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 - Home repair: should I get a new roof based on a roof inspector who says my insurance will cover it for free?
2 - Roth conversion: as an average wage earner who is maxing out my Roth IRA, should I convert my 401k as well?
3 - Tech heavy portfolio: should I rebalance my retirement portfolio away from AI if I think it’s a bubble?
4 - Savings rates: should I ditch Ally for another bank that’s paying a higher rate on their savings account?
5 - Open enrollment: I’ve always gone with my employer provided Health Reimbursement Arrangement, but is the HSA better?
Want more How To Money in your life? Here are some additional ways to get ahead with your personal finances:
- We referenced a bunch of previous episodes:
- Finding financial freedom making less than $40,000 a year with Hope Ware.
- Timing a Roth conversion with CFP Cody Garrett.
- AI and your investments with Vanguard’s Joe Davis.
- I’m not sure who needs to hear this but Health Savings Accounts, or HSAs, are the ultimate retirement accounts.
- Knowing your ‘money gear’ is a crucial part of your personal finance journey. Start here.
- Sign up for the weekly HTM newsletter. It’s fun, free, & practical.
- Join a thriving community of fellow money in the HTM Facebook group.
- Massively reduce your cell phone bill each month by switching to a discount provider like Mint Mobile.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joeld, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
Your mustache, by the way, buddy, is looking quite fine. Well,
I think we've not talked. Have we not talked about
it on the show?
Speaker 1 (00:29):
I don't think we have mentioned it.
Speaker 2 (00:30):
Maybe early on we joked about it, but it's like
full on legits.
Speaker 1 (00:34):
Well.
Speaker 2 (00:34):
Oh, we did joke about it early on.
Speaker 1 (00:35):
Because it wasn't joke in the beginning. It looked like
a joke.
Speaker 2 (00:38):
No, it's like it's just it's like a stick as
your hair up top. And I'm not disparaging.
Speaker 1 (00:44):
Either with good My thinning hair looks great with mine
not so great.
Speaker 2 (00:48):
Mustache, but the thin mustache as well. No, how long
are you planning to keep it? By the way, I
don't know.
Speaker 1 (00:52):
I'm kind of I feel like it's one of our
friends recently, one of our mutual friends recently said, you
look more like yourself now I mustache, And I.
Speaker 2 (01:00):
Thought that was the highest compliment. Honestly, pains that they've
gotten used to it, that's what that means.
Speaker 1 (01:04):
And I was like, but I think it was the
first time you'd seen me with it. Oh, really yeah,
and so okay, all right if you feel that way
and this is your first or second time seeing me,
But I think I'm I think I'm starting to enjoy it.
I like me with a mustache better than me without. Okay,
so maybe I'll keep it around for a while, so
not to make things about me. Do you think I
should grow mine out? And then we can not duly
mustache but like coordinated sparring mustaches. I thought it looked good.
(01:27):
It was just that all of your family hated it.
Speaker 2 (01:29):
That's the thing. I even mentioned that, Decate, because maybe
it was that Halloween. We're hanging out with some friendly
a little party, right and we're talking about it, and
they were like saw pictures.
Speaker 1 (01:38):
They're like, oh no, no, that's that's decent.
Speaker 2 (01:40):
And I mentioned it. Decate. She's like, I don't care
what they think. What about what? I think? We should
probably move on. I can't just talk about mustaches. I
don't think I'm gonna grown out.
Speaker 1 (01:49):
But let's just lit in my first foray in official hair,
and it's going well. I think it's I think it's solid.
Speaker 2 (01:53):
Bit I keep it around. But no, this is another
glorious Monday where we're gonna tackle some listener questions. Buddy,
We're gonna talk about how there's no such thing as
a free roof. If I was gonna say lunch, didn't you.
There's no such thing as a free roof.
Speaker 1 (02:07):
This is an ensure such thing as a cheap lunch
if you bring leftovers.
Speaker 2 (02:10):
That's that's true. It's another glorious day of eating leftovers
as well today coming up.
Speaker 1 (02:14):
Mine were inferior leftovers today, but still leftovers.
Speaker 2 (02:17):
Another lessener, Well, he's worried about AI putting him out
of work soon, so he wants to know what he
should be doing about that. We're also going to talk
about health reimbursement arrangements, which sounds so sketchy. It sounds
so it sounds not legit, right, it's an arrangement, jol.
It's an It sounds so informal. That's the problem. That's true.
When you say an arrangement, it just sounds like something
that you don't have written down on paper. But that's
(02:38):
not the case. I'm highly suspicious that's not the case
with this one though. But yeah, open enrollment. It's still open,
so we'll get to that one plus question.
Speaker 1 (02:45):
I'm thinking maybe he needs to go unplug all the
machines to run all the ais. Maybe this is the
way around it to kill it in its infancy. Oh yeah,
just a thought. Okay, go to the heart of Mordor
and eliminate the AI.
Speaker 2 (02:58):
Oh the two towers rubbing off on How did you
You just finished? So good? Yeah, I'm waiting on the
third book. You can immediately start Return of the King.
Speaker 1 (03:06):
Uh when while I'm waiting for the library to say
that I can have it. When when they do, I'll
read it.
Speaker 2 (03:10):
I'm pome for you. Man. This this is a series
that i haven't touched in decades, but I'm looking forward
to definitely worth revisiting. Oh yeah, I can't. I can't
wait too well, I want to redo it. I want
to revisit it with the kids. Speaking of the you
know what it reminds me of. There's like many names
that I mentioned the name of a certain object, and
there's AI companies named after these objects in Lord of
(03:32):
the Rings and a Rill and there is a defense
defense defense yeah yeah, yeah, yeah, So I just I'm
like volunteer, but I think some of those companies missed
the part of the point of the book and being
like more of the there's some.
Speaker 1 (03:45):
Highly relational, beautiful moments in the book, and I'm like,
these are like defense they picked out a cute name.
Speaker 2 (03:51):
But I think it's like a nerdy way for some
of these guys to have maybe a signaled to some
of the other fans of Yeah LOTR but that hey,
we're on the same page here when it comes to
some of the not fan I was about to say,
fanfic some of the different stories that we've enjoyed over.
Speaker 1 (04:06):
At I just wonder if they fully internalized it in
the way Tolkien wanted them to. You know.
Speaker 2 (04:10):
Yeah, I don't know. Maybe we should move on there.
Maybe we should have named our company instead of we
should have after a Tolkien s.
Speaker 1 (04:18):
Gollum incorporated Schmiegel LLC.
Speaker 2 (04:24):
No, let's get to our beer that you and I
are gonna share today. This is a bourbon barrel Age
Imperial Stout Vintage Ale by Kirkland Signature, and technically it's
got the Kirkland Sig label on it. But this is
a beer by the Shoots. But you can't buy that
to Shoots, right, I think literally this is Kirkland Sigg's beer.
Speaker 1 (04:43):
I love a co branded beer like this and to
be honest, many of the Kirkland signature beers have left
me wanting and in fact, they've been downright not very good,
and so I'm really excited to dive into this one.
This is a specialty beer they've made, so we'll give
our thoughts at the end of the episode. All right,
so let's get in listener questions. Matt, and by the way,
if you have a question for us, we want to
(05:03):
hear it, just got to have the money dot com
slash ask or if you want to skip the reading part,
just go to the voice memo app of your phone,
turn it, press the record button, say your name and
what your question is, and then email it to us.
It won't take long and we'll hopefully take it next
week on the show. Thank Yeah, we'd love to hear
from you. All right, let's get to a question. This
one is specifically about insurance and I don't know, maybe
(05:27):
pull the wool over your insurance company's eyes.
Speaker 3 (05:30):
Hey, Matt and Joel, this is him from Mount Prospect, Illinois.
I greatly appreciate all the financial and non financial advice
you guys have given over the years. I can honestly
say that I am living in all around healthier lifestyle
thanks to you guys bringing up books like The eighty
eighty Marriage and Born to Run. A question for you
guys today is in regards to these companies going around
our neighborhood handing out flyers advertising that can help you
(05:50):
get a free roof through insurance due.
Speaker 2 (05:52):
To wind and hail damage.
Speaker 3 (05:54):
On the other side of this coin, insurance companies are
saying that premiums are going up because of the increase
they are seeing and paying out these time it claims.
The sled to a friendly debate with one of my buddies.
Would you enlist one of these companies since you are
already paying higher premiums as a result of others doing it?
Or would you pay for the new roof yourself so
you are not contributing to the problem. I look forward
to hearing your guys thoughts.
Speaker 2 (06:14):
Thank you, Joel, you know exactly what Tim's talking about.
You get these texts as well, right, Oh yeah, and
so I just I just pulled up my phone.
Speaker 1 (06:22):
Sometimes it's legitally people just knocking on your door or
leaving a flyer in your mailbox too.
Speaker 2 (06:26):
I get more often than not text like maybe I'll
get like two a year as far as folks coming by,
but more than off, like more often than not their
text and literally, in the past month, I just looked,
I've had four people reach out and they say, Hey,
we've got a crew in the area, or we've got
an inspector. We'd love to swing by and see if
there's any damage to your roof. I don't like it.
Speaker 1 (06:46):
It's about to be five because I'm gonna text you later,
okay about the roof. Yeah, it's funny. I had a
friend growing up and his dad would do this, but
not the fly by night kind of thing. He would
literally go to areas of experienced storm damage with this company,
and that was just jo like to go to the
part of the country that had just recently experienced some
sort of natural disaster and then work to get quotes
(07:06):
for people to get things six, which makes sense. We
haven't had a natural disaster in our area, mat this
is not There was no tornado that just ripped through
our neighborhoods causing dam or hailstorm causing damage. And so
this is one of those things where, yeah, the question
is partly financial, but it's also moral, right, and this
actually reminds me of a recent Econ Talk podcast, one
(07:29):
of my favorite podcasts. It's been around for like twenty years.
But the conversation was about Roberts. Oh yeah, he's awesome.
And so this one was about the shampoo bottles in
hotels and it it sounds like the most random conversation.
But why is it that we think it's fine to
take small three ounce bottles of shampoo home with us?
But now that hotels have largely migrated to using the bigger,
(07:50):
wall mounted bottles, which I love, which is great, probably
makes sense for a money saving perspective for them to
the pump. You just yeah, but then you don't get
to take it home with you, right, which I think
some people they met, like the guy that was being interviewed,
has apparently a treasure trove of these three ounce shampoo
bottles and he loves them.
Speaker 2 (08:06):
I hate them. They're they're so hard to get the
it's I like the pump. It's like the old Ketchup bottles, Yeah,
trying to get the Ketchup out, but even tiny p
yeah yeah, yeah, I don't like so.
Speaker 1 (08:16):
But of course we wouldn't dream of putting the full
size bottle in our suitcase, right, Like.
Speaker 2 (08:21):
That'd be cheap.
Speaker 1 (08:22):
Yeah, exactly, And I think this is a point I
get arrested. The whole conversation is centered around this point
where money saving maneuvers are acceptable, like putting more money
in your four O one K to reduce income, and
then maybe where others cross the line, like hiding income
or lying to reduce your taxable income. And some things
are literally just like could get you in legal hot water,
but others are just we find them repulsive or we
(08:46):
know that if our neighbor told us about it, they
that we would be like, oh dude, I don't know, man,
that's pretty ridiculous, Like nobody does that, why would you
do that? Yeah, maybe you can get away with it,
but it doesn't make it right.
Speaker 2 (08:57):
Yeah, I mean, I think everyone has a different line,
which is a part of what makes the frugal versus
cheap questions so interesting. But I do think that there's
always a window of acceptability, like where the vast majority
of folks can at least understand why someone would come
to that conclusion. That being said, we wouldn't be able
to use this method to file acclaim with the clear conscience.
First of all, many of the companies that do business
(09:19):
in this way are fly by night, right, and so
I think the chances are that the job has done well,
that they do a good job.
Speaker 1 (09:29):
It's pretty slim. The kind of companies that would try
to get you to file a claim for damage that
wasn't actually done to your roof are likely going to
be the companies who don't take as much care when
they're repairing or replacing your roof.
Speaker 2 (09:41):
I wouldn't suspect that they would be a high quality
company putting doing it properly. And I think the primary
thing is they're just looking for the paycheck from the
insurance company, right like they're waiting on that fat check,
and then they're moving on as quickly as they can.
Speaker 1 (09:53):
And so part of that is because they're not maybe
an actual company who does business in your community, who
thrives or at least exist on good reviews from people
who live in the community, right, And if they are
more of a fly by night company, that's not what
they care about. And if they don't care about community reputation,
then it probably means they're not as beholden to how
(10:13):
you think of them, which could mean inferior service soure.
Speaker 2 (10:16):
The incentives aren't aligned for them to do a good job.
They're literally there to get the project started, to get
the check, and then they move on.
Speaker 1 (10:23):
And typically these companies can find something to report that
justifies a new roof, right, but does it really feel
like the right thing to do to get them up
on the roof to file a report that might or
might not pass muster with the insurance company. As my
mom would say, Matt, if everyone was going to jump
off a bridge, would you do it too? Did your
(10:44):
mom ever say anything like that to you?
Speaker 2 (10:45):
No? And I literally jumped off bridges. So the answer
for Matt was yes, but she she didn't know I
was jumping off the bridges and it was into a
river and we would check out that. Actually, we didn't
check out the river before we jumped into That's my
biggest regret looking back. We could have really messed us. Really,
you always, yeah, you always gotta if you're gonna do this, kids,
(11:05):
I always make sure there's no Yeah, check the depth,
make sure there's no trees down there. Hey, let's assume
there's no water below. Especially if people are jumping off
the bridge, like, you're not going to follow them to
their demise because everybody's doing it, and I think that
was that was my mom's point, although you you might
not have understood it, like, yeah, it sounds like fun.
