Ask HTM - iPhone Upgrades, Burden of the Gift Tax, & A Potential HSA ‘Gotcha’ #835 - How to Money

Episode Transcript
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Speaker 1 (00:00):
Welcome to a Head of Money. I'm Joel and I
am Matt, and today we're gonna answer some of your
listener questions.

Speaker 2 (00:25):
That's right, buddy, it's Monday, so we've got listener questions
to get to. We're gonna hear directly from the how
to Money nation out there, the pipeline to the people.

Speaker 1 (00:33):
Matt.

Speaker 2 (00:33):
Yeah, we've got a listener and she's ready to make
an iPhone upgrade, but she's trying to do it as
affordably as possible.

Speaker 1 (00:39):
And she's in a situation like your wife recently. We'll
talk about that.

Speaker 2 (00:44):
Another is afraid that she might be subjugated to the
gift tax, and yet another question that we'll address.

Speaker 1 (00:51):
He has some.

Speaker 2 (00:52):
Potential HSA, Gotcha's that he's trying to clear with us.
So we'll get to those plus more during our episode today.

Speaker 1 (01:00):
Gift tax, that's something that not a lot of people
maybe even know exist, and there's a lot of like
fine print to cover on that. Like I don't know,
if you give Christmas presents to your kids, are you
going to go tax on that? No, but we'll get
into that in just a second. But before we get
to that, Matt, listener, Eric emailed us and he basically said, Hey,
I think maybe there's a better way to do the
target date fund. Instead of buying a target date fund,

(01:21):
what if you just buy all of the respective individual
funds and save yourself some fees. I don't know. I
was just curious to hear your take on that on
listener Eric's DIY sensibilities for it. All right, that was
a short discussion. What about you you agree, No, I
don't actually, because I think that creates a lot. We
talk a lot about the importance of simplicity here, and

(01:42):
we talk about the importance of low fees, and so
you have to kind of discuss and figure out in
your own life, well, how much is it worth the
extra effort, the rebalancing, the making sure that you are
following the glide path that a target date fund would
be following for you, And how much is the fee
reduction actually going to save you.

Speaker 2 (01:58):
Right about somebody out there who's and to keep costs
as low as humanly possible. He's looking to optimize in
every part of his life, and he's not afraid to
He or she isn't afraid to make some of those
adjustments to their retirement.

Speaker 1 (02:09):
Talk about how much your time's worth. Is your time
worth sweating it over whether or not you're hitting the
glidepath right and you're making the.

Speaker 2 (02:17):
You're making it seem like this big deal. So this
makes me think of target.

Speaker 1 (02:21):
Day funds were created, and the really really inexpensive ones
make it super simple. I just don't see any to
reinvent the wheel and dihy that.

Speaker 2 (02:27):
So target day funds they're not prohibitively expensive, but they are,
I mean substantially more expensive than like total index fund,
whether you're talking about a total stock index fund or
like a total bond etf or something like that. So
I mean, personally, I think for folks who are looking
to truly optimize, and for all the nerds out there,
it is a way for them to ride along that glidepath,

(02:49):
look at it once a year and just be like, oh, okay,
look looks like the total bond exposure is now at
sixteen percent. Last year it was only fourteen percent. Fifteen percent,
that kind of thing. I think that's a simple readjustment
that that some folks could make. But I agree with
you if the vast majority of folks who are in
target day funds, they don't want to think about it.

Speaker 1 (03:07):
They're not interested. They're not interested.

Speaker 2 (03:08):
And so if that's you, that's totally fine, just for
aers to know that that is what you're paying in
order to have that someone to have fully automated. But
I guess I don't want it to seem like this
task that's something that most people can't do, because I
think it's to me it seems like the fear of
the unknown, because like, personally, do I own any bonds?
Absolutely not. I don't have any any target day funds.

Speaker 1 (03:30):
You probably will someday.

Speaker 2 (03:31):
I will someday, but I currently don't. And even for me,
the thought of that, it's like, oh, what would that
look like. I've never owned a total bond index fund.
But it's like anything that you do for the first time,
there is like a fear of the unknown, and until
you take the first steps towards that, it feels like
something that's maybe bigger in your mind than it actually is.
Like it makes me think of the first time I

(03:52):
smoked a brisket. I was kind of scared because I'm like, man,
there's a lot right in here. It's similar to a
piece of meat. Yeah, similar to our hirement. You might
be thinking this is my portfolio is decently sized, Like
we're talking about a lot of money here, and I
think for those folks to even just start to dip
their toes in the water, just to start waiting in
a little bit, like the next time you are going

(04:12):
to invest some of your dollars in your roth Ira
instead of going after VU, go after the total bond
etf something like that. Even like literally just even one
hundred bucks to where you see under your wroth Ira vehicle.
Oh looks like there I am with, you know, one
hundred and twenty dollars worth of bond exposure. I think
even that could be enough for some folks who want

(04:33):
to diyatt to kind of get past that hurdle of
it feeling like something that's completely novel and intimidating.

