Ask HTM - Caring for Parents, Dreaming of Partial Retirement, and Paying Extra on the Mortgage #1078

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 - Caring for parents: how do I financially prepare to take care of my parents as they enter their later years?

2 - Partial retirement: would contributing to a Roth or traditional IRA allow me to pay less taxes and retire earlier?

3 - Charitable giving: can I use a donor advised fund to strategically give to my local church, even if they don’t accept electronic payments?

4 - Extra mortgage payments: should I stop making extra payments on our house and instead invest those dollars?

5 - Old 401k: what should I do with my old 401k after accepting a new job?

 

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During this episode we enjoyed a Polotmavý by von Trapp 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!

 

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Episode Transcript

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

Speaker 2 (00:24):
You know what, buddy, are you ready to help people?
That's what we try to do here.

Speaker 1 (00:27):
I was no podcast, literally, just responding to a listener email,
and she would just like thank me for my demeanor
and stuff, and.

Speaker 2 (00:33):
Oh, really, yeah, I thought you were talking about the
other one that you had to get back to my email.

Speaker 1 (00:37):
Demeanor is awesome, Matt.

Speaker 2 (00:39):
No, But I was just like, you know what about
the complaint that was getting Oh, we got a complaint
today too.

Speaker 1 (00:44):
Actually, we get those from time to time, and you.

Speaker 2 (00:46):
Beat me to it because I love them. But I
took the one right before where the guy said that
he wanted to hook us up with some beers from
his brewery.

Speaker 1 (00:54):
And always respond to those quicker, Hey.

Speaker 2 (00:56):
I sit down, when I sit down, and I tackle
them all. I don't care what's in front of me.
It's sort of like a workout. I don't look ahead
to the workout. I just show up and I do
the work. Speaking of people sending us stuff, as we're
recording this, there's like a box of multiple, multiple different
types of popcorn from listener Bill. Shout out to Bill,
and Bill has been with us for not only listening.

Speaker 1 (01:15):
To us four forever for a long time, but also.

Speaker 2 (01:17):
Setting us his favorite popcorn, and he Northern Neck.

Speaker 1 (01:20):
Also emails us regularly. One of our most regular listener
emails that we get is from Bill. So Bill, thank
you for sending us popcorns. Thank you, Bill, and we
just man, I just appreciate our listeners, even when we
get the emails that are like, you guys suck, You're
not doing it right. Honestly, I appreciate the feedback because
we can always stand to do better too.

Speaker 2 (01:38):
Yeah, we are trying to help people for the most part.
I think that's what we do. But sometimes the way
we say it maybe misses the mark.

Speaker 1 (01:44):
Yeah, so we'll try to be.

Speaker 2 (01:46):
Clearer in our communications and how we phrase things.

Speaker 1 (01:49):
And truly that is at the heart of this show
is to try to help people be better with their money.
If like we're not doing that, then we're not doing
our job. That's true.

Speaker 2 (01:57):
But Joe, we're gonna hear from a listener who is
looking to reduce the cost of taken care of family,
specifically his parents. Another listener is dreaming of partial retirement
and he's got a really a tax question when it
comes to socking the way money for retirement. And another
listener has been paying a little extra on the mortgage.
She wants to know if that's a good idea, if

(02:18):
he should stop doing that. We'll get to those questions,
plus a couple others, most likely during this episode.

Speaker 1 (02:24):
So the email I was responding to where I told
you she thanks me for my demeanor that it is kind.
People don't do that much anymore, Matt. I appreciate your
demeanor here on this podcast.

Speaker 2 (02:34):
What's my demeanor? It's awake, a little stuff professional, happy
to enjoy a beer.

Speaker 1 (02:40):
But one of the things she mentioned and she was
asking me about, was I show it for the beer. Yeah,
by the craft beer. Well, she was like, hey, I'm
with one of the big cell phone companies, but one
of the cool things that they're offering me right now
is access to a bank that has a superior savings
rate four point two percent in this environment, that is
really really good, all right, And then she told me

(03:01):
what she pays every single month. It to her yeah,
And I was like, oh, you think they're doing you
a service, but really this this is one of those
things that like feels like a perk, but really it's
only so they can continue like punching you in the
stomach while they look at you lovingly in the face.
That's that's exactly what this offer feels like.

Speaker 2 (03:22):
That's a twisted, messed up visual What kind of twisted
mind do you have? Well that like you have experience
with this kind of behavior.

Speaker 1 (03:31):
Maybe it's happened once. Okay, okay, so uh I think
question these sorts of perks like it's it's almost like
when you shop on certain retailers matt after you click
by uh, like this this happened when I bought concert
tickets recently, they're like, oh, here's two free months of
clear Oh, here's three free deliveries of food service whatever
it's called.

Speaker 3 (03:52):
Dude.

Speaker 2 (03:52):
Yeah, even on is it Venmo that they're hitting you with,
like these offers, these coupons, it is feeling more like
a value pack that showed up in my mailbox versus
any actual benefit that's being delivered.

Speaker 1 (04:02):
And sometimes sometimes that's helpful, purple. Most of the time
it's just another way to advertise to you with this
bank offer connected to your cell phone company. It's I
would say four point two percent is great, especially in
today's environment. That's wonderful. That is good, But if you
only get it by signing up for the really expensive
cell phone service, it defeats the purpose and you're actually
probably coming out behind. So maybe, like got this is

(04:25):
what I suggested to her, Go find a better cell
phoned service. I mentioned a couple of our favorites that
we talk about regularly here on the show, meant Mobile,
US Mobile. Yeah, And I'm like, go with one of
those guys, and then get it. Get your own high
heeled savings account with a bank that doesn't and maybe
it won't be quite four point two percent, but you're
gonna save so much on your cell phone service that

(04:45):
it's gonna be worth the trade.

Speaker 2 (04:46):
Off, you know. Okay, So you know what's at the
heart of this strategy. And I will say I wouldn't
be what's the company.

Speaker 1 (04:52):
The cell phone company? Yeah, Verizon.

Speaker 2 (04:54):
Oh of course, it's like the Bank of America equivalent
of cell phones. Right. I do think that they have
a chance at succeeding with this strategy because what is
at the heart of this is what is called loss aversion,
and specifically, over the past few years, what have we
all experienced when it comes to the interest rate that
our banks were paying us really high rates. And then

(05:16):
as we have seen inflation slowly but surely, I don't know,
let's just say slowly tick down and interest rates follow. Well,
of course we're seeing savings interest rates drop as well.
And we all okay, so we talked about loss a
version on the show before, but that's when you feel
a loss twice as hard as an equivalent game. Yeah, essentially, right,
And so people are seeing their savings rates tick down

(05:39):
and it sucks. It sucks bad, and they hate it
and they know it. They're very they're very much aware
of it, sort of like the press of gasoline. It's
something that they see all the time.

