Speaker 1: Episode three point thirty one, what to do with a
Speaker 1: windfall or unexpected money.
Speaker 2: Welcome to the Frugal Friends podcast, where you'll learn to
Speaker 2: save money, embrace simplicity, and live a life.
Speaker 1: Here your hosts Jen and Jill. Welcome to the Frugal
Speaker 1: Friends podcast. My name is Jen, my name is Jill,
Speaker 1: and today we are talking about windfalls, unexpected money like
Speaker 1: rebates or tax returns, or somebody left you some money,
Speaker 1: or you've won the lottery. Who knows, could be anything,
Speaker 1: but we're talking about what to do with that. And
Speaker 1: this was actually a request from your own Jillian Sirianni.
Speaker 3: Here they're like, who's that. It's Jill, it's me, Hi,
Speaker 3: it's Jill. I had this thought, like what would we do.
Speaker 3: I've been having a lot of conversations. I have friends
Speaker 3: who are the generation above me, and they're experiencing death
Speaker 3: of loved ones, which is a difficult, painful process, losing
Speaker 3: aunts and uncles and parents. And yet in the midst
Speaker 3: of those grieving processes, receiving money that has been left
Speaker 3: behind for them or some type of inheritance, and recognizing
Speaker 3: for my own self, what do you do with that?
Speaker 3: What do you need to consider? What would be the wise,
Speaker 3: most frugally stewardship way of managing that. But of course
Speaker 3: that's not the only way that we can come upon money,
Speaker 3: you know, a large gift, a bonus, like you said,
Speaker 3: a tax return. So I think anytime we receive a
Speaker 3: large chunk of money, it's worth considering what's the best
Speaker 3: thing to do with this?
Speaker 1: And this is definitely going to come up most often
Speaker 1: with tax returns. But I think it's important to also
Speaker 1: hit on the topic of talking with your parents about
Speaker 1: their finances so that you can be prepared for something
Speaker 1: like this, know if you should expect something or not,
Speaker 1: because that can be like on both sides of blindside, right,
Speaker 1: like you're expecting something and you realize nothing's coming, or
Speaker 1: you're not expecting something and something's coming and you feel
Speaker 1: guilty about taking it or doing anything with it. You
Speaker 1: just don't know. So I know these particular episodes aren't
Speaker 1: directly related to Windfalls, but episode sixty two talking about
Speaker 1: your parents' finances with Cameron Huddleston, this is an episode
Speaker 1: that's very near and dear to my heart. Cameron Huddleston
Speaker 1: wrote a book about how to talk to your parents
Speaker 1: about their finances. I'm actually in that book as like
Speaker 1: one of the stories, because you'll probably hear throughout this
Speaker 1: episode my experience with this maybe, and then episode two
Speaker 1: eighty five how your parents' finances affect you and what
Speaker 1: to do next. So if you are not sure if
Speaker 1: you're going to get something from your parents or you
Speaker 1: just don't know, definitely, episodes two eighty five and sixty
Speaker 1: two for sure want good ones to queue up. But
Speaker 1: this will also come a lot with the tax returns
Speaker 1: and maybe unexpected money. I know that our episode with
Speaker 1: Lisa Rowan, I can't remember the number right now, but
Speaker 1: people they love that episode because of the tip of
Speaker 1: found money. So you'll have to listen to the episode
Speaker 1: to get the website because I'm drawing a blank on
Speaker 1: it right now. But people all the time email us
Speaker 1: and say that they have found money through the site.
Speaker 1: It is not a scam. It is awesome, So it
Speaker 1: could be stuff like that too. Definitely, those are two
Speaker 1: good episodes to queue up. But before we get into
Speaker 1: this one, this episode is brought to you by opt
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Speaker 3: Yeah, on the day that we're recording this, it is
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Speaker 3: The first one comes from Forbes and is titled sixteen
Speaker 3: smart steps to take when you receive an unexpected financial windfall.
Speaker 3: We're not going to go through all sixteen. We're going
Speaker 3: to pick three each, but I am going to start
Speaker 3: at the very end with number sixteen and take us
Speaker 3: backwards just to be fun, but also I do feel
Speaker 3: like this is a helpful blueprint for the rest of
Speaker 3: what we're talking about. I don't really understand why they
Speaker 3: put it at the very bottom, because they do think
Speaker 3: this sets the framework for how we should approach unexpected money.
Speaker 3: And so number sixteen is treat it the same way
Speaker 3: as expected or earned money. So whatever windfall unexpected cash
Speaker 3: that you get, whether it's one thousand, ten thousand or more,
Speaker 3: treating it as if it was earned and expected. So
Speaker 3: they reference how impulse purchases can kind of come from
Speaker 3: this faulty mental accounting that found money doesn't really count,
Speaker 3: and we might be more apt to frivolously spend it
Speaker 3: and not really leverage it in a way that's going
Speaker 3: to make a big difference for us financially. I think
Speaker 3: I would even add to this something that stood out
Speaker 3: to me as I read through this article is almost
Speaker 3: treating a windfall or an influx of cash like you
Speaker 3: would with the rest of your financial plan. So whatever
Speaker 3: it is that you are already focusing on doing, this
Speaker 3: boost of finances can be a help towards that direction.
Speaker 3: As far as the big picture financial goals that you
Speaker 3: may have, we'll definitely tease that out more as we
Speaker 3: get through this. But I think our mentality going into
Speaker 3: it how we're approaching If it just feels like fun money,
Speaker 3: blow it on, whatever, then that's not going to be
Speaker 3: the best stewarding way of the cash, and we might
Speaker 3: not see a massive difference in our financial landscape as
Speaker 3: a result, versus if we treat it like Okay, I
Speaker 3: have to approach this like I approach my salary. I
Speaker 3: have to consider my overall financial goals alongside this additional
Speaker 3: money that has just been entrusted to me.
