Let’s kick off the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Selling a home and renting instead: what do we do with cash from the closing table?
2 - Best credit card for groceries: but what about ethical fatigue from asking for annual fee waiver?
3 - High income Roth investors: how do we go about (legally) shoehorning some dollars in there?
4 - Car rental deals: is is worth it to go with the ultra cheap car rental that’s a fraction of the regular cost?
5 - Debt payoff: what’s the best method for knocking out 4 credit card balances?
Want more How To Money in your life? Here are some additional ways to get ahead with your personal finances:
- Use Undebt.it to help you figure out a get-outta-debt plan
- If you make too much to directly contribute to a Roth, the "backdoor Roth" might be just the thing to get you invested.
- Knowing your ‘money gear’ is a crucial part of your personal finance journey. Start here.
- Sign up for the weekly HTM newsletter. It’s fun, free, & practical.
- Join a thriving community of fellow money in the HTM Facebook group.
- Massively reduce your cell phone bill each month by switching to a discount provider like Mint Mobile.
During this episode we enjoyed a Fat Pug by Maplewood Brewing! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
Best friends out!
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Had of Money. I'm Joel, I'm Matt. Today
we're answering your listener questions.
Speaker 2 (00:23):
I hope everyone out there had a relaxing, recharged Sunday
and that you are ready to get back at it. Man,
it's Monday, back to the grind, back.
Speaker 1 (00:32):
To the personal finance education in your ears. As they say,
we do have listener questions.
Speaker 2 (00:36):
We're going to talk about the best cash back card
for groceries. We're going to discuss l cheap o rental
card companies, whether or not they're worth it.
Speaker 1 (00:43):
Joel.
Speaker 2 (00:44):
Actually I'll share a little bit of personal experience there
as well. Another listeners asking about what he should be
doing with a lump sum that he is going to
have in his hands. And we're talking six figures. So yeah,
a lot on the line here, but actually maybe it
doesn't differ all that much from if it was just
six hundred bucks. So okay, looking forward to getting to
(01:05):
all of those plus more today. But buddy, I've got
a quick frugal or cheap question for you.
Speaker 1 (01:11):
It's been a minute since we've done one of these.
Would you get a tattoo if it was like eighty
or ninety percent off Okay, here's I have a question.
Is it an inferior tattoo artist?
Speaker 2 (01:21):
No, it would be if it would be a tattoo,
that's perfectly Maybe it wouldn't be, Like, I don't know,
how are tattoo artists rated. You know, there's a certain
level of artistic ability that you're going for. So maybe
that's a little bit different than the story I'm trying
to parallel here, But yeah, what would you do?
Speaker 1 (01:36):
I've feel solid well, okay, I wouldn't do it just
if I wasn't interested in getting a tattoo. But my
wife got a couple of tattoos earlier this year, and
I have been do you feel not nearly as cool
as she? Definitely definitely don't feel as cool as she is.
I don't feel as like edgy or interesting. But you know,
it's as someone who likes art, I'm like, well, yeah,
(01:57):
there's probably some art i'd be down to put on
my body. If I knew the right thing I wanted
to get, for sure, i'd want the sweet discount. I'd
want a much cheaper tattoo. Okay. So but if I
didn't want to get one, I would would discount by the.
Speaker 2 (02:09):
Sale, Okay. Good response. The reason I'm asking this is because,
in a similar way, did you hear that Claire's the
teenage girl where pierced? Yeah, it's going out of business.
So I heard about this a few weeks ago, and
Kate happened to be uh in the area swung By.
I think maybe she was going in there to pick
(02:29):
up a gift, like a birthday gift for one of
the girl's friends, and she saw that everything was like
eighty or ninety percent off, including ear piercings.
Speaker 1 (02:38):
So guess what she did. She got some additional holes.
She got another, Yeah, another she got She's got more
ear rings? Now, yeah? Yeah? Did she get like one
of the.
Speaker 2 (02:49):
She wanted to get a second one further up from
like the traditional spot.
Speaker 1 (02:53):
I guess on the on the ear.
Speaker 2 (02:54):
But she just totally went for it, and I was
up the moment, spur of the moment. It's not typically
something that she does. But here's the thing.
Speaker 1 (03:02):
She doesn't sound like.
Speaker 2 (03:03):
It doesn't sound like Kate. It is something she had
been thinking about, Okay, so sort of like you're saying,
it was already on her mind. She was maybe quote
unquote shopping for an opportunity. She was looking for a
time to be able to get it on discount, and dude,
it was I think she paid twenty bucks.
Speaker 1 (03:18):
It was a tours it normally cost to get fears.
Speaker 2 (03:20):
Well, we took one of our daughters on her birthday
last winter and it was two fifty. What is a nice,
isn't she dah? Why that at home?
Speaker 1 (03:28):
It was a very well reviewed place. It was like
one of these tattoos slash, especially a man of your
skills and ability piercing places. They're known for you to
earn a nailby an excellent job over there. And so
we paid two fifty. It comes with like, you know,
the earrings and whatnot, but still two fifty versus twenty
dollars real.
Speaker 2 (03:48):
Kate was definitely feeling pretty good about the uh, the
deal that.
Speaker 1 (03:52):
She was able to do so in a similar way.
Speaker 2 (03:54):
I guess if I so, what I asked you was
I assumed you have thought more seriously about a tattoo.
Speaker 1 (04:00):
You have an ear piercing. But my question for you is, now,
are you so attracted that deal that you're going to
go get something pierced on your body?
Speaker 2 (04:07):
That was literally the last days why it's a part
of why she did it because they they said, hey,
we actually were not allowed to do any more piercings
here after today. So I think she was maybe one
of the last ones.
Speaker 1 (04:18):
Only particular players. The lady was also.
Speaker 2 (04:20):
Trying to talk her into buying some diamond earrings because
those are also eight I think those are eighty percent off,
but if you buy like ten pairs, they're ninety percent off.
Then you're talking about started like a Yes, she could
have started like an eBay business. Yeah, like there are
real diamonds, like actual diamond ear rings.
Speaker 1 (04:36):
That's incredible. I was like, well, where are they? She's like,
I didn't get them. I was like, what, Well, I
will make sure to compliment her on her new ear
holes next time I see her. I'm sure she would
appreciate it. Yeah, uh well yeah, And I guess I'll
always be looking for a deal. That's the moral of
the story. I'm gonna yeah, if I see a good
deal on a tattoo and I know what I'm going
to get, I'll pound if you've.
Speaker 2 (04:54):
Thought through the design, maybe you even have it saved
in your phone. Yep, maybe you know, and you can
be like, hey, can.
Speaker 1 (04:58):
You do this? Yeah? Can you bust up this folk
art bear Head. I know that's one that's yeah, on
my radart through the whole black Cat tips, right, he's
the best. All right, let's mention the beer we're having
on the episode. This one's called fat Pug Oatmeal stout
by Maple Wood Brewing. I've never had a beer by
this brewery before. I don't think they're out of normal.
What a funny tone. Illinois normal Illinois. Okay, Yeah, so yeah,
(05:22):
we'll give our thoughts on this one later on in
this kind of stout season.
Speaker 2 (05:25):
So we're getting in there. I'm pretty excited about it. Yeah,
also super fun to say fat Pug. I don't know
if you're allowed to call pugs fat. Is that that's
just rude? That's who they are. Yeah, I think it's.
Speaker 1 (05:36):
An abrasive name for acceptable. Yeah, I guess you're right.
All right. If you, by the way, have a money question,
we'd love to hear from you got to have to
money dot com, slash ask, or just record your money
question on the voicemai wapp of your phone. Email it
over to us. We'll take you about two minutes and
then hopefully we can take it next week on the show.
Matt let's get to a question from a listener who
(05:57):
has gobs of money in his hands right now. I
was trying to figure out how to proceed.
Speaker 3 (06:02):
Hey, Matt Joel, this is Hayden from Marlborough, New York.
My wife and I decided that we were tired of
home ownership and we decided to become renters again. We
just sold our primary residence and we walked away with
a little over three hundred thousand. We're also going to
sell the duplex that we own, and we should walk
away after everything with another three hundred thousand from that,
we don't need to worry much about retirement. We still
(06:22):
have twenty five years, but my wife and I max
out our four or three bees our roths and we'll
each have New York State pensions upon our retirement that'll
pay us about sixty five percent of our final average salary.
We also contribute a lot to my daughter's five twenty nine,
so our salaries more than cover our rent, our one car,
or other expenses. So since we don't need this chunk
(06:43):
of money for another home purchase, what's the best way
to make this money work for us?
Speaker 1 (06:48):
Cheers, Hayden. You're not going to buy another home. That's
the only ticket to building wealth. Hayden, you know that
it's the only way you can be considered a true American. Yeah,
otherwise you're just a free loader. Obviously we're joking here.
Speaker 2 (07:00):
Despite the equity that you've been able to accrue, huge
congrats on that. I I really appreciate. I can totally
respect the fact that Hayden that him and his wife
decided that owning a home that it wasn't for him.
You know, like this is he's just like, Hey, this
is my jam. I'm gonna pivot. We're gonna try something different.
Speaker 1 (07:17):
What happened by the way, like his he sometimes there's
a you think you think it got burned. I don't know,
Like is it did something happen to the home and
you were like I can't deal with this anymore. You're
gonna do it again? Maybe maybe like you had to
have the AC repair guy out six times over this
past summer and you're like this is just getting absurd.
I'm done with it. Yeah, Or you know the cross
Bace flooded. I mean, there's all these sorts of things
that can happen as a homeowner and home ownership. Yet
(07:39):
like kind of like you're alluding to, mattis seen. Is
this end all be all. It's a smart financial decision,
but you can take a toll on you too.
Speaker 2 (07:44):
Absolutely, it just depends on what you wanna, what you
want to sign up for. And I will say, generally speaking,
it's a nice perk to be able to build up
equity as you have purchased your own home, But there
is a lot more to life than just maximizing every
single financial decision. You're obviously doing a lot, a lot
of the right things. You are talking about how you are,
(08:04):
I mean truly, I think he checked all the boxes.
He even mentioned one car. Talk to me, Hayden, like,
but oh, you are a fellow one car brother. I
feel like we've got a kinship here. And with that
in mind, not just because of the one car thing,
but because you are. He's got the state pension, he's Yeah,
I think he's going to be just fine even though
he doesn't have a home, and I'll still.
Speaker 1 (08:27):
Be able to retire potentially even better penty of money, yeah,
by by not having the home equity, by renting and
saving the difference.
Speaker 2 (08:35):
And of course he's gonna have more flexibility if you
you know ends up wanting to move or try a
new location. If life is ends up being a little
bit different in three or four years, it's gonna be
a lot easier to uproot, which it sounds like he's
not worried about doing anyway, since he already did sell
his primary So.
Speaker 1 (08:51):
He also might get a pretty sick deal on rent
depending on where he lives and what's happening in this
particular market. I want to our favorite creators in the
real estate space. Coach Carson was talking to one of
his most recent email newsletters. First first named Chad Chad
Chad Carson awesome individual but just really smart real estate
(09:11):
investor too, And he was saying how some of the
properties he's on the longest, even being in solid condition,
he's seen significant rent declines on some of those units,
and so that's bad for him, bad for investors, but
it's a great, great thing for a lot of renters
out there because we'd seen those massive rent increases, especially
in those early COVID days, and now it's like, hey,
(09:33):
that trend is reversing a fair amount. So maybe you
get top dollar for your home, Hayden, and then you're
able to have a lower monthly payment and then fewer updates,
fewer repairs the chief to make because guess what now
the landlord is on the hook for that as well.
A nice thing about selling your primary home, though, is
that the gains you accrue are delivered to you tax free.
That's one of the coolest things. Like, yeah, there's a
(09:54):
lot of expense, real estoric expense when it comes to
selling a residence, but at least the taxman doesn't get
his hands on that money. So Uncle Sam doesn't get
a penny of your three hundred thousand dollars in gains.
And it's one of the reasons that like the live
in flip strategy. Living in that home for two plus
years while you renovate it can be a smart investing
(10:16):
strategy because there's zero taxation because it was considered a
primary home that you lived in. It's we talked with
our friend Carl back in the day about this, Matt.
It's why he loves that strategy. He likes to do
the work himself. Anyway, they live in the house while
he's doing the work. Last name Jensen, that's right, and
then they eventually sell the money, sell the house, and
(10:36):
they don't pay any taxes on the games they received.
The duplex, by the way that you mentioned, you're selling,
So he's like getting out of the landlord game too.
He's like, I'm just done with homes. Don't want to
own one in any capacity. Well, that is likely to
be subject to long term capital gains taxes. You're probably
gonna know something like forty five thousand bucks at the
fifteen percent long term capital gains tax rate on the
(10:56):
three hundred thousand dollars in gains you're gonna experience on
that one. So make sure to set that money aside,
make sure you don't forget to keep that around when
tax time comes for April. And some people they want
to avoid taxes at all costs, even if it means
holding on to assets that they don't like or that
stress them out. It sounds like this is a success tax.
(11:17):
It's worth paying. It's a small price, I think, to
pay ultimately for the simpler financial life that you're looking
to create for yourself. Totally.
Speaker 2 (11:25):
Yeah, One thing I just realized is I think he
said that they are planning to or they might be selling,
or I think he's planning. He's definitely gonna sell the duplex,
but it sounds like it maybe is often the future.
And so with this in mind, you've got the ability
to potentially avoid that possible forty five thousand in tax
were you to occupy that that duplex and tru I know,
(11:46):
if it was me, I would seriously I don't know,
maybe it's not in the most desirable part of town,
or maybe it's in a different town. There's a whole
lot of constraints here, but I would seriously be considering
that because we're talking about avoiding taking almost fifty thousand
dollars bath. Yeah, just by the stakes living in this
great duplex that you've owned for a number of years,
and I guarantee you that two years is going to
(12:07):
fly by when you're going to get a fifty thousand
dollars more dollars in your pocket. Just something to consider.
