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1 - Will we wreck our finances if we sell our house after just two years?
2 - How should I invest a recent windfall as someone who hasn’t invested before?
3 - What should I do after my newish car has broken down nine?!
4 - Should I consolidate my high interest rate credit card debt with a HELOC?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to had the Money. I'm Joel and I am Matt,
and today we are answering your listener questions.
Speaker 2 (00:24):
We hope everyone had a fantastic for a wee kid,
and we are glad you're joining us today on Monday
as we tackle some listener.
Speaker 1 (00:31):
Questions, you have a case of the Mondays today.
Speaker 2 (00:32):
I'm at never. I like Monday's because we love what
we do. So honestly, I feel like I used to
have sort of this impending dread back when I had
an old W two job, like you would feel it right,
even at that point, I feel like I like my job,
but it gets old, and when the ability to work
for yourself, man, yeah, there's nothing like it.
Speaker 1 (00:48):
Plus you get to show up and see Mike smile
and face every Monday morning always brightened.
Speaker 2 (00:53):
But we're going to discuss the high price of driving
a lemon and maybe it's not even the the high
financial cost, but in other ways. Another listener is asking
about how he should invest a windfall that he's come
into possession of, especially in his case it's his first
time or it's going to be his first maybe what
he considers his first big boy.
Speaker 1 (01:14):
Sort of investment.
Speaker 2 (01:16):
And then Another listener is asking about selling a home
after just two years of ownership. Wants to get the
Joel and Matt stamp of approval. So we'll get to
that plus others.
Speaker 3 (01:26):
Today.
Speaker 1 (01:26):
I forgot my ink pads, so I don't know if
he able to do that, but we'll give our best advice.
And you mentioned driving a lemon. Well, we're not talking
about driving a fruit here. We're talking about it of
course now the car. And actually there's a lot to
share on that that's applicable to people and basically every state,
because every state has a law if you sold a
car that has perpetual problems. We'll talk about that too.
Is that something I don't know if you've ever talked
about it.
Speaker 2 (01:46):
And so even just kind of talking about it at
all here on the show, I think it's gonna be
good stuff.
Speaker 1 (01:51):
Agreed. All right, So Matt, you got an email from
the folks that yeah, what happened?
Speaker 2 (01:56):
Okay, So you get emails from all the different companies
that have your email, right, and I received one from
Fidelity and I saw it and immediately my spidy sense
like red flag started going up. It just it's not
the kind of email I've ever seen from Fidelity before,
Like oftentimes you'll see one where they're like, here's the
monthly report from whatever mutual fund and stuff like that.
(02:18):
This one did not look like that. And then I
looked a little bit closer and it kind of had
a weird email address specifically, and it.
Speaker 1 (02:24):
Was something it's another red flag.
Speaker 2 (02:26):
Yeah, it was something like Fidelity Investors at you know,
like mail dot something, you know, dot Fidelity do dot com.
And I was just like, oh no, this is totally
this is a scam. This is totally a phishing email.
I was like, wait a minute, it does say Fidelity,
it does say dot Fidelity. And I looked a little
bit closer and I realized that, in fact, this was
a real email. It's just that Fidelity they've got some
(02:48):
weird subdomains. And it made me realize that this is
not something we've ever talked about on the show. And
so do you know how to tell the difference between
an email that is coming from Fidelity that is legit
or not based on based on the domain.
Speaker 1 (03:02):
I don't know, fill me in. And that is true
that when you look at the sender, typically that is
the thing that tips you off. You're like, oh, Okay,
it looks like they got the logo, they got maybe
even the same font and copy, and it almost looks
like a real Fidelity email. But it's typically the center
that throws me off. But is there another way?
Speaker 2 (03:15):
Well, yeah, so this is not just what's written in there,
but if when you look at the actual address, because
sometimes you will see Fidelity in there. But what you
need to pay attention to is basically the difference between
a domain, so the at whatever dot com or the subdomain,
which is the at and there's a word there, but
then there's another dot word dot com, right, And so
in this case, I think the email address was something
(03:36):
like Fidelity Investors at mail dot Fidelity dot com.
Speaker 1 (03:42):
And I pause for a second.
Speaker 2 (03:43):
I'm like, wait a minute, this is this is actually
a legitimate email, because what you want to pay attention
to is the word that is closest to the dot
com or the dot org or dot gov or whatever
it is that you know, whoever's emailing you. But the
subdomain can be anything, and so what you want to
avoid is the exact opposite. Right, So let's say that
(04:04):
you get an email and it's investors at Fidelity dots
how to money or something like that. It just threw
us under the bus. That would actually make a great
phishing email, wasn't it. Because anyway, but if the mad
Joel partner with the guy's ability, either send me the
email or le let's just say like, uh, investor email
dot com or you know, something like that, because anybody
(04:26):
can set up a random website, but then you can
set up a subdomain called whatever you want it to be,
including fidelity. So Fidelity might be in there. And if
that's the first thing that you look at and you
don't look further down the line of the email address,
that's when you might be tempted into thinking that, oh,
this is legitimate, when in fact, this is a phishing email.
And so in this case, it's funny because the email
looked kind of sus you know, like it looked a
(04:48):
little phishy, But then on closer inspection, I realized, wait
a minute, no, this is in fact a legitimate email,
and I confirmed it and whatnot. But I just wanted
to mention throw that out there because I think a
a lot of folks are thinking, oh, well, it's got
Fideli in there, it must be good. You don't want
to assume that that's the case.
Speaker 1 (05:05):
Yeah, or again logo font looks like something I would send,
but maybe there's something like some some spam emails clearly
like right off the bat, that's not legit. I still
of them do a better job than others. I'll say that.
I'll slipping through my spam folder the other day because
I hadn't been in there in forever, and I realized
there was a couple of messages I thought I had missed,
and you actually pointed one out, and so that's why
I kind of went through there, and there were a
(05:26):
couple of things that I was glad I found. But
it's really interesting to kind of float through all those
spam emails that don't make it get older. And I
was like, wait, first, the spam folder's pretty good, and too,
there's some really interesting attempts at spam. Like I saw
there was one email headline. I didn't click on the email,
but it's basically about that money I owe you. That
was a subject line, and I'm like, of course, super conversation. Yes, hey,
(05:46):
it makes it.
Speaker 2 (05:46):
It seemed casual, like oh yeah, somebody, I'm sure there's
somebody out there that money, right.
Speaker 1 (05:50):
It feels very clickable like, oh about that money I
owe you?
Speaker 2 (05:52):
Because it did you almost want to reward them just
because they had a good subject.
Speaker 1 (05:55):
Yes, of course I did. I'm like, that's a good
attempt at a for f scam, right, But yeah, pay attention.
And even if you just actually click the email and
you look at it, typically nothing's going to happen to you.
But it's now you click something on the inside of
that Emaactly, that's when a keylogger or someone's going to
attempt to steal your money. That's when you're going to
get entangled with these gammers. So best to avoid exactly.
(06:16):
It's a good tip.
Speaker 2 (06:16):
So investor dot fidelity, dot com should be totally fine. Fidelity,
dot whatever. The next thing is dot com. That's where
there might be an attempt. And I will say one
of the other things that tipped me off to with
this specific email is I copied one of the main
links within the email. It turns out it was for
a financial advisor appointment or something like that, which they
(06:37):
I've never seen them do before either, which was kind
of odd. But I copied the link and pasted it
in the in my browser without just so I could
see what the link was and it was Fidelityinvestments dot Com,
which is another.
Speaker 1 (06:48):
Red flag because they owned both URLs.
Speaker 2 (06:50):
Huh yeah, But why in the world is this giant
company who is awesome, Why are they dealing with all
these silly subdomains that make them look like a local
credit union. Like that's the part that I don't understand,
Like why are they sending emails because you can send
emails from these different subdomains and that's what they're doing
when instead I feel.
Speaker 1 (07:07):
Like they on a streamline something. It just can be
bad branding and also confusing, especially and it's an unclear
message where we have to watch out for ourselves even
more in our inbox one hundred. So we still love
you Fidelity. Yeah, that's a good, good tip, Matt. All right,
let's mention the beer we're having on this episode. This
one's called Scale a Hawk. The logo on this one
looks so dope, like a bird rising from the ashes
or something kind of like Phoenix. Yeah, really cool looking.
Speaker 2 (07:29):
Scale Hawk makes me think of I don't know. The
sku sk part makes me think of I guess skateboarding,
and the fact that it ends with hawk makes me
The throwback to Tony is what it makes me think.
Speaker 1 (07:39):
Of og of skateboarding. But yeah, we'll give our thoughts
on this IPA at the end of the episode, but
let's move on to list our questions. Matt. For folks
out there who have a question for us, we would
love to hear from you, Just go to how tomoney
dot com, slash ask, or record a voice memo on
the app on your phone, send it our way via
email and we'll get it hopefully on the next Ask
How to Money episode. The first question of the day
(07:59):
comes from a little who wants to know whether or
not he can tell us home. He wants our verdict
before he does it.
Speaker 4 (08:05):
Hey, joel Annette, this is Tim from Fairfax, Virginia, a long,
long time listener since Believe It or Not Episode one
when you guys talked about how much you love biking.
Love what you guys do. A quick question for you. So,
my wife and I bought a house last August. We
put down ten percent at a six point five rate.
Definitely a very rush process given a competitor. The market
(08:26):
is out here, but in the time since we've learned
so much about ourselves home ownership, that sort of thing.
But we're actually discussing the possibility of leaving this house
after two years Showley's avoid capital gains, and the reason
being this house is simply not what we thought it
would be in terms of you know, functionality, location, that
sort of thing. And I'm reluctant to rent this place
(08:49):
out as I've had some terrible tenant experiences with another property.
And I know it's pretty much a cardinal sin to
buy a house and sell it before the recommended five
to seven years, depending on who you ask. But is
there ever a case to do exactly that? If home
ownership is really not for you, it's affecting your mental
health and you feel and need to just cut your
(09:10):
losses and financially and also mentally regroup as a couple.
I guess I'm looking for some validation in some shape
or form that this isn't the most financially crippling decision
if we got on this route. And if you guys
are ever out in northern Virginia, check out a brewery
with the coolest name, Quatro Goombas. Thanks again, guys, and
keep with the awesome work.
Speaker 1 (09:29):
Bye. Matt. Tim said he'd been listening since episode one.
I thought it was literally just our moms to listen
to the first episode.
Speaker 2 (09:35):
We had a few, like a handful of folks out there.
What's more impressive is the fact that he stuck with us,
Like it's one thing to be like.
Speaker 1 (09:43):
Oh yeah, I was there for the inaugural episode. Because
we're not joking when we say those first twenty or so,
maybe fifty or so episodes were right, we learned a
lot since they were rough.
Speaker 2 (09:52):
Should we send Tim a pair of socks for being
a longtime listener? To Tim, send us an email. You've
already sent us your voice memo, but send us another
follow up email with your with your mailing address.
Speaker 1 (10:02):
And we'll get those on the way to you. I mean,
for literally having stuck with us for one hundred and
sixty plus episodes.
Speaker 2 (10:06):
The least we can do is and you should at
least have some warm this winter. But uh, okay, one
thing that stood out to me. I wanted to point
out the fact that Tim mentioned not loving the location
where he is. This is why we suggest renting in
a specific location for at least like six months or
so before buying.
Speaker 1 (10:24):
And so Tim, I'm you know, I'm not totally sure
if you just moved to that part of Virginia or not.
Speaker 2 (10:29):
But the stakes are just higher when you are looking,
you know, when you're buying a home, as opposed to
just saying, oh, let's just try this area out, get a.
Speaker 1 (10:36):
Feel for it. If you were in a place for
six months and it sucks, you can move six months
from now. If you buy, it's tougher to pull that off.
Speaker 2 (10:42):
You might find yourself in for a tough financial lesson.
Or he might just be sort of he may feel
forced to stay at a house that hasn't treated him well.
You know, like there's certain experiences that you have with
different places or different products where you're just like, you
know what, this just isn't for me.
Speaker 1 (10:57):
That's one of the underdiscussed elements of home ownership. We
talk about maybe the extra costs that you incur Matt
when you own a home, and people often under assume
whether they think the mortgage, oh, the mortgage is about
the same as my rent, so might as well buy.
But then there are all these other costs you endure.
But in addition to that, Tim mentioned kind of the
mental health factor, because there's a lot more to maintain,
(11:19):
and so it's like it's the weekend warrior thing is legit,
so mowing the lawn or what a tree falls him.
I had a tree fall recently, another one I think
I mentioned this hit my neighbor's shed. And it's all
this stuff you have to deal with as an owner
that you don't have to deal with in nearly the
same way as a renter, and it adds up. So yes,
it's the finances, but it's also the just additional brain
(11:40):
space that it takes up owning a home. So I
totally get where Tim is coming from here. And let's
just say that Tim's kind of sort of been lucky
here to a certain degree. The market over the past
couple of years has been on his side, and so
in a normal two year stretch, you're probably going to
find that the transaction costs eat into whatever meager profit
you might have made you might have enjoyed, meaning that
(12:02):
renting would have clearly been a better move. And sometimes
it's just better to be lucky than smart, right, Matt,
And that I think is where Tim has ended up.
Not that Tim's not smart, Tim, I'm promise I'm not
questioning your intelligence, but I'm just saying that because the
market has been solidly in the favor of buyers over
the past few years. If you've phoned a home, even
on a truncated timeline, you've done better than you traditionally
(12:23):
would have done historically. Matt, I know someone who's bought
and sold homes in the state of Florida more times
than we typically recommend over the past five or so years.
But the insane housing market that up into the right
trajectory of prices in there, and it's finally starting to correct,
I think, But it's made those moves look reasonable. That
is typically not the case, though, and I would not
expect a ridiculously hot housing market to do that for
(12:46):
people in the future. I wouldn't expect this to continue
to be the case. But I guess in Tim's case,
it's okay to be thankful that it's allowing him potentially
to move on from this current purchase without enduring too
much pain.
Speaker 2 (12:57):
Sure well, and honestly, like these different personal finance choices
that we make, I think the whole point that we
are trying to be smart with our money is to
serve some sort of greater end, right, It's to serve
sort of like our deeper needs and desires.
Speaker 1 (13:10):
It's not an attemptic to be like an old school
gnostic right where we flail ourselves into extreme frugality, hate
our lives as much as possible to get the biggest
number of the banke accounty.