Speaker 1: The second one for well, the first one for me,
Speaker 1: second one on the list that I like is actually
Speaker 1: number four, I'll let you have number one, Jill, I'll
Speaker 1: let you.
Speaker 3: Have Jen because I'm just going to bounce bookends.
Speaker 1: Yeah, some of these are repeated, which I don't like,
Speaker 1: but for the sake of word count, I guess that's
Speaker 1: what you do. But number four is really I think
Speaker 1: should maybe be. Number two is to set up an
Speaker 1: interest bearing account. So we often call these high yield
Speaker 1: savings accounts. It could be viewed as maybe an investment.
Speaker 1: If you already have an emergency fund, then you could
Speaker 1: if you wanted to put it in an investment, But
Speaker 1: I would really recommend opening a high yield savings account
Speaker 1: just for this. Depending on the size of the windfall,
Speaker 1: open up a separate high yield savings account just for
Speaker 1: your windfall, so that you don't confuse it with the
Speaker 1: money that you have. Normally, you don't look at your
Speaker 1: bank account and see like, oh, I'm rich. You just
Speaker 1: keep it separate so that you can spend it wisely
Speaker 1: and it doesn't give you that false sense that this
Speaker 1: is regular money. Right now, we really like cit Bank.
Speaker 1: It has I think about four point six y five
Speaker 1: ap y But really anything right now over four percent
Speaker 1: is going to be great. If your high heeled savings
Speaker 1: account is under four, you should really consider getting something
Speaker 1: else because a lot of the good ones are over four. Yeah,
Speaker 1: but yeah, that would be the first thing that I
Speaker 1: do is open it and have the wind fallse scent
Speaker 1: to that account so that you can sit it there
Speaker 1: and figure out what to do with it away from
Speaker 1: your regular spending and saving accounts.
Speaker 3: While it's earning interest. And that's right, depending on the
Speaker 3: amount of money, that's just a significant amount that you're earning
Speaker 3: on that cash year over year as it's sitting there.
Speaker 1: Yeah, it's not going to keep up with inflation as
Speaker 1: it is right now, but it will be a little
Speaker 1: bit of inflation. And if you have enough savings to
Speaker 1: where you feel good enough to actually put this in
Speaker 1: an investment account while you sit and wait to figure
Speaker 1: out what to do with it, something like M one
Speaker 1: would be a really good choice. If you want like
Speaker 1: a kind of a roboadvisor or just a regular brokerage
Speaker 1: like a Fidelity or a Vanguard something like that, park
Speaker 1: it in an index fund up to you, But I
Speaker 1: think the hi old savings account really is the way
Speaker 1: to go. Frugal Friends podcast dot Com, slash c thank you.
Speaker 3: Yeah, We have links for them in the show notes
Speaker 3: as well. Definitely, if you're considering it, click on that
Speaker 3: link first. Okay, I'm jumping back to number one because
Speaker 3: we like book ends, and that is I think should
Speaker 3: then be number three on this list. We're rearranging for Forbes.
Speaker 3: You're welcome. That's what we do on the show. Yeah,
Speaker 3: so spend a small percentage and invest the rest immediately.
Speaker 3: And so I would say, immediately you get the money,
Speaker 3: put it in a high yeld savings account, then you
Speaker 3: can spend a small percentage. That's my tweak to this,
Speaker 3: but you will most likely have an impulse to buy
Speaker 3: something to treat yourself, to recognize and celebrate the reality
Speaker 3: that you've come upon additional money that maybe you weren't expecting,
Speaker 3: and that's exciting, and you should because I think complete
Speaker 3: deprivation is not going to do well for us in
Speaker 3: the long term. So they recommend that that small percentage
Speaker 3: you spend be about ten to twenty percent. So whatever
Speaker 3: the amount is, consider what ten to twenty percent might
Speaker 3: be and take that to buy a gadget, go on
Speaker 3: a vacation, have a spa day, whatever it is that
Speaker 3: sounds really really nice to you. I've also heard some
Speaker 3: people who might have received the money as an inheritance
Speaker 3: from a deceased loved one, and they've considered what would
Speaker 3: be most honoring to them, what did they enjoy doing,
Speaker 3: what would they want to see me do with this
Speaker 3: money to honor their memory. So I think that's another
Speaker 3: really beautiful way of kind of pairing the grief process
Speaker 3: with the reality that money has now been given and entrusted,
Speaker 3: like using that word rightly, And how can you honor
Speaker 3: them with their hard earned money that they've now chosen
Speaker 3: to pass to you, And the rest of it should
Speaker 3: be put into an investment account, should be saved in
Speaker 3: some regard where it can earn money as you go.
Speaker 3: There's other tips that you could do, of course, if
Speaker 3: you've got debt and that kind of thing, we'll talk
Speaker 3: about that next. But the main point of this one
Speaker 3: is give yourself permission to spend a small percentage of it.
Speaker 1: Yeah, this is the one I will take from you,
Speaker 1: Jill Is. The next on this list should be number seven.
Speaker 1: Pay down high interest debt. So investing is going to
Speaker 1: look different depending on where you are with your finances.