But let's assume that you already have sold it. So
we're talking about what it is that you should do
with five hundred and fifty thousand dollars. Well, now's the
perfect time to dig down into your family's goals. I
would start just asking some questions like do I feel
(12:30):
fulfilled to hear at work, like maybe it's time to
take a mini retirement. Maybe you're happy with that, or
maybe you're like, well, I don't want to jeopardize the pension,
so I'm gonna keep doing that. Guys, Well, then maybe
it looks like getting a little bit more philanthropic when
it comes to the money that you're giving to local charities,
charities that are globally or maybe it's just time for
(12:51):
you to just continue investing just in a brokerage so
that you can increase your options. Maybe you don't have
like a clear path that you want to take now,
but you're thinking, all right, well, let's be about it
so that we can do even more good to have
even more options down the road.
Speaker 1 (13:04):
Because it doesn't sound like Hayden needs to put a
lot more money aside in retirement accounts because he's already
done a lot of that hard work. He's got the
pension too, exactly, so I think big here accomplished. He's
basically saying his expenses are essentially covered. So she's kind
of like, all right, I got a lot of things
I could potentially do here. I think that Hayden's got
the ability to make some just audacious moves without impinging
(13:27):
on your ability to reach financial independence in a reasonable timeframe.
So this is an opportunity, Hayden, for you and your
wife to essentially have your cake and to eat it too.
So I would this isn't like a one time sort
of conversation either, like certainly sit down some craft beer,
maybe a bottle of wine, where y'all really do dig
(13:47):
into what this could look like, but continue. You don't
have to make a decision anytime too. This is something
you can revisit over the course of like the rest
of this year, but even into the coming years. So
that's something that I would most definitely be doing. I
think it's good advice. I think you probably don't want
to make a rash decision. It's like after the death
of a spouse, like sometimes I think the biggest regrets
people have is the super quick moves that they make,
(14:10):
whether it's life insurance payout or trying to figure out
what to do with the house. They don't allow themselves
to grieve and they make a big decision and then
they're like, oh, man, if I felt like I was
in more of my right mind, a better headspace, I
probably would have done something different. And the same thing
is probably true when you're essentially cashing out investments to
the tune of half a million dollars. You don't want
(14:33):
to make a rash decision lock that money in some
way that doesn't allow you to have some liquidity and
some flexibility totally. And so you know, I think when
you're as far along the path as you are, Hayden,
and you live simply, the world is your oyster here.
And yeah, so like, if the mini retirement sounds the
most enticing, Matt, you just mentioned that, I think you'd
want to keep a bigger chunk in cash because that's
(14:54):
an expense that you're going to have the fund. You
might not have income coming in, you might be doing
more extensive travel, So I want to want to prioritize
you probably don't need all that money in cash, right
for a mini retirement. That'd be the most expensive many
retirement I've ever heard of, But you definitely would want
to keep some of that set aside in cash if
you want to give big money away, and you're going
to get a tax benefit for doing that as well.
If you're smart, you can ramp up your donor advice
(15:16):
fund contributions in the coming years, maybe big chunks in
twenty twenty five, twenty six, and twenty seven getting tax benefits,
you're also just ramping up your ability. You're kind of
garnering that nest egg for future giving and then you know,
beyond the roth ira. The taxable broker's account is a
great place to store medium term money that you're not
(15:38):
quite sure what to do with. You keep it liquid
as long as it's invested for more than a year.
You're talking about the long term capital gains tax rate
when you do pull money out of that account, and
it allows you to make big moves when you feel compelled,
like let's say you do say, man, you know what,
three years down the road, we really do miss home ownership,
or yeah, our life has changed substantially enough that we're
(16:00):
we're considering buying another investment property. Well, then you still
have access to that big chunk of cash, and that
chunk of cash has grown because it's been invested. So
most people don't have access to a six figure stockpile
that's also going to be growing and compounding along the way.
I think the tax bill brokerage account is a great
way to make a smart move with the majority of
(16:22):
the funds that doesn't really compromise your ability to change
course in the futures as you desire, as those goals
become more apparent. That's right.
Speaker 2 (16:32):
One other thing I just thought of too, your conversation
with Cody Garrett last week he talked about he said
he subscribed to fire the financial independence, recreational employment.
Speaker 1 (16:43):
Oh yeah, and I.
Speaker 2 (16:43):
Really like that. The ability, Hayden, for you to potentially
pivot in your career. Again, you probably want to make
sure you're not losing out on the pension. You don't
want to sacrifice that. But finding what I know, at
some point, if you've.
Speaker 1 (16:53):
Got enough money and you're like this job kind of
thinks it might be time.
Speaker 2 (16:56):
Yeah, but finding ways to leverage your time, right, like
the ability for not only for you to align your
money with things that you care about, but also your time.
Speaker 1 (17:07):
Man.
Speaker 2 (17:08):
To me, that sounds like a recipe for happiness. So
I think that might be something worth considering as well.
But Joel, we got more to get to. We're gonna
hear from a newlywed couple. They've got an investment question
that plus more right after this.
Speaker 1 (17:28):
All right, Matt, we're back. Let's get to a question
about credit cards and is it is you know some
of the best credit cards have substantial annual fees, but
is there a way around that?
Speaker 4 (17:39):
Hello Joel and Mann. This is really from the DMW
area in Texas. I want to ask you guys a
two part question when it comes to your individual approaches
to annual fees on credit cards. My wife and I
are looking to get the AMEX Blue Cash Preferred card
to take advantage of the six percent cash crack on
groceries for up to six case spent annually, and we
(18:00):
predict we should hit the threshold by the end of
the year. However, I know the caveat with this card
is after the introductory year of having your fee waved,
there's the expectation of paying the ninety five dollars fee
every following year. I recall you guys mentioned before. You
can always reach out to these lenders in a request
to have your fee waved as a courtesy in that
(18:21):
following year. But let's take that scenario further to a
year by year basis for the long term. Could that
approach still be feasible on a yearly basis if you're
able to present a charismatic or justifiable enough reason to
the lender and having the fee wave. Is this something
either one of you have ever successfully done or continue
(18:43):
to do. If so, how have you managed to pull
that off? On to the second part of my question.
Could waving an annual fee on a card every year
be considered frugal or cheap? At some point it seems
like the lender may put their foot down and quit
waving the fee, or the individual making the request could
(19:03):
reach an ethical fatigue to where it may it may
make more sense to quote unquote pay what you owe
to the generally worthwhile benefits that most of these cards
with annual fees may offer. I would like to sign
off by thanking you guys for all the insight you
offer on various financial spectrums as well as a life
(19:23):
in general, as it has helped me reach money Gear
four in about two years that my sites to begin
money Gear five and twenty twenty six. I look forward
to listening to this show for many more years to come,
including den the sabbatical periods you guys will surely take
along the way best friends out J.
Speaker 2 (19:42):
I like how Roy mentioned that it's not just the
money stuff that we talk about, it's also the life stuff. Yeah,
and you and I were just recently talking about how
personal finance that's our sandbox, right, like that is the
world that we live in. These are the headlines we
pay attention to, the rule changes, policy updates, things like that.
But also it's not I don't know, I'll speak for
myself personally, like I find money very interesting, but it
(20:05):
has more to do with the ability to use that
as a tool to lead to a happier success, successful,
fulfilling life. And I appreciate that. Roy appreciates that. Yeah, Roy,
I appreciate you appreciating us at.
Speaker 1 (20:16):
Some point, at some point, it's impossible not to have
those broader conversation conversations as you start to figure the
money stuff out, like how does what sort of implication
does this have for how I live my life? And
to me, those that intersection that overlap are some of
the most interesting conversations, the most fun conversations that I
get to have. And it's it's some of the most
fun conversations you and I have that I have with Emily,
(20:39):
because yeah, you get to you just have this freedom,
this choice to stability at some point in your money
journey that gives you where the optionality is significant and
the things that you can pull off, whether it's you know,
many retirement I guess, or a sabbatical is what we're
calling it, really, Matt, like that you and I got
to have or just bigger giving goals, and that's what
(21:01):
we want all of our listeners to ultimately experience. By
the way, the best phrase that Roy used in that
question was ethical fatigue. I'm going to use that in
the future. Sometimes sounds like a fatigue ethically, but obviously massive,
massive props to Roy for reaching money gear at number
four and what sounds like short order. And let's talk
(21:21):
about credit cards, Matt. I'm we're not against annual fees
because if you're savvy, if you're if you're smart in
the credit card space, which half Americans are not, so
you got to be careful, you can easily get more
value out of the cards that you're using than the
cost of the annual fee. But also, as we discussed
not so long ago, some of the new fangled travel
credit cards, the revamped credit cards from City and Chase
(21:45):
and Amex, well, they offer cash back for more upscale spending.
It's like, oh, do you spend a lot of money
on that Peloton subscription? That's how you're going to get
money back, but you have to spend a lot, if
to fork over a lot of money in order to
get the perk pack. So we would just say be
careful before signing up for the super fancy cards, because
you know, using credit cards for spending you're already doing
(22:07):
in order to get rewarded. That's cool, but spending money
that you otherwise would not have spent in order to
reach that threshold. Like, well, I guess in order to
get one hundred bucks back, I need to spend five
hundred bucks over here. That doesn't make much sense unless
that product is really adding a lot to your life
and you would have paid it anyway. So find a
credit card that rewards you for how you spend, and
if it doesn't after a while, like down Grater, ditch
(22:29):
that card.
Speaker 2 (22:30):
Yeah, specifically I'm thinking of like one of those travel
cards was the City Strata card. Oh yeah, it's got
like a six hundred dollars annual fee. That's so much
money that I don't think that's one that Joel, that
you nor I are even considering.
Speaker 1 (22:42):
But I will say it, sim of those cards do
make sense for some people, especially for that's how you
spend your money, go for it.
Speaker 4 (22:48):
Not me.
Speaker 1 (22:48):
I think they're really marketed for my blood at like
dinks in big cities where you're into kind of the
finer things in life and you are doing more more
traveling and you're staying at those higher end hotels. If
that's already you, then those cards can make a lot
of sense. But if it's not, then it might be
more like square peg in a round hole.
Speaker 2 (23:05):
That's true, but Roy was talking about spending on groceries,
so he mentioned the American Express Blue Cash Preferred Card.
It is still a great card if you pay attention
to the particulars, to the details. And the first year
is even more beneficial because, yeah, you can avoid the
annual fee when you sign up. You can think of
the sign up bonus that you receive after that initial
(23:26):
spend as covering a few years of the annual fee
as well. See, I don't know, there's almost like a
feeling of getting.
Speaker 1 (23:32):
It for free for a few years, Yeah, but then
technically not waived. Well, what fifty dollars signup bonus? Typically
on that card, it's going to feel like it covers
a few.
Speaker 2 (23:40):
Years, but then once the annual fee kicks in, is
it going to be worth it? It will be if
you spend the six thousand dollars on groceries each year,
because that's three hundred and sixty dollars in rewards for
that category alone, which obviously far surpasses the annual fee.
But I do think it's a card that a bunch
of out of money listeners would benefit from. And essentially
(24:03):
there's a threshold and you need to be looking at
spending at least three thousand dollars on that card. Otherwise
you can just roll with the Blue Cash, the everyday
Blue Cash card that has no annual fee, and you're
getting about the same benefit from that card and anything
above that it's yeah, it's gravy on top.
Speaker 1 (24:19):
One thing you realized because you use that card regularly
is that you were getting close to that six thousand
dollars spending limit earlier in the year, and so there's
no extra benefit to you because it goes down to
what one percent after hitting that six thousand dollars cap
on groceries, So you got to switch the card you're using. Case, yeah,
it turns into a big old stinker of a card.
Speaker 2 (24:38):
After which that's something that snuck up on us because
we were used to not spending that much.
Speaker 1 (24:43):
This is pre pan time.
Speaker 2 (24:44):
So it's like when we could feed our family for one,
you know, one dollar a day per person, per meal
with a good old essentially, and I don't think we
were sounds like a little house on the paride, I know,
but we basically hit that spend amount roughly halfway through
the year now, so that's when we make the switch. Yeah,
So keep that in mind because if you continue to
use it getting one percent back like there's then you're
(25:05):
too loyal to that card. The only other category that
you'd want to use the blue Cash preferred on is
streaming because you get six percent back on streaming services too.
You and I met were not big streaming people, but
if you have multiple services, six percent.
Speaker 1 (25:20):
Back really into it. Pretty solid.
Speaker 2 (25:21):
I will say, even though we've hit the six percent
on the groceries, I still have that card tied to
ride share because it's three percent on trains it and
so all my lift in Uber. I know recently I
totally shot down Uber, but I'm I still like hopping
in an Uber X. I don't think is Uber black?
Is that the fancy car? So don't I just get
the cheap what's the big one? Because I had to
(25:42):
use the bigger I think is it uber x Is
that the xls uber XL for like a suburban or something.
Speaker 1 (25:48):
Yeah, I had to do that because for your trip
on my backpack track, there was like three dude backpacks
in there that were enormous stuff. And we're big. Burley
does sometimes kind of okay. But the big question that
Roy had was can you get the annual fee waived
on a credit card? And I'll tell you this, Roy,
It's harder than you might think. And that is because
most of the premium credit cards they're just not going
to budge on their annual fee. Right. They'll say, well,
(26:11):
if you're not getting enough value from the card, you
can just downgrade. And we've got this other card, like
you mentioned the not the blue Cash Preferred, but what's
it called me just the regular, the every day, every
day blue Cash. Okay, so you can they'll say, oh,
you're not getting enough value from this, well we can't
wave the annual fee, but we've got this other card
that's a good fit for you. And because of that,
like it's rare that they're going to say, oh, you
(26:33):
called in to ask sure, we'll do away with this
because they have another option for you, and it's a
really big part of the business model that these credit
card companies run. If they were just like waving annual
fees all the time, then the structure of these cards,
they wouldn't be able to offer some of the parks
that they offer. So exactly, you can always call them
try Sure. I don't see any shame in that game.
(26:53):
But how likely are you to succeed? We would say
minimal possibility. Yeah.
Speaker 2 (26:57):
Yeah, the term he used that you've mentioned at the
very beginning ethical fatigue.
Speaker 1 (27:02):
I don't see any.