Speaker 1 (11:23):
You lived my house going up. But even if let's
say this roof for was to do a top notch job,
giving you a fantastic roof to enjoy for decades to come,
you still pay deductible, which is far less than the
cost of the new roof. But that will also increase
your insurance premiums for years to come and your ability
to switch insurers to save because that claim goes on
your clue report, and that clue report is kind of
(11:45):
behind the scenes that when you say, hey, I'm trying
to go from State Farm to Liberty Mutual, Libertymutual says, hey, well,
you found that claim with State Farm for the new roof,
so we're either going to charge you more or not
accept you. So that could prevent you from saving money
in the future. And I think, but I think really
you agree this too. Is my guess is that the
most important thing at the heart of this question is
it feels like cheating your insurance company. It reminds me
(12:08):
of the stories of people just massively abusing Costco's return policy. Hey,
I got these tires four years ago. They're bald as
a mother now, but I'm going to return them because
your return policy says that I can. And everybody who
has any sort of conscience or like moral care or
qualm decency, decency is going to say, yeah, I don't
(12:31):
do that. We don't do that. That's ridiculous. That's abusive
of a company that is actually great and offers offers
a solid product at a reasonable price. So I think
if you truly experienced hail damage and you need to
file a claim, do it. But if it's a bogus
claim and an attempt to get a new roof that
you don't deserve, that you don't need, that isn't truly damaged,
(12:51):
don't do it.
Speaker 2 (12:52):
Yeah, this is why we can't have nice things. That's
the phrase that comes to mind when I hear this, right,
because people are abusing the system, even though technically speaking
it might be allowable. But that's unfortunately, it's just the
tendency of society to be moving in this more lawfair
sort of direction where things are contested as opposed to
just having character like doing the right thing. And also,
(13:14):
I don't want it to make it sound like that
we're like running Tim through the ringer here, Like truly,
if there is damage that has been afflicted upon your roof,
then like, yeah, like Joe said, that is totally something
that you can do. But there's a difference between like
the heart of the law and like the.
Speaker 1 (13:29):
The letter of the law basically yeah, and then the
heart of the law or that you're getting at here
is not.
Speaker 2 (13:34):
Like every time something happens to your roof that you
are entitled to a new roof basically yeah.
Speaker 1 (13:39):
Well again, yeah, it's this collective action problem where if
everybody does it, it's going to lead to higher insurance
rates across the board. But it's also going to lead
to higher insurance rates for Tim or for his friend.
He said, this was a conversation with his friend. What
if you two, whoever does this is going to see
increased premiums you know, for themselves as well.
Speaker 2 (13:54):
Totally, Yeah, it's costing all of us money. And I
totally get the impulse to, you know, to the smooth
talking roover up the inspector, take them up on there. Hey,
let me hop up there, all take a look around,
see what's going on. But you know, I think some
folks unwillingly file acclaim they move forward, but this is
ultimately why we're seeing rates rise across the board for
(14:14):
all of us. But one thing to keep in mind
know that insurance companies they have gotten wise to this
game and they are pushing back a bit more forcefully now.
So even still, despite the allure of a quote unquote
free roof, I think that's ethically dubious, and on top
of that, aside from the ethics, from a financial standpoint,
it could end up coming back and biting in the butt.
Speaker 1 (14:34):
And the reason I think the roof part is so
is a big part of this matt is because roofs
are expensive, like the idea, depending on the size of
your roof and what material you're using. I think at
this point ten thousand dollars would be cheap for a roof,
right and I haven't replaced a roof in the last
few years, but like could be, especially if you have
(14:57):
a big house covering a lot of square footage. You
can be talking about twenty plus thousand dollars to replace
a roof. And so this feels so enticing, like, oh,
this is a twenty to thirty year product that's gonna
it's gonna last that long. Yes, I know I'm gonna
have to replace it soon. But man, if I can
get the insurance company to take this headache off my hands,
for me, that's a lot of money I'm gonna save.
(15:17):
So it's appealing from that perspective, But it's one of
those things as a homeowner that you have to be
budgeting for. Along the way is the replacement of those
more expensive systems of your home, the roof, the HVAC,
stuff like that. So yeah, well, nobody wants to fork
over the money. That's kind of part of what comes
along with buying that home in the first place.
Speaker 2 (15:35):
You got to set up that sinking phone. But Joel,
we got more to get to. We're gonna hear from
a listener and he thinks that AI is gonna run
him out of business.
Speaker 1 (15:42):
We'll get to that and more right after this. Right
we're back from the break, got more of your questions
to get to, Matt. Let's take a question now from
a listener who wants to wroth of more of her money.
Speaker 4 (16:02):
Hi, man, Jel, this is Vicky from Ohio. I'm an
average earner around sixty nine thousand a year. I max
out my HSA and my WROTH every year. I wanted
to know if I can put money into my four
oh one k at work and transfer it over do
(16:22):
a ROTH conversion to my ROTH. Thank you for your help.
I really enjoy your show. I've learned so much. Bye.
Speaker 2 (16:33):
All right, VICKI, First off, can I just say that
you are a total boss, the fact that you are.
She's got an annual income of around seventy thousand dollars,
she's maxing out her roth IRA and her HSA, and
she didn't mention a family, so I'm assuming that she's
talking about the single version of the HSA for an
individual as opposed to a family that's over eleven thousand
(16:55):
dollars with totally is not easy in total, Yeah, that's
not easy to do with seventy seventy thousand dollars income
and so so.
Speaker 1 (17:04):
Much riz as the kids would say, Matt, Yeah, I
don't know. I think does I like to use those
terms early twenty twenty four inappropriately just to make myself
sound even older.
Speaker 2 (17:13):
Actually, which is what it in fact does.
Speaker 1 (17:16):
That's my favorite thing to do, so now that people
know I'm truly middle aged. But yeah, no, for real,
like maxim both those retirement accounts on that salary is incredible.
Speaker 2 (17:25):
It's really impressive, and it just adds I hope it's
encouraging for a lot of folks who hear this. They
hear that and they're like, oh man, that's about what
I make. Actually, oh wow, that's possible. She's doing it,
she's been doing it, yeah, and on talk about that
she's looking to do even more. It makes me think
of my conversation not too long ago with Hope from
Under the Median and their family has essentially made average
of forty thousand dollars for their entire working lives, and
(17:49):
she talks about how they were able to buy a
home in cash and pay off a home quickly, like
they just all the things they were able to do,
And that's such an inspiring episode because of their attention
to detail and frugality.
Speaker 1 (18:00):
Not everybody wants to go out there and find a
job that's incredibly stressful that's going to pay them one
hundred and fifty grand a year, because let's be honest,
sometimes the more money you make, it means the more
you have to trade off living your life. And so
Vicky is, I don't know what she's doing, whether she
loves her job or not. Put it, I will say
she's from a numbers standpoint, she's doing a great job,
(18:21):
totally crushing it. Yes, it does make me think too,
she's from She says she's.
Speaker 2 (18:24):
From Ohio, and Ohio has the lower cost of living
rate or whatever. Sure, it has an actual lower cost
of living compared to the rest of the country. So
I don't know what city she's in. But that's something
else too, that maybe there's a quick takeaway here for
folks to hear that and think that's it would be
impossible for me to set aside that amount of money
where I live. Well, yeah, you could also can, and
(18:45):
I'm not saying completely uproot your life, but there are
certain things that you have control over. Yeah, And I
think it's worth considering cost of living. And maybe Vicky
actually like lives out in the country, so maybe she's
not even in a city, right, and so she's maybe
for her this is easy, this is cake.
Speaker 1 (18:59):
Also, I think there's something about Midwestern values and I
don't know, maybe maybe that sounds ridiculous, but I do
think frugality is kind of like baked into the cake
of how Midwesterners function at least on average right as
like a looking from the outsiders, as someone who's visited
regularly places like Ohio and Wisconsin, the people I meet there,
frugality seems to be less like dorky. It's more just
(19:22):
kind of this is normal. Where if you live in
la is like frugality, yeah, And so I think there
is something to that where if you live in a
place where all the heart Landers, people don't care if
you're wearing a Kirkland signature sweatshirt and jeans versus or.
Speaker 2 (19:35):
Not because we're over here drinking Cookland sig beer.
Speaker 1 (19:38):
I know, but like you're not getting into that in
the club in West Hollywood or something like that.
Speaker 2 (19:43):
So I don't know.
Speaker 1 (19:44):
Maybe it's easier to pull off in Ohio as well.
For that reason.
Speaker 2 (19:46):
You've made yourself sound old yet again, Josh, I know,
I'm really good at that.
Speaker 1 (19:51):
You fit your quota for this for the show. Oh,
there's more to come. So the accessibility that Viggie's gonna
have right is going to help her out to she's
attempting to retire early. I don't know if she is,
but the HSA and the roth Ira, those are very
flexible accounts, but she's looking to do even more, which
of course we love. And the first thing to note,
by the way, is that you you might not have
(20:12):
to do a Roth conversion. Many employers offer a Wroth
four oh one K option picky, so that's worth looking
into that. I think last I read something like ninety
percent of employers make a WROTH four O one K
option available, so it's getting pretty ubiquitous at this point,
which means you wouldn't have to do anything other than
just contribute directly to that account, and you probably should
(20:33):
do that if it's available to you. Right, if you
were making like three hundred thousand dollars a year, we'd
probably say stick with the traditional four oh one k,
But given your income level, I think Wroth everything is
a totally fine, potentially an awesome approach. So if there's
a Roth four O one k available where you work,
I don't know, Matt, I'd i'd be strongly considering that.
Speaker 2 (20:51):
Yeah, yeah, So check with your with HR or looking
to do your benefits to see if that's something you
can do right directly contributing to that Wroth four one
K that would be the simplest path forward, although it
wouldn't help you if you were looking to be able
to draw down on some of those those contributions if
you're looking to retire early. But let's assume though that
your employer does not offer a ROTH four O one K,
(21:14):
and let's just say you you know you want to
get more money into your actual ROTH IRA. To your
specific question, the answer is yes, if your company allows
in service rollovers, you're allowed to contribute money to your
four O one K. And by the way, I hope
you're getting a match for doing so, for contributing to
that four on K. But then you would do a
direct rollover of four to one K dollars to an IRA.
(21:36):
But that is a big if though, And I'll say,
if you're with a low cost brokerage, a low cost provider,
it certainly makes sense to keep it with that company,
keep it under the same umbrella essentially. But then what
you're able to do is convert the traditional IRA dollars
into WROTH dollars. It's a few steps, but you can potentially,
like Joel said, rathify those dollars. Do keep in mind
(22:00):
that you're gonna be paying tax on this, right, and
so it sounds like this is something you're looking to
do moving forward. It's not like you've got seventy five
thousand dollars worth of four ON and K contributions sitting
there to where you'd be stuck with a big old
fat tax bill all in a singular year. But if
she does, if you do keep that in mind, you're
gonna have a big old tax bill. But just yeah,
(22:20):
no moving forward that you are not getting a deduction
for those four and K contributions.
Speaker 1 (22:25):
Yeah, yeah, I think that's a really important thing to mention.
Speaker 2 (22:29):
And taxes are a big consideration when you are looking
to change the tax What is it the tax character
of these dollars?
Speaker 1 (22:36):
Yeah, and so and when and how much like those are?
Really those are really important questions. And the truth is
you if there is a big lump summon there that
would push you to think through that in a more
holistic way.
Speaker 2 (22:49):
About more gradual way.
Speaker 1 (22:50):
Perhaps, yeah, maybe I do this over the course of
a number of years instead of doing this in one
fell swoop. And actually, I don't know. Maybe because I'm
still making money and I think I'll make less money
once I retire, maybe it makes sense to actually hold
off on some of those recharacterizations from traditional to ROTH
until I look like I'm making less money to the
(23:11):
irs right because I am, because I'm not working anymore,
and that is often a great time. Makes me think
of that conversation with Cody Garrett that's worth listening to
as well, talking about when you turn money that you've
invested from traditional into ROTH. I think it's really important
to think through that so you can pay less tax
overall on those dollars over time. We should also mention
(23:32):
that that so much depends on your current tax bracket
and your likely tax bracket in retirement, because ROTH isn't
always a slam dunk, especially on the four to one
K side. I think the ROTH ira, if your income allows,
makes sense for almost everybody pretty much all the time.
Roth iras are great, but if you think your income
is going to increase quite a bit, I think it
sways things in favor of the ROTH. Even more so
(23:54):
if you're like, hey, I'm making seventy grand now, but
I see this path, I'm probably going to be increasing
my income significantly. That makes like time of the essence
to get money into the ROTH right as you know,
as many dollars as you can get into the roth
Roth vehicles. Now, if your income is going to go up,
then I think it's a beautiful thing, a valiant attempt
(24:15):
to try to get as much as you can. And
if you think your income is going to decline, like
let's say you are going to retire soon and it's
going to go down in a big way, well does
the opposite, right, I think it incentivizes putting money into
traditional vehicles, traditional formal k, traditional ira. And don't forget
that once you reach the age of fifty, you're going
to be eligible for catch up contributions. This means you
(24:36):
can contribute an extra one thousand dollars straight into your
roth ira at that point in time into and you
can put extra into the four one K or Wroth
four O one k if you find you have that available.
So take note of that.
Speaker 2 (24:47):
The biggies you're seeing the viggies old. I don't know
how old she is.
Speaker 1 (24:50):
I know I'm old. I know I'm getting closer to that.
Speaker 2 (24:52):
Jill's looking at it, He's like, oh, catch up contributions, baby,
that's the only sexy thing about turning fifty in my opinion,
right is or I don't know.
Speaker 1 (25:00):
I think actually, I think there's plenty of great things.
Speaker 2 (25:02):
At fifty.
Speaker 1 (25:03):
I'm actually even more great gray hair in the mustache.