Speaker 1 (05:47):
I'm almost got nostalgia for those five percent APR rates.

Speaker 2 (05:50):
And if you were thinking about maybe hoping cell phone providers,
but then all of a sudden they're sweetening the pot
with this offer, you think, you know what, I'm actually
going to stay because they do a good job, they've
got any commercials, and also I'm gonna be able to
maintain high rate of interest. I think that's what's going
on here. Yeah, And I agree with you ultimately, if
you want to the absolute best way is to go

(06:10):
with your saving money on the selfhone provider, and you
are going with an online bank that's paying a high rate,
right Like, you've got your cake and you're eating it too.

Speaker 1 (06:18):
Which are not far off, by the way, those highest
rates from what this horizon off for you.

Speaker 2 (06:22):
Yeah, but it does depend on how much you've got
set aside, because if you've got let's say you've got
a fully funded emergency fund, maybe you are extra cautious.
You like to avoid risk, you like to have a
high level of liquidity, and you've got like six figures,
you know, let's say you've got one hundred and fifty
maybe two hundred thousand dollars. Okay, you need to start
running the numbers, yeah, because I mean I talked to

(06:42):
somebody recently who's with Verizon, and I think they're I mean,
I think for both of them they're paying like one
forty or something like that.

Speaker 1 (06:49):
So it's hard to overcome.

Speaker 2 (06:50):
A significant amount. But you start overcoming that monthly amount.

Speaker 1 (06:55):
If you've got let's say six figures set aside, Yeah, and.

Speaker 2 (06:57):
It saving's got one percent on one hundred thousand dollar,
you can start doing the math and it starts possibly
making sense to stick around.

Speaker 1 (07:04):
I will say just her switching cell phone service providers
was going to save more than eight hundred dollars a
year for the two lines in her family. It's hard
to overcome that with the interest from the sound.

Speaker 2 (07:12):
One percent. One hundred thousand dollars is one thousand bucks
a year though, So yes, that's when you didn't need
to start cunching the numbers.

Speaker 1 (07:17):
But also one percent, Come on, we're not We're not
down to three point two percent yet.

Speaker 2 (07:21):
Bank I'm an all Ali is a great bank, but
you we're talking mid you know, mid to lower threes.
I don't. I haven't checked it recently.

Speaker 1 (07:28):
Yeah, but not not quite as good as c I
t as betterment right now, but it's it's still tops
and it's pretty good rate.

Speaker 2 (07:34):
But I still like them.

Speaker 1 (07:35):
Still, don't be sucker punched biperized with that offer.

Speaker 2 (07:38):
That's right. Hey, let's introduce the beer.

Speaker 1 (07:40):
Okay, this one. Yeah, I don't know how to pronounce
this Matt this pup polo mav, so I'm gonna pronounce
it pull out mv oh. That's the actual name of
the beer, and it's a it's a logger with spruce tips,
and this is by Von Trapp and Bissell Brothers, a
collaboration Bistle. I've had from beer from before, but never
had anything by by Von Trapp.

Speaker 2 (07:59):
So, so is this the same v Trap from the
What Not of music? Were they a real family that
or was that purely fictional?

Speaker 1 (08:06):
I think it was purely fictional.

Speaker 2 (08:07):
Okay, that's just happened to be their last name. Yeah, okay,
So I know of a Von Trapp like resort up
in New England somewhere, and I bet it's like in
that same little town. I've had friends who they go
up there and okay, I don't know. They do like
maple syrup tapping and skiing and that sounds cool, very
Von Trap sounding things. Oh well, while you're up there,

(08:27):
I guess part of the reason New England.

Speaker 1 (08:29):
I wanted to have this beer today is because it's
got spruce tips, and I was like, what a perfect
time a year to have a beer with Bruce does
Christmas week? Baby, let's do it most deff. Okay, So
let's move on to listener questions. If you have a
money question we would love to hear from you, just
record it on the voice memo app of your phone,
say your name at the beginning. Email it on over
to us how to moneypot at gmail dot com or
go to how to money dot com slash ask. You

(08:50):
can see the full directions there if that felt too
difficult for you. All right, man, let's get to the
first question of the day. This question is from a
listener who has a lot of in flux right now.

Speaker 4 (09:01):
Hey, Madam Joel, I hope you guys are doing well.
My name is Rojat and I live in Denver, Colorado
with my wife and two pets, a doc and a cat.
My questions today might be a little bit different and
involve moving internationally. So my parents live in India omerginally
from India. I've been in the States for the last
eight years and my parents they are in their mid seventies,

(09:25):
so there's a high per populability that my wife and
I may need to move to India for a few
years to take care of them. My sisters are in
the same city as my parents and they care of
them as needed. But you know, in our culture, it's
kind of like my responsibility to take care of them.
So my questions are around what if any changes to

(09:46):
future investments in savings, you guys would suggest I should
start thinking about if I know that we may have
to move to India for a few years, but since
we don't know when we will move, how long we'll
need to move for, and whether or not we will
work while in India, and what income would look like
when we are there. My wife and I just turned

(10:07):
thirty this year. We don't have any kids, but we
do plan on starting a family in the next year.
Today we make around two hundred thousand dollars a year
and contribute to various retirement accounts, but we don't max
them out. We have six months of emergency funds saved
up and have no credit card debt. My wife has
around thirteen thousand student loan debt with interest rate around

(10:29):
or under four point three percent that are currently in
fourbearans and we make monthly payments of five hundred dollars
for them or towards them, and soon a new home
loan of around seventy five thousand dollars at an interest
rate between seven point seven to eight point five percent
for a house in India that I'm aiming to purchase
by the end of December for my parents as there

(10:52):
are quite a lot of unknowns and no defined timeline.
I would love to get your thoughts or advice on
how I should start thinking about the possibility of moving
to India and make changes to retirement accounts, investments, and savings.
I love the show. If you guys are ever in Denver,
hit me up. My wife and I would love to
host you guys and prepare some street Indian street food.

(11:14):
I mean, thank you for taking my question.

Speaker 2 (11:17):
Oh Joe, do you like Indian street food?

Speaker 1 (11:20):
I don't know. I'm not very cultured, so I don't
know they've ever had Indian street food.

Speaker 2 (11:24):
I've never been to India neither, and I have rarely
had Indian food. But I'm down. I've had some great
I like me some curry curry before, but yeah, I.

Speaker 1 (11:32):
Don't what is what is Indian treefood? Do you get
curry in a bowl and as Indian street food or
is it more like meat.

Speaker 2 (11:38):
On a stick or something?

Speaker 1 (11:39):
I don't like a kebab?

Speaker 2 (11:40):
I don't know. I need Reje to enlighten minute to
come hang out heyng on Denver and have him whip
them up for you.