Speaker 2 (13:20):
And I'm also not saying that you should just chase
after whatever fleeting yolo wants and desires that you might have,
right Like, I'm not suggesting to buy, not pay later
into finance a new wardrobe because that's going to make
you happy, and which it actually won't make you.
Speaker 1 (13:32):
Happy, of course.
Speaker 2 (13:33):
But this is far different though, because this home, you know,
where it is that you live, it's about a lot
more than finances. It's more than just your fleeting desires.
And it sounds like that you've thought through the different
trade offs and that you're okay with making a decision
that's not optimal. You're okay making a decision here that's
going to serve you guys well, even if it isn't
the best thing for.
Speaker 1 (13:52):
Your long term finances.
Speaker 2 (13:54):
Yeah, like we said, you realize that home ownership it's
not for you. That's a reasonable conclusion to to arrive at.
And because of that, I wouldn't resign myself. I wouldn't
shackle myself to owning this home for years more, you know,
just because you're looking for you know, Matt and Joel
to give it the stamp of approval, for us to
for you to have abided by our rule of thumb.
Speaker 1 (14:15):
Often typically say seven years, right, I mean, yeah, five
to seven years.
Speaker 2 (14:18):
But here's the thing, even and honestly, the market has
cooled because I think he said he got it last year,
let maybe last fall, and since then the market has.
Speaker 1 (14:26):
Cooled a little bit. I think he said two years ago.
Speaker 2 (14:27):
Well, he's wanting to hang on to it, I think
for at least two years to avoid the capital gains.
Speaker 1 (14:31):
Which it hasn't even staciated much. He's not gonna have
much capital games to pay. Boom, there you go.
Speaker 2 (14:35):
But on top of that, it's like, well, is that
enough to offset some of the transaction costs? Again, like
we're talking about questions that are bigger than just transaction costs. Then,
whether or not you've seen appreciation in that home, it's
not ideal, certainly, No, it's not ideal at all. But
there are also a whole lot of other worse things
that you can do with your money than having purchased
a home.
Speaker 1 (14:53):
Yeah, as well, exactly, And so let's talk about the
tax thing for just a second. It's important for everyone
else out there to know, but Tim as well well.
Crossing the two year threshold is key. It's not being
forced to pay capital gains on the increase in value
that you've experienced. So it's if you hit that hurdle,
you're not going to be triggering that tax consequence. But
(15:14):
the other side of the equation again is Matt that
if your house didn't appreciate much, we're talking about fifteen
percent on peanuts.
Speaker 2 (15:21):
So yeah, you tell a little bit worry about all
that much anyway. Yeah, and so you're overly if that's
the case, you're maybe a little overly focused on the
principle as opposed to the reality of how much you're
having a day in Texas.
Speaker 1 (15:31):
It still sinks because you're paying transaction costs on the
front end and the back end. Those costs have come
down a little bit recently, but not much, and so
it's still it's going to feel like a financial face
punch to a certain extent. It doesn't mean that it's
not worth it. And it's also important to mention that
they put ten percent down on the home, which does
mean you should walk away from the closing table with
some money back in your pocket. And I do think, Matt,
(15:53):
the answer might take a different tone. If Tim had
a smaller down payment. Let's say he put two percent
down three two percent down, and the market wins hadn't
been on his back at least just a little bit,
you might have find yourself potentially even unable to sell right,
not having enough cash in the bank, not having enough
equity on hand to allow you to sell this house. Fortunately,
(16:14):
that's not the case. Other people might find themselves in
that position, Matt in the years to come, especially with
what's happened with the rise in home prices and a
potential moderation and even a potential decline in some parts
of the country and home prices. But going back to
what you were saying, Matt, I think prioritizing your life
your mental well being makes sense here because it's not
some sort of complete financial catastrophe exactly.
Speaker 2 (16:34):
Yeah, And going back to the timeline, it's worth kind
of touching on that because, like you said, if you
hang onto it for if you live in it as
your primary residence for at least two out of the
five years, you've got that if you're married, a five
hundred thousand dollars exclusion on any profit there. But if
you own the home and single people have that much, yeah, yeah, exactly.
But if you only hang onto it for basically between
(16:55):
one and two years, that's when you enter into that
long term capital gains tax bracket, which I will say though,
depending on how much it is that you make, might
even be zero if you're making less than ninety four
thousand dollars, which is honestly like there are a decent
number of folks out there who that would apply to,
So that's worth keeping in mind for other folks who
might be in a similar situation. And of course you
certainly want to avoid owning it for less than one year,
(17:17):
because that's when you're looking at short term capital gains
where that profit is taxed basically as ordinary income, So
it could be significantly higher than that fifteen percent. But
sort of going back to what we're saying at the beginning,
I think renting can it can just not only be
a better financial decision over the long haul, but it
can just be a better lifestyle choice for a lot
of folks as well. Home Ownership isn't necessary to build wealth,
(17:40):
and it's not even the best way to go about
doing that. We own our homes. We're certainly glad that
we do, but it comes with its fair share of
frustrations as well. July, as we were working today, our
landlord who owns the home right here next to our office,
he owns our office. He owns our office. Yeah, we
don't own this carriage house. But he was out on
his roof looking for I think he's looking for a
whole yeah or something. What's he doing out there? That's
(18:02):
the kind of thing you have to worry about when
when you're a homeowner.
Speaker 1 (18:05):
Sorry, and he's got to worry about lousy tenants.
Speaker 2 (18:07):
Like us too, who at least we pair rent on
time and in full every single month.
Speaker 1 (18:13):
But there are reasons to buy a home.
Speaker 2 (18:14):
We just don't want you to fall into the American
dream home ownership cults. Just make sure that you're making
your choice based on your specific circumstances and the goals
that you have him.
Speaker 1 (18:24):
Yep, so I guess we will give the stamp of
approval here, Matt, based on tim circumstances and market circumstances.
There's worse things that you can do with your money.
That's right, and it sounds like, yeah, he's been listening
obviously for a really long time. He's made a lot
of good financial moves. And guess what, doing the right
thing most of the time for a long time means
you can occasionally make a non optimized move if it's
(18:46):
in the best interest of your life over your finances.
All right, Matt, we got more questions to get to
and actually later the show we're going to talk about
taking out a heelock to pay off credit card debt.
Is that a smart move? We'll get to that more
after this. We are back for the break.
Speaker 2 (19:08):
It is time now for our next listener question. This
one sits at the intersection of the silver screen in Investing,
Matt and Joel.
Speaker 5 (19:16):
My name is Jay. I may be your only jen
Xer listener. Anyway, I would like some advice on getting
my first investment. I already have a roth Ira, which
I've been funding for a couple of years now.
Speaker 3 (19:35):
I don't know what else to invest in.
Speaker 5 (19:37):
I have a small inheritance that I got from my
very close auntie who passed away. It's like a second
mother to me. So I have some money coming in
and I want to.
Speaker 3 (19:51):
Know what to do with it. Quick backstory about me.
Speaker 5 (19:55):
I'm an actor here living in Hollywood or LA, trying
to pursue the dream. And you probably heard the cliche
statements starving artists or the other extreme don't forget us
when you're famous. So that's where I am. I'm not
the typical working nine to five I mean artists. Actors
were always trying to wait, trying to find a way
(20:16):
to make a living.
Speaker 3 (20:19):
While pursuing our dreams.
Speaker 5 (20:20):
Because we know that currently a lot of us actors
can't support ourselves like the typical nine to five job,
which most of your listeners are, I think. So that's
my story. What would you recommend I invest in for
my very first investment once I get since I now
have an inheritance. My inheritance is about I want to say,
(20:41):
plus or minus sixty five thousand dollars, So there you go.
Speaker 3 (20:46):
What should I do with that money? And let me know?
Thank you?
Speaker 1 (20:51):
Jay. First things first, trust me, you're not the only
gen X listener. Oh yeah, it's true that the vast
majority are millennial and gen but there's still a fair
amount of gen X listener So to hear from a
lot of older folks for an email this week from
an eighty year old listener. There's people truly all love
it all stripes living all across the country, all across
the world who listened to the show, and we appreciate
(21:13):
all of you listening. And also, Jay, sorry to hear
about your your aunt. An inheritance is wonderful, but it
doesn't make up for that loss. Sure, and last thing,
I can't wait to see Jay act across on the
screen from brash can or something like that.
Speaker 2 (21:27):
Yeah, well, I was going to comment on his baton.
The fact that he is set to receive an inheritance
from his aunt is like evidence of the fact that
him and his aunt.
Speaker 1 (21:36):
Were close, which that's I think that's just pretty.
Speaker 2 (21:38):
Cool, you know, Like I haven't received any inheritances from
many of my aunts or uncles, but maybe that's because
my crummy nephew, whereas Jay, Jay, you are an awesome nephew.
But I think it's just cool that, yeah, that they
share that kind of bond. It's worth maybe pointing out
that this is obviously something that Jay knows really well,
but maybe a lot of folks don't know this.
Speaker 1 (21:57):
Most actors they're not crushing.
Speaker 2 (21:58):
It in Jay kind of he's attesting to that fact.
Many of the household names certainly are doing quite well
for themselves. You mentioned Edward Norton, and oh you mentioned
Brad Pitt as well, so you must be thinking about
fight clubs. Makes me think of the see Robert Dowling
Junior who just assigned was it like an eighty million
dollar contract to play to re enter the Marvel universe.
Speaker 1 (22:21):
Apparently they were running out of other actors to play
Marvel characters. They had to go back to the well
for the same same guy to play another character. I
don't he's kind of the face of that fat No
one tell him that Jay was available to play Doctor Doom.
That would have been all Jay was available.
Speaker 2 (22:34):
Yeah, But the fact is you don't know the names
of the vast majority of actors out there, and I
think they're often scraping by. I don't personally know, I
don't think any actors, but from what I understand, they're
like working multiple jobs.
Speaker 1 (22:46):
Just at onebuddy who's an actor here in Atlanta, and
it is like occasionally known his name, Stephen. He's awesome.
He's great due I don't think, but he's and he's
been in he'll show me, like a clip from thirty
seconds in a show or something that's so cool. When
he gets that that's pretty cool. Or he's doing in
like an ad advertisement for a brand or something like that.
But you know, he's not living high on the hawk.
Speaker 2 (23:05):
That George's not Hollywood. It's Yollywood, that's what they call it.
And he does well.
Speaker 1 (23:09):
He does well, but not nobody would know it from
the outside, like, oh, he's not crushing it and he's
not a household name. But he gets steady work. And
that is the case for a lot of actors, and
even other actors do Matt maybe they're not getting steady work.
There's just more supplied than demand of actors, and so
it can be tough even just to make a living.
So but Jay's pursuer's dream. Kudos to you, j for that.
(23:32):
And your job actually influences our advice on this, because
let's talk about what to do with this inheritance money.
I think if you had a nine to five that
you'd been working for many years.
Speaker 2 (23:42):
Yeah, like if you were an accountant perhaps or a
coal miner like whatever it might be, that's just nine
to five in vibe.
Speaker 1 (23:50):
I think if it was just incredibly stable alongside like
a healthy emergency fund. We might be more keen on
you investing most of the money that you're inheriting. The
exactly talked about investing that money, but our typical rule
of thumb, by the way, is that you should consider
using something like ten percent of this for fun and
then attempt to make smart money decisions with the rest.
And I think that would honor your aunt's legacy. It
(24:10):
also gives you some breathing room to say, I don't
have to be productive with every single dollar that comes
into my life. This was something I was not counting on,
and so I'm going to take a small amount to enjoy.
But that doesn't necessarily mean investing right the smart with
the stuff with the ninety percent. We don't know your
whole financial picture, but we would suggest to check out
the money gears on our website if you clet our
a hear button, because we think that's going to be helpful. Truly,
(24:32):
when you're thinking about what to do with money that
comes into your life, that's the first place to turn.
Speaker 3 (24:36):
Yeah.
Speaker 2 (24:36):
Yeah, So it's not that we're against investing, of course,
we just don't want you investing money that would be
better going towards saving or paying off debts. So, Joe,
you mentioned the money gears, like what we're specifically talking
about here. Our money gear is number three and number
four because this gift from your aunt can have a
massive impact on your life, and so look to use
some of this money to pay off any debts with
(24:57):
any higher rates of interest, especially gregious, just rates that
you might find with credit cards, maybe a car loan
that's got a crummy rate.
Speaker 1 (25:05):
Perhaps, yes, Chase, you got credit card debt. I know,
investing the first thing you need to be doing. Investing
is the sexy thing, but paying off the credit card
debt that's the real money maker.
Speaker 2 (25:13):
And then beyond that, make sure that you've got a
minimum of six months worth of living expenses on hand
within a high yield savings account. I think only once
those two things have happened, like, that's when we can
start having a conversation about investing. And I think there's
just that temptation to look like you said, Joel, to
the thing that feels sophisticated and smart, when man, there's
(25:34):
like some some sort of like foundational elements that we
need to make sure are laid before we build on
top of it.
Speaker 1 (25:38):
Some low hanging fruit before you grab the ladder and
try to get this stuff on the higher branches. It's funny.
I walk past a partree on my walk every day.
Do you walk past that partree too on it? I do,
and I've seen a lot laying out on the ground.
It's a Bartlet partree. It's super sad. I'm gonna start
picking them because you're going to waste, you know. It's
just random thing that no we talk. That's like a
frugal or cheap Is it okay to like steal the
(25:59):
pairs off of the neighbor's tree. Why haven't I taken
any off of that tree? Shocked? Because I have restraint
because there's a fig tree I used to always walk by.
Speaker 2 (26:07):
I used to always grab like two or three figs
off of that tree when they were in season, and
that was my.
Speaker 1 (26:11):
Fruit for the day, pairs at least for my lunch.
The trick with Bartlet pears.
Speaker 2 (26:15):
A lot of times folks think that their pear tree
produces crummy, crappy pears. But what you need to do
is you pull the pair and then it's got to
sit on the counter for a week for it to
like continue to ripen if you wait until it falls
on the ground ground like, it's certainly right, but it's
so right that it's gonna like it tends to split
open or that's when other animals get it. But you
pull it, let it sit on your counter for a week.
Speaker 1 (26:37):
So get those green bananas.
Speaker 2 (26:38):
Then it's sweetens. Actually it's our buddy, our mutual friends,
our buddy Tim. He's the one that turned me on
to this fruit forging knowledge.