Oh yeah, it's coming. But yeah, being forty one has
been surprisingly pleasant, and so I actually am not I'm
not nervous about aging, And I guess the last thing
I would suggest for VICKI is to not forget about
taxbile brokerage accounts because if you're like, oh man, they
don't offer the Wroth por one K. Well, taxbile brokerage
(25:24):
accounts are another great way to invest. Yes, you're going
to pay tax on the gains right and you're not
getting the same tax break that you are for contributing
to a traditional account right now or a WROTH account
in the future where you don't pay tax on the earnings.
But that's still a great account. If you have more
money you want to invest and you don't have access
(25:44):
to some of these other great accounts, or you're kind
of capped essentially.
Speaker 2 (25:48):
By the contribution limits, yeah, yeah, you'd be artificially capped
if you were to have stopped investing at that point,
as opposed to saying, oh, I'll just invest like a
normal person in a less tax advantage way. Joel let's
now hears from another listener, this is a listener who
doesn't want to go all in with VU. He doesn't
want to go with an S and p ETF all
the way. He's looking to diversify. This is a question
(26:09):
from listener Steve, Hey, Matt and Joel.
Speaker 5 (26:12):
My wife and I are currently in money gear seven,
and assuming nothing changes in my current business, we have
already reached coast FI. We both max out our four
oh one ks and rath I rays on January first
each year, and we dollar cost average into a brokerage
account every month. So if nothing changes, we should easily
be fully fired in five to ten years. I'm currently
(26:33):
forty five and own my own business, but I'm guessing
I have four to five years tops before AI puts
me out of a job, forcing me into FI. Whether
I'm ready or not. It's not the worst thing, but
I'd hate to have to start drawing down funds to
live off of if we're in a recession. My plan
thus far has always been to invest solely in VT SACHS,
which is a total stock market fund, since I theoretically
(26:56):
won't need the funds for at least a decade. But
now that I see the strong potent being forced into
retirement early by AI, I'm wondering if I shouldn't be
a bit more conservative. On top of this, I'm increasingly
concerned that we're in an AI bubble, with much of
the gains in the market tied to those AI companies.
So if AI keeps growing, it puts me out of work.
But if it's actually all smoke in the bubble bursts,
(27:18):
it cuts into my portfolio. So my question is, would
it makes sense to start shifting future stock purchases into
something more like Vanguard's Value Index Fund. When I look
at the holdings, vt SACHS is thirty eight percent tech,
where VVIAX is only seven point five percent tech, so
much lower on the tech. My thinking is this would
(27:40):
keep me aggressively in the market, but would start diversifying
my portfolio away from being so tech heavy. Furthermore, I
keep losing faith in the future stability of the US
for all sorts of reasons, so I'm also considering diversifying
a percentage into Vanguard's Total International Stock Index to protect
against the putotential of future US in stability. I get
(28:02):
that this all sounds like timing the market and it
complicates things way beyond just dumping everything into VT sacks.
But being at cost FI, I'm willing to trade some
of that upside for a bit more peace of mind.
All that being said, would shifting to something closer to
fifty percent total stock market, twenty five percent growth, twenty
five percent international makes sense in my situation? Or am
(28:26):
I just overthinking things way more than I need to?
Thanks guys, Oh Steve.
Speaker 2 (28:32):
Oh Steve.
Speaker 1 (28:33):
Do you think he's overthinking it? I don't think he's
overthinking it. I think he's put a lot of thought
into this, and I think it's admirable that he's considering
not just doom and gloom headlines about what AI could
do to the job market or will do to specific sectors,
but he's really thinking through kind of long term ramifications
(28:54):
of what it means for his particular job, his overall portfolio.
And this is not a knee reaction like when he
talked when he mentioned not wanting the time to market.
That's not the vibe I get.
Speaker 2 (29:04):
No, this is this isn't a timing thing. But I
will say I there is a part of this very
small part of me that does think he's over indexing
the whole AI thing because of the fact that it
is going to impact him specifically with his ability to
continue his business. And I totally and in some ways
you have to.
Speaker 1 (29:21):
I totally feel that in some ways you have to,
because it's it's almost like owning a bunch of company
stock in the company you work for, and you're like,
you're over indexed to this thing, man. And so if
your bread and butter, if your income comes from AI,
you might want to not have as much of your
investment portfolio tied up in artificial intelligence. So I think
that is also another factor on the table. I love
(29:42):
this question. And by the way, Steve, I'm not sure
if you had a chance to listen to my interview
with Vanguard's Joe Davis that came out recently, I think
it would be particularly helpful for you. He's put a
lot of thought and methodology into what happens if AI
crushes or if it's kind of a lackluster and it
doesn't really do everything that Sam Altman and those bros.
(30:04):
Are saying it's going to do. He also factored in
other major trends into his analysis, and so I get
that the bubble talk can be disconcerting, but I think
Joe's work can offer some encouragement to stay the course,
which doesn't mean we don't think you should make any changes,
but I do think it at least provides h And
by the way, email me, I'll send you his book.
(30:25):
I've got an extra copy if you want it. Yeah,
coming into view. Yeah, coming entitle of the book. For
everyone else who we will not send an extra copy to,
only sending one to Steve Females, just email us, we'll
hook you up. But yeah, I think that that's it
was just like an important conversation because I think it's
on the minds of a lot of people, like how
is AI going to impact not just my profession potentially,
(30:47):
but also like the uh, the investments that I hold
as well.
Speaker 2 (30:50):
Yeah, yeah, and Steve, he's in money gear seven. But
that doesn't mean that you are fully financially independent or
even that you want to quit working. Right, doesn't sound
like you have any real debt. That's what you down
You've been doing a really good job investing as well, right,
Like you are fully funding your accounts at the beginning
of the year, so you are paying attention to.
Speaker 1 (31:08):
Three out of four years. He is a man after
your own harm.
Speaker 2 (31:10):
My gosh.
Speaker 1 (31:11):
In that regard, I love that you love a January
first full fund, pull.
Speaker 2 (31:14):
The trigger, make it happen. Yeah, being in that position
is going to give you a lot of cushion and flexibility.
But still, retirement isn't always something that we choose to do, right,
And my guess is that you could still use some
of your skills in other ways if AI were to
crush your small business. But that being said, you may
not want to do those things, and you may not
have to if you've built up a large enough nest
(31:35):
egg and it's well diversified.
Speaker 1 (31:38):
Yeah.
Speaker 2 (31:38):
Steve kind of points to the fact that he's kind
of in this weird situation where like AI is bad
for business, but it's good for good for portfolio. As
he's looking at his nest egg, I kind of think
he's in the perfect position, right, because like, you are
perfectly hedged to a certain extent, because you're diversified in
that way at least, because yeah, if you know you're
he's worried about the portion of his overall PORTFOLI being
(32:00):
in tech and if it takes off, well, guess what,
you can't afford to retire early. But if it doesn't
and it does pop, turns out you're in business for
another ten twenty years.
Speaker 1 (32:09):
Perhaps no, But I think that's what he's saying too, though,
is like, actually, if the bubble bursts, I'm impacted. He
thinks maybe, yeah, maybe you're right, Maybe maybe that keeps
his business around longer. Yeah, but maybe it doesn't.
Speaker 2 (32:19):
I think he said it as like a negative in that, like, well,
it's just an awkward position. But actually I sort of
see that as a good thing because if it does well, well,
you got a little bit of that. If it does poorly, okay,
well you got a little bit of that as well.
That's that might be a good point. But the hardest
Efs question is about his portfolio allocation and VT sacks.
(32:39):
The VT sacks and chill can be kind of a
great strategy for a lot of investors. VT sacks. By
the way, if you're listening to you're like, what is that?
It is a Vanguard ETF Total stock market ETF, and
it is incredibly inexpensive, and so that is like one
of the funds that's highly recommended. Matt, your equivalent you, oh,
that's the mutual fund. The ETF is VU right, Well,
(33:01):
VU is the SMP okay, so then VT I VTI
that's right, so bt total Vanguard's total stock market ETF.
Speaker 1 (33:07):
So BTI is the ETF version of VT SACKS. So
that simplicity is crucial. It's it's certainly not the right
mix for everyone.
Speaker 2 (33:16):
Right.
Speaker 1 (33:16):
Your timeline, your individual investor timeline, is crucial. And the
reality is that that Steve might he might need to
start tapping those funds in half a decade. So I
lean here towards Steve's line of thinking. Matt right, He's
he's not making this knee jerk decision based on headlines.
His risk profile truly is changing, and he is getting
closer to the wealth preservation stage of his life.
Speaker 2 (33:38):
That's a kind way of saying he's getting older.
Speaker 1 (33:40):
Well that, but he's also much younger than most people
are going to be tapping their retirement funds, because it
doesn't sound like he's anywhere close to traditional retirement age.
He is just getting closer to saying I'm financially independent
and I might not be working anymore. And because of that,
he's going to want to stay heavily weighted towards stock
still because he is young, but now being as tech
(34:01):
and as US centric would de risk things for him,
given kind of where things stand in his personal situation.
Speaker 2 (34:07):
Yeah, not being quite as exposed. One of the other
things that Steve mentioned was not selling his current holdings
but buying those other funds with new investment dollars, which
I think is a really smart way to rebalance. That's
actually something that Joe mentioned in that interview, Joe Joel
when you talked with him, that it's like slowly gently
moving the rudder as opposed to like jerking the wheel
(34:29):
to one side. In the new fishtail crash.
Speaker 1 (34:31):
A lot of people want to go like sell positions
and buy positions, and Joe's thing was like, just he's
into it. Slowly buy the new position, and you'll you'll
rebalance over.
Speaker 2 (34:39):
Time, exactly. Yeah, So increasing exposure every month with those
new investments means that over the next few years you're
going to be changing your investment mix in a meaningful
way without some of those substantial changes. Now that actually
could be more headline driven, perhaps with it being more
in than news lately.
Speaker 1 (34:56):
Yeah, and Steve, he's still looking at low cost Vanguard funds,
which is brilliant. And you know he mentioned he's experiencing
less growth by potentially making these changes. That might be true,
it might not be right, Like recent history would say
that you're stupid to opt for less tech exposure. It
would be like no, no, no. The fact that you're
not invested solely in the mag seven means you're a moron, right,
(35:18):
But that could change quickly, right, And it's really hard
to know when or how or if that's actually going
to come to pass. And so your goal at this
point in your money progress in your journey isn't to
maximize returns as much as possible. It's to be prepared
for upcoming changes.
Speaker 2 (35:36):
Matt.
Speaker 1 (35:36):
You mentioned the term hedging. It's to be hedged to
make sure that you're not exposed on the underside. You
have this soft underbelly because you didn't take into account
changes in investor sentiment that could negatively impact you if
you were all in on one on one fund and
so know what you're after make changes for that reason.
(35:58):
It's going to help ensure that you don't cake your
for missing out on higher returns if that's what comes
the past, because you might be like dang, I did
the wrong thing, and no, just because you didn't get
higher returns. Doesn't mean you did the wrong thing. You
kind of could have still easily done the right thing
for yourself, for your own risk tolerance given what's happening
in your life and the potential loss of your business. Yeah,
(36:19):
the risk tolerance part of it is super important. And
this is why this is such a personal decision. One
of the other things Joe Davis talked about in that
interview Joel that you had with them, We'll make sure
to link to that one in the show notes.
Speaker 2 (36:30):
For this episode, But he talked about that thought exercise
of imagining your portfolio down thirty percent so good, which
I've never done that, And so I actually, as I
was sitting there editing, done to a cold sweat. No,
But as I was listening, as I was editing that episode,
I hopped on over to my Excel, pulled up all
my investments, and I did a times one point three
and did a one point did a thirty percent up.
(36:51):
And so you were like, that was the fun side
of things. What if twenty million became fourteen million. Oh,
that's the thirty percent top, you know. But he said
to do both, which was an enlightening exercise because I
was like, oh wow, holy cow, if the market does
go up in thirty percent over the next couple of years,
it would be shocking to see what that would grow to.
In a similar way, that was the fun side of it.
(37:11):
The not so fun, the more painful exercise that is
also probably more important is to see that drop and
to kind of feel that, to see that number within
your framework with in my case over there on Excel,
and to think, Okay, yeah, this is the price of admission.
This could very easily happen. Do I have what it
takes to see this thing out were that to happen
over the next couple years. So I think in a
(37:32):
similar way, whatever it takes for you to kind of
visualize yourself in that position, Steve, is what I would
recommend that will help you.
Speaker 1 (37:39):
Then if it does come to pass, you're like, already
went through the mental in here before.
Speaker 2 (37:42):
Exactly. Yeah, Folks talk about visualizing victory, right like, like
literally go through the steps creating new habits, right Like
a lot of times talk about Okay, imagine waking up
the next morning, imagine putting your shoes on, going for
the run. Not to make this all about you and running, Joel,
but imagine being hated the trophy or the metal after
after running your.
Speaker 1 (38:00):
Parathon they do hand out obscene medal. Sometimes I hate
those medals.
Speaker 2 (38:04):
I do, But I think doing some of these thought
exercises could be really beneficial.
Speaker 1 (38:08):
But not just the victory one, the defeat one too.
What happens Oh yeah yeah, if like there's a market decline,
that's the.
Speaker 2 (38:15):
More important one. Hopefully the fun positive one is just
for kicks and to think, oh wow, but don't count
on that, right, Like that is the if things like
you can't count on the best case scenario unfolding something
else as you are potentially getting closer to retirement, stocking
up on cash, having more cash in your savings account
so that it gives you a bit more flexibility were
(38:35):
you to enter into those retirement ears a little bit
sooner without having to draw down on your retirement nest
egg in a down market where you'd be hit with
that sequence of returns risk.
