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Speaker 1: Welcome to How the Money. I'm Joel, and I am that.

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Speaker 1: Today we're going to answer your listener questions happy, gloomy,

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Speaker 1: dreary Monday.

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Speaker 2: Joel, do you think not the nicest one for last season,

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Speaker 2: at least where we are.

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Speaker 1: Do you think people can tell when it's rainy outside?

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Speaker 1: I think my voice does get a little deeper. I

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Speaker 1: was taking less peppy. You just get less. Really, I

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Speaker 1: was gonna say, I feel like you tried to. Did

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Speaker 1: you try to counter that with like the pep in

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Speaker 1: your voice at the beginning. You came in with more

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Speaker 1: energy than I've been feeling all morning. That's all I'm

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Speaker 1: gonna say. I think it just was average, but it

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Speaker 1: felt like it was over the top given the fair things. Yeah,

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Speaker 1: I get that. This is an ask How to Money

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Speaker 1: Monday episode. We're going to talk about actually a newlywed couple.

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Speaker 1: They're having a down payment debate, and Joel is going

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Speaker 1: to step in the middle. He's going to settle this.

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Speaker 1: Score love to solve marital arguments. Usually I don't think

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Speaker 1: they're arguing. I just wanted to say down payment. But

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Speaker 1: if anybody out there is having a merrital spat, holler

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Speaker 1: at me. I'll help, Joel. He will do it for free.

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Speaker 1: There's gonna be a car payments or a car loan

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Speaker 1: that a listener signed up for that I actually might

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Speaker 1: approve of. Yeah, can you believe that, Joel. We'll get

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Speaker 1: to that one. Another listener is wondering whether or not

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Speaker 1: it matters that he is able to or no longer

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Speaker 1: able to max out some of his retirement accounts. So

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Speaker 1: we'll get to that one plus more during our episode today. Quickly,

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Speaker 1: before we get started, though, I want to share the

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Speaker 1: most middle aged dad when that I've recently experienced, Joel.

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Speaker 1: So was it last last weekend coming back from Thanksgiving

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Speaker 1: or driving home? And I look down? Do you do this?

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Speaker 1: Do you do you hit the Do you reset the

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Speaker 1: trip meter on your car when you go on trips? Now?

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Speaker 1: I don't you should? I should? You know why you

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Speaker 1: should be. It's a good practice because it helps you

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Speaker 1: to see what you're basically what your baseline is as

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Speaker 1: far as what your vehicle is getting from a miles

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Speaker 1: per gallon standpoint. Okay, so let's say you always know

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Speaker 1: that you you get it like twenty five and my

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Speaker 1: car has it always showing, and I can reset it.

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Speaker 1: I just never do, but yeah I should. So you

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Speaker 1: hit because you got your running average, and that includes

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Speaker 1: driving around town. Yeah, but I also know what I

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Speaker 1: typically get when I'm on the interstate, and so you

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Speaker 1: reset it at the beginning of a trip that way.

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Speaker 1: If it's if it's like in the teens, you're like,

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Speaker 1: wait a minute, something's wrong if my car is not

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Speaker 1: running properly. I had the opposite problem.

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Speaker 2: Are you typically, by the way, trying to like beat

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Speaker 2: your last effort. You're like, I got twenty five miles

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Speaker 2: to the gall last I'm to see if I get

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Speaker 2: twenty five.

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Speaker 1: And a halfs Not really, I literally mainly do it

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Speaker 1: just as a data gathering exercise, just to know that

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Speaker 1: the old odyssey is chugging along like it's supposed to.

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Speaker 1: But what I found most recently was that it was

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Speaker 1: and I say significant, but it was like a couple

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Speaker 1: of miles per gallon higher than what I have ever

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Speaker 1: gotten interesting in that odyssey. So typically I'm like hyper miling. No,

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Speaker 1: I was just this is kind of the opposite. I

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Speaker 1: was like, we're flying because I wanted to get home,

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Speaker 1: and I looked down and we were like in the

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Speaker 1: mid twenty like around twenty six twenty six plus, which

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Speaker 1: I had never gotten before, and so I tried a

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Speaker 1: little So I did do this for a little bit

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Speaker 1: because I was like, I want to see it hit

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Speaker 1: twenty seven, which I've certainly never hit that pr before

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Speaker 1: as well on the with a Honda, and I didn't

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Speaker 1: want to dry that slow. So I was happy with

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Speaker 1: twenty six point seven. But what I realized with this,

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Speaker 1: this was the first trip that we've taken since we

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Speaker 1: had some work done to the van and where we

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Speaker 1: got it had a tune up where we had new

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Speaker 1: spark plugs, and that's a shame to say. It's not

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Speaker 1: something I had ever done. And this is like coming

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Speaker 1: up on ten years of car, I don't think it's

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Speaker 1: ever had new spark plugs. And so I'm assuming ingranted.

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Speaker 1: Come on, like I'm saying that this is a massive

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Speaker 1: like middle aged dad win. But at least is going

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Speaker 1: to save me like a couple bucks time per gallon

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Speaker 1: than average. So twenty six, like, what is that? What

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Speaker 1: is the normal? Normally it's like twenty four or something.

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Speaker 1: You're talking about two extra miles to the gallon. Yeah,

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Speaker 1: which again that's not that's that's hardly anything over, Like

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Speaker 1: when you are talking about filling up your car's not

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Speaker 1: gonna change your life. It's more. I mean, I know

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Speaker 1: that when I take care of the vehicle that it's

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Speaker 1: like that is how you keep the thing on the

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Speaker 1: road over the long haul, right. But it was just

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Speaker 1: also it was an emotional win for me to see that, oh, Okay,

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Speaker 1: I know this is going to allow it to last longer,

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Speaker 1: to allow it to hit two fifty three hundred. Maybe

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Speaker 1: someday fingers can be amazing if so. But it was

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Speaker 1: also just emotionally encouraging to see that, oh, this is

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Speaker 1: actually impacting, albeit in a very small way. This is

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Speaker 1: impacting my mousepera galln here on the interstate. That's cool.

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Speaker 2: I was pumped about that cool. And it just makes

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Speaker 2: you love that thing even more. And the more you

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Speaker 2: love your old car, the more you are likely to

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Speaker 2: keep it around. Like I just put some I mentioned

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Speaker 2: recently on the on the show, I got some new

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Speaker 2: tires on my on the van and it just handles

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Speaker 2: so much better.

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Speaker 1: And I got you got some new kicks, some new shoes.

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Speaker 2: I don't know, man, I just like it more now.

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Speaker 2: I'm like, yeah, taking it on the Thanksgiving road trip.

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Speaker 2: It's a virtuous cycle, isn't it. Yeah, it is, it is.

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Speaker 2: So take care of those older vehicles, not just because

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Speaker 2: maybe it'll get you some more miles to the gallon,

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Speaker 2: also because you're gonna like that car more, which means

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Speaker 2: you're gonna keep it around longer, which.

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Speaker 1: Means you're gonna say, more money. What kind of miles

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Speaker 1: are you getting with us? Mickey Thompson's on the Micky Thompson, No,

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Speaker 1: are they fancy or something? Those are the they're like

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Speaker 1: super off road. Okay, yeah, I remember, like as a

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Speaker 1: teenager who love jeeps, like the guys that would like

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Speaker 1: try to lift their trucks and they'd stick the Mickey Thompson.

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Speaker 1: They're like the super gnarly off road, like really thick

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Speaker 1: tread I do like Monster truck tires.

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Speaker 2: Basically, I don't track the mouse per gallon on the van,

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Speaker 2: although I should. I'll let you know once I get

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Speaker 2: in there, and.

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Speaker 1: You should hit the reset next time you go on

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Speaker 1: a road trip, or just when you're on the estate

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Speaker 1: for over an hour or two, and then you'll know

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Speaker 1: you got your baseline. I will I will say on

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Speaker 1: my fore Runner, my six fore Runner, it's it shows

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Speaker 1: it on the display, so I get nineteen point one

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Speaker 1: on the fore Runner, which it's mostly driving around town.

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Speaker 1: It's not bad. Probably what you should expect out of

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Speaker 1: a it's a V six, right, yeah, V six around town.

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Speaker 1: I mean you can't expect too much more than twenty.

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Speaker 1: Look at us out of the.

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Speaker 2: Going on car talk here, car talk like click and clack.

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Speaker 2: Let's go back to the beer talk, Matt. The beer

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Speaker 2: we're having on this episode is called a measured procession

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Speaker 2: of veracity. All right, it's an IPA from Burial, of course,

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Speaker 2: the most ridiculous names. We haven't had a ridiculous beer

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Speaker 2: from Burial, so time to scratch that itch. It's always

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Speaker 2: time for that. Look at our thoughts on this beer

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Speaker 2: at the end of the episode. And if you have

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Speaker 2: a money question, go to have money dot com, slash ask,

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Speaker 2: or just record your money conundrum on the voicemail app

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Speaker 2: of your phone and email it over to us at

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Speaker 2: how to moneypod at gmail dot com. Hopefully you can

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Speaker 2: take it next week on the show. Always looking for

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Speaker 2: fun and interesting listener questions. Your fellow listeners appreciate it too, Matt.

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Speaker 1: Let's kick it off.

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Speaker 2: Let's get to a question about how much to put

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Speaker 2: down when you're buying a home.

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Speaker 3: Hey, Matt and Joel, my name is Max and I

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Speaker 3: live in Seattle, Washington. I've been on a long time

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Speaker 3: list of the show since the Poor and Out Poor Days,

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Speaker 3: and I'm getting ready to buy my first helm. My wife,

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Speaker 3: Rachel I got married over the summer, and we're grappling

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Speaker 3: with the question of how much to put towards a

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Speaker 3: down payment. Over the years, we've set aside money into

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Speaker 3: individual investment accounts into index funds, and that money has

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Speaker 3: grown over time. Our plan is to put down at

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Speaker 3: least twenty percent towards the down payment to avoid PMI.

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Speaker 3: But if we have the means, we're wondering, does it

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Speaker 3: make sense to try to put down thirty, forty, maybe

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Speaker 3: even fifty percent towards the down payment to lower our

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Speaker 3: monthly mortgage. To me, it comes down to this question

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Speaker 3: of do we let the money ride and the stock

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Speaker 3: market and then take it out of the index funds

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Speaker 3: as we need to cover that monthly mortgage, or do

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Speaker 3: we just throw as much as possible towards the down

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Speaker 3: payment to lower it right off the bat. We'd love

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Speaker 3: your feedback on what you think makes the most sense.

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Speaker 3: If you're ever out in Seattle, come check out the

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Speaker 3: Ballard Brewery District. It's a whole neighborhood that has thirteen,

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Speaker 3: fourteen different breweries, all within commile of each other, and

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Speaker 3: it's a great spot to find a good beer.

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Speaker 2: Thanks so much, man, I'm ashamed to say this. I

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Speaker 2: was just in Ballard, Max over the summer. Suggest that

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Speaker 2: we go to Pallor check out the brewery district and

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Speaker 2: guess what Matt I stayed or Max, Max and Matt

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Speaker 2: I stayed in Ballard. I was in the heart of

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Speaker 2: the brewery district. And guess how many breweries I went to.

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Speaker 1: Matt, you sound upset with yourself. I went to none,

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Speaker 1: like a total and complete loser. Rightly so, given the

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Speaker 1: fact that there's he said, there's thirteen or fourteen, Yeah,

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Speaker 1: within a half mile.

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Speaker 3: I didn't.

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Speaker 1: I've heard of this magical craft beer fantasy land. I

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Speaker 1: did not realize there were that many in such a

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Speaker 1: concentrated geographic ocation. I drove past some, I ran past some,

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Speaker 1: you think, and come on, I did not darken the

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Speaker 1: door of one, and I did go to the dip

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Speaker 1: In for a quick pint in the middle of a run.

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Speaker 1: I know, I should have got to get your priorities.

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Speaker 2: Well, it was my I was there for only just

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Speaker 2: a couple of days and just really to explore with

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Speaker 2: my family and to for my cousin. Was there for

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Speaker 2: my cousin's wedding, and so tons of wedding festivities and

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Speaker 2: time with extended family stuff like that. That took up

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Speaker 2: the majority of my time. But I obviously need to

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Speaker 2: go back because what I need to do is a

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Speaker 2: pub crawl with Max.