Speaker 1 (26:47):
So the low hanging fruit is to pay off that
high interested. But then the next thing is to, yeah,
start investing. If you've gone through money gears three and four,
you feel like you're hitting on all cylinders there. And
the first account they consider is the roth Ira. And
I believe Jay mentioned in his question Matt, he is
investing in the roth Ira. He just doesn't know where
to go after the fact. Sure it's important to mention.
Speaker 2 (27:04):
He is investing, because I will point out I think
what he said was that he is funding.
Speaker 1 (27:08):
His roth Ira. Which that is one sort of.
Speaker 2 (27:11):
Warning flag that went up in my mind that made
me a little unsure of whether or not those funds
are have been destoid.
Speaker 1 (27:16):
That is a common problem for people opening the account,
sticking money in it, but then not investing the money
inside of it. So Jay, make sure you're doing that,
and everybody else out there listening to make sure go
in there and look at the account. You open the account,
but did you actually not just fund it but invest
inside of it. So you can put seven thousand dollars
a year in that account. And depending on when you
were born, Jay, some gen xers, this is a nice
(27:37):
thing about being a gen X or not millennial, You
qualify to invest in extra thousand bucks a year, oh snap,
for a total of eight thousand if you if you're
fifty year over right, So, Matt, I know you're counting
down the days.
Speaker 2 (27:48):
I guess there's a lot of gen xers that are
solidly in their fifties.
Speaker 1 (27:51):
No exactly, that's crazy. So you know, whatever your health
time flies. I know you might have the max contribution
limit of seven, you might have it of eight thousand bucks.
Either way, we want you to max it out in
twenty twenty four and twenty twenty five as well, and
hopefully every year from here on out. But that combined
with beefing up your savings paying off any debts you
may could soak up a whole bunch of this money,
(28:12):
a whole bunch of this inheritance, doing the right thing,
just getting yourself on better financial footing from a debt
eradication and smart investing standpoint. And then if not, if
you've got more money hanging around, the other thing you
could do, you can consider opening up a solo four
oh one k. We talked in depth with this about
solo form case Matt with Sean Malaney back in the day.
We'll put a link to our boy Sean. Yeah, we'll
(28:34):
put a link to that episode he wrote the book
on it. We'll put a link to that list to
the show notes. You can put a lot of money
in that account, which and get tax breaks in the process,
which would be great since you're really just getting started
investing and you've got a lump some Hey, toss the
money in and think about that. You're getting a lot
of money into investment accounts even though you feel like
you're starting late. You're making up for lost time in
(28:55):
a hurry. Totally. Yeah.
Speaker 2 (28:57):
Something else I'm thinking of, too, is the fact that
what we're so we're talking about about you adding more
margin to your life by ensuring that you've got that
six months of living expenses on hand. Not only is
that going to be good for your personal finances, I
think this could be good for your career as well,
because there when you have more margin like that, it
allows you to take other risks and turning down a
role the stinks, yes, exactly, like there might be a
recurring role or something that is on that just happens
(29:19):
in his I don't know if he has an agent.
Speaker 1 (29:21):
I don't know how this.
Speaker 2 (29:22):
Works at all, but maybe there's something like a gig
that he takes and he doesn't really love it, but
you know that, Joe, it pays the bills. But when
you've got some money on hand, if you've got more
of a cushion like that, you can say, you know what,
I'm actually not gonna I'm gonna say no this time,
and instead I want to focus on this role that
you're really excited about, that you are going to really
throw yourself after, and that could lead to your career.
(29:42):
Not only your personal finance is blowing up and being awesome, yeah,
but also your career as well. So that's one of
the things that having more cash on hand, that that
can afford you.
Speaker 1 (29:49):
Yeah, yeah, you could be like, oh no, the role
of a school teacher like making drugs and then blowing
up his family life. That sounds like it's not going
to be a success at all. I don't think I
want to just payton that.
Speaker 2 (30:00):
I'm not going to give Hollywood career acting advice because we.
Speaker 1 (30:05):
Talked about this on the show Was It last year?
Maybe it's funny when you put it like that, You're like,
that sounds like a role that might not be.
Speaker 2 (30:09):
Again, Yeah, and then it ends up being like this
amazing role and breaking bad. But I'm thinking of We
talked about this on the show Flow from the Progressive Commercials.
We talked about how she's just this totally like down
to earth, was just doing insurance commercials, which typically isn't
the kind of role sort of like you said that
you would expect to be all that good, but even
within that, was able to just really find a role
(30:32):
that folks were able to resonate with.
Speaker 1 (30:33):
And she's like doing really well, totally crushing it. I
think that's like, what's a better gig being a Marvel
superhero or being the recurring insurance pitch person to Jake
from State Farm or the Flow One's a steady paycheck
for the rest of your life. One's like immortal glory.
So it depends on what you're interested in it, yes,
to make that call. Yeah, And ultimately two, j we'd
recommend investing in low cost index funds with one of
(30:56):
our low cost favorites, So Vanguard, Fidelity, Schwab are the
companies we typically recommend because they don't charge high fees.
In fact, their fees are the lowest in the industry.
You're getting broad diversification and it's super easy to do.
And it, Matta, it makes me think to what when
we're talking about not investing before you should You share
this story multiple times on the podcast. But you invested
(31:16):
in a roth Ira you ended up having to pull
some of that money out at an inopportune time, exactly.
And so that's why the emergency fund is so key
and so important. Don't neglect that. Don't start investing because
it seems more fun without having that basic thing taken
care of. Totally agree, we want you to be able
to sustain those acting the ambitions, Jay, and you know,
investing money that you are going to need on hand
could impact your ability to do that. To keep it
(31:39):
this career that you love. That's right.
Speaker 2 (31:41):
Okay, let's get to our next listener question. This one
has to do with listeners having some issues with his ride.
Speaker 6 (31:48):
Hey, Matt, Joe Timothy here in Palm Springs, California.
Speaker 1 (31:51):
So I've been dealing with this.
Speaker 6 (31:53):
Car nightmare for the last year. Essentially, my new ish
car broke down like nine times. The service center at
the dealer eventually found that there's water damage on the car,
which is crazy because I've never exposed the car to
any type of water apart from the rain and a
(32:16):
car wash, and they said, go through your insurance to
fix it. So insurance covered the ten thousand dollars fix.
Got my car back very next day. The check engine
light was back on and they found more water damage
on the car, and they said, go through your insurance
again for the seven thousand dollar fix. So I filed
a claim with my insurance. I also filed a claim
(32:39):
with Subaru's consumer advocacy department, and I was very disappointed
with the results. They essentially washed their hands of it.
They said, there's water damage, go through your insurance, which
they didn't address the underlying issue, and that was that
there should never have been water damage on the vehicle
in the first place, since it was never exposed to
any water, and so clearly they're some kind of defect
(33:01):
with it.
Speaker 1 (33:02):
So what recourses.
Speaker 3 (33:04):
Are available to me?
Speaker 1 (33:05):
Like, what options do I have?
Speaker 6 (33:06):
Do you guys have any ideas about what I could
do to try to fix this nightmare? Especially because I
heard that once there's water damage on a car, there
will always be issues with it. So I was really
hoping that subru would do the right thing and step
up and kind of stand behind their products do something
to make it right.
Speaker 1 (33:24):
But they don't seem really interested in doing it.
Speaker 6 (33:27):
So ww MJD in this situation, any ideas, thanks, guys,
really appreciate it.
Speaker 1 (33:33):
Oh, Matt, should we make WWMJD bracelets?
Speaker 2 (33:37):
Okay, Well, folks need to know, like if you're not
in the know twenty years ago about yeah, they're the
what would Jesus do?
Speaker 1 (33:44):
WWJD bracelets? And I never had one that those were
even before the Lance Armstrong Livestrong bracelets. I think were they,
But I think I'm the same. I think I kicked
off the bracelet trend and maybe the Lance arms Yeah, yeah,
which one faired better? It's a tough question. So let's
get to Jesus. Joel is Jesus, not Lance Armstrong. Okay,
(34:08):
I don't have to say about this.
Speaker 2 (34:09):
Well, it's interesting because with Lance Armstrong, I feel like
a whole lot of folks are like it's like he's
back in good graces with everybody, even though there was
like the giant doping scandal and all that. Like you
see more folks brushing shoulders of him, and it's like
he's still almost seeing as sort of like this expert.
Speaker 1 (34:23):
I mean time heals all wounds, Matt and I guess
so he's one of those guys. It would have been
really interesting to see, similar in my mind to Barry Bonds,
where if they had not done something they would they
would have been Hall of famers anyway based on their
innate skill and hard work. Yeah, and so it's like, ah, man,
I wish you had done But then again, in a
sport that was unclean basically everywhere, Yeah, it's kind of
(34:46):
tough to compete. I guess if you don't do anything.
So not that I'm condoning every saying it was a
good thing. Okay, So let's move on to Timothy's question.
The whole experience sounds awful and Timothy, you said it
was a newish car, and I think in your email
you said it was a twenty one model. This makes
me think that your car should qualify under the Lemon
(35:06):
Law rules in your state. So no need to tap
your insurance, although you have and we'll talk about that
in just a second. No need to even get SUPERU involved,
although I reached out to Suberu multiple times to try
to see if they would give me a comment or
be willing to help you. Literally, Matt got crickets at
every turn trying to contact Suberu, which is surprising. Suberu
(35:27):
seems like a customer friendly company, not in this case.
But yes, going back to the Lemon Law, the key
is that this car needs to have been new or used,
and that you purchased but it was still covered under
the manufacturer's warranty. That's what it takes to qualify. And
if that's the case, this is almost certainly the next
step you should take. Every state has one of these laws.
They all vary just a little bit. If your car
(35:48):
has been snake bitten by a specific issue. On repeat, Timothy,
like yours clearly happen. He said nine times, Yes, that's
well beyond what most states it's what like three. It's
like yo, If it's three, then you're in reasonable effort
to make the repairs right. If we're getting close to
double digits, nine is much more you should qualify or
Lemon law. And it's ridiculous to me that you've had
(36:08):
to bear the financial consequences here because of supers in action.
Even making that claim under your insurance impacts you financially.
We're talking about the deductible potentially higher premiums moving forward.
So turning to your state, I think in your state's
Lemon law specifically is the right move at this point.
Speaker 2 (36:22):
Let's just address that the insurance side of this. Do
not continue to file claims with your insurance, especially I
mean at all, like I was gonna say, for this
next round of repairs, but this could, like you said, Joel,
cause prices to go up for him. Then this is
a lesson I had to basically learn the hard way.
I didn't realize that when I was in college into
young adulthood and it was something like what happened. I
(36:43):
was a little fender bender, wasn't my fault, but still
that ended up on my clue report I ended up
having a crack windshield, and I was like, I don't
like that. It doesn't look good, impacts how my ride looks,
and it can't be safe, can't it.
Speaker 1 (36:55):
And so it's gonna be hard to get that girl
to go out on.
Speaker 2 (36:59):
Was super low as well, so I was like, oh,
paying one hundred bucks and just get that thing replaced,
fresh windshield. Then I hit a deer coming home. Actually
I hit two deer. So I hit a deer twice
at the same time. No, no, no, separate, separate instances. Same
deer both times.
Speaker 1 (37:12):
Yeah. Same.
Speaker 2 (37:12):
It is one tough dear coming back for more coming
back from college, going home one time and then again.
And anyway, all that to say, these multiple claims caused
the insurance company to say, oh, you are costing us
a lot of money. So just keep that in mind
for everybody out there, even if it's not your fault,
or even if it is a comprehensive claim like hail damage,
(37:34):
like a deer, like the windshield just cracking because it's
a really hot day and you went out to wash
your car and the walk cold water did a number
on that little chip on your windshield and it cracked.
But those claims, and that activity on your report causes
the insured to say, hey, you're costing us money, so
now it is going to cost you money in order
to maintain your policy with us. So instead, I think
(37:56):
it's a.
Speaker 1 (37:56):
Good point man. And that's another reason why we typically
suggest hired itductibles, because it keeps you from using your
insurance in low stake scenarios, free and clear of it
all together. Because if you use, the more you use
that insurance, the higher the more you're gonna pay, the
more likely you are to get maybe kicked off your insurance.
And then if you shop around for insurance with another provider.
You mentioned the Clue report, Well, all those claims you've made,
it follows you they're on the Clue Report, And the
(38:18):
next insurance company is like, yeah, we'll ensure you for like.
Speaker 2 (38:21):
Ten times what you're paying for, seriously, like twice as much. Yeah,
and like it's a shame, but like I mean, it's honestly,
I think it's fair. Like if you are costing the
comp it makes sense, right, Like, if you are costing
a company more money, it makes sense that they're gonna
be like, you know what, We're gonna raise your premiums
and for me, I think my rate doubled and like
all my money, all my meager income was going, it's
going towards my ability to drive her around. That's early
(38:42):
twenty year old, and that means sid I get why
why Timothy decided to tap his insurance in this instance
because of the ridiculously high price tag. And so when
you're talking about that kind of money, that's what insurance
is there for. It's not for the one hundred dollars
windshield repair. And you think that this is a perfect
case for insurance to step in. But in your case, Timothy,
it's I mean honestly taking the hey, is this a
lemon like? That should have been a question that others,
(39:05):
now that they're hearing your situation here, will maybe think
of sooner. But that you now pursue. We want you
to determine whether or not this issue qualifies under the
Lemon law so that you can avoid having to pay
anything anymore. And if it does, there's an easy way
to file an arbitration appeal on your state's website. In
this case, you don't even have to deal directly with Suber.
(39:25):
You just go through the standard process that the state moderates,
not the manufacturer, but just make sure that you are
paying attention to what it is that California requires and
for everybody else listening wherever.
Speaker 1 (39:37):
It is that you live.
Speaker 2 (39:38):
The states have different requirements, and you just want to
make sure that you've got good notes, You want to
have details, you want to document your case because essentially
the burden of proof typically is on you as a consumer.
This is why you don't see a whole lot of
folks talking about lemon law because it just takes work.
And I think a lot of folks just kind of
they take it laying down and they don't necessarily make
it easy. But you basically have to to prove your
(40:00):
case the fact that you do in fact have a lemon.