Speaker 2 (27:02):
Ethical dilemma at all, and asking me like this, this
is business, and so they either have permission to grant
you the ninety five dollars, whether it's via credit or
just straight.
Speaker 1 (27:12):
Up to refund that fee.
Speaker 2 (27:14):
But I realized I've had my card for a while,
and I'm like, oh, I haven't I personally haven't even.
Speaker 1 (27:19):
Tried to wave that fee. So I actually reached out
to MX.
Speaker 2 (27:21):
This morning, and no luck, because exactly what you said,
They're essentially like, oh, so this is just how this works.
There's no amount of charisma, there is no amount of
justifiable evidence that I was able to provide. Really, that's
one of the other things you said. It's like you're
picturing it more like you're sitting down with like a
mom or pop kind of landlord of Like.
Speaker 1 (27:42):
But what if I do have a dog.
Speaker 2 (27:45):
But I take care of the lawn. Okay, Hey, there's
a conversation to be had there, right As opposed to Amex,
there's no it's either yes or no, and it doesn't.
I don't think it really matters how much you push,
because I push pretty dang hard and at the end
they're just like, appreciate you being a customer since twenty twelve.
But there's there's absolutely nothing that.
Speaker 1 (28:05):
We can do. It's gonna throw that polite to cline
your way in suggest another card if this one doesn't sure,
which is what they did. And oh man, two things.
Speaker 2 (28:11):
Okay, it's one thing to expect and to feel that
like you are entitled to a credit and that's not
what we're advocating for here.
Speaker 1 (28:19):
That's not what we're all about here on the show.
Would be not cool. Yeah.
Speaker 2 (28:22):
But secondly, I'm just realizing myself that when I had
talked about this card previously, about hitting that six thousand dollars.
I mentioned that I've switched to the City double Cash
card to get the at least get the two percent,
which is better than the one percent. Yeah, I need
to get a stinking everyday card because that's three percent
and it's free.
Speaker 1 (28:38):
That's true. What am I? What am I doing? I
could get one percent of the more percent if I'm
looking to optimize, and so that's true. That's gonna be
the new how to money.
Speaker 2 (28:46):
Matt grocery approach. I want to rock that every day.
I'm sorry, I'm going to rock the Blue Cash preferred
up until that six thousand. Then then I'm going to switch
over the three percent card, which is free, so there's
no additional charge there anyway to even consider using that
card for the rest of the year.
Speaker 1 (28:59):
Smart Boom slammed, duck, Yeah, I love it. Look at
you figuring this stuff out on the fly. I'm jack.
Speaker 4 (29:05):
Oh.
Speaker 1 (29:05):
I do want to highlight that the one case in
which it's actually much easier to get an annual fee
waived is if you serve in the military, and that's
there are federal regulations specifically on what credit cards are
allowed to charge active duty service members as far as
like interest rates, I think of the cap as like
six percent or something like that, which is much lower
than what Normanis are charged twenty two percent average. Yeah,
(29:29):
something like that. But a lot of card issuers don't
just limit the interest rate. They also wave annual fees
for active duty service members as well, even on some
of those super fancy elite cards, even though they aren't
required to. I think MX is actually one of the
better credit card companies at this so if you are
if you are an active duty service member, you might
(29:49):
want to strongly consider getting one of the nicer cards
that has like a seven hundred dollars annual fee, because
you get all the perks, but you don't get any
of that downside of having to fork go. We're a
big chuck of money to the credit card company every
year too. There you go. Let's hear now from a
listener who is having a tough time participating in one
of our favorite investing accounts.
Speaker 5 (30:11):
I met Jel. This is Chelsea and Franklin, Massachusetts. My
partner and I got married in April this year, and
we were both contributing to our roth Ira accounts. However,
now that we're married and PLANTI file our taxes jointly,
we've hit the income limit and can no longer contribute
to the roth We were told that we can open
a traditional IRA account and contribute there, so we did
(30:34):
do that, but it made me realize that that's still
technically after tax dollars that we're putting in, so I
wasn't sure if that's actually allowed. Also, since we've already
contributed into the roth IRA for the first part of
the year, what do we need to do with anything
with that money that we've already put in And if
(30:56):
the traditional Ira is not allowed, what do we do
with the money that we've already put in there?
Speaker 1 (31:03):
Thank you, Chelsea, congrats on getting married. Pump for you guys.
I see the sadness in your eyes that you weren't
invited to the wedding. I was just gonna say, you're
disappointed you weren't asked to officiate. Oh man, nobody wants
meet to officiate. They'll get that online certificate and do it.
If a listener asked you to.
Speaker 2 (31:20):
Oh man, I think I'm I would seriously consider it.
I think I would do because of the honor. Like
if if it's your most the most important day for
you and your partner. Even though this isn't necessarily like
a life goal of mine, I would feel obligated to like,
all right, time for Matt or Matt to step up
to the plate.
Speaker 1 (31:38):
I got lever you really want, Yeah, I'll do this
for you exactly. Yeah. Plus, if there's a good local
craft brewery, I'm like, all right, make it a two
for one. Or maybe hey, maybe they got good craft
beer at the reception afterwards, like some good homebrew. Yeah,
it'd be cool, But so other other head of money listeners.
If you're planning on getting married soon and you want
Matt there, just reach out.
Speaker 2 (31:58):
Or Matt, what if it's a dual efficient sort of
setup that we got go to on jouy.
Speaker 1 (32:03):
That'd be first time for everything. Let's go for it.
Though Okay, they would probably be like they would be
afraid of what would happen on the mic front because
they listen to the podcast and they're like.
Speaker 2 (32:12):
Well, I don't want that. But also at my wedding,
what weird off the cuff stuff? Will they say?
Speaker 1 (32:17):
You never know?
Speaker 2 (32:18):
I think I'd be too nervous. I would completely stick
to whatever was written on the certificate.
Speaker 1 (32:22):
I would think that potential listener should be more nervous
because I might go off script and you might not
like it. Let's talk about Roth's, Matt, because I'm glad
that Chelsea's been able to contribute to a ROTH recently.
And in some ways it sucks that you can't do
a direct ROTH contribution anymore. But it also means that
you're making good money, which is a great thing, so
(32:42):
I would Yeah, I don't feel too bad. It's a
good problem to have. Yeah, And it basically means that
you're making more than a quarter million dollars a year,
which is a killer combined salary. So it props to
you guys for that. I know, I take a ton
of hard work to get there, and it just makes
it so much easier to build wealth if you're diligent
on a high salary, Matt. That was one of the
things that talked about with Nick Medulie not too long ago.
(33:03):
He's like, that's the biggest problem for a lot of people, say,
just don't make enough money. And it's also true that
a lot of people earning six figures are living paycheck
to paycheck because they haven't really figured out the personal
finance basics. But Chelsea's in a great spot because she's
got both, she's got the personal finance basics down, and
they're making a killer income at the same time.
Speaker 2 (33:21):
Well as a happy marriage. I'm sure it's been nothing
but butterflies and rainbows up until this point, right Chelsea.
Speaker 1 (33:26):
Yeah, I can speak for her and say, yes, okay,
hopefully it.
Speaker 2 (33:30):
Has been so, Chelsea. One way that you might see
this is why they don't want us to officiate.
Speaker 1 (33:36):
Do you ever know what we'll say their wedding awkward thing?
Oh my gosh. Okay, you could qualify to directly contribute
to your ross by moving more of your money into
your workplace retirement accounts. Basically by upping let's say a
traditional four one K contribution, that right there could bring
your adjusted gross income below the roth IRA income limit threshold,
(33:59):
which would allow you to then funnel money into your
roth iras directly. That's worth considering. Yeah, it's like, if
you're really.
Speaker 2 (34:05):
Close, I certainly want to mention this because it only
works if you're within an earshot essentially of that limit,
and of course, if you are, you got to be
keen on investing more. Otherwise you should consider a backdoor
WROTH And we've got an article up on the slide
that will link to. But essentially, you are making a
non deductible contribution to your traditional ira and then you
(34:28):
are going to immediately roll that over into your wroth ira.
You're still going to be able to put seven thousand
dollars there into that roth, but you need to be
aware of the pro rata rule if you already have
money they're in a traditional ira. Basically, I hope it's
easier if you don't have a traditional and you're opening
it for the first time for this backdoor roth maneuver.
(34:51):
But if you already have one set up, basically there's
just a lot more tax keeping up with taxes and
what's already been in there and making.
Speaker 1 (35:00):
Sure it's taxed at the proper rate. If you've got
let's say six figures in the traditional ira, you're trying
to do the contribution to the non deductible traditional ira
and then do the rollover, you could be making a
big messy tax mistake.
Speaker 2 (35:13):
Yeah, and it doesn't even require a large amount of
money in the traditional even just like any money that's
in there is going to complicate it from a taxing perspective.
And so if that's the case, it's not a huge deal,
but that would be something, for instance, that you would
want to discuss with your CPA, with your accountant. It's
something that they come across fairly fairly frequently. I guess, well,
maybe it just depends on.
Speaker 1 (35:33):
Who you're working with. Well, my guess is that that
Chelsea also probably doesn't have that problem because she's been
prioritizing the wroth up until now. So if I were
venturing to guess, Matt, I would sing Chelsea probably doesn't
have Probably keeping it simple taking them in deduction, which
makes her ripe for the back door wrath makes it
a great idea because she's not going to mess with
that pro rout of rule. It's probably true. And then
(35:54):
what do you do if you've contributed to a wroth
but you're now ineligible, So basically you put the money
in and then like wait a second, not allowed to
do that. Well, that happens regularly. Two people just figure
out they're going to make more and they don't qualify
based on income requirements anymore. Well, the IRS wants you
to recharacterize the money you've already contributed, so you can
go in through your brokerage account. You can change the
(36:16):
wroth contribution to a traditional IRA contribution, and there's a
specific form you need to send to the IRS after
doing this, which is is a Form eighty six six
math eighty six. Because you've done this before exactly, Yeah,
and you could you could also choose to just withdraw
the contribution and the earnings before the tax filing deadline.
(36:36):
You'd only be taxed on the earnings plus a ten
percent penalty. It's likely not going to be a huge
amount because it's not been in there for very long. Yeah,
but it would still go against your goal of saving
for retirement and getting money into a roth ira and
you just.
Speaker 2 (36:49):
Basically it, Yeah, don't do that, just based on principle. Yeah,
even though it's a small amount, because you know, seven
whatever seven thousand has grown into from earlier this year,
and that's assuming a lump sum investment at the beginning
of the year. Although I guess if she's dollar cost averaging,
she would have seen even more growth because of where
the market tank to there in April. Regardless, you want
(37:10):
to make sure that you fill out that form eighty
six oh six, file that when you file your taxes
for twenty twenty five. Also, that's the same form. So
essentially what you're doing when you execute a backdoor wroth
IRA contribution, it's the same thing. It's essentially intentionally doing
the recharacterization. So yeah, you also have to file that
form eighty six oh six when you execute.
Speaker 1 (37:33):
A backdoor wrath IRA as.
Speaker 2 (37:35):
Well, so you can get familiar with that if that's
something that you think you're going to be participating in.
Speaker 1 (37:39):
You're talking about penalties, Joel.
Speaker 2 (37:41):
Right, so you've got the ten percent penalty you're taxed
on the earnings were you to just simply withdraw those contributions,
another penalty if this is something that you don't fix,
which does not sound like something that you're planning to do, Chelsea,
you're looking to nip this in the bud. But let's
just say you don't fix this, well, there is a
six percent annual tax or penalty that the IRS applies
(38:02):
to these ros con to these WROTH contributions that you
are making an error essentially, and so every year you
don't fix it, those penalties are going to accrue. So
it certainly behooves you to do this quickly. But moving forward,
getting money into a ROTH, it's still possible, and it's
a very brilliant thing to do to avoid all future
tax liability completely. You just got to jump through the
(38:25):
proper hoops in order to not run a foul of
the IRS.
Speaker 1 (38:28):
Wish it weren't so complex, Wish it weren't so annoying,
and that Hey, you're trying to do the right thing
and then you got to make things right with the
IRS on the back end. Wish it were simpler. It's not,
but that is the way you clear things up and
still get money into your roth iray.
Speaker 2 (38:42):
That's right, and it's really not that big of a deal.
The eighty six take it away with it though. Math
is your friend.
Speaker 1 (38:47):
Why can't everyone contribute to a roth ira? Matthew, That's
what I want to know. Yeah, well that would be
the Peter Teel approach in should he be eligible for
a roth iray? But somehow he found away? He found away.
I mean, it's like water, water always finds. Just from
a theoretical standpoint, it does seem like just the fact
that we cap contributions amount contribution amounts, it's seven thousand
(39:09):
per person that despite your income, like why not? Why not?
And because of the availability the backdoor roth ira two,
the fact that high income owners can still get money
into a roth.
Speaker 2 (39:19):
It does feel different than like a like a solo
for one K, where it's like you can put like
tens of thousands of dollars into this thing.
Speaker 1 (39:26):
Oh yeah, that's not what we're talking about. Yeah, just
seven thousand dollars.
Speaker 2 (39:29):
But all right, we got more to get to. We've
got asked our Facebook questions of the week. Buddy, we're
gonna talk about the classic conundrum of which credit card
balances to pay off first.
Speaker 1 (39:38):
We'll get to that more right after this. We're back.
We've got a classic personal finance question to get to
here in just a second. It's classic. But first let's
give it the Facebook question of the week. This one
comes from Matthew What is everyone's experience with the the
(40:00):
best rental car company when traveling? I found some that
are only one hundred dollars for the week, which sounds
incredibly cheap, but others that are four hundred dollars, so
big disparity is what he's saying. The ones that are
expensive are the ones with the best reviews, while the
dirt cheap ones have horrible reviews. Yeah, I'd be questioning
whether or not the one hundred dollars a week when
it comes with like tires and like what other fee?
(40:20):
What additional fees are there going to be?
Speaker 2 (40:21):
Ye that they're going to force you to cough up
in order to actually leave the lot with the car.
Speaker 3 (40:26):
You know.