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Speaker 1: Will hit up all the breweries there. Yeah, see maybe

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Speaker 1: not one. You say it like that and then you're like, well,

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Speaker 1: that's so ridiculous. I'm never going to do that. That's awesome,

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Speaker 1: I know, but like in reality, are you actually gonna

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Speaker 1: do that? Come out? I am, I going to go

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Speaker 1: have beers. What you are more likely to do is

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Speaker 1: to go to a family friendly brewery where the kids

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Speaker 1: can run around, Like that's the that's how you walk

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Speaker 1: the line right there, like you find ways include the

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Speaker 1: like the brewery hangs where the kids can be free

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Speaker 1: and gosh, one of our favorite breweries Burial up in

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Speaker 1: North Carolina. There's a Volkswagen, like a gutted Volkswagen that

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Speaker 1: has benches in it that the kids can sit in

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Speaker 1: there and pretend to dry. So you on your beer

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Speaker 1: and they're just playing. Yes, yeah, all the sharp edges

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Speaker 1: have been filed off of the sheet metal of the vehicle.

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Speaker 1: But that's the kind of place where the kids are like,

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Speaker 1: oh yeah, we love that place. Regardless, Max, you are

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Speaker 1: newly married. You've got a substantial amount for down payment,

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Speaker 1: which is just amazing. Man, Kudos to you, you and your

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Speaker 1: new wife for making that happen. And by the way, Seattle,

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Speaker 1: it's not a cheap housing market, so it's even more

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Speaker 1: impressive that he's got that much on hand to be

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Speaker 1: able to put down.

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Speaker 2: So he wasn't like I'm in Nowheresville, Alabama or something

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Speaker 2: like that, and not hating on Alabama, but it's just

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Speaker 2: legitimately much cheaper to buy a house in Alabama, cost.

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Speaker 1: Of living much lower. But he's not only got twenty

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Speaker 1: percent put down, but he could he's even thinking about

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Speaker 1: putting down like half in cash on that new home. Amazing.

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Speaker 1: Because of that, I think Max has put himself in

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Speaker 1: a phenomenal position. And I'll say, when rates were lower,

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Speaker 1: the answer to this question was a bit more clear cut, right,

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Speaker 1: you just put down your twenty percent you stay invested

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Speaker 1: with the rest of the money. But it is not

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Speaker 1: as simple a decision now though that said, I still

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Speaker 1: lean towards the twenty percent down payment and perhaps investing

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Speaker 1: the rest. Yeah.

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Speaker 2: I think that's because you mentioned rates are not as

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Speaker 2: good as they used to be, and that's true.

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Speaker 1: Like that, that's that an understatement.

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Speaker 2: As an understatement, people feel very locked into the home

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Speaker 2: purchase they've made if they have an incredibly low rated

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Speaker 2: It is part of what's created as stagnating housing market

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Speaker 2: in many ways, I think the further we get away

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Speaker 2: from two and a half three percent rates, the more

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Speaker 2: of the housing market is going to free up. But

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Speaker 2: you get the best rates in terms once you hit

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Speaker 2: the twenty percent down payment threshold. I think that's why

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Speaker 2: Matt we're so keen on that, not that it's like

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Speaker 2: a standard everyone has to meet, but for first time

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Speaker 2: home buyers, I think there's more flexibility. But if you

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Speaker 2: can hit the twenty percent down metric, you're able to

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Speaker 2: avoid PMI. You're able to if you do decide that

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Speaker 2: you want to sell that house on a shorter timeline,

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Speaker 2: you're not like messing yourself up financially in the same

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Speaker 2: way you would be if you had only put three

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Speaker 2: and a half percent down or something like that. And

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Speaker 2: it's also important to mention that if you shop around

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Speaker 2: with a few different lenders, which is always crucial when

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Speaker 2: you're talking about getting a mortgage, especially shopping with a

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Speaker 2: local credit union or two, you're likely to find rates

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Speaker 2: that actually aren't all that bad, that are kind of

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Speaker 2: coming back down into normal territory. We see like the

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Speaker 2: headline numbers, especially for like thirty year mortgage varieties. I

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Speaker 2: think I looked at the number the other day. The

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Speaker 2: average thirty year mortgage rate is like six point three percent,

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Speaker 2: so it has come down like half a point from

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Speaker 2: last year. But there are other mortgage varieties. It's not

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Speaker 2: just thirty your mortgages that are out there available to you.

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Speaker 2: We mentioned like a fifteen to fifteen arm that exists

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Speaker 2: at a local credit union nearby where we live. The

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Speaker 2: rate right now is five point one two five percent.

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Speaker 3: Nice.

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Speaker 1: That's more than a full point lower than the thirty

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Speaker 1: year mortgage average. And so yeah, on like a million

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Speaker 1: dollar home, you'd say something like five hundred dollars a

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Speaker 1: month going with that fifteen to fifteen mortgage versus a

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Speaker 1: thirty year traditional you'd be putting a lot more money

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Speaker 1: towards principle because of that lower interest rate. And so

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Speaker 1: I think, what this makes me? What this pushes me towards? Max?

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Speaker 1: One I think maybe this should push you towards is

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Speaker 1: shopping extensively for a mortgage and thinking outside the box

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Speaker 1: when it comes to mortgage products. Arms used to be

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Speaker 1: this like flashing red light because you're like, it's so risky,

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Speaker 1: don't do it. But there are arms that are not

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Speaker 1: all that risky for people who are in a financially

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Speaker 1: secure position like you are. And that's probably where I

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Speaker 1: would be leaning towards. Yeah, And plus, most folks aren't

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Speaker 1: even in the home fifteen years down their road, or

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Speaker 1: if they, if they are in the same home, maybe

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Speaker 1: it's a different loan, like maybe they've refinanced. But you know,

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Speaker 1: with rates and the low fives, the optionality that you

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Speaker 1: gain would be incredibly powerful moving forward. And it's likely

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Speaker 1: that you'll be better off financially by staying invested with

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Speaker 1: let's say a low five percent mortgage given the historical

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Speaker 1: stock performance. So you'll kind of piggybacking off your numbers

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Speaker 1: here let's say if you were to put down an

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Speaker 1: additional two hundred thousand dollars on a one million dollar

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Speaker 1: purchase price, you would lower your monthly payments by just

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Speaker 1: over one thousand bucks and you would save almost two

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Speaker 1: hundred thousand dollars in interest, which is awesome. But if

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Speaker 1: you left that two hundred thousand dollars in the markets,

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Speaker 1: and this is just assuming average returns of a very

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Speaker 1: conservative of seven percent, you're gonna have five hundred and

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Speaker 1: fifty thousand dollars at the end of that. So the

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Speaker 1: difference is substantial over fifteen years, more than three hundred

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Speaker 1: and fifty thousand dollars in total. And on top of that,

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Speaker 1: you have the perk of liquidity, which is highly underrated.

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Speaker 1: Right now, Max, maybe you're thinking, we're newlyweds. We're gonna

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Speaker 1: get it. We're gonna get a house, we're going to

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Speaker 1: live here, we're going to stay in this job. We

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Speaker 1: love this neighborhood. We're going to stay near the Ballard district.

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Speaker 2: Yeah, we're gonna love this place forever because it's got

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Speaker 2: so many breweries nearby.

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Speaker 1: But priorities change, and when you are locked into a

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Speaker 1: house like that with a lot of equity. It can

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Speaker 1: constrain some of your options. And maybe you want to

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Speaker 1: do the trap, the no what is the digital nomad life,

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Speaker 1: Maybe you want to start a business. All of those

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Speaker 1: kinds of things are going to be tougher to do

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Speaker 1: when more of your money is tied up in your home. Yeah.

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Speaker 2: Yeah, And that's not to say that like paying off debt,

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Speaker 2: don't do it, because you should keep that debt debt

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Speaker 2: around as long as possible. Home debt is I think different, Matt.

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Speaker 2: We treat it differently than almost every other kind of debt,

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Speaker 2: especially if you can get a reasonable mortgage product and

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Speaker 2: a reasonable rate on that mortgage. And the one thing

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Speaker 2: kind of what you're getting at too, meant that I

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Speaker 2: have learned, maybe the hard way, I don't know, but

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Speaker 2: just learned by growing up, is that the things you

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Speaker 2: thought were going to you were going to love forever,

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Speaker 2: or the places you were going to want to be,

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Speaker 2: we're going to be like this is a forever house

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Speaker 2: or this is a forever job. That's not necessarily true,

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Speaker 2: even if you really like those things. And so we

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Speaker 2: moved six months after we renovated our house in town,

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Speaker 2: and it was not like the smartest financial move, but

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Speaker 2: it was like, this is what our family needs to do,

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Speaker 2: and we have the financial ability to withstand. Not the

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Speaker 2: smartest decision at this point in time, and it's just

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Speaker 2: amazing how you're right. Like priorities and what you want

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Speaker 2: in life changes, and the more liquidity you have, the

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Speaker 2: more flexibility you have to kind of pull off that

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Speaker 2: and go in a different direction that maybe you weren't

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Speaker 2: thinking that's the path you were going to go down.

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Speaker 1: It just gives you more margin. You're not counting on

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Speaker 1: everything going exactly right in order for the ship to

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Speaker 1: keep sailing.

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Speaker 2: Yeah, yep, And you know, Max, we'd love to see

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Speaker 2: you with a manageable monthly payment while putting twenty percent down,

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Speaker 2: so that way you can leave the rest of those

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Speaker 2: dollars invest it and not feel like you have to

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Speaker 2: sell right, sell holdings if the market is having a

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Speaker 2: rough year to be able to afford the mortgage that

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Speaker 2: maybe is stretching you. That's like a really crummy position

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Speaker 2: to be in to be like, oh, yeah, I had

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Speaker 2: the money, I didn't sell when I could have put

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Speaker 2: more down, and now I have to sell when the

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Speaker 2: market is down thirty percent. That's the only way I

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Speaker 2: can afford the mortgage in the coming months. Like, that's

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Speaker 2: a tough position to be in. We wouldn't want you

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Speaker 2: to be there. And if you're leaning in that direction, though,

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Speaker 2: like we'd consider putting down a bit more of a

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Speaker 2: lump sum. Like if you're like, ah, I think we're

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Speaker 2: looking for a home that does stretch us from a

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Speaker 2: monthly payment perspective beyond what we feel really comfortable with

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Speaker 2: a twenty percent down payment, then maybe I just don't

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Speaker 2: like being put in that position. That feels like a

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Speaker 2: little too much of being in the house poor bucket.

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Speaker 2: So maybe put down thirty percent or thirty five percent

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Speaker 2: or something like that. If you're planning on buying a

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Speaker 2: little bit nice over a house so that you have

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Speaker 2: a monthly payment that feels eminently comfortable for years to come,

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Speaker 2: and if you're still in this loan fifteen years down

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Speaker 2: the line, let's say, if you do say I'm just

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Speaker 2: gonna put twenty percent down, you can always sell some

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Speaker 2: stock in order to pay off a big chunk of

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Speaker 2: your mortgage, then I guess, yeah, you lose optionality. But

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Speaker 2: if you are biting off more than you can chew

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Speaker 2: from a monthly payment, perspective, you really might need to

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Speaker 2: put more down just to feel like you can hack

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Speaker 2: it for month to month.

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Speaker 1: And I would even encourage them too if if it

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Speaker 1: is looking like they're going to be a bit cash

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Speaker 1: strap when it comes to the payment, I would even

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Speaker 1: I would push them to consider living moving into a

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Speaker 1: smaller house. Similar to what you're saying, how our priorities change.

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Speaker 1: You think all this is gonna be the forever home,

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Speaker 1: going into the decision making process knowing that, all right,

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Speaker 1: this is going to work for us for the next

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Speaker 1: few years. Max. If you've ever thought about becoming a

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Speaker 1: rental property owner, a landlord, essentially the ability to transition this,

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Speaker 1: this primary home of y'all's into a rental property, If

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Speaker 1: that is something that you're interested in, this would be

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Speaker 1: a great way to do it. Yeah. And the typically

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Speaker 1: homes that are a bit smaller, not like the big

400
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Speaker 1: grand homes that you're thinking of. The smaller, more affordable

401
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Speaker 1: kind of homes tend to make better rentals from a

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Speaker 1: capitalization rate standpoint.