But the stakes are high here right, We're talking about
expense and then more potential expense coming up for Timothy too,
So this is the route to go. The other thing
Matt I think that he could do and make sense
maybe in addition even to filing a lemon law case
with the state is to publicly shame super And I
don't say that lightly. I don't typically this isn't something
(40:23):
I resort to often, and this isn't something we recommend
very frequently. But if you feel like they've let you
down and their response has been insufficient, inadequate, and it's
a brand that presents themselves as being customer friendly and conscious,
posting something on Twitter that's facts based about what's happened
in this brand's response right to what you're going through,
(40:44):
I think can make a whole lot of sense. And
sometimes it can get that brand off their butt in
an effort to actually potentially help you resolve this issue
instead of going through the same bureaucratic rigm role that
you've been through already. So he's posting something tagging them
in their accountability, I think that can make a big
difference in at least getting them to be a little
more curious about your case and potentially helping you to
(41:05):
resolve it.
Speaker 1 (41:06):
But that's goes to just washing their hands with the
situation altogether. Yeah, it does any fact space. It sounds
like Timothy, he's not out for blood or anything like that.
Just make this right.
Speaker 2 (41:13):
I was gonna say, it doesn't make me think twice
about SUPERU. Like you had a sue rou for a
little bit and you had some serious issues. Yours was
used and so you were well outside of the warranty period,
it shoulder.
Speaker 1 (41:23):
I don't know.
Speaker 2 (41:23):
I think I'm naturally drawn to a brand that embraces
the outdoors and all that, but I don't I'm thinking
twice about it. Yeah, but we've got more to get to.
We're gonna talk about trading one debt for another. We'll
get to that question here right after the break.
Speaker 1 (41:43):
Our man, we'll back. We got more money, talk to
you too. This we always got to give to our
Facebook question of the week, Yeah, we do. This one
comes from Nathan and Yeah, we're gonna talk about trading
one debt for another. He says, is it a good
idea to get a helock, a home equity line of
credit when your credit score is six twenty five to
try to consolidate high interest credit card debt? This was
a question, right Nathan Poe's in the Facebook group Are
(42:06):
you what are your thoughts on this one? Man?
Speaker 2 (42:08):
Well, first of all, say that this is a classic
personal finance sort of scenario that folks find themselves in.
But there's just a lot to think through here before
you magically, because like if you first hear about it,
you're thinking, oh, this is like a.
Speaker 1 (42:20):
Magical elixir sounds like a no brainer.
Speaker 2 (42:22):
I'm going to magically poof my twenty two percent debt
down into ten percent helock. Because certainly, when you're looking
out the numbers, that initial proposition it sounds nice, but
that doesn't mean it's a no brainer. And it certainly
could work out to your financial advantage, but it also
could compound your your debt issues, and so.
Speaker 1 (42:39):
That's what we're going to talk about here. The main
reason that it could compound things and not alleviate the
pressure is because of something else we talked about recently,
the reduction of friction that you're able to enjoy when
you make this sort of debt switch, which sounds like
a good thing. Everybody loves reducing friction, Matt everybody likes
to hit. Was a Staples that had the easy button. Yeah,
(43:00):
where it's like all the easy button and it's like,
oh great, the easy button sounds so nice. I want
one of those easy buttons in my life. But by
hitting the easy button, by turning the credit card debt
into something less offensive, you're actually reducing the negative feelings,
the discomfort I guess that that debt gives you. But
in our estimation, the discomfort that the credit card debt
gives you is a good thing because it kind of
(43:21):
lights that fire under your butt to get rid of it.
It gives you a reason to get rid of it,
gives you a reason to attack it more strikingly. Right
and if so, if you the more comfortable you feel
with it lingering around, the worse it is for you
and for your financial future. So when you turn one
form of debt into another more palatable kind, ultimately, the
truth is for a lot of people that leads to
(43:42):
more debt accrual overall. That that is the heart of
the issue. That is the position we really don't want
you to find yourself in, Nathan. That would be a
big problem if you magically poof, like you said, Matt,
this one debt into a better form of debt, and
then ultimately you end up accruing more debt overall, just
two different kinds.
Speaker 2 (43:59):
Because you're not addressing the unlying problems, you know. Like,
so it's funny you're talking about like hitting the easy button.
So here's a potential hot button topic or issue that
you feel like it tends to circulate around. Makes me
think about semiglue tides. So like the monjourno's or the
ozimpics of the world. And there are a lot of
folks who are finding success with these drugs, right they're like,
(44:19):
oh man, this thing is causing me to lose weight,
and like it's caused me to lose weight quickly, and
it's staying off. Like it's kind of like being touted
as like this magical sort of drug, miracle drug.
Speaker 1 (44:29):
That's actually what I meant to say.
Speaker 2 (44:31):
But the problem with that is that it doesn't address
all of the underlying issues that might lead to somebody
to be in that sort of situation, which is that
you aren't moving your body basically, like I'm thinking about
exercise and working out and mobility, Like these are all
things that don't get addressed at all when you are
taking some of these different drugs, and so because of that,
(44:52):
you're not increasing your like your metabolic health or you
like your cardiovascular fitness. These things that are sort of
like pillars of personal uh not still findance of personal health.
And what I'm afraid of happening is that like years
down the road, folks are still dealing not with all
the same issues because certainly there's some improvement to their
life and it's amazing what it is.
Speaker 1 (45:11):
You're not a doctor, and you're not saying that nobody
should take these drus exactly.
Speaker 2 (45:14):
It's amazing what we're able to accomplish with some of
the advances in science and technology and drugs and shots.
But to a certain extent, it almost does kind of
feel like a band aid because of the fact that
it's not addressing all of the different underlying issues that
you are you're kind of forced to address because I mean,
let's be honest, like a lot of folks when they're
looking to exercise more, it's because they do want to
lose weight. I'm not saying that is a good measure
(45:34):
of health because sometimes you get fit and you gain
weight because you're putting on muscle, but.
Speaker 1 (45:38):
From people have different body shapes and bodies types and sizes.
Speaker 2 (45:40):
But that is a goal for a lot of folks.
And if you're able to achieve that goal by completely
skipping this whole aspect of it, I'm afraid it like
that you end up kicking the can further down the road.
And that's almost how I see this helock. If you're
not addressing the underlying issue, that's.
Speaker 1 (45:55):
A risk here, right yes, like, and too many folks
attempt to move debt around and then they've got heat
lock debt. But they never change their ways, and so
they wrack up debt on that credit card again. And
temporary kind of solution, right, I think the person who
uses it right can potentially see benefit. But a lot
of people use this poorly and they end up harming themselves.
(46:15):
What seemed smart ends up being dumb. And it also
it's also important to point out that the difference there's
a difference between secured and unsecured debt. So if you
don't pay your credit card on time, or you're failing
to pay your bill for months on end American Express
or Visa, they can't come and repossess your car or
your home. But if you fail to pay it on
your helock for an extended period of time, you're putting
(46:35):
your house at risk. And so it's not like you're
just enjoying a reduced interest rate with no strings attached.
You're taking on a real added risk by making that move,
and it is worth thinking long and hard about that
additional risk. Maybe it's still within the realm of hey,
i've got this, I've got enough whiggle room I'm literally
just trying to pay it off more quickly, but I'm
not worried about actually being able to pay it off
(46:57):
or actually going into more debt overall. Because I make
this move, then maybe it's worth considering. But it is
important to mention that is a real downside factor here, totally.
Speaker 2 (47:06):
Yeah, I think it's important to point out to you
that both credit cards and he locks come with variable
interest rates. And here's some potential good news, though, is
that it looks like those rates might be taken down
slightly moving forward. It is impossible to predict if, when,
and then actually how much they're gonna tick down, but
for reading the tee Le's right, that could mean lower
(47:28):
rates on some different variable interest rate products out there.
I almost wish that maybe I wouldn't have mentioned that
because it's such an unknown, it's such an X factor,
and you shouldn't make a decision based on that anyway.
Speaker 1 (47:40):
Yeah, maybe I'll keep that nasty dead around because it's
going to be a slightly less now. So maybe we
should just cut all this part answer.
Speaker 2 (47:46):
I don't know, but our goal is to present you
with all the information that we know that's out there,
and not to like hide anything from you, but even
still like what we're talking about, just a minor downward
movement on both of these products, and they would both
still be considered bad debt. Instead, we'd love to see
you make a plan not to just you know, shift
one debt from another slightly less agregious one, but just
(48:08):
a plan to actually pay it off as quickly as possible.
We want you to address those underlying issues.
Speaker 1 (48:12):
I think maybe the other option here that Nathan should
consider after increasing his credit score, by the way, because
this is really important to getting approved for the best rates.
You hear the commercials, You see the commercials and it's like, oh,
rates starting at seven point five percent or something like that.
I think my credit union, Matt is offering some sort
of intra introductory rate on a helock as low as
five and a half percent right now. Well, guess what.
(48:34):
That sounds nice, But Nathan's not going to qualify for
those with a credit score of six to twenty five.
He's got to work on increasing the credit score before
he attempts to do some of these moves. Anyway, we'll
link to some resources in the show notes, Nathan to
help you do just that. By the way, do not
pay someone who tells you they can help you raise
your score for you. That's bloney and it's gonna cost
(48:55):
you a lot of money that's not gonna pay off.
This is a DIY thing. But once that score is up,
you might find that a zero percent transfer card. Getting
another credit card isn't even better way to go. Giving
you a zero percent interest rate for something like fifteen, eighteen,
maybe even twenty one months, that allows you to pay
down that debt much faster because you're not continually accruing interest.
(49:15):
And then even still the same advice about being vigilant
about racking up even more debt applies, so you have
to be careful in either instance. But in that case
it's not a he lock and it's actually getting you
a lower interest rate for a specific period of time,
So it's worth looking into that. But the credit score
is a big issue in that and it's worth paying
some attention to what's going on with that score so
(49:36):
you can prove it in short order. Oh, by the way,
and if your credit card debt, if it's over the top,
we would suggest going to see a non for profit
credit counselor NFCC is one place money Management International is
another place. Those are two great organizations where you can
meet with somebody for free to talk about what's going
on with your debt and to work towards a debt
payoff plan a debt management program. So I feel like
(49:57):
we threw a lot out there in this answer, Matt.
There's a lot to cover if what feels like a
basic question ends up being ultimately more complex than a
lot of people might think on its surface.
Speaker 2 (50:04):
Yeah, it depends on how committed he is to eliminating
this debt, Like it depends on where his heart is
and whether or not he truly wants to get rid
of this like once and for all, and this is
sort of the last tool that he's going to implement
that's going to get him to that point. Or if
this is like almost like another excuse, it's just like
another prolonging problems. Yeah, where he's just going through the
motions where in the end there's not any real change
(50:26):
that's going to occur.
Speaker 1 (50:26):
If you think about one last thing, undebt dot it
you n dbt dot it. That is a website. You
should check it out because it can help you create
a debt payoff plan. And that is ultimately what you
need in order to get rid of this debt in
a specific timeframe. Totally figure out how much money do
I have that I can dedicate to paying off this debt?
Structure it, make a structured plan, whether you're doing snowball
(50:47):
or avalanche method on a website like undebt dot it,
I think keep to it. That is ultimately the way.
Having that plan right in front of your face, Matt
is crucial to allowing you to actually do the thing
you want to do, which it's especially helpful to if
you multiple debts that you're trying to where you're trying
to figure out the order in which that you're going
to pay them off.
Speaker 2 (51:03):
But let's get back to the beer you and I
enjoyed today was a SkELL A Hawk and I didn't
realize this, but this is a collaboration between Parish Brewing
Company as.
Speaker 1 (51:13):
Well as Horace h.
Speaker 2 (51:15):
O r Us and I'm actually surprised that we have
never had a Parish beer on the show before. It's
one that you and I have enjoyed before.
Speaker 1 (51:23):
The best brewery I've had that comes out of State
of Louisiana.
Speaker 2 (51:26):
See you you're a huge You're a big fan of them.
I think they're okay, and I don't know, but I
really like this beer, which makes.
Speaker 1 (51:31):
Me a better Louisiana brewery Matt Horace, assuming that they
are they Louisiana. A lot of times you collab with
somebody that's local, so it makes me think more highly
of them because I've had different Parish beers and I
feel like they're decent, but they've never I don't know,
they've never risen to the top in my mind as
to if I'm in Louisiana, you're looking at getting a
sassarak or a cocktail or something like that. I don't
(51:53):
think of when I think of Louisiana. I don't think
of what's who makes Andy Gator and Abita a beta
brewery or whatever. It's the best, one of the big ones.
Speaker 2 (52:01):
They're out of Louisiana. And not to hate or anything
like that. Parish is a fantastic brewery. But this, in
my mind, man, what a great collaboration. Maybe they're both
able to pull the best out of each other. Yeah,
because this is a fantastic beer. It's like super somehow,
it's like juicy, while at the same time it.
Speaker 1 (52:15):
Still has that dry bite that you get.
Speaker 2 (52:17):
I don't know if it's just from dry hopping an
ipa or what, but a whole lot of flavor going on.
Speaker 1 (52:22):
This was one of the best, like hazy IPAs I've
had in a while, and I think it was like that,
not overly sweet. Some of them tend to go in
that just syrupy sweet direction. This is the the hops
really came through in this one, but it wasn't found
that balance pali fatigue, not overwhelming. So yeah, I really
enjoyed this one. And yeah, maybe it's maybe it's the
some of the parts right there, the two solid breweries
make it something great more than some of its parts. Yeah.
Speaker 2 (52:44):
Well, it's got the cryo mosaic, which, from what I understand,
cryo is like hop concentrate. Oh essentially that's like, yeah,
it's like is it in that like cryogenically frozen or
something like that.
Speaker 1 (52:56):
Yeah, but how does that work in actuality? I don't
I'm not a beer sign. I know, we don't make
the beer, we just drink it, but we should look
at that at some point.
Speaker 2 (53:04):
But yeah, really glad that you know, I got to
enjoy this one. Would highly recommend SkELL A Hawk all right.
Speaker 1 (53:09):
But that's going to do it for this one. We'll
put links to everything we mentioned on this podcast episode
in our show notes at howtomoney dot com, including a
link to the Facebook group. If you're not in there,
you should joins a bunch of money nerds helping each
other out every single week. Matt. That's going to do
it for this episode. Until next time, best Friends out,
Best Friends Out. Don't you don't like that ghost of
(53:41):
the machine.