Speaker 1 (40:26):
It just sprung to my mind was the time I
bought the knockoff Atlanta United jersey oh yeah yeah, and
it was like off color to get what you pay
for his nice material. The stripes were totally like the
wrong size, yeah and color. And it was one of
those things where I was like, put this jerseys twenty
bucks and the official ones through m molest A like
eighty bucks, and I don't I don't want to drop
that kind of money and uh yeah, but I looked
(40:49):
ridiculous wearing it around. And so yeah, you do at times,
many times get what you pay for. And those reviews
I think are evidence. And so some of these, some
of these second rate carnal companies matt are indeed awful
most of the time.
Speaker 2 (41:01):
Okay, So I so speaking of reviews, this is an
to my detriment. I ignored some reviews at a local
car rental place and they had it's one that you
I'll say it was Budget, and everyone's heard of Budget, right,
it's a name brand, it's fairly reputable. But this particular
location had abysmal reviews, and I said, you know what,
I'm no, no, I've got the deal. They've got the
(41:23):
deal going on there. I'm gonna pounce on the opportunity
here to save a ton of money. And guess what,
they of course, did not have the vehicle that I
had reserved. It led to a mass like an hour's
long headache, which.
Speaker 1 (41:36):
Let's be honest, that is also a car rental thing
in particular, where they don't have the stupid They know
how to take the reservation, they just don't know how
to keep the well.
Speaker 2 (41:44):
I will say their parent company, AVIS, which I have
subsequently rented from, was fantastic and so I don't know
if this was just an instance of feeling burned in
a given situation, but because that, guess what, I'm much
less likely to rent for them, even though there are
plenty of folks who would probably swear by budget.
Speaker 1 (42:04):
And they're like, no, man, I love budget. Problem there
might go to Yeah, the guy that works there were buds.
Speaker 2 (42:09):
I send him a Christmas card every year. You know
he's like part of the family comes over on Sunday.
Speaker 1 (42:13):
It's weird. Don't do that.
Speaker 2 (42:15):
Hey, if if that's your buddy, if y'all got to
know each other, it doesn't matter where it is that
you originally met. So all that said, I ignored the reviews.
Reviews are really important.
Speaker 1 (42:25):
Yeah, and uh yeah, going with one of the more
reputable names, I think, yeah, well, especially I think what
Matthew's getting at is there are like these really subpar
non name brands, second tier, third tier, almost just crappy companies.
That and the reviews are so horrible because and I've
been I've done the same thing. I've rented from one
of these places feels a little more fly by night. Yeah.
(42:45):
At operation often the location is further off the airport,
it's harder to get to, and the people working there
don't seem to care nearly as much. And maybe there
are additional fees that you weren't told about ahead of
time at the booking, and so the deal is not
even as good as you thought it was going to be.
So I would just say, think about all those things,
read their reviews thoroughly. Don't just look at the star rating.
(43:07):
If the savings are substantial and you've got flexible travel,
and you're keen to give it a go because you're
that kind of person. You like, you're the experimenter, you
do you, but those reviews might be enough to freak
you out and prevent you from giving it a go
with some of the non name brand car rental company.
Speaker 2 (43:23):
Especially when you consider when it is that you typically
rent a vehicle, which is when you're at of town,
you don't typically have other options, right, and you're typically
on a tighter time schedule, You've got reservations, you've got
different Oh, our entry for the museum is between these hours,
like every minute counts when you're on vacation. Typically, the
(43:44):
way we Americans schedule our vacation tool right like, it's
so there's like zero margin, which honestly that should be
referendum on how it is that we relax and how
we vacate our homes. But that being said, I am
now more at the point to where I'm to pay
a little bit more in order to ensure that I'm
not going to be stuck there a without a vehicle
(44:06):
that works for our party, our group, but be just
waiting in lines too, man Like that's the other part
of it, like I don't want to spend like an
out And I've had this happen before too. I'm thinking
about one time I flew into Detroit and not supposed
to make a certain dinner by like a certain time,
and I stood there in line for like forty to
fifty minutes. One person working the counter. I swear it
(44:27):
was that one person that was also like going to
get the cars too, Like it.
Speaker 1 (44:29):
Wasn't like, oh, yeah, the keys are also washing the cars.
Oh my gosh.
Speaker 2 (44:32):
So that's not the kind of scenario that I want
to find myself in. That being said, you don't have
to pay off the nose in order to ensure that
you're getting a good company. I know, well you you
used Costco recently.
Speaker 1 (44:43):
I feel like Costco travel rocks. It's so good. It's
super simple, the grid format that they display. If you're
a Costco member, it's a great place to turn. They've
got like five different rental car companies that they'll the
list and depending on the make and model of the
car or basically you know, are you going for a
compact or are you going for a pickup truck? Are
you going for a And they'll they'll tell you, well, hey,
which these which one offers the best deal? Right now?
(45:04):
That that's a great way to shop. But then I
think the other most important way to save on rental
cars Matt, that most people don't think about. Most people
are like, they book it, they forget about it, and
then they show up and they get the car that
they booked. Well, if you reshop regularly before your trip,
you could see substantial savings. So if like you manually checking, now,
are you doing auto slash? So auto slash is awesome
(45:27):
site to help you with that, but I'm I like
to I don't know, I'm weird. I like to manually
check back in. So I checked back in yesterday on
a car rental that I've got upcoming, and I was like,
the gas electric disparity was significant. Well it's gone down,
and so I'm like, great, I think I'm actually going
to get a gas vehicle. Just I don't know that
EV's gonna quite do what I needed to do sadly
on this one.
Speaker 2 (45:46):
Yeah, you don't want to get stuck in the situation. Yeah,
that I felt as if a few weeks ago where
they're like, hey, it's actually you're gonna you're gonna deal
with some range range anxiety.
Speaker 1 (45:56):
Yeah, but I was like, great, well, this is my
perfect chance for you booking, and guess what, I'll probably
reshop that two more times before the actual trip. So classic, Joel.
It's the amount you can save by doing that, which really,
you know, plugging back in those dates and checking the
pricing again takes all of two minutes. Yeah, and so
that's the best way to save instead of going with
(46:16):
the super duper low cost off brand not going to
be good or nice to you choice, just reshop instead.
That's the way you'll save more and feel more confident. Totally.
Speaker 2 (46:26):
Yeah, don't forget about Touro as well. You might be
able to find a deal over there by running from
an individual as opposed to a company.
Speaker 5 (46:32):
Joe.
Speaker 2 (46:32):
Let's take another one from an anonymous poster. I'm trying
to pay off some credit card debt. I've got a
couple with larger balances and a couple smaller ones. Is
it better to pay off one to two cards or
split the money to bring down all the balances? This
is a debt snowball question right here. Yes, whether or
not this listener or poster should subscribe to that as
(46:53):
opposed to the debt avalanche, right, And we'll describe what
that means. But first off, I mean it's really a
question of versus your brain, and the math would say
to pay the minimum balance on each card except for
the card with the highest interest rate. You know, you
pay as much as you possibly can on that one
particular card, and you get rid of that particular debt
(47:15):
in short order. And then once you've.
Speaker 1 (47:17):
Eradicated the debt from that first card, you move on
to the one with the next highest interest rate. That's
the best tactic from a math perspective, right, That computes Yeah,
because gonna you're gonna be paying it off while paying
the least amount of interest overall. And that that really
is the debt avalanche approach. But when we're talking about
(47:38):
the snowball we're talking about it's the best motivator for
your brain, which is to pay off the card with
the lowest balance more quickly, no matter what the interest
rate disparity is, and then getting rid of a whole
debt from your life more quickly. That just kind of
speeds up the process or makes you more excited about
and motivated to pay off debt more quickly. So that's yeah,
(48:00):
is it better to go the math route or the
more psychologically advantageous route. I lean towards psychologically advantageous, but
it also kind of depends.
Speaker 2 (48:10):
It depends on the situation. Yeah, Like a lot of times,
the criticism is that, like, well, if you're paying attention,
paying attention to math, you wouldn't have started spending on
your credit cards to begin with. But I do think
there are some There are certain scenarios where it's like, oh, yeah,
over a decade and all of a sudden, you look
down and you got like four cards in your wallet
with balances on all of them, and then you've sort of, oh,
(48:30):
the scales have fallen from my eyes, and I realized
that I got to figure some things out here. And
in a scenario like that, I could see taking the
more mathematical, which I'll say, the mathematical is the brain
approach versus the snowball, which feels more like a heart,
like an emotional response.
Speaker 1 (48:45):
Brain and math kind of probably go together, and heart
and emotion more go together.
Speaker 2 (48:48):
Yeah, yeah, or like following your heart or your stomach,
you know, like you feel it. But I think that
whether or not you choose the avalanche or the snowball.
That comes down to your individual situation. Because also practically speaking,
if we're talking about a bunch of different credit cards,
I think the snowball it certainly can make this the
most sense. And that's mostly because the disparity between the
(49:09):
interest rates is unlikely to be that big.
Speaker 1 (49:11):
But if we broaden out a little bit and are
talking about additional forms of debt. Let's say we're talking
about a.
Speaker 2 (49:18):
Five percent car loan that you are also trying to
pay off in addition to these credit cards, well, dang,
even if it's the smallest amount, I would rather you
say that one until after you've paid off all of
the other credit cards first. But yeah, I think given
the specifics to this anonymous poster, I would most likely
go with a snowball because that's probably going to lead
(49:38):
to the most emotionally positive, fulfilling response, and that reinforcement matters.
Speaker 1 (49:44):
And you're right, like the it's probably somewhere between nineteen
and twenty two percent each credit card is roughly in
the same range. Shall pay off the lowest balance first,
get that win under your belt, and then keep moving
forward and pay off the next lowest balance. You could
also consider something a zero percent interest rate credit card
to transfer some of that debt to make it less disadvantageous.
(50:05):
But whether that makes sense or not, it just really
depends on where your head's at as well, because if
you're one of those extremely motivated individuals, it can speed
up your process, but if not, it can lead to
more credit card debt and a worse overall financial picture
for yourself. You know, some people might suggest to you
debt consolidation. Hey, it's going to help you pay off
your debt more quickly. This is really the way, well,
you know, coming up with a plan and working your
(50:26):
butt off to pay off that credit card debt quickly.
I think that's likely your best path to take instead
of just trying to move debts around. Actually write down
a plan and stick to it. Put it on the
bathroom mirror matth. There's the undebt dot. It can help
you come up with that plan to figure out, hey,
how can I cut my spending for a little while
so that I can actually pay off this debt credit
card debt in even a smaller timeframe. I think those
(50:49):
are the kind of tweaks you're going to want to
make so that you can get rid of it quickly,
whereas trying to shuffle things around. It sounds good and
it seems like it's going to be the best way forward,
but it's a lot of people in even more trouble.
Speaker 2 (51:01):
That's right, buddy. Let's touch on the beer that you
and I enjoyed during our episode today. You and I
split a fat Pug, which this is an oatmeal milk.
Speaker 1 (51:10):
Stout, not just a milk stout, that's true. Yeah, it's
got oatmeal in it, which is healthy for you, which
is why we drink these beers. Is good for your heart,
good for our heart, good for our bodies, just like cheerios,
good for your good for your heart. That's right. So
I didn't I didn't love this beer. I thought it
was kind of mad. Really yeah, I thought it was
kind of bland. I was like, where's the flavor? You'll
anymore more punch? Yeah? Oh sorry.
Speaker 2 (51:32):
This isn't like Cobra Kai or some of these other
massive barrel age milk stouts with like Serrano Pepper's a
very accessible stout, I guess from people who are like
just trying to figure out whether or not they like them.
It's not too offensive or overpowering from a flavor standpoint, Yeah, so,
but from a craft.
Speaker 1 (51:50):
Beer standpoint, you're kind of looking for a little bit more.
I like a little more. It was toasty, it was roasty,
had all those flavors going on.
Speaker 2 (51:55):
It wasn't overly bitter though, so sometimes some of those stouts,
like a Russian Imperial, they're just really over the top
from up sock you in the face. This can be
kind of bitter and charring too. Yeah, but with this
being a milk stout, it's got that lactose sweetness going on,
which personally I love. And I've actually been my typical
coffee Kate and I have both been up in the
(52:15):
amount of milk we're drinking and we're like because we
realize we're.
Speaker 1 (52:19):
Like, man, we're not We like never drink milk.
Speaker 2 (52:21):
And then we always we're always trying to get the
kids to drink their milk because we're like, hey, we
want your bones to be all strong and your teeth
to be healthy, and they're like, why do you drink
your milk?
Speaker 1 (52:29):
And kain't I looked at each other. We're like, oh, yeah,
we don't really take your own medicine. I know.
Speaker 2 (52:33):
So I was like, hey, that's a good point actually,
and so we started brewing slightly less coffee in the morning.
She's just been like, don't talk back, to get back
to eating your eggs. But it reminds me of my
coffee now, which tends to be a bit more milky,
which I'm all for because we're also adding less actual
granulated sugar, because there is a sweetness yea, in milk,
there's a you know that lactose.
Speaker 1 (52:54):
When I put my milk just a little bit, or
in my coffee, just a little bit of milk. Yeah,
good to go. I'm like, I'm putting like at least
four ounces in there.
Speaker 4 (53:00):
No.
Speaker 1 (53:00):
People are like, well, that's not even coffee.
Speaker 2 (53:02):
Yeah, that's not It's like that's probably equivalent to a
latte or something like that. That's too much if I'm.
Speaker 1 (53:06):
Looking, dude, well all the coffee peris from. Yeah, you
are a coffee purist. I don't understand.
Speaker 2 (53:11):
I see it as a different drink. Now, it's not
the same thing. I'm not This is not an espresso shot.
This isn't enjoying a finely crafted cortato something like that,
even a flat white.
Speaker 1 (53:20):
No, I see this as like a coffee drink. It's
not coffee, okay, it's a coffee flavored drink, Okay, that
also has a lot of milk in it. I want
to make sure my bones are st I'm judging you
right now, put silently. I'm not going to say anything
out loud.
Speaker 2 (53:33):
Well, I'm sure there's plenty of other I got a
feeling I'm not the only one. I bet there's a
lot of folks out there who add a healthy serving
a full milk to their coffee.
