Ask HTM - Break-Even Bank Switch, Doubling Down on a 457b, & Financing an ADU for Extra Cash #1042 - How to Money

Episode Transcript
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Speaker 1 (00:00):
Welcome to How to Money. I'm Joel, I am Matt,
and today we're answering your listener questions.

Speaker 2 (00:24):
You know, a buddy, We've got listener questions to get
to some very specific.

Speaker 1 (00:27):
Questions that we're going to answer.

Speaker 2 (00:29):
These are our case studies. We talk about personal finance
very broadly. Actually we get personal when it comes to
different things that we're doing. But there's a greater variety
in the different types of topics we're able to cover
when we get to hear from all of you wonderful
listeners out there.

Speaker 1 (00:44):
Yeah, I appreciate this betificity of some of these questions,
and it dives into the details that sometimes we're covering
the main points, we're.

Speaker 2 (00:51):
Kind of glassing over some of the particulars. Yes, and
I see to dive in deep sometimes I totally agree.
For instance, a listener is wondering if he should be
jumping to a higher interest savings rate bank, if it's
gonna be worth it. Turns out the amount of money
that he's got on hand. It pertains to the answer
that we'll give. We're gonna talk about four three bes,
four fifty sevens. These are the less traditional retirement accounts

(01:14):
that we're gonna get to some.

Speaker 1 (01:15):
People have access to two major retirement accounts.

Speaker 2 (01:18):
Which well, he is insane more than that as well.
There these are accounts that we don't talk much about,
but I think I'm want to make it a point
for us to cover these a bit more often. We're
also gonna hear from a listener who's looking to build
an ADU, an accessory dwelling unit as to whether or
not they should finance it. We'll dive into those particulars

(01:38):
as well.

Speaker 1 (01:39):
Yeah, I man, I was super close to building an
ADU in my backyard back in the day. Remember there
was a company around the corner from us who had
started a business kind of like the old Seers robut catalogs,
and they said, we've got three types of agues we build.
Which one do you want?

Speaker 3 (01:52):
Man?

Speaker 1 (01:53):
Price? Yeah, and I loved.

Speaker 2 (01:55):
They all had super suburban, preppy names. It's like, are
you going with the Worthington?

Speaker 1 (02:02):
I forget what the what they're actually called. The Kirkwood
I think was might everyone. But they were very cool looking. Yeah,
they were cool looking. And I remember when they launched
the prices were pretty solid and I was like, oh man,
that could make sense as an investment stamp from an
investment standpoint, but then at prices continue to go up
on those eighty US over the years, I starting to
imagine what they cost now they started gaining steam. Yeah,

(02:22):
so I can't wait to tackle that question a little
bit because aid to use or something near and dear
to my heart, especially as we need more housing supply
in this country. Totally. But you have a frugler cheap
you wanted to start off with.

Speaker 2 (02:31):
Yeah, yeah, okay, So is it frugal or cheap to
transplant seedlings little plants that you might see on the
side of the road, maybe from public lands.

Speaker 1 (02:41):
What do you think are these marijuana plants? Matt, Because
I don't okay, don't want you to be trafficking in illicit activity.

Speaker 2 (02:48):
Legal in some states, but is it federally still still federally?

Speaker 1 (02:51):
Yeah?

Speaker 2 (02:51):
What kind of weird time do we live in that
you kind of have to like it's like this in
between it's like the it's like you're a limbo, you know,
and the states have like you're a purgatory. You're in
heaven or not hell? Like well, like where do you
end up landing here?

Speaker 1 (03:03):
The federal government is essentially saying states, we're just going
to close our eyes, let you do what you want
to do. And then but then those small businesses have
to deal with the fact that banks don't. But now
we're getting off on a tangent y.

Speaker 2 (03:12):
Yeah, okay, so in case as far as we'll get
into yeah, marijuana right policy, which.

Speaker 1 (03:17):
Could change, but okay, okay, So tell me more about
what you're doing, and so like the nature of your
indekay so.

Speaker 2 (03:23):
Specifically, so near a house, there is a quote unquote trail.

Speaker 1 (03:28):
A lot of people will.

Speaker 2 (03:29):
Walk, run you run on it, run on it a
good bit. A lot of folks will bike on it.
I bike on it to.

Speaker 1 (03:35):
Our little studio here, our office.

Speaker 2 (03:39):
And a lot of the property adjoining or like right
next to that trail is public land, like it's right
of way property. And I don't know, every few months,
you see the city folks will come by and they've
got their truck and they're hey, I hate it because
they're always they always park up on the actual path
and they block in. I'm like, hey, man, there's people
who want to run, you know, and bike, but I

(04:00):
guess it's better than out in.

Speaker 1 (04:00):
The road and whatever. It's no other place for the part.

Speaker 2 (04:03):
Not gonna complain, I guess. But they just pull out
the weedy deers, the mowers and they're just like chopping
it down. But what if you see a plant and
you're like, wait a minute, I want that in my yard.
Do you think it's okay to This is different than
like pulling something out of somebody else's yard.

Speaker 1 (04:18):
Yeah, of course.

Speaker 2 (04:18):
This kind of reminds me of like me, I used
to pick a fig off of a local a nearby,
because that's wise, they fell on the ground with the waist. Yeah,
an ultralocal scenario here. No, I would eat a fig
on my lunch break, as I would walk around the block,
and I would only pick off one, but it seemed
like they're totally going to waste in a similar way.
That's how I at least see some of these seedlings. Yeah, yeah,

(04:41):
what do you think?

Speaker 1 (04:41):
I don't know what the legal ramifications can or would be.
I just can't imagine one. Anybody's gonna care if they
see you doing it legally.

Speaker 2 (04:49):
This isn't a legal question. This is a do you
think it's frugal or cheap?

Speaker 1 (04:52):
I'm gonna say proogole, I'm gonna say it's fine. Yeah, yeah,
I don't feel bad about it if I don't do it,
because I don't care about like interesting plants the way
you do.

Speaker 2 (05:01):
But well, that's the thing. So it's starting to cool down.
The temperatures are dropping, and this is planting season, Like
if you are into gardening getting plants in your yard,
it's not as hot, so it's easier on the plants,
like the roots. I think they overwinter, they get established
that way. Come spring, these things are ready to go. Man,
you know, but when it comes to purchasing plants, they

(05:23):
could be expensive. Some of the ones that Kate's looking at,
I'm like, wait, how much does that cost for a
five gallon?

Speaker 1 (05:28):
That's a lot of money?

Speaker 2 (05:29):
Like can we not just continue to like find some
of these cool plants on the side of the road here,
And here's one of my arguments. I'm glad you think
it's frugal, first of all, But secondly, you know I'm
doing it anyway.

Speaker 1 (05:42):
I guess even if I was, like, whoa bro also
do it.

Speaker 2 (05:46):
One of the reasons is because most people, like I'm
not pulling up green giants right like that, plants that
most people are looking for, like these are quote unquote
native species native plants, which most people call weeds, which
is why they're just whacked down. I or in Kate
in particular, tends to like these native plants because they're
more interesting looking, like they're just cool looking. So it

(06:07):
provides a nice variety in your garden. You're able to
maintain some of the some of the local flora. Is
that it, yeah, the local plants. But then also it's
a huge money saver if we're able to be like, oh,
let's just pop that over into the yard, get that
going to when otherwise it would just either get sprayed
with round up or get weeded down to you know,
not existing anymore.

Speaker 1 (06:27):
You're saving one of these poor little plants.