Speaker 3 (53:42):
I feel like it.
Speaker 1 (53:42):
I feel like it's decent.
Welcome to had the Money. I'm Joel and I am Matt,
and today we are answering your listener questions.
Speaker 2 (00:24):
We hope everyone had a fantastic for a wee kid,
and we are glad you're joining us today on Monday
as we tackle some listener.
Speaker 1 (00:31):
Questions, you have a case of the Mondays today.
Speaker 2 (00:32):
I'm at never. I like Monday's because we love what
we do. So honestly, I feel like I used to
have sort of this impending dread back when I had
an old W two job, like you would feel it right,
even at that point, I feel like I like my job,
but it gets old, and when the ability to work
for yourself, man, yeah, there's nothing like it.
Speaker 1 (00:48):
Plus you get to show up and see Mike smile
and face every Monday morning always brightened.
Speaker 2 (00:53):
But we're going to discuss the high price of driving
a lemon and maybe it's not even the the high
financial cost, but in other ways. Another listener is asking
about how he should invest a windfall that he's come
into possession of, especially in his case it's his first
time or it's going to be his first maybe what
he considers his first big boy.
Speaker 1 (01:14):
Sort of investment.
Speaker 2 (01:16):
And then Another listener is asking about selling a home
after just two years of ownership. Wants to get the
Joel and Matt stamp of approval. So we'll get to
that plus others.
Speaker 3 (01:26):
Today.
Speaker 1 (01:26):
I forgot my ink pads, so I don't know if
he able to do that, but we'll give our best advice.
And you mentioned driving a lemon. Well, we're not talking
about driving a fruit here. We're talking about it of
course now the car. And actually there's a lot to
share on that that's applicable to people and basically every state,
because every state has a law if you sold a
car that has perpetual problems. We'll talk about that too.
Is that something I don't know if you've ever talked
about it.
Speaker 2 (01:46):
And so even just kind of talking about it at
all here on the show, I think it's gonna be
good stuff.
Speaker 1 (01:51):
Agreed. All right, So Matt, you got an email from
the folks that yeah, what happened?
Speaker 2 (01:56):
Okay, So you get emails from all the different companies
that have your email, right, and I received one from
Fidelity and I saw it and immediately my spidy sense
like red flag started going up. It just it's not
the kind of email I've ever seen from Fidelity before,
Like oftentimes you'll see one where they're like, here's the
monthly report from whatever mutual fund and stuff like that.
(02:18):
This one did not look like that. And then I
looked a little bit closer and it kind of had
a weird email address specifically, and it.
Speaker 1 (02:24):
Was something it's another red flag.
Speaker 2 (02:26):
Yeah, it was something like Fidelity Investors at you know,
like mail dot something, you know, dot Fidelity do dot com.
And I was just like, oh no, this is totally
this is a scam. This is totally a phishing email.
I was like, wait a minute, it does say Fidelity,
it does say dot Fidelity. And I looked a little
bit closer and I realized that, in fact, this was
a real email. It's just that Fidelity they've got some
(02:48):
weird subdomains. And it made me realize that this is
not something we've ever talked about on the show. And
so do you know how to tell the difference between
an email that is coming from Fidelity that is legit
or not based on based on the domain.
Speaker 1 (03:02):
I don't know, fill me in. And that is true
that when you look at the sender, typically that is
the thing that tips you off. You're like, oh, Okay,
it looks like they got the logo, they got maybe
even the same font and copy, and it almost looks
like a real Fidelity email. But it's typically the center
that throws me off. But is there another way?
Speaker 2 (03:15):
Well, yeah, so this is not just what's written in there,
but if when you look at the actual address, because
sometimes you will see Fidelity in there. But what you
need to pay attention to is basically the difference between
a domain, so the at whatever dot com or the subdomain,
which is the at and there's a word there, but
then there's another dot word dot com, right, And so
in this case, I think the email address was something
(03:36):
like Fidelity Investors at mail dot Fidelity dot com.
Speaker 1 (03:42):
And I pause for a second.
Speaker 2 (03:43):
I'm like, wait a minute, this is this is actually
a legitimate email, because what you want to pay attention
to is the word that is closest to the dot
com or the dot org or dot gov or whatever
it is that you know, whoever's emailing you. But the
subdomain can be anything, and so what you want to
avoid is the exact opposite. Right, So let's say that
(04:04):
you get an email and it's investors at Fidelity dots
how to money or something like that. It just threw
us under the bus. That would actually make a great
phishing email, wasn't it. Because anyway, but if the mad
Joel partner with the guy's ability, either send me the
email or le let's just say like, uh, investor email
dot com or you know, something like that, because anybody
(04:26):
can set up a random website, but then you can
set up a subdomain called whatever you want it to be,
including fidelity. So Fidelity might be in there. And if
that's the first thing that you look at and you
don't look further down the line of the email address,
that's when you might be tempted into thinking that, oh,
this is legitimate, when in fact, this is a phishing email.
And so in this case, it's funny because the email
looked kind of sus you know, like it looked a
(04:48):
little phishy, But then on closer inspection, I realized, wait
a minute, no, this is in fact a legitimate email,
and I confirmed it and whatnot. But I just wanted
to mention throw that out there because I think a
a lot of folks are thinking, oh, well, it's got
Fideli in there, it must be good. You don't want
to assume that that's the case.
Speaker 1 (05:05):
Yeah, or again logo font looks like something I would send,
but maybe there's something like some some spam emails clearly
like right off the bat, that's not legit. I still
of them do a better job than others. I'll say that.
I'll slipping through my spam folder the other day because
I hadn't been in there in forever, and I realized
there was a couple of messages I thought I had missed,
and you actually pointed one out, and so that's why
I kind of went through there, and there were a
(05:26):
couple of things that I was glad I found. But
it's really interesting to kind of float through all those
spam emails that don't make it get older. And I
was like, wait, first, the spam folder's pretty good, and too,
there's some really interesting attempts at spam. Like I saw
there was one email headline. I didn't click on the email,
but it's basically about that money I owe you. That
was a subject line, and I'm like, of course, super conversation. Yes, hey,
(05:46):
it makes it.
Speaker 2 (05:46):
It seemed casual, like oh yeah, somebody, I'm sure there's
somebody out there that money, right.
Speaker 1 (05:50):
It feels very clickable like, oh about that money I
owe you?
Speaker 2 (05:52):
Because it did you almost want to reward them just
because they had a good subject.
Speaker 1 (05:55):
Yes, of course I did. I'm like, that's a good
attempt at a for f scam, right, But yeah, pay attention.
And even if you just actually click the email and
you look at it, typically nothing's going to happen to you.
But it's now you click something on the inside of
that Emaactly, that's when a keylogger or someone's going to
attempt to steal your money. That's when you're going to
get entangled with these gammers. So best to avoid exactly.
(06:16):
It's a good tip.
Speaker 2 (06:16):
So investor dot fidelity, dot com should be totally fine. Fidelity,
dot whatever. The next thing is dot com. That's where
there might be an attempt. And I will say one
of the other things that tipped me off to with
this specific email is I copied one of the main
links within the email. It turns out it was for
a financial advisor appointment or something like that, which they
(06:37):
I've never seen them do before either, which was kind
of odd. But I copied the link and pasted it
in the in my browser without just so I could
see what the link was and it was Fidelityinvestments dot Com,
which is another.
Speaker 1 (06:48):
Red flag because they owned both URLs.
Speaker 2 (06:50):
Huh yeah, But why in the world is this giant
company who is awesome, Why are they dealing with all
these silly subdomains that make them look like a local
credit union. Like that's the part that I don't understand,
Like why are they sending emails because you can send
emails from these different subdomains and that's what they're doing
when instead I feel.
Speaker 1 (07:07):
Like they on a streamline something. It just can be
bad branding and also confusing, especially and it's an unclear
message where we have to watch out for ourselves even
more in our inbox one hundred. So we still love
you Fidelity. Yeah, that's a good, good tip, Matt. All right,
let's mention the beer we're having on this episode. This
one's called Scale a Hawk. The logo on this one
looks so dope, like a bird rising from the ashes
or something kind of like Phoenix. Yeah, really cool looking.
Speaker 2 (07:29):
Scale Hawk makes me think of I don't know. The
sku sk part makes me think of I guess skateboarding,
and the fact that it ends with hawk makes me
The throwback to Tony is what it makes me think.
Speaker 1 (07:39):
Of og of skateboarding. But yeah, we'll give our thoughts
on this IPA at the end of the episode, but
let's move on to list our questions. Matt. For folks
out there who have a question for us, we would
love to hear from you, Just go to how tomoney
dot com, slash ask, or record a voice memo on
the app on your phone, send it our way via
email and we'll get it hopefully on the next Ask
How to Money episode. The first question of the day
(07:59):
comes from a little who wants to know whether or
not he can tell us home. He wants our verdict
before he does it.
Speaker 4 (08:05):
Hey, joel Annette, this is Tim from Fairfax, Virginia, a long,
long time listener since Believe It or Not Episode one
when you guys talked about how much you love biking.
Love what you guys do. A quick question for you. So,
my wife and I bought a house last August. We
put down ten percent at a six point five rate.
Definitely a very rush process given a competitor. The market
(08:26):
is out here, but in the time since we've learned
so much about ourselves home ownership, that sort of thing.
But we're actually discussing the possibility of leaving this house
after two years Showley's avoid capital gains, and the reason
being this house is simply not what we thought it
would be in terms of you know, functionality, location, that
sort of thing. And I'm reluctant to rent this place
(08:49):
out as I've had some terrible tenant experiences with another property.
And I know it's pretty much a cardinal sin to
buy a house and sell it before the recommended five
to seven years, depending on who you ask. But is
there ever a case to do exactly that? If home
ownership is really not for you, it's affecting your mental
health and you feel and need to just cut your
(09:10):
losses and financially and also mentally regroup as a couple.
I guess I'm looking for some validation in some shape
or form that this isn't the most financially crippling decision
if we got on this route. And if you guys
are ever out in northern Virginia, check out a brewery
with the coolest name, Quatro Goombas. Thanks again, guys, and
keep with the awesome work.
Speaker 1 (09:29):
Bye. Matt. Tim said he'd been listening since episode one.
I thought it was literally just our moms to listen
to the first episode.
Speaker 2 (09:35):
We had a few, like a handful of folks out there.
What's more impressive is the fact that he stuck with us,
Like it's one thing to be like.
Speaker 1 (09:43):
Oh yeah, I was there for the inaugural episode. Because
we're not joking when we say those first twenty or so,
maybe fifty or so episodes were right, we learned a
lot since they were rough.
Speaker 2 (09:52):
Should we send Tim a pair of socks for being
a longtime listener? To Tim, send us an email. You've
already sent us your voice memo, but send us another
follow up email with your with your mailing address.
Speaker 1 (10:02):
And we'll get those on the way to you. I mean,
for literally having stuck with us for one hundred and
sixty plus episodes.
Speaker 2 (10:06):
The least we can do is and you should at
least have some warm this winter. But uh, okay, one
thing that stood out to me. I wanted to point
out the fact that Tim mentioned not loving the location
where he is. This is why we suggest renting in
a specific location for at least like six months or
so before buying.
Speaker 1 (10:24):
And so Tim, I'm you know, I'm not totally sure
if you just moved to that part of Virginia or not.
Speaker 2 (10:29):
But the stakes are just higher when you are looking,
you know, when you're buying a home, as opposed to
just saying, oh, let's just try this area out, get a.
Speaker 1 (10:36):
Feel for it. If you were in a place for
six months and it sucks, you can move six months
from now. If you buy, it's tougher to pull that off.
Speaker 2 (10:42):
You might find yourself in for a tough financial lesson.
Or he might just be sort of he may feel
forced to stay at a house that hasn't treated him well.
You know, like there's certain experiences that you have with
different places or different products where you're just like, you
know what, this just isn't for me.
Speaker 1 (10:57):
That's one of the underdiscussed elements of home ownership. We
talk about maybe the extra costs that you incur Matt
when you own a home, and people often under assume
whether they think the mortgage, oh, the mortgage is about
the same as my rent, so might as well buy.
But then there are all these other costs you endure.
But in addition to that, Tim mentioned kind of the
mental health factor, because there's a lot more to maintain,
(11:19):
and so it's like it's the weekend warrior thing is legit,
so mowing the lawn or what a tree falls him.
I had a tree fall recently, another one I think
I mentioned this hit my neighbor's shed. And it's all
this stuff you have to deal with as an owner
that you don't have to deal with in nearly the
same way as a renter, and it adds up. So yes,
it's the finances, but it's also the just additional brain
(11:40):
space that it takes up owning a home. So I
totally get where Tim is coming from here. And let's
just say that Tim's kind of sort of been lucky
here to a certain degree. The market over the past
couple of years has been on his side, and so
in a normal two year stretch, you're probably going to
find that the transaction costs eat into whatever meager profit
you might have made you might have enjoyed, meaning that
(12:02):
renting would have clearly been a better move. And sometimes
it's just better to be lucky than smart, right, Matt,
And that I think is where Tim has ended up.
Not that Tim's not smart, Tim, I'm promise I'm not
questioning your intelligence, but I'm just saying that because the
market has been solidly in the favor of buyers over
the past few years. If you've phoned a home, even
on a truncated timeline, you've done better than you traditionally
(12:23):
would have done historically. Matt, I know someone who's bought
and sold homes in the state of Florida more times
than we typically recommend over the past five or so years.
But the insane housing market that up into the right
trajectory of prices in there, and it's finally starting to correct,
I think, But it's made those moves look reasonable. That
is typically not the case, though, and I would not
expect a ridiculously hot housing market to do that for
(12:46):
people in the future. I wouldn't expect this to continue
to be the case. But I guess in Tim's case,
it's okay to be thankful that it's allowing him potentially
to move on from this current purchase without enduring too
much pain.
Speaker 2 (12:57):
Sure well, and honestly, like these different personal finance choices
that we make, I think the whole point that we
are trying to be smart with our money is to
serve some sort of greater end, right, It's to serve
sort of like our deeper needs and desires.
Speaker 1 (13:10):
It's not an attemptic to be like an old school
gnostic right where we flail ourselves into extreme frugality, hate
our lives as much as possible to get the biggest
number of the banke accounty.