Speaker 1 (53:41):
Okay, please reach out to Matt, support him. He can
use it. Right now. I need the support because Joel
isn't doing it all right. Thanks so much for listening.
We'll put show notes up for this episode on our
website have to money dot com, including links to some
of the stuff we mentioned today. There's even a snowball
versus avalanche calculator that we can stick up their math
that can help people see the difference between that choice
(54:04):
you can make from a dollars and cents perspective. So
you know, all right? Until next time, Best Friends Out,
Best Friends Out.
Welcome to Had of Money. I'm Joel, I'm Matt. Today
we're answering your listener questions.
Speaker 2 (00:23):
I hope everyone out there had a relaxing, recharged Sunday
and that you are ready to get back at it. Man,
it's Monday, back to the grind, back.
Speaker 1 (00:32):
To the personal finance education in your ears. As they say,
we do have listener questions.
Speaker 2 (00:36):
We're going to talk about the best cash back card
for groceries. We're going to discuss l cheap o rental
card companies, whether or not they're worth it.
Speaker 1 (00:43):
Joel.
Speaker 2 (00:44):
Actually I'll share a little bit of personal experience there
as well. Another listeners asking about what he should be
doing with a lump sum that he is going to
have in his hands. And we're talking six figures. So yeah,
a lot on the line here, but actually maybe it
doesn't differ all that much from if it was just
six hundred bucks. So okay, looking forward to getting to
(01:05):
all of those plus more today. But buddy, I've got
a quick frugal or cheap question for you.
Speaker 1 (01:11):
It's been a minute since we've done one of these.
Would you get a tattoo if it was like eighty
or ninety percent off Okay, here's I have a question.
Is it an inferior tattoo artist?
Speaker 2 (01:21):
No, it would be if it would be a tattoo,
that's perfectly Maybe it wouldn't be, Like, I don't know,
how are tattoo artists rated. You know, there's a certain
level of artistic ability that you're going for. So maybe
that's a little bit different than the story I'm trying
to parallel here, But yeah, what would you do?
Speaker 1 (01:36):
I've feel solid well, okay, I wouldn't do it just
if I wasn't interested in getting a tattoo. But my
wife got a couple of tattoos earlier this year, and
I have been do you feel not nearly as cool
as she? Definitely definitely don't feel as cool as she is.
I don't feel as like edgy or interesting. But you know,
it's as someone who likes art, I'm like, well, yeah,
(01:57):
there's probably some art i'd be down to put on
my body. If I knew the right thing I wanted
to get, for sure, i'd want the sweet discount. I'd
want a much cheaper tattoo. Okay. So but if I
didn't want to get one, I would would discount by the.
Speaker 2 (02:09):
Sale, Okay. Good response. The reason I'm asking this is because,
in a similar way, did you hear that Claire's the
teenage girl where pierced? Yeah, it's going out of business.
So I heard about this a few weeks ago, and
Kate happened to be uh in the area swung By.
I think maybe she was going in there to pick
(02:29):
up a gift, like a birthday gift for one of
the girl's friends, and she saw that everything was like
eighty or ninety percent off, including ear piercings.
Speaker 1 (02:38):
So guess what she did. She got some additional holes.
She got another, Yeah, another she got She's got more
ear rings? Now, yeah? Yeah? Did she get like one
of the.
Speaker 2 (02:49):
She wanted to get a second one further up from
like the traditional spot.
Speaker 1 (02:53):
I guess on the on the ear.
Speaker 2 (02:54):
But she just totally went for it, and I was
up the moment, spur of the moment. It's not typically
something that she does. But here's the thing.
Speaker 1 (03:02):
She doesn't sound like.
Speaker 2 (03:03):
It doesn't sound like Kate. It is something she had
been thinking about, Okay, so sort of like you're saying,
it was already on her mind. She was maybe quote
unquote shopping for an opportunity. She was looking for a
time to be able to get it on discount, and dude,
it was I think she paid twenty bucks.
Speaker 1 (03:18):
It was a tours it normally cost to get fears.
Speaker 2 (03:20):
Well, we took one of our daughters on her birthday
last winter and it was two fifty. What is a nice,
isn't she dah? Why that at home?
Speaker 1 (03:28):
It was a very well reviewed place. It was like
one of these tattoos slash, especially a man of your
skills and ability piercing places. They're known for you to
earn a nailby an excellent job over there. And so
we paid two fifty. It comes with like, you know,
the earrings and whatnot, but still two fifty versus twenty
dollars real.
Speaker 2 (03:48):
Kate was definitely feeling pretty good about the uh, the
deal that.
Speaker 1 (03:52):
She was able to do so in a similar way.
Speaker 2 (03:54):
I guess if I so, what I asked you was
I assumed you have thought more seriously about a tattoo.
Speaker 1 (04:00):
You have an ear piercing. But my question for you is, now,
are you so attracted that deal that you're going to
go get something pierced on your body?
Speaker 2 (04:07):
That was literally the last days why it's a part
of why she did it because they they said, hey,
we actually were not allowed to do any more piercings
here after today. So I think she was maybe one
of the last ones.
Speaker 1 (04:18):
Only particular players. The lady was also.
Speaker 2 (04:20):
Trying to talk her into buying some diamond earrings because
those are also eight I think those are eighty percent off,
but if you buy like ten pairs, they're ninety percent off.
Then you're talking about started like a Yes, she could
have started like an eBay business. Yeah, like there are
real diamonds, like actual diamond ear rings.
Speaker 1 (04:36):
That's incredible. I was like, well, where are they? She's like,
I didn't get them. I was like, what, Well, I
will make sure to compliment her on her new ear
holes next time I see her. I'm sure she would
appreciate it. Yeah, uh well yeah, And I guess I'll
always be looking for a deal. That's the moral of
the story. I'm gonna yeah, if I see a good
deal on a tattoo and I know what I'm going
to get, I'll pound if you've.
Speaker 2 (04:54):
Thought through the design, maybe you even have it saved
in your phone. Yep, maybe you know, and you can
be like, hey, can.
Speaker 1 (04:58):
You do this? Yeah? Can you bust up this folk
art bear Head. I know that's one that's yeah, on
my radart through the whole black Cat tips, right, he's
the best. All right, let's mention the beer we're having
on the episode. This one's called fat Pug Oatmeal stout
by Maple Wood Brewing. I've never had a beer by
this brewery before. I don't think they're out of normal.
What a funny tone. Illinois normal Illinois. Okay, Yeah, so yeah,
(05:22):
we'll give our thoughts on this one later on in
this kind of stout season.
Speaker 2 (05:25):
So we're getting in there. I'm pretty excited about it. Yeah,
also super fun to say fat Pug. I don't know
if you're allowed to call pugs fat. Is that that's
just rude? That's who they are. Yeah, I think it's.
Speaker 1 (05:36):
An abrasive name for acceptable. Yeah, I guess you're right.
All right. If you, by the way, have a money question,
we'd love to hear from you got to have to
money dot com, slash ask, or just record your money
question on the voicemai wapp of your phone. Email it
over to us. We'll take you about two minutes and
then hopefully we can take it next week on the show.
Matt let's get to a question from a listener who
(05:57):
has gobs of money in his hands right now. I
was trying to figure out how to proceed.
Speaker 3 (06:02):
Hey, Matt Joel, this is Hayden from Marlborough, New York.
My wife and I decided that we were tired of
home ownership and we decided to become renters again. We
just sold our primary residence and we walked away with
a little over three hundred thousand. We're also going to
sell the duplex that we own, and we should walk
away after everything with another three hundred thousand from that,
we don't need to worry much about retirement. We still
(06:22):
have twenty five years, but my wife and I max
out our four or three bees our roths and we'll
each have New York State pensions upon our retirement that'll
pay us about sixty five percent of our final average salary.
We also contribute a lot to my daughter's five twenty nine,
so our salaries more than cover our rent, our one car,
or other expenses. So since we don't need this chunk
(06:43):
of money for another home purchase, what's the best way
to make this money work for us?
Speaker 1 (06:48):
Cheers, Hayden. You're not going to buy another home. That's
the only ticket to building wealth. Hayden, you know that
it's the only way you can be considered a true American. Yeah,
otherwise you're just a free loader. Obviously we're joking here.
Speaker 2 (07:00):
Despite the equity that you've been able to accrue, huge
congrats on that. I I really appreciate. I can totally
respect the fact that Hayden that him and his wife
decided that owning a home that it wasn't for him.
You know, like this is he's just like, Hey, this
is my jam. I'm gonna pivot. We're gonna try something different.
Speaker 1 (07:17):
What happened by the way, like his he sometimes there's
a you think you think it got burned. I don't know,
Like is it did something happen to the home and
you were like I can't deal with this anymore. You're
gonna do it again? Maybe maybe like you had to
have the AC repair guy out six times over this
past summer and you're like this is just getting absurd.
I'm done with it. Yeah, Or you know the cross
Bace flooded. I mean, there's all these sorts of things
that can happen as a homeowner and home ownership. Yet
(07:39):
like kind of like you're alluding to, mattis seen. Is
this end all be all. It's a smart financial decision,
but you can take a toll on you too.
Speaker 2 (07:44):
Absolutely, it just depends on what you wanna, what you
want to sign up for. And I will say, generally speaking,
it's a nice perk to be able to build up
equity as you have purchased your own home, But there
is a lot more to life than just maximizing every
single financial decision. You're obviously doing a lot, a lot
of the right things. You are talking about how you are,
(08:04):
I mean truly, I think he checked all the boxes.
He even mentioned one car. Talk to me, Hayden, like,
but oh, you are a fellow one car brother. I
feel like we've got a kinship here. And with that
in mind, not just because of the one car thing,
but because you are. He's got the state pension, he's Yeah,
I think he's going to be just fine even though
he doesn't have a home, and I'll still.
Speaker 1 (08:27):
Be able to retire potentially even better penty of money, yeah,
by by not having the home equity, by renting and
saving the difference.
Speaker 2 (08:35):
And of course he's gonna have more flexibility if you
you know ends up wanting to move or try a
new location. If life is ends up being a little
bit different in three or four years, it's gonna be
a lot easier to uproot, which it sounds like he's
not worried about doing anyway, since he already did sell
his primary So.
Speaker 1 (08:51):
He also might get a pretty sick deal on rent
depending on where he lives and what's happening in this
particular market. I want to our favorite creators in the
real estate space. Coach Carson was talking to one of
his most recent email newsletters. First first named Chad Chad
Chad Carson awesome individual but just really smart real estate
(09:11):
investor too, And he was saying how some of the
properties he's on the longest, even being in solid condition,
he's seen significant rent declines on some of those units,
and so that's bad for him, bad for investors, but
it's a great, great thing for a lot of renters
out there because we'd seen those massive rent increases, especially
in those early COVID days, and now it's like, hey,
(09:33):
that trend is reversing a fair amount. So maybe you
get top dollar for your home, Hayden, and then you're
able to have a lower monthly payment and then fewer updates,
fewer repairs the chief to make because guess what now
the landlord is on the hook for that as well.
A nice thing about selling your primary home, though, is
that the gains you accrue are delivered to you tax free.
That's one of the coolest things. Like, yeah, there's a
(09:54):
lot of expense, real estoric expense when it comes to
selling a residence, but at least the taxman doesn't get
his hands on that money. So Uncle Sam doesn't get
a penny of your three hundred thousand dollars in gains.
And it's one of the reasons that like the live
in flip strategy. Living in that home for two plus
years while you renovate it can be a smart investing
(10:16):
strategy because there's zero taxation because it was considered a
primary home that you lived in. It's we talked with
our friend Carl back in the day about this, Matt.
It's why he loves that strategy. He likes to do
the work himself. Anyway, they live in the house while
he's doing the work. Last name Jensen, that's right, and
then they eventually sell the money, sell the house, and
(10:36):
they don't pay any taxes on the games they received.
The duplex, by the way that you mentioned, you're selling,
So he's like getting out of the landlord game too.
He's like, I'm just done with homes. Don't want to
own one in any capacity. Well, that is likely to
be subject to long term capital gains taxes. You're probably
gonna know something like forty five thousand bucks at the
fifteen percent long term capital gains tax rate on the
(10:56):
three hundred thousand dollars in gains you're gonna experience on
that one. So make sure to set that money aside,
make sure you don't forget to keep that around when
tax time comes for April. And some people they want
to avoid taxes at all costs, even if it means
holding on to assets that they don't like or that
stress them out. It sounds like this is a success tax.
(11:17):
It's worth paying. It's a small price, I think, to
pay ultimately for the simpler financial life that you're looking
to create for yourself. Totally.
Speaker 2 (11:25):
Yeah, One thing I just realized is I think he
said that they are planning to or they might be selling,
or I think he's planning. He's definitely gonna sell the duplex,
but it sounds like it maybe is often the future.
And so with this in mind, you've got the ability
to potentially avoid that possible forty five thousand in tax
were you to occupy that that duplex and tru I know,
(11:46):
if it was me, I would seriously I don't know,
maybe it's not in the most desirable part of town,
or maybe it's in a different town. There's a whole
lot of constraints here, but I would seriously be considering
that because we're talking about avoiding taking almost fifty thousand
dollars bath. Yeah, just by the stakes living in this
great duplex that you've owned for a number of years,
and I guarantee you that two years is going to
(12:07):
fly by when you're going to get a fifty thousand
dollars more dollars in your pocket. Just something to consider.
But let's assume that you already have sold it. So
we're talking about what it is that you should do
with five hundred and fifty thousand dollars. Well, now's the
perfect time to dig down into your family's goals. I
would start just asking some questions like do I feel
(12:30):
fulfilled to hear at work, like maybe it's time to
take a mini retirement. Maybe you're happy with that, or
maybe you're like, well, I don't want to jeopardize the pension,
so I'm gonna keep doing that. Guys, Well, then maybe
it looks like getting a little bit more philanthropic when
it comes to the money that you're giving to local charities,
charities that are globally or maybe it's just time for
(12:51):
you to just continue investing just in a brokerage so
that you can increase your options. Maybe you don't have
like a clear path that you want to take now,
but you're thinking, all right, well, let's be about it
so that we can do even more good to have
even more options down the road.