Speaker 1 (38:46):
So maybe diversifying with those new investment dollars, stocking up
on cash over the next five years in anticipation of
this potential happening of you know, your coming obsoletely essentially
your small business, and that I think we'll give you
enough diversification from a cash and stocks perspective to whether
(39:10):
a storm and feel like you're doing it in the
right way. You've got plenty of time to play in here,
that's right, all right. We got more to get to, Matt,
including a retirement account. I don't know if we've ever
discussed it, if we ever talked about it on the
show before. We'll get to that question and another one
right after this.
Speaker 2 (39:32):
All right, buddy, we are back from the break. Let's
now hear from a listener who is considering hopping banks.
Speaker 6 (39:40):
Hey, Matt and Joel, Joel and Matt mole Jat, you
guys are awesome. My name is Jordan, a longtime listener
really since you guys debuted in twenty eighteen.
Speaker 2 (39:52):
And I just have a question.
Speaker 6 (39:54):
I have a high yield savings account with Ally and
the rate has shifted down from the fours into the threes,
and I was just wondering you know what your thoughts
are on moving large amounts of money into other high
old savings accounts offering better rates. You know you can
play the credit card rewards game. Do we play the
(40:15):
high old savings account rewards game? In terms?
Speaker 2 (40:19):
Of interest in things like that? How does that work?
Speaker 6 (40:22):
What are you guys thoughts on that?
Speaker 2 (40:23):
All right? Thanks? Man?
Speaker 1 (40:25):
What you think about our celebrity nickname?
Speaker 2 (40:27):
Which one do you prefer?
Speaker 1 (40:28):
Mole snow jat Snow Brandolina. That's all I can think of.
Speaker 2 (40:33):
Tomcat was Tom Cruise and wire Arts have to be
so bad Key Hills that I don't know.
Speaker 1 (40:39):
I'm okay with it.
Speaker 2 (40:40):
I could be a way cooler.
Speaker 1 (40:41):
We'll just let it die now, just cause the boys
as people do. Well, let's Jordan's question. Ally, that's one
of the best online banks. You've been with Ally for
a really really long time? Well, how long do you know?
Ten decade?
Speaker 5 (40:54):
Oh?
Speaker 2 (40:54):
I I might be closer to twenty years, dude. I
mean it feels like it's been forever. It feels like
I've always been without.
Speaker 1 (41:00):
I'm like at the age where I underestimate how long
things have been. I'm like, wait, that was twenty years ago.
Speaker 2 (41:05):
Now we're measuring things by decades again. I'm old.
Speaker 1 (41:08):
But like Ally has great customer service, as you know, Matt,
They've got a great interface, extra perks like I like
the way they do savings buckets. They've got the no
penalty CDs, which we think is cool. They've got competitive
interest rates in the market. So why would you consider
leaving a bank like that, Jordan, just to get a
slightly better rate on savings.
Speaker 2 (41:29):
I don't know.
Speaker 1 (41:30):
I probably wouldn't make this move. I think the exception
would be if you were doing something known as soft switching,
which Matt you and I talked about recently on a
Friday flight, Like, if you're funneling a bulk of your
savings into an account that's paying more, let's say, with
like Betterment or CI who are paying some top notch
rates right now, while you're still keeping ally kind of
(41:51):
at the center of your personal banking orbit. I think
it can make sense. But if you play the sign
up for better Rates game on repeat and you're moving
everything over and trying to do everything under a new
bank that you you know, switching your bill pay all
that kind of stuff, boy, that sounds exhausting after a while,
doesn't it.
Speaker 2 (42:10):
Sure, it depends on the stage of life that Jordan
is in. He sounds like he's got a bit more
energy though, right, And so typically when you're younger, you've
got more time on your hands and maybe less money,
and so you're no stone goes unturned when it comes
to optimizing, and max A don't on. I'm just throwing
that out there. I still remember sign up bonuses from
I would win to every single one everythingle one.
Speaker 1 (42:31):
Yeah, I opened one that I would at Chase and
I had to go into a physical branch to do it,
and I think it was like three hundred bucks.
Speaker 2 (42:37):
Really, what is this twenty ten?
Speaker 1 (42:39):
I know it was probably, and there were all these
hoops to jump through, and I remember at the end
of the day being like that three hundred dollars was
not worth the effort.
Speaker 2 (42:47):
Well, that's honestly, I think that's a good lesson to learn, Jordan, Like,
if this sounds appealing to you, give it a shot,
because this isn't like an irreversible decision. Like, give it
a shot, see how it feels, see if you think
it's worth it, especially if you're talking about like the
soft switching, like talking mont Jole, where you're putting a
portion of your money, like the portion of your emergency
fund that you know you're not going to touch. Let's
say you've got a solid six plus months worth of
(43:09):
living expenses. Okay, yeah, I move that over there and
then you can just learn and say, huh, was that
worth it? And if not, you can just undo it, right,
Like this is one of those two way doors where
it's easy to walk back and no harm, no foul.
Speaker 1 (43:21):
If it's the soft switching, then where you have both
bank accounts are kept alive, and they're connected, you can
transfer money back and forth within a couple of days,
and so I have multiple bank accounts. If you're doing
that and you're like, this is the place where I
keep the bulk of my savings and this is the
place where I operate my day to day, great, why
not have a relationship with two banks? But really, when
(43:42):
it comes down to it, if you're talking about switching
all the way and abandoning ally opening up this new
bank account because they're paying half a percent more, and
let's say you've got twenty thousand dollars in savings, how
much is that actually going to move the needle? I
would want to know that before I moved all the
way over. And so yeah, that this sort of soft
switching two bank thing makes more sense to me than
(44:04):
going all the way in and ditching your current bank
for a new one that pays a slightly higher rate.
But yeah, I guess if you have a ton of
cash on hand, Matt, the benefit is more substantial. But
even still played the both bank game totally all right.
Speaker 2 (44:17):
The Facebook question of the Week comes from Angela, and
she wrote, I frequently hear the guys extole the great
benefits of an HSA up till now, I have always
had my employer's hr A plan with open enrollment. I
was wondering the pros and the cons of the two.
Also kind of curious why I never hear Matt and
Joel reference in hr A in general. I'm a newer listener,
(44:38):
so I apologize if I have simply missed this discussion.
You have not missed the discussion, Angela. She also that's
something we've talked about. What she did miss is that
we go by Mole or Jack. So Angela, let's get
that right or the boys the Fellas. Yeah, no, I
will say, Angela, thank you so much for being a
new listener. And the hr why don't we mention it? Well,
it's because it's a much rarer perk than the other
(45:01):
main retirement accounts that get discussed frequently iras they are
fairly ubiquitous. Same thing with four one k's with HSA's
as well, but HRAs are far less common, and so
for those who don't know, it is a health reimbursement arrangement.
Thus again the casual nature of the arrangement. This is
something that we've talked about, but it's a real thing. Again,
(45:24):
but some companies offer this as a way to help
employees fund healthcare expenses. And it's something that you're bought,
like your company, they fully fund, they fully they contribute to.
It's not something that you can do anything. Yeah, yeah,
and it's just a betterffer you use the money. Yeah,
that's true. Yeah, And you just submit your receipts your
expenses to be reimbursed from this account. And it's pretty
(45:47):
nice if this is something that you have at your disposal. Yeah, yeah, exactly.
Speaker 1 (45:50):
But you're right, I mean, like the reason we don't
talk about is just because so few people have access
to one. And I'm glad you're bringing it up because
for people people that do, especially this time of year,
just recognize that, Yeah, your employer might offer you free
money for healthcare expenses you might incur and you might
have to do less saving on your or it might
even mean that you can contribute more to an HSA
(46:11):
for future health care costs, but we'll get into that
too here. You might not be able to do both.
So there's really not much for you to do except
use the funds in the HRA that your employer provides
if you have them, because your employer owns those funds
and if you don't use them in a given year,
or if you leave the company, you lose access to
those funds. So maybe you schedule an elective surgery or
(46:36):
something because you realize you're not going to fully utilize
your hr dollars if not, or you bump up a
medical procedure into the current year to fully exhaust those
funds when you might have waited another year. Those are
just kind of thoughts on how you might utilize the
HRRA to its full potential. But you kind of hinted
at the question, Angela, can you use an HSA and
(46:57):
an HRA at the same time. Potentially, you know, you
can't have the traditional HRA we were just talking about,
but there are other versions of the HRA, so this
is not this has not come out without its complications.
If you have a limited purpose HRA, you can use
an HSA at the same time, and that's the case,
(47:18):
we would say use them both. But if you have
access to one of these, the full HR version and
not the kind of light limited version, then you cannot
simultaneously have both. So which one's better probably depends on
how much your employer contributes to the HRA. But if
you have a really generous employee orre offering a substantial
(47:40):
reimbursement for you every year, that's a pretty sweet perk
that I want to take full advantage of.
Speaker 2 (47:45):
Certainly something to keep in mind, like, especially if you're
weighing another job, like this is a sweet perk. This
is a sweet benefit that you have, and make sure
to count that into the total compensation package that you're
being offered.
Speaker 1 (47:56):
I mean, it could be five grand in free money
towards healthcare and you're like, well, get paid seventy grand
a year. I want to go get take this job
to pay seventy sived. Not really, you get paid seventy five. Yes,
exactly mentioned the match.
Speaker 2 (48:05):
And I'm not saying you should stay there at whatever
company you're at Angela, but something considered.
Speaker 1 (48:11):
And those dollars don't get taxed either, so from by
the employ the government doesn't tax them for the employer
you don't get taxed for using them, so their tax
tax free money towards healthcare expenses. All right, Matt, let's
get back to the beer. This one that we enjoyed
on this episode was a Vintage Jail a bourbon barrel
aged Imperial stout by this Kirkland signature, but brewed by
(48:32):
De Shoots Brewery out of Oregon, who seems like they
Shoots teamed up and they're making a lot of beers
for Costco's private label. Now is that where Costco? Where's
Costco based?
Speaker 2 (48:41):
Washington? Kirkland, Washington.
Speaker 1 (48:42):
It's like right there, Yeah, they're not too far I
guess bordering.
Speaker 2 (48:46):
Is that why it's called Kirkland SIG because it's based
out of the same town, Kirkland, Washington. Very cool? Yeah,
I didn't know that. You probably bet you learned that
during that episode of Acquire. Probably I'm sure I did,
But I have a wait. Is it called acquired or acquired? Yeah,
that's right.
Speaker 1 (48:59):
Thinking of the bit game, I mean, it's still one
of the best episodes, have Acquired the Costco one. Yeah,
but one of my family members actually got the tour
the and I was like, dude, last time I was
in Seattle. He was telling me about his tour of
the headquarters headquarters of Costco, and I guess it's pretty spartan,
So it's what you would expect. You would expect that
from Costco.
Speaker 2 (49:18):
It kind of feels like that aisle, like that that
hallway on the way to the bathroom at Costco. That's
just kind of like, that's exactly right. Does anybody ever
walk over here right and you see the employee break
room over there off to your left. Yeah, it just
looks like an extension of the warehouse. I know.
Speaker 1 (49:31):
So I'm a little jealous though, And I don't know.
Hopefully that's funny. Someday he can give me the hook
up and I can check out Costco HQ as well.
But thoughts on this beer.
Speaker 2 (49:40):
It was really good man, that bourbon barrel. I mean
that's the first thing, like we poured it and I
gave a little sniff. You could totally pick up on
that on the nose. But it wasn't overly boozy. It
was just it was nice and oaky, which is hard
for me to not be happy with a beer that
doesn't have a strong oak presence. Yeah, that's like one
of my favorite flavor profiles and any almost any beer,
Like I love it in a stout, and I really
(50:01):
like it.
Speaker 1 (50:01):
In sours as well, So I'd say it's hard for
you not to be happy in general, my friend.
Speaker 2 (50:05):
Oh yeah, yeah, might fairly positive guy, I think so okay, Yeah,
that can be moody sometimes you've seen me be moody
before you What do you think about it.
Speaker 1 (50:13):
Though, Dude, I loved this beer, And to be honest,
like I said, I have not enjoyed many of the
Kirklet signature beers in the past. This beer was excellent, Like,
it was truly fantastic. And although I would maybe quibble
with the definition of this as an Imperial stout, it
it wasn't.
Speaker 2 (50:30):
Yeah, it wasn't a stout.
Speaker 1 (50:31):
Territory was gotchail or quad kind of vibes going on,
some of those dark fruit vibes maybe like fig and
raisin notes. But this is so high quality and it
had kind of some of those unique holiday spices going on,
almost like the Saint Bernardist Christmas ale, Yeah, which is
one of my you're going to say that favorite beers
to drink this time of year, And I was totally
getting you in the mood for Thanksgiving coming up later
(50:53):
this week. I was like, this is the perfect beer
to drink this this time of year. So if you
totally agree, can find the vintag jail your local costco
buy it, maybe buy a couple.
Speaker 2 (51:03):
Have you ever gotten it in the past? Have you
picked it up? I want to say we have.
Speaker 1 (51:07):
Maybe I'm trying to think they you should carry chame
blue and oh, that's what I'm thinking of. That's what
I would because that similar kind of you know, fall partnership.
Speaker 2 (51:16):
I wonder if this is the first year that they've
done this partnership with the shoots, but I.
Speaker 1 (51:19):
Think it is.
Speaker 2 (51:20):
I'm totally with you. Like it's labeled a stout, but
it is not super thick and stoudy, like it is
lighter in body, which, honestly, this time of year, I'm
looking for a little bit like I want that darker
flavor and those notes, those spicy notes, but without you know,
you don't want to get completely filled up as people
are passing around pumpkin and pecan pie. Sure, so to me,
(51:41):
this was it's this is perfect, better than I thought
it would be, and well worth buying. Pleasantly surprised. I
will actually next time I go to pe Costco, I'm
gonna look for this and pick up a couple bottles
the holiday season.
