way. But there are a
Speaker 2: few other things that we want you.
Speaker 1: To consider first, Like first things first, how are you
Speaker 1: going to get around? Do you have to drive to
Speaker 1: your job? And if you do well, then I mean
Speaker 1: you can't necessarily sell this car and not find another one.
Speaker 1: Selling this car to pay off your credit card debt
Speaker 1: and then buying a more expensive new one, though that
Speaker 1: doesn't ultimately help your financial situations real either, you're kicking
Speaker 1: another can down the road. And you specifically mentioned saving
Speaker 1: up enough for a down payment, which means that you're
Speaker 1: you're looking to take out another car loan, which is
Speaker 1: going to be more than the one you have now
Speaker 1: in all likelihood, given the fact that you'd be buying
Speaker 1: a new car, and that's not something we like hearing.
Speaker 1: Like you said, you'd be paying more, you'd have a
Speaker 1: higher interest rate. Even if you did get approved, the
Speaker 1: terms would be massively unfavorable. They'd be worse than the
Speaker 1: ones you're carrying on the car that you have now.
Speaker 1: So no, we don't love this plan. That's not what
Speaker 1: we would suggest. If you're going to sell your car
Speaker 1: to pay off credit card debt, we'd want you to
Speaker 1: either go car less. Just hard to do in Los Angeles,
Speaker 1: of course, Yeah, how I need a car to get
Speaker 1: around most of the time in that city in particular,
Speaker 1: or to buy something much much cheaper with cash, saving
Speaker 1: you money each and every month moving forward. But that'd
Speaker 1: be difficult to do too, because it sounds like there's
Speaker 1: not quite enough cash on hand to buy something suitable.
Speaker 2: Yeah. Well, and then on top of that, it's not
Speaker 2: easy to buy even a used car right now, Joel,
Speaker 2: you learned that firsthand in recent weeks. And it would
Speaker 2: also be different too, Armand if you had a fancier car,
Speaker 2: right like if you had a few years ago you
Speaker 2: had gone out and bought a new Jeep brand Wagoneer
Speaker 2: for eighty thousand dollars, if.
Speaker 1: You're rolling with a Ribbean, Yeah, that would.
Speaker 2: Be it would be a different story because it's like, yeah,
Speaker 2: you don't need to have that much car compared to
Speaker 2: what you're dealing with and the rest of your personal finances.
Speaker 2: But that's not necessarily the case. Yeah, you've got a
Speaker 2: twenty nineteen Ultima.
Speaker 1: Like that's a that's a pretty affordable.
Speaker 2: Car in twenty nineteen, So technically that probably means it's
Speaker 2: from twenty eighteen, so that think is five years old
Speaker 2: if you've owned that entire time, like you've already taken
Speaker 2: most of the depreciation hit on that vehicle typically like
Speaker 2: a roup fifty to sixty percent, and so what more
Speaker 2: affordable car could you potentially go to if you were buying,
Speaker 2: if you're going from like no car to one car
Speaker 2: right now, yes, maybe we would point you like towards
Speaker 2: something that is a little more affordable. But twenty nineteen
Speaker 2: Nissan Ultima is a pretty solid car.
Speaker 1: Yeah, I mean it's still in the grand scheme of
Speaker 1: Armand's finances. That's a big commitment, but it's better than
Speaker 1: the alternative, right. And so there's just not an easy
Speaker 1: solution to getting you in a solid car Ormond to
Speaker 1: get to and from work while also paying off that
Speaker 1: credit card debt that involves selling that car. And so
Speaker 1: the best solution, although it's not an easy one, is
Speaker 1: to increase your income, and that is I think the
Speaker 1: best suggestion we can give a side hustle is probably
Speaker 1: the best thing for helping you get through this pinch.