Speaker 2 (06:30):
From I'm not only saving myselfh money, but I am
preserving the local plant scene.

Speaker 1 (06:36):
I don't know what you would call what you call it,
like captain planet, but for your neighborhood.

Speaker 2 (06:40):
Yeah, for the different varieties of plants. Okay, you know
it's not the typical plants that you're picking up at
home depot. So there are, by the way, there are
local nurseries that special eyes in native plants.

Speaker 1 (06:53):
But they're they're few and far between them. Those probably
costs even more because they there is like there there
aren't as many of those they're taking care of verseries
in existence. Ryeah, that's true. Okay, So I think it's plants, man,
go for it and for it. Related I'm curious to
see if some listeners disagree, if they send you an
email and they're.

Speaker 2 (07:10):
Like, I would love to know.

Speaker 1 (07:12):
Yeah, their their their thoughts.

Speaker 2 (07:13):
On a related note, what would you do if you
knew of a local florist that was doing something similar
more so maybe like clipping taking clippings and then putting
them in uh bouquets, selling them at local coffee shops.

Speaker 1 (07:27):
Perhaps, and the free flowers stuff like that. I think
making money on it feels different than planning it on
your own yard. I agree.

Speaker 2 (07:33):
Yeah, this is a conversation Kate and I've had because
of the fact that it's more of a business. It
feels like you're taking a public good and then making
a profit off of it, as opposed to I guess
the way I'm looking at it's like sort of like
you're saying more of a preservation of the thing. But
uh yeah, I'm not gonna put anybody on a blaster.

Speaker 1 (07:50):
But that's not that's something that you know who you are,
that's something that I have noticed. Nice, all right, good times.
All right, let's let's move on. If you have a
money question, we'd love to hear from you, go to
how to money dot com, slash ask, or just record
your question on the Voicemato app of your phone. Email
it over to us. Hopefully we can take it next
week on the show. Matt, let's get to a question. Specifically,

(08:11):
let's talk about HSA's health, save the accounts. We haven't
really covered that in a bit.

Speaker 4 (08:15):
Hello, Joel and Matt. This is David from Harrisonburg, Virginia.
Recently started listening to the show and it's been super helpful,
so thank you. I have two questions. I have an
employer sponsored HSA plan through Health Equity. They have some
higher fees and maybe not quite the funds that I
would like to invest in. They don't have the greatest

(08:36):
selection of ETF so I was wondering if it would
make sense to maybe do an account through Fidelity and
transfer those HSA dollars into Fidelity every month to get
some better fund options. I recently started maxing out our
family HSA plan last year, so the account is growing
quickly and just want to make sure I'm doing the

(08:57):
best version of that. My other question is on HIL
savings account. I am currently with ALLY and I'm getting
three point five percent APY, but I'm seeing c IT
banks rates are at like four percent APY right now,
and I do have about two and twenty k in

(09:20):
there due to selling a rental home last month. Probably
won't be there long term, but I was wondering if
it's worth the switch to a better API savings rate
in the long run. Would love your thoughts.

Speaker 1 (09:30):
Thank you all.

Speaker 2 (09:31):
Right, David, Thank you for being a part of the
HTM nation.

Speaker 1 (09:35):
Just kidding the we're grafting you or the family. We're
not gonna go to a nation.

Speaker 2 (09:41):
Yeah, let's go with family or sounds a little too brash.

Speaker 1 (09:44):
Oh oh, I know.

Speaker 2 (09:46):
I was making a joke of the fact that we
said that a few weeks ago. I don't think it
took and I'm not very interested in propagating. Oh that's
there's another point term I like. So you said grafting,
I said propagate. Now, David, thank you for being a
hod of Money listener. We will get to to your
savings account question, but first let's tackle the HSA, the
health savings account, and I think this. I think there

(10:08):
are more folks out there who might have this question
than we're hearing about. Because there are a slew of
different HSA providers, and not all of them are created.

Speaker 1 (10:17):
Equal HSA providers.

Speaker 2 (10:19):
They often offer limited or pretty crummy aka expensive investment options.
So trying to get your health savings account dollars over
to Fidelity, I like it, man.

Speaker 1 (10:32):
I think that points to the fact that.

Speaker 2 (10:33):
You're thinking like you're thinking next level when it comes
to what it is that you can do with your
health savings account.

Speaker 1 (10:38):
Not just your streets ahead as some might say. Not
some stuff from the show community. You remember that wait
streets ahead instead of like two steps out of the game,
your streets ahead? Oh I miss that? What's season? Kids said?
I don't know.

Speaker 2 (10:49):
Okay, A lot of folks think of HSA's as how
they pay for medical expenses. But of course you're thinking
next level. You're not spending those dollars. You are investing
those dollars as well.

Speaker 1 (11:00):
And there are other.

Speaker 2 (11:02):
Solid options, but Fidelity it remains the best, I think
for many reasons. By the way, so here's a stat
only eighteen percent of people actually invest inside of their HSA,
So you are in the minority to think of your
health savings account as a retirement account.

Speaker 1 (11:17):
And some people can't because they use it as a
way to pay for current health Care Act, which.

Speaker 2 (11:21):
I totally expenses, that's how it was originally created.

Speaker 1 (11:24):
Yeah, but if you can get past that and have
enough savings to pay for current your health care expenses
out of money that you have on hand, and you
can invest those HSA dollars, it's just it becomes a
super powerful retirement account that most people don't see as
a powerful retirement account, and we want to kind of
change that narrative, right, and David is buying into that,
which I think is really really cool. So yeah, HSA

(11:46):
incredible account to grow tax free wealth if you are
so inclined, and if you're intentional in the fewer fees
that you're paying, that means like the more your money
is working for you, which is part of the reason, Matt,
you and I mostly dislike fees.

Speaker 4 (11:59):
Right.

Speaker 1 (12:00):
We want people to go away from banks to charge
high fees like the big banks, which we'll get to
in just a second, but especially given like the HSA
contribution limits and how there are more fee heavy providers
in the HSA world than there are in almost any
other investing accounts that you could participate in. It can
have even more I think of an impact on the

(12:20):
ability of those dollars to compound. So transferring your HSA
money it's helping you to avoid potential nasty fees. There
might be like a monthly or a quarterly fee or
something like that that your HSA provider charges. And because
you're putting, you know, a few thousand dollars, not like
twenty thousand dollars into this, they have like an outsize,
like I said, outside impact, So and then going somewhere

(12:41):
else too might give you not just fewer fees, but
also better low cost investment choices. So you're gonna want
to initiate what's called a trustee to trustee transfer in
order to get those dollars from your current HSA provider
over to fidelity. It's pretty easy. And the other thing is,
which I think most people don't realize, Matt, you can
do this as often as you'd like, no limit, So

(13:02):
you could say, oh, I'm gonna do this every couple
of weeks instead of doing it once a year or
something like that if you're one of those hyper optimizers
who wants to get that money into that new ahsay
as quickly as humanly possible.

Speaker 2 (13:14):
Honestly, it makes me think of a few months ago.
I was looking to move some money over to a
donor advised fund Joel, and I thought, you know who
makes it easy to do to do that kind of thing, Robinhood.
So I hopped over to robin Hood because I remember
it specifically. This is I guess last year, a couple
of years ago, doing that with some crypto they had
recently linked and said, hey, you can instantly transfer over.

Speaker 1 (13:34):
I hurd on that too, and I appreciate that. It
was awesome. The link between robin Hood and Daffy is
strong though. It's it is, it.