Speaker 1 (04:39):
I think the heart of what you're saying and what
I'm agreeing with you on is your inclination, is your
inclination to do this, because like Eric Resound, he's like,
I think I want to do this because I think
it's going to save me some money. And I think
if that's where your head's at, more power to your
rockdomation of our conversation with Brian Ferraldi about investing in
individual stocks. He loves index funds too, and he talks
about hey, in in individual stocks if you want to

(05:03):
do the work, like if you are so inclined and
you want to be reading the nuts and bolts financials
of these different companies you're thinking about investing in, not
just like knee jerk because someone said something on CNBC,
and so if you are interested in going that direction,
go for it. But if you're the kind of person,
which I think the vast majority of people are, who

(05:24):
just say, how about let's go the simple route that
is going to get me where I want to go,
then do that. I do think there's a big difference.
There's a gulf between those two examples, though, right because
on the one hand, you've got somebody like literally it's
the full time job of lots of analysts who work
for different hudge funds as they're coming through tax filings
and business wrecords and profit and low statements and balance
sheets of individual companies, versus the ability to look at

(05:48):
a target date fund offered by Vanguard, click over to
allocation and they just tell you it's right there, it's
laying out right before you.

Speaker 2 (05:55):
And so the information is out there. It's not like
it's a secret by any stretch of the imagine nation.
But will you actually follow through and do the thing
that's what you have to address. Am I willing to
take the you know, some of the additional steps, and
let's be honest, some folks aren't, which is why they're
willing to pay point two percent more instead of point
oh three. It's maybe point two three percent, which is

(06:16):
still very affordable.

Speaker 1 (06:17):
And it's not like it's like the Urbs and spices
formula for KFC that's under lock and key. You can't
figure it.

Speaker 2 (06:22):
It's out there for it's whether it's old school perspectus
that's getting mailed out or you just search whatever target
date fund you want and man, it's all laid Bayer
right there.

Speaker 1 (06:31):
There's no hiding it. Last thing on this just when
we're talking about target date funds, which ones and where
you buy them from matters a lot because the expense
ratio on one target date fund can differ greatly from
the expense ratio on another. So you're talking about those
cheap Vanguard and Fidelity funds, Well, even Fideli has an
expensive target date fund. So which one you pick and
how much you're spending to own that fund, well that

(06:54):
matters too, so make sure you're picking the right one.
If you're with like some sort of expensive brokerage, you
might be way over space for a target day fund
and you could save a buttload by doing it yourself. So, Nott,
you want to mention the beer we're having on this episode.

Speaker 2 (07:05):
Yeah, we are enjoying a Carlsberg Danish style pilsner eighteen
forty seven onwards. Baby, This is in continuation of us
not reaching our daffy campiles.

Speaker 1 (07:18):
So well, take a self flagellation.

Speaker 2 (07:19):
We will, and I'll say I had a little sip,
so I'm getting ahead myself a little bit.

Speaker 1 (07:22):
This is pretty decently tasty. It's not as crap as
it could be. Yeah, exactly, So.

Speaker 2 (07:27):
We will drink and enjoy and share our thoughts at
the end of the episode.

Speaker 1 (07:30):
All right, let's get onto listener questions, Matt and if
you are listening and you've got a money question, we'd
love to answer it on the next ask HTM episode.
Just got to have the money dot com slash ask
and or just record a voice memo on your phone
and send it our way. To how to moneypod at
gmail dot com. Let's get to the first one. This
one is about gift taxes.

Speaker 3 (07:49):
Hi, Joan Matt, This is Aaron from right outside of Baltimore.
Let me just start by saying, thank you guys so
much for everything that you do. I've learned so much
from this podcast and also turns that knowledge into knowledge
I can share with other people, So thank you for that.
My question is less about right now and more about
just some planning for the future. I know that you

(08:11):
can give a gift in twenty twenty four of up
to seventeen thousand dollars to someone before taxes have to
get paid on that. My question is who pays the
taxes and more importantly why. All of my research shows
me that the giver seems to be the one that
pays the tax and I'm not quite sure why that happens,

(08:33):
since presumably they've already paid tax on that money. So
I'm just a little confused about the rule when it applies,
why it applies, who it applies to. So any help
would be appreciated.

Speaker 4 (08:43):
Thanks guys.

Speaker 2 (08:45):
All right, Aaron, I'm not sure if you're asking because
you want to give a big chunk of money away
to someone, or because someone is giving you a big
chunk of money, or if you're looking to donate to
Joel's Rivian fund.

Speaker 1 (08:56):
Come on, I'll take it either way.

Speaker 2 (08:59):
The gift tax rule, they can be a bit confusing,
and it's worth having a discussion about it. Is that
something that I don't know if we've something that we've
ever talked about here on the show. I think so,
But uh yeah, looking forward to approaching a new subject.