Speaker 1 (51:51):
The value excellent too nice, So all right, that's gonna
do it for this one. We appreciate you listening. You
can find links to some of the resources mentioned up
on our website at howamoney dot com. There's also literally
a resources page on our site. So I feel like
I heard the Boys mentioned something. I've heard mentioned that
a couple of times. It probably lives on the resource page.
I heard you redact the Boys, the Boys Matt or
(52:14):
no what jat and Mole, So yeah, you can check
that out. There's plenty of stuff, good stuff up there
on our website at howtomoney dot com.
Speaker 2 (52:21):
That's right, buddy, But that is going to do it
for this episode. So until next time, Best brands Out,
Best Friends Out,
Welcome to How to Money. I'm Joeld, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
Your mustache, by the way, buddy, is looking quite fine. Well,
I think we've not talked. Have we not talked about
it on the show?
Speaker 1 (00:29):
I don't think we have mentioned it.
Speaker 2 (00:30):
Maybe early on we joked about it, but it's like
full on legits.
Speaker 1 (00:34):
Well.
Speaker 2 (00:34):
Oh, we did joke about it early on.
Speaker 1 (00:35):
Because it wasn't joke in the beginning. It looked like
a joke.
Speaker 2 (00:38):
No, it's like it's just it's like a stick as
your hair up top. And I'm not disparaging.
Speaker 1 (00:44):
Either with good My thinning hair looks great with mine
not so great.
Speaker 2 (00:48):
Mustache, but the thin mustache as well. No, how long
are you planning to keep it? By the way, I
don't know.
Speaker 1 (00:52):
I'm kind of I feel like it's one of our
friends recently, one of our mutual friends recently said, you
look more like yourself now I mustache, And I.
Speaker 2 (01:00):
Thought that was the highest compliment. Honestly, pains that they've
gotten used to it, that's what that means.
Speaker 1 (01:04):
And I was like, but I think it was the
first time you'd seen me with it. Oh, really yeah,
and so okay, all right if you feel that way
and this is your first or second time seeing me,
But I think I'm I think I'm starting to enjoy it.
I like me with a mustache better than me without. Okay,
so maybe I'll keep it around for a while, so
not to make things about me. Do you think I
should grow mine out? And then we can not duly
mustache but like coordinated sparring mustaches. I thought it looked good.
(01:27):
It was just that all of your family hated it.
Speaker 2 (01:29):
That's the thing. I even mentioned that, Decate, because maybe
it was that Halloween. We're hanging out with some friendly
a little party, right and we're talking about it, and
they were like saw pictures.
Speaker 1 (01:38):
They're like, oh no, no, that's that's decent.
Speaker 2 (01:40):
And I mentioned it. Decate. She's like, I don't care
what they think. What about what? I think? We should
probably move on. I can't just talk about mustaches. I
don't think I'm gonna grown out.
Speaker 1 (01:49):
But let's just lit in my first foray in official hair,
and it's going well. I think it's I think it's solid.
Speaker 2 (01:53):
Bit I keep it around. But no, this is another
glorious Monday where we're gonna tackle some listener questions. Buddy,
We're gonna talk about how there's no such thing as
a free roof. If I was gonna say lunch, didn't you.
There's no such thing as a free roof.
Speaker 1 (02:07):
This is an ensure such thing as a cheap lunch
if you bring leftovers.
Speaker 2 (02:10):
That's that's true. It's another glorious day of eating leftovers
as well today coming up.
Speaker 1 (02:14):
Mine were inferior leftovers today, but still leftovers.
Speaker 2 (02:17):
Another lessener, Well, he's worried about AI putting him out
of work soon, so he wants to know what he
should be doing about that. We're also going to talk
about health reimbursement arrangements, which sounds so sketchy. It sounds
so it sounds not legit, right, it's an arrangement, jol.
It's an It sounds so informal. That's the problem. That's true.
When you say an arrangement, it just sounds like something
that you don't have written down on paper. But that's
(02:38):
not the case. I'm highly suspicious that's not the case
with this one though. But yeah, open enrollment. It's still open,
so we'll get to that one plus question.
Speaker 1 (02:45):
I'm thinking maybe he needs to go unplug all the
machines to run all the ais. Maybe this is the
way around it to kill it in its infancy. Oh yeah,
just a thought. Okay, go to the heart of Mordor
and eliminate the AI.
Speaker 2 (02:58):
Oh the two towers rubbing off on How did you
You just finished? So good? Yeah, I'm waiting on the
third book. You can immediately start Return of the King.
Speaker 1 (03:06):
Uh when while I'm waiting for the library to say
that I can have it. When when they do, I'll
read it.
Speaker 2 (03:10):
I'm pome for you. Man. This this is a series
that i haven't touched in decades, but I'm looking forward
to definitely worth revisiting. Oh yeah, I can't. I can't
wait too well, I want to redo it. I want
to revisit it with the kids. Speaking of the you
know what it reminds me of. There's like many names
that I mentioned the name of a certain object, and
there's AI companies named after these objects in Lord of
(03:32):
the Rings and a Rill and there is a defense
defense defense yeah yeah, yeah, yeah, So I just I'm
like volunteer, but I think some of those companies missed
the part of the point of the book and being
like more of the there's some.
Speaker 1 (03:45):
Highly relational, beautiful moments in the book, and I'm like,
these are like defense they picked out a cute name.
Speaker 2 (03:51):
But I think it's like a nerdy way for some
of these guys to have maybe a signaled to some
of the other fans of Yeah LOTR but that hey,
we're on the same page here when it comes to
some of the not fan I was about to say,
fanfic some of the different stories that we've enjoyed over.
Speaker 1 (04:06):
At I just wonder if they fully internalized it in
the way Tolkien wanted them to. You know.
Speaker 2 (04:10):
Yeah, I don't know. Maybe we should move on there.
Maybe we should have named our company instead of we
should have after a Tolkien s.
Speaker 1 (04:18):
Gollum incorporated Schmiegel LLC.
Speaker 2 (04:24):
No, let's get to our beer that you and I
are gonna share today. This is a bourbon barrel Age
Imperial Stout Vintage Ale by Kirkland Signature, and technically it's
got the Kirkland Sig label on it. But this is
a beer by the Shoots. But you can't buy that
to Shoots, right, I think literally this is Kirkland Sigg's beer.
Speaker 1 (04:43):
I love a co branded beer like this and to
be honest, many of the Kirkland signature beers have left
me wanting and in fact, they've been downright not very good,
and so I'm really excited to dive into this one.
This is a specialty beer they've made, so we'll give
our thoughts at the end of the episode. All right,
so let's get in listener questions. Matt, and by the way,
if you have a question for us, we want to
(05:03):
hear it, just got to have the money dot com
slash ask or if you want to skip the reading part,
just go to the voice memo app of your phone,
turn it, press the record button, say your name and
what your question is, and then email it to us.
It won't take long and we'll hopefully take it next
week on the show. Thank Yeah, we'd love to hear
from you. All right, let's get to a question. This
one is specifically about insurance and I don't know, maybe
(05:27):
pull the wool over your insurance company's eyes.
Speaker 3 (05:30):
Hey, Matt and Joel, this is him from Mount Prospect, Illinois.
I greatly appreciate all the financial and non financial advice
you guys have given over the years. I can honestly
say that I am living in all around healthier lifestyle
thanks to you guys bringing up books like The eighty
eighty Marriage and Born to Run. A question for you
guys today is in regards to these companies going around
our neighborhood handing out flyers advertising that can help you
(05:50):
get a free roof through insurance due.
Speaker 2 (05:52):
To wind and hail damage.
Speaker 3 (05:54):
On the other side of this coin, insurance companies are
saying that premiums are going up because of the increase
they are seeing and paying out these time it claims.
The sled to a friendly debate with one of my buddies.
Would you enlist one of these companies since you are
already paying higher premiums as a result of others doing it?
Or would you pay for the new roof yourself so
you are not contributing to the problem. I look forward
to hearing your guys thoughts.
Speaker 2 (06:14):
Thank you, Joel, you know exactly what Tim's talking about.
You get these texts as well, right, Oh yeah, and
so I just I just pulled up my phone.
Speaker 1 (06:22):
Sometimes it's legitally people just knocking on your door or
leaving a flyer in your mailbox too.
Speaker 2 (06:26):
I get more often than not text like maybe I'll
get like two a year as far as folks coming by,
but more than off, like more often than not their
text and literally, in the past month, I just looked,
I've had four people reach out and they say, Hey,
we've got a crew in the area, or we've got
an inspector. We'd love to swing by and see if
there's any damage to your roof. I don't like it.
Speaker 1 (06:46):
It's about to be five because I'm gonna text you later,
okay about the roof. Yeah, it's funny. I had a
friend growing up and his dad would do this, but
not the fly by night kind of thing. He would
literally go to areas of experienced storm damage with this company,
and that was just jo like to go to the
part of the country that had just recently experienced some
sort of natural disaster and then work to get quotes
(07:06):
for people to get things six, which makes sense. We
haven't had a natural disaster in our area, mat this
is not There was no tornado that just ripped through
our neighborhoods causing dam or hailstorm causing damage. And so
this is one of those things where, yeah, the question
is partly financial, but it's also moral, right, and this
actually reminds me of a recent Econ Talk podcast, one
(07:29):
of my favorite podcasts. It's been around for like twenty years.
But the conversation was about Roberts. Oh yeah, he's awesome.
And so this one was about the shampoo bottles in
hotels and it it sounds like the most random conversation.
But why is it that we think it's fine to
take small three ounce bottles of shampoo home with us?
But now that hotels have largely migrated to using the bigger,
(07:50):
wall mounted bottles, which I love, which is great, probably
makes sense for a money saving perspective for them to
the pump. You just yeah, but then you don't get
to take it home with you, right, which I think
some people they met, like the guy that was being interviewed,
has apparently a treasure trove of these three ounce shampoo
bottles and he loves them.
Speaker 2 (08:06):
I hate them. They're they're so hard to get the
it's I like the pump. It's like the old Ketchup bottles, Yeah,
trying to get the Ketchup out, but even tiny p
yeah yeah, yeah, I don't like so.
Speaker 1 (08:16):
But of course we wouldn't dream of putting the full
size bottle in our suitcase, right, Like.
Speaker 2 (08:21):
That'd be cheap.
Speaker 1 (08:22):
Yeah, exactly, And I think this is a point I
get arrested. The whole conversation is centered around this point
where money saving maneuvers are acceptable, like putting more money
in your four O one K to reduce income, and
then maybe where others cross the line, like hiding income
or lying to reduce your taxable income. And some things
are literally just like could get you in legal hot water,
but others are just we find them repulsive or we
(08:46):
know that if our neighbor told us about it, they
that we would be like, oh dude, I don't know, man,
that's pretty ridiculous, Like nobody does that, why would you
do that? Yeah, maybe you can get away with it,
but it doesn't make it right.
Speaker 2 (08:57):
Yeah, I mean, I think everyone has a different line,
which is a part of what makes the frugal versus
cheap questions so interesting. But I do think that there's
always a window of acceptability, like where the vast majority
of folks can at least understand why someone would come
to that conclusion. That being said, we wouldn't be able
to use this method to file acclaim with the clear conscience.
First of all, many of the companies that do business
(09:19):
in this way are fly by night, right, and so
I think the chances are that the job has done well,
that they do a good job.
Speaker 1 (09:29):
It's pretty slim. The kind of companies that would try
to get you to file a claim for damage that
wasn't actually done to your roof are likely going to
be the companies who don't take as much care when
they're repairing or replacing your roof.
Speaker 2 (09:41):
I wouldn't suspect that they would be a high quality
company putting doing it properly. And I think the primary
thing is they're just looking for the paycheck from the
insurance company, right like they're waiting on that fat check,
and then they're moving on as quickly as they can.
Speaker 1 (09:53):
And so part of that is because they're not maybe
an actual company who does business in your community, who
thrives or at least exist on good reviews from people
who live in the community, right, And if they are
more of a fly by night company, that's not what
they care about. And if they don't care about community reputation,
then it probably means they're not as beholden to how
(10:13):
you think of them, which could mean inferior service soure.
Speaker 2 (10:16):
The incentives aren't aligned for them to do a good job.
They're literally there to get the project started, to get
the check, and then they move on.
Speaker 1 (10:23):
And typically these companies can find something to report that
justifies a new roof, right, but does it really feel
like the right thing to do to get them up
on the roof to file a report that might or
might not pass muster with the insurance company. As my
mom would say, Matt, if everyone was going to jump
off a bridge, would you do it too? Did your
(10:44):
mom ever say anything like that to you?
Speaker 2 (10:45):
No? And I literally jumped off bridges. So the answer
for Matt was yes, but she she didn't know I
was jumping off the bridges and it was into a
river and we would check out that. Actually, we didn't
check out the river before we jumped into That's my
biggest regret looking back. We could have really messed us. Really,
you always, yeah, you always gotta if you're gonna do this, kids,
(11:05):
I always make sure there's no Yeah, check the depth,
make sure there's no trees down there. Hey, let's assume
there's no water below. Especially if people are jumping off
the bridge, like, you're not going to follow them to
their demise because everybody's doing it, and I think that
was that was my mom's point, although you you might
not have understood it, like, yeah, it sounds like fun.