Speaker 2 (13:39):
Is, and so I was I incorrectly assumed that the
same was true of other assets. Sadly it is not
the case. It is a one hundred dollars A cats
the A Cat's transfer, which is dude, it's such. It's
so frustrating because so the A, I don't know, you
even know what it stands for the whole A Cat's thing,
but that the first letter the A stands for automated,

(14:00):
which means, wait a minute, it seems like this is
something that is automatic, and so you should not be
charging me one hundred dollars to make a transfer.

Speaker 1 (14:10):
So all that being said, be like charging one hundred
bucks for an Ah.

Speaker 2 (14:13):
Yeah, it was so dumb and I was like, Nope,
not going to do that, So I just hopped over
to Vanguard and transferred funds ETF from over there instead.
But what I'm pointing to is the fact that one
hundred dollars, let's say, for you, like it could be
something it could be like the equivalent of one percent.
But if it's every time that you make a transfer,
like let's say on a monthly basis, well, all of

(14:35):
a sudden, instead of being a one percent overall fee
that you're eating, it quickly ramps up the more often
that you do it. And so this is an instance
where like sometimes.

Speaker 1 (14:45):
We'll say, well, don't let the don't let the tail
wag the dog, but this.

Speaker 2 (14:47):
Is an instance to where the fee actually has a
pretty significant impact on how much you're going to be
able to invest. So you want to know what that
fee amount is before you initiate this transfer.

Speaker 1 (14:57):
If the outgoing transfer, like you says twenty bucks. Well,
it might be worth doing that once a year to
move many many thousands of dollars over, but it's probably
not worth doing that once a month to move many
hundreds of dollars. No, I wouldn't do it because that's
a much bigger percentage, right of the overall assets a
twenty bucks.

Speaker 2 (15:11):
Given the maximums for family HSA contribution, I think I'd
be willing to do that a few times a year,
you know, But more than that it starts feeling expensive.
Less than that feels less optimized from an investing standpoint.

Speaker 1 (15:21):
Yeah, so that's why I would land it tough to
find that balance, but it's yeah, it's a shame. I
guess that there aren't better HSA options widely available if
you do have fidelity, although I think those because of
all the tax benefits the fees that are that many
of these HSA providers charge, Well, it's still worth contributing
to an HSA because the tax benefits are so stinking significant.

(15:43):
So don't avoid the AHSA because of those, but find
ways to minimize the destruction that those fees are doing
to your dollars. Sure, all right, let's talk about save
these accounts and David's question there, I think, you know,
some people are just way too dialed into interest rates
and kind of parsing the difference between banks and well,
this one's offering three and a half and this one's
offering three and a quarter, So I'm moving. We definitely

(16:06):
don't want people being with banking with the big banks
because they're getting paid point zero one percent. It doesn't
matter how high rates go. Like the big banks just
aren't budging. They're not going to pay anything reasonable on
your money.

Speaker 2 (16:17):
So uh yeah, and point zero one is not an exaggeration. No,
it's like it's that's actually real, that's actually that's very accurate.

Speaker 1 (16:24):
Like I looked up specifically some of those accounts. My
go is highest point oh five, you.

Speaker 2 (16:28):
Know, specifically Bank of America. It's their Platinum Honors account
that goes up to point.

Speaker 1 (16:34):
Zero four percent of man, which is like.

Speaker 2 (16:36):
The dumbest thing. Platinum Honors, Like what is this? It's
like magnum cop in money or something like that. They're
trying to make it sound so special. Yeah that uh oh,
if you if you are Platinum Honors, you are among
the elite. And you are because you have to jump
through so many hoops. You have to have like a
ton of money with them and satisfy a bunch of
other requirements and oh yeah, yeah, you get four times

(16:57):
what the rest of the customers get. But it's still
only point zero four pick, it's.

Speaker 1 (17:01):
Still one hundred x less than what's the best banks
that we like actually want to pay. So yeah, doing
business with the big banks you do at your own peril.
It's a complete waste of your time and you're not
maximizing the return that you can get on your savings.
And so you know, the gap between the big banks
and our favorite online banks is massive right as we're
outlining here. But the gap between a great online bank

(17:21):
and the very best one is a lot smaller. So
that is true rates that are changing all the time. Normally,
we just want you to do business with an online
bank that's in the top tier. But Matt, this question
is pointing out David says, hey, I got a lot
of cash on hand right now, and he's got so
much money in savings that if you, let's say, had

(17:44):
that cash shitting in a bank account for a whole
year and you got just an extra half a percent
of a return, we could be talking about four figures, right,
we could be talking about a lot of money. So
I think for people with ten thousand dollars in savings,
which is admirable, that's great. That's enough for most people.
I don't think there mistakes when it comes to interest.

(18:05):
You don't need to stress between three and three and
a half percent. But if you've got over six you know,
six figures, if you've got two hundred grand in savings, yeah,
you probably do want to sweat those details. Yeah.

Speaker 2 (18:14):
I see this being as like the impetus to get
him to consider moving to a slightly better bank and
then just trying it out and seeing if the services
that they offer are worth the additional quote unquote hassle, right,
because a lot of times once you get switched over,
there's no additional hassle. But all banks are, they're not
created equally, and they do offer different they all have
different strengths specifically, I.

Speaker 1 (18:35):
Will I'm with you, David, I'm literally with ally as well.

Speaker 2 (18:39):
And I know they don't pay the highest rate, but
I've been so happy with their customer service and the
different services the overall rate that they are willing to
pay that I have stuck with them over the years, so.

Speaker 1 (18:50):
Free perks or the user interface can make up for
a site lower fee, like ALLY has the.

Speaker 2 (18:57):
Pockets and the polished man.

Speaker 1 (18:58):
It's so good.

Speaker 2 (18:59):
Yeah, they got the non CDs, so that's that's something
to consider. But well, he mentioned c I T and
that is a great option. They certainly remain one of
our favorites. They consistently pay the absolute top tier rates.
But I don't think there's any harm in staying with ALLY.
If you've been like ultra happy with them, maybe maybe
you do want to consider one of those one of

(19:20):
those CDs, one of the short term CDs until you
know what it is that you want to do with
that cash from the sale of that rental property. You know,
six months to bump up a full percentage point in
your return could certainly make sense. And then in addition
to that, one of the advantages that you are realizing
is that you are able to protect that cash from
potential interest rate declines. But be sure to check out

(19:43):
Betterment as well. Their savings account has offered really good
rates recently, with higher rates for new customers in particular.
In addition to that, I would say, don't forget. And
it sounds like this is what you're doing. But don't
forget that it sounds like you might have a tax bill.
Do given the fact that this the rental property, So
make sure you set that money aside and that this
isn't something that you just blow through. But I don't

(20:06):
think Dave is going to quickly burn through twour and
twenty Cagel.

Speaker 1 (20:09):
Doesn't sound like it. No, All right, Matt, We got
more questions to get to, including what do you do
when you have multiple workplace retirement accounts open to you?
Which one do you prioritize. We'll talk about that and
more right after this.

Speaker 2 (20:27):
All right, buddy, we are back from the break. We're
going to talk about the high cost of healthcare here
in a minute, but before that, let's hear from a
listener now who is weighing some of the different menu
options that she has before her when it comes to
where it is she should invest her retirement dollars.