Speaker 1 (09:09):
When when you look dig into details, Really, the gift
tax is something that at first glance, if you're hyper
generous in a specific year, you might think, oh, I'm
gonna run a foul of this, I'm gonna attax. But
we'll dig into details and that might not be the case.
It might not be what it looks like at first glance.
And so before we get to the heart of your
question as well, Aaron I wanted to say, it's worth
it's worth pointing out that giving money to your loved
ones while you're alive can be a wonderful thing. And

(09:32):
that is when you run into potential gift tax issues,
right similar to giving money away to your favorite nonprofits. Yes,
we're all about compounding returns. But if you give that
money away decades later, yes you're gonna have more money
to give away. But balance is key here, right, because
giving one hundred thousand bucks to your fifty year old child,
how's all a vastly different impact then giving thirty thousand

(09:54):
dollars away to your thirty year old child.

Speaker 2 (09:56):
In both cases fully grown adults.

Speaker 1 (09:58):
But it does feel a little bit different your.

Speaker 2 (10:00):
Thirty year old versus hooking your fifty year old up
with some money.

Speaker 1 (10:04):
So which, but that's the way it works a lot
of times is because many many parents don't give it.
They're saving, hoarding or whatever that money up for so long,
even if they have more than enough that they'll never need,
they're not giving it away in the meantime, they're waiting
to give it away at their passing. And so yes,
it's fewer dollars to give those those dollars away earlier,
but it can be more impactful at that stage of life.

(10:24):
Let's say your your son or daughter is having kids
and wanting to buy a home. You're never going to
strike the balance perfectly, but it's food for thought, I
think for a lot of folks out there totally.

Speaker 2 (10:33):
I agree as well, I think it's probably not as
fulfilling to leave behind one million dollars by the time
you die. It's more fun to see that money get
put to use while you're living. But simultaneously, I know
that I'm sure a lot of folks who have fully
grown children who could use that money. I mean, they're
looking at it from their their perspective, which is, well, dudes,
I want to make sure I've got enough for me
to live. That way, you don't have to. Yeah, you

(10:55):
tap into your heelock because now you got to take
care of mom or dad, right, Like, they're thinking about
themselves first, as opposed to I guess our perspective, who
might be looking at this sort of situation more from
more from the lens of being the receiver, Which is
why we always talk about five twenty nine plans as
being kind of second priority, because it's the whole oxygen
mask example, putting exactly put your on first, make sure

(11:16):
that you're reaching financial independence, that you're not a financial
burden on your children at some point. Yeah, and five
twenty nine plans, Sure it can be great. Giving money
away to your grown adult children can be awesome, but only.

Speaker 1 (11:28):
If you like for real, got the breathing room to
do totally.

Speaker 2 (11:30):
But that's the thing I think a lot of times,
as you get into your later years, you just don't know, like, oh,
what kind of health emergencies, what kind of health issues
might we run into? So yeah, this is kind of
as a tight rope to walk there, I'm sure. But
let's get to gift taxes, Aaron, and how it does
that they work. First off, we're not just talking about
monetary financial gifts, although that's the most common form of gifting,

(11:54):
I'm guessing, but if you give other things of value
to someone as well, whether they're family or not, though
those things also count as gifts to the irs. And
so what we're talking about here is real estate. We're
talking about art, an art collection. If you've got one
of those vehicles, even five twenty nine contributions, right, things like.

Speaker 1 (12:13):
That my folk art collection, Matt is millions. When to
pass that on someday, those Howard Fincher, that one Howard
Finser piece I have is gonna Yeah, that's gonna set
off a gift tax alarm.

Speaker 2 (12:22):
You never know, man, And I will say, so I
mentioned five twenty nine contributions. What's an exception to that
is if you contribute to the higher education of someone directly,
and so if you if you make five twenty nine contributions,
you were making those contributions to an individual, and that's
a gift compared to if you were to cover the
cost of tuition or books directly with the university. That's

(12:45):
an exception to the rule that does not get included
when the IRS is looking at gift gift tax. Same
thing with medical costs. So if you cover the costs
of medical bill for somebody, let's say you've got an
elderly parent and they're going into assisted living, as long
as you pay that bill directly yourself, that's not something
that is concluded as as a gift tax co versus

(13:07):
other expenses.

Speaker 1 (13:08):
Yeah, let's say like there's a parent.

Speaker 2 (13:09):
Who's like, oh, I want to I want to get
thirty thousand dollars. We're going to put that towards your wedding.
You can't go to the let's say the venue and
cover the bill directly and say.

Speaker 1 (13:20):
Well, no, I'm covering that bill for them.

Speaker 2 (13:22):
No, no, no, it's literally it's only for higher ed
and for medical expenses. So keep that in mind. But
the person who is giving the gift, they are the
one who might owe the tax, and we'll we'll dive
into you know why it is that we're saying might
here in a second. But just know this, if someone
opts to give you a big chunk of money, it's
not going to have any impact on your taxes.