Speaker 2 (13:20):
And I'm also not saying that you should just chase
after whatever fleeting yolo wants and desires that you might have,
right Like, I'm not suggesting to buy, not pay later
into finance a new wardrobe because that's going to make
you happy, and which it actually won't make you.
Speaker 1 (13:32):
Happy, of course.
Speaker 2 (13:33):
But this is far different though, because this home, you know,
where it is that you live, it's about a lot
more than finances. It's more than just your fleeting desires.
And it sounds like that you've thought through the different
trade offs and that you're okay with making a decision
that's not optimal. You're okay making a decision here that's
going to serve you guys well, even if it isn't
the best thing for.
Speaker 1 (13:52):
Your long term finances.
Speaker 2 (13:54):
Yeah, like we said, you realize that home ownership it's
not for you. That's a reasonable conclusion to to arrive at.
And because of that, I wouldn't resign myself. I wouldn't
shackle myself to owning this home for years more, you know,
just because you're looking for you know, Matt and Joel
to give it the stamp of approval, for us to
for you to have abided by our rule of thumb.
Speaker 1 (14:15):
Often typically say seven years, right, I mean, yeah, five
to seven years.
Speaker 2 (14:18):
But here's the thing, even and honestly, the market has
cooled because I think he said he got it last year,
let maybe last fall, and since then the market has.
Speaker 1 (14:26):
Cooled a little bit. I think he said two years ago.
Speaker 2 (14:27):
Well, he's wanting to hang on to it, I think
for at least two years to avoid the capital gains.
Speaker 1 (14:31):
Which it hasn't even staciated much. He's not gonna have
much capital games to pay. Boom, there you go.
Speaker 2 (14:35):
But on top of that, it's like, well, is that
enough to offset some of the transaction costs? Again, like
we're talking about questions that are bigger than just transaction costs. Then,
whether or not you've seen appreciation in that home, it's
not ideal, certainly, No, it's not ideal at all. But
there are also a whole lot of other worse things
that you can do with your money than having purchased
a home.
Speaker 1 (14:53):
Yeah, as well, exactly, And so let's talk about the
tax thing for just a second. It's important for everyone
else out there to know, but Tim as well well.
Crossing the two year threshold is key. It's not being
forced to pay capital gains on the increase in value
that you've experienced. So it's if you hit that hurdle,
you're not going to be triggering that tax consequence. But
(15:14):
the other side of the equation again is Matt that
if your house didn't appreciate much, we're talking about fifteen
percent on peanuts.
Speaker 2 (15:21):
So yeah, you tell a little bit worry about all
that much anyway. Yeah, and so you're overly if that's
the case, you're maybe a little overly focused on the
principle as opposed to the reality of how much you're
having a day in Texas.
Speaker 1 (15:31):
It still sinks because you're paying transaction costs on the
front end and the back end. Those costs have come
down a little bit recently, but not much, and so
it's still it's going to feel like a financial face
punch to a certain extent. It doesn't mean that it's
not worth it. And it's also important to mention that
they put ten percent down on the home, which does
mean you should walk away from the closing table with
some money back in your pocket. And I do think, Matt,
(15:53):
the answer might take a different tone. If Tim had
a smaller down payment. Let's say he put two percent
down three two percent down, and the market wins hadn't
been on his back at least just a little bit,
you might have find yourself potentially even unable to sell right,
not having enough cash in the bank, not having enough
equity on hand to allow you to sell this house. Fortunately,
(16:14):
that's not the case. Other people might find themselves in
that position, Matt in the years to come, especially with
what's happened with the rise in home prices and a
potential moderation and even a potential decline in some parts
of the country and home prices. But going back to
what you were saying, Matt, I think prioritizing your life
your mental well being makes sense here because it's not
some sort of complete financial catastrophe exactly.
Speaker 2 (16:34):
Yeah, And going back to the timeline, it's worth kind
of touching on that because, like you said, if you
hang onto it for if you live in it as
your primary residence for at least two out of the
five years, you've got that if you're married, a five
hundred thousand dollars exclusion on any profit there. But if
you own the home and single people have that much, yeah, yeah, exactly.
But if you only hang onto it for basically between
(16:55):
one and two years, that's when you enter into that
long term capital gains tax bracket, which I will say though,
depending on how much it is that you make, might
even be zero if you're making less than ninety four
thousand dollars, which is honestly like there are a decent
number of folks out there who that would apply to,
So that's worth keeping in mind for other folks who
might be in a similar situation. And of course you
certainly want to avoid owning it for less than one year,
(17:17):
because that's when you're looking at short term capital gains
where that profit is taxed basically as ordinary income, So
it could be significantly higher than that fifteen percent. But
sort of going back to what we're saying at the beginning,
I think renting can it can just not only be
a better financial decision over the long haul, but it
can just be a better lifestyle choice for a lot
of folks as well. Home Ownership isn't necessary to build wealth,
(17:40):
and it's not even the best way to go about
doing that. We own our homes. We're certainly glad that
we do, but it comes with its fair share of
frustrations as well. July, as we were working today, our
landlord who owns the home right here next to our office,
he owns our office. He owns our office. Yeah, we
don't own this carriage house. But he was out on
his roof looking for I think he's looking for a
whole yeah or something. What's he doing out there? That's
(18:02):
the kind of thing you have to worry about when
when you're a homeowner.
Speaker 1 (18:05):
Sorry, and he's got to worry about lousy tenants.
Speaker 2 (18:07):
Like us too, who at least we pair rent on
time and in full every single month.
Speaker 1 (18:13):
But there are reasons to buy a home.
Speaker 2 (18:14):
We just don't want you to fall into the American
dream home ownership cults. Just make sure that you're making
your choice based on your specific circumstances and the goals
that you have him.
Speaker 1 (18:24):
Yep, so I guess we will give the stamp of
approval here, Matt, based on tim circumstances and market circumstances.
There's worse things that you can do with your money.
That's right, and it sounds like, yeah, he's been listening
obviously for a really long time. He's made a lot
of good financial moves. And guess what, doing the right
thing most of the time for a long time means
you can occasionally make a non optimized move if it's
(18:46):
in the best interest of your life over your finances.
All right, Matt, we got more questions to get to
and actually later the show we're going to talk about
taking out a heelock to pay off credit card debt.
Is that a smart move? We'll get to that more
after this. We are back for the break.
Speaker 2 (19:08):
It is time now for our next listener question. This
one sits at the intersection of the silver screen in Investing,
Matt and Joel.
Speaker 5 (19:16):
My name is Jay. I may be your only jen
Xer listener. Anyway, I would like some advice on getting
my first investment. I already have a roth Ira, which
I've been funding for a couple of years now.
Speaker 3 (19:35):
I don't know what else to invest in.
Speaker 5 (19:37):
I have a small inheritance that I got from my
very close auntie who passed away. It's like a second
mother to me. So I have some money coming in
and I want to.
Speaker 3 (19:51):
Know what to do with it. Quick backstory about me.
Speaker 5 (19:55):
I'm an actor here living in Hollywood or LA, trying
to pursue the dream. And you probably heard the cliche
statements starving artists or the other extreme don't forget us
when you're famous. So that's where I am. I'm not
the typical working nine to five I mean artists. Actors
were always trying to wait, trying to find a way
(20:16):
to make a living.
Speaker 3 (20:19):
While pursuing our dreams.
Speaker 5 (20:20):
Because we know that currently a lot of us actors
can't support ourselves like the typical nine to five job,
which most of your listeners are, I think. So that's
my story. What would you recommend I invest in for
my very first investment once I get since I now
have an inheritance. My inheritance is about I want to say,
(20:41):
plus or minus sixty five thousand dollars, So there you go.
Speaker 3 (20:46):
What should I do with that money? And let me know?
Thank you?
Speaker 1 (20:51):
Jay. First things first, trust me, you're not the only
gen X listener. Oh yeah, it's true that the vast
majority are millennial and gen but there's still a fair
amount of gen X listener So to hear from a
lot of older folks for an email this week from
an eighty year old listener. There's people truly all love
it all stripes living all across the country, all across
the world who listened to the show, and we appreciate
(21:13):
all of you listening. And also, Jay, sorry to hear
about your your aunt. An inheritance is wonderful, but it
doesn't make up for that loss. Sure, and last thing,
I can't wait to see Jay act across on the
screen from brash can or something like that.
Speaker 2 (21:27):
Yeah, well, I was going to comment on his baton.
The fact that he is set to receive an inheritance
from his aunt is like evidence of the fact that
him and his aunt.
Speaker 1 (21:36):
Were close, which that's I think that's just pretty.
Speaker 2 (21:38):
Cool, you know, Like I haven't received any inheritances from
many of my aunts or uncles, but maybe that's because
my crummy nephew, whereas Jay, Jay, you are an awesome nephew.
But I think it's just cool that, yeah, that they
share that kind of bond. It's worth maybe pointing out
that this is obviously something that Jay knows really well,
but maybe a lot of folks don't know this.
Speaker 1 (21:57):
Most actors they're not crushing.
Speaker 2 (21:58):
It in Jay kind of he's attesting to that fact.
Many of the household names certainly are doing quite well
for themselves. You mentioned Edward Norton, and oh you mentioned
Brad Pitt as well, so you must be thinking about
fight clubs. Makes me think of the see Robert Dowling
Junior who just assigned was it like an eighty million
dollar contract to play to re enter the Marvel universe.
Speaker 1 (22:21):
Apparently they were running out of other actors to play
Marvel characters. They had to go back to the well
for the same same guy to play another character. I
don't he's kind of the face of that fat No
one tell him that Jay was available to play Doctor Doom.
That would have been all Jay was available.
Speaker 2 (22:34):
Yeah, But the fact is you don't know the names
of the vast majority of actors out there, and I
think they're often scraping by. I don't personally know, I
don't think any actors, but from what I understand, they're
like working multiple jobs.
Speaker 1 (22:46):
Just at onebuddy who's an actor here in Atlanta, and
it is like occasionally known his name, Stephen. He's awesome.
He's great due I don't think, but he's and he's
been in he'll show me, like a clip from thirty
seconds in a show or something that's so cool. When
he gets that that's pretty cool. Or he's doing in
like an ad advertisement for a brand or something like that.
But you know, he's not living high on the hawk.
Speaker 2 (23:05):
That George's not Hollywood. It's Yollywood, that's what they call it.
And he does well.
Speaker 1 (23:09):
He does well, but not nobody would know it from
the outside, like, oh, he's not crushing it and he's
not a household name. But he gets steady work. And
that is the case for a lot of actors, and
even other actors do Matt maybe they're not getting steady work.
There's just more supplied than demand of actors, and so
it can be tough even just to make a living.
So but Jay's pursuer's dream. Kudos to you, j for that.
(23:32):
And your job actually influences our advice on this, because
let's talk about what to do with this inheritance money.
I think if you had a nine to five that
you'd been working for many years.
Speaker 2 (23:42):
Yeah, like if you were an accountant perhaps or a
coal miner like whatever it might be, that's just nine
to five in vibe.
Speaker 1 (23:50):
I think if it was just incredibly stable alongside like
a healthy emergency fund. We might be more keen on
you investing most of the money that you're inheriting. The
exactly talked about investing that money, but our typical rule
of thumb, by the way, is that you should consider
using something like ten percent of this for fun and
then attempt to make smart money decisions with the rest.
And I think that would honor your aunt's legacy. It
(24:10):
also gives you some breathing room to say, I don't
have to be productive with every single dollar that comes
into my life. This was something I was not counting on,
and so I'm going to take a small amount to enjoy.
But that doesn't necessarily mean investing right the smart with
the stuff with the ninety percent. We don't know your
whole financial picture, but we would suggest to check out
the money gears on our website if you clet our
a hear button, because we think that's going to be helpful. Truly,
(24:32):
when you're thinking about what to do with money that
comes into your life, that's the first place to turn.
Speaker 3 (24:36):
Yeah.
Speaker 2 (24:36):
Yeah, So it's not that we're against investing, of course,
we just don't want you investing money that would be
better going towards saving or paying off debts. So, Joe,
you mentioned the money gears, like what we're specifically talking
about here. Our money gear is number three and number
four because this gift from your aunt can have a
massive impact on your life, and so look to use
some of this money to pay off any debts with
(24:57):
any higher rates of interest, especially gregious, just rates that
you might find with credit cards, maybe a car loan
that's got a crummy rate.
Speaker 1 (25:05):
Perhaps, yes, Chase, you got credit card debt. I know,
investing the first thing you need to be doing. Investing
is the sexy thing, but paying off the credit card
debt that's the real money maker.
Speaker 2 (25:13):
And then beyond that, make sure that you've got a
minimum of six months worth of living expenses on hand
within a high yield savings account. I think only once
those two things have happened, like, that's when we can
start having a conversation about investing. And I think there's
just that temptation to look like you said, Joel, to
the thing that feels sophisticated and smart, when man, there's
(25:34):
like some some sort of like foundational elements that we
need to make sure are laid before we build on
top of it.
Speaker 1 (25:38):
Some low hanging fruit before you grab the ladder and
try to get this stuff on the higher branches. It's funny.
I walk past a partree on my walk every day.
Do you walk past that partree too on it? I do,
and I've seen a lot laying out on the ground.
It's a Bartlet partree. It's super sad. I'm gonna start
picking them because you're going to waste, you know. It's
just random thing that no we talk. That's like a
frugal or cheap Is it okay to like steal the
(25:59):
pairs off of the neighbor's tree. Why haven't I taken
any off of that tree? Shocked? Because I have restraint
because there's a fig tree I used to always walk by.
Speaker 2 (26:07):
I used to always grab like two or three figs
off of that tree when they were in season, and
that was my.
Speaker 1 (26:11):
Fruit for the day, pairs at least for my lunch.
The trick with Bartlet pears.
Speaker 2 (26:15):
A lot of times folks think that their pear tree
produces crummy, crappy pears. But what you need to do
is you pull the pair and then it's got to
sit on the counter for a week for it to
like continue to ripen if you wait until it falls
on the ground ground like, it's certainly right, but it's
so right that it's gonna like it tends to split
open or that's when other animals get it. But you
pull it, let it sit on your counter for a week.
Speaker 1 (26:37):
So get those green bananas.
Speaker 2 (26:38):
Then it's sweetens. Actually it's our buddy, our mutual friends,
our buddy Tim. He's the one that turned me on
to this fruit forging knowledge.