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Speaker 2: Yeah, if you're so inclined, If you're like I think,

404
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Speaker 2: maybe being a landlord wouldn't be the worst thing in

405
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Speaker 2: the world. I could do that in addition to my

406
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Speaker 2: day job, well, owning a rental property in the Ballad

407
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Speaker 2: area in particular amazing, it's a good spot. I know

408
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Speaker 2: how much we paid for an airbnb that we shared

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Speaker 2: with like my sister and my sisters and their families.

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Speaker 1: Yes, so expensive. I was thinking long term leases, but

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Speaker 1: I mean if you wanted to consider even doing short

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Speaker 1: term and yeah, obviously that's even more of a part

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Speaker 1: time job than even a long term lease situation. But

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Speaker 1: something to consider if you're interested. I don't at all

415
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Speaker 1: want to push you in this direction. If this if

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Speaker 1: these are not thoughts that you've already had, but if

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Speaker 1: you've had these thoughts and it's something that y'all are

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Speaker 1: interested in, Uh see, if you can find a off

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Speaker 1: a nice affordable three too three to three, you know,

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Speaker 1: and that's that's where putting twenty percent down, living in

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Speaker 1: it for a while, and then guess what you make

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Speaker 1: that a rental start. I've already got the next down

423
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Speaker 1: payment massively started. Yeah, you move out of that thing,

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Speaker 1: but and then you're really thinking about this initial property

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Speaker 1: buy as kind of a place to live in, kind

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Speaker 1: of a future investment. And I love that mentality. Not

427
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Speaker 1: enough people think that way, and not that you have to,

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Speaker 1: but it really can jump start your ability to move

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Speaker 1: towards financial independence and have financial security and have really

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Speaker 1: income coming in from multiple different streams. So Max, hope

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Speaker 1: that helps.

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Speaker 4: Matt.

433
00:19:34,920 --> 00:19:38,520
Speaker 2: We got more to get to, including what about annuities,

434
00:19:38,840 --> 00:19:40,800
Speaker 2: like is that a good investment choice? We'll talk about

435
00:19:40,840 --> 00:19:41,919
Speaker 2: that and more right after this.

436
00:19:49,920 --> 00:19:52,200
Speaker 1: All right, buddy, we are back from the break. We're

437
00:19:52,200 --> 00:19:54,840
Speaker 1: gonna take a listener question here in a second about

438
00:19:54,920 --> 00:19:58,439
Speaker 1: a special needs child. But first, let's here from a

439
00:19:58,440 --> 00:20:00,760
Speaker 1: listener who's gone through quite the arduous process when it

440
00:20:00,800 --> 00:20:03,160
Speaker 1: comes to purchasing a new vehicle. We don't typically take

441
00:20:03,240 --> 00:20:05,280
Speaker 1: questions like this. It's more of a it's almost like

442
00:20:05,280 --> 00:20:09,320
Speaker 1: a PSA. But we'll address some of his concerns. Let's

443
00:20:09,320 --> 00:20:10,240
Speaker 1: hear from Kevin.

444
00:20:10,640 --> 00:20:13,919
Speaker 5: Hey, Joel, and Matt. This is Kevin from Toronto, longtime listener.

445
00:20:14,000 --> 00:20:15,800
Speaker 5: Love what you guys are doing, so thank you and

446
00:20:15,880 --> 00:20:18,399
Speaker 5: keep it up. I'm curious to hear your thoughts and

447
00:20:18,480 --> 00:20:20,960
Speaker 5: also raise awareness for your listeners about our experience I

448
00:20:21,000 --> 00:20:23,480
Speaker 5: had recently with buying a car. I'm well into money

449
00:20:23,480 --> 00:20:26,040
Speaker 5: gear number seven with excellent credit. Money set aside for

450
00:20:26,080 --> 00:20:29,240
Speaker 5: a while for a car for a car purchase that

451
00:20:29,280 --> 00:20:32,080
Speaker 5: I've been delaying. I have growing family with two kids,

452
00:20:32,119 --> 00:20:34,360
Speaker 5: and we're on a one car household. I'm a big

453
00:20:34,400 --> 00:20:36,360
Speaker 5: fan of biking, and I've been delaying the second car

454
00:20:36,480 --> 00:20:40,000
Speaker 5: or upsizing for as long as possible. Unfortunately, over the summer,

455
00:20:40,080 --> 00:20:41,600
Speaker 5: my family and I were in a car accident on

456
00:20:41,680 --> 00:20:44,679
Speaker 5: day one of a vacation and our beloved ten year

457
00:20:44,720 --> 00:20:47,720
Speaker 5: old Subaru was totaled. We're all fine and walked away thankfully,

458
00:20:47,760 --> 00:20:50,800
Speaker 5: as did the other driver. So I began my replacement

459
00:20:51,000 --> 00:20:52,919
Speaker 5: car search with the intention of finding a newer but

460
00:20:52,960 --> 00:20:55,960
Speaker 5: still used car and paying cash from the insurance settlement

461
00:20:56,000 --> 00:20:59,080
Speaker 5: and the savings I mentioned. Several dealers these days offer

462
00:20:59,080 --> 00:21:01,960
Speaker 5: a thousand dollars disc out to finance, or in other words,

463
00:21:01,960 --> 00:21:04,680
Speaker 5: it would be an extra thousand dollars for a cash purchase.

464
00:21:05,160 --> 00:21:07,600
Speaker 5: This was disappointing to somebody that was pretty that was

465
00:21:07,640 --> 00:21:08,960
Speaker 5: prepared to pay cash.

466
00:21:09,600 --> 00:21:10,360
Speaker 1: During a test.

467
00:21:10,200 --> 00:21:11,919
Speaker 5: Drive, one of the salespeople told me that a lot

468
00:21:11,960 --> 00:21:13,800
Speaker 5: of people just stopped to finance and then pay off

469
00:21:13,800 --> 00:21:16,400
Speaker 5: their loan immediately, as it would be an open car loan.

470
00:21:16,920 --> 00:21:19,760
Speaker 5: So I was begrudgingly mentally prepared to finance and carried

471
00:21:19,800 --> 00:21:23,080
Speaker 5: on with the purchase of another major Japanese brand. So,

472
00:21:23,200 --> 00:21:25,520
Speaker 5: after the final negotiation with a salesperson and putting a

473
00:21:25,560 --> 00:21:28,000
Speaker 5: small deposit down to secure the deal, I was ushered

474
00:21:28,040 --> 00:21:32,119
Speaker 5: to the finance manager finalized paperwork. The finance manager advised

475
00:21:32,119 --> 00:21:34,520
Speaker 5: the minimum to finance was fifty percent, or about twenty

476
00:21:34,520 --> 00:21:38,159
Speaker 5: thousand Canadian dollars in my case, the remaining twenty k

477
00:21:38,240 --> 00:21:41,080
Speaker 5: would be at their used car financing rate. Even with

478
00:21:41,119 --> 00:21:44,640
Speaker 5: me being in the highest tier credit score of eight

479
00:21:44,640 --> 00:21:48,320
Speaker 5: point nine to nine percent. It's obviously obviously sky high,

480
00:21:48,320 --> 00:21:50,639
Speaker 5: but didn't think much of it, considering I intended to

481
00:21:50,640 --> 00:21:53,920
Speaker 5: pay it off immediately. However, the finance manager then told

482
00:21:53,920 --> 00:21:55,200
Speaker 5: me that I needed to have the loan for a

483
00:21:55,240 --> 00:21:57,880
Speaker 5: minimum of six months before I could pay it off,

484
00:21:58,440 --> 00:22:00,720
Speaker 5: with a bit of a wishy washy expt nation that

485
00:22:00,800 --> 00:22:02,800
Speaker 5: the title had to clear and the loan needed to

486
00:22:02,800 --> 00:22:05,080
Speaker 5: be registered so the lender knew where to apply the

487
00:22:05,119 --> 00:22:09,239
Speaker 5: payments and that typically takes six months. Coincidentally or not,

488
00:22:09,400 --> 00:22:11,199
Speaker 5: the back of the envelope math turns out to be

489
00:22:11,240 --> 00:22:14,320
Speaker 5: roughly one thousand dollars in interest for that principle interest

490
00:22:14,400 --> 00:22:17,640
Speaker 5: rate and term. Taking it further, I thought they probably

491
00:22:17,680 --> 00:22:19,840
Speaker 5: hope that buyers like me agreed to finance, even with

492
00:22:19,880 --> 00:22:22,679
Speaker 5: the attention of paying it off asap, but then forget

493
00:22:22,800 --> 00:22:25,720
Speaker 5: and pay even more interest over the term. So I

494
00:22:25,800 --> 00:22:27,639
Speaker 5: put on my cairen hat and marched over to the

495
00:22:27,680 --> 00:22:30,320
Speaker 5: general manager to explain my frustration with what felt like

496
00:22:30,359 --> 00:22:33,680
Speaker 5: a bait and switch sales tactic. The general manager conceded

497
00:22:33,720 --> 00:22:36,000
Speaker 5: slightly and let me put another few thousand dollars down

498
00:22:36,040 --> 00:22:38,680
Speaker 5: to reduce the financing amount, which I appreciated but also

499
00:22:38,760 --> 00:22:40,440
Speaker 5: thought at the same time that there doesn't seem to

500
00:22:40,480 --> 00:22:42,280
Speaker 5: be any firm policy if he just spent the rule

501
00:22:42,359 --> 00:22:45,320
Speaker 5: so easily. He also shared that it probably wouldn't take

502
00:22:45,359 --> 00:22:48,359
Speaker 5: six months, but maybe three. I asked how I would

503
00:22:48,359 --> 00:22:50,679
Speaker 5: know when the title clears, and I was told I

504
00:22:50,680 --> 00:22:53,240
Speaker 5: would just need to periodically call the lender to confirm.

505
00:22:53,359 --> 00:22:56,600
Speaker 5: This lack of clarity seemed pretty archaic, manual, and suspicious.

506
00:22:57,160 --> 00:22:59,320
Speaker 5: All that said, I opted to roll the dice in

507
00:22:59,440 --> 00:23:02,639
Speaker 5: finance for one thousand dollars discount, assuming that the interest

508
00:23:02,640 --> 00:23:04,520
Speaker 5: paid would be less than a thousand, so I'd be

509
00:23:04,680 --> 00:23:09,000
Speaker 5: ultimately net positive. Once the paperwork was signed, down, payment paid,

510
00:23:09,040 --> 00:23:11,199
Speaker 5: and direct debit set up for the financing payments that

511
00:23:11,280 --> 00:23:14,000
Speaker 5: was on my way. I immediately went home and searched

512
00:23:14,000 --> 00:23:17,159
Speaker 5: for the lender, which was associated with the dealership. I

513
00:23:17,280 --> 00:23:20,720
Speaker 5: very quickly found a robust online owner portal that can

514
00:23:20,760 --> 00:23:24,000
Speaker 5: be used to book service appointments, including making extra payments,

515
00:23:24,359 --> 00:23:27,040
Speaker 5: getting a payoff quote, and paying off a loan, with

516
00:23:27,119 --> 00:23:29,439
Speaker 5: the caveat that the first payment, which I set up

517
00:23:29,440 --> 00:23:32,160
Speaker 5: as bi weekly, would need to clear the bank before

518
00:23:32,200 --> 00:23:35,359
Speaker 5: I could download the payoff quote. While I was pleasantly

519
00:23:35,440 --> 00:23:39,920
Speaker 5: surprised to see this payoff option, this solidified this sleazy feeling,

520
00:23:40,000 --> 00:23:42,440
Speaker 5: as there was absolutely no mention of this amazing owner

521
00:23:42,480 --> 00:23:44,400
Speaker 5: portal that makes it easy to pay off a loan

522
00:23:44,680 --> 00:23:47,359
Speaker 5: when I was at the dealership or in my closing paperwork.