Speaker 1 (13:42):
Errand yeah, you can be blissful and be and then
also kind of scratch your head, wonder how much it's
going to cost them atax for giving me this giant gift.
And so yeah, let's cover maybe the MIPE part of
the gift tax now, Matt. Basically there's an annual and
a lifetime gift tax exclusion, which and that's the confusing
part I think for a lot of people. For twenty twenty,
for the annual gift tax exclusion amount is eighteen thousand dollars,

(14:03):
So you can give that amount to any individual and
you can owe zero tax. But let's say someone wants
to give seventy two thousand dollars to their married daughter, Well,
they can give her eighteen thousand dollars. They can give
her husband eighteen thousand dollars. Then their spouse could do
the same, and all of those gifts would be under
the radar from an IRS and tax perspective, which is
kind of cool. So it's a personal ability. So if

(14:25):
you're married, right, and then if you're giving to a
married couple, you can essentially quadruple that amount that goes
unseen by the RS and doesn't have any sort of
tax implications.

Speaker 2 (14:34):
Yeah, as a couple, you have four avenues of giving
to that other company basically, But what if that person
wants to give more than that to a single person
because maybe they for some reason want them to have
half a million dollars that they've been sitting on a
given year, Well, that still doesn't necessarily mean.

Speaker 1 (14:51):
That they'll owe additional tax.

Speaker 2 (14:52):
It just means that they'll need to report that large
gift whatever is in excess of that eighteen thousand dollars
for this year specific to the IRS.

Speaker 1 (15:01):
Only.

Speaker 2 (15:02):
Once that generous person surpasses the lifetime exclusion, well they
need to pay tax on their gifts. And so again
there's two separate buckets to separate quantities to keep track
of here, and the lifetime limit is really high, that
lifetime exclusion amount right now, it is set at thirteen
zero point six one million dollars, So I think there's

(15:22):
not a whole lot of folks who are going to
be falling into that camp.

Speaker 1 (15:25):
Yeah, you see the eighteen thousand dollars number and you're like, oh, okay,
well I can see some people going above and beyond that.
But then when you realize the intricacies of the way
the law is worded and the lifetime gift tax exclusion,
you're like, oh, not many people going to run at exactly.

Speaker 2 (15:37):
There's additional paperwork, but not additional tax until you're a
baller basically, I mean that being said, filing additional paperwork
it sucks. So, you know, unless we're talking about massive
sums of money, the best way to give money is
just to do so and the way we just we
just referenced, and then to max those gifts out each
and every year over the course of a number of years. Basically,
instead of like a lump sum in a single year,

(15:59):
doing all that you can can, we're without having to
report to the irs. Yeah, and that's that sounds kind
of sketchy when I say it that way, but the
way it's just.

Speaker 1 (16:07):
How it is written.

Speaker 2 (16:08):
But then doing it the next year, basically you're spreading
out that gift over maybe let's say a few years,
and you could give someone a whole lot of money
over the course of several years.

Speaker 1 (16:16):
It's just like if you had fourteen grand and you
wanted to sock money in your wrath. You sacked seven
grand in on December thirty first, seven grand in on
January first. While that feels almost like you made a
double donation, but that's the way the law work. Like
you totally can do that, and there's nothing nobody can
say and think about thing sketchy about that?

Speaker 2 (16:32):
All right, lesting to see you here, irs, Sorry, don't audit,
Joel lars Guard.

Speaker 1 (16:36):
I share your social Let's not all right. Although I
could be like that guy from LifeLock. You remember when
he did that back in the day, and then I
think he got his account's broken into, or so he
thought it was. You can't make yourself that big of
a target. Yeah, I know, well, but I guess when
you're the CEO of LifeLock, you're trying to prove a
point and then things don't pan out for it what
got disproven? But yeah, okay, I'm with you man. I'm
all about reducing paperwork and complexity, but one of Aaron's

(16:58):
questions was like, why does the get tax even exist?
And I think that's a good question, Like why It
sounds like a question my kids ask me all the time,
and but it's usually for a good reason because they
don't understand how the thing works. And yeah, I think
the main reason here is so that incredibly rich folks
can't just give their money away right before they die
and avoid inheritance tax.

Speaker 2 (17:18):
I thought you were gonna say that it's just because
the government wants their cut, which is that's what I
would have said, like bottom line, government.

Speaker 1 (17:23):
Wants piece of the pie.

Speaker 2 (17:24):
Yeah, And they're like, if you haven't spent all of
the money and you plan on passing that on to
future generations, well we're gonna go ahead, all right, maybe
incentivize used to spend more of that money in the
here and now.