Speaker 5 (20:44):
Him Att Angel, I'm Terry from northern California and I
have a question about tax advantage retirement accounts. It's some background.
I'm in money Gear seven. I've been working in the
public sector for about nineteen years. I expect it in
my career there in another fifteen years or so, I
should have a pretty solid pension coming to me. Right now,
the plan is for the pension to be the bulk
of my retirement income, but I'll supplement that with Social

(21:06):
Security and personal savings. I'm also currently maxing out my
roth IRA, So getting to my actual question. Through my employer,
I have access to a four or three B and
a four to fifty seven through Fidelity. I've been putting
money in the four h three B, but I'm wondering
if i should switch that to the four fifty seven.
I'm not sure what the advantage is for one or

(21:27):
the other. Thanks for any advice.

Speaker 1 (21:29):
Oh like this question, Matt and I love that Terry
is in money Gear number seven, just thanks to hear
from people who are very far along in their financial journey.
We try to offer advice for people who are all
along the spectrum there, but it's nice to see someone
have had a ton of success in the first couple
of years, our first couple of decades really of being
an investor.

Speaker 2 (21:48):
Yeah, Money Gear seven, that's like cruising altitude. Yeah, when
it comes to the money gear.

Speaker 1 (21:52):
Tons of choices, lots of the world's your oyster you
may unbuckle and go to the bathroom. That's right. Yeah,
it's nice that she has a pension too.

Speaker 2 (21:58):
May even have a drink if you like this player
the Yeah, I.

Speaker 1 (22:00):
Guess you're right. Yeah, you can pay that extra for
the drink. He used to be like on the house.
Not anymore, right, So.

Speaker 2 (22:05):
This isn't the seventies.

Speaker 1 (22:06):
Last time I was on a Southwest flight, it was like,
what was a cocktail? Maybe ten dollars? Do I ever sports? No,
of course I don't for that. I don't even sports
for the nice seats. So but I do like to
if I get well. And sorry if I'm gonna liment
on this, but Southwest changing their boarding structure soon, I'm
gonna miss being able to get on, you know, in
that mid A group and still finding an exit row seat.

(22:27):
That's gonna be a bummer.

Speaker 2 (22:28):
So now the trick is, and I've seen you do this,
is that when you're buried in B or at in
the C group, you just look to the middle seat
in the very front of the plane because those seats
are going to be taken by somebody. You can either
go to the very back and sit in the middle seats, right, Oh,
you take the middle seat. Oh man, we're giving away
our secrets. Well, the other thing that people do, you
immediately take the middle seat right there at the front

(22:50):
of the plane. Do you got plenty of leg room?

Speaker 1 (22:51):
There's all these ways that people create put a menacing
look on their face or or chain cantort their body
structure to prevent you from taking the middle seat next
to them up front row. Oh I do that make
it look like I've got gas? I believe it.

Speaker 2 (23:06):
I learned from you. I learned it from the best.

Speaker 1 (23:08):
Last time I went on the plane, I mean I
saw a guy like slumped over both seats and then
on the other side of the aisle, the guy literally
had his leg up as he was reading a book
to just to create this sort of environment that says
you really don't want to sit here next to me.
You got to ask me, I think twice, yeah, And
I was like, that's okay. I'm going to run past
this because I think ei there's an next or real
seat there. But if there had been, I would have

(23:30):
sat in their lap just to mess with them.

Speaker 2 (23:31):
Oh yeah, why not?

Speaker 1 (23:32):
Yeah, that's my style. All right, let's get to Terry's question. Uh,
Terry you're not resting on your laurels here, which is
good because you're like, hey, I'm crushing it, but I
want to do even more your max and the wrath
you want to save it invest even more, which is great.
And it makes me think of our conversation Matt with
Dan Otter, which was episode eight fifty one. Dan is
doing the Lord's work when it comes to helping teach

(23:54):
three B why that's right? So org right, yeah, or
so if you were a teacher, it's a nonprofit and
you want to figure out what's going on with your
retirement accounts. The expert in that space is Dan, and
his website is a treasure trove of helpful information. So,
and one of the things he got to in that
conversation was just that intentional teachers can retire incredibly rich,

(24:16):
which is not something you typically think about with teachers,
but as a teacher, yes you can if you are
if you're thoughtful and so, yeah, your efforts in addition
to this pension are going to increase your options significantly
over time. Terry, you really might retire with more money
than people who were like big wig executives at companies
and stuff like that because of your dedication and the

(24:39):
high percentage of your income that you're saving investment. True,
that's true.

Speaker 2 (24:42):
Yeah, it's cool that Terry has got access to both
of these accounts, the four to three B the four
to fifty seven. You could actually contribute to both if
you wanted to save, if you wanted to invest even more,
which is a pretty cool perk that some super savers
take advantage of, and that would allow you to sock
away almost fifty thousand dollars in a year in addition
to your other investments, like you're your roth Ira, which

(25:04):
would be a ton of money. But I would say
the first one to pick is the one that offers
a match, which is most likely going to be your
four to three B.

Speaker 1 (25:13):
Four to three b's act more like a four to
one K.

Speaker 2 (25:17):
And just in case folks that't know, we're never fans
of leaving money on the table. I'm gonna reach for everything,
even if it's a plant on the side of the road,
and I'm just like, I don't even know if I'm
allowed to take that, but it seems like it's seems
like it's a free plant, fair game. This is free
money that would be left on the table. Warry to
not take advantage of that match if that is something
that is offered to you. So that was the first

(25:39):
thing I would do is make sure that you are
aware of that. But if you don't have one of those,
then I would say, what is it past? Uh, don't stop, pasco,
I haven't played monopoly in forever?

Speaker 1 (25:51):
What's the term? Yeah, don't stop or collect two hundred dollars?
I don't know, don't play? Yeah, it's been a minute. Anyway,
Well you if you go to jail, it's yeah, you
don't you pa, but you don't collick the two hundred dollars?
What are you going to jail? There?

Speaker 2 (26:02):
You go, yeah, do that thing and go straight to
the four to fifty seven.

Speaker 1 (26:05):
Sure, So what you're saying is match first in the
four or three B, if you know, invests until you're
maxing that out, and then revert to the four to
fifty seven. And there's a reason that the four to
fifty seven B is the next ideal choice before you
sock more money into the four h three B. And
that's one because she said it's with Fidelity, which is
one of our favorite low cost companies. So if the

(26:25):
account is with a low cost brokerage that is like
two thumbs up extra plus and then you know, I
mean fees are going to essentially be non existent. You're
gonna have a lot of low cost investment choices. But
the other reason is because one major difference between the
two accounts, which is the early withdrawal penalty, and so
the four oh three B has one. The four to
fifty seven doesn't. Yeah, four to three B again more

(26:46):
like a four to one K. Four fifty seven feels
a bit more like a brokerage again, this kind of
like loosey goosey four h three B equivalent that doesn't
have some of the same draconian rules about early access
and so being able to take money out of that
account early without the IRS hassling you in any way
about those withdraws is a clutch feature. And with like

(27:08):
the insane effort that you're putting into investing for your future,
you really might choose to retire early like you want.
You might want this money before the age of fifty
nine and a half. And in the four to three
B and the four to one K, you're talking about
paying tax and a ten percent penalty. But in the
four to fifty seven you are avoiding that percent penalty.
You still pay the tax, and so you want to

(27:30):
be wise with how much you're taking out in the
given year. But yeah, being able to tap those funds
without the penalty before the age of fifty nine and
a half is pretty sick. It's amazing.

Speaker 2 (27:38):
Yeah, there's another cool feature as well that the four
to fifty seven has, which is the three year like
double feature. I don't it doesn't really have a name,
but it should totally give it a brand, cool brand, Yeah,
the three year double. But it makes it even more
appealing than the four to three B. And the way
it works is that if you haven't maxed out contributions

(27:58):
over the prior three years, you can contribute.