Speaker 1 (13:04):
Because it doesn't sound like Hayden needs to put a
lot more money aside in retirement accounts because he's already
done a lot of that hard work. He's got the
pension too, exactly, so I think big here accomplished. He's
basically saying his expenses are essentially covered. So she's kind
of like, all right, I got a lot of things
I could potentially do here. I think that Hayden's got
the ability to make some just audacious moves without impinging
(13:27):
on your ability to reach financial independence in a reasonable timeframe.
So this is an opportunity, Hayden, for you and your
wife to essentially have your cake and to eat it too.
So I would this isn't like a one time sort
of conversation either, like certainly sit down some craft beer,
maybe a bottle of wine, where y'all really do dig
(13:47):
into what this could look like, but continue. You don't
have to make a decision anytime too. This is something
you can revisit over the course of like the rest
of this year, but even into the coming years. So
that's something that I would most definitely be doing. I
think it's good advice. I think you probably don't want
to make a rash decision. It's like after the death
of a spouse, like sometimes I think the biggest regrets
people have is the super quick moves that they make,
(14:10):
whether it's life insurance payout or trying to figure out
what to do with the house. They don't allow themselves
to grieve and they make a big decision and then
they're like, oh, man, if I felt like I was
in more of my right mind, a better headspace, I
probably would have done something different. And the same thing
is probably true when you're essentially cashing out investments to
the tune of half a million dollars. You don't want
(14:33):
to make a rash decision lock that money in some
way that doesn't allow you to have some liquidity and
some flexibility totally. And so you know, I think when
you're as far along the path as you are, Hayden,
and you live simply, the world is your oyster here.
And yeah, so like, if the mini retirement sounds the
most enticing, Matt, you just mentioned that, I think you'd
want to keep a bigger chunk in cash because that's
(14:54):
an expense that you're going to have the fund. You
might not have income coming in, you might be doing
more extensive travel, So I want to want to prioritize
you probably don't need all that money in cash, right
for a mini retirement. That'd be the most expensive many
retirement I've ever heard of, But you definitely would want
to keep some of that set aside in cash if
you want to give big money away, and you're going
to get a tax benefit for doing that as well.
If you're smart, you can ramp up your donor advice
(15:16):
fund contributions in the coming years, maybe big chunks in
twenty twenty five, twenty six, and twenty seven getting tax benefits,
you're also just ramping up your ability. You're kind of
garnering that nest egg for future giving and then you know,
beyond the roth ira. The taxable broker's account is a
great place to store medium term money that you're not
(15:38):
quite sure what to do with. You keep it liquid
as long as it's invested for more than a year.
You're talking about the long term capital gains tax rate
when you do pull money out of that account, and
it allows you to make big moves when you feel compelled,
like let's say you do say, man, you know what,
three years down the road, we really do miss home ownership,
or yeah, our life has changed substantially enough that we're
(16:00):
we're considering buying another investment property. Well, then you still
have access to that big chunk of cash, and that
chunk of cash has grown because it's been invested. So
most people don't have access to a six figure stockpile
that's also going to be growing and compounding along the way.
I think the tax bill brokerage account is a great
way to make a smart move with the majority of
(16:22):
the funds that doesn't really compromise your ability to change
course in the futures as you desire, as those goals
become more apparent. That's right.
Speaker 2 (16:32):
One other thing I just thought of too, your conversation
with Cody Garrett last week he talked about he said
he subscribed to fire the financial independence, recreational employment.
Speaker 1 (16:43):
Oh yeah, and I.
Speaker 2 (16:43):
Really like that. The ability, Hayden, for you to potentially
pivot in your career. Again, you probably want to make
sure you're not losing out on the pension. You don't
want to sacrifice that. But finding what I know, at
some point, if you've.
Speaker 1 (16:53):
Got enough money and you're like this job kind of
thinks it might be time.
Speaker 2 (16:56):
Yeah, but finding ways to leverage your time, right, like
the ability for not only for you to align your
money with things that you care about, but also your time.
Speaker 1 (17:07):
Man.
Speaker 2 (17:08):
To me, that sounds like a recipe for happiness. So
I think that might be something worth considering as well.
But Joel, we got more to get to. We're gonna
hear from a newlywed couple. They've got an investment question
that plus more right after this.
Speaker 1 (17:28):
All right, Matt, we're back. Let's get to a question
about credit cards and is it is you know some
of the best credit cards have substantial annual fees, but
is there a way around that?
Speaker 4 (17:39):
Hello Joel and Mann. This is really from the DMW
area in Texas. I want to ask you guys a
two part question when it comes to your individual approaches
to annual fees on credit cards. My wife and I
are looking to get the AMEX Blue Cash Preferred card
to take advantage of the six percent cash crack on
groceries for up to six case spent annually, and we
(18:00):
predict we should hit the threshold by the end of
the year. However, I know the caveat with this card
is after the introductory year of having your fee waved,
there's the expectation of paying the ninety five dollars fee
every following year. I recall you guys mentioned before. You
can always reach out to these lenders in a request
to have your fee waved as a courtesy in that
(18:21):
following year. But let's take that scenario further to a
year by year basis for the long term. Could that
approach still be feasible on a yearly basis if you're
able to present a charismatic or justifiable enough reason to
the lender and having the fee wave. Is this something
either one of you have ever successfully done or continue
(18:43):
to do. If so, how have you managed to pull
that off? On to the second part of my question.
Could waving an annual fee on a card every year
be considered frugal or cheap? At some point it seems
like the lender may put their foot down and quit
waving the fee, or the individual making the request could
(19:03):
reach an ethical fatigue to where it may it may
make more sense to quote unquote pay what you owe
to the generally worthwhile benefits that most of these cards
with annual fees may offer. I would like to sign
off by thanking you guys for all the insight you
offer on various financial spectrums as well as a life
(19:23):
in general, as it has helped me reach money Gear
four in about two years that my sites to begin
money Gear five and twenty twenty six. I look forward
to listening to this show for many more years to come,
including den the sabbatical periods you guys will surely take
along the way best friends out J.
Speaker 2 (19:42):
I like how Roy mentioned that it's not just the
money stuff that we talk about, it's also the life stuff. Yeah,
and you and I were just recently talking about how
personal finance that's our sandbox, right, like that is the
world that we live in. These are the headlines we
pay attention to, the rule changes, policy updates, things like that.
But also it's not I don't know, I'll speak for
myself personally, like I find money very interesting, but it
(20:05):
has more to do with the ability to use that
as a tool to lead to a happier success, successful,
fulfilling life. And I appreciate that. Roy appreciates that. Yeah, Roy,
I appreciate you appreciating us at.
Speaker 1 (20:16):
Some point, at some point, it's impossible not to have
those broader conversation conversations as you start to figure the
money stuff out, like how does what sort of implication
does this have for how I live my life? And
to me, those that intersection that overlap are some of
the most interesting conversations, the most fun conversations that I
get to have. And it's it's some of the most
fun conversations you and I have that I have with Emily,
(20:39):
because yeah, you get to you just have this freedom,
this choice to stability at some point in your money
journey that gives you where the optionality is significant and
the things that you can pull off, whether it's you know,
many retirement I guess, or a sabbatical is what we're
calling it, really, Matt, like that you and I got
to have or just bigger giving goals, and that's what
(21:01):
we want all of our listeners to ultimately experience. By
the way, the best phrase that Roy used in that
question was ethical fatigue. I'm going to use that in
the future. Sometimes sounds like a fatigue ethically, but obviously massive,
massive props to Roy for reaching money gear at number
four and what sounds like short order. And let's talk
(21:21):
about credit cards, Matt. I'm we're not against annual fees
because if you're savvy, if you're if you're smart in
the credit card space, which half Americans are not, so
you got to be careful, you can easily get more
value out of the cards that you're using than the
cost of the annual fee. But also, as we discussed
not so long ago, some of the new fangled travel
credit cards, the revamped credit cards from City and Chase
(21:45):
and Amex, well, they offer cash back for more upscale spending.
It's like, oh, do you spend a lot of money
on that Peloton subscription? That's how you're going to get
money back, but you have to spend a lot, if
to fork over a lot of money in order to
get the perk pack. So we would just say be
careful before signing up for the super fancy cards, because
you know, using credit cards for spending you're already doing
(22:07):
in order to get rewarded. That's cool, but spending money
that you otherwise would not have spent in order to
reach that threshold. Like, well, I guess in order to
get one hundred bucks back, I need to spend five
hundred bucks over here. That doesn't make much sense unless
that product is really adding a lot to your life
and you would have paid it anyway. So find a
credit card that rewards you for how you spend, and
if it doesn't after a while, like down Grater, ditch
(22:29):
that card.
Speaker 2 (22:30):
Yeah, specifically I'm thinking of like one of those travel
cards was the City Strata card. Oh yeah, it's got
like a six hundred dollars annual fee. That's so much
money that I don't think that's one that Joel, that
you nor I are even considering.
Speaker 1 (22:42):
But I will say it, sim of those cards do
make sense for some people, especially for that's how you
spend your money, go for it.
Speaker 4 (22:48):
Not me.
Speaker 1 (22:48):
I think they're really marketed for my blood at like
dinks in big cities where you're into kind of the
finer things in life and you are doing more more
traveling and you're staying at those higher end hotels. If
that's already you, then those cards can make a lot
of sense. But if it's not, then it might be
more like square peg in a round hole.
Speaker 2 (23:05):
That's true, but Roy was talking about spending on groceries,
so he mentioned the American Express Blue Cash Preferred Card.
It is still a great card if you pay attention
to the particulars, to the details. And the first year
is even more beneficial because, yeah, you can avoid the
annual fee when you sign up. You can think of
the sign up bonus that you receive after that initial
(23:26):
spend as covering a few years of the annual fee
as well. See, I don't know, there's almost like a
feeling of getting.
Speaker 1 (23:32):
It for free for a few years, Yeah, but then
technically not waived. Well, what fifty dollars signup bonus? Typically
on that card, it's going to feel like it covers
a few.
Speaker 2 (23:40):
Years, but then once the annual fee kicks in, is
it going to be worth it? It will be if
you spend the six thousand dollars on groceries each year,
because that's three hundred and sixty dollars in rewards for
that category alone, which obviously far surpasses the annual fee.
But I do think it's a card that a bunch
of out of money listeners would benefit from. And essentially
(24:03):
there's a threshold and you need to be looking at
spending at least three thousand dollars on that card. Otherwise
you can just roll with the Blue Cash, the everyday
Blue Cash card that has no annual fee, and you're
getting about the same benefit from that card and anything
above that it's yeah, it's gravy on top.
Speaker 1 (24:19):
One thing you realized because you use that card regularly
is that you were getting close to that six thousand
dollars spending limit earlier in the year, and so there's
no extra benefit to you because it goes down to
what one percent after hitting that six thousand dollars cap
on groceries, So you got to switch the card you're using. Case, yeah,
it turns into a big old stinker of a card.
Speaker 2 (24:38):
After which that's something that snuck up on us because
we were used to not spending that much.
Speaker 1 (24:43):
This is pre pan time.
Speaker 2 (24:44):
So it's like when we could feed our family for one,
you know, one dollar a day per person, per meal
with a good old essentially, and I don't think we
were sounds like a little house on the paride, I know,
but we basically hit that spend amount roughly halfway through
the year now, so that's when we make the switch. Yeah,
So keep that in mind because if you continue to
use it getting one percent back like there's then you're
(25:05):
too loyal to that card. The only other category that
you'd want to use the blue Cash preferred on is
streaming because you get six percent back on streaming services too.
You and I met were not big streaming people, but
if you have multiple services, six percent.
Speaker 1 (25:20):
Back really into it. Pretty solid.
Speaker 2 (25:21):
I will say, even though we've hit the six percent
on the groceries, I still have that card tied to
ride share because it's three percent on trains it and
so all my lift in Uber. I know recently I
totally shot down Uber, but I'm I still like hopping
in an Uber X. I don't think is Uber black?
Is that the fancy car? So don't I just get
the cheap what's the big one? Because I had to
(25:42):
use the bigger I think is it uber x Is
that the xls uber XL for like a suburban or something.
Speaker 1 (25:48):
Yeah, I had to do that because for your trip
on my backpack track, there was like three dude backpacks
in there that were enormous stuff. And we're big. Burley
does sometimes kind of okay. But the big question that
Roy had was can you get the annual fee waived
on a credit card? And I'll tell you this, Roy,
It's harder than you might think. And that is because
most of the premium credit cards they're just not going
to budge on their annual fee. Right. They'll say, well,
(26:11):
if you're not getting enough value from the card, you
can just downgrade. And we've got this other card, like
you mentioned the not the blue Cash Preferred, but what's
it called me just the regular, the every day, every
day blue Cash. Okay, so you can they'll say, oh,
you're not getting enough value from this, well we can't
wave the annual fee, but we've got this other card
that's a good fit for you. And because of that,
like it's rare that they're going to say, oh, you
(26:33):
called in to ask sure, we'll do away with this
because they have another option for you, and it's a
really big part of the business model that these credit
card companies run. If they were just like waving annual
fees all the time, then the structure of these cards,
they wouldn't be able to offer some of the parks
that they offer. So exactly, you can always call them
try Sure. I don't see any shame in that game.
(26:53):
But how likely are you to succeed? We would say
minimal possibility. Yeah.
Speaker 2 (26:57):
Yeah, the term he used that you've mentioned at the
very beginning ethical fatigue.
Speaker 1 (27:02):
I don't see any.
Speaker 2 (27:02):
Ethical dilemma at all, and asking me like this, this
is business, and so they either have permission to grant
you the ninety five dollars, whether it's via credit or
just straight.
Speaker 1 (27:12):
Up to refund that fee.
Speaker 2 (27:14):
But I realized I've had my card for a while,
and I'm like, oh, I haven't I personally haven't even.
Speaker 1 (27:19):
Tried to wave that fee. So I actually reached out
to MX.
Speaker 2 (27:21):
This morning, and no luck, because exactly what you said,
They're essentially like, oh, so this is just how this works.