Speaker 1 (17:34):
Well, and there are all sorts of weird uh parts
of the of the tax code, right, like we can
talk about the stepped up basis, how that's kind of weird.
How Okay, why if it's real estate, did the laws
shift and then there's no taxation for the person who's
inheriting a piece of property. But if you were to
give it away during your life. There might be different,
different stipulations. I don't know. These are things that have

(17:57):
come across a come up, and it's our tax code.
That tax code is incredibly complex. But both inheritance taxes
and estate taxes, they're kind of a political football, like
kind of like Matts alluding to some people really hate them.
Others think it's one of the least degregious ways to
collect taxes. But this is really only something again that
applies to the super wealthy. Most how to Money listeners
are not going to be in danger of running a

(18:18):
foul of the gift tax law, no matter how generous
they are, because I just don't think the Warren Buffets
of this world, matt are listening to Little o' LUs
most weeks. Although I don't know, hopefully, hopefully for your
sake listening, maybe you do end up with like ridiculous
sums of money and you're incredibly philanthropic. I think what's okay.

Speaker 2 (18:36):
So what's worth mentioning is the fact that Aaron, she
says she's just outside Baltimore, and Maryland specifically, is the
only state in the entire country that has both and
you mentioned inheritance and estate taxes. It's the only state
in the entire country that has both of those at
a state level. Oh really, And so there is a
federal inheritance tax, but there is a state tax, and

(18:56):
it comes down to the state as to whether or
not the state also taxes you. But in Maryland you
got both, which is crazy. And so Aaron's for you specifically,
it is probably it's honestly probably why she's asking this
question because it's more of a topic over there, you know,
East Coast up there in Maryland, as folks are like,
oh my gosh, wait a minute.

Speaker 1 (19:12):
Get tax coming and going there.

Speaker 2 (19:13):
Yes, So all that being said, it's especially important to
be familiar with the laws of your specific state and
how does you can avoid some of that inheritance tax
if you're in one of the few states that does
tax money that is left to you after someone dies.

Speaker 1 (19:27):
Yeah, Okay, Matt, We've got more to get through on
this episode, including we're gonna talk about HSA's there's a
question about what happens through HSA if it turns out
they remain healthy. We'll talk about that and more right
after this.

Speaker 2 (19:45):
Man, we are back from the break, Let's continue on
with listener questions. This one is from a listener who's
trying to figure out what to do with his four
when KAY as he is leaving his employer.

Speaker 5 (19:55):
Hey man, Joel, this is Nathan from Glade Spring, Virginia.
I have a question and guardian for four one K
rollovers that you all have mentioned in a previous ascout
of Money episode. I currently have a four to one
K through my employer. However, in the next couple of months,
I'll be transitioning into a graduate school position. Though I
will have to leave my job in order to obtain

(20:17):
this graduate degree, I will have my tuition covered in
a stipend provided from outside funding, so I don't have
to worry about any more debt and will still be
able to live day to day. My question is where
I have a four to one K that will be
worth about thirty five hundred dollars by the time I
enter into this graduate school position and not have the

(20:39):
option to roll it over into another four to one K.
What is my best option? My current four to one
K provider is not a typical low fee provider. Would
it be best to roll it over into a traditional
IRA through a company like Fidelity, or is there a
better option that is suited for this amount of money
and sort of around the step that I'm Matt. I

(21:01):
appreciate any advice that you can give, and I've enjoyed
listening to the episodes over the past year or so.

Speaker 1 (21:07):
Thanks again, Nathan first off Man, congrats on going back
to school, Matt. Not having to take on debt plus
having your expenses covered by stipen. That's the way to go, right,
So back to.

Speaker 2 (21:17):
School when that like that was like a coming of
age movie back in the eighties.

Speaker 1 (21:21):
Saw that? Yeah, so like John Cusack, Oh no.

Speaker 2 (21:24):
It wasn't John qughs. It was like, was it John
Candy what? I don't think it was John k It
was somebody that kinda was like him. It was essentially
I feel like it's the American pie of like the eighties.
It's like, don't even ask me why I know this
because this is like way before my generation. But when
you say going back to school, that's totally what.

Speaker 1 (21:38):
Was like, you're older than me, but not that much.

Speaker 2 (21:41):
I'm only like three years older than you, years year
and a half, a year and a half. Yeah, look
at that, I feel I feel so much younger already
it's right.

Speaker 1 (21:48):
Well, I mean I think the truth is debt free
degrees are so far, so much less stressful. Yeah, and depends.
I mean that's what Emily and I felt not taking
on student loans for her master's degree right now. It
alleviate some of that weight, like, oh my gosh, how
much don are we racking up? Why do we get this?
And I hope the same is true for Nathan, Like,
depending on what you're studying, Nathan, you should be able
to graduate immediately increase your salary. And at the same time,

(22:11):
it's not like, oh, salary went up, but now I
got this big, old, like loaded debt hanging around my neck.

Speaker 2 (22:16):
There's less of that expectation to perform at an incredibly
high level where it feels like you're taking on yeah,
a whole whole lot of the day.