Speaker 1 (28:02):
Quite a bit more than the.

Speaker 2 (28:03):
Twenty three dollars max that the account currently offers. And
this is given though, that you are in the three
years preceding retirement age. And so basically, if you like
under allocated contributions to the four to fifty seven B
over the past few years, you're getting closer to retirement
and you are keen to toss gobs of cash and
you can supercharge the amount that you sawck in there

(28:24):
beyond the standard catchup contribution that most retirement accounts allow for.
So it's got the it's got the typical ketchup contributions
that the the four to three B also has, but
beyond that, it's got this uh, this little it feels
like a boost like what were the racing games where
you hit the nas Was this that what it's called?

Speaker 1 (28:43):
Like the gas It's like the mushroom on Mario Kart. Yeah, yeah, yeah,
okay exactly.

Speaker 2 (28:47):
Oh, you know, like the mushrooms. There's three of them,
so you got you got three year years to make
this thing out of three years.

Speaker 1 (28:52):
Although I was we look into the details because there's
the ketchup contribution and then there's also the three year
rule that specifically applies to four to fifty sevens and
you can't do both, but you could take advantage of
whichever one is larger for you. You can't do them
both in the same year. Yeah, exactly, so know that.
But that's what one of the other things that makes
the four to fifty seven be a pretty cool account

(29:13):
that is again different from some of the accounts that
most people have access to. And yeah, being able to
utilize both means you can man toss in a lot
more pre tax dollars, reducing your AGI, allowing you to
pay a low tax bill now, giving a lot of
flexibility into the future as well. So yeah, doing kind

(29:34):
of the both and approach that we just outlined, I
think is going to lead to your ability to save
and invest a lot of money and retire early if
that's your desire. You're contributing to the roth ra on
top of that. And so I guess just the last
piece of advice, Matt, which we try to always incorporate
as we're you know, thinking about the how much you
can stick away into retirement accounts, and some people are like, oh, man,

(29:56):
that's great. I make one hundred grand, Let me invest
sixty five thousand dollars of that this year. Wait, am
I going to be eating like essentially rice and beans
and toast all the time. Just make sure you're not
forgetting to enjoy your life while you're simultaneously saving for
the future. That's true. It is easy to think, especially
as you get nerdy into this man, all these levers
I can pull, and some of them are well worth pulling,

(30:17):
and you just want to make sure you don't pull
so many levers that you are feeling destitute in the
here and now, as you say, for that future that
you so look forward to. Absolutely. Yeah.

Speaker 2 (30:27):
For all the folks out there though, who have access
to a four to fifty seven. So one of the
reasons we don't talk about it as much is because
it's it is limited to government workers, to police officers,
to firefighters. But like, man, if you are if you
fall within that category, I would most definitely be looking
to the four to fifty seven.

Speaker 1 (30:43):
Because of the flexibility. It's so great that there is.

Speaker 2 (30:47):
I feel like sometimes it gets misconstrued as well, that like, oh, well,
I'm not going to be an early retiree.

Speaker 1 (30:52):
Well it's not.

Speaker 2 (30:54):
That makes it sound like you're going to bag work
altogether as opposed to finding something else that you might
want to move towards. Right, it's not just about abandoning something,
but it's about being excited about what you might be
moving into. And quote unquote retirement doesn't have to mean
you not working. It simply means you leaving that employer.
That's right, so you can you can draw them those
funds quote unquote early while you're building a business or something.

Speaker 1 (31:17):
Yeah.

Speaker 2 (31:17):
Yeah, like you don't have to be older in order
to pull that off as well. So it's why it
makes it very attractive, especially for quote unquote early retirees.

Speaker 1 (31:25):
But Joel, let's.

Speaker 2 (31:26):
Hear from another listener who's looking to take on the
best social Security strategy. He's looking to stretch those dollars
into some of those later years.

Speaker 3 (31:35):
Hi, Joel and Matt, this is Ron from Columbus, Ohio.
I've been a follow up your podcast for many years
and appreciate the solid financial guidance that the two of
you provide. My question is in regards to when to
take Social Security. My wife and I are in our
early sixties and well into money gear number seven. My
wife is a retired teacher and I am semi retired

(31:58):
but not yet drawing off of my retirement portfolio. I've
long held to the opinion that delaying taking Social Security
until age sixty seven or even seventy was the best
option in order to maximize the monthly payout. However, I've
recently questioned that for a couple of reasons. First, if

(32:19):
I start drawing now, even at a reduced rate, I
am able to both draw from Social Security for more
years and avoid drawing funds from my IRA. Thus, allowing
my IRA funds to continue to grow while also collecting
Social Security payments for more years. Second, and possibly more importantly,

(32:42):
with the elimination of the government pension offset, my wife
could start drawing social Security as a spouse at fifty
percent of my rate in the next year. Add to
that the fact that with the political pendulum, who knows
whether her benefit will always be available, and the fact
that Social Security benefits in general could be reduced in

(33:04):
the future to protect it from going bankrupt. Given those factors,
I'm strongly considering taking social Security earlier than I had
previously planned. I'm curious to hear your thoughts. Thanks, and
keep up the great work, Matt.

Speaker 1 (33:18):
First off, I just want to say congrats Torana being
semi retired in his sixties. I think it's a great
way to live. Like, I think that's what I want
to be in my sixties, Like I want to be
working some but not.

Speaker 2 (33:29):
I want to be semi retired now.

Speaker 4 (33:32):
Yeah.

Speaker 2 (33:33):
I mean, but we need to keep Workingtrol. We need
to keep getting the content out there for all the
how the money listeners.

Speaker 1 (33:37):
That's right, Yeah, And there's something beautiful about being able
to produce this show to help people. That's the whole
the whole goal behind it, right, is to really help
people maximize the dollars that are put in their hands
to their ability to build wealth and their ability to
live their best.

Speaker 2 (33:53):
Life and plus rounds like Matt, get off your butt.
He's like, dude, I put in twenty more years than U.

Speaker 1 (33:58):
Man. Yeah, take like, talk to me in two decades.
That's right, that's right, back off. The cool thing though
about that is you get to keep some income heading
your way. He's still working some You get to enjoy
the benefits that work can provide. I think that relational
aspect is important, having you know, coworkers and a missional
aspect to your life, and especially if work does provide
that for you, being able to work part time can

(34:20):
be the best of both worlds for people in the
phase of their lives. Not everyone has that option, but
Ron certainly does because of so much the hard work
that he's put in over the years. And so yeah,
I just think for a lot of people maybe that
should be on their radar is trying to go from
not fifty hours a week to zero, but maybe this
kind of sliding scale downward where you're like I'm going
to work. You know, I was working forty to fifty hours.

(34:41):
Now I'm working like twenty to thirty, and then maybe
I don't know, I'm working ten to twenty and you
kind of slowly back off instead of like going from
all in to all out.

Speaker 2 (34:49):
Yeah, going from fifty to zero, like you're slamming on
the brakes. I like the coast, which is why I mean,
I feel like that's why the coast fire. So it
works on so many different levels, but for Run.

Speaker 1 (35:00):
It also bodes well for Ron. By the way, bringing
in some money means okay, cool, I can let those
assets continue to grow exactly.

Speaker 2 (35:06):
We'll probably find some way to get to that here.
But his specific question, though, it's tough because there are
a lot of different moving parts. Because like, yes, taking
Social Security earlier is going to mean that you can
allow your investment portfolio to keep growing.