Speaker 1: If you have credit card debt, that's at twenty percent
Speaker 1: interest maybe more, then investing for you looks like paying
Speaker 1: off that credit card debt. We just hit a milestone
Speaker 1: where there's over a trillion dollars of credit card debt, right,
Speaker 1: what a great milestone, and that the average family has
Speaker 1: about ten thousand dollars of credit card debt, and that
Speaker 1: is debt that needs to be gotten rid of. But
Speaker 1: I will caveat by saying another way to invest is
Speaker 1: by getting your emergency fund set. So if you don't
Speaker 1: have an emergency fund, and you pay off all your
Speaker 1: credit cards and you have an emergency, then you're going
Speaker 1: back into credit card debt. So it behooves you to
Speaker 1: sit with twenty percent interest if you can get a
Speaker 1: small emergency fund, maybe it's just five hundred dollars maybe,
Speaker 1: and then pay off that debt and then get a
Speaker 1: larger emergency fund of one thousand or two thousand or
Speaker 1: whatever makes you feel safe. But I think that with
Speaker 1: something like this, it can skyrocket your progress to financial security.
Speaker 1: If you take money that you don't usually get and
Speaker 1: you just put it towards your high interest debt, it's
Speaker 1: so free, but still saving ten percent of that for
Speaker 1: fun money, fun spending but I really think that if
Speaker 1: you have any credit card debt, really anything above ten
Speaker 1: percent interest. Most of the time we say anything above
Speaker 1: five percent, but interest rates right now are pretty high,
Speaker 1: So I will amend that to say ten percent, and
Speaker 1: anything above that should really be first priority.
Speaker 3: And that emergency fund that you're working on can still
Speaker 3: sit in that high yield savings account.
Speaker 1: Yes, and that should not be invested.
Speaker 3: Frugal friendspodcast dot com, slash c Yes.
Speaker 1: Your emergency fund should not be invested.
Speaker 3: Yeah, yeah, yeah, yeah. You want it to be liquid,
Speaker 3: you want to be able to pull it out, but
Speaker 3: yet still be able to earn some interest. So I'm
Speaker 3: now going to choose number five on this list, which
Speaker 3: given the other numbers we've chosen, I think it's adequately positioned. Now.
Speaker 3: Number five is okay to be number five. Contribute to
Speaker 3: a roth IRA, So if you have not already been
Speaker 3: maxing out your IRA with what you are bringing in
Speaker 3: regularly with your salaries your work, then this is a
Speaker 3: really great opportunity to use that extra cash to max
Speaker 3: out that IRA. Of course we're talking once we focused
Speaker 3: on the high interest debt, we've got an emergency fund.
Speaker 3: If you're like, yeah, check check check. Then now we
Speaker 3: want to be thinking about investing for retirement and putting
Speaker 3: that money as much as you can above and beyond
Speaker 3: into these investment accounts, namely maxing out that ROTH.
Speaker 1: The one caveat to this is that if your windfall
Speaker 1: can be considered actual taxable income that will affect your
Speaker 1: taxable rate, then I would consider maybe a traditional IRA,
Speaker 1: or even putting the money into savings so that you
Speaker 1: can max out.
Speaker 3: Your four oh one K.
Speaker 1: If it's not enough to where it's going to bump
Speaker 1: you up over to the next tax bracket, or if
Speaker 1: you're making just not a lot you really think you
Speaker 1: could make more in the future, you think your job
Speaker 1: prospects are better in the future, then sure, cool, go
Speaker 1: wroth IRA. If you're pretty tapped out and you get
Speaker 1: more money on top of that, just do the math
Speaker 1: consider raw versus traditional. And that's kind of the point
Speaker 1: where you would want to consult a financial advisor, a
Speaker 1: Certified financial planner CFP, a fiduciary. This is one of
Speaker 1: those instances where you may not want to do it yourself.
Speaker 1: So there are times a lot of investing can be
Speaker 1: done yourself, but there are times where it behooves you
Speaker 1: to get the advice of a fee only financial planner,
Speaker 1: and wind falls are one of them, especially if like
Speaker 1: it's a significant size. Wind falls are one of them.
Speaker 1: Maybe it's your spouse who is deceased and you're getting
Speaker 1: life insurance money CFP. Do it. You will thank yourself later.
Speaker 1: So the next one for me would be to think
Speaker 1: about college. And so this is a unique thing. This
Speaker 1: is kind of so number thirteen can invest in continued education.
Speaker 1: But there's also number where is it twelve? Set aside
Speaker 1: to twelve and thirteen? Okay, so definitely your retirement and
Speaker 1: your investments come first. But if you can put a
Speaker 1: windfall into a five twenty nine for your child and
Speaker 1: just let it sit there, it can gain a lot
Speaker 1: more interest and compound interest than if you're contributing every month.
Speaker 1: So if contributing every month is something you want to
Speaker 1: do anyways, go ahead. And if you're going to put
Speaker 1: like one hundred dollars a month into a five twenty
Speaker 1: nine and you get a twelve hundred dollars windfall, go
Speaker 1: ahead and put the twelve hundred in there now instead
Speaker 1: of the one hundred dollars a month, and you actually
Speaker 1: will be better off. You'll have more money at the
Speaker 1: end of it when your kid goes to college than
Speaker 1: if you had done all of them at the same
Speaker 1: and this is it's not like a I can't guarantee
Speaker 1: you'll have more. Obviously, the stock market is volatile.
Speaker 3: Sometimes make promises, say extreme things.
Speaker 1: If the past is indicative of the future over eighteen
Speaker 1: year time spans, you should benefit from doing a lump
Speaker 1: sum investment into a five twenty nine versus monthly and
Speaker 1: then you can just keep one hundred dollars a month
Speaker 1: for a year or you get the explaining like the example.
Speaker 1: So that would be my last recommendation.
Speaker 3: Okay, moving into the next article. This second article comes
Speaker 3: from Forbes. Again we're loving on us some Forbes, Forbes
Speaker 3: and ful Friends collab and this one's looking at some
Speaker 3: top mistakes. So it's titled Unexpected cash Windfall. Don't make
Speaker 3: these ten common financial mistakes. Again, we're not going to
Speaker 3: go through all ten, but I do want to start
Speaker 3: off with number three, which is overlooking potential tax obligations.