Speaker 1 (22:22):
It's just leaves you more choices to not having the
debt because you're like, cool, I want to take this
actually lower paying job in a nonprofit, but gosh, I
got the debt to pay off. So I don't know
if it makes sense, and it just yeah, it just
means you can do whatever you want to do without
a higher degree instead of like having to do the
thing that makes the most money totally. Yeah.

Speaker 2 (22:38):
So, I mean we talk about investing obviously on the
show all the time, but investing in your human capital
is one of the smartest things that you can do,
and that's what Nathan is doing, especially when you can
pull that off without costing yourself a bunch of money.
I think, even if it means taking a couple of
years out of the workforce and you you know you
can't invest anything during that that period of time. Well,
you're increased skills, you're increased marketability. It could potentially lead

(23:02):
to a big pay bump and just allow you to
come out ahead in a pretty big way. But you
also want to make sure that you do start investing
regularly once.

Speaker 1 (23:10):
You get that that great job. Yeah, you're thinking of
it as a specific period of time where you're like,
all right, no investing for the time being. It's almost
like fasting or something like that. And you're like, I'm
gonna feast at some point, but this fast is I'm
hitting pause, yeah exactly, so that maybe this is just
an investing fast. But you'll get back on it, you know,
once you have income coming in again as well. All right,
let's talk about what to do with that four oh

(23:31):
one k. There's there's not a ton of money in there,
and the rules for how your money is treated once
you leave your employer change depending on your account balance,
which is kind of interesting. You might not assume that,
but if you had less than a thousand bucks you don't.
But if you did, your employer has the legal right
to just liquidate those funds and send you a check.
They can be like, here, you need to just take

(23:51):
this back and sorry, you're probably gonna tax and a
penalty on that, but yes, like well, that's the worst
part of it. They can do that to you because
it's little a thousand, Like.

Speaker 2 (23:59):
You don't have a choice, right, like you are hit
with uh well income taxes federal and state depending on
what state you live in. But then that early withdraw penalty,
like they are forcing you to take that out and
that's it. It come bums me out, especially for somebody
who might just be getting started to basically I don't know,
it makes taking one on the chin. It's like somebody
like going out for a date and they got like
some pretty flowers, but the dates just like no, and

(24:20):
they just like gratified, like throw it back.

Speaker 1 (24:21):
In their like you speak from personal experience, man, and
in his face, that's what it kind of feels like.
It's just like, I don't want your flower. It reminds
me of a date I went on and I don't know,
I want to go short of the most expensive thing
on the menu. Matt and and frugal. Joel was like
all tied up in knots and sweating the whole time.
That's probably why it didn't work out, because she sensed
the tension. She really did, She really did. I wonder

(24:42):
if that's like a test that that's when I was
a caterpillar now butterfly. So that's some parents tell their dogs.

Speaker 2 (24:47):
It's like, hey, uh, what are the most expensive thing
on them?

Speaker 1 (24:50):
And you?

Speaker 2 (24:50):
Not because you're trying to take advantage of the guy,
but because they can spark a conversation about money and
what it is they's value.

Speaker 1 (24:55):
See if like, did you talk about sweat? No, we
didn't know. That was the one date and done. Okay,
So if you have less than a thousand bucks, your
employer can do that. If you had more than five
thousand dollars, you could leave your money in that four
one K account. If you wanted to, but it sounds
like you don't want to do that. And if your
account was in the middle somewhere between the thousand and
five thousand dollars like yours is, you're in this like

(25:17):
gray zone. You're gonna need to be proactive rolling. You're
going to roll it over into an IRA with a
low cost investment firm of your choice. That's that's the
route you're gonna want to take.

Speaker 2 (25:26):
Yeah, And the reason you want to be proactive about this, Nathan,
is because your employer has the ability to do that
on your behalf if they want to. But they're probably
not going to choose a company like Fidelity, who is
They're probably not going to take costs into account because
they don't care about fees being low. They don't care
about low cost investing as much as you likely do.

Speaker 1 (25:46):
They're probably just.

Speaker 2 (25:47):
Gonna roll your four O one k into an IRA
with the same crappy, high cost company that you're currently with,
which is no win.

Speaker 1 (25:55):
Might be an insurance company might be exactly. A giant
bank might be like literally one of the worst places
you can stash your money. And lucky for you, I
guess you're kind of getting out of that relationship exactly.

Speaker 2 (26:04):
Yeah, and I think that's they're required maybe to send
you a letter, and if you don't respond with them
thirty days, that's when they're able to be like, all right,
we're gonna slide it on over here. So bottom line,
we just don't want you to leave it up to
your employer because it's not like they're making an intentionally
bad choice. You know, it's not that they hate you.
You know, you're leaving work. It's like they're trying to
pay you back or anything like that. It's just because

(26:25):
they don't have your best interests in mind. Essentially, they're
incentivized just to be like, all right, cool, we'll just
sly that on over to this again. Like you said,
you'll oftentimes an insurance company that has high fees, or
sometimes they just don't know any better, right, They just
have a relationship established and this is just what they do.