Speaker 1 (35:20):
That's great.

Speaker 2 (35:21):
But you could also take the opposite approach, and this
is where we like to talk through all the different
scenarios here. Ron, you could begin to tap some of
your investments for income now in order to guarantee yourself
a higher Social Security payment down the line. What you
decide comes down at least in part to your goals
and to your risk tolerance. But what we have to

(35:42):
recognize here is that you'd be selling either ats or
nearish all time highs in the market, which is pretty
attractive from a timing standpoint, from a do I need
this money, whichs like, well, I don't know if I
need it, but it is at all time highs. And
then by drawing on that portfolio some that would get
to yourself a check that is eight percent larger each

(36:02):
and every year going forward, which is guaranteed.

Speaker 1 (36:05):
Yeah.

Speaker 2 (36:05):
Right, So this is I don't know, This is kind
of contrary to what it is that Ron was proposing,
but I think it's worth considering.

Speaker 1 (36:11):
It is worth considering, I agree, because you got to
think there's trade offs either way, and one trade off
is I get the check now, I let my investments grow,
and the reverse is true, which is what you're pointing into,
is where if you tap investments now, you're letting your
social Security check grow. And there's a reality that one
way or the other, and it's really hard to decipher
which one is going to be the most effective way forward,

(36:34):
and so much of that is like, well, what's the
marketing invested in?

Speaker 3 (36:38):
Right?

Speaker 1 (36:38):
And and yeah, how is the market going to perform
compared to the guaranteed return I get by delaying social Security?
And I think part of this comes down to as well,
like how good a shape are you in? Ron are
you like still, are you going on runs? Are you
doing kayaking trips? Like what kind of physical shape?

Speaker 3 (36:54):
Yeah?

Speaker 2 (36:55):
Yeah, no, not financial shape?

Speaker 1 (36:56):
Right? If you no financial shape, he's doing great. So
now we're talking about well, yeah, what sort of longevity
do you expect for yourself? That's obviously a tough question.
We could all get hit by a bus tomorrow. Like
there's just I almost got hit by a taxi by
a cap a bright orange.

Speaker 2 (37:11):
Taxi makes it sound like we live in New York
City or something like that, which we don't.

Speaker 1 (37:15):
But you got to watch.

Speaker 2 (37:16):
Out for those when you're out there running.

Speaker 1 (37:17):
Buddy, I could tell the guy I felt bad, but
I felt bad too because he almost held me, so
almost the end of my life.

Speaker 2 (37:22):
Yeah, do you wear were you wearing like all beige
where you like blended bunding into the sidewalk or anything,
So Emily's gonna start making you run with like a
neon green neon green vest I don't know, maybe she's like,
because at this point, she's like, Dude, the life insurance
not worth it. I just want you to do all
the things that you've promised to do for the next.

Speaker 1 (37:39):
Life insurance might be more valuable than me sticking around.
But true, true, those are the kind of things that
happen though, And you're like, I mean, I did not
see my life flash before my eyes or anything like that,
but it does remind you that we can roll up
under the hood. It wasn't like this. I've done that
before on my bike, gotten hit by when I was
on my bike in downtown.

Speaker 2 (37:57):
Buddy, I don't know. I'm starting to think this might
be a you problem, not everybody else problem.

Speaker 1 (38:01):
Yeah, the fact that this is multiple No, he totally
blew through that stop sign that was okay, not cool.

Speaker 2 (38:07):
That's his fault. Then, yeah, sorry to victim.

Speaker 1 (38:09):
Shame that. What's the term? Is that? The term? I think? So,
don't blame me. It's not your fault, it's not my fault. Nope, okay.
So but and it's obviously tough to know this, but
if you're likely, if you think you're likely to live
into your late eighties or nineties, right, the effect of
waiting to draw on social Security, it becomes more pronounced.
And so, you know, one tactic that often can make
sense is for the lower earning spouse to take social

(38:31):
Security early, the higher earning spouse to wait until later,
right sixty seven or ideally even seventy, like you mentioned Ron.
And part of the reason this strategy makes so much
sense is because it also guarantees a higher survival benefit
for this surviving spouse, right who who continues to live
after the other partner passes away. So yeah, it's just

(38:52):
kind of like general social security strategy claiming strategy that
people take. And there's a reason it makes sense if
you're thoughtful of about it, that taking that approach can
can really maximize benefits. It means, hey, we get in
one check at least claiming that early, we're waiting for
quite a while to claim the other one, and you're
kind of covering both bases. Yeah, yeah, I do think so.

Speaker 2 (39:14):
Something he didn't mention was whether or not there are
kids in the picture and whether or not we're talking
about passing well down from a legacy standpoint, because guess what,
I guess what, you can't pass down.

Speaker 1 (39:24):
To your kids once you dies. Social Security, and so
that like that's the check.

Speaker 2 (39:28):
In the on the side of like, hey, maybe it's
worth taking social Security now letting your portfolio cook a
little bit longer, because guess because you can pass four one.

Speaker 1 (39:37):
K's, roth IRA's, these are all things that you can
pass down to your kids.

Speaker 2 (39:40):
And so, yeah, certainly not necessary or I don't think
it should be expected in most cases. But that's something else.
If you've got more than enough on hand and you're
just looking to try to find a way to maximize
what it is to maximize returns essentially and to figure
out what it is that you're looking to pass on,
I think that's a consideration. Yeah, as well, making of
maximizing returns. I think that's one of the reasons too

(40:02):
that people decide to punt into delay taking Social Security
because they're looking for those guaranteed chill returns as opposed
to staying invested in the S and P where there's
a whole lot more volatility, because that's you know, that's
how you're going to maximize your return.

Speaker 1 (40:19):
There's like historical average returns, and then there's like what
are the returns I'm actually going to see and the
risk free nature of those social Security returns of waiting
for those that's ap peoint.

Speaker 2 (40:31):
Yeah, exactly. Yeah, it's not this predictable or straightforward. But
if you look at the past couple of years and
you're like, all right, we're looking at twenty five percent years,
if you're looking at okay, what should the next two
years look like? You know, I'm not going to do
the math in my head, but it would take some
sour years to get us to a ten percent eight
to ten per annualized return on average. So that's again

(40:55):
going back to sort of the timing element of possibly
pulling some that money out of the market.

Speaker 1 (41:01):
Now, let's cover the Social Security Fairness Act, which Ron
alluded to, and this is kind of a sort of
niche thing, but it's going to really help millions of
retirees because, as a teacher who was not covered by
Social Security in her job, your wife would have had
her social Security benefits reduced because of that pension offset

(41:23):
that you mentioned. That is no longer the case thanks
to legislation earlier this year which kind of uncomplicated social
Security for people in that camp and also means they're
going to receive larger checks and so just a big
chunk of teachers and government workers are now going to
receive bigger Social Security checks than they previously would have
received because of the way the law existed prior to

(41:46):
this year. And this was also retroactive to twenty twenty four,
so some people were going to get back pay in
some of those benefits, and this is I think good
news for those people. Obviously, the specifics can vary wildly though,
so especially with these changes, it's just one more really
crucial factor to think through. I would suggest paying fifty
bucks for maximize my Social Security. It's a website you

(42:08):
can go to. We'll link to it in the show
notes on how to money dot com. But you're gonna get,
you know, specifics in the differences in annual and lifetime
benefit for different claiming strategies that you could take, and
they show data on you mentioned future benefit cuts. How
is that going to impact my claiming strategy? And you know,
I think there's a solid reason to consider claiming sooner.