523
00:23:47,840 --> 00:23:50,000
Speaker 5: At this point, I was sure that they intentionally neglected

524
00:23:50,000 --> 00:23:52,640
Speaker 5: to tell me about the owner portal and or really

525
00:23:52,680 --> 00:23:54,360
Speaker 5: had no idea it was an option to pay off

526
00:23:54,359 --> 00:23:56,560
Speaker 5: the car after as little as fifteen days, which is

527
00:23:56,600 --> 00:23:59,000
Speaker 5: what I did. I ended up paying about one hundred

528
00:23:59,040 --> 00:24:02,320
Speaker 5: bucks an interest, and the owner portal immediately provided proof

529
00:24:02,359 --> 00:24:05,159
Speaker 5: of ownership enclosure of the loan. So sorry for the

530
00:24:05,160 --> 00:24:07,480
Speaker 5: long story, but was curious if you've heard about this,

531
00:24:08,080 --> 00:24:10,840
Speaker 5: what feels like an arbitrary Lucy Goosey six month or

532
00:24:10,840 --> 00:24:14,840
Speaker 5: three months financing minimum. I've been doing it over for

533
00:24:14,880 --> 00:24:17,000
Speaker 5: a couple of months now, debating whether to report it

534
00:24:17,000 --> 00:24:19,600
Speaker 5: to a consumer protection type of agency or something. So

535
00:24:20,359 --> 00:24:22,520
Speaker 5: thanks in advance for listening, and I appreciate your thoughts.

536
00:24:23,280 --> 00:24:25,639
Speaker 1: So I was just taking notes here as Kevin was talking,

537
00:24:25,680 --> 00:24:29,720
Speaker 1: and he said it seems overly manual, archaic and suspicious.

538
00:24:30,280 --> 00:24:33,720
Speaker 1: And I would say, Kevin, that it's intentionally manual. It's

539
00:24:33,720 --> 00:24:38,240
Speaker 1: intentionally archaic, and yes, you should be suspicious because that's, yeah,

540
00:24:38,280 --> 00:24:39,400
Speaker 1: that's what's going on here.

541
00:24:39,560 --> 00:24:43,800
Speaker 2: That's the car buying experience, at least done the old

542
00:24:43,840 --> 00:24:46,760
Speaker 2: school way, and so much of car buying is still

543
00:24:46,760 --> 00:24:50,119
Speaker 2: done that way, and there are companies trying to change that,

544
00:24:50,280 --> 00:24:53,760
Speaker 2: right CarMax, Carbana, especially on the used car salesfront, are

545
00:24:53,800 --> 00:24:55,320
Speaker 2: trying to make it a little bit.

546
00:24:55,359 --> 00:24:57,720
Speaker 1: Although they've got finance flancing now. Because I think about

547
00:24:57,720 --> 00:25:01,000
Speaker 1: when I've I mean, it's been the the Odyssey's gonna

548
00:25:01,000 --> 00:25:03,439
Speaker 1: allow to love this episode. When we purchased ours, they

549
00:25:03,440 --> 00:25:05,800
Speaker 1: didn't have a financing department, and so the ability to

550
00:25:05,840 --> 00:25:08,680
Speaker 1: walk in pay cash not literal you know cash. I

551
00:25:08,720 --> 00:25:11,320
Speaker 1: didn't drop in on twenty thousand dollars, but they didn't

552
00:25:11,320 --> 00:25:12,879
Speaker 1: have financing, but they do now, so I would be

553
00:25:12,880 --> 00:25:14,800
Speaker 1: surprised if they do something similar to that as well,

554
00:25:14,800 --> 00:25:16,720
Speaker 1: where it's just like, hey, if you if you finance

555
00:25:16,800 --> 00:25:19,919
Speaker 1: with us, you gotta you get a discount, I think.

556
00:25:19,960 --> 00:25:22,560
Speaker 1: And that's because like this is a profit center for

557
00:25:22,720 --> 00:25:27,239
Speaker 1: so many dealerships, right, they want you to take out

558
00:25:27,280 --> 00:25:28,800
Speaker 1: a loan with them, and in fact, they're going to

559
00:25:28,880 --> 00:25:31,600
Speaker 1: often charge you more for paying in cash. Makes me

560
00:25:31,600 --> 00:25:36,160
Speaker 1: think of conversation we had with Zach and Ray Schevska

561
00:25:36,560 --> 00:25:41,200
Speaker 1: the episode eight forty five, and they man so much knowledge.

562
00:25:42,160 --> 00:25:45,920
Speaker 1: Ray was a former car dealer and car salesman, which

563
00:25:45,960 --> 00:25:47,000
Speaker 1: one was Ray?

564
00:25:46,840 --> 00:25:48,720
Speaker 2: Ray was the dad, the dad, and so he and

565
00:25:48,800 --> 00:25:50,480
Speaker 2: side I know that it was the dad who was

566
00:25:50,840 --> 00:25:51,680
Speaker 2: they used to work at the dealers.

567
00:25:51,760 --> 00:25:53,040
Speaker 1: Yeah, but I get their names.

568
00:25:53,119 --> 00:25:55,760
Speaker 2: The two of them basically started a website to help

569
00:25:55,840 --> 00:25:59,719
Speaker 2: consumers shop well for a car, and it's because they

570
00:25:59,720 --> 00:26:02,240
Speaker 2: have the insider knowledge of like how people use to

571
00:26:02,320 --> 00:26:05,400
Speaker 2: rate people over the coals to ensure that they got

572
00:26:05,400 --> 00:26:09,080
Speaker 2: what they wanted and that consumers were ultimately paying more

573
00:26:09,160 --> 00:26:11,600
Speaker 2: than they thought. And so yeah, they're hoping that you

574
00:26:11,640 --> 00:26:13,360
Speaker 2: forget to pay off the loan in short order, as

575
00:26:13,359 --> 00:26:15,960
Speaker 2: you mentioned, right, then you'll rack up more in interest charges.

576
00:26:16,160 --> 00:26:18,560
Speaker 2: They also get money for originating a new loan. They

577
00:26:18,640 --> 00:26:21,920
Speaker 2: often get kickbacks for writing a higher interest rate loan

578
00:26:22,040 --> 00:26:24,800
Speaker 2: you mentioned the eight point nine percent or whatever. If

579
00:26:24,840 --> 00:26:28,119
Speaker 2: you pay with cash, that profit center for the dealership disappears.

580
00:26:28,359 --> 00:26:30,720
Speaker 2: Most people just don't push back the way you did.

581
00:26:31,040 --> 00:26:35,280
Speaker 2: They accept what they're told. But that's exactly why they're

582
00:26:35,320 --> 00:26:37,320
Speaker 2: trying to get you to think about paying the car

583
00:26:37,400 --> 00:26:40,480
Speaker 2: off on a longer timeline, not immediately. They're like that

584
00:26:40,640 --> 00:26:42,400
Speaker 2: Kevin seems like a smart dude, Like he's gonna pay

585
00:26:42,400 --> 00:26:44,160
Speaker 2: this loan off real quick. Let's not give him all

586
00:26:44,200 --> 00:26:47,399
Speaker 2: the details because he'll probably cost us a lot of

587
00:26:47,440 --> 00:26:48,760
Speaker 2: money if he does.

588
00:26:48,800 --> 00:26:48,919
Speaker 3: It.

589
00:26:48,920 --> 00:26:51,000
Speaker 2: Sounds like you did about as well as you could have,

590
00:26:51,119 --> 00:26:54,400
Speaker 2: given kind of the funky nature of dealership sales and financing.

591
00:26:54,640 --> 00:26:56,720
Speaker 1: Yeah, that's right. Yeah, And going back to ray Inzach, like,

592
00:26:56,760 --> 00:26:58,720
Speaker 1: that's why they mentioned in that episode that many people

593
00:26:59,000 --> 00:27:02,600
Speaker 1: they essentially pretend that they're going to finance when they

594
00:27:02,600 --> 00:27:05,520
Speaker 1: are negotiating the deal, but then they reveal that they

595
00:27:05,560 --> 00:27:08,760
Speaker 1: are a cash buyer after they've agreed to a deal

596
00:27:08,800 --> 00:27:10,960
Speaker 1: that they're happy with after a big term, which but

597
00:27:11,440 --> 00:27:14,520
Speaker 1: on the opposite way, yeah, but I mean, it's true

598
00:27:14,560 --> 00:27:16,960
Speaker 1: that the loan is funded within a week of your purchase,

599
00:27:17,000 --> 00:27:20,280
Speaker 1: typically within forty eight hours, and some dealerships do have

600
00:27:20,400 --> 00:27:24,520
Speaker 1: early payoff restrictions baked into the contract, and so if you,

601
00:27:24,640 --> 00:27:26,760
Speaker 1: let's say you pay the loan off within ninety days

602
00:27:26,760 --> 00:27:30,320
Speaker 1: of funding, you could be subject to having that discount avoided.

603
00:27:30,320 --> 00:27:33,880
Speaker 1: And so it's important to know the terms. But if not, man,

604
00:27:33,920 --> 00:27:35,879
Speaker 1: you did the right thing by advocating for yourself and

605
00:27:35,880 --> 00:27:38,720
Speaker 1: by not not buying every line coming out of the

606
00:27:38,760 --> 00:27:41,720
Speaker 1: salesperson's mouth. And by the way, this man, this question

607
00:27:41,800 --> 00:27:43,199
Speaker 1: is coming out a good time of years as well,

608
00:27:43,200 --> 00:27:45,920
Speaker 1: because we're talking about the the insider knowledge that Ray

609
00:27:45,920 --> 00:27:47,960
Speaker 1: and Zach had and they I mean them talking about

610
00:27:48,000 --> 00:27:51,959
Speaker 1: how the dealerships man the lots they're trying to move inventory,

611
00:27:52,119 --> 00:27:54,359
Speaker 1: and how essentially the end of the month is better,

612
00:27:54,640 --> 00:27:56,520
Speaker 1: it's better time to buy than the beginning of the month,

613
00:27:56,880 --> 00:27:58,479
Speaker 1: and to the quarter is better than that the beginning

614
00:27:58,480 --> 00:28:01,560
Speaker 1: of the quarter, and then the ultimate is the end

615
00:28:01,560 --> 00:28:03,600
Speaker 1: of the year is a better time to buy than

616
00:28:03,600 --> 00:28:05,760
Speaker 1: at the beginning of the year. So right now, if

617
00:28:05,760 --> 00:28:09,240
Speaker 1: you are in the market for a new to you,

618
00:28:10,280 --> 00:28:13,840
Speaker 1: hopefully vehicle certified pre owned is great use vehicle from

619
00:28:13,840 --> 00:28:17,800
Speaker 1: a dealership. Now is a great time to potentially snag

620
00:28:17,840 --> 00:28:20,080
Speaker 1: a deal. But make sure you know the terms of

621
00:28:20,080 --> 00:28:23,280
Speaker 1: the financing if you're taking the path of trying to

622
00:28:23,400 --> 00:28:27,440
Speaker 1: negotiate this discount, but you got to finance it. And

623
00:28:27,640 --> 00:28:30,520
Speaker 1: to Kevin's point, the fact, he said he did some

624
00:28:30,640 --> 00:28:33,120
Speaker 1: rough back of a napkin math and it's just like, oh, yeah,

625
00:28:33,119 --> 00:28:34,720
Speaker 1: it turns out I'm going to pay a thousand dollars

626
00:28:34,760 --> 00:28:36,240
Speaker 1: an interest where I had to keep this around for

627
00:28:36,280 --> 00:28:39,920
Speaker 1: three months. This exact thing happened to my in laws, yes,

628
00:28:40,560 --> 00:28:42,680
Speaker 1: and three months. And he's very very much a commentary.

629
00:28:42,720 --> 00:28:45,480
Speaker 1: It was a thirteen hundred dollars discount, and he calculated

630
00:28:45,520 --> 00:28:47,720
Speaker 1: the exact math and it was exactly it was thirteen

631
00:28:47,800 --> 00:28:51,320
Speaker 1: hundred dollars. And I love the approach that the dealership

632
00:28:51,360 --> 00:28:52,960
Speaker 1: for them, that they took. It sounds like they took

633
00:28:52,960 --> 00:28:56,480
Speaker 1: a slightly more honest approach. They just asked them if

634
00:28:56,480 --> 00:28:59,960
Speaker 1: you could keep the loan around for a Chentleman's agree

635
00:29:00,080 --> 00:29:03,120
Speaker 1: at least for three months. But then they're like that's

636
00:29:03,160 --> 00:29:05,280
Speaker 1: not in the contract. So is there is there a

637
00:29:05,320 --> 00:29:09,600
Speaker 1: pre payment penalty? Like are we able to eliminate this immediately?