Speaker 3: Jen already touched on this, but I will say one
Speaker 3: of the reasons for wanting to even do this episode
Speaker 3: had to do with this very thing of what do
Speaker 3: I need to consider, Like what if someone yeah, gives
Speaker 3: a substantial amount or even a house, Like there's actual
Speaker 3: real estate attached to an inheritance, and we're not going
Speaker 3: to go into a deep dive there. What we're going
Speaker 3: to recommend is seeking experts on that type of thing
Speaker 3: because there are real tax obligations connected to these types
Speaker 3: of receiving of goods and money, and so seeking out,
Speaker 3: like Jen said, a certified financial planner who can help
Speaker 3: you understand how does this affect my tax bracket? How
Speaker 3: is this money considered? Is it? Because most likely it's
Speaker 3: going to be different than your salaried money that comes
Speaker 3: in each month or even if you're a subcontractor. So
Speaker 3: having that understanding is going to be really important rather
Speaker 3: than just thinking great, I can have access to all
Speaker 3: of this money. Most likely not most likely you should
Speaker 3: anticipate needing to fork over up to twenty percent of
Speaker 3: that money back to the government. But again, talk with
Speaker 3: a certified financial planner to kind of understand what that's
Speaker 3: going to look like.
Speaker 1: Yeah, that is where the certified financial planner really comes
Speaker 1: into is will pay for itself? Because I know a
Speaker 1: lot of people get worried about estate tax on stuff
Speaker 1: like this, and there are I had no idea until
Speaker 1: I wrote an article about estate tax. There are so
Speaker 1: many ways around a state tax, especially for when it's
Speaker 1: not a huge amount if you're not a high income
Speaker 1: earner like in millions and millions, So there are so
Speaker 1: many ways around it, and you don't know unless you
Speaker 1: get the help from somebody who is an expert in
Speaker 1: hacks strategy. So that is probably the number one reason
Speaker 1: to consult with somebody when you're getting a windfall like this.
Speaker 3: You will pay more when you don't know what you
Speaker 3: don't know, so that's exactly the reason. Let them help
Speaker 3: you so that you can get the most in your
Speaker 3: own pocket.
Speaker 1: Yes, I'll go with number one for my first is
Speaker 1: financing something that does not appreciate and it is our
Speaker 1: favorite thing. When we see like people win the lottery
Speaker 1: and they go out and they go by the BMW
Speaker 1: or the Tesla or something that they really they could
Speaker 1: not afford before and will not be hipple to afford.
Speaker 1: It's a bad move financially, whether it's a BMW, a
Speaker 1: wave runner, a boat, I don't care. Don't go out
Speaker 1: and just because you have the dow payment finance something
Speaker 1: that doesn't appreciate. That's why it behooves you to put
Speaker 1: the money in a high healed savings account. Think about
Speaker 1: it for a little bit, because a lot of times
Speaker 1: when you get money like this, there is a period
Speaker 1: of either if it is a loss, there's a period
Speaker 1: of grief where you're not thinking clearly. This happened to
Speaker 1: my mom when my dad died and she got the
Speaker 1: insurance money. She was in this state of grief and
Speaker 1: she was being kind of forced to make financial decisions,
Speaker 1: and she made very horrible financial decisions in that season
Speaker 1: because she thought she had to. I don't think she
Speaker 1: consulted with the right people that had a fiduciary interest
Speaker 1: in her, but she just made poor financial decisions when
Speaker 1: she could have just parked the money and said for
Speaker 1: three months, I'm not doing anything with this money, nothing,
Speaker 1: not a thing. I'm not spending a dime out of sight,
Speaker 1: out of mind, and having some time to get things
Speaker 1: in order before you know, so you don't make like
Speaker 1: finance all these things, or even one thing, even if
Speaker 1: you've wanted it for a really long time that you
Speaker 1: can sit down and figure out, can I afford to
Speaker 1: upkeep this, make the payment? Can I afford to take
Speaker 1: it out? People get boats. Boats are so cheap in Florida,
Speaker 1: but people can't afford to take them out. That is
Speaker 1: the real expense. You can't afford to hold it, to
Speaker 1: dock it, and to take it out. The gas is
Speaker 1: so expense. Like, just you got to think about the stuff.
Speaker 3: Yeah, Jill notes about every yeah, just about every time
Speaker 3: you got to fix the boat. It's going to be
Speaker 3: one thousand dollars. Yeah. Anyhow. Number eight on the common
Speaker 3: mistakes here is changing overall spending habits, which kind of
Speaker 3: goes in line with buying or you know, going into
Speaker 3: debt taking out a loan for some of these more
Speaker 3: luxury items. Some of the most common mistakes people make
Speaker 3: with a surprise cash influx is changing their spending ha
Speaker 3: habits overall based on the thought that, oh, maybe this
Speaker 3: type of luck will just kind of keep happening indefinitely.
Speaker 3: Or I can treat this as if it's a monthly
Speaker 3: amount of money that I get to increase my spending with,
Speaker 3: when really it's a one time thing that has happened,
Speaker 3: and so making a one time purchase is fine, but
Speaker 3: treating it like it's this ongoing, never ending Now I
Speaker 3: can change all of my spending habits is going to
Speaker 3: put us in a really tough position. So one time
Speaker 3: influx could mean a one time purchase, but not the
Speaker 3: one time purchase that leads to monthly spending that is
Speaker 3: above and beyond the norm or outside of your typical means.
Speaker 1: And it's not something you're going to do on purpose.