Speaker 1 (11:46):
You know what I'm gonna Maybe I should email this
to reject to he he's got multiple pets, he said,
And where's he gonna put the pets if he moves
to India? Like, do you want me to volunteer your
house as a place where you can We are currently
a pet freezer. We've we decided Kate and I, Oh
my gosh, did I tell you about that?

Speaker 2 (12:04):
So we talked about this on the show. Some friends
of ours.

Speaker 1 (12:06):
They have what kind of dog do they have?

Speaker 2 (12:09):
I can't remember if they have the poodle or if
they have the Burmese mountain dog, but they they when
you mate it with another and they create these.

Speaker 1 (12:17):
You're making me think of dumb and dumber right now.
What do you get when he made a bulldog and
a shit?

Speaker 2 (12:23):
I thin get. They're like Burma doodles or something. I
don't know, but they're just like the fluffiest, most hypo allergenic,
like cute little fluffy puppies. And some friends of ours
they had a litter and they always try to get
a bunch of their friends to experience the delights of
having this beautiful puppy. And Kate and I were just like,
we can't even bring this up to the kids. This

(12:44):
is a non this is a non starter.

Speaker 1 (12:46):
I'm not gonna touch it someday later life.

Speaker 2 (12:48):
Unlike you, y'all got at least two cats, multiple chickens.

Speaker 1 (12:51):
Sorry, I'm gonna divul Just go for one more second.
On a weird tangent. My cat, one of the cats
likes to hide in our bathroom vanity. Like she'll open
the drawer and like somehow shove her way back in there.

Speaker 2 (13:06):
It gets up underneath.

Speaker 1 (13:07):
Every once in a while she can't get out. So
I'll go to the bathroom last night, it like before
I go to bed, and I hear like the cat
basically being like, let me out. It's really funny.

Speaker 2 (13:17):
Okay, let's get to this is what you're missing on
on if you don't have pets in your life.

Speaker 1 (13:20):
Yes, that's right, that's right. The cats are great, but
no dog for us right now. And Jette like, this
is a great question. I love too. I have so
much respect for your culture and for the emphasis that
it seems to be placed on taking care of parents,
and totally that's something that I think is just less
common here in the States, Matt.

Speaker 2 (13:39):
And it's less Yeah, it's less common. I do think
I am hearing more families who are doing that though. Yeah,
Like I mean to return back to some of those. Yeah,
the multi generational household conversation is one that I've had
more and more, and I love hearing that because I
think it makes sense on so many on so many friends. Obviously,
from a financial standpoint, you're kind of pulling your resource

(14:00):
is to a certain extent, But from a relational standpoint,
for kids to grow up with their grandparents, like truly
getting to know them and for them to truly get
to know the kids, I didn't have that, Yeah, I mean, like, yeah,
Grandma and Grandpa man, they lived on the other side
of the country. It's so same with me.

Speaker 1 (14:14):
Yeah, And I think the book Being Mortal by an
American Indian doctor really kind of helps them at that home.
For me too a little bit where I was like, oh, actually,
like I see the beauty in that. That's something that
feels culturally different than what I've experienced, but it's something
I'm fond of and family.

Speaker 2 (14:31):
It's a creative solution to a tough problem that a
lot of people have. Yeah, Like, it truly does make
sense on like almost all fronts.

Speaker 1 (14:38):
I'm seeing my neighbors do it right now, Like my
neighbor next door. She's one hundred years old. Her son
lives across the street, and she's kind to a point
where she can't even even though they live really close
to each other, she can't live alone at all, and
so somebody spends the night with her basically every night.
And this is kind of like elder planning. In American culture.
It's gotten really really expensive, and you almost have to

(15:00):
think outside of the box and live your life a
little differently so you can avoid some of those crazy
long term care costs.

Speaker 2 (15:06):
That's right, yeah, and Rejet, he also talked about how
much money he said he's got six months worth of
emergency funds set aside, and the ability for him to
at some point go and help take care of his
folks is I think one of the best uses of
not only emergency fund but with it being a potentially
extended period of time of what you might call peace

(15:27):
out money, or just a degree of financial independence. It's
not just for traveling the world and for ditching work
for a sabbatical, but being able to take care of
the people in your life. It's far less stressful if
you have a strong financial buffer, or if you can
just reduce work, you know, take some time away. I
think amassing more investments and having that liquid cash is

(15:49):
going to give you Rejet the ability to make the
life changes that you need to make, but the ones
that you truly just want to be able to make.
Here giving you the flexibility to make some of these
changes if need be, depending on how long you're going
to be over there, Like you said, so many unknowns.
But if that was me, I would want to have
more though than just the six months worth of living

(16:11):
expenses I would want to have. I'd want to basically
beef that up. I'd be living on a lot less
in order to essentially build up like this war chest
to just give you the options to stay over there
maybe longer then you might normally feel comfortable. But by
having more cash like this on hand, it just is
going to decrease the level of stress that you and
your family is going to experience. I will say, based

(16:33):
on he mentioned the house that he's sounds like maybe
purchasing for his parents. I know that the cost of
living in India is substantially less than in America on average.
So one benefit though is that you've got the ability
to have your dollars go a whole lot further while
you're over there. So yeah, just one of the factors
to keep in mind.

Speaker 1 (16:54):
Yeah, And I think what you're getting at too, is
that money isn't just to buy the the smart saving
and investing over a long period of time isn't just
to buy your own freedom or to buy fancy vacations
or anything like that. But it can really facilitate the
kind of life you want to live, especially with your family.
And makes me think of like, you know, Matt, you

(17:14):
and I've talked a lot about this. My mom is
not doing so great right now, and I've had a
lot more time, a lot more time flexibility, partly because
over a lot of years I've earned it over a
lot of years of hard work with my money, and
so I've been able to spend a lot of time
with her, take her to a doctor's appointment, grab a
random lunch or coffee or something like that, and that matters.

(17:35):
Like what Richett is doing here, I'm doing it on
like a smaller scale, right, I'm not moving across the
country to be with They're already liberally close by.

Speaker 2 (17:42):
But I think that's not indianagil I know. Yeah, Okay, Yeah,
just making sure.

Speaker 1 (17:46):
So I just love that. I think I would love
to see more people be able to experience that sort
of flexibility that money can buy.

Speaker 2 (17:54):
Yeah, yeah, and you would. It would be much harder
to handle that situation if let's say you didn't invest
at all in your twenties or your thirties, and you're like, Okay,
now is the time to buckle up and finally grow
up and start setting money aside in my four one k. Yeah,
you'd be like, well, no, we can't. I can't not work.
But you can say no, no, no, I can not
work for the things that matter the most into here now. Yeah.