Speaker 1 (26:41):
That is the conundrum of being an employer these days,
because not only are you providing a job and telling
people what to do and establishing pay scales and all
that kind of stuff, but then you're also trying to
help provide a retirement account. You're also a healthcare provider.
And I think a lot of employers don't screw that
up intentionally, but oftentimes they're providing like inferior benefits just

(27:03):
because they don't know better, and they don't understand the
impact of low fees or the high cost they are
passing on to their employees. They don't realize that there's
a better option. So yeah, I don't necessarily like point
the finger at that these employers. I just think, man,
it's tough to do all the above. They're holestly necessarily
equipped to do that well. And so yeah, the biggest
thing is not to cash this account out right. People

(27:25):
who leave a job, who have a four ro one
K with a low balance, they often cash it out.
In fact, a Harvard Business review reveals that over forty
percent of folks who leave a job take cash out
of their four oh one K, and the vast majority
of folks who do that they cash out the whole thing.
So it sounds like that isn't on your radar, But
in case it does cross your mind, in case you're like, oh, man,
I'm about to be like a poor college student again.

(27:46):
What if I had that money back in my bank account?
My savings are checking and I could like do whatever
I wanted with it. Don't do that. It's the worst
move you can make because you're gonna income tax plus
a ten percent penalty we talked about. And then those dollars.
The biggest kicker that people underestimate is that those dollars
are no longer working for your future. Right. It's not
a massive sum, but you still want those dollars working

(28:07):
on your behalf while you're in school. It's not going
to be long before you've got an even better job.
You're investing like a baller, but you want a base
to start from. One other thing worth mentioning is that
you can use a company like Capitalized to help you
with this rollover. I've used them before. It just streamlines everything,
It makes it easier. Capitalized doesn't charge a dime. They
can help you roll it over to those low cost institutions.

(28:27):
We'll put a link in the show notes to an
article that we wrote about Capitalized and how easy it
can be. But yeah, rollovers can be like you know,
the paperwork can be a little bit of a hassle,
a bit it's an annoying It's.

Speaker 2 (28:38):
A more antiquated process as opposed like if you're taking
one IRA from one brokerage to another, it's it's no
big deal at all because it's a it's the exact
same account. But when you are rolling it over from
a four to onin K into something like a traditional IRA,
it's just more of a manual process. They go back
to the typewriter, they call you up on the rotary phone,
and I don't know why, but not literally they don't.

(28:59):
They don't actually do that, but it is a more
manual process and they have to get you on the phone.
So that's something to keep in mind.

Speaker 1 (29:03):
You usually have to get a notary involved and just
capitalize makes it easy to do all that stuff. But yeah, again,
the main thing, don't leave these funds invested some way
for more fashion fashion, preferably into an IRA with a
company of your choice.

Speaker 2 (29:16):
All right, Joel's here from a listener who has a
potential HSA gotcha question.

Speaker 4 (29:21):
Hey, Jel and Matt, This is David from Minneapolis. I've
been listening to your show for a little over five
years now, and I really love the information you're providing.
In the community of financially savvy individuals that you've cultivated here,
I've definitely established a better financial Foundation because of listening

(29:41):
to your show. So I was meeting with my accountant
to file my taxes and a question came up about
my HSA and future plans on spending. I told him,
as you two had recommended, that I plan to invest
my HSA until I'm ready to retire and save my
receipts from larger medical ex expenses to pay myself back

(30:02):
in retirement. He warned that my HSA can only reimburse
medical expenses incurred under the current plan, meaning that if
I change jobs in a few years, then I can't
use those funds to reimburse medical bills from my current job.
He also said that if I stay at the same

(30:23):
company but they change plans on a corporate level, the
same rules apply and I wouldn't be able to get reimbursed.
Is this accurate for perspective. I'm thirty two and in
generally good health, with roughly twenty thousand dollars in my HSA,
and I'm contributing the max each year. My wife and
I are looking to start a family, and I'm trying

(30:43):
to weigh my options on how to cover these future expenses.
Thanks so much for all of your help, and I
look forward to hearing your answer.

Speaker 1 (30:53):
All right, man, we've talked a lot about HSA's over
the years. Yeah, they're one of the unsung retirement accounts.
But yeah, these little details could matter a lot. And
David decides to do and what a lot of people
decide to do.

Speaker 2 (31:05):
Yeah, I wanted to highlight the fact David said he's
been listening for five years.

Speaker 1 (31:08):
He's one of the real ones the Ogs. Thank you, David.
We appreciate all.

Speaker 2 (31:13):
If you've only been listening for like five minutes, you're
a real one.