There's no amount of charisma, there is no amount of
justifiable evidence that I was able to provide. Really, that's
one of the other things you said. It's like you're
picturing it more like you're sitting down with like a
mom or pop kind of landlord of Like.
Speaker 1 (27:42):
But what if I do have a dog.
Speaker 2 (27:45):
But I take care of the lawn. Okay, Hey, there's
a conversation to be had there, right As opposed to Amex,
there's no it's either yes or no, and it doesn't.
I don't think it really matters how much you push,
because I push pretty dang hard and at the end
they're just like, appreciate you being a customer since twenty twelve.
But there's there's absolutely nothing that.
Speaker 1 (28:05):
We can do. It's gonna throw that polite to cline
your way in suggest another card if this one doesn't sure,
which is what they did. And oh man, two things.
Speaker 2 (28:11):
Okay, it's one thing to expect and to feel that
like you are entitled to a credit and that's not
what we're advocating for here.
Speaker 1 (28:19):
That's not what we're all about here on the show.
Would be not cool. Yeah.
Speaker 2 (28:22):
But secondly, I'm just realizing myself that when I had
talked about this card previously, about hitting that six thousand dollars.
I mentioned that I've switched to the City double Cash
card to get the at least get the two percent,
which is better than the one percent. Yeah, I need
to get a stinking everyday card because that's three percent
and it's free.
Speaker 1 (28:38):
That's true. What am I? What am I doing? I
could get one percent of the more percent if I'm
looking to optimize, and so that's true. That's gonna be
the new how to money.
Speaker 2 (28:46):
Matt grocery approach. I want to rock that every day.
I'm sorry, I'm going to rock the Blue Cash preferred
up until that six thousand. Then then I'm going to switch
over the three percent card, which is free, so there's
no additional charge there anyway to even consider using that
card for the rest of the year.
Speaker 1 (28:59):
Smart Boom slammed, duck, Yeah, I love it. Look at
you figuring this stuff out on the fly. I'm jack.
Speaker 4 (29:05):
Oh.
Speaker 1 (29:05):
I do want to highlight that the one case in
which it's actually much easier to get an annual fee
waived is if you serve in the military, and that's
there are federal regulations specifically on what credit cards are
allowed to charge active duty service members as far as
like interest rates, I think of the cap as like
six percent or something like that, which is much lower
than what Normanis are charged twenty two percent average. Yeah,
(29:29):
something like that. But a lot of card issuers don't
just limit the interest rate. They also wave annual fees
for active duty service members as well, even on some
of those super fancy elite cards, even though they aren't
required to. I think MX is actually one of the
better credit card companies at this so if you are
if you are an active duty service member, you might
(29:49):
want to strongly consider getting one of the nicer cards
that has like a seven hundred dollars annual fee, because
you get all the perks, but you don't get any
of that downside of having to fork go. We're a
big chuck of money to the credit card company every
year too. There you go. Let's hear now from a
listener who is having a tough time participating in one
of our favorite investing accounts.
Speaker 5 (30:11):
I met Jel. This is Chelsea and Franklin, Massachusetts. My
partner and I got married in April this year, and
we were both contributing to our roth Ira accounts. However,
now that we're married and PLANTI file our taxes jointly,
we've hit the income limit and can no longer contribute
to the roth We were told that we can open
a traditional IRA account and contribute there, so we did
(30:34):
do that, but it made me realize that that's still
technically after tax dollars that we're putting in, so I
wasn't sure if that's actually allowed. Also, since we've already
contributed into the roth IRA for the first part of
the year, what do we need to do with anything
with that money that we've already put in And if
(30:56):
the traditional Ira is not allowed, what do we do
with the money that we've already put in there?
Speaker 1 (31:03):
Thank you, Chelsea, congrats on getting married. Pump for you guys.
I see the sadness in your eyes that you weren't
invited to the wedding. I was just gonna say, you're
disappointed you weren't asked to officiate. Oh man, nobody wants
meet to officiate. They'll get that online certificate and do it.
If a listener asked you to.
Speaker 2 (31:20):
Oh man, I think I'm I would seriously consider it.
I think I would do because of the honor. Like
if if it's your most the most important day for
you and your partner. Even though this isn't necessarily like
a life goal of mine, I would feel obligated to like,
all right, time for Matt or Matt to step up
to the plate.
Speaker 1 (31:38):
I got lever you really want, Yeah, I'll do this
for you exactly. Yeah. Plus, if there's a good local
craft brewery, I'm like, all right, make it a two
for one. Or maybe hey, maybe they got good craft
beer at the reception afterwards, like some good homebrew. Yeah,
it'd be cool, But so other other head of money listeners.
If you're planning on getting married soon and you want
Matt there, just reach out.
Speaker 2 (31:58):
Or Matt, what if it's a dual efficient sort of
setup that we got go to on jouy.
Speaker 1 (32:03):
That'd be first time for everything. Let's go for it.
Though Okay, they would probably be like they would be
afraid of what would happen on the mic front because
they listen to the podcast and they're like.
Speaker 2 (32:12):
Well, I don't want that. But also at my wedding,
what weird off the cuff stuff? Will they say?
Speaker 1 (32:17):
You never know?
Speaker 2 (32:18):
I think I'd be too nervous. I would completely stick
to whatever was written on the certificate.
Speaker 1 (32:22):
I would think that potential listener should be more nervous
because I might go off script and you might not
like it. Let's talk about Roth's, Matt, because I'm glad
that Chelsea's been able to contribute to a ROTH recently.
And in some ways it sucks that you can't do
a direct ROTH contribution anymore. But it also means that
you're making good money, which is a great thing, so
(32:42):
I would Yeah, I don't feel too bad. It's a
good problem to have. Yeah, And it basically means that
you're making more than a quarter million dollars a year,
which is a killer combined salary. So it props to
you guys for that. I know, I take a ton
of hard work to get there, and it just makes
it so much easier to build wealth if you're diligent
on a high salary, Matt. That was one of the
things that talked about with Nick Medulie not too long ago.
(33:03):
He's like, that's the biggest problem for a lot of people, say,
just don't make enough money. And it's also true that
a lot of people earning six figures are living paycheck
to paycheck because they haven't really figured out the personal
finance basics. But Chelsea's in a great spot because she's
got both, she's got the personal finance basics down, and
they're making a killer income at the same time.
Speaker 2 (33:21):
Well as a happy marriage. I'm sure it's been nothing
but butterflies and rainbows up until this point, right Chelsea.
Speaker 1 (33:26):
Yeah, I can speak for her and say, yes, okay,
hopefully it.
Speaker 2 (33:30):
Has been so, Chelsea. One way that you might see
this is why they don't want us to officiate.
Speaker 1 (33:36):
Do you ever know what we'll say their wedding awkward thing?
Oh my gosh. Okay, you could qualify to directly contribute
to your ross by moving more of your money into
your workplace retirement accounts. Basically by upping let's say a
traditional four one K contribution, that right there could bring
your adjusted gross income below the roth IRA income limit threshold,
(33:59):
which would allow you to then funnel money into your
roth iras directly. That's worth considering. Yeah, it's like, if
you're really.
Speaker 2 (34:05):
Close, I certainly want to mention this because it only
works if you're within an earshot essentially of that limit,
and of course, if you are, you got to be
keen on investing more. Otherwise you should consider a backdoor
WROTH And we've got an article up on the slide
that will link to. But essentially, you are making a
non deductible contribution to your traditional ira and then you
(34:28):
are going to immediately roll that over into your wroth ira.
You're still going to be able to put seven thousand
dollars there into that roth, but you need to be
aware of the pro rata rule if you already have
money they're in a traditional ira. Basically, I hope it's
easier if you don't have a traditional and you're opening
it for the first time for this backdoor roth maneuver.
(34:51):
But if you already have one set up, basically there's
just a lot more tax keeping up with taxes and
what's already been in there and making.
Speaker 1 (35:00):
Sure it's taxed at the proper rate. If you've got
let's say six figures in the traditional ira, you're trying
to do the contribution to the non deductible traditional ira
and then do the rollover, you could be making a
big messy tax mistake.
Speaker 2 (35:13):
Yeah, and it doesn't even require a large amount of
money in the traditional even just like any money that's
in there is going to complicate it from a taxing perspective.
And so if that's the case, it's not a huge deal,
but that would be something, for instance, that you would
want to discuss with your CPA, with your accountant. It's
something that they come across fairly fairly frequently. I guess, well,
maybe it just depends on.
Speaker 1 (35:33):
Who you're working with. Well, my guess is that that
Chelsea also probably doesn't have that problem because she's been
prioritizing the wroth up until now. So if I were
venturing to guess, Matt, I would sing Chelsea probably doesn't
have Probably keeping it simple taking them in deduction, which
makes her ripe for the back door wrath makes it
a great idea because she's not going to mess with
that pro rout of rule. It's probably true. And then
(35:54):
what do you do if you've contributed to a wroth
but you're now ineligible, So basically you put the money
in and then like wait a second, not allowed to
do that. Well, that happens regularly. Two people just figure
out they're going to make more and they don't qualify
based on income requirements anymore. Well, the IRS wants you
to recharacterize the money you've already contributed, so you can
go in through your brokerage account. You can change the
(36:16):
wroth contribution to a traditional IRA contribution, and there's a
specific form you need to send to the IRS after
doing this, which is is a Form eighty six six
math eighty six. Because you've done this before exactly, Yeah,
and you could you could also choose to just withdraw
the contribution and the earnings before the tax filing deadline.
(36:36):
You'd only be taxed on the earnings plus a ten
percent penalty. It's likely not going to be a huge
amount because it's not been in there for very long. Yeah,
but it would still go against your goal of saving
for retirement and getting money into a roth ira and
you just.
Speaker 2 (36:49):
Basically it, Yeah, don't do that, just based on principle. Yeah,
even though it's a small amount, because you know, seven
whatever seven thousand has grown into from earlier this year,
and that's assuming a lump sum investment at the beginning
of the year. Although I guess if she's dollar cost averaging,
she would have seen even more growth because of where
the market tank to there in April. Regardless, you want
(37:10):
to make sure that you fill out that form eighty
six oh six, file that when you file your taxes
for twenty twenty five. Also, that's the same form. So
essentially what you're doing when you execute a backdoor wroth
IRA contribution, it's the same thing. It's essentially intentionally doing
the recharacterization. So yeah, you also have to file that
form eighty six oh six when you execute.
Speaker 1 (37:33):
A backdoor wrath IRA as.
Speaker 2 (37:35):
Well, so you can get familiar with that if that's
something that you think you're going to be participating in.
Speaker 1 (37:39):
You're talking about penalties, Joel.
Speaker 2 (37:41):
Right, so you've got the ten percent penalty you're taxed
on the earnings were you to just simply withdraw those contributions,
another penalty if this is something that you don't fix,
which does not sound like something that you're planning to do, Chelsea,
you're looking to nip this in the bud. But let's
just say you don't fix this, well, there is a
six percent annual tax or penalty that the IRS applies
(38:02):
to these ros con to these WROTH contributions that you
are making an error essentially, and so every year you
don't fix it, those penalties are going to accrue. So
it certainly behooves you to do this quickly. But moving forward,
getting money into a ROTH, it's still possible, and it's
a very brilliant thing to do to avoid all future
tax liability completely. You just got to jump through the
(38:25):
proper hoops in order to not run a foul of
the IRS.
Speaker 1 (38:28):
Wish it weren't so complex, Wish it weren't so annoying,
and that Hey, you're trying to do the right thing
and then you got to make things right with the
IRS on the back end. Wish it were simpler. It's not,
but that is the way you clear things up and
still get money into your roth iray.
Speaker 2 (38:42):
That's right, and it's really not that big of a deal.
The eighty six take it away with it though. Math
is your friend.
Speaker 1 (38:47):
Why can't everyone contribute to a roth ira? Matthew, That's
what I want to know. Yeah, well that would be
the Peter Teel approach in should he be eligible for
a roth iray? But somehow he found away? He found away.
I mean, it's like water, water always finds. Just from
a theoretical standpoint, it does seem like just the fact
that we cap contributions amount contribution amounts, it's seven thousand
(39:09):
per person that despite your income, like why not? Why not?
And because of the availability the backdoor roth ira two,
the fact that high income owners can still get money
into a roth.
Speaker 2 (39:19):
It does feel different than like a like a solo
for one K, where it's like you can put like
tens of thousands of dollars into this thing.
Speaker 1 (39:26):
Oh yeah, that's not what we're talking about. Yeah, just
seven thousand dollars.
Speaker 2 (39:29):
But all right, we got more to get to. We've
got asked our Facebook questions of the week. Buddy, we're
gonna talk about the classic conundrum of which credit card
balances to pay off first.
Speaker 1 (39:38):
We'll get to that more right after this. We're back.
We've got a classic personal finance question to get to
here in just a second. It's classic. But first let's
give it the Facebook question of the week. This one
comes from Matthew What is everyone's experience with the the
(40:00):
best rental car company when traveling? I found some that
are only one hundred dollars for the week, which sounds
incredibly cheap, but others that are four hundred dollars, so
big disparity is what he's saying. The ones that are
expensive are the ones with the best reviews, while the
dirt cheap ones have horrible reviews. Yeah, I'd be questioning
whether or not the one hundred dollars a week when
it comes with like tires and like what other fee?
(40:20):
What additional fees are there going to be?
Speaker 2 (40:21):
Ye that they're going to force you to cough up
in order to actually leave the lot with the car.
Speaker 3 (40:26):
You know.
Speaker 1 (40:26):
It just sprung to my mind was the time I
bought the knockoff Atlanta United jersey oh yeah yeah, and
it was like off color to get what you pay
for his nice material. The stripes were totally like the
wrong size, yeah and color. And it was one of
those things where I was like, put this jerseys twenty
bucks and the official ones through m molest A like
eighty bucks, and I don't I don't want to drop
that kind of money and uh yeah, but I looked
(40:49):
ridiculous wearing it around. And so yeah, you do at times,
many times get what you pay for. And those reviews
I think are evidence. And so some of these, some
of these second rate carnal companies matt are indeed awful
most of the time.