Speaker 1 (18:16):
In today you mentioned liquid savings. I think that's really important.
Buffering building that up is one part of the equation
on the investment side, though, I think that that would
also mean putting money into accounts that have more flexibility.
Thinking roth IRA think in HSA right, four on ks
are great, get the match if you have one, but
those are going to be as flexible. You're gonna be
able to tap that money if need be before you

(18:39):
turn fifty nine and a half. And so I'd just say,
like after that match, and I would just prioritize accounts
that allow you greater access, even if maybe the tax
break isn't quite as meaningful, which the tax back on
the roth IRA HSA are still great. But if you
have more money to invest beyond that, a taxable brokerage
could make sense before putting more money in your four
on K because you might need that money before you

(19:01):
reach full retirement age. So yeah, I would kind of
be wanting to do both at the same time.

Speaker 2 (19:06):
Really yeah. And I want to address the income side
of things too, because he talked about not knowing whether
or not he'd be able to work while he's over there.

Speaker 1 (19:14):
I would.

Speaker 2 (19:15):
I'm just thinking of a buddy and he works for
a global company and like more than half of his
team is in India, Like he's either waking up crazy
early to get on calls or he's he's got a
ton of flexibility during the day. It goes for runs,
but he's either up really early or up a little
bit later to make sure that they're able to communicate. Well,

(19:36):
I think he didn't. Did Jette say what he does?
He said income, but I don't think he said his profession.
But if you do have a job or a company
or a profession that allows you to maintain the work
that you're currently doing while abroad. There's totally a way
of doing that from a technology and hopefully from the
type of work that you're doing. Dude, Like, then you've

(19:56):
got the best of both worlds potentially, right, Like you
are still making like, maybe you're not going to get
the same kind of raises because they're like, well, you're
not here in the office, you're not able to show
up to the team building Fridays or whatever. I don't
know whatever company might want to call it.

Speaker 1 (20:10):
But we call ours, Yeah, the team building Friday.

Speaker 2 (20:13):
But because you you've reduced your cost of living so
significantly as well, Uh, that could honestly leave you in
a like a really really strong position, uh, assuming that
you're there for an extended period of time. But even still, like,
I can't imagine that you're gonna do nothing while you're
over there, even if it's tricky from a visa's standpoint,

(20:34):
were visas and you know, and as far as your
wife and what she's gonna do, I don't know. I'm
just optimistic that you're not going to go over there
and just completely sit around hang out with your parents, like.

Speaker 1 (20:43):
You're gonna go two hundred K to zero of income.

Speaker 2 (20:46):
Yeah, and going from zero assistance provided to your parents
to like every second of the day where you're at
their beck and call, Like, I can't imagine that they're
going to need that, but then also that you would
want that necessarily. So I just got a feeling that
you're gonna be able to provide yourself some to income
at the very least on a part time basis while
you're over there.

Speaker 1 (21:03):
Maybe part time might be the sweet spot, based on
how much time you want to give and the fact
that you don't need to earn quite as much. I
would also be working in the time being, like right
now to reduce debt. So if you can pay off
the home loan before taking off the India, that would
be huge. Right paying off the student loan in full,
I think it would be a tough thing to do
in this time span that he's talking about, but that

(21:24):
might be a goal of mine to try to work
towards that. And the interest rate isn't all that bad
on that student loan either, but still I would spend
time like simplifying your finances, having fewer monthly obligations. Those
are going to have a similar result as saving up
more cash just not having as much money that needs
to go out every single month. You know you're going
to require less income if you have fewer debt payments

(21:46):
and or you have more cash in the bank. So
I think that's just kind of a strategic way to
approach this move to India.

Speaker 2 (21:53):
Yeah, I think you do have to be careful, though,
I think you got to not overdo it because you
could say, oh, this is going to happen. I got
to prepare like crazy and then and I'm sure rejet
that your wife is loving and very supportive, but I
also can picture of very frustrated wife who's like, hey, like,
when are we going to live our life? Like when

(22:13):
are we gonna do the things that we have set
as goals for our family? And so only you know
how to strike that balance and the responsibilities from being
the son. I don't know, maybe the firstborn or something.
I'm just assuming that sort of duties I guess that
are expected of you, but then also the duties that
you signed up for. But when you married your wife,

(22:34):
there's a man I would just be paying special attention
to your wife and just the y'all's relationship and making
sure that y'all are communicating well to make sure that
everyone's on board. This is something that y'all are doing together,
and that you're not just constantly preparing for some you know,
something that's going to happen down the read.

Speaker 1 (22:52):
And it sounds like you have the finger on the
pulse of your finances. Just make sure. I think it
could be tempting to go so hard to like I
want to be so prepared. It made me think mad
of the biblical story of Joseph in Egypt, right, and
he gets the dream and they're preparing for the famine
to come, and in that case they knew exactly what
was coming down the pike, or according to the dream, right,

(23:13):
But seven years, seven years, seven years of each right,
And I just.

Speaker 2 (23:18):
Don't think Ridgett has an idea that seven years from now, right,
we will you know, this will all make sense, you know,
Like that's one of the problems, is exactly it feels
it's very open ended.

Speaker 1 (23:28):
And so you just have to be careful, like you said,
to plan well, but also to realize that those plans
are going to be somewhat shaky based on timeline and
based on the specifics. And you also don't want to
go so hard in the paint that you're unable to
really enjoy these next couple of years where before you
move to India, so you're preparing well but also enjoying

(23:50):
the time that you have.

Speaker 2 (23:51):
That's that craft beer equivalent, dude, finding that balance. We've
got more to get to. We're going to hear from
a listener who's asking about one of our new favorite accounts,
the Donor Advised Fund.

Speaker 1 (24:01):
Will get to that.

Speaker 2 (24:01):
Plus we'll talk about some wroths, all that and more
right after this.

Speaker 1 (24:13):
Alright, Matt, come back, let's tell me get to our
next question. This one is kind of one of the
most classic personal finance questions out there, but it's always
fun to revisit.

Speaker 3 (24:23):
Hi, this is Ethan from Denver, and I am wondering
if I should wroth or not wroth this upcoming year.
I am in the twenty four percent tax bracket, married
filing jointly with all W two income. I normally max
out o roth IRA and in the last few years
I have been doing the back door WROTH. I also
contribute to a WROTH four to oh one K. I
dream of a partial retirement someday, but it feels impossible

(24:45):
to know for sure what tax bracket I'll be in
when I want to start withdrawing contributions, So I can't
decide if I should pay the twenty four percent tax
on the contributions now or if I should wait until
I'm in the next tax bracket before switching to traditional.
Even though I might be paying a higher percentage of
taxes now, there is some comfort in knowing that I'll
never pay taxes on this money. Again, appreciate the advice,

(25:08):
Thank you man.

Speaker 2 (25:09):
It sounds like Ethan is in the messy middle He's
realizing that, oh, it used to make all the sense
in the world to Roth but he's probably Yeah, he's
talking about tax brackets, he's seeing his income increase. He's
trying to figure out what is the most optimized moved
to make. So I'll just cut to the I'll cut
to the chase. A roth ira and a traditional four

(25:30):
one K is what we typically recommend, and for somebody
will spend the rest of this time explaining why.