Speaker 1: You're not going to get a windfall and say, oh,
Speaker 1: now I'm going to increase my monthly spending. No, it's
Speaker 1: like you put it in with your money and you
Speaker 1: see that you have the extra money, and you're like, oh,
Speaker 1: I can afford to go out to eat one extra
Speaker 1: time this week, and then that turns to two or three,
Speaker 1: and I can afford this extra coffee or this extra
Speaker 1: hundred dollars at Target because I have this money. And
Speaker 1: then the money runs out and you have built these
Speaker 1: habits because you're like, I'll only do it one time.
Speaker 1: I'll only do it one more time. And that's how
Speaker 1: it starts. And that's why we're such big proponents of
Speaker 1: keeping the money out of sight and out of mind
Speaker 1: so it doesn't cloud your judgment with stuff like that.
Speaker 1: So the next one for me is number five paying
Speaker 1: off mortgages or other debts. And so I know I
Speaker 1: just said paying off high interest debt is a super
Speaker 1: important thing that you should do with a windfall, But
Speaker 1: this is more directed at paying off mortgages, and this
Speaker 1: is more for like life insurance, big like six figure payouts.
Speaker 1: Be sure that you don't need that liquid cash before
Speaker 1: you pay off a mortgage. And I know you know
Speaker 1: everybody wants to be mortgage free. We just don't want
Speaker 1: to have to worry about that monthly payment. But if
Speaker 1: you need that money more, there are always ways to
Speaker 1: get help with a mortgage payment. But if you've paid
Speaker 1: off your mortgage, doing a reverse mortgage is not the
Speaker 1: best idea to get more money. Think about what you're
Speaker 1: going to need in the future, and that's another reason
Speaker 1: you want to just let the money sit for a
Speaker 1: few months so that you can figure out, Okay, what
Speaker 1: do I have to do? Is it better? Am I
Speaker 1: at a point in my life where it's better to
Speaker 1: invest this money? Can it grow higher through investing in
Speaker 1: the stock market versus paying off my mortgage? Where am
Speaker 1: I in my career? Am I disabled? Do I have
Speaker 1: any health conditions that are going to have force me
Speaker 1: out of the workplace early. So thinking about all of
Speaker 1: that before you pay off your mortgage. It is not
Speaker 1: a bad thing to pay off a mortgage, It is great,
Speaker 1: But if you've considered all these other things that come
Speaker 1: around needing liquid.
Speaker 3: Cash, yeah, what could that money do if it was
Speaker 3: invested instead? Lots of leveraging to do there. My last
Speaker 3: one on this article is number nine, which a common
Speaker 3: mistake can be not carefully considering a windfall of more
Speaker 3: than one percent of your income. I found this to
Speaker 3: just be a helpful metric as well when considering, all right, well,
Speaker 3: at what amount of money do I really need to
Speaker 3: have sights on this? And they're kind of identifying that
Speaker 3: anything less than one percent of your income is a
Speaker 3: relative blip on the radar. It's not going to make
Speaker 3: that much difference in your overall financial landscape. You can
Speaker 3: kind of do what you want with that, but anything
Speaker 3: above one percent of your total annual income should be
Speaker 3: deserving of a little bit extra thought and intentionality. And
Speaker 3: this is where you want to pay attention to all
Speaker 3: of the other things that we've said in this episode
Speaker 3: so far of should you pay down debt, should you
Speaker 3: invest should you pay off your mortgage? And a lot
Speaker 3: of those questions are going to be well answered with
Speaker 3: a certified financial planner and your own considerations of your
Speaker 3: financial goals that you've already had laid out, because that
Speaker 3: amount of money could make a decent dent in some
Speaker 3: of those long term financial goals. And if you don't
Speaker 3: know what you want to see for yourself in the
Speaker 3: long term financially, this is a great time to start
Speaker 3: considering that. Even if you aren't facing a windfall or
Speaker 3: unexpected money right now, that ended, that just sounds great,
Speaker 3: awesome plan now for what you want to see for
Speaker 3: your finances. Is your number one priority and goal right now?
Speaker 3: Paying down debt? Is it saving for a how is
Speaker 3: it investing for retirement? Do you want to kind of
Speaker 3: be doing a little bit of all of those things?
Speaker 3: And you don't have to wait for a windfall, You
Speaker 3: don't have to like hope you find money someday, start
Speaker 3: putting money towards those things, and then you now already
Speaker 3: have the blueprint for what you want to do if
Speaker 3: you ever do experience some unexpected cash flow.
Speaker 1: The last one for me is going to be for
Speaker 1: big and small windfalls, alike, but especially for small windfalls.
Speaker 1: I'm going back to number two. It's spending it right away,
Speaker 1: and I'm going to sound like a broken record, but
Speaker 1: even this article says you should keep windfall in cash
Speaker 1: for six to twelve months, I don't think you need
Speaker 1: to keep it that long unless it's a big one.
Speaker 1: Then the bigger the windfall, the longer you need to
Speaker 1: sit with it before you spend it. Let's just say that.
Speaker 1: But if it's a tax return or some kind of
Speaker 1: rebate or back child support something like that, then we
Speaker 1: can sit with it a little less. But what you
Speaker 1: don't want is to spend it right away. Like you
Speaker 1: hear all the sports ball players spending all their advances
Speaker 1: almost instantaneously. Don't be like that. Be like Shack.
Speaker 3: Don't do sports ball.
Speaker 1: You could do sports ball like Shaq who just invests
Speaker 1: in literally every company that's anywhere and is now so wealthy.