Speaker 1: We were not like hustle culture dudes who want to
Speaker 1: suggest that people like work for jobs in order to
Speaker 1: crush their finances, right, stuff like that. But when you're
Speaker 1: in a position like you are, if you can find
Speaker 1: a way to increase your income to help you pay
Speaker 1: off that credit card debt more quickly and simultaneously keep
Speaker 1: that Ultima on hand, because it's a reasonably priced car
Speaker 1: that is going to probably perform well for you for
Speaker 1: years to come. Well, then that solution just makes the
Speaker 1: most sense.
Speaker 2: Yeah. Well, and I mean we talked about this last week,
Speaker 2: but cutting back, like taking a step into frugality is
Speaker 2: the most immediate step that you could take. And maybe
Speaker 2: you have done that, but if you haven't truly gotten
Speaker 2: serious about cutting back in some of the other things
Speaker 2: that you're spending money on, I think that could also be.
Speaker 2: That's the other lever that you can pull, right basically
Speaker 2: questioning every outgoing expense exactly exactly, But ultimately you don't
Speaker 2: necessarily you're probably not wanting to live a prolonged lifestyle
Speaker 2: where it feels like you are depriving yourself of everything.
Speaker 1: So when in credit card debt and like living that
Speaker 1: monastic existence for a short put time period, I think
Speaker 1: it makes sense.
Speaker 2: Yeah, exactly, Like when you have an end goal in
Speaker 2: goal in mind, like when you see the light at
Speaker 2: the end of the tunnel, then it can be a
Speaker 2: worthwhile pursuit. But living, yes, sticking with that for a
Speaker 2: long period of time is going to be difficult, and
Speaker 2: in with that mind, it will be important to find
Speaker 2: ways to either increase your income, make some more money
Speaker 2: so that you can pay more than just the minimums
Speaker 2: on your credit cards. But if you're not able to
Speaker 2: do that at this point, right like if there's just
Speaker 2: not enough time left in your schedule, if you are
Speaker 2: working all the possible hours with no way to increase
Speaker 2: what it is that you're bringing in every single month,
Speaker 2: you might want to speak to a nonprofit debt counselor
Speaker 2: at an affiliate of NFCC, the National Foundation for Credit Counseling,
Speaker 2: or with a group called Money Management International. Will make
Speaker 2: sure to link to both those organizations in our show notes.
Speaker 2: And then, by the way, drive that ultimate for years
Speaker 2: after you pay that thing off. Once you're able to
Speaker 2: pay off that credit card debt and you've got to
Speaker 2: pay it off car, then you're gonna seriously be ready.
Speaker 2: You're gonna be able to make some big money moves.
Speaker 2: At that point, you're no longer digging yourself out of
Speaker 2: a hole. Instead, you're like you're using that shovel to
Speaker 2: build a mountain for yourself.
Speaker 1: Most most people start in some sort of a hole,
Speaker 1: especially if you went to school or you've made financial
Speaker 1: mistakes like everybody has to dig themselselves out to some
Speaker 1: degree in armand like you're gonna dig yourself out, you
Speaker 1: just might need a little bit of help from one
Speaker 1: of these organizations that Matt mentioned. Those are the places
Speaker 1: to go. Or you might just need find a way
Speaker 1: to get a bigger shovel, which is get that they
Speaker 1: get that income up. Yeah, all right, best of luck,
Speaker 1: Armond rooting for you, man ur R. Matt. Let's mention,
Speaker 1: get back to this beer that we had on this episode.
Speaker 1: This one's called Pyrotechnic Pleasantries by Sour Sellers out of
Speaker 1: Rancho Cucamonga, speaking of California. Say it, enjoy it, hold
Speaker 1: it up on the label so I could say it properly.
Speaker 1: But oh my god, Well, first of all, I want
Speaker 1: to mention the label because did you ever have you
Speaker 1: ever seen the Triplets of Bellville? Oh yeah, it's got
Speaker 1: that style of art.
Speaker 2: Yeah, yeah, done it. It kind of has like so for
Speaker 2: everyone else out there. It's a it's an animated short film.