Speaker 1 (25:36):
Yeah, somebody in this situation in particular, because he is
in that middle spot.

Speaker 3 (25:39):
Right.

Speaker 1 (25:40):
Let's say you are really early on in your wealth
building trajectory and your first job out of college or something,
and you're like, mam, I my salary's not awesome, but gosh,
I'm being frugal and I'm attempting to do but contributions
significant contributions to my IRA into my four one K.
What should I do? The answer is probably gonna be

(26:00):
wroth both of them. Right, But let's say then, the
further along you get in your career you're crushing it.
The more that your income goes up, the more traditional
can make sense. And it's just impossible here to make
a perfect decision because we're dealing with unknowns around future
tax rates as a society, but we're also dealing with
unknowns about our individual tax rates. Where will my individual

(26:23):
effective tax rate be? It's hard to know, right, it's
hard to specify. For people who are incredible savers and investors,
you might find that it's higher in retirement. But what
most people find is that, especially if they're high earners, now,
the likelihood is strong that you're going to be in
a lower tax bracket in retirement, and that actually makes

(26:44):
traditional contributions, especially in that four one K, make more sense.

Speaker 2 (26:48):
Now, Yeah, I hear what you're saying, which is that,
like if you know you're making bank right now, and
that you are like, oh man ah, I am working
really hard, I'm getting after it. Yes, then you might
know that you are on likely to continue to generate
an income like that. But it also depends on how
much you invest. Yeah, because if you are I mean,
making a ton of money right now, but then you're

(27:09):
investing like crazy, there's a good chance that the money
you have on hand later and down the road and
the kind of lifestyle essentially that you are requiring of
your money means that you have to withdraw more money,
which means not necessarily a higher cost of living from
the income that you're drawing up, but possibly a similar

(27:29):
similar expenses to what you're experiencing in there today.

Speaker 1 (27:32):
When you look at the vast majority of retirees, though,
I think you see that on average, they end up
paying a reasonably lower overall effective tax rate in their
retirement years.

Speaker 2 (27:44):
I think. But what I'm saying is, I think a
lot of times that have to do with the fact
that they haven't set aside a ton of money, which
means that they're drawing down less. So so much of
the behavioral aspect of it. How much are you investing
now and then how much are you going to draw
on that? Yeah, you're pointing to like the lived reality
of a lot of folks, which I totally agree with.
But it's definitely true.

Speaker 1 (28:02):
You're right, Like, if you if you're an incredible saber
and investor, there's a chance there's a reasonable chance that
you're going to end up just as high of an
effective fact rate, if not higher, if you're like balling
out and saving a massively high percentage of what you
bring in.

Speaker 2 (28:15):
I think there's a chance Ethan might fall into that count.

Speaker 1 (28:19):
Based on two dumb, dumb and dumber references in one episode.

Speaker 2 (28:24):
The frequency in which Joel talks about Jim Carrey folks
is hot just aside as you would expect.

Speaker 1 (28:28):
He's still my hero. Yeah, when I was a kid,
that's why I wanted to be more than everybody else,
he told me. But the listeners didn't know that.

Speaker 2 (28:35):
Yeah.

Speaker 1 (28:36):
So the roth II rate traditional four one K combo
allows you, i'd say, to take the burden the hand
that's taken some future tax exposure off the table, while
also getting a current tax break on another chunk of
your retirement dollars. It also allows you to turn traditional
dollars into ROTH dollars down the road, so you retain flexibility. So,
for example, if you retire early as is as is

(28:59):
your goal ethan, the likelihood that you'll have a lower
income is quite high. You can then do roth conversions,
likely in a ladder form, to turn traditional dollars into
ROTH dollars at a far lower tax rate because you're
not bringing money in anymore. So one of the things
you can do is then you know, turn those traditional
dollars into roth dollars via a conversion. And having more

(29:22):
traditional dollars creates less certainty, which is one of the
things that you mentioned in your question. You like the
idea of that certainty, but it allows more of an
ability to reduce your overall tax exposure.

Speaker 2 (29:32):
Yeah. Yeah, I will say, so you said something about
retiring early. I heard him say partially retiring, which I
guess is that technically the same thing retiring early in
the spectrum. It's not a spectrum, but I get when
I hear partial retiring, that tells me that he's still
planning to work, he's still planning to generate an income.
But I guess that's also similar to coast fire. There's

(29:53):
all varying degrees here, which actually so it makes me think.
One of the things he said, it almost sounded like
that getting this problem, like striking it perfectly, was what
was going to allow him to partially retire or to
not partially retire, he called it. He's just like, I
want to achieve the dream of partially retiring someday, but
I don't know, well, my taxes are going to be

(30:15):
and Ethan, I'm just here to let you know that
you don't have to nail it perfectly, like it is
very unlikely that you are going to be able to
hit it right on the nose, and you still can
partially retire off in the future. You still can coast
fire at some point in time. You're not going to
partially retire. I think there's a good chance you're going
to fully retire, And so I just want you to
take a little bit of pressure off this specific decision,

(30:37):
because there are so many other factors that play into
whether or not you can partially or fully retire than
nailing your tax rate here versus your tax rate later
down the road, finding the right mix of which tax
to pay, another perk by the way of having accounts
in that are post tax and pre tax. Having both
those to draw from is that you can kind of

(30:59):
create your own tax bracket in retirement based on which
account you draw from and win and how much. It's
like those Choose your own Adventure books, Matt. You remember
those when we were kids. Loved him.

Speaker 1 (31:08):
That was pretty fun and you'd be like, oh, page,
turn to page sixty two, and then you're like, oh,
you just got killed by pirates. You're like, my adventure's over,
I guess, but hopefully that doesn't happen in Ethan's case.
But like, this allows you to kind of choose your
own tax rate. In years where you've got less income
coming in, you can tap those traditional accounts more heavily.
When the opposite is true, you can lean more on
your WROTH accounts, and then ultimately you know, for other

(31:30):
how to money listeners. This question is far easier if
you're in either the lowest or the highest tax bracket.
If you're just starting out incomes meager, the WROTH is
the way to go as you ramp up your income.
If you're in that like thirty two, thirty five, thirty
seven percent tax bracket, that's when the traditional makes even
more is even more appealing totally.