Speaker 1 (26:47):
So the low hanging fruit is to pay off that
high interested. But then the next thing is to, yeah,
start investing. If you've gone through money gears three and four,
you feel like you're hitting on all cylinders there. And
the first account they consider is the roth Ira. And
I believe Jay mentioned in his question Matt, he is
investing in the roth Ira. He just doesn't know where
to go after the fact. Sure it's important to mention.
Speaker 2 (27:04):
He is investing, because I will point out I think
what he said was that he is funding.
Speaker 1 (27:08):
His roth Ira. Which that is one sort of.
Speaker 2 (27:11):
Warning flag that went up in my mind that made
me a little unsure of whether or not those funds
are have been destoid.
Speaker 1 (27:16):
That is a common problem for people opening the account,
sticking money in it, but then not investing the money
inside of it. So Jay, make sure you're doing that,
and everybody else out there listening to make sure go
in there and look at the account. You open the account,
but did you actually not just fund it but invest
inside of it. So you can put seven thousand dollars
a year in that account. And depending on when you
were born, Jay, some gen xers, this is a nice
(27:37):
thing about being a gen X or not millennial, You
qualify to invest in extra thousand bucks a year, oh snap,
for a total of eight thousand if you if you're
fifty year over right, So, Matt, I know you're counting
down the days.
Speaker 2 (27:48):
I guess there's a lot of gen xers that are
solidly in their fifties.
Speaker 1 (27:51):
No exactly, that's crazy. So you know, whatever your health
time flies. I know you might have the max contribution
limit of seven, you might have it of eight thousand bucks.
Either way, we want you to max it out in
twenty twenty four and twenty twenty five as well, and
hopefully every year from here on out. But that combined
with beefing up your savings paying off any debts you
may could soak up a whole bunch of this money,
(28:12):
a whole bunch of this inheritance, doing the right thing,
just getting yourself on better financial footing from a debt
eradication and smart investing standpoint. And then if not, if
you've got more money hanging around, the other thing you
could do, you can consider opening up a solo four
oh one k. We talked in depth with this about
solo form case Matt with Sean Malaney back in the day.
We'll put a link to our boy Sean. Yeah, we'll
(28:34):
put a link to that episode he wrote the book
on it. We'll put a link to that list to
the show notes. You can put a lot of money
in that account, which and get tax breaks in the process,
which would be great since you're really just getting started
investing and you've got a lump some Hey, toss the
money in and think about that. You're getting a lot
of money into investment accounts even though you feel like
you're starting late. You're making up for lost time in
(28:55):
a hurry. Totally. Yeah.
Speaker 2 (28:57):
Something else I'm thinking of, too, is the fact that
what we're so we're talking about about you adding more
margin to your life by ensuring that you've got that
six months of living expenses on hand. Not only is
that going to be good for your personal finances, I
think this could be good for your career as well,
because there when you have more margin like that, it
allows you to take other risks and turning down a
role the stinks, yes, exactly, like there might be a
recurring role or something that is on that just happens
(29:19):
in his I don't know if he has an agent.
Speaker 1 (29:21):
I don't know how this.
Speaker 2 (29:22):
Works at all, but maybe there's something like a gig
that he takes and he doesn't really love it, but
you know that, Joe, it pays the bills. But when
you've got some money on hand, if you've got more
of a cushion like that, you can say, you know what,
I'm actually not gonna I'm gonna say no this time,
and instead I want to focus on this role that
you're really excited about, that you are going to really
throw yourself after, and that could lead to your career.
(29:42):
Not only your personal finance is blowing up and being awesome, yeah,
but also your career as well. So that's one of
the things that having more cash on hand, that that
can afford you.
Speaker 1 (29:49):
Yeah, yeah, you could be like, oh no, the role
of a school teacher like making drugs and then blowing
up his family life. That sounds like it's not going
to be a success at all. I don't think I
want to just payton that.
Speaker 2 (30:00):
I'm not going to give Hollywood career acting advice because we.
Speaker 1 (30:05):
Talked about this on the show Was It last year?
Maybe it's funny when you put it like that, You're like,
that sounds like a role that might not be.
Speaker 2 (30:09):
Again, Yeah, and then it ends up being like this
amazing role and breaking bad. But I'm thinking of We
talked about this on the show Flow from the Progressive Commercials.
We talked about how she's just this totally like down
to earth, was just doing insurance commercials, which typically isn't
the kind of role sort of like you said that
you would expect to be all that good, but even
within that, was able to just really find a role
(30:32):
that folks were able to resonate with.
Speaker 1 (30:33):
And she's like doing really well, totally crushing it. I
think that's like, what's a better gig being a Marvel
superhero or being the recurring insurance pitch person to Jake
from State Farm or the Flow One's a steady paycheck
for the rest of your life. One's like immortal glory.
So it depends on what you're interested in it, yes,
to make that call. Yeah, And ultimately two, j we'd
recommend investing in low cost index funds with one of
(30:56):
our low cost favorites, So Vanguard, Fidelity, Schwab are the
companies we typically recommend because they don't charge high fees.
In fact, their fees are the lowest in the industry.
You're getting broad diversification and it's super easy to do.
And it, Matta, it makes me think to what when
we're talking about not investing before you should You share
this story multiple times on the podcast. But you invested
(31:16):
in a roth Ira you ended up having to pull
some of that money out at an inopportune time, exactly.
And so that's why the emergency fund is so key
and so important. Don't neglect that. Don't start investing because
it seems more fun without having that basic thing taken
care of. Totally agree, we want you to be able
to sustain those acting the ambitions, Jay, and you know,
investing money that you are going to need on hand
could impact your ability to do that. To keep it
(31:39):
this career that you love. That's right.
Speaker 2 (31:41):
Okay, let's get to our next listener question. This one
has to do with listeners having some issues with his ride.
Speaker 6 (31:48):
Hey, Matt, Joe Timothy here in Palm Springs, California.
Speaker 1 (31:51):
So I've been dealing with this.
Speaker 6 (31:53):
Car nightmare for the last year. Essentially, my new ish
car broke down like nine times. The service center at
the dealer eventually found that there's water damage on the car,
which is crazy because I've never exposed the car to
any type of water apart from the rain and a
(32:16):
car wash, and they said, go through your insurance to
fix it. So insurance covered the ten thousand dollars fix.
Got my car back very next day. The check engine
light was back on and they found more water damage
on the car, and they said, go through your insurance
again for the seven thousand dollar fix. So I filed
a claim with my insurance. I also filed a claim
(32:39):
with Subaru's consumer advocacy department, and I was very disappointed
with the results. They essentially washed their hands of it.
They said, there's water damage, go through your insurance, which
they didn't address the underlying issue, and that was that
there should never have been water damage on the vehicle
in the first place, since it was never exposed to
any water, and so clearly they're some kind of defect
(33:01):
with it.
Speaker 1 (33:02):
So what recourses.
Speaker 3 (33:04):
Are available to me?
Speaker 1 (33:05):
Like, what options do I have?
Speaker 6 (33:06):
Do you guys have any ideas about what I could
do to try to fix this nightmare? Especially because I
heard that once there's water damage on a car, there
will always be issues with it. So I was really
hoping that subru would do the right thing and step
up and kind of stand behind their products do something
to make it right.
Speaker 1 (33:24):
But they don't seem really interested in doing it.
Speaker 6 (33:27):
So ww MJD in this situation, any ideas, thanks, guys,
really appreciate it.
Speaker 1 (33:33):
Oh, Matt, should we make WWMJD bracelets?
Speaker 2 (33:37):
Okay, Well, folks need to know, like if you're not
in the know twenty years ago about yeah, they're the
what would Jesus do?
Speaker 1 (33:44):
WWJD bracelets? And I never had one that those were
even before the Lance Armstrong Livestrong bracelets. I think were they,
But I think I'm the same. I think I kicked
off the bracelet trend and maybe the Lance arms Yeah, yeah,
which one faired better? It's a tough question. So let's
get to Jesus. Joel is Jesus, not Lance Armstrong. Okay,
(34:08):
I don't have to say about this.
Speaker 2 (34:09):
Well, it's interesting because with Lance Armstrong, I feel like
a whole lot of folks are like it's like he's
back in good graces with everybody, even though there was
like the giant doping scandal and all that. Like you
see more folks brushing shoulders of him, and it's like
he's still almost seeing as sort of like this expert.
Speaker 1 (34:23):
I mean time heals all wounds, Matt and I guess
so he's one of those guys. It would have been
really interesting to see, similar in my mind to Barry Bonds,
where if they had not done something they would they
would have been Hall of famers anyway based on their
innate skill and hard work. Yeah, and so it's like, ah, man,
I wish you had done But then again, in a
sport that was unclean basically everywhere, Yeah, it's kind of
(34:46):
tough to compete. I guess if you don't do anything.
So not that I'm condoning every saying it was a
good thing. Okay, So let's move on to Timothy's question.
The whole experience sounds awful and Timothy, you said it
was a newish car, and I think in your email
you said it was a twenty one model. This makes
me think that your car should qualify under the Lemon
(35:06):
Law rules in your state. So no need to tap
your insurance, although you have and we'll talk about that
in just a second. No need to even get SUPERU involved,
although I reached out to Suberu multiple times to try
to see if they would give me a comment or
be willing to help you. Literally, Matt got crickets at
every turn trying to contact Suberu, which is surprising. Suberu
(35:27):
seems like a customer friendly company, not in this case.
But yes, going back to the Lemon Law, the key
is that this car needs to have been new or used,
and that you purchased but it was still covered under
the manufacturer's warranty. That's what it takes to qualify. And
if that's the case, this is almost certainly the next
step you should take. Every state has one of these laws.
They all vary just a little bit. If your car
(35:48):
has been snake bitten by a specific issue. On repeat, Timothy,
like yours clearly happen. He said nine times, Yes, that's
well beyond what most states it's what like three. It's
like yo, If it's three, then you're in reasonable effort
to make the repairs right. If we're getting close to
double digits, nine is much more you should qualify or
Lemon law. And it's ridiculous to me that you've had
(36:08):
to bear the financial consequences here because of supers in action.
Even making that claim under your insurance impacts you financially.
We're talking about the deductible potentially higher premiums moving forward.
So turning to your state, I think in your state's
Lemon law specifically is the right move at this point.
Speaker 2 (36:22):
Let's just address that the insurance side of this. Do
not continue to file claims with your insurance, especially I
mean at all, like I was gonna say, for this
next round of repairs, but this could, like you said, Joel,
cause prices to go up for him. Then this is
a lesson I had to basically learn the hard way.
I didn't realize that when I was in college into
young adulthood and it was something like what happened. I
(36:43):
was a little fender bender, wasn't my fault, but still
that ended up on my clue report I ended up
having a crack windshield, and I was like, I don't
like that. It doesn't look good, impacts how my ride looks,
and it can't be safe, can't it.
Speaker 1 (36:55):
And so it's gonna be hard to get that girl
to go out on.
Speaker 2 (36:59):
Was super low as well, so I was like, oh,
paying one hundred bucks and just get that thing replaced,
fresh windshield. Then I hit a deer coming home. Actually
I hit two deer. So I hit a deer twice
at the same time. No, no, no, separate, separate instances. Same
deer both times.
Speaker 1 (37:12):
Yeah. Same.
Speaker 2 (37:12):
It is one tough dear coming back for more coming
back from college, going home one time and then again.
And anyway, all that to say, these multiple claims caused
the insurance company to say, oh, you are costing us
a lot of money. So just keep that in mind
for everybody out there, even if it's not your fault,
or even if it is a comprehensive claim like hail damage,
(37:34):
like a deer, like the windshield just cracking because it's
a really hot day and you went out to wash
your car and the walk cold water did a number
on that little chip on your windshield and it cracked.
But those claims, and that activity on your report causes
the insured to say, hey, you're costing us money, so
now it is going to cost you money in order
to maintain your policy with us. So instead, I think
(37:56):
it's a.
Speaker 1 (37:56):
Good point man. And that's another reason why we typically
suggest hired itductibles, because it keeps you from using your
insurance in low stake scenarios, free and clear of it
all together. Because if you use, the more you use
that insurance, the higher the more you're gonna pay, the
more likely you are to get maybe kicked off your insurance.
And then if you shop around for insurance with another provider.
You mentioned the Clue report, Well, all those claims you've made,
it follows you they're on the Clue Report, And the
(38:18):
next insurance company is like, yeah, we'll ensure you for like.
Speaker 2 (38:21):
Ten times what you're paying for, seriously, like twice as much. Yeah,
and like it's a shame, but like I mean, it's honestly,
I think it's fair. Like if you are costing the
comp it makes sense, right, Like, if you are costing
a company more money, it makes sense that they're gonna
be like, you know what, We're gonna raise your premiums
and for me, I think my rate doubled and like
all my money, all my meager income was going, it's
going towards my ability to drive her around. That's early
(38:42):
twenty year old, and that means sid I get why
why Timothy decided to tap his insurance in this instance
because of the ridiculously high price tag. And so when
you're talking about that kind of money, that's what insurance
is there for. It's not for the one hundred dollars
windshield repair. And you think that this is a perfect
case for insurance to step in. But in your case, Timothy,
it's I mean honestly taking the hey, is this a
lemon like? That should have been a question that others,
(39:05):
now that they're hearing your situation here, will maybe think
of sooner. But that you now pursue. We want you
to determine whether or not this issue qualifies under the
Lemon law so that you can avoid having to pay
anything anymore. And if it does, there's an easy way
to file an arbitration appeal on your state's website. In
this case, you don't even have to deal directly with Suber.
(39:25):
You just go through the standard process that the state moderates,
not the manufacturer, but just make sure that you are
paying attention to what it is that California requires and
for everybody else listening wherever.
Speaker 1 (39:37):
It is that you live.
Speaker 2 (39:38):
The states have different requirements, and you just want to
make sure that you've got good notes, You want to
have details, you want to document your case because essentially
the burden of proof typically is on you as a consumer.
This is why you don't see a whole lot of
folks talking about lemon law because it just takes work.
And I think a lot of folks just kind of
they take it laying down and they don't necessarily make
it easy. But you basically have to to prove your
(40:00):
case the fact that you do in fact have a lemon.