Speaker 1 (11:23):
You lived my house going up. But even if let's
say this roof for was to do a top notch job,
giving you a fantastic roof to enjoy for decades to come,
you still pay deductible, which is far less than the
cost of the new roof. But that will also increase
your insurance premiums for years to come and your ability
to switch insurers to save because that claim goes on
your clue report, and that clue report is kind of
(11:45):
behind the scenes that when you say, hey, I'm trying
to go from State Farm to Liberty Mutual, Libertymutual says, hey, well,
you found that claim with State Farm for the new roof,
so we're either going to charge you more or not
accept you. So that could prevent you from saving money
in the future. And I think, but I think really
you agree this too. Is my guess is that the
most important thing at the heart of this question is
it feels like cheating your insurance company. It reminds me
(12:08):
of the stories of people just massively abusing Costco's return policy. Hey,
I got these tires four years ago. They're bald as
a mother now, but I'm going to return them because
your return policy says that I can. And everybody who
has any sort of conscience or like moral care or
qualm decency, decency is going to say, yeah, I don't
(12:31):
do that. We don't do that. That's ridiculous. That's abusive
of a company that is actually great and offers offers
a solid product at a reasonable price. So I think
if you truly experienced hail damage and you need to
file a claim, do it. But if it's a bogus
claim and an attempt to get a new roof that
you don't deserve, that you don't need, that isn't truly damaged,
(12:51):
don't do it.
Speaker 2 (12:52):
Yeah, this is why we can't have nice things. That's
the phrase that comes to mind when I hear this, right,
because people are abusing the system, even though technically speaking
it might be allowable. But that's unfortunately, it's just the
tendency of society to be moving in this more lawfair
sort of direction where things are contested as opposed to
just having character like doing the right thing. And also,
(13:14):
I don't want it to make it sound like that
we're like running Tim through the ringer here, Like truly,
if there is damage that has been afflicted upon your roof,
then like, yeah, like Joe said, that is totally something
that you can do. But there's a difference between like
the heart of the law and like the.
Speaker 1 (13:29):
The letter of the law basically yeah, and then the
heart of the law or that you're getting at here
is not.
Speaker 2 (13:34):
Like every time something happens to your roof that you
are entitled to a new roof basically yeah.
Speaker 1 (13:39):
Well again, yeah, it's this collective action problem where if
everybody does it, it's going to lead to higher insurance
rates across the board. But it's also going to lead
to higher insurance rates for Tim or for his friend.
He said, this was a conversation with his friend. What
if you two, whoever does this is going to see
increased premiums you know, for themselves as well.
Speaker 2 (13:54):
Totally, Yeah, it's costing all of us money. And I
totally get the impulse to, you know, to the smooth
talking roover up the inspector, take them up on there. Hey,
let me hop up there, all take a look around,
see what's going on. But you know, I think some
folks unwillingly file acclaim they move forward, but this is
ultimately why we're seeing rates rise across the board for
(14:14):
all of us. But one thing to keep in mind
know that insurance companies they have gotten wise to this
game and they are pushing back a bit more forcefully now.
So even still, despite the allure of a quote unquote
free roof, I think that's ethically dubious, and on top
of that, aside from the ethics, from a financial standpoint,
it could end up coming back and biting in the butt.
Speaker 1 (14:34):
And the reason I think the roof part is so
is a big part of this matt is because roofs
are expensive, like the idea, depending on the size of
your roof and what material you're using. I think at
this point ten thousand dollars would be cheap for a roof,
right and I haven't replaced a roof in the last
few years, but like could be, especially if you have
(14:57):
a big house covering a lot of square footage. You
can be talking about twenty plus thousand dollars to replace
a roof. And so this feels so enticing, like, oh,
this is a twenty to thirty year product that's gonna
it's gonna last that long. Yes, I know I'm gonna
have to replace it soon. But man, if I can
get the insurance company to take this headache off my hands,
for me, that's a lot of money I'm gonna save.
(15:17):
So it's appealing from that perspective, But it's one of
those things as a homeowner that you have to be
budgeting for. Along the way is the replacement of those
more expensive systems of your home, the roof, the HVAC,
stuff like that. So yeah, well, nobody wants to fork
over the money. That's kind of part of what comes
along with buying that home in the first place.
Speaker 2 (15:35):
You got to set up that sinking phone. But Joel,
we got more to get to. We're gonna hear from
a listener and he thinks that AI is gonna run
him out of business.
Speaker 1 (15:42):
We'll get to that and more right after this. Right
we're back from the break, got more of your questions
to get to, Matt. Let's take a question now from
a listener who wants to wroth of more of her money.
Speaker 4 (16:02):
Hi, man, Jel, this is Vicky from Ohio. I'm an
average earner around sixty nine thousand a year. I max
out my HSA and my WROTH every year. I wanted
to know if I can put money into my four
oh one k at work and transfer it over do
(16:22):
a ROTH conversion to my ROTH. Thank you for your help.
I really enjoy your show. I've learned so much. Bye.
Speaker 2 (16:33):
All right, VICKI, First off, can I just say that
you are a total boss, the fact that you are.
She's got an annual income of around seventy thousand dollars,
she's maxing out her roth IRA and her HSA, and
she didn't mention a family, so I'm assuming that she's
talking about the single version of the HSA for an
individual as opposed to a family that's over eleven thousand
(16:55):
dollars with totally is not easy in total, Yeah, that's
not easy to do with seventy seventy thousand dollars income
and so so.
Speaker 1 (17:04):
Much riz as the kids would say, Matt, Yeah, I
don't know. I think does I like to use those
terms early twenty twenty four inappropriately just to make myself
sound even older.
Speaker 2 (17:13):
Actually, which is what it in fact does.
Speaker 1 (17:16):
That's my favorite thing to do, so now that people
know I'm truly middle aged. But yeah, no, for real,
like maxim both those retirement accounts on that salary is incredible.
Speaker 2 (17:25):
It's really impressive, and it just adds I hope it's
encouraging for a lot of folks who hear this. They
hear that and they're like, oh man, that's about what
I make. Actually, oh wow, that's possible. She's doing it,
she's been doing it, yeah, and on talk about that
she's looking to do even more. It makes me think
of my conversation not too long ago with Hope from
Under the Median and their family has essentially made average
of forty thousand dollars for their entire working lives, and
(17:49):
she talks about how they were able to buy a
home in cash and pay off a home quickly, like
they just all the things they were able to do,
And that's such an inspiring episode because of their attention
to detail and frugality.
Speaker 1 (18:00):
Not everybody wants to go out there and find a
job that's incredibly stressful that's going to pay them one
hundred and fifty grand a year, because let's be honest,
sometimes the more money you make, it means the more
you have to trade off living your life. And so
Vicky is, I don't know what she's doing, whether she
loves her job or not. Put it, I will say
she's from a numbers standpoint, she's doing a great job,
(18:21):
totally crushing it. Yes, it does make me think too,
she's from She says she's.
Speaker 2 (18:24):
From Ohio, and Ohio has the lower cost of living
rate or whatever. Sure, it has an actual lower cost
of living compared to the rest of the country. So
I don't know what city she's in. But that's something
else too, that maybe there's a quick takeaway here for
folks to hear that and think that's it would be
impossible for me to set aside that amount of money
where I live. Well, yeah, you could also can, and
(18:45):
I'm not saying completely uproot your life, but there are
certain things that you have control over. Yeah, And I
think it's worth considering cost of living. And maybe Vicky
actually like lives out in the country, so maybe she's
not even in a city, right, and so she's maybe
for her this is easy, this is cake.
Speaker 1 (18:59):
Also, I think there's something about Midwestern values and I
don't know, maybe maybe that sounds ridiculous, but I do
think frugality is kind of like baked into the cake
of how Midwesterners function at least on average right as
like a looking from the outsiders, as someone who's visited
regularly places like Ohio and Wisconsin, the people I meet there,
frugality seems to be less like dorky. It's more just
(19:22):
kind of this is normal. Where if you live in
la is like frugality, yeah, And so I think there
is something to that where if you live in a
place where all the heart Landers, people don't care if
you're wearing a Kirkland signature sweatshirt and jeans versus or.
Speaker 2 (19:35):
Not because we're over here drinking Cookland sig beer.
Speaker 1 (19:38):
I know, but like you're not getting into that in
the club in West Hollywood or something like that.
Speaker 2 (19:43):
So I don't know.
Speaker 1 (19:44):
Maybe it's easier to pull off in Ohio as well.
For that reason.
Speaker 2 (19:46):
You've made yourself sound old yet again, Josh, I know,
I'm really good at that.
Speaker 1 (19:51):
You fit your quota for this for the show. Oh,
there's more to come. So the accessibility that Viggie's gonna
have right is going to help her out to she's
attempting to retire early. I don't know if she is,
but the HSA and the roth Ira, those are very
flexible accounts, but she's looking to do even more, which
of course we love. And the first thing to note,
by the way, is that you you might not have
(20:12):
to do a Roth conversion. Many employers offer a Wroth
four oh one K option picky, so that's worth looking
into that. I think last I read something like ninety
percent of employers make a WROTH four O one K
option available, so it's getting pretty ubiquitous at this point,
which means you wouldn't have to do anything other than
just contribute directly to that account, and you probably should
(20:33):
do that if it's available to you. Right, if you
were making like three hundred thousand dollars a year, we'd
probably say stick with the traditional four oh one k,
But given your income level, I think Wroth everything is
a totally fine, potentially an awesome approach. So if there's
a Roth four O one k available where you work,
I don't know, Matt, I'd i'd be strongly considering that.
Speaker 2 (20:51):
Yeah, yeah, So check with your with HR or looking
to do your benefits to see if that's something you
can do right directly contributing to that Wroth four one
K that would be the simplest path forward, although it
wouldn't help you if you were looking to be able
to draw down on some of those those contributions if
you're looking to retire early. But let's assume though that
your employer does not offer a ROTH four O one K,
(21:14):
and let's just say you you know you want to
get more money into your actual ROTH IRA. To your
specific question, the answer is yes, if your company allows
in service rollovers, you're allowed to contribute money to your
four O one K. And by the way, I hope
you're getting a match for doing so, for contributing to
that four on K. But then you would do a
direct rollover of four to one K dollars to an IRA.
(21:36):
But that is a big if though, And I'll say,
if you're with a low cost brokerage, a low cost provider,
it certainly makes sense to keep it with that company,
keep it under the same umbrella essentially. But then what
you're able to do is convert the traditional IRA dollars
into WROTH dollars. It's a few steps, but you can potentially,
like Joel said, rathify those dollars. Do keep in mind
(22:00):
that you're gonna be paying tax on this, right, and
so it sounds like this is something you're looking to
do moving forward. It's not like you've got seventy five
thousand dollars worth of four ON and K contributions sitting
there to where you'd be stuck with a big old
fat tax bill all in a singular year. But if
she does, if you do keep that in mind, you're
gonna have a big old tax bill. But just yeah,
(22:20):
no moving forward that you are not getting a deduction
for those four and K contributions.
Speaker 1 (22:25):
Yeah, yeah, I think that's a really important thing to mention.
Speaker 2 (22:29):
And taxes are a big consideration when you are looking
to change the tax What is it the tax character
of these dollars?
Speaker 1 (22:36):
Yeah, and so and when and how much like those are?
Really those are really important questions. And the truth is
you if there is a big lump summon there that
would push you to think through that in a more
holistic way.
Speaker 2 (22:49):
About more gradual way.
Speaker 1 (22:50):
Perhaps, yeah, maybe I do this over the course of
a number of years instead of doing this in one
fell swoop. And actually, I don't know. Maybe because I'm
still making money and I think I'll make less money
once I retire, maybe it makes sense to actually hold
off on some of those recharacterizations from traditional to ROTH
until I look like I'm making less money to the
(23:11):
irs right because I am, because I'm not working anymore,
and that is often a great time. Makes me think
of that conversation with Cody Garrett that's worth listening to
as well, talking about when you turn money that you've
invested from traditional into ROTH. I think it's really important
to think through that so you can pay less tax
overall on those dollars over time. We should also mention
(23:32):
that that so much depends on your current tax bracket
and your likely tax bracket in retirement, because ROTH isn't
always a slam dunk, especially on the four to one
K side. I think the ROTH ira, if your income allows,
makes sense for almost everybody pretty much all the time.
Roth iras are great, but if you think your income
is going to increase quite a bit, I think it
sways things in favor of the ROTH. Even more so
(23:54):
if you're like, hey, I'm making seventy grand now, but
I see this path, I'm probably going to be increasing
my income significantly. That makes like time of the essence
to get money into the ROTH right as you know,
as many dollars as you can get into the roth
Roth vehicles. Now, if your income is going to go up,
then I think it's a beautiful thing, a valiant attempt
(24:15):
to try to get as much as you can. And
if you think your income is going to decline, like
let's say you are going to retire soon and it's
going to go down in a big way, well does
the opposite, right, I think it incentivizes putting money into
traditional vehicles, traditional formal k, traditional ira. And don't forget
that once you reach the age of fifty, you're going
to be eligible for catch up contributions. This means you
(24:36):
can contribute an extra one thousand dollars straight into your
roth ira at that point in time into and you
can put extra into the four one K or Wroth
four O one k if you find you have that available.
So take note of that.
Speaker 2 (24:47):
The biggies you're seeing the viggies old. I don't know
how old she is.
Speaker 1 (24:50):
I know I'm old. I know I'm getting closer to that.
Speaker 2 (24:52):
Jill's looking at it, He's like, oh, catch up contributions, baby,
that's the only sexy thing about turning fifty in my opinion,
right is or I don't know.
Speaker 1 (25:00):
I think actually, I think there's plenty of great things.
Speaker 2 (25:02):
At fifty.
Speaker 1 (25:03):
I'm actually even more great gray hair in the mustache.
Oh yeah, it's coming. But yeah, being forty one has
been surprisingly pleasant, and so I actually am not I'm
not nervous about aging, And I guess the last thing
I would suggest for VICKI is to not forget about
taxbile brokerage accounts because if you're like, oh man, they
don't offer the Wroth por one K. Well, taxbile brokerage
(25:24):
accounts are another great way to invest. Yes, you're going
to pay tax on the gains right and you're not
getting the same tax break that you are for contributing
to a traditional account right now or a WROTH account
in the future where you don't pay tax on the earnings.
But that's still a great account. If you have more
money you want to invest and you don't have access
(25:44):
to some of these other great accounts, or you're kind
of capped essentially.