638
00:29:10,120 --> 00:29:12,600
Speaker 1: And they're like, yep, you can, but we ask you

639
00:29:12,680 --> 00:29:15,200
Speaker 1: please to keep this are out. It's like, okay, I

640
00:29:15,240 --> 00:29:16,320
Speaker 1: think I have all the information.

641
00:29:16,440 --> 00:29:18,120
Speaker 2: Yeah I need It's more like a doo me a

642
00:29:18,160 --> 00:29:21,360
Speaker 2: salad if you don't mind, you know, I don't know.

643
00:29:21,680 --> 00:29:23,680
Speaker 1: Probably not. Not if it's gonna cost me thirteen hundred bucks,

644
00:29:23,680 --> 00:29:26,360
Speaker 1: I'm not going to do it. Of appreciate the honesty though,

645
00:29:26,400 --> 00:29:28,760
Speaker 1: as opposed to like the run around and not sharing

646
00:29:28,800 --> 00:29:29,320
Speaker 1: the information.

647
00:29:29,480 --> 00:29:31,960
Speaker 2: Yeah, I respect that a little bit more. Yeah, me too.

648
00:29:32,040 --> 00:29:34,560
Speaker 2: And so Kevin said, we'll shod to report this dealership

649
00:29:34,560 --> 00:29:35,680
Speaker 2: to a consumer agency.

650
00:29:35,920 --> 00:29:36,360
Speaker 1: Probably not.

651
00:29:36,480 --> 00:29:40,160
Speaker 2: I mean these are fairly normal tactics that you're mentioning here,

652
00:29:40,200 --> 00:29:43,520
Speaker 2: like it's the classic car sales dance. And so you

653
00:29:43,520 --> 00:29:45,760
Speaker 2: handle yourself well right, paying a hundred bucks an interest

654
00:29:45,760 --> 00:29:47,560
Speaker 2: to get a thousand dollars discount. It sounds like it

655
00:29:47,600 --> 00:29:50,280
Speaker 2: was worth the annoyance and the frustration and putting on

656
00:29:50,320 --> 00:29:52,720
Speaker 2: your Karen hat, which you said, which that was that

657
00:29:52,800 --> 00:29:55,680
Speaker 2: was funny. You can always leave an accurate Google review.

658
00:29:55,720 --> 00:29:57,600
Speaker 2: I would leave like a one star review and talk

659
00:29:57,680 --> 00:29:59,880
Speaker 2: smack but maybe like three stars, and mentioned kind of

660
00:29:59,880 --> 00:30:03,520
Speaker 2: the annoying financing combo. Help your fellow potential car buyers

661
00:30:03,520 --> 00:30:05,920
Speaker 2: out that that can just you know, make a difference

662
00:30:05,960 --> 00:30:07,600
Speaker 2: for them, people who are out there thinking about buying

663
00:30:07,600 --> 00:30:10,200
Speaker 2: a car in the future from that dealership. And we

664
00:30:10,240 --> 00:30:11,640
Speaker 2: hope you enjoy this car. I hope it lasts you

665
00:30:11,720 --> 00:30:14,400
Speaker 2: a long time. It just makes me think when a

666
00:30:14,520 --> 00:30:17,160
Speaker 2: used car that you love, when you get into an accident,

667
00:30:17,240 --> 00:30:19,520
Speaker 2: when if someone runs into your car or something like that,

668
00:30:19,880 --> 00:30:22,880
Speaker 2: it is such a bummer because oftentimes the value you

669
00:30:23,000 --> 00:30:25,600
Speaker 2: get from the insurance company for that car, it doesn't

670
00:30:25,600 --> 00:30:27,800
Speaker 2: match up to the value in your head, in your

671
00:30:27,800 --> 00:30:29,640
Speaker 2: heart for what that car is worth, like at least

672
00:30:29,640 --> 00:30:31,440
Speaker 2: for me, Like if one of my cars were to

673
00:30:31,440 --> 00:30:33,800
Speaker 2: get damaged right now, like our van is worth I

674
00:30:33,800 --> 00:30:35,280
Speaker 2: looked up the value of the other day. I was shocked,

675
00:30:35,320 --> 00:30:38,200
Speaker 2: it's worth like fifty five hundred dollars. To me, it's

676
00:30:38,240 --> 00:30:39,720
Speaker 2: worth way more than that. And so if I get

677
00:30:39,840 --> 00:30:43,080
Speaker 2: is slammed in that car and that's the cash I get,

678
00:30:43,320 --> 00:30:44,040
Speaker 2: I'll be bumped.

679
00:30:44,080 --> 00:30:46,320
Speaker 1: So so that happened to you. Joel's here from another

680
00:30:46,440 --> 00:30:48,960
Speaker 1: listener This is a listener with a new baby in tow,

681
00:30:49,200 --> 00:30:51,360
Speaker 1: and he wants to make sure he's taking the proper

682
00:30:51,400 --> 00:30:54,400
Speaker 1: financial steps to prepare for this baby's future.

683
00:30:55,560 --> 00:30:58,280
Speaker 4: Hey guys, Casey from Utah here. My wife and I

684
00:30:58,320 --> 00:31:01,120
Speaker 4: recently had a son with Down syndrome, and she needed

685
00:31:01,120 --> 00:31:03,080
Speaker 4: to quit her job to help care for his needs.

686
00:31:03,880 --> 00:31:05,800
Speaker 4: It's likely that he will live with us for the

687
00:31:05,800 --> 00:31:07,720
Speaker 4: rest of our lives, and we want to ensure that

688
00:31:07,760 --> 00:31:10,760
Speaker 4: he is provided for and that whoever cares for him

689
00:31:10,800 --> 00:31:14,000
Speaker 4: after we are gone has the resources they need. At

690
00:31:14,040 --> 00:31:16,720
Speaker 4: the same time, I would still like to retire someday.

691
00:31:17,320 --> 00:31:20,080
Speaker 4: How can I plan for retirement for three people instead

692
00:31:20,120 --> 00:31:23,800
Speaker 4: of two, especially with the reduced household income. Any thoughts

693
00:31:23,840 --> 00:31:24,920
Speaker 4: would be appreciated.

694
00:31:25,120 --> 00:31:28,120
Speaker 2: Thanks man, Casey. First off, I just want to say

695
00:31:28,160 --> 00:31:31,680
Speaker 2: it sounds like you're being intentional to love your son. Well, yeah,

696
00:31:31,720 --> 00:31:34,920
Speaker 2: and I love how he's approaching yes this question, and

697
00:31:35,160 --> 00:31:37,000
Speaker 2: it's going to throw a wrench in things financially like

698
00:31:37,040 --> 00:31:40,720
Speaker 2: this is this changes your future, your family's future, your

699
00:31:40,720 --> 00:31:44,480
Speaker 2: financial future. Saving for retirement of course is still necessarily

700
00:31:44,480 --> 00:31:47,560
Speaker 2: and important, but the family is the top priority and

701
00:31:47,600 --> 00:31:50,160
Speaker 2: so this is going to make it harder. Like you said,

702
00:31:50,480 --> 00:31:52,280
Speaker 2: but I think I just want to say that I'm

703
00:31:52,280 --> 00:31:54,720
Speaker 2: impressed by your dedication to make sure that your son

704
00:31:54,800 --> 00:31:57,880
Speaker 2: is well taken care of, even if it means rearranging

705
00:31:57,920 --> 00:32:00,440
Speaker 2: finances so your wife can stay at home. Like, those

706
00:32:00,480 --> 00:32:03,360
Speaker 2: are the big kinds of decisions, Matt, that people face.

707
00:32:03,400 --> 00:32:06,240
Speaker 2: They just don't get talked about all that much. And

708
00:32:06,880 --> 00:32:08,880
Speaker 2: so I'm glad Casey brought this up so we can

709
00:32:08,920 --> 00:32:11,480
Speaker 2: address it, address it on the show totally. Yeah, And

710
00:32:11,560 --> 00:32:15,000
Speaker 2: so I don't at all want to discount how hard

711
00:32:15,080 --> 00:32:17,120
Speaker 2: it might be for Casey. I grew up with a

712
00:32:17,160 --> 00:32:20,200
Speaker 2: special needs sister, so I certainly know. But at the

713
00:32:20,200 --> 00:32:23,000
Speaker 2: same time, and she needs care for the rest of

714
00:32:23,000 --> 00:32:25,240
Speaker 2: her days from your absolutely, and you have to probably

715
00:32:25,280 --> 00:32:26,600
Speaker 2: be a part of that at some point in the future.

716
00:32:26,680 --> 00:32:30,840
Speaker 1: Absolutely. That being said, it's almost like like the ability

717
00:32:30,840 --> 00:32:34,440
Speaker 1: for Casey to know that now and have years and

718
00:32:34,560 --> 00:32:36,880
Speaker 1: like decades ahead of him to prepare for that. I

719
00:32:36,920 --> 00:32:40,680
Speaker 1: think it's almost like, I think I would rather that

720
00:32:40,760 --> 00:32:43,360
Speaker 1: happen than let's say, if you had a kid then

721
00:32:43,440 --> 00:32:45,120
Speaker 1: something happened when they're like eighteen and then all of

722
00:32:45,160 --> 00:32:46,760
Speaker 1: a sudden, Like what I'm saying is that if you've

723
00:32:46,760 --> 00:32:48,640
Speaker 1: got twenty years ahead of you to prepare, and you've

724
00:32:48,640 --> 00:32:52,200
Speaker 1: got time on your side, and compounding that is totally

725
00:32:52,240 --> 00:32:54,480
Speaker 1: doable as opposed to like, hey, we got to do

726
00:32:54,520 --> 00:32:56,640
Speaker 1: this thing that needs to be fixed by next year.

727
00:32:56,960 --> 00:32:59,240
Speaker 1: There's not a lot that you can do within such

728
00:32:59,400 --> 00:33:01,160
Speaker 1: a just such a quick turnaround.

729
00:33:01,280 --> 00:33:03,720
Speaker 2: But the small rudder changes you can make now to

730
00:33:03,800 --> 00:33:05,280
Speaker 2: the course of the ship, like you're going to get

731
00:33:05,280 --> 00:33:07,000
Speaker 2: there over the course of twenty years. You have to

732
00:33:07,000 --> 00:33:09,200
Speaker 2: make a much harder turn right to get there in

733
00:33:09,320 --> 00:33:11,040
Speaker 2: less and like a year or two exactly.

734
00:33:11,200 --> 00:33:15,320
Speaker 1: Yeah, So Casey mentioned saving for his son. He wants

735
00:33:15,320 --> 00:33:16,840
Speaker 1: to obviously make sure that he's taken care of in

736
00:33:16,840 --> 00:33:19,200
Speaker 1: the future. Casey, I'm not sure if you've heard of

737
00:33:19,280 --> 00:33:22,760
Speaker 1: an able account, but you have certainly heard it now.

738
00:33:23,640 --> 00:33:25,080
Speaker 1: That is going to be the best way to stock

739
00:33:25,120 --> 00:33:28,880
Speaker 1: money away for his future. Anyone who has a disability

740
00:33:28,920 --> 00:33:33,120
Speaker 1: that is diagnosed before the age of twenty six qualifies

741
00:33:33,280 --> 00:33:38,080
Speaker 1: for an able account. It's basically it's akin to the

742
00:33:38,080 --> 00:33:40,920
Speaker 1: five twenty nine accounts out there, but was created specifically

743
00:33:41,200 --> 00:33:44,240
Speaker 1: to help family save money for disabled children without losing

744
00:33:44,280 --> 00:33:48,680
Speaker 1: out on federal benefits like Social Security income and Medicaid

745
00:33:48,720 --> 00:33:53,400
Speaker 1: as well. But so Casey specifically lives in Utah, so

746
00:33:53,480 --> 00:33:57,600
Speaker 1: you can head over to the website ableut dot com

747
00:33:58,080 --> 00:34:00,880
Speaker 1: and they've got pretty good options over there. Expense ratios,

748
00:34:01,400 --> 00:34:04,000
Speaker 1: the fees, they're fairly low, and that is going to

749
00:34:04,040 --> 00:34:06,160
Speaker 1: be the best account to help your son to save

750
00:34:06,240 --> 00:34:09,759
Speaker 1: up a nest egg for his future. And we're specifically

751
00:34:09,800 --> 00:34:14,680
Speaker 1: mentioning Utah's account because Casey, you get a state deduction

752
00:34:14,920 --> 00:34:17,719
Speaker 1: for dollars that you contribute to that account. If you

753
00:34:18,000 --> 00:34:20,680
Speaker 1: live in a state that didn't have a deduction, that's

754
00:34:20,680 --> 00:34:23,080
Speaker 1: when you would want to start looking at other state plans,

755
00:34:23,120 --> 00:34:24,960
Speaker 1: just like we do with five twenty nine accounts, right, Yeah,

756
00:34:25,000 --> 00:34:27,080
Speaker 1: And so when it comes to able accounts, I think

757
00:34:27,120 --> 00:34:28,960
Speaker 1: Ohio has a really good one. I think Florida has

758
00:34:29,000 --> 00:34:31,319
Speaker 1: a really good one as well. So for everyone else

759
00:34:31,320 --> 00:34:34,200
Speaker 1: out there who's interested in an able account you don't

760
00:34:34,239 --> 00:34:36,360
Speaker 1: get the in state deduction, make sure to look to

761
00:34:36,400 --> 00:34:38,880
Speaker 1: some of those better options out there. But UTAs seems

762
00:34:38,920 --> 00:34:39,440
Speaker 1: pretty solid.