Speaker 2 (31:49):
Yeah, Okay, So while you're talking about tax brackets, that
makes me think about the fact too that he's it
seems like he was also agonizing over like, well, I'm
in the twenty four percent. That's what he said, right,
twenty four percent, and should I go ahead and take
the break now by going with pre tax to avoid
paying tax on that now? But just the way he

(32:10):
was talking about it makes me think that there might
be a slight chance that he's a little bit confused
between marginal tax rate and effective tax rate. And you're
only tax at that twenty four percent on dollars above
that like two hundred and five thousand dollars threshold. Everything
below that is taxed at twenty two percent. That's for
couple or verifying jointly or less, And don't I don't

(32:33):
know going from twenty two to twenty four Like, trust me,
I don't like paying taxes. But that's not too bad.
There's a much bigger difference, I would say between jumping
from that twenty four percent bracket up to thirty two percent.
I would most definitely be looking to maybe optimize ways
to not pay that jump and tax, but just keep
that in mind too, that if you got two hundred

(32:54):
thirty thousand dollars, like you're paying an additional two percent
on maybe twenty five thousand dollars as opposed to that
if let's say you're earning three hundred and fifty k Okay,
I hear where you're coming from. That's a lot, that's
a lot more. You're paying two percent more on many
more dollars. But just wanted to highlight that and just
point that out as well. I think your head's in
the right place and get informed now, and I think

(33:16):
that can continue to help you to make wise decisions,
especially if you are expecting to continue to increase your
earning where you you know where you are looking at
potentially entering into that thirty two percent bracket, because that's
when it that's when it really is going to start
to hurt.

Speaker 1 (33:29):
And like Friends of the Show Sean Malaney Cody Garrett say, Matt,
they're all about reducing your overall lifetime taxation. And so
that's really the way you want to think about this
from a strategic perspective. And while it might be painful
to pay twenty two to twenty four percent marginal tax rate,
you might also realize, well, when you step back and

(33:50):
look at things, what is that in the spectrum of
your likely tax rate for your entire life. That's kind
of the question. You want to ask a big picture
so that you can maximize those decisions, not trying to
just say that little extra bit of tax now when
it's going to set you up for a bigger tax
bill in the future.

Speaker 2 (34:06):
Yeah, that's right. One other, okay, one final quick note.
Keep in mind that you are effectively investing more dollars
by putting money into a wrath as opposed to a
traditional because on a traditional you still have taxes to
pay out of that, and with a roth you are
essentially frontloading that pain, that sacrifice. So when you are
maxing out both accounts, you are effectively investing more dollars

(34:29):
when the time comes for you to actually draw down
on that. So there's this behavioral actually richer, Yes, at
the end of the day, you will be richer because
traditional ethan down the road is going to have to
pay more in taxes, whereas roth Ethan is just like
all that money is mine baby. Yeah, So it's weird, like, yeah,
that kind of behavioral side effect of maxing out of
roth ira versus a traditional ira. You're just going to

(34:51):
come out ahead in the roth ira if you're a
max saver.

Speaker 1 (34:54):
That's right, Joe.

Speaker 2 (34:55):
Let's hear from a listener who is looking to use
a sophisticated giving account to benefit an organization that is
less interested in the technologies I met in Joel.

Speaker 5 (35:06):
This is Mary from South Carolina. All of your talk
about donor advised funds lately got me to thinking. We
go to a very small church and the only way
they take donations is cash and check. So I find
myself in twenty twenty five writing about twelve checks per year.
I implicitly trust the people who handle the money, but

(35:28):
occasionally I have to mail a check, and that's pretty terrifying.
Do you think that a donor advised fund would be
able to distribute money to a really small organization like that?
Or does it have to be a bigger charity? Thank
you so much?

Speaker 1 (35:43):
Ooh Matt using a check? I don't think. I can't
tell you the last time I wrote a check?

Speaker 2 (35:48):
You remember yours? I?

Speaker 1 (35:51):
No, Yeah, it's hard man like I can think of.

Speaker 2 (35:54):
I mean, I know I cut some checks when we
were doing some work at the house for sure, because
that's yeah, not really zelling large sums like that around.

Speaker 1 (36:04):
Yeah let zell use sixty thousand dollars to a.

Speaker 2 (36:05):
General contractor well yeah, less So in that.

Speaker 1 (36:08):
Case, I feel like maybe five six years ago, it
used to be a little bit more necessary on occasion,
but I feel like checks are mostly a blasted in
the past, and they're also becoming problematic right in some
ways from a theft standpoint, I think they're going the
way of the Dodo burden. So if I don't know,
they're kind of like the new version of the fax

(36:29):
machine in my estimation, and I just get I feel
a little uncomfortable writing checks, and so yeah, I feel
Mary's pain, like, yeah, I don't want to be writing
a check to my church either.

Speaker 2 (36:42):
This is also a longtime listener, Mary, who we were
talking about corresponding with listeners earlier on, and we correspond
a good bit with Mary. Mary. Mary's got a great
heart and does a lot for folks out there who
are trying to better their personal finance situation. And Mary,
I promise we'll get to donor advise funds specifically here
in a second. But it's worth pointing out that there

(37:03):
are some online donation platforms for churches now like Tithely
and give the Fi, which, of course great names you
got like these like web three point zero names for
like these old like traditional sounding actions. But I think
these can be better options for a lot of smaller

(37:24):
churches and organizations out there, because the reason your church
might be avoiding those is because they come with a
payment fee, so that's the downside. Obviously taking a check
doesn't cost them a dying, but still it's like, it
makes me think of Aldi right where they used to
not take credit cards, which used to drive me crazy
because that's the only reason I had my Ally check

(37:44):
card in my wallet was for this one particular story.

Speaker 1 (37:47):
We all understood it because we were like, the reason
all these is doing this because they're making sure we
save the most money, that's right.

Speaker 2 (37:54):
But that being said, they did start to take them,
and I think it's because they saw that the like
the pros of taking it outweighed the cons which for
them was the expense they were seeing abandoned cars. They
figured it was worth taking the payment method that most
folks are going to prefer. And it's a little awkward
here too, because it's kind of weird to think that
there might be people who won't give to their church

(38:17):
for that reason, right, because it's not easy, because it's
not convenient. But not taking credit cards or not taking
ah could actually inhibit giving for an organization, especially when
younger folks in particular don't have or don't use checks
at all. It's just it's making the kinds of actions
that you want to see more of easier. And retailers

(38:37):
do this all the time when it comes to being
parted with your dollars for goods that you may or
may not need. Yeah, So it's just something for churches
and organizations to keep in mind, dude.

Speaker 1 (38:48):
So it's like a cell phone to not take any
form of payment beyond.

Speaker 2 (38:52):
Cash and checks at this point in time, Yeah it is. Yeah.
So Christmas is later this week makes me think about
I found myself on my phone look for a gift
for Kate, and I had already done the research, so
I kind of knew that, like, Okay, this is this
is I'm going to buy it from here. I didn't
need to shop around anymore. I'm kind of old school
when I when I like to shop, I like being
on the computer so I can click open tabs search

(39:13):
more easily, you know, do all the research. I had
already done all that, and so I was just like, Okay,
it's just time to actually make this purchase. I could
not believe how easy they make it to pay. I
guess it's not the retailer, it's not the website, but
it's Apple Pay as well. It's the integration with Apple Pay,
and I just selected that. Dude, I bought that thing
before I even realized. I mean, I knew I wanted it,

(39:36):
but truly they I mean, because it's Apple Pay, they
already have your address there, they have the right card
because I use that for other things. I just double
click that thing and I was good to go. That
sale happened because they made it easy for me. Yeah,
and I think if other churches and organizations can keep
that in mind, I think they like, Yeah, they might
see increased levels of giving.