Speaker 2 (25:48):
By the contribution limits, yeah, yeah, you'd be artificially capped
if you were to have stopped investing at that point,
as opposed to saying, oh, I'll just invest like a
normal person in a less tax advantage way. Joel let's
now hears from another listener, this is a listener who
doesn't want to go all in with VU. He doesn't
want to go with an S and p ETF all
the way. He's looking to diversify. This is a question
(26:09):
from listener Steve, Hey, Matt and Joel.
Speaker 5 (26:12):
My wife and I are currently in money gear seven,
and assuming nothing changes in my current business, we have
already reached coast FI. We both max out our four
oh one ks and rath I rays on January first
each year, and we dollar cost average into a brokerage
account every month. So if nothing changes, we should easily
be fully fired in five to ten years. I'm currently
(26:33):
forty five and own my own business, but I'm guessing
I have four to five years tops before AI puts
me out of a job, forcing me into FI. Whether
I'm ready or not. It's not the worst thing, but
I'd hate to have to start drawing down funds to
live off of if we're in a recession. My plan
thus far has always been to invest solely in VT SACHS,
which is a total stock market fund, since I theoretically
(26:56):
won't need the funds for at least a decade. But
now that I see the strong potent being forced into
retirement early by AI, I'm wondering if I shouldn't be
a bit more conservative. On top of this, I'm increasingly
concerned that we're in an AI bubble, with much of
the gains in the market tied to those AI companies.
So if AI keeps growing, it puts me out of work.
But if it's actually all smoke in the bubble bursts,
(27:18):
it cuts into my portfolio. So my question is, would
it makes sense to start shifting future stock purchases into
something more like Vanguard's Value Index Fund. When I look
at the holdings, vt SACHS is thirty eight percent tech,
where VVIAX is only seven point five percent tech, so
much lower on the tech. My thinking is this would
(27:40):
keep me aggressively in the market, but would start diversifying
my portfolio away from being so tech heavy. Furthermore, I
keep losing faith in the future stability of the US
for all sorts of reasons, so I'm also considering diversifying
a percentage into Vanguard's Total International Stock Index to protect
against the putotential of future US in stability. I get
(28:02):
that this all sounds like timing the market and it
complicates things way beyond just dumping everything into VT sacks.
But being at cost FI, I'm willing to trade some
of that upside for a bit more peace of mind.
All that being said, would shifting to something closer to
fifty percent total stock market, twenty five percent growth, twenty
five percent international makes sense in my situation? Or am
(28:26):
I just overthinking things way more than I need to?
Thanks guys, Oh Steve.
Speaker 2 (28:32):
Oh Steve.
Speaker 1 (28:33):
Do you think he's overthinking it? I don't think he's
overthinking it. I think he's put a lot of thought
into this, and I think it's admirable that he's considering
not just doom and gloom headlines about what AI could
do to the job market or will do to specific sectors,
but he's really thinking through kind of long term ramifications
(28:54):
of what it means for his particular job, his overall portfolio.
And this is not a knee reaction like when he
talked when he mentioned not wanting the time to market.
That's not the vibe I get.
Speaker 2 (29:04):
No, this is this isn't a timing thing. But I
will say I there is a part of this very
small part of me that does think he's over indexing
the whole AI thing because of the fact that it
is going to impact him specifically with his ability to
continue his business. And I totally and in some ways
you have to.
Speaker 1 (29:21):
I totally feel that in some ways you have to,
because it's it's almost like owning a bunch of company
stock in the company you work for, and you're like,
you're over indexed to this thing, man. And so if
your bread and butter, if your income comes from AI,
you might want to not have as much of your
investment portfolio tied up in artificial intelligence. So I think
that is also another factor on the table. I love
(29:42):
this question. And by the way, Steve, I'm not sure
if you had a chance to listen to my interview
with Vanguard's Joe Davis that came out recently, I think
it would be particularly helpful for you. He's put a
lot of thought and methodology into what happens if AI
crushes or if it's kind of a lackluster and it
doesn't really do everything that Sam Altman and those bros.
(30:04):
Are saying it's going to do. He also factored in
other major trends into his analysis, and so I get
that the bubble talk can be disconcerting, but I think
Joe's work can offer some encouragement to stay the course,
which doesn't mean we don't think you should make any changes,
but I do think it at least provides h And
by the way, email me, I'll send you his book.
(30:25):
I've got an extra copy if you want it. Yeah,
coming into view. Yeah, coming entitle of the book. For
everyone else who we will not send an extra copy to,
only sending one to Steve Females, just email us, we'll
hook you up. But yeah, I think that that's it
was just like an important conversation because I think it's
on the minds of a lot of people, like how
is AI going to impact not just my profession potentially,
(30:47):
but also like the uh, the investments that I hold
as well.
Speaker 2 (30:50):
Yeah, yeah, and Steve, he's in money gear seven. But
that doesn't mean that you are fully financially independent or
even that you want to quit working. Right, doesn't sound
like you have any real debt. That's what you down
You've been doing a really good job investing as well, right,
Like you are fully funding your accounts at the beginning
of the year, so you are paying attention to.
Speaker 1 (31:08):
Three out of four years. He is a man after
your own harm.
Speaker 2 (31:10):
My gosh.
Speaker 1 (31:11):
In that regard, I love that you love a January
first full fund, pull.
Speaker 2 (31:14):
The trigger, make it happen. Yeah, being in that position
is going to give you a lot of cushion and flexibility.
But still, retirement isn't always something that we choose to do, right,
And my guess is that you could still use some
of your skills in other ways if AI were to
crush your small business. But that being said, you may
not want to do those things, and you may not
have to if you've built up a large enough nest
(31:35):
egg and it's well diversified.
Speaker 1 (31:38):
Yeah.
Speaker 2 (31:38):
Steve kind of points to the fact that he's kind
of in this weird situation where like AI is bad
for business, but it's good for good for portfolio. As
he's looking at his nest egg, I kind of think
he's in the perfect position, right, because like, you are
perfectly hedged to a certain extent, because you're diversified in
that way at least, because yeah, if you know you're
he's worried about the portion of his overall PORTFOLI being
(32:00):
in tech and if it takes off, well, guess what,
you can't afford to retire early. But if it doesn't
and it does pop, turns out you're in business for
another ten twenty years.
Speaker 1 (32:09):
Perhaps no, But I think that's what he's saying too, though,
is like, actually, if the bubble bursts, I'm impacted. He
thinks maybe, yeah, maybe you're right, Maybe maybe that keeps
his business around longer. Yeah, but maybe it doesn't.
Speaker 2 (32:19):
I think he said it as like a negative in that, like, well,
it's just an awkward position. But actually I sort of
see that as a good thing because if it does well, well,
you got a little bit of that. If it does poorly, okay,
well you got a little bit of that as well.
That's that might be a good point. But the hardest
Efs question is about his portfolio allocation and VT sacks.
(32:39):
The VT sacks and chill can be kind of a
great strategy for a lot of investors. VT sacks. By
the way, if you're listening to you're like, what is that?
It is a Vanguard ETF Total stock market ETF, and
it is incredibly inexpensive, and so that is like one
of the funds that's highly recommended. Matt, your equivalent you, oh,
that's the mutual fund. The ETF is VU right, Well,
(33:01):
VU is the SMP okay, so then VT I VTI
that's right, so bt total Vanguard's total stock market ETF.
Speaker 1 (33:07):
So BTI is the ETF version of VT SACKS. So
that simplicity is crucial. It's it's certainly not the right
mix for everyone.
Speaker 2 (33:16):
Right.
Speaker 1 (33:16):
Your timeline, your individual investor timeline, is crucial. And the
reality is that that Steve might he might need to
start tapping those funds in half a decade. So I
lean here towards Steve's line of thinking. Matt right, He's
he's not making this knee jerk decision based on headlines.
His risk profile truly is changing, and he is getting
closer to the wealth preservation stage of his life.
Speaker 2 (33:38):
That's a kind way of saying he's getting older.
Speaker 1 (33:40):
Well that, but he's also much younger than most people
are going to be tapping their retirement funds, because it
doesn't sound like he's anywhere close to traditional retirement age.
He is just getting closer to saying I'm financially independent
and I might not be working anymore. And because of that,
he's going to want to stay heavily weighted towards stock
still because he is young, but now being as tech
(34:01):
and as US centric would de risk things for him,
given kind of where things stand in his personal situation.
Speaker 2 (34:07):
Yeah, not being quite as exposed. One of the other
things that Steve mentioned was not selling his current holdings
but buying those other funds with new investment dollars, which
I think is a really smart way to rebalance. That's
actually something that Joe mentioned in that interview, Joe Joel
when you talked with him, that it's like slowly gently
moving the rudder as opposed to like jerking the wheel
(34:29):
to one side. In the new fishtail crash.
Speaker 1 (34:31):
A lot of people want to go like sell positions
and buy positions, and Joe's thing was like, just he's
into it. Slowly buy the new position, and you'll you'll
rebalance over.
Speaker 2 (34:39):
Time, exactly. Yeah, So increasing exposure every month with those
new investments means that over the next few years you're
going to be changing your investment mix in a meaningful
way without some of those substantial changes. Now that actually
could be more headline driven, perhaps with it being more
in than news lately.
Speaker 1 (34:56):
Yeah, and Steve, he's still looking at low cost Vanguard funds,
which is brilliant. And you know he mentioned he's experiencing
less growth by potentially making these changes. That might be true,
it might not be right, Like recent history would say
that you're stupid to opt for less tech exposure. It
would be like no, no, no. The fact that you're
not invested solely in the mag seven means you're a moron, right,
(35:18):
But that could change quickly, right, And it's really hard
to know when or how or if that's actually going
to come to pass. And so your goal at this
point in your money progress in your journey isn't to
maximize returns as much as possible. It's to be prepared
for upcoming changes.
Speaker 2 (35:36):
Matt.
Speaker 1 (35:36):
You mentioned the term hedging. It's to be hedged to
make sure that you're not exposed on the underside. You
have this soft underbelly because you didn't take into account
changes in investor sentiment that could negatively impact you if
you were all in on one on one fund and
so know what you're after make changes for that reason.
(35:58):
It's going to help ensure that you don't cake your
for missing out on higher returns if that's what comes
the past, because you might be like dang, I did
the wrong thing, and no, just because you didn't get
higher returns. Doesn't mean you did the wrong thing. You
kind of could have still easily done the right thing
for yourself, for your own risk tolerance given what's happening
in your life and the potential loss of your business. Yeah,
(36:19):
the risk tolerance part of it is super important. And
this is why this is such a personal decision. One
of the other things Joe Davis talked about in that
interview Joel that you had with them, We'll make sure
to link to that one in the show notes.
Speaker 2 (36:30):
For this episode, But he talked about that thought exercise
of imagining your portfolio down thirty percent so good, which
I've never done that, And so I actually, as I
was sitting there editing, done to a cold sweat. No,
But as I was listening, as I was editing that episode,
I hopped on over to my Excel, pulled up all
my investments, and I did a times one point three
and did a one point did a thirty percent up.
(36:51):
And so you were like, that was the fun side
of things. What if twenty million became fourteen million. Oh,
that's the thirty percent top, you know. But he said
to do both, which was an enlightening exercise because I
was like, oh wow, holy cow, if the market does
go up in thirty percent over the next couple of years,
it would be shocking to see what that would grow to.
In a similar way, that was the fun side of it.
(37:11):
The not so fun, the more painful exercise that is
also probably more important is to see that drop and
to kind of feel that, to see that number within
your framework with in my case over there on Excel,
and to think, Okay, yeah, this is the price of admission.
This could very easily happen. Do I have what it
takes to see this thing out were that to happen
over the next couple years. So I think in a
(37:32):
similar way, whatever it takes for you to kind of
visualize yourself in that position, Steve, is what I would
recommend that will help you.
Speaker 1 (37:39):
Then if it does come to pass, you're like, already
went through the mental in here before.
Speaker 2 (37:42):
Exactly. Yeah, Folks talk about visualizing victory, right like, like
literally go through the steps creating new habits, right Like
a lot of times talk about Okay, imagine waking up
the next morning, imagine putting your shoes on, going for
the run. Not to make this all about you and running, Joel,
but imagine being hated the trophy or the metal after
after running your.
Speaker 1 (38:00):
Parathon they do hand out obscene medal. Sometimes I hate
those medals.
Speaker 2 (38:04):
I do, But I think doing some of these thought
exercises could be really beneficial.
Speaker 1 (38:08):
But not just the victory one, the defeat one too.
What happens Oh yeah yeah, if like there's a market decline,
that's the.
Speaker 2 (38:15):
More important one. Hopefully the fun positive one is just
for kicks and to think, oh wow, but don't count
on that, right, Like that is the if things like
you can't count on the best case scenario unfolding something
else as you are potentially getting closer to retirement, stocking
up on cash, having more cash in your savings account
so that it gives you a bit more flexibility were
(38:35):
you to enter into those retirement ears a little bit
sooner without having to draw down on your retirement nest
egg in a down market where you'd be hit with
that sequence of returns risk.
Speaker 1 (38:46):
So maybe diversifying with those new investment dollars, stocking up
on cash over the next five years in anticipation of
this potential happening of you know, your coming obsoletely essentially
your small business, and that I think we'll give you
enough diversification from a cash and stocks perspective to whether
(39:10):
a storm and feel like you're doing it in the
right way. You've got plenty of time to play in here,
that's right, all right. We got more to get to, Matt,
including a retirement account. I don't know if we've ever
discussed it, if we ever talked about it on the
show before. We'll get to that question and another one
right after this.
Speaker 2 (39:32):
All right, buddy, we are back from the break. Let's
now hear from a listener who is considering hopping banks.