Speaker 2 (41:01):
Okay, So I so speaking of reviews, this is an
to my detriment. I ignored some reviews at a local
car rental place and they had it's one that you
I'll say it was Budget, and everyone's heard of Budget, right,
it's a name brand, it's fairly reputable. But this particular
location had abysmal reviews, and I said, you know what,
I'm no, no, I've got the deal. They've got the
(41:23):
deal going on there. I'm gonna pounce on the opportunity
here to save a ton of money. And guess what,
they of course, did not have the vehicle that I
had reserved. It led to a mass like an hour's
long headache, which.
Speaker 1 (41:36):
Let's be honest, that is also a car rental thing
in particular, where they don't have the stupid They know
how to take the reservation, they just don't know how
to keep the well.
Speaker 2 (41:44):
I will say their parent company, AVIS, which I have
subsequently rented from, was fantastic and so I don't know
if this was just an instance of feeling burned in
a given situation, but because that, guess what, I'm much
less likely to rent for them, even though there are
plenty of folks who would probably swear by budget.
Speaker 1 (42:04):
And they're like, no, man, I love budget. Problem there
might go to Yeah, the guy that works there were buds.
Speaker 2 (42:09):
I send him a Christmas card every year. You know
he's like part of the family comes over on Sunday.
Speaker 1 (42:13):
It's weird. Don't do that.
Speaker 2 (42:15):
Hey, if if that's your buddy, if y'all got to
know each other, it doesn't matter where it is that
you originally met. So all that said, I ignored the reviews.
Reviews are really important.
Speaker 1 (42:25):
Yeah, and uh yeah, going with one of the more
reputable names, I think, yeah, well, especially I think what
Matthew's getting at is there are like these really subpar
non name brands, second tier, third tier, almost just crappy companies.
That and the reviews are so horrible because and I've
been I've done the same thing. I've rented from one
of these places feels a little more fly by night. Yeah.
(42:45):
At operation often the location is further off the airport,
it's harder to get to, and the people working there
don't seem to care nearly as much. And maybe there
are additional fees that you weren't told about ahead of
time at the booking, and so the deal is not
even as good as you thought it was going to be.
So I would just say, think about all those things,
read their reviews thoroughly. Don't just look at the star rating.
(43:07):
If the savings are substantial and you've got flexible travel,
and you're keen to give it a go because you're
that kind of person. You like, you're the experimenter, you
do you, but those reviews might be enough to freak
you out and prevent you from giving it a go
with some of the non name brand car rental company.
Speaker 2 (43:23):
Especially when you consider when it is that you typically
rent a vehicle, which is when you're at of town,
you don't typically have other options, right, and you're typically
on a tighter time schedule, You've got reservations, you've got
different Oh, our entry for the museum is between these hours,
like every minute counts when you're on vacation. Typically, the
(43:44):
way we Americans schedule our vacation tool right like, it's
so there's like zero margin, which honestly that should be
referendum on how it is that we relax and how
we vacate our homes. But that being said, I am
now more at the point to where I'm to pay
a little bit more in order to ensure that I'm
not going to be stuck there a without a vehicle
(44:06):
that works for our party, our group, but be just
waiting in lines too, man Like that's the other part
of it, like I don't want to spend like an
out And I've had this happen before too. I'm thinking
about one time I flew into Detroit and not supposed
to make a certain dinner by like a certain time,
and I stood there in line for like forty to
fifty minutes. One person working the counter. I swear it
(44:27):
was that one person that was also like going to
get the cars too, Like it.
Speaker 1 (44:29):
Wasn't like, oh, yeah, the keys are also washing the cars.
Oh my gosh.
Speaker 2 (44:32):
So that's not the kind of scenario that I want
to find myself in. That being said, you don't have
to pay off the nose in order to ensure that
you're getting a good company. I know, well you you
used Costco recently.
Speaker 1 (44:43):
I feel like Costco travel rocks. It's so good. It's
super simple, the grid format that they display. If you're
a Costco member, it's a great place to turn. They've
got like five different rental car companies that they'll the
list and depending on the make and model of the
car or basically you know, are you going for a
compact or are you going for a pickup truck? Are
you going for a And they'll they'll tell you, well, hey,
which these which one offers the best deal? Right now?
(45:04):
That that's a great way to shop. But then I
think the other most important way to save on rental
cars Matt, that most people don't think about. Most people
are like, they book it, they forget about it, and
then they show up and they get the car that
they booked. Well, if you reshop regularly before your trip,
you could see substantial savings. So if like you manually checking, now,
are you doing auto slash? So auto slash is awesome
(45:27):
site to help you with that, but I'm I like
to I don't know, I'm weird. I like to manually
check back in. So I checked back in yesterday on
a car rental that I've got upcoming, and I was like,
the gas electric disparity was significant. Well it's gone down,
and so I'm like, great, I think I'm actually going
to get a gas vehicle. Just I don't know that
EV's gonna quite do what I needed to do sadly
on this one.
Speaker 2 (45:46):
Yeah, you don't want to get stuck in the situation. Yeah,
that I felt as if a few weeks ago where
they're like, hey, it's actually you're gonna you're gonna deal
with some range range anxiety.
Speaker 1 (45:56):
Yeah, but I was like, great, well, this is my
perfect chance for you booking, and guess what, I'll probably
reshop that two more times before the actual trip. So classic, Joel.
It's the amount you can save by doing that, which really,
you know, plugging back in those dates and checking the
pricing again takes all of two minutes. Yeah, and so
that's the best way to save instead of going with
(46:16):
the super duper low cost off brand not going to
be good or nice to you choice, just reshop instead.
That's the way you'll save more and feel more confident. Totally.
Speaker 2 (46:26):
Yeah, don't forget about Touro as well. You might be
able to find a deal over there by running from
an individual as opposed to a company.
Speaker 5 (46:32):
Joe.
Speaker 2 (46:32):
Let's take another one from an anonymous poster. I'm trying
to pay off some credit card debt. I've got a
couple with larger balances and a couple smaller ones. Is
it better to pay off one to two cards or
split the money to bring down all the balances? This
is a debt snowball question right here. Yes, whether or
not this listener or poster should subscribe to that as
(46:53):
opposed to the debt avalanche, right, And we'll describe what
that means. But first off, I mean it's really a
question of versus your brain, and the math would say
to pay the minimum balance on each card except for
the card with the highest interest rate. You know, you
pay as much as you possibly can on that one
particular card, and you get rid of that particular debt
(47:15):
in short order. And then once you've.
Speaker 1 (47:17):
Eradicated the debt from that first card, you move on
to the one with the next highest interest rate. That's
the best tactic from a math perspective, right, That computes Yeah,
because gonna you're gonna be paying it off while paying
the least amount of interest overall. And that that really
is the debt avalanche approach. But when we're talking about
(47:38):
the snowball we're talking about it's the best motivator for
your brain, which is to pay off the card with
the lowest balance more quickly, no matter what the interest
rate disparity is, and then getting rid of a whole
debt from your life more quickly. That just kind of
speeds up the process or makes you more excited about
and motivated to pay off debt more quickly. So that's yeah,
(48:00):
is it better to go the math route or the
more psychologically advantageous route. I lean towards psychologically advantageous, but
it also kind of depends.
Speaker 2 (48:10):
It depends on the situation. Yeah, Like a lot of times,
the criticism is that, like, well, if you're paying attention,
paying attention to math, you wouldn't have started spending on
your credit cards to begin with. But I do think
there are some There are certain scenarios where it's like, oh, yeah,
over a decade and all of a sudden, you look
down and you got like four cards in your wallet
with balances on all of them, and then you've sort of, oh,
(48:30):
the scales have fallen from my eyes, and I realized
that I got to figure some things out here. And
in a scenario like that, I could see taking the
more mathematical, which I'll say, the mathematical is the brain
approach versus the snowball, which feels more like a heart,
like an emotional response.
Speaker 1 (48:45):
Brain and math kind of probably go together, and heart
and emotion more go together.
Speaker 2 (48:48):
Yeah, yeah, or like following your heart or your stomach,
you know, like you feel it. But I think that
whether or not you choose the avalanche or the snowball.
That comes down to your individual situation. Because also practically speaking,
if we're talking about a bunch of different credit cards,
I think the snowball it certainly can make this the
most sense. And that's mostly because the disparity between the
(49:09):
interest rates is unlikely to be that big.
Speaker 1 (49:11):
But if we broaden out a little bit and are
talking about additional forms of debt. Let's say we're talking
about a.
Speaker 2 (49:18):
Five percent car loan that you are also trying to
pay off in addition to these credit cards, well, dang,
even if it's the smallest amount, I would rather you
say that one until after you've paid off all of
the other credit cards first. But yeah, I think given
the specifics to this anonymous poster, I would most likely
go with a snowball because that's probably going to lead
(49:38):
to the most emotionally positive, fulfilling response, and that reinforcement matters.
Speaker 1 (49:44):
And you're right, like the it's probably somewhere between nineteen
and twenty two percent each credit card is roughly in
the same range. Shall pay off the lowest balance first,
get that win under your belt, and then keep moving
forward and pay off the next lowest balance. You could
also consider something a zero percent interest rate credit card
to transfer some of that debt to make it less disadvantageous.
(50:05):
But whether that makes sense or not, it just really
depends on where your head's at as well, because if
you're one of those extremely motivated individuals, it can speed
up your process, but if not, it can lead to
more credit card debt and a worse overall financial picture
for yourself. You know, some people might suggest to you
debt consolidation. Hey, it's going to help you pay off
your debt more quickly. This is really the way, well,
you know, coming up with a plan and working your
(50:26):
butt off to pay off that credit card debt quickly.
I think that's likely your best path to take instead
of just trying to move debts around. Actually write down
a plan and stick to it. Put it on the
bathroom mirror matth. There's the undebt dot. It can help
you come up with that plan to figure out, hey,
how can I cut my spending for a little while
so that I can actually pay off this debt credit
card debt in even a smaller timeframe. I think those
(50:49):
are the kind of tweaks you're going to want to
make so that you can get rid of it quickly,
whereas trying to shuffle things around. It sounds good and
it seems like it's going to be the best way forward,
but it's a lot of people in even more trouble.
Speaker 2 (51:01):
That's right, buddy. Let's touch on the beer that you
and I enjoyed during our episode today. You and I
split a fat Pug, which this is an oatmeal milk.
Speaker 1 (51:10):
Stout, not just a milk stout, that's true. Yeah, it's
got oatmeal in it, which is healthy for you, which
is why we drink these beers. Is good for your heart,
good for our heart, good for our bodies, just like cheerios,
good for your good for your heart. That's right. So
I didn't I didn't love this beer. I thought it
was kind of mad. Really yeah, I thought it was
kind of bland. I was like, where's the flavor? You'll
anymore more punch? Yeah? Oh sorry.
Speaker 2 (51:32):
This isn't like Cobra Kai or some of these other
massive barrel age milk stouts with like Serrano Pepper's a
very accessible stout, I guess from people who are like
just trying to figure out whether or not they like them.
It's not too offensive or overpowering from a flavor standpoint, Yeah, so,
but from a craft.
Speaker 1 (51:50):
Beer standpoint, you're kind of looking for a little bit more.
I like a little more. It was toasty, it was roasty,
had all those flavors going on.
Speaker 2 (51:55):
It wasn't overly bitter though, so sometimes some of those stouts,
like a Russian Imperial, they're just really over the top
from up sock you in the face. This can be
kind of bitter and charring too. Yeah, but with this
being a milk stout, it's got that lactose sweetness going on,
which personally I love. And I've actually been my typical
coffee Kate and I have both been up in the
(52:15):
amount of milk we're drinking and we're like because we
realize we're.
Speaker 1 (52:19):
Like, man, we're not We like never drink milk.
Speaker 2 (52:21):
And then we always we're always trying to get the
kids to drink their milk because we're like, hey, we
want your bones to be all strong and your teeth
to be healthy, and they're like, why do you drink
your milk?
Speaker 1 (52:29):
And kain't I looked at each other. We're like, oh, yeah,
we don't really take your own medicine. I know.
Speaker 2 (52:33):
So I was like, hey, that's a good point actually,
and so we started brewing slightly less coffee in the morning.
She's just been like, don't talk back, to get back
to eating your eggs. But it reminds me of my
coffee now, which tends to be a bit more milky,
which I'm all for because we're also adding less actual
granulated sugar, because there is a sweetness yea, in milk,
there's a you know that lactose.
Speaker 1 (52:54):
When I put my milk just a little bit, or
in my coffee, just a little bit of milk. Yeah,
good to go. I'm like, I'm putting like at least
four ounces in there.
Speaker 4 (53:00):
No.
Speaker 1 (53:00):
People are like, well, that's not even coffee.
Speaker 2 (53:02):
Yeah, that's not It's like that's probably equivalent to a
latte or something like that. That's too much if I'm.
Speaker 1 (53:06):
Looking, dude, well all the coffee peris from. Yeah, you
are a coffee purist. I don't understand.
Speaker 2 (53:11):
I see it as a different drink. Now, it's not
the same thing. I'm not This is not an espresso shot.
This isn't enjoying a finely crafted cortato something like that,
even a flat white.
Speaker 1 (53:20):
No, I see this as like a coffee drink. It's
not coffee, okay, it's a coffee flavored drink, Okay, that
also has a lot of milk in it. I want
to make sure my bones are st I'm judging you
right now, put silently. I'm not going to say anything
out loud.
Speaker 2 (53:33):
Well, I'm sure there's plenty of other I got a
feeling I'm not the only one. I bet there's a
lot of folks out there who add a healthy serving
a full milk to their coffee.
Speaker 1 (53:41):
Okay, please reach out to Matt, support him. He can
use it. Right now. I need the support because Joel
isn't doing it all right. Thanks so much for listening.
We'll put show notes up for this episode on our
website have to money dot com, including links to some
of the stuff we mentioned today. There's even a snowball
versus avalanche calculator that we can stick up their math
that can help people see the difference between that choice
(54:04):
you can make from a dollars and cents perspective. So
you know, all right? Until next time, Best Friends Out,
Best Friends Out.
Hosts And Creators
Joel Larsgaard
Matthew Altmix
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.