Speaker 1: But he was really frugal and good with his money
Speaker 1: throughout his career so that he could do that, and
Speaker 1: very lots of respect for him. But sit with it
Speaker 1: and make a plan that you feel really good about
Speaker 1: before you spend it all. And again, spending a little
Speaker 1: bit on yourself and ninety percent on things that are
Speaker 1: going to better your life. Because even if this was
Speaker 1: a gift from somebody who's no longer with us, think
Speaker 1: about why they gave you this gift and how they
Speaker 1: want your future to be because of it, and how
Speaker 1: you can maximize it. They don't want you to squander
Speaker 1: what they have saved, But what are the best ways
Speaker 1: that you can use this money and increase it and
Speaker 1: let their legacy live on to an even bigger extent
Speaker 1: to where you can say, like, hey, Grandma gave me
Speaker 1: five thousand dollars here and in twenty years, think about
Speaker 1: how much it could be and how much Grandma's legacy
Speaker 1: can be built even after she's not with us anymore.
Speaker 3: And again, this is the time to consult, ask people,
Speaker 3: be patient, put it in a high yield savings account,
Speaker 3: and consider what's the best route. And this is not
Speaker 3: a decision that you need to nor should make on
Speaker 3: your own. Find the trusted experts to help in knowing
Speaker 3: how to leverage this as best as possible. And speaking
Speaker 3: of leveraging and best use of treating something as the
Speaker 3: best way.
Speaker 2: Yeah, the bill of the week, that's right, It's time
Speaker 2: for the best minute of your entire week. Maybe a
Speaker 2: baby was born and his name is William. Maybe you
Speaker 2: paid off your mortgage. Maybe your car died, and you're
Speaker 2: happy to not have to pay that bill anymore. Duck bill,
Speaker 2: Buffalo bills, Bill Clinton, this is the bill of the week.
Speaker 4: Hey, Jan and Jill. My name is Adrian, and I
Speaker 4: want to tell you about my bill. So, my dog Fiochi,
Speaker 4: who I've had for about twelve years, is getting on
Speaker 4: and so she needs a monthly allergy shot and also
Speaker 4: arthritis meant medications. That's pretty expensive for me as I'm
Speaker 4: on a low income. But turns out my nicotine loss
Speaker 4: and chabit after quitting fabing over a year ago, costs
Speaker 4: about the same as Fiochi's monthly medical needs. So I
Speaker 4: quit my nicotine and instead I'm paying for Fiochi's vet bills. Thanks.
Speaker 1: I am so happy to hear this on so many levels. A,
Speaker 1: It's not just saving you the money you're spending every
Speaker 1: month on nicotine, it is saving you the cost of
Speaker 1: medical bills that will come as a result of that.
Speaker 1: So you're doing this for Kyoki yoch now, Piochique, you're
Speaker 1: sweet puppy. Now you know adult puppy and for yourself later. Adrian,
Speaker 1: this is fantastic news, and it's a great example of
Speaker 1: getting creative and not saying like I can afford this,
Speaker 1: but saying, how can I afford this? So this is
Speaker 1: such a great bill.
Speaker 3: Yeah, Adrian, I'm celebrating with you because you're caring for
Speaker 3: yourself as you care for Fiochi. And what a beautiful
Speaker 3: win win win pairing across the board. You've really done it.
Speaker 3: We're so glad to have you. Thanks for submitting your
Speaker 3: bill of the week. If you all listening, have some
Speaker 3: win win wins, you're just crushing it. You're caring for yourself,
Speaker 3: you're caring for your pups, you're caring for your kids.
Speaker 3: Or if you're just out there like just focused on you,
Speaker 3: we're fine with that, especially if you're.
Speaker 1: Gone smoking or quit vaping, like call us up and
Speaker 1: say like I've saved this much money.
Speaker 3: Yes, we want to know. And if you're a bill
Speaker 3: who quit smoking, yikes, oh gosh, I don't know if
Speaker 3: we can even handle it, but please do call Frugal
Speaker 3: Friends podcast dot com slash bill leave us your bill. Now,
Speaker 3: it's time for right, John, which question are you going
Speaker 3: to pick?
Speaker 1: Yeah, you have added a question, so I can assume
Speaker 1: that maybe you want to answer the question you have added.
Speaker 3: Well, I just feel like it might be more advantageous
Speaker 3: to our listeners, so like, okay, we can be transparent.
Speaker 3: There's two questions here. One is what would you treat
Speaker 3: yourself to if you got unexpected money today? And that's
Speaker 3: just kind of like a fun Okay, obviously I'd go
Speaker 3: on vacation, but that doesn't give real insight for people.
Speaker 3: Or have you ever received a windfall or unexpected money
Speaker 3: and what did you do with it? That feels more
Speaker 3: vulnerable to me.
Speaker 1: Okay, So there's a fun one and a serious one,
Speaker 1: and I think we should do both.
Speaker 3: Okay, there you go, yep, go for it.
Speaker 1: Okay, all right, So okay, I'll answer the serious one.
Speaker 4: First.
Speaker 1: I have received a windfall before, besides like tax returns
Speaker 1: and stuff, and I didn't actually see any of the
Speaker 1: money that the life insurance money for my dad. But
Speaker 1: when I was a baby, my uncle is an insurance agent.
Speaker 1: He sells insurance, and my grandmother took out a whole
Speaker 1: life insurance policy for me when I was a baby. Why,
Speaker 1: I don't know. To help this guy out, you do
Speaker 1: not need whole life policies on babies. What's the point
Speaker 1: And people are gonna don't want star review me for that,
Speaker 1: Like that's just my personal opinion of like what is
Speaker 1: a baby doing to contribute to the family financially that
Speaker 1: they need a life insurance policy. Like, you got to
Speaker 1: answer me that. If you're gonna want star review me,
Speaker 1: you have to answer me that. So fast forward to
Speaker 1: my adult years.
Speaker 3: Well, if you're negotiating with our one star reviewers, I
Speaker 3: guess if they're gonna play fair.