(42:30):
There's just a lot of evidence in that direction, but
there's also other evidence saying that waiting could be your
best bet. It's so it's so hard to tell you
ron without sitting down and looking at everything, and that's
actually what this software is kind of has the ability
to do. So I would say fifty bucks to have
your data specifically laid out and easy to understand format,

(42:51):
helping you make a choice with all the different inputs
kind of on a screen right in front of you.
I think makes a lot of sense because that fifty
bucks as well spent, could really be the difference between
tens of thousands of dollars in your pocket over you know,
the decades to come. That's right.

Speaker 2 (43:08):
And one of the reasons we're mentioning the site too
is it's just well run. This isn't a government website.
It's a site that was started by a professor of
economics from Boston University, which is a part of the
reason why I think it works so well.

Speaker 1 (43:21):
And yeah, there's such a crummy calculators that are free
that you can access or they're they're decent for really
chill scenarios, but a decent because they're free.

Speaker 2 (43:29):
But this is like a great Yeah, this is a
great resource that's totally worth checking out.

Speaker 1 (43:34):
For saying frugal or cheap, it's frugal to drop the
fifty bucks here given what ron's the question Ron's asking
and what's going on with his particulars.

Speaker 2 (43:41):
Absolutely, but buddy, we got more to get to. We're
going to hear from a listener who is asking about
some of the different affordable options at least on the
healthcare front.

Speaker 1 (43:50):
We'll get to that and more right after this. Matt's
time to get to the Facebook question of the week.
This one comes from Gael and she says, preparing to
retire in two years and I want to get more income.
I have a lot of equity in my house. I'm
thinking of a helock loan for a small amount to

(44:13):
build out in a tou. The helock payments would be
made from the ADU the accessory dwelling unit income that
I would get and I estimate a five year or
less payback. What are your thoughts?

Speaker 2 (44:23):
All right? First of all, I like how Gayel spills
her name ga e l. Yeah that's a rad spelling,
but execonly it's got to be like Celtic and roots, right. Well,
are you thinking like Gaelic, like a Gaelic Ale?

Speaker 1 (44:34):
Yeah, I don't know.

Speaker 2 (44:35):
I think it might just be Gaale And she was thinking,
what's a different way of spelling it. I don't know.
I think it's cool that she is looking to retire
in two years and then she's looking.

Speaker 1 (44:45):
Ahead a little bit.

Speaker 2 (44:46):
She's trying to forecast, trying to plan for some cash flow,
and I think having a little rental property could be
a potential game changer. The fact that she's looking ahead
allows her to pursue this while she still has some income.
I think that that is pretty wise. And eighty US
in particular. You mentioned this at the beginning, Joel, but
they have been growing in popularity around the country. They're

(45:07):
certainly booming in California due to the loosening of building restrictions.
I think was it maybe the late teens they loosened
the laws, and I think they exploded in the early
early twenty twenty.

Speaker 1 (45:19):
Something like a quarter of new units going up in
California are eighty US because those are like some of
the easiest units to build in a state that's really
hard to build in. I love it.

Speaker 2 (45:29):
And if you have some extra land that you already own, Gale,
I think building an extra dwelling unit here can offer
some income while also increasing the value of that property
as well. Not to mention, you're talking about doing this
in retirement, which is pretty cool because it kind of
I think it allows you to transition to taking on
sort of this additional project. And as to whether or

(45:50):
not you look to do a short term rental, if
you're looking for it to be more of a hands
on thing, I think you could do airbnb right like
the ability to list this unit, maximize reiss.

Speaker 1 (46:00):
Yes, it's going to.

Speaker 2 (46:01):
Require a little more hands on, maybe a little more
cleaning or at least even managing other folks who are
going to be doing that work for you. But what's
so cool is that you can dial it back and
you can say, you know what, that's actually, that's a
little bit too much from a lifestyle standpoint, that's not
what I was picturing my retirement years to look like.
And then all of a sudden, you get you a
long term renner in there where you aren't maximizing the

(46:21):
returns quite as much, but it's a lot.

Speaker 1 (46:23):
A lot easier. Or be like our landlord and get
a podcaster in their torrential space. Maybe that's the best.

Speaker 2 (46:30):
I think that's the best because we don't spend nights here.
I know, we don't gride our bikes up, we don't
clog the driveway yeah, we're very conscientious. We're a very
green podcast. Even the last standpoint high.

Speaker 1 (46:39):
Five their child as I walk by, and I'm like,
what's up man, and catch up and I.

Speaker 2 (46:43):
Just try not to get bit by the dog. No
that too, you get barked at, right, Yeah? Oh yeah, okay,
so very barkie dog. I always play it cool.

Speaker 1 (46:51):
He's not that barkie. He's kind of barkie. I think
you're right though. I mean, I think this is one
of those things where it maybe you could even provide
a little bit of joy sometimes, like running your own
little rental property, especially when you don't have a day job.
It's like cool, it gives me something to focus on
and think about. And I'm kind of, like we referenced earlier,
you're not going from one hundred down to zero all

(47:13):
the way. But should you take out a loan? I
think I think probably I'm okay with this. I mean,
especially since you said you'd be able to pay it
off in five years or less. That is a really
good sign saving up cash would be ideal. That's a
tall task. I mean, there's a reason most people take
out a mortgage when they're buying a home, and this
is kind of similar, right that you are taking out

(47:35):
money from the value of your home to build something
that is going to produce returns for many years to come.
So if you take out a he lock, I think
paying it off in short order is ideal. And then
you know, run the numbers to make sure they're they're
actually realistic. So how much is it actually going to
cost you to build this adu in your backyard? Make
sure you have proper information, and then you're not just

(47:58):
making assumptions and to keep drawing down on that helock
because maybe you didn't sufficiently plan for the actual cost.
So get a firm number in hand before you sign off,
because you might be like, oh, I think it'll take
me five years, but then you get the hard numbers
and you're like, actually it's gonna take like eight and
a half.

Speaker 2 (48:13):
I didn't realize ten years. Yeah, and all of a
sudden doesn't feel quiet as smart of a move. It
becomes a different proposition. So yeah, Also, what's it likely
to rent for? Do your due diligence on that, because
if you're making rosy prognostications, it could come back to bite.

Speaker 1 (48:28):
You gotta be realistic.

Speaker 2 (48:29):
Yeah, And I really like the timeframe of shooting for
five years or less. I wouldn't bank on this, but
the fact that helock rates could decline in the near
future I think with that in mind, that causes me
to think that, you know, I think a helock could
make a whole lot of sense as long as you
have thought through what it is at Joel. What you
just mentioned right like that, you're being realistic, that you're

(48:51):
not counting on the rosiest projections as to what your
return might be. Let's hear from another anonymous Facebook group member,
and she wrote, how is everyone affording health care? I'm
considering leaving my job to become a stay at home mom,
but my family's insurance has always been through my employer.
My husband has a small business and we are a

(49:11):
family of four with plans to continue growing. If you
are self employed or a business owner, what are you
doing health share plans? I would appreciate if anyone is
able to share actual costs and experiences.