Speaker 6 (39:40):
Hey, Matt and Joel, Joel and Matt mole Jat, you
guys are awesome. My name is Jordan, a longtime listener
really since you guys debuted in twenty eighteen.
Speaker 2 (39:52):
And I just have a question.
Speaker 6 (39:54):
I have a high yield savings account with Ally and
the rate has shifted down from the fours into the threes,
and I was just wondering you know what your thoughts
are on moving large amounts of money into other high
old savings accounts offering better rates. You know you can
play the credit card rewards game. Do we play the
(40:15):
high old savings account rewards game? In terms?
Speaker 2 (40:19):
Of interest in things like that? How does that work?
Speaker 6 (40:22):
What are you guys thoughts on that?
Speaker 2 (40:23):
All right? Thanks? Man?
Speaker 1 (40:25):
What you think about our celebrity nickname?
Speaker 2 (40:27):
Which one do you prefer?
Speaker 1 (40:28):
Mole snow jat Snow Brandolina. That's all I can think of.
Speaker 2 (40:33):
Tomcat was Tom Cruise and wire Arts have to be
so bad Key Hills that I don't know.
Speaker 1 (40:39):
I'm okay with it.
Speaker 2 (40:40):
I could be a way cooler.
Speaker 1 (40:41):
We'll just let it die now, just cause the boys
as people do. Well, let's Jordan's question. Ally, that's one
of the best online banks. You've been with Ally for
a really really long time? Well, how long do you know?
Ten decade?
Speaker 5 (40:54):
Oh?
Speaker 2 (40:54):
I I might be closer to twenty years, dude. I
mean it feels like it's been forever. It feels like
I've always been without.
Speaker 1 (41:00):
I'm like at the age where I underestimate how long
things have been. I'm like, wait, that was twenty years ago.
Speaker 2 (41:05):
Now we're measuring things by decades again. I'm old.
Speaker 1 (41:08):
But like Ally has great customer service, as you know, Matt,
They've got a great interface, extra perks like I like
the way they do savings buckets. They've got the no
penalty CDs, which we think is cool. They've got competitive
interest rates in the market. So why would you consider
leaving a bank like that, Jordan, just to get a
slightly better rate on savings.
Speaker 2 (41:29):
I don't know.
Speaker 1 (41:30):
I probably wouldn't make this move. I think the exception
would be if you were doing something known as soft switching,
which Matt you and I talked about recently on a
Friday flight, Like, if you're funneling a bulk of your
savings into an account that's paying more, let's say, with
like Betterment or CI who are paying some top notch
rates right now, while you're still keeping ally kind of
(41:51):
at the center of your personal banking orbit. I think
it can make sense. But if you play the sign
up for better Rates game on repeat and you're moving
everything over and trying to do everything under a new
bank that you you know, switching your bill pay all
that kind of stuff, boy, that sounds exhausting after a while,
doesn't it.
Speaker 2 (42:10):
Sure, it depends on the stage of life that Jordan
is in. He sounds like he's got a bit more
energy though, right, And so typically when you're younger, you've
got more time on your hands and maybe less money,
and so you're no stone goes unturned when it comes
to optimizing, and max A don't on. I'm just throwing
that out there. I still remember sign up bonuses from
I would win to every single one everythingle one.
Speaker 1 (42:31):
Yeah, I opened one that I would at Chase and
I had to go into a physical branch to do it,
and I think it was like three hundred bucks.
Speaker 2 (42:37):
Really, what is this twenty ten?
Speaker 1 (42:39):
I know it was probably, and there were all these
hoops to jump through, and I remember at the end
of the day being like that three hundred dollars was
not worth the effort.
Speaker 2 (42:47):
Well, that's honestly, I think that's a good lesson to learn, Jordan, Like,
if this sounds appealing to you, give it a shot,
because this isn't like an irreversible decision. Like, give it
a shot, see how it feels, see if you think
it's worth it, especially if you're talking about like the
soft switching, like talking mont Jole, where you're putting a
portion of your money, like the portion of your emergency
fund that you know you're not going to touch. Let's
say you've got a solid six plus months worth of
(43:09):
living expenses. Okay, yeah, I move that over there and
then you can just learn and say, huh, was that
worth it? And if not, you can just undo it, right,
Like this is one of those two way doors where
it's easy to walk back and no harm, no foul.
Speaker 1 (43:21):
If it's the soft switching, then where you have both
bank accounts are kept alive, and they're connected, you can
transfer money back and forth within a couple of days,
and so I have multiple bank accounts. If you're doing
that and you're like, this is the place where I
keep the bulk of my savings and this is the
place where I operate my day to day, great, why
not have a relationship with two banks? But really, when
(43:42):
it comes down to it, if you're talking about switching
all the way and abandoning ally opening up this new
bank account because they're paying half a percent more, and
let's say you've got twenty thousand dollars in savings, how
much is that actually going to move the needle? I
would want to know that before I moved all the
way over. And so yeah, that this sort of soft
switching two bank thing makes more sense to me than
(44:04):
going all the way in and ditching your current bank
for a new one that pays a slightly higher rate.
But yeah, I guess if you have a ton of
cash on hand, Matt, the benefit is more substantial. But
even still played the both bank game totally all right.
Speaker 2 (44:17):
The Facebook question of the Week comes from Angela, and
she wrote, I frequently hear the guys extole the great
benefits of an HSA up till now, I have always
had my employer's hr A plan with open enrollment. I
was wondering the pros and the cons of the two.
Also kind of curious why I never hear Matt and
Joel reference in hr A in general. I'm a newer listener,
(44:38):
so I apologize if I have simply missed this discussion.
You have not missed the discussion, Angela. She also that's
something we've talked about. What she did miss is that
we go by Mole or Jack. So Angela, let's get
that right or the boys the Fellas. Yeah, no, I
will say, Angela, thank you so much for being a
new listener. And the hr why don't we mention it? Well,
it's because it's a much rarer perk than the other
(45:01):
main retirement accounts that get discussed frequently iras they are
fairly ubiquitous. Same thing with four one k's with HSA's
as well, but HRAs are far less common, and so
for those who don't know, it is a health reimbursement arrangement.
Thus again the casual nature of the arrangement. This is
something that we've talked about, but it's a real thing. Again,
(45:24):
but some companies offer this as a way to help
employees fund healthcare expenses. And it's something that you're bought,
like your company, they fully fund, they fully they contribute to.
It's not something that you can do anything. Yeah, yeah,
and it's just a betterffer you use the money. Yeah,
that's true. Yeah, And you just submit your receipts your
expenses to be reimbursed from this account. And it's pretty
(45:47):
nice if this is something that you have at your disposal. Yeah, yeah, exactly.
Speaker 1 (45:50):
But you're right, I mean, like the reason we don't
talk about is just because so few people have access
to one. And I'm glad you're bringing it up because
for people people that do, especially this time of year,
just recognize that, Yeah, your employer might offer you free
money for healthcare expenses you might incur and you might
have to do less saving on your or it might
even mean that you can contribute more to an HSA
(46:11):
for future health care costs, but we'll get into that
too here. You might not be able to do both.
So there's really not much for you to do except
use the funds in the HRA that your employer provides
if you have them, because your employer owns those funds
and if you don't use them in a given year,
or if you leave the company, you lose access to
those funds. So maybe you schedule an elective surgery or
(46:36):
something because you realize you're not going to fully utilize
your hr dollars if not, or you bump up a
medical procedure into the current year to fully exhaust those
funds when you might have waited another year. Those are
just kind of thoughts on how you might utilize the
HRRA to its full potential. But you kind of hinted
at the question, Angela, can you use an HSA and
(46:57):
an HRA at the same time. Potentially, you know, you
can't have the traditional HRA we were just talking about,
but there are other versions of the HRA, so this
is not this has not come out without its complications.
If you have a limited purpose HRA, you can use
an HSA at the same time, and that's the case,
(47:18):
we would say use them both. But if you have
access to one of these, the full HR version and
not the kind of light limited version, then you cannot
simultaneously have both. So which one's better probably depends on
how much your employer contributes to the HRA. But if
you have a really generous employee orre offering a substantial
(47:40):
reimbursement for you every year, that's a pretty sweet perk
that I want to take full advantage of.
Speaker 2 (47:45):
Certainly something to keep in mind, like, especially if you're
weighing another job, like this is a sweet perk. This
is a sweet benefit that you have, and make sure
to count that into the total compensation package that you're
being offered.
Speaker 1 (47:56):
I mean, it could be five grand in free money
towards healthcare and you're like, well, get paid seventy grand
a year. I want to go get take this job
to pay seventy sived. Not really, you get paid seventy five. Yes,
exactly mentioned the match.
Speaker 2 (48:05):
And I'm not saying you should stay there at whatever
company you're at Angela, but something considered.
Speaker 1 (48:11):
And those dollars don't get taxed either, so from by
the employ the government doesn't tax them for the employer
you don't get taxed for using them, so their tax
tax free money towards healthcare expenses. All right, Matt, let's
get back to the beer. This one that we enjoyed
on this episode was a Vintage Jail a bourbon barrel
aged Imperial stout by this Kirkland signature, but brewed by
(48:32):
De Shoots Brewery out of Oregon, who seems like they
Shoots teamed up and they're making a lot of beers
for Costco's private label. Now is that where Costco? Where's
Costco based?
Speaker 2 (48:41):
Washington? Kirkland, Washington.
Speaker 1 (48:42):
It's like right there, Yeah, they're not too far I
guess bordering.
Speaker 2 (48:46):
Is that why it's called Kirkland SIG because it's based
out of the same town, Kirkland, Washington. Very cool? Yeah,
I didn't know that. You probably bet you learned that
during that episode of Acquire. Probably I'm sure I did,
But I have a wait. Is it called acquired or acquired? Yeah,
that's right.
Speaker 1 (48:59):
Thinking of the bit game, I mean, it's still one
of the best episodes, have Acquired the Costco one. Yeah,
but one of my family members actually got the tour
the and I was like, dude, last time I was
in Seattle. He was telling me about his tour of
the headquarters headquarters of Costco, and I guess it's pretty spartan,
So it's what you would expect. You would expect that
from Costco.
Speaker 2 (49:18):
It kind of feels like that aisle, like that that
hallway on the way to the bathroom at Costco. That's
just kind of like, that's exactly right. Does anybody ever
walk over here right and you see the employee break
room over there off to your left. Yeah, it just
looks like an extension of the warehouse. I know.
Speaker 1 (49:31):
So I'm a little jealous though, And I don't know.
Hopefully that's funny. Someday he can give me the hook
up and I can check out Costco HQ as well.
But thoughts on this beer.
Speaker 2 (49:40):
It was really good man, that bourbon barrel. I mean
that's the first thing, like we poured it and I
gave a little sniff. You could totally pick up on
that on the nose. But it wasn't overly boozy. It
was just it was nice and oaky, which is hard
for me to not be happy with a beer that
doesn't have a strong oak presence. Yeah, that's like one
of my favorite flavor profiles and any almost any beer,
Like I love it in a stout, and I really
(50:01):
like it.
Speaker 1 (50:01):
In sours as well, So I'd say it's hard for
you not to be happy in general, my friend.
Speaker 2 (50:05):
Oh yeah, yeah, might fairly positive guy, I think so okay, Yeah,
that can be moody sometimes you've seen me be moody
before you What do you think about it.
Speaker 1 (50:13):
Though, Dude, I loved this beer, And to be honest,
like I said, I have not enjoyed many of the
Kirklet signature beers in the past. This beer was excellent, Like,
it was truly fantastic. And although I would maybe quibble
with the definition of this as an Imperial stout, it
it wasn't.
Speaker 2 (50:30):
Yeah, it wasn't a stout.
Speaker 1 (50:31):
Territory was gotchail or quad kind of vibes going on,
some of those dark fruit vibes maybe like fig and
raisin notes. But this is so high quality and it
had kind of some of those unique holiday spices going on,
almost like the Saint Bernardist Christmas ale, Yeah, which is
one of my you're going to say that favorite beers
to drink this time of year, And I was totally
getting you in the mood for Thanksgiving coming up later
(50:53):
this week. I was like, this is the perfect beer
to drink this this time of year. So if you
totally agree, can find the vintag jail your local costco
buy it, maybe buy a couple.
Speaker 2 (51:03):
Have you ever gotten it in the past? Have you
picked it up? I want to say we have.
Speaker 1 (51:07):
Maybe I'm trying to think they you should carry chame
blue and oh, that's what I'm thinking of. That's what
I would because that similar kind of you know, fall partnership.
Speaker 2 (51:16):
I wonder if this is the first year that they've
done this partnership with the shoots, but I.
Speaker 1 (51:19):
Think it is.
Speaker 2 (51:20):
I'm totally with you. Like it's labeled a stout, but
it is not super thick and stoudy, like it is
lighter in body, which, honestly, this time of year, I'm
looking for a little bit like I want that darker
flavor and those notes, those spicy notes, but without you know,
you don't want to get completely filled up as people
are passing around pumpkin and pecan pie. Sure, so to me,
(51:41):
this was it's this is perfect, better than I thought
it would be, and well worth buying. Pleasantly surprised. I
will actually next time I go to pe Costco, I'm
gonna look for this and pick up a couple bottles
the holiday season.
Speaker 1 (51:51):
The value excellent too nice, So all right, that's gonna
do it for this one. We appreciate you listening. You
can find links to some of the resources mentioned up
on our website at howamoney dot com. There's also literally
a resources page on our site. So I feel like
I heard the Boys mentioned something. I've heard mentioned that
a couple of times. It probably lives on the resource page.
I heard you redact the Boys, the Boys Matt or
(52:14):
no what jat and Mole, So yeah, you can check
that out. There's plenty of stuff, good stuff up there
on our website at howtomoney dot com.
Speaker 2 (52:21):
That's right, buddy, But that is going to do it
for this episode. So until next time, Best brands Out,
Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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