763
00:34:39,520 --> 00:34:42,000
Speaker 2: Yeah, And that's one piece of the puzzle, right Matt

764
00:34:42,160 --> 00:34:44,799
Speaker 2: is saving for the third member of the family, for

765
00:34:45,200 --> 00:34:48,560
Speaker 2: their son. It's like a practical accounts yeah, answer, that's

766
00:34:48,560 --> 00:34:50,680
Speaker 2: something that has to be has to be mentioned, and

767
00:34:50,760 --> 00:34:53,360
Speaker 2: it is one of the places you want to start

768
00:34:53,400 --> 00:34:55,840
Speaker 2: funneling some amount of money to help him save for

769
00:34:55,880 --> 00:35:00,359
Speaker 2: his own future. Because yeah, it's different than you talk

770
00:35:00,360 --> 00:35:02,640
Speaker 2: regularly about whether or not we're going to invest for

771
00:35:02,640 --> 00:35:04,920
Speaker 2: our children's future, and we kind of waffle on that,

772
00:35:05,000 --> 00:35:06,759
Speaker 2: and we do a little bit, but not a whole lot,

773
00:35:06,840 --> 00:35:10,000
Speaker 2: and we think our children should largely be responsible for

774
00:35:10,040 --> 00:35:13,239
Speaker 2: funding their own retirement. But it's different, like when you

775
00:35:13,320 --> 00:35:16,600
Speaker 2: have a special needs child who is going to need

776
00:35:16,600 --> 00:35:18,120
Speaker 2: a lot more care and won't be able to do

777
00:35:18,440 --> 00:35:21,719
Speaker 2: some of those things for himself. At the same time, Casey,

778
00:35:21,760 --> 00:35:24,279
Speaker 2: you're also worried about your own future. Understandably, you're going

779
00:35:24,360 --> 00:35:27,239
Speaker 2: to have higher expenses because your son is likely going

780
00:35:27,280 --> 00:35:29,560
Speaker 2: to live with you for a long long time. You've

781
00:35:29,600 --> 00:35:32,479
Speaker 2: also gone down to being a one income household, which

782
00:35:32,520 --> 00:35:34,480
Speaker 2: makes it harder to make ends meet and to deal

783
00:35:34,480 --> 00:35:37,640
Speaker 2: with those escalating costs that we're all experiencing, and at

784
00:35:37,640 --> 00:35:41,040
Speaker 2: the same time to save well for your own retirement.

785
00:35:41,120 --> 00:35:46,520
Speaker 2: That it feels like a mountain of necessities. And it's

786
00:35:46,600 --> 00:35:48,800
Speaker 2: not that it isn't possible, it's just that it will

787
00:35:48,800 --> 00:35:52,440
Speaker 2: inevitably take longer, which is why the time portion matters

788
00:35:52,480 --> 00:35:54,840
Speaker 2: so much that Matt talked about. So I think the

789
00:35:54,840 --> 00:35:57,319
Speaker 2: first piece of advice I would say is to maybe

790
00:35:57,320 --> 00:36:01,080
Speaker 2: give yourself some grace realizing that you're circumstances are going

791
00:36:01,120 --> 00:36:05,800
Speaker 2: to delay your path to financial independence and that's okay, Like, yeah,

792
00:36:05,360 --> 00:36:08,719
Speaker 2: I think it could be demoralizing. Don't let it be demoralizing.

793
00:36:08,760 --> 00:36:10,520
Speaker 2: You just have new goals in your life that you

794
00:36:10,600 --> 00:36:11,280
Speaker 2: need to address.

795
00:36:11,400 --> 00:36:13,160
Speaker 1: Yeah, No, I think thinking about it in that way

796
00:36:13,360 --> 00:36:15,759
Speaker 1: is really helpful because it just shows that there are

797
00:36:15,800 --> 00:36:18,600
Speaker 1: all different types of goals that we set for ourselves,

798
00:36:18,600 --> 00:36:22,160
Speaker 1: and so how do we sacrifice into here now to

799
00:36:22,160 --> 00:36:23,600
Speaker 1: make sure that we're able to achieve those goals?

800
00:36:23,680 --> 00:36:23,839
Speaker 4: Right?

801
00:36:23,880 --> 00:36:27,879
Speaker 1: Like, that's how we are able to realize the life

802
00:36:27,920 --> 00:36:30,279
Speaker 1: we envision for ourselves. And so practically speaking, I think

803
00:36:30,280 --> 00:36:32,279
Speaker 1: what that can look like is just I don't want

804
00:36:32,320 --> 00:36:37,279
Speaker 1: to This seems so like small and petty, but like

805
00:36:37,320 --> 00:36:41,880
Speaker 1: budgeting is what I'm thinking about, right, Like assessing your income,

806
00:36:41,920 --> 00:36:46,200
Speaker 1: assessing your expenses. You've certainly lost some income and you

807
00:36:46,280 --> 00:36:49,359
Speaker 1: could stop prioritizing retirement al together in order to meet

808
00:36:49,360 --> 00:36:52,640
Speaker 1: your current needs. That would be an understandable reaction, but

809
00:36:52,680 --> 00:36:54,760
Speaker 1: I think it would be a bad one for your future,

810
00:36:54,800 --> 00:36:58,160
Speaker 1: for your desire to be financially independent and retire someday.

811
00:36:58,239 --> 00:37:01,720
Speaker 1: And instead I'd be asking, like, how can I reduce

812
00:37:01,760 --> 00:37:04,840
Speaker 1: my expenses so that I'm not going to negatively impact

813
00:37:04,880 --> 00:37:09,080
Speaker 1: my life in a significant way. Just start trimming wherever

814
00:37:09,120 --> 00:37:12,000
Speaker 1: you can, wherever possible to create more margin. And I

815
00:37:12,040 --> 00:37:14,400
Speaker 1: think this will be important as you just build up

816
00:37:14,440 --> 00:37:17,319
Speaker 1: your savings, you are able to continue investing and also

817
00:37:17,440 --> 00:37:21,000
Speaker 1: start saving for your son's future as well. It may

818
00:37:21,080 --> 00:37:23,759
Speaker 1: not take, depending on how tight of a budget and

819
00:37:23,760 --> 00:37:28,000
Speaker 1: how type of a ship that you're running within, that

820
00:37:28,120 --> 00:37:31,120
Speaker 1: you might find, Holy cow, all of a sudden, all

821
00:37:31,320 --> 00:37:33,879
Speaker 1: of these dollars that were kind of just getting spent

822
00:37:33,960 --> 00:37:36,360
Speaker 1: willy nilly, we're able to funnel and harness in a

823
00:37:36,400 --> 00:37:39,640
Speaker 1: way that's going to lead to significant wealth down the road.

824
00:37:40,560 --> 00:37:43,560
Speaker 1: If you were already really on top of your budget,

825
00:37:43,600 --> 00:37:45,680
Speaker 1: then I would say maybe it take, like maybe some

826
00:37:45,680 --> 00:37:48,439
Speaker 1: bigger cuts, some more drastic changes in your life, as

827
00:37:48,440 --> 00:37:50,640
Speaker 1: opposed to just trimming around the margins.

828
00:37:50,760 --> 00:37:53,520
Speaker 2: Yeah, well, I think this is going to buy necessity,

829
00:37:53,600 --> 00:37:56,600
Speaker 2: involve some more communication between you and your wife, right,

830
00:37:56,920 --> 00:37:59,640
Speaker 2: And it's often an incumbent on the stay at home

831
00:37:59,719 --> 00:38:02,600
Speaker 2: spouse to create that more frugal environment. I think it's

832
00:38:02,600 --> 00:38:04,480
Speaker 2: going to take both of you really all hands on

833
00:38:04,560 --> 00:38:08,440
Speaker 2: deck sort of approach in order to feel comfortable to

834
00:38:08,440 --> 00:38:11,160
Speaker 2: still invest for yourself while taking care of your son

835
00:38:11,520 --> 00:38:13,360
Speaker 2: and you, like you mentioned, Matt, you'll probably have to

836
00:38:13,400 --> 00:38:16,760
Speaker 2: look beyond even low hanging fruit. I'm thinking about something like, Okay,

837
00:38:16,800 --> 00:38:19,360
Speaker 2: your wife is staying at home now, depending on your

838
00:38:19,400 --> 00:38:21,680
Speaker 2: work situation, casey, can y'all go down to being a

839
00:38:21,719 --> 00:38:23,960
Speaker 2: one car family? Like that's one of those things that

840
00:38:23,960 --> 00:38:26,000
Speaker 2: it's not just selling the car. It's the fact that

841
00:38:26,000 --> 00:38:30,080
Speaker 2: you're not paying insurance on that car anymore. Like it's

842
00:38:30,080 --> 00:38:33,759
Speaker 2: not a depreciating asset sitting in your driveway. So like,

843
00:38:33,920 --> 00:38:36,440
Speaker 2: what can you do that maybe might be a little

844
00:38:36,480 --> 00:38:39,400
Speaker 2: outside the box that you haven't You really haven't thought about.

845
00:38:39,440 --> 00:38:41,680
Speaker 1: Even a lower cost of living area, you know. I mean,

846
00:38:41,760 --> 00:38:44,400
Speaker 1: maybe you're thinking before now it's not that important that

847
00:38:44,440 --> 00:38:46,839
Speaker 1: we're not close to family. Oh maybe all of a sudden,

848
00:38:46,840 --> 00:38:49,239
Speaker 1: you're realizing that it's much more important for us to

849
00:38:49,239 --> 00:38:52,239
Speaker 1: be closer to family because of the assistance that they're

850
00:38:52,239 --> 00:38:54,040
Speaker 1: going to be able to provide. For sure.

851
00:38:54,120 --> 00:38:57,000
Speaker 2: I think ultimately financial independence is still doable over a

852
00:38:57,080 --> 00:39:00,160
Speaker 2: longer timeline. It's going to mean thinking more about your

853
00:39:00,200 --> 00:39:02,960
Speaker 2: own earning potential and working to increase your primary income

854
00:39:03,080 --> 00:39:05,200
Speaker 2: as well. Especially since you are going to be the

855
00:39:05,280 --> 00:39:08,920
Speaker 2: sole breadwinner, You're probably gonna need to reduce some of

856
00:39:08,920 --> 00:39:11,279
Speaker 2: your retirement contributions for a while, make sure you're still

857
00:39:11,280 --> 00:39:13,959
Speaker 2: getting the match though, and then increase them steadily over

858
00:39:14,000 --> 00:39:18,600
Speaker 2: time as you get more comfortable with the one income lifestyle.

859
00:39:18,719 --> 00:39:22,120
Speaker 2: So yeah, I tend mostly your own investments, some to

860
00:39:22,520 --> 00:39:25,759
Speaker 2: the investing on your son's behalf as well. We wish

861
00:39:25,760 --> 00:39:27,879
Speaker 2: you the best and man, it sounds like these new

862
00:39:27,880 --> 00:39:31,480
Speaker 2: goals are going to be more difficult, but these are

863
00:39:31,880 --> 00:39:34,600
Speaker 2: goals that are going to be worthwhile for your family

864
00:39:34,600 --> 00:39:35,000
Speaker 2: to thrive.