But the stakes are high here right, We're talking about
expense and then more potential expense coming up for Timothy too,
So this is the route to go. The other thing
Matt I think that he could do and make sense
maybe in addition even to filing a lemon law case
with the state is to publicly shame super And I
don't say that lightly. I don't typically this isn't something
(40:23):
I resort to often, and this isn't something we recommend
very frequently. But if you feel like they've let you
down and their response has been insufficient, inadequate, and it's
a brand that presents themselves as being customer friendly and conscious,
posting something on Twitter that's facts based about what's happened
in this brand's response right to what you're going through,
(40:44):
I think can make a whole lot of sense. And
sometimes it can get that brand off their butt in
an effort to actually potentially help you resolve this issue
instead of going through the same bureaucratic rigm role that
you've been through already. So he's posting something tagging them
in their accountability, I think that can make a big
difference in at least getting them to be a little
more curious about your case and potentially helping you to
(41:05):
resolve it.
Speaker 1 (41:06):
But that's goes to just washing their hands with the
situation altogether. Yeah, it does any fact space. It sounds
like Timothy, he's not out for blood or anything like that.
Just make this right.
Speaker 2 (41:13):
I was gonna say, it doesn't make me think twice
about SUPERU. Like you had a sue rou for a
little bit and you had some serious issues. Yours was
used and so you were well outside of the warranty period,
it shoulder.
Speaker 1 (41:23):
I don't know.
Speaker 2 (41:23):
I think I'm naturally drawn to a brand that embraces
the outdoors and all that, but I don't I'm thinking
twice about it. Yeah, but we've got more to get to.
We're gonna talk about trading one debt for another. We'll
get to that question here right after the break.
Speaker 1 (41:43):
Our man, we'll back. We got more money, talk to
you too. This we always got to give to our
Facebook question of the week, Yeah, we do. This one
comes from Nathan and Yeah, we're gonna talk about trading
one debt for another. He says, is it a good
idea to get a helock, a home equity line of
credit when your credit score is six twenty five to
try to consolidate high interest credit card debt? This was
a question, right Nathan Poe's in the Facebook group Are
(42:06):
you what are your thoughts on this one? Man?
Speaker 2 (42:08):
Well, first of all, say that this is a classic
personal finance sort of scenario that folks find themselves in.
But there's just a lot to think through here before
you magically, because like if you first hear about it,
you're thinking, oh, this is like a.
Speaker 1 (42:20):
Magical elixir sounds like a no brainer.
Speaker 2 (42:22):
I'm going to magically poof my twenty two percent debt
down into ten percent helock. Because certainly, when you're looking
out the numbers, that initial proposition it sounds nice, but
that doesn't mean it's a no brainer. And it certainly
could work out to your financial advantage, but it also
could compound your your debt issues, and so.
Speaker 1 (42:39):
That's what we're going to talk about here. The main
reason that it could compound things and not alleviate the
pressure is because of something else we talked about recently,
the reduction of friction that you're able to enjoy when
you make this sort of debt switch, which sounds like
a good thing. Everybody loves reducing friction, Matt everybody likes
to hit. Was a Staples that had the easy button. Yeah,
(43:00):
where it's like all the easy button and it's like,
oh great, the easy button sounds so nice. I want
one of those easy buttons in my life. But by
hitting the easy button, by turning the credit card debt
into something less offensive, you're actually reducing the negative feelings,
the discomfort I guess that that debt gives you. But
in our estimation, the discomfort that the credit card debt
gives you is a good thing because it kind of
(43:21):
lights that fire under your butt to get rid of it.
It gives you a reason to get rid of it,
gives you a reason to attack it more strikingly. Right
and if so, if you the more comfortable you feel
with it lingering around, the worse it is for you
and for your financial future. So when you turn one
form of debt into another more palatable kind, ultimately, the
truth is for a lot of people that leads to
(43:42):
more debt accrual overall. That that is the heart of
the issue. That is the position we really don't want
you to find yourself in, Nathan. That would be a
big problem if you magically poof, like you said, Matt,
this one debt into a better form of debt, and
then ultimately you end up accruing more debt overall, just
two different kinds.
Speaker 2 (43:59):
Because you're not addressing the unlying problems, you know. Like,
so it's funny you're talking about like hitting the easy button.
So here's a potential hot button topic or issue that
you feel like it tends to circulate around. Makes me
think about semiglue tides. So like the monjourno's or the
ozimpics of the world. And there are a lot of
folks who are finding success with these drugs, right they're like,
(44:19):
oh man, this thing is causing me to lose weight,
and like it's caused me to lose weight quickly, and
it's staying off. Like it's kind of like being touted
as like this magical sort of drug, miracle drug.
Speaker 1 (44:29):
That's actually what I meant to say.
Speaker 2 (44:31):
But the problem with that is that it doesn't address
all of the underlying issues that might lead to somebody
to be in that sort of situation, which is that
you aren't moving your body basically, like I'm thinking about
exercise and working out and mobility, Like these are all
things that don't get addressed at all when you are
taking some of these different drugs, and so because of that,
(44:52):
you're not increasing your like your metabolic health or you
like your cardiovascular fitness. These things that are sort of
like pillars of personal uh not still findance of personal health.
And what I'm afraid of happening is that like years
down the road, folks are still dealing not with all
the same issues because certainly there's some improvement to their
life and it's amazing what it is.
Speaker 1 (45:11):
You're not a doctor, and you're not saying that nobody
should take these drus exactly.
Speaker 2 (45:14):
It's amazing what we're able to accomplish with some of
the advances in science and technology and drugs and shots.
But to a certain extent, it almost does kind of
feel like a band aid because of the fact that
it's not addressing all of the different underlying issues that
you are you're kind of forced to address because I mean,
let's be honest, like a lot of folks when they're
looking to exercise more, it's because they do want to
lose weight. I'm not saying that is a good measure
(45:34):
of health because sometimes you get fit and you gain
weight because you're putting on muscle, but.
Speaker 1 (45:38):
From people have different body shapes and bodies types and sizes.
Speaker 2 (45:40):
But that is a goal for a lot of folks.
And if you're able to achieve that goal by completely
skipping this whole aspect of it, I'm afraid it like
that you end up kicking the can further down the road.
And that's almost how I see this helock. If you're
not addressing the underlying issue, that's.
Speaker 1 (45:55):
A risk here, right yes, like, and too many folks
attempt to move debt around and then they've got heat
lock debt. But they never change their ways, and so
they wrack up debt on that credit card again. And
temporary kind of solution, right, I think the person who
uses it right can potentially see benefit. But a lot
of people use this poorly and they end up harming themselves.
(46:15):
What seemed smart ends up being dumb. And it also
it's also important to point out that the difference there's
a difference between secured and unsecured debt. So if you
don't pay your credit card on time, or you're failing
to pay your bill for months on end American Express
or Visa, they can't come and repossess your car or
your home. But if you fail to pay it on
your helock for an extended period of time, you're putting
(46:35):
your house at risk. And so it's not like you're
just enjoying a reduced interest rate with no strings attached.
You're taking on a real added risk by making that move,
and it is worth thinking long and hard about that
additional risk. Maybe it's still within the realm of hey,
i've got this, I've got enough whiggle room I'm literally
just trying to pay it off more quickly, but I'm
not worried about actually being able to pay it off
(46:57):
or actually going into more debt overall. Because I make
this move, then maybe it's worth considering. But it is
important to mention that is a real downside factor here, totally.
Speaker 2 (47:06):
Yeah, I think it's important to point out to you
that both credit cards and he locks come with variable
interest rates. And here's some potential good news, though, is
that it looks like those rates might be taken down
slightly moving forward. It is impossible to predict if, when,
and then actually how much they're gonna tick down, but
for reading the tee Le's right, that could mean lower
(47:28):
rates on some different variable interest rate products out there.
I almost wish that maybe I wouldn't have mentioned that
because it's such an unknown, it's such an X factor,
and you shouldn't make a decision based on that anyway.
Speaker 1 (47:40):
Yeah, maybe I'll keep that nasty dead around because it's
going to be a slightly less now. So maybe we
should just cut all this part answer.
Speaker 2 (47:46):
I don't know, but our goal is to present you
with all the information that we know that's out there,
and not to like hide anything from you, but even
still like what we're talking about, just a minor downward
movement on both of these products, and they would both
still be considered bad debt. Instead, we'd love to see
you make a plan not to just you know, shift
one debt from another slightly less agregious one, but just
(48:08):
a plan to actually pay it off as quickly as possible.
We want you to address those underlying issues.
Speaker 1 (48:12):
I think maybe the other option here that Nathan should
consider after increasing his credit score, by the way, because
this is really important to getting approved for the best rates.
You hear the commercials, You see the commercials and it's like, oh,
rates starting at seven point five percent or something like that.
I think my credit union, Matt is offering some sort
of intra introductory rate on a helock as low as
five and a half percent right now. Well, guess what.
(48:34):
That sounds nice, But Nathan's not going to qualify for
those with a credit score of six to twenty five.
He's got to work on increasing the credit score before
he attempts to do some of these moves. Anyway, we'll
link to some resources in the show notes, Nathan to
help you do just that. By the way, do not
pay someone who tells you they can help you raise
your score for you. That's bloney and it's gonna cost
(48:55):
you a lot of money that's not gonna pay off.
This is a DIY thing. But once that score is up,
you might find that a zero percent transfer card. Getting
another credit card isn't even better way to go. Giving
you a zero percent interest rate for something like fifteen, eighteen,
maybe even twenty one months, that allows you to pay
down that debt much faster because you're not continually accruing interest.
(49:15):
And then even still the same advice about being vigilant
about racking up even more debt applies, so you have
to be careful in either instance. But in that case
it's not a he lock and it's actually getting you
a lower interest rate for a specific period of time,
So it's worth looking into that. But the credit score
is a big issue in that and it's worth paying
some attention to what's going on with that score so
(49:36):
you can prove it in short order. Oh, by the way,
and if your credit card debt, if it's over the top,
we would suggest going to see a non for profit
credit counselor NFCC is one place money Management International is
another place. Those are two great organizations where you can
meet with somebody for free to talk about what's going
on with your debt and to work towards a debt
payoff plan a debt management program. So I feel like
(49:57):
we threw a lot out there in this answer, Matt.
There's a lot to cover if what feels like a
basic question ends up being ultimately more complex than a
lot of people might think on its surface.
Speaker 2 (50:04):
Yeah, it depends on how committed he is to eliminating
this debt, Like it depends on where his heart is
and whether or not he truly wants to get rid
of this like once and for all, and this is
sort of the last tool that he's going to implement
that's going to get him to that point. Or if
this is like almost like another excuse, it's just like
another prolonging problems. Yeah, where he's just going through the
motions where in the end there's not any real change
(50:26):
that's going to occur.
Speaker 1 (50:26):
If you think about one last thing, undebt dot it
you n dbt dot it. That is a website. You
should check it out because it can help you create
a debt payoff plan. And that is ultimately what you
need in order to get rid of this debt in
a specific timeframe. Totally figure out how much money do
I have that I can dedicate to paying off this debt?
Structure it, make a structured plan, whether you're doing snowball
(50:47):
or avalanche method on a website like undebt dot it,
I think keep to it. That is ultimately the way.
Having that plan right in front of your face, Matt
is crucial to allowing you to actually do the thing
you want to do, which it's especially helpful to if
you multiple debts that you're trying to where you're trying
to figure out the order in which that you're going
to pay them off.
Speaker 2 (51:03):
But let's get back to the beer you and I
enjoyed today was a SkELL A Hawk and I didn't
realize this, but this is a collaboration between Parish Brewing
Company as.
Speaker 1 (51:13):
Well as Horace h.
Speaker 2 (51:15):
O r Us and I'm actually surprised that we have
never had a Parish beer on the show before. It's
one that you and I have enjoyed before.
Speaker 1 (51:23):
The best brewery I've had that comes out of State
of Louisiana.
Speaker 2 (51:26):
See you you're a huge You're a big fan of them.
I think they're okay, and I don't know, but I
really like this beer, which makes.
Speaker 1 (51:31):
Me a better Louisiana brewery Matt Horace, assuming that they
are they Louisiana. A lot of times you collab with
somebody that's local, so it makes me think more highly
of them because I've had different Parish beers and I
feel like they're decent, but they've never I don't know,
they've never risen to the top in my mind as
to if I'm in Louisiana, you're looking at getting a
sassarak or a cocktail or something like that. I don't
(51:53):
think of when I think of Louisiana. I don't think
of what's who makes Andy Gator and Abita a beta
brewery or whatever. It's the best, one of the big ones.
Speaker 2 (52:01):
They're out of Louisiana. And not to hate or anything
like that. Parish is a fantastic brewery. But this, in
my mind, man, what a great collaboration. Maybe they're both
able to pull the best out of each other. Yeah,
because this is a fantastic beer. It's like super somehow,
it's like juicy, while at the same time it.
Speaker 1 (52:15):
Still has that dry bite that you get.
Speaker 2 (52:17):
I don't know if it's just from dry hopping an
ipa or what, but a whole lot of flavor going on.
Speaker 1 (52:22):
This was one of the best, like hazy IPAs I've
had in a while, and I think it was like that,
not overly sweet. Some of them tend to go in
that just syrupy sweet direction. This is the the hops
really came through in this one, but it wasn't found
that balance pali fatigue, not overwhelming. So yeah, I really
enjoyed this one. And yeah, maybe it's maybe it's the
some of the parts right there, the two solid breweries
make it something great more than some of its parts. Yeah.
Speaker 2 (52:44):
Well, it's got the cryo mosaic, which, from what I understand,
cryo is like hop concentrate. Oh essentially that's like, yeah,
it's like is it in that like cryogenically frozen or
something like that.
Speaker 1 (52:56):
Yeah, but how does that work in actuality? I don't
I'm not a beer sign. I know, we don't make
the beer, we just drink it, but we should look
at that at some point.
Speaker 2 (53:04):
But yeah, really glad that you know, I got to
enjoy this one. Would highly recommend SkELL A Hawk all right.
Speaker 1 (53:09):
But that's going to do it for this one. We'll
put links to everything we mentioned on this podcast episode
in our show notes at howtomoney dot com, including a
link to the Facebook group. If you're not in there,
you should joins a bunch of money nerds helping each
other out every single week. Matt. That's going to do
it for this episode. Until next time, best Friends out,
Best Friends Out. Don't you don't like that ghost of
(53:41):
the machine.
Speaker 3 (53:42):
I feel like it.
Speaker 1 (53:42):
I feel like it's decent.
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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