Speaker 1 (39:54):
I agreed the suck about donor ice ones as well.
That was the heart of Mary's questions actual question. Yeah,
they're not as common as folks wanting to pay from
their bank account, I don't think, but it would still
make sense for a church to welcome those two. It
could lead to more donations rolling in. That's partly because
people with donor avice funds often have larger sums of
money they're willing to give. And so you're like, no,

(40:14):
we don't take donor advice on money. Well, okay, you're
becoming your own worst enemy. And so donor avice funds,
they can, and they do make it fairly easy for
organizations of all sizes to accept money. So your church
can easily get in on this, get in on your
giving from your donor advice fund. They just have to
be a registered five oh one C three and they

(40:36):
can by default except donor advice fund money. The donor,
which is you can recommend a donation to your church
from your donor advice fund, and then your donor advice
fund sponsor, which is usually paying Guard Fidelity Daffy, can
even send a physical check, so since your church likes checks,
this allows you to give via your preferred method and

(40:58):
then for them to receive in there when win baby.
I think the donor vice one might be the best
best thing going right now for your church and for
your You have this overlap of interest.

Speaker 2 (41:09):
So I give to the kids school and we do
that via our donor advised fund and I specifically wanted
wanted to know how it arrived. But I think that
maybe I'm getting ahead of myself here. I don't think
it was listed originally and I think I entered it
in and so that's actually something that you can do,
Mary specifically, we'll get to that part. Let's say that
your church is not listed when you are attempting to

(41:30):
make a donation, and if you are using our favorite
donor advised fund site, Daffy, they allow you as a
member to request that the nonprofit be added. And so
all you gotta do is just submit the nonprofits tax
I D, their EI N number, their mailing address and
some other basic details via daffi's request a charity form

(41:55):
and boom, that's it. It's pretty simple, and then they'll
get added. I think I actually did that with the
kids school. I don't exactly remember, but I do know
that they receive the paper check because I wanted to
make sure that they were receiving it, and I was
just like, hey, do you mind checking to see if
this is early on in our DAFU days. And I'll
be honest, Jill, I didn't know if I trusted it,

(42:15):
and I wanted to know what it was like, I
was going to show up and as far as I know,
they are still cutting a check and it's being mailed
there to this day.

Speaker 1 (42:23):
So that's cool.

Speaker 2 (42:24):
Yeah, I think it's It's just fun because we have
a great solution for Mary because that satisfies exactly what
she wants to do and also what the church wants
to continue to do.

Speaker 1 (42:33):
Yeah. Yeah, the church doesn't have to go through some
fancy rigam role in order to accept donor of ice
Fund money just because they are a nonprofit five oh
one C three they can and you can give to
them from your donor a vice one. So it should
be pretty easy, pretty chill, make it happen, and maybe
your church can still stay in that luddite status of

(42:55):
not accepting ah in credit cards, which is fine, but
you could still get to what you want to do. Yep.
All right, Sorry not to throw shade, just saying we
got more questions to get to, including what do you
do with your four O on K when you're changing jobs?
Talk about that and more. Right after this, we are back.

Speaker 2 (43:19):
From the break buddy, and it is now time for
the Facebook Question of the Week, which is from Paul,
who writes, we happen to be in a good spot
with our home mortgage interest rate with a rate of
three and a half percent, is it better for me
to just make the minimum payment and put whatever extra
we have into roth Ira or our four oh one k.
We have been paying extra into the mortgage to equal

(43:41):
an extra payment a year in order to lower the
life of the loan. But with a lower interest rate,
the money should perform better in a retirement vehicle, or
at least I feel it would thoughts.

Speaker 1 (43:53):
I agree.

Speaker 2 (43:55):
I also I want to say, I know it will,
but you can't become us that because we don't know
the future. But yeah, Paul, I would not be making
these extra payments.

Speaker 1 (44:04):
There's a bird in the hand of paying down debt,
and usually I mean, so much of this comes down
to what kind of debt and what the interest rate
is right, Because if it's if he had said, I've
got this payday loan with an annual interest rate of
three hundred and sixty percent, what should I do? I mean,
the clear answer is get rid of that thing as
soon as possible, and you know, you can get back
to your roth Ira later on down the line. But

(44:25):
we're talking about baked in incredibly low mortgage rate, and
so for us paying it off, his agreed makes the
most sense not making any additional payments to try and
get rid of it faster, and Matt we honestly, I
always want to call like a three percent mortgage like
an asset. I know it's not.

Speaker 2 (44:44):
It's it's a liability right on your on your technical
accounting terms.

Speaker 1 (44:49):
Yeah, like on your net worth statement, like it would
be counted as that.

Speaker 2 (44:52):
But it feels so good.

Speaker 1 (44:54):
But when you can earn more or just as much
in a high held savings account, you're taking zero risk,
like you always, you're keeping that optioninality to pay it
off at a quicker clip if rates, let's say, fall
significantly down the line. I just don't see any reason
to accelerate mortgage payoff. Investing in the accounts that Paul
mentioned is a far better option, that's right.

Speaker 2 (45:13):
Yeah, Paul, You're you're also not asking about putting less
towards your mortgage so that you can up your spending,
right like you are trying to proactively do something positive here.
You're trying to invest more for your future, and the
multi decade reality shows that you're going to be richer
to the tune of hundreds of thousands of dollars by
investing these dollars instead of opting to pay your mortgage

(45:35):
off and so, and this is based on historical data. Again,
this is what I was referring to. You're talking about
HYGYLD savings coounctrol, which is more guaranteed. Uh, it's guaranteed.
It's like it's guaranteed to work six like sixty percent
of the time or one hundred percent of the time. Right, Like,
while those rates are sticking around, Yes, you can count
on the rate of return there, but what are those

(45:57):
rates going to do?

Speaker 1 (45:58):
I guess what I'm highlighting there is just that it's
a zero risk, zero risk, right, and you can do
even better by taking on that risk. Just No, it's
not guaranteed, but it's nice to have that guaranteed ability
to outpace it at least for the near term, at
least right now.

Speaker 2 (46:12):
But when it comes to investing, it's the returns even higher,
and it's for decades and hundreds of years. But that's
not guaranteed either. Who's living hundreds of years by the way,
Well he's not. But I would say max out that
roth contribute more to your four one K and then
just enjoy this three and a half percent mortgage that
I would consider even calling a gift at this point

(46:35):
in time.