865
00:39:35,280 --> 00:39:37,520
Speaker 1: That's right, Joe. We've got more to get to. We're

866
00:39:37,560 --> 00:39:40,640
Speaker 1: going to take a question about maximizing your retirement accounts.

867
00:39:40,920 --> 00:39:43,400
Speaker 1: Maybe we'll even talk about annuities. We'll get to all

868
00:39:43,400 --> 00:39:53,239
Speaker 1: that and more. Right after this all we're back. Let's

869
00:39:53,239 --> 00:39:54,759
Speaker 1: get to the Facebook question of the week.

870
00:39:54,880 --> 00:39:56,759
Speaker 2: This one comes from Connie says, what do you think

871
00:39:56,760 --> 00:39:59,719
Speaker 2: about annuities? Two different banks have advised me to get these.

872
00:40:00,040 --> 00:40:02,200
Speaker 2: I understand they probably get a nice commission, but they've

873
00:40:02,239 --> 00:40:05,680
Speaker 2: offered it as a safe alternative investment. Matt, what's your take.

874
00:40:05,960 --> 00:40:08,600
Speaker 1: I like that two different banks have recommended them. So

875
00:40:08,680 --> 00:40:12,000
Speaker 1: she's been out there doing her shopping and she's like, well,

876
00:40:12,200 --> 00:40:14,560
Speaker 1: the first time I thought no, no, thank you. But

877
00:40:14,640 --> 00:40:16,399
Speaker 1: then when the second bank was just like, oh, yeah, yeah,

878
00:40:16,400 --> 00:40:20,840
Speaker 1: you need an annuity, it's probably like everybody's saying, maybe

879
00:40:20,840 --> 00:40:24,520
Speaker 1: there's some truth here. No. Well, first off, I mean

880
00:40:24,520 --> 00:40:26,759
Speaker 1: I guess even the fact that she's going to a bank, right,

881
00:40:26,880 --> 00:40:30,440
Speaker 1: Like getting financial advice from a financial institution like a

882
00:40:30,480 --> 00:40:33,840
Speaker 1: bank is I mean, it's always a bad idea. Where

883
00:40:33,920 --> 00:40:36,600
Speaker 1: it is that you get your financial advice matters so much,

884
00:40:37,120 --> 00:40:40,200
Speaker 1: and the incentives often determine the kind of advice that

885
00:40:40,239 --> 00:40:42,640
Speaker 1: you're going to receive. So, as you mentioned, if the

886
00:40:42,640 --> 00:40:45,440
Speaker 1: commission is deep, there is a much higher chance that

887
00:40:45,440 --> 00:40:48,080
Speaker 1: they're going to recommend that product, whether or not it

888
00:40:48,160 --> 00:40:51,200
Speaker 1: is in your your best interest. And so the fees

889
00:40:51,760 --> 00:40:55,440
Speaker 1: that banks realize on annuities, like variable annuities, think they

890
00:40:55,440 --> 00:40:57,319
Speaker 1: can be massive and I'm talking like in the two

891
00:40:57,320 --> 00:41:01,239
Speaker 1: to three percent range annually. And so I would say

892
00:41:01,280 --> 00:41:04,560
Speaker 1: the first mistake was even going to your local banker

893
00:41:04,600 --> 00:41:08,640
Speaker 1: and saying, hey, sell me a financial products. Yeah, yeah,

894
00:41:08,719 --> 00:41:10,680
Speaker 1: that's something you want to avoid generally speak a greed.

895
00:41:10,719 --> 00:41:15,040
Speaker 1: Stay away from banks for financial advice. Also, an annuity,

896
00:41:15,080 --> 00:41:18,440
Speaker 1: it's kind of an investment, but it's also an insurance product.

897
00:41:19,120 --> 00:41:22,719
Speaker 1: With many forms of annuities, like an indexed annuity, your

898
00:41:22,760 --> 00:41:25,920
Speaker 1: investment returns are capped and so you know, think about

899
00:41:26,000 --> 00:41:28,600
Speaker 1: the returns you would have been losing out on in

900
00:41:28,640 --> 00:41:31,960
Speaker 1: this fantastic market run if you were to have opted

901
00:41:31,960 --> 00:41:35,480
Speaker 1: for an annuity instead of putting your dollars in an annuity,

902
00:41:35,520 --> 00:41:37,919
Speaker 1: instead of investing them in the market, right, you would

903
00:41:37,960 --> 00:41:41,560
Speaker 1: have gotten creamed. From a returns perspective. You would have

904
00:41:41,600 --> 00:41:45,640
Speaker 1: lost out on so much upside aiming for security and

905
00:41:45,680 --> 00:41:48,120
Speaker 1: not and trying to avoid risk. And so if you're

906
00:41:48,160 --> 00:41:51,320
Speaker 1: looking for an investment, annuities are not the best place

907
00:41:51,360 --> 00:41:55,000
Speaker 1: to look. If you're looking, though, to create income based

908
00:41:55,040 --> 00:41:57,520
Speaker 1: on the investment dollars you've been able to grow as

909
00:41:57,560 --> 00:42:01,200
Speaker 1: you get closer to retirement age's and I stress some

910
00:42:01,200 --> 00:42:05,839
Speaker 1: some some, A few low cost types of annuities might

911
00:42:06,480 --> 00:42:10,759
Speaker 1: maybe a decent choice for steady income, but annuities just

912
00:42:10,800 --> 00:42:12,799
Speaker 1: are not a great choice for most folks. And if

913
00:42:12,840 --> 00:42:15,520
Speaker 1: you're looking for a smart investing strategy, They're just not

914
00:42:15,600 --> 00:42:19,080
Speaker 1: really a reasonable choice at all. So they are an

915
00:42:19,080 --> 00:42:20,440
Speaker 1: inferior financial product.

916
00:42:20,480 --> 00:42:23,800
Speaker 2: Boo annuities. And if you do step into that space

917
00:42:24,040 --> 00:42:29,000
Speaker 2: later in life seeking that sort of like income like

918
00:42:29,040 --> 00:42:32,360
Speaker 2: clockwork every single month, just be really really careful and

919
00:42:32,400 --> 00:42:34,839
Speaker 2: to your due diligence and know that you need to

920
00:42:34,880 --> 00:42:37,920
Speaker 2: opt for a really low cost one and you're probably

921
00:42:37,920 --> 00:42:39,959
Speaker 2: not going to get that at your bank.

922
00:42:40,280 --> 00:42:43,360
Speaker 1: That's right, Joel's take a question from an anonymous poster

923
00:42:43,440 --> 00:42:46,360
Speaker 1: in the Facebook group. Is anyone else finding it harder

924
00:42:46,360 --> 00:42:50,040
Speaker 1: to keep maxing out hsas and roths as the contribution

925
00:42:50,360 --> 00:42:53,600
Speaker 1: limits increase? I don't think we can comfortably do it

926
00:42:53,640 --> 00:42:57,480
Speaker 1: next year. Company raises have been non existent for two years,

927
00:42:57,640 --> 00:43:00,400
Speaker 1: and costs for everything are up, including health and insurance.

928
00:43:00,719 --> 00:43:02,680
Speaker 1: I'm glad we can still get some money in there,

929
00:43:02,719 --> 00:43:05,200
Speaker 1: and super grateful for the past years we could max

930
00:43:05,239 --> 00:43:07,720
Speaker 1: it out. It's feeling a bit sad that we can't

931
00:43:07,800 --> 00:43:10,399
Speaker 1: hit the goal next year, though, Joe, what do you think?

932
00:43:10,920 --> 00:43:13,239
Speaker 2: Yeah, I mean, you're not alone, anonymous. I think that's

933
00:43:13,280 --> 00:43:15,040
Speaker 2: the first thing I want to mention, especially you talk

934
00:43:15,080 --> 00:43:17,319
Speaker 2: about the rising cost of health insurance. Depending on where

935
00:43:17,320 --> 00:43:20,480
Speaker 2: you work, you might be seeing a double digit increase

936
00:43:20,600 --> 00:43:23,000
Speaker 2: in what you're expected to pay for health insurance. And

937
00:43:23,280 --> 00:43:25,800
Speaker 2: it makes sense with that being such a large expense,

938
00:43:25,920 --> 00:43:28,440
Speaker 2: You're like, it's got to come from somewhere, and I

939
00:43:28,440 --> 00:43:30,520
Speaker 2: feel like I have to dial it back on retirement

940
00:43:30,600 --> 00:43:33,960
Speaker 2: account contributions. Also want to say, I'm so glad that

941
00:43:34,000 --> 00:43:36,080
Speaker 2: you want to max out all those accounts that you've

942
00:43:36,120 --> 00:43:38,480
Speaker 2: been able to. Yeah, right, even if you can't do

943
00:43:38,520 --> 00:43:40,719
Speaker 2: it every single year, the fact that that is your goal,

944
00:43:40,760 --> 00:43:44,160
Speaker 2: that's what you're striving after, it means a lot. It

945
00:43:44,200 --> 00:43:45,880
Speaker 2: means that your heart's in the right place, you're shovling

946
00:43:45,920 --> 00:43:47,680
Speaker 2: your money in the right place, and you're setting yourself

947
00:43:47,760 --> 00:43:49,719
Speaker 2: up for an awesome future, even if you can't do

948
00:43:49,760 --> 00:43:50,680
Speaker 2: it to perfection.

949
00:43:50,800 --> 00:43:52,400
Speaker 1: You know, yeah, you know what this makes me think of.

950
00:43:52,480 --> 00:43:56,040
Speaker 1: This makes me think of James Clear Atomic Habits, where

951
00:43:56,040 --> 00:43:59,520
Speaker 1: he talks about identity based habits, right, And so there

952
00:43:59,520 --> 00:44:02,279
Speaker 1: are times when we latch onto certain habits and things

953
00:44:02,280 --> 00:44:03,800
Speaker 1: that we're trying to implement because there's some sort of

954
00:44:03,880 --> 00:44:07,360
Speaker 1: external marker, right, And in this case, I think for

955
00:44:07,360 --> 00:44:11,000
Speaker 1: this anonymous poster, maybe the external marker is being able

956
00:44:11,040 --> 00:44:13,400
Speaker 1: to say that I maxed out the roth IRA or

957
00:44:13,400 --> 00:44:16,440
Speaker 1: I maxed out the HSA. But what I think is

958
00:44:16,440 --> 00:44:19,880
Speaker 1: more important is the fact that this person sees themselves

959
00:44:19,960 --> 00:44:22,759
Speaker 1: as an investor, right Like this is because something that

960
00:44:22,800 --> 00:44:27,200
Speaker 1: they do because I'm an investor, Like because I am

961
00:44:27,239 --> 00:44:30,520
Speaker 1: intelligent and I understand the power of compounding returns. I

962
00:44:30,600 --> 00:44:34,040
Speaker 1: understand how tax advantage accounts lead to more wealth for

963
00:44:34,120 --> 00:44:37,640
Speaker 1: me and my family down the road. I understand delayed gratification.

964
00:44:37,719 --> 00:44:39,799
Speaker 1: Like these are all the kind of tenants that are

965
00:44:39,840 --> 00:44:42,080
Speaker 1: at the core no means to be an investor. The

966
00:44:42,120 --> 00:44:44,759
Speaker 1: optionality I'm building for myself. Yes, every year that I

967
00:44:44,800 --> 00:44:46,759
Speaker 1: get at least close to maxing those houns. Yeah, And

968
00:44:46,800 --> 00:44:49,279
Speaker 1: so I mean, personally, I wouldn't beat myself up if

969
00:44:49,320 --> 00:44:54,280
Speaker 1: I wasn't able to hit the new max amounts, especially

970
00:44:54,680 --> 00:44:57,800
Speaker 1: if you're you know, contributing the same amount that you

971
00:44:57,840 --> 00:44:59,719
Speaker 1: didn let's say last year or the year before, but

972
00:44:59,719 --> 00:45:02,200
Speaker 1: the have just gone up and so you're quote quote

973
00:45:02,280 --> 00:45:04,440
Speaker 1: unquote not maxing it out anymore, but you're you know,

974
00:45:04,760 --> 00:45:08,440
Speaker 1: investing pretty dang close to what you're investing before. Well,

975
00:45:08,440 --> 00:45:11,200
Speaker 1: on doesn't matter, like you don't have the title anymore.