Speaker 2: It's a movie, but it's got a very unique style
Speaker 2: of illustration. It's this French illustrated movie about bicyclists, and
Speaker 2: it's got a bunch of other quirky stuff in it
Speaker 2: as well. Anyway, all that to say, I like this beer.
Speaker 2: This is pyrotechnic pleasantries. Joel, what were your thoughts on it?
Speaker 1: So this is a strawberry sour, so it was like
Speaker 1: re fermented with strawberries, I believe. And this is a
Speaker 1: bunch of different beers that they've blended together they made
Speaker 1: over the years, which just gave it a depth of character,
Speaker 1: Oh my goodness, which was wonderful.
Speaker 2: I love. So they've actually got the blend info on
Speaker 2: the side there, which I love for a data nerd
Speaker 2: like you, Oh my gosh, I love having those data.
Speaker 2: So I'm going to go through it real quick. Thirty
Speaker 2: five percent fifty four month barrel aged brown mixed culture
Speaker 2: twelve percent. That's like spontaneous four and a half years
Speaker 2: on that beer. Yes, nineteen of a nineteen month barrel
Speaker 2: age Sayson And then thirty four percent of this beer
Speaker 2: is a twenty six month barrel aged golden.
Speaker 1: So this is like science in a battle.
Speaker 2: It's like a science experiment. This is the suicide from
Speaker 2: a chem lab.
Speaker 1: But a great beer blender knows how to blend all
Speaker 1: these together and create something special, and they really did
Speaker 1: on this.
Speaker 2: There's no way that this isn't good for our digestion.
Speaker 1: Yeah, and it's so it's so tart and very sweet
Speaker 1: with the strawberry vibes going on. I think it could
Speaker 1: probably used a tiny bit more strawberry actually going on,
Speaker 1: But overall I was thrilled with it.
Speaker 2: I feel like it had the right amount of strawberry.
Speaker 1: As far as the fruit that.
Speaker 2: Was on the nose, I feel like it could have
Speaker 2: used a touch more sweetness because then I think that
Speaker 2: sweetness would have pulled that strawberry forward a little bit
Speaker 2: rather than it feel like it was just kind of
Speaker 2: there in the background. But it was really aggressive, yeah,
Speaker 2: you know, acidic, punchy. But man, I really I did
Speaker 2: really like it. Like the first sip, I was like, ooh,
Speaker 2: that's that's tart, that's brash.
Speaker 1: Yeah, made you pucker for sure.
Speaker 2: But then the more, you know, as I continue to
Speaker 2: have more SIPs, I enjoyed it just even more and more.
Speaker 2: Maybe it was the perfect blend.
Speaker 1: This is one of my favorite styles, and it's something
Speaker 1: that I feel like because it's a finer, it's a
Speaker 1: more specialized kind of beer we don't drink as often,
Speaker 1: and they're more expensive too, so this one. I'm glad
Speaker 1: I picked this up while we were in California. While
Speaker 1: I was in California, Yeah, brought it back because you did.
Speaker 1: It was delicious and we've never had a beer from
Speaker 1: these guys before, so it's fun to try something from
Speaker 1: a completely new group of folks, for sure. Yeah, all right, Matt,
Speaker 1: that's going to do it for this episode. We'll put
Speaker 1: show notes up on the website at how to money
Speaker 1: dot com with some of the links that we mentioned
Speaker 1: in answer some of these questions. And that's right by
Speaker 1: the way. For if you have a question you want
Speaker 1: Matt and I to tackle on an upcoming episode, just
Speaker 1: go to how to money dot com slash ask send
Speaker 1: your voice memo over. Hopefully we'll take it on the
Speaker 1: next ask HTAM episode.
Speaker 2: That's all right, but buddy, that's gonna be it for
Speaker 2: this one until next time. Best Friends Out, Best Friends Out.