Speaker 1 (49:23):
Joel, what you think man? What's going on with health care? Man?
It's such a pain in the butt, especially for small
business owners, but it's becoming even more of a pain
for people that are traditionally employed as well. And so
it's one of those problems that's been brewing kind of
slowly and then rapidly. It's both at the same time.
And so it's just this really problematic price increases over

(49:45):
the past decades, and then when you have a ten
percent price wing in a single given year, it just
feels like an extra punch to the gut. And so, yeah,
for listeners who have coverage through their job, they might
be more insulated, but employers are still passing on increased
cost at higher rates. And so yeah, small business owners
who are at a particular disadvantage. If your income is solid,

(50:06):
prices on healthcare dot gov can just be stratospheric. They
can be laughable. You might look that up and be like,
how in the world is my family going to afford
twenty seven thousand dollars in premiums for our family. That's
just that's before we go see the doctor, right, that's
just the monthly premium amount total for a given year,
and the coverage might be bare bones even with an
astounding monthly cost. So you have to be really careful

(50:29):
to thread this needle because if you don't thread it well,
then you could be talking about a huge percentage of
your income going just to you know, pay the healthcare piper.
That's true.

Speaker 2 (50:40):
Yeah, so the answer really might be health sharing, which
is what our family has done. Ours currently costs three
hundred and seventy five dollars a month. There's a recent
bump to health care health sharing ministries.

Speaker 1 (50:53):
Our bumpus pretty significant this year.

Speaker 2 (50:55):
Yeah, they put like a special press release out where
they're just like explaining the fact that, like, hey, costs
gone up, this is why we're having to Essentially, they
technically can't call them premiums because it's not technically insurance.
And so that's one of the things you have to
keep in mind when it comes to health sharing is
that it is technically not insurance. It's not federally regulated.
It is health sharing.

Speaker 1 (51:14):
But so many people are migrating there because the cost
of actual insurance it's so much better, made it impossible
to afford, and so there's better over at health sharing. Well, yeah,
if I'm going to save you know, eighty five percent
on the premium equivalent of a health sharing plan, then.

Speaker 2 (51:27):
I think the risk I think some folks are Yeah,
so literally we're paying three seventy five which you might
be hearing and thinking, oh my goodness, you are paying
three seventy five a month for a family of six.

Speaker 1 (51:37):
Yes, that is exactly what we're doing.

Speaker 2 (51:39):
That being said, our family household share, which is code
for deductible, is twelve thousand dollars, so we're at one
of the higher amounts. We're treating it more like a
high deductible healthcare plan.

Speaker 1 (51:52):
On top of that, there is no copay, right, so
when you go see the doctor, you don't pay twenty
five dollars. You're paying out a pocket with thirty five
dollars or something like that, which is what most people
with traditional health insurance pay.

Speaker 2 (52:03):
So we pay the full freight. Get used to going
to the doctor and paying a lot more.

Speaker 1 (52:07):
And talking about what you're paying ahead of time.

Speaker 2 (52:09):
Yeah, yeah, in order to negotiate that more foodable rate.
But this poster was looking for specifics, and so I
was because I'm a nerd and I've got all my
expenses on excel.

Speaker 1 (52:19):
I look back at our.

Speaker 2 (52:20):
Medical out of pocket costs aside from our health sharing
premiums that we pay, and over the past decade, we
have averaged two hundred and eighty nine dollars a month
in out of pocket medical costs so anywhere from so
that that includes paying for medication or paying for a
doctor's visit, a physical, different things like that. And of

(52:42):
course there's a wide spectrum of years, and so I
wanted to share this too because she mentioned that they're
looking at still growing their family. That included a year
years when we added a couple kids, So that was
on average over the past ten years when we had
two more kids.

Speaker 1 (53:00):
I imagine we're your most expensive Those.

Speaker 2 (53:01):
Were more expensive years. Those were years that out of
pocket we paid closer to nine ten thousand dollars. But
it also includes years when we didn't have a kid
that we're paying closer to nine hundred dollars a year.
So it swings, there are vastic it oscillates in a
crazy way. But that being said, I know we have
saved so much stink and money over the years due
to health sharing, so that's something it's something to consider.

(53:24):
There's a faith element, of course, that's why it's able
to be with some providers, but some of the private
that's true, yeah.

Speaker 1 (53:29):
Because then there's like sidera out there who doesn't have
any sort of faith requirement. So it's worth if you're like, oh,
I'm not a part of a church or a faith tradition,
then you can look into other providers who don't have
that requirement. But yeah, if you are a member of
a church or a faith tradition, you can potentially say
more by being with one of those faith affiliated health
sharing companies. So it's uh, man, it's such an expensive thing.

(53:52):
It's such a conundrum, and that this is one of
the reasons I think it's the biggest reason math that
I hate that healthcare is tied to employment because the
trade off's the worst to go. It disincentivizes entrepreneurship in
this country. So this is something we really need to
figure out for the for individual families, for the burden
that they face, but also for the economic dynamism that

(54:13):
we want to see from our country. And I think
we want to incentivize people to go out there and
start something awesome and build a cool small business. But
right now we've made it kind of prohibitive with how
expensive healthcare is, and typically most people have to decide,
actually one of the spouses is going to remain working
in order to get the healthcare benefits so that the
other partner can go out there and start that business,

(54:35):
and this couple is kind of trying to do like
both those things, start a business and not have that
additional employment and healthcare coverage. It's not easy. It's not easy.

Speaker 2 (54:44):
All right, we're going to touch along, but we've got
to get to our beer, which was a cordial offering.
It's got some art here, sort of like Burial. They're
going a little more metal, but this was a peanut
butter cup by Edmund's host. What did you think about
this one, buddy? I was under, well, oh yeah, I
like it.

Speaker 1 (55:01):
I think I maybe it just had to do with expectations,
and I like edmund zost and I was expecting something great.
I was expecting peanut butter imperial stout, Like.

Speaker 2 (55:11):
They don't make a whole lot of stouts, do they.
That's I don't think that's their typical Yeah, their typical style.

Speaker 1 (55:16):
Maybe maybe that's why. Maybe that's why I guess I
was expecting something like thick and rich and vibrant and
peanut buttery, and it was I.

Speaker 2 (55:23):
Just wanted to be the middle of winter. This happened
last week too.

Speaker 1 (55:25):
Is an Imperial stout though, man, like, come on, this
this tastes more like a porter with like a few
Reese's peanut. It was a little bit thicker than a porter.
But I hear what you're saying.

Speaker 2 (55:35):
It felt a little like when you say that it's
an is it Did it say it's an imperial Yeah?

Speaker 1 (55:40):
It says right here.

Speaker 2 (55:40):
Okay, Yeah, when you say that you're an imperial stout,
you expect at least three notes, you know, like like
it's such, whereas this does feel a bit too nody.

Speaker 4 (55:49):
Right.

Speaker 1 (55:49):
It's kind of got like.

Speaker 2 (55:50):
The peanut butter kind of flavors going on, but then
it's got the roasty flavors. It makes me think of
like a peanut butter cup for sure, but with like
dark chocolate. Like there's no I don't know, there's no
additional surprise element that makes I think a good beer great.

Speaker 1 (56:04):
So I'll forgive them for this one and hope for
a return to greatness on the next selection that we
get from them.

Speaker 2 (56:10):
Yeah, they're still a fantastic brewery, but that's gonna be
it for this episode. Buddy listeners can find our show
notes up on the website at howtomoney dot com. We'll
make sure to link to any of the different resources
that we mentioned, and that's gonna be it, so until
next time, best friends out, best friends out.

Speaker 1 (56:39):
It doesn't, man, it doesn't taste like a ten percent

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Ask HTM - Break-Even Bank Switch, Doubling Down on a 457b, & Financing an ADU for Extra Cash #1042

Episode Transcript

Hosts And Creators

Joel Larsgaard

Matthew Altmix

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