976
00:45:11,280 --> 00:45:14,319
Speaker 1: But I don't know. I'm not My wife doesn't given

977
00:45:14,360 --> 00:45:18,719
Speaker 1: me like a gold star for maxing up our retirement accounts,

978
00:45:19,640 --> 00:45:22,720
Speaker 1: so I don't know. I don't hopefully that that is helpful, Like, yes,

979
00:45:22,840 --> 00:45:26,839
Speaker 1: please still do invest, but I personally I wouldn't beat

980
00:45:26,840 --> 00:45:29,040
Speaker 1: myself up over not being able to quote unquote max

981
00:45:29,040 --> 00:45:29,560
Speaker 1: those accounts.

982
00:45:29,640 --> 00:45:31,719
Speaker 2: I think it's just also important to note that as

983
00:45:31,760 --> 00:45:34,960
Speaker 2: we make progress towards financial goals, it's not always up

984
00:45:34,960 --> 00:45:37,279
Speaker 2: into the right endeavor. That means, like, even as a

985
00:45:37,320 --> 00:45:39,640
Speaker 2: serious investors, your net worth is going to go down

986
00:45:39,719 --> 00:45:41,880
Speaker 2: year of a year, sometimes not through any fault of

987
00:45:41,880 --> 00:45:44,360
Speaker 2: your own, but just because hey, twenty twenty two was

988
00:45:44,360 --> 00:45:45,880
Speaker 2: a rough year in the markets, and guess what to

989
00:45:46,040 --> 00:45:48,719
Speaker 2: even though I contributed, I'm worth less today than I

990
00:45:48,880 --> 00:45:51,640
Speaker 2: was a year ago. And that's just like a frustrating

991
00:45:51,640 --> 00:45:54,160
Speaker 2: thing to encounter, or like, yeah, i can't put as

992
00:45:54,200 --> 00:45:56,360
Speaker 2: much in as I did last year, but I'm still

993
00:45:56,800 --> 00:46:01,480
Speaker 2: doing my best. Like that's okay. And as long as

994
00:46:01,480 --> 00:46:04,399
Speaker 2: like you're doing your best, you're still prioritizing, contributing, and

995
00:46:04,520 --> 00:46:07,919
Speaker 2: setting money aside for your future, then I think you

996
00:46:08,040 --> 00:46:11,680
Speaker 2: are creating a bright financial future for yourself, and you

997
00:46:11,719 --> 00:46:14,240
Speaker 2: are taking the right tactic totally.

998
00:46:13,920 --> 00:46:16,600
Speaker 1: And not to mention too over the years, it's less

999
00:46:16,600 --> 00:46:20,919
Speaker 1: about your contributions and it's more about the nest egg

1000
00:46:20,920 --> 00:46:23,520
Speaker 1: that you've accumulated and how much how much weight that

1001
00:46:23,520 --> 00:46:26,160
Speaker 1: that thing is pulling for you here right like once

1002
00:46:26,239 --> 00:46:29,120
Speaker 1: your investments are working harder for you than you are.

1003
00:46:30,520 --> 00:46:34,480
Speaker 1: Like the maximum contribution limits, they matter less and less

1004
00:46:35,200 --> 00:46:38,480
Speaker 1: the further along the further down your financial journey journey

1005
00:46:38,600 --> 00:46:40,799
Speaker 1: you travel. I think it's always good to look back

1006
00:46:40,800 --> 00:46:42,759
Speaker 1: at how far you've come to, like, Hey, what have

1007
00:46:42,800 --> 00:46:45,280
Speaker 1: I done over the past six, seven, eight years? Celebrate

1008
00:46:45,320 --> 00:46:45,840
Speaker 1: those wins?

1009
00:46:45,960 --> 00:46:47,960
Speaker 2: Yeah, as like my main goal has to been to

1010
00:46:48,640 --> 00:46:52,120
Speaker 2: maxos out that I think will hearten you. You're like, man,

1011
00:46:52,160 --> 00:46:53,960
Speaker 2: I have been crushing it. So the fact that this

1012
00:46:54,080 --> 00:46:56,480
Speaker 2: is a minor blip of five hundred dollars that I

1013
00:46:56,520 --> 00:46:59,480
Speaker 2: can't get to to max it out overall, I'm still

1014
00:46:59,480 --> 00:46:59,960
Speaker 2: crushing it.

1015
00:47:00,080 --> 00:47:02,200
Speaker 1: Totally, agree, Joe. Let's get back to the beer that

1016
00:47:02,239 --> 00:47:04,200
Speaker 1: you and I enjoy. I'm going to say this time,

1017
00:47:04,840 --> 00:47:06,320
Speaker 1: which was I'm measured?

1018
00:47:06,680 --> 00:47:07,160
Speaker 3: What was it?

1019
00:47:07,320 --> 00:47:12,040
Speaker 1: Press procession? You need a new prescription for your well

1020
00:47:12,120 --> 00:47:16,680
Speaker 1: It is very tiny type and it's written in like uh, handwritten. Yeah,

1021
00:47:16,680 --> 00:47:20,799
Speaker 1: precession measured procession of veracity. This is an I P

1022
00:47:20,920 --> 00:47:24,000
Speaker 1: A by Burial, A seven percenter. What do you think, buddy?

1023
00:47:24,280 --> 00:47:27,200
Speaker 2: And I'm gonna say this was gentle. It was luscious,

1024
00:47:27,239 --> 00:47:30,080
Speaker 2: like laying down in a bed of hops. And uh,

1025
00:47:30,280 --> 00:47:34,440
Speaker 2: it's just not as abrasive as some of the double

1026
00:47:34,520 --> 00:47:37,120
Speaker 2: dry hopped I pas that you might expect from Burial,

1027
00:47:37,480 --> 00:47:40,200
Speaker 2: but still like packed to the gill with hot flavor,

1028
00:47:40,680 --> 00:47:43,799
Speaker 2: but just not It didn't quite have that what do

1029
00:47:43,840 --> 00:47:45,280
Speaker 2: you usually call it, like blue cheese.

1030
00:47:45,600 --> 00:47:47,960
Speaker 1: Yeah, that sharpness, that sharpness did quite have. That didn't

1031
00:47:47,960 --> 00:47:50,359
Speaker 1: have that sharpness. It almost had like it seemed a

1032
00:47:50,400 --> 00:47:53,280
Speaker 1: little bit sweeter than usual. Like it there's it almost

1033
00:47:53,280 --> 00:47:55,799
Speaker 1: had like a fried I don't know why I'm thinking

1034
00:47:55,800 --> 00:47:57,120
Speaker 1: of this, and it made me almost think of it

1035
00:47:57,200 --> 00:48:00,560
Speaker 1: like a fried donut, like a to it like almost

1036
00:48:00,560 --> 00:48:02,880
Speaker 1: like a waffle house waffle. Yeah, there's like a paste

1037
00:48:02,960 --> 00:48:05,040
Speaker 1: tastes like a donut. Yeah, there's something about it. I

1038
00:48:05,040 --> 00:48:07,520
Speaker 1: don't I don't know what. It is certainly delicious and

1039
00:48:07,560 --> 00:48:09,440
Speaker 1: had the hops and all that going on, and like

1040
00:48:09,480 --> 00:48:11,960
Speaker 1: this isn't a pastry stout or you know, it's pastry

1041
00:48:11,960 --> 00:48:14,000
Speaker 1: sour Patriot pa yet did they make pastry?

1042
00:48:14,000 --> 00:48:14,400
Speaker 4: I pas?

1043
00:48:14,560 --> 00:48:15,640
Speaker 1: I don't even know if that's the thing. I bet

1044
00:48:15,680 --> 00:48:20,239
Speaker 1: somebody has, somebody one of those wacky beers that you

1045
00:48:20,239 --> 00:48:22,040
Speaker 1: can get off the shelves. But yeah, something about this

1046
00:48:22,840 --> 00:48:26,560
Speaker 1: reminded me of like stepping into like a small hipster

1047
00:48:26,760 --> 00:48:29,680
Speaker 1: donut shop or something like that. But it was really good. Glad,

1048
00:48:29,719 --> 00:48:31,000
Speaker 1: you know. I don't know if I've ever been in

1049
00:48:31,080 --> 00:48:32,920
Speaker 1: a small donut hipster shop, like you've never been to

1050
00:48:32,960 --> 00:48:35,400
Speaker 1: like a local, locally owned donut place. I have, it

1051
00:48:35,440 --> 00:48:38,640
Speaker 1: wasn't Did we talk to that owned I can't remember

1052
00:48:38,640 --> 00:48:40,640
Speaker 1: if that was both of us who interviewed her, or

1053
00:48:40,680 --> 00:48:47,120
Speaker 1: if that was just you her husband shop Christen Karat shop.

1054
00:48:47,160 --> 00:48:48,960
Speaker 1: I wonder if it's hipster. I don't know, but one

1055
00:48:48,960 --> 00:48:51,840
Speaker 1: of these days, by defaults it is because it's a locally,

1056
00:48:52,200 --> 00:48:55,359
Speaker 1: responsibly sustainly owned and operated. Yeah right, That's what I'm

1057
00:48:55,360 --> 00:48:57,279
Speaker 1: just trying to do as a small business owner. I'm

1058
00:48:57,280 --> 00:48:58,279
Speaker 1: just not a huge donut guy.

1059
00:48:58,440 --> 00:49:00,480
Speaker 2: So unless it's hot and fresh off the cre speakream

1060
00:49:00,480 --> 00:49:03,200
Speaker 2: line like not interested, you can't beat the mouthfeel on

1061
00:49:03,239 --> 00:49:05,160
Speaker 2: the Krispy Creme just melts. Man, Oh my gosh, that's

1062
00:49:05,200 --> 00:49:05,440
Speaker 2: so good.

1063
00:49:05,440 --> 00:49:09,120
Speaker 1: Straight in so good. How do you feel about toasted

1064
00:49:09,160 --> 00:49:11,360
Speaker 1: marshmallows because that has a similar mouthfeel.

1065
00:49:11,400 --> 00:49:14,640
Speaker 2: I think marshmallows are a worthless food we should all

1066
00:49:14,680 --> 00:49:15,520
Speaker 2: avoid completely.

1067
00:49:16,640 --> 00:49:18,719
Speaker 1: Yeah, I don't know that heat. I think it's something

1068
00:49:18,719 --> 00:49:19,319
Speaker 1: that kids like.

1069
00:49:19,360 --> 00:49:22,200
Speaker 2: And then you even think back to Thanksgiving not long ago,

1070
00:49:22,280 --> 00:49:24,840
Speaker 2: and I'm like, there's so many random foods with marshmallows

1071
00:49:24,880 --> 00:49:25,080
Speaker 2: on them.

1072
00:49:25,120 --> 00:49:26,920
Speaker 1: Just get them out of my Facebook. So many? How

1073
00:49:26,960 --> 00:49:28,839
Speaker 1: many sides did you like? At least too?

1074
00:49:28,920 --> 00:49:32,040
Speaker 2: There's like there's like a fruit dessert with like or

1075
00:49:32,320 --> 00:49:35,520
Speaker 2: or you side with marshmallows, and there's like the sweet potato.

1076
00:49:35,520 --> 00:49:38,760
Speaker 1: Yeah pie is that's a little more traditional with the marshmallows.

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Speaker 1: I'm trying to figure out what else he stuck marshmallows on.

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00:49:41,280 --> 00:49:43,520
Speaker 1: I know you didn't personally stick them on there. It's

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00:49:43,520 --> 00:49:46,600
Speaker 1: indicative of avoided them your southern heritage. I guess it

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00:49:46,640 --> 00:49:50,399
Speaker 1: is perhaps that everything had is that marshmallows on top

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Speaker 1: of the turkey. Let's go not cool.

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Speaker 2: You can put bacon on the turkey, just not marshmallows.

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Speaker 2: All right, that's gonna do it for this episode. Thank

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00:49:57,000 --> 00:49:58,799
Speaker 2: you as always for listening. We'll put links to some

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00:49:58,840 --> 00:50:00,799
Speaker 2: of the resources we mentioned up in the show notes

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00:50:01,080 --> 00:50:03,640
Speaker 2: on our website at howtomoney dot com. You guys to

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00:50:03,640 --> 00:50:05,200
Speaker 2: sign up for the Head of Money newsletter.

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Speaker 1: You know it, do it. It's great, all right. That'll

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Speaker 1: be though, until next time. Best friends out, Best friends Out,