Speaker 1 (46:36):
This time of year, we'll call it a gift. Yeah,
let's give to another question. This one comes from Esra
and she said, I'm curious as to what others have
chosen to do with their four on and K when
leaving a job. Have you a just kept it with
your old employer, b roll it into an IRA, or
c roll it into your new jobs four and K? Matt,
this feels like a who wants to be a millionaire? Question?
Do you remember that with Regis fillb In. It's a

(46:57):
classic show. I saw it on TV rerun the other
day and I don't know remember where I was, but
I was like, I think maybe I was in like
a mechanic shop or something. On the background we got
the SAME's Club. It's like, man, I wanted to play
that game so desperately back in the day.

Speaker 2 (47:10):
I think I'm just distracted by the fact that you
said Ezra Esra versus Ezra, which my son's name. Yeah,
but she just spells it with an S instead of
a Z. Yeah, so you can just say Ezra.

Speaker 1 (47:21):
I guess I'm gonna say extra, okay, Ezra, for you
don't cash out your retirement plan upon leaving your old employer.

Speaker 2 (47:32):
And this is like a principal thing here for sure, right,
because even if we're talking about a small amount of money,
like obviously the tax hit is going to seem small,
but it's going to take a pretty decent chunk out
of your the future compounding returns that you are no
longer going to experience. Right, we're talking about your future
retirement nest egg. But guess what, Joel Ezra is didn't

(47:54):
even put that out there as an option. She's She's like, Okay, no,
I'm gonna I'm trying to do the smart Yeah here, well,
I believe I can't believe even put that on the
table of options here before me, guys.

Speaker 1 (48:04):
Of course, yeah, she was mentioning it for everyone else.
We know Esra would not do that, Matt, And so
I think any of these options can make sense that
she mentioned, right, Which is best depends on your individual circumstance.
Keeping it with your old employer can be a solid
option if they're with one of our favorite low cost providers,
but if that's not the case, I would take that
one off the table, Matt. I still have four to
one K money with my old employer because it's with Vanguard,

(48:27):
and I just have seen no reason to take it
out of just this wonderful place and turn it into
IRA money. Because I've got really low cost options and
it's with one of my favorite brokerage firms. Why would
I change anything? Why I switch it up?

Speaker 2 (48:42):
Yeah? And then beyond that, as a you could roll
it into your new jobs four one K and that
is if you have access to our favorite low cost
investing options as well. And so we're specifically talking about Vanguard,
Fidelity and Schwab. And that can be a solid move too.
If you're just looking to keep things simple, right, like
you are looking to have all your eggs and a single.

Speaker 1 (49:04):
Basket, one account log in, it's like you see all
your investable assets or most of them essentially in one place.

Speaker 2 (49:12):
Yeah, if you like to stay organized and keep things
super simple and buttoned up. But that being said, I
could also see an argument to be made if you
liked to Okay, I want to even pretend that money
doesn't even exist. Let's keep it at the old employer. Again,
assuming costs are low. I could almost see that being
a strategy too. It kind of comes down to knowing
yourself and what speaks to you as an investor.

Speaker 1 (49:31):
Oh, I don't pretend it doesn't exist. I mean I
don't look in there like every month or anything like that,
but I know.

Speaker 2 (49:36):
It's But if somebody might be tempted to feel richer
than they are, and then they're and you know they're
spending is more indicative of their net worth as opposed
to what it is that they're earning month a month. Yeah,
I think that could be a decent strategy.

Speaker 1 (49:50):
The third option is rolling you like how I said Ezzie,
I did because that's what she called a lot of
mess with your head, A lot of nicknames for him.
I would call her Essie though it would be different.
But rolling that money into an IRA is another great option.
It's the one that most folks take, and you have
full control over where your money goes, which means you
can opt for the lowest cost providers. You are in

(50:12):
full control. That's why I think why the majority of
people opt for this choice. One of the biggest reasons, though,
to potentially avoid this route is if your income is
climbing and it looks like you're going to want to
make backdoor wroth contributions in the future. Essentially, not having
any money in a traditional IRA makes that a much

(50:32):
simpler task. So if you attempt to, you know, back
too a wroth money in the future, and you have
money in traditional IRA, you're subject to the pro rautal rule.
That can be kind of a frustrating thing to work through. Yeah,
so if you think that's on the horizon, I think
one of those first two options is probably a better choice.

Speaker 2 (50:48):
It doesn't mean you can't do it. You just have
to calculate how much tax you actually owe. You got
to figure out the percentage of the pretax versus the
post tax. But uh ezra, I hope that gets you
pointed in the right direction.

Speaker 5 (50:58):
Jel.

Speaker 2 (50:59):
The beier that you and I I enjoyed was a
check style amber lagger, and it also had freshly picked
spruce tips from Maine. Could you taste the spruce?

Speaker 1 (51:09):
I could, I could a little bit there, would you like,
especially in the end? I did? Yeah, I loved it.

Speaker 2 (51:14):
It wasn't it wasn't too over the top.

Speaker 1 (51:15):
Sometimes if i'd be this time of year, you.

Speaker 2 (51:17):
Know, sometimes it can feel like you're drinking pine sal
a little bit where you're just like, oh my gosh,
if it feels too stringent, because a lot of times
I think that's the only time we experience spruce or
like juniper. Oh no, I guess I'm thinking about Gin.
There's juniper, juniper berries, and and Gin.

Speaker 1 (51:33):
Is that she dies a kid? Before the tide Pod Challenge?
Was it the pine sal challenge?

Speaker 2 (51:36):
Pesall challenge? I didn't. I didn't do any Oh no,
I take it back. I did the cinnamon challenge. Have
you ever done that? It's a spoonful of cinnamon, huh
and if you can eat it, so you put it
in your mouth and actually swallow and yeah, So what
happens is it's so dry and pottery that the slightest
inhale that cinnamon will shoot down in your lungs and

(51:58):
then you spend the next day hacking your lungs out.
And I mean it's I do not advise people to
do this, but it's something that I certainly did when
I was in high school as an idiot sixteen year old.

Speaker 1 (52:09):
Ingest cinnamon in small quantities and don't ingest cleaning products
in any amount.

Speaker 2 (52:14):
I definitely don't do that.

Speaker 1 (52:15):
My thoughts on this, I think I like this. The
sweet caramel vibes of this had going on. Yeah, this
is that amber. Yeah, check lagger. The toasted malt does get.
But then the spruce tip note added something special to
this one. So yeah, especially he has a pre Christmas beer.
I'm a fan.

Speaker 2 (52:30):
The Christmas vibes are strong with this one, But Buddy,
that's gonna be it for this ask how to Money episode.
You can find our show notes up on the website
at how to money dot com. But that's gonna be
it soon. Until next time, Best Friends Out, Best Friends Out,