Speaker 1: I'm at that point in my career now, so I
Speaker 1: am an adult and my grandmother is no longer with us,
Speaker 1: so I have control of this insurance policy and trying
Speaker 1: to pay off our debt, and I'm like, you know what,
Speaker 1: I would rather have a twenty year term life insurance
Speaker 1: policy than this whole life policy because nobody's paying for
Speaker 1: it at this point. My grandmother's no longer with us,
Speaker 1: and it's just taking money from the investment. And so
Speaker 1: I got that. It was a couple thousand dollars and
Speaker 1: my uncle actually pleaded with me to not take it,
Speaker 1: and I was like, dude, sorry, and I did it anyways,
Speaker 1: and put that money towards my student loan debt.
Speaker 3: Wow, I didn't know that you could do that with insurance.
Speaker 1: With a whole life or universal anything that has an
Speaker 1: investment portion to it, you can cash out and take
Speaker 1: anything that's in it for it. And that's one of
Speaker 1: the reasons they take whole life policies out on babies
Speaker 1: because they're told that it's a good investment. It is
Speaker 1: a much better investment to put some money into a
Speaker 1: five twenty nine or to employ your child in some
Speaker 1: capacity and put money in a roth iray for them.
Speaker 1: Those are much better in my opinion.
Speaker 3: So did you shove all the money towards debt like
Speaker 3: one hundred dead? Entirely? I did?
Speaker 1: That was me at that moment in my life. I
Speaker 1: was on that train and I couldn't get off. So
Speaker 1: that was my windfall experience. And then what would I
Speaker 1: treat myself today if I got some unexpected money.
Speaker 3: It depends on how how much the money is. Yeah,
Speaker 3: what is ten percent of the unexpected money? Right?
Speaker 1: So I would either find somebody and pay them an
Speaker 1: exorminant amount of money to finish the renovation of my house.
Speaker 1: There's a lot of money. If it's a little bit
Speaker 1: of money, I will go out to a sit down restaurant,
Speaker 1: maybe with my husband, maybe by.
Speaker 3: Myself, and pay for childcare.
Speaker 1: And pay for childcare.
Speaker 3: Wow, yes, we'll see. What would you go to?
Speaker 1: Oh I don't know. I don't know what restaurants? Oh
Speaker 1: I do know what I would Oh no, so bell,
Speaker 1: who is that considered sit down? I would go to
Speaker 1: Carabas because it's it's the fancy olive garden.
Speaker 3: I've never heard someone describe as like that. I'm pretty
Speaker 3: sure the lateral move. I'm so embarrassed. No it is not.
Speaker 1: Oh no, no, Carabas and olive Garden are both wonderful.
Speaker 1: Carabas is definitely a fancy olive garden. You cannot deny that.
Speaker 3: I'm denying that lariously.
Speaker 1: I am vulnerable. This ended up being the more vulnerable one.
Speaker 3: You didn't You didn't have to say that. You could
Speaker 3: have chose different. Well, we better get sponsored by Garabos
Speaker 3: for that. Okay, Well, never have I ever received a
Speaker 3: tax return? Wah wah, So that's not even like, oh, yeah,
Speaker 3: you know, not counting tax returns because I can't even
Speaker 3: say that. But there was one Christmas where Eric's parents
Speaker 3: his dad had owned an ice plant and they sold
Speaker 3: it and they were like, rather than waiting till we're
Speaker 3: dead for you guys to get some money, we're gonna
Speaker 3: give it to you now. And it was a few
Speaker 3: thousand dollars for each one of their children. So Eric
Speaker 3: and I got which was a very unexpected, exciting generous
Speaker 3: Christmas that year to receive a few thousand dollars. So
Speaker 3: we decided to We did take a small percentage of
Speaker 3: that money and bought a digital camera, which Jen is
Speaker 3: the camera that you and I planned to use to
Speaker 3: record our videos for the Frugal Friends podcast. I haven't
Speaker 3: done it yet. Oh actually no, that's the camera we
Speaker 3: recorded our debt Free stories Debt Free Stories on YouTube.
Speaker 3: We have a YouTube channel. Check that out. Recorded. We
Speaker 3: recorded said camera with that camera. So that was our
Speaker 3: kind of fun way of taking a small percentage in
Speaker 3: buying something for ourselves, and we did shove the rest
Speaker 3: towards debt. At that time, I didn't have in my
Speaker 3: sights like put start an emergency fund and put money
Speaker 3: in a high healed savings account. That wasn't on my radar,
Speaker 3: And it felt really amazing to shove like three thousand
Speaker 3: dollars towards debt and definitely made a big debt. It
Speaker 3: probably increased or decreased the amount of time it took
Speaker 3: to pay off debt by at least a couple of months,
Speaker 3: if not more, because we were not making a lot
Speaker 3: of money at the time. So yeah, look at us.
Speaker 3: We just want that debt gone so badly.
Speaker 1: And where would you go? I know you said you'd
Speaker 1: take a vacation with.
Speaker 3: Your money, probably, I mean, yeah, I guess there's so
Speaker 3: many things I would want to do with money. I mean, yeah,
Speaker 3: are you saying you wouldn't go to Carabas? No? No, no, No,
Speaker 3: that's like a Tuesday. That is not a oh my god,
Speaker 3: I expected to win.
Speaker 1: Wow, okay, good for you.
Speaker 2: Tuesday.
Speaker 1: I'm sorry I should not have made that voice. That's great.
Speaker 1: I love that life for you.
Speaker 3: Yeah, I am still so hard on this train of
Speaker 3: really wanting to stack up investment and savings that honestly,
Speaker 3: I'd be the boring one who would just probably put
Speaker 3: it all towards those types of endeavors. But if you're
Speaker 3: saying it was a lot of money and you feel
Speaker 3: okay about spending a few thousand on a vacation, it
Speaker 3: would probably be grease.
Speaker 1: Yeah, Italy, we could take that cruise.
Speaker 3: I would get that private.
Speaker 1: Yeah yeah, I would just get on a big boat.
Speaker 1: But you take some money for carabas well.
Speaker 3: There you haven't Folks the fan fear ol of Garden.
Speaker 3: Thanks for listening. We love having you here. It's like
Speaker 3: this third silent person listening in on us. It's not
Speaker 3: weird judging me. We also love reading all of your
Speaker 3: kind reviews. We especially loved this one from Jessica eight
Speaker 3: four eight seven three nine four seven ninety three, who
Speaker 3: said upbeat Advice. Jen and Jill are the perfect duo
Speaker 3: to not only pull you from your debt ridden slump,
Speaker 3: but they give you tons of advice to really start
Speaker 3: fighting your way out of whatever overspending you've been doing,
Speaker 3: especially if you weren't aware of it. A treat to
Speaker 3: listen to every week. Jessica, you got a lot of numbers,
Speaker 3: or you're real old, or that's like your bank account.
Speaker 3: That'd be fun. Hopefully it's not your social hope number, Sarity.
Speaker 3: I think it's too many numbers for that even but
Speaker 3: what a kind review. Thank you so much. Please feel
Speaker 3: free to leave us a review like Jessica.
Speaker 1: And if you could title it the fans like the
Speaker 1: Carabas of podcasts. If you could do that, that would
Speaker 1: be great, and we will for sure read it on
Speaker 1: the show if that is the title.
Speaker 3: And they'll know they'll know what they're getting themselves into
Speaker 3: as a result. Okay, see you later, Bie.
Speaker 1: Google Friends is produced by.
Speaker 3: Eric Sirianni Okay, Jen, I'm realizing and recording this episode
Speaker 3: that there's a couple of things subconsciously semi consciously in
Speaker 3: the way that I moved throughout life. One being one
Speaker 3: being that I sometimes think like, oh, I might win
Speaker 3: the lottery, and then I'm like, dang it, I don't
Speaker 3: play the lottery. Like you can't win the lottery if
Speaker 3: you're not playing the lottery. So that's something I have
Speaker 3: to remind myself of a lot Another thing is pretty
Speaker 3: much every time Eric and I are out and about,
Speaker 3: which honestly isn't often. We both work from home and
Speaker 3: it's kind of sad to watch what life looks like
Speaker 3: for us. But when we are out, I will often
Speaker 3: say to Eric, keep an eye out for the money,
Speaker 3: like where's this money I was promised? Because I think
Speaker 3: I'm gonna find money on the ground. I'm always thinking
Speaker 3: found money is gonna be there for me. And granted,
Speaker 3: there are lots of pennies and nickels, and it's a
Speaker 3: good day if it's a dime a dime for a
Speaker 3: dime piece, and that's exciting. That's not the found money
Speaker 3: we're talking about on this app. But it is still fun.
Speaker 3: And then, of course, so you all know how I
Speaker 3: like to trick myself with found money, like hiding twenties
Speaker 3: with my Christmas tree.
Speaker 1: But and this is where I realize that we are
Speaker 1: opposites on this because I always assume that there's never
Speaker 1: going to be any extra money, like there's no money.
Speaker 1: I don't I'll never play the lottery.
Speaker 3: And I just have the growth mindset that you don't have.
Speaker 3: And I find pennies everywhere.
Speaker 1: Yeah, and I just know that it's not going to
Speaker 1: be out there for me, that I have to work
Speaker 1: for it if I want it.
Speaker 3: There was a time outside of a Planet Fitness, that
Speaker 3: there was like a wad of two fives. Can I
Speaker 3: call that a wad probably not crumpled up five dollar bills?
Speaker 3: Two of them? And that felt like winning the lottery.
Speaker 3: I mean, you can do something with ten bucks.
Speaker 1: I will say Okay, this is one time in my
Speaker 1: life where that has been wrong. I once pulled up
Speaker 1: to a gas station with twenty dollars on the tank
Speaker 1: and it was just for the next person who filled
Speaker 1: their tank. So I got to fill my car with
Speaker 1: twenty dollars worth of gas like that I didn't pay for,
Speaker 1: and I've always wanted to do that. I feel like
Speaker 1: I have done it once. Yeah, I've definitely done it once,
Speaker 1: but it is something that I would like to in
Speaker 1: the future.
Speaker 4: Do more of.
Speaker 3: Yeah, that's really.
Speaker 1: Cool because that was such a great surprise.
Speaker 3: Yeah. Yeah, there was a time speaking of thrift stores.
Speaker 3: Outside of a thrift store that there was a true
Speaker 3: WoT of cash. I mean, I would say at least
Speaker 3: one hundred dollars in like various types of bills, but
Speaker 3: also a cell phone. So I ended up taking all
Speaker 3: of it to like a clerk and being like, clearly
Speaker 3: someone left both of these things. I'm not gonna lie.
Speaker 3: If the cell phone hadn't have been there, I might
Speaker 3: have treated myself to a want of cash, but I
Speaker 3: was like, Okay, someone's come and act for both these things,
Speaker 3: and I'm not going to take their money. The clerk
Speaker 3: probably did I'm like, I'm probably handing this over to
Speaker 3: someone who is going to be like, no, they only
Speaker 3: return to phone. Yeah, I know the truth. I walked
Speaker 3: away with a clean conscience. Yeah.
Speaker 1: Well, I guess here's to finding money that's not yours
Speaker 1: and being able to keep it