Speaker 1 (31:16):
Yeah. Well guess what five years from now, you'll still
be listening and then you'll be like David, So we
hope that is if Matt hasn't retired to you're assuming
a lot on private island by then. Well okay, despite
the name not revealing it as an investment account, by
the way, which is poor marketing. I think on the
HSA front health savings account, well, we think of it
as a health investment account. We've talked about how great

(31:39):
it can be on that front, helping you avoid tax
and helping you invest in a meaningful way for your future.
You can literally avoid tax altogether on funds you put
into these accounts if you jump through the proper hoops, Matt,
there is no other account on the face of God's
green Earth, except for maybe in unheard of countries that
in the United States of America least where you can

(32:00):
literally avoid you always have to pay the piper at
some point in the process, whether it's beforehand, later on
down the process, at some point like this is the
only account that allows you to avoid tax all the
way through if you use it properly, that's right.

Speaker 2 (32:12):
Yeah, So, David, we wanted to affirm that your approach
here with how it is that you're using your HSA.

Speaker 1 (32:18):
It's a sound one, but you.

Speaker 2 (32:20):
Are revealing potentially more hoops that investing within an HSA
can come with. And we'll do our best to discuss
the full range of pros and cons. But first I
think it's worth pointing out, and it's worth mentioning that
you can have multiple hsas. If your employer starts using
a different provider, or you change jobs you get a
different health care plan, well, you can hold on to
your old HSA and then you can open a new

(32:41):
one down the road, say, if you are with another
yet another employer where you do have a high deductible
health care plan.

Speaker 1 (32:47):
Again, you might have like asas and different zip codes,
you know what I'm saying.

Speaker 2 (32:51):
Just like the old songs. What I'm pointing out though,
is that your HSA it stays with you like it
is yours no matter what you keep it forever, regardless
of what jobbyhold or you know, if you opt to
retire altogether. It kind of makes me think of like Ari,
I you pay once and guess what you are a
member for a life.

Speaker 1 (33:09):
It's like a co op membership.

Speaker 2 (33:10):
It's a lifetime membership and from then on the thing
is yours.

Speaker 1 (33:13):
You get to shop. There re turn policies grade at
rio two. Right, you love Aria, you have a year
for that, Okay. And I'm not sure that actually your
CPA is one hundred percent correct on some of the
things he mentioned, especially on the reimbursement front. Right, There's
there's not a lot of great nuanced information out there
on hsa is when it comes to the fine print,
but from everything we've read and seen over the over
the years, you can pay or reimburse yourself for any

(33:36):
eligible medical expenses incurred after your HSA was established, So
you're not limited to reimbursing yourself for specifically medical expenses
incurred while you had contribution access to that specific HSA.
I hope that made sense in the way I said it.
But those funds right that are in your HSA can

(33:56):
cover future healthcare expenses, even if they occurcades in the future. So, Hey,
you've been stocking money away in an HSA and you
end up going to a different job, different HSA, or
maybe no HSA at all, and down the road you
have the baby like you're talking about, Well, you can
still use money from the HSA from your previous employer
to cover some of those expenses. Totally.

Speaker 2 (34:17):
Yeah, let's give a full example. Let's kind of provide
some more color here. Let's imagine you have an HSA
for five years, and every year you toss three thousand
dollars over into that HSA for a total of fifteen
thousand dollars. Well, let's imagine years later down the road
it's worth thirty thousand dollars.

Speaker 1 (34:32):
Because you can invest those dollars wheat.

Speaker 2 (34:34):
Yeah, but then let's say you encounter a serious medical
issue that results in a twenty five thousand dollars medical bill.
If that were to be the case, it doesn't matter
if you are working for another company, it doesn't matter
if you are fully retired. You can still use those
HSA funds to pay off that massive health care expense.
And then on top of that, you'll still have five

(34:54):
thousand dollars left in order to keep growing for other
medical expenses that that might pop up in the future.
And because you use those funds for qualified expenses, you
never got tax on a dime of the contributions of the.

Speaker 1 (35:06):
Growth or of the withdrawals.

Speaker 2 (35:08):
This is why this is an incredible account and even
like a better way even of paying for that twenty
five thousand dollars expense, hopefully if you have the money
on hand and the ability to do this. But you
pay for that expense out of pocket, and then you
still don't touch the dollars that you have invested in
your HSA because you want those dollars to continue to compound,
because again it grows tax free, and again you will
be able to withdraw that money tax free way on

(35:30):
down the line, whether or not you have a current
high deductible healthcare plan.

Speaker 1 (35:34):
Yeah. So basically what you're saying is like the longer
the money seasons and grows longer, the better, the more
tax free money you have available to tap. So totally,
the longer you can hold off tapping your HSA, the better.
But Matt, there's something else I think that needs to
be addressed when we're talking about hsas. And like, by
the way, you can even use HSA funds from decades
prior to pay for Medicare premiums. So yeah, if you're

(35:56):
like sweet little perk, Yeah, that's a nice thing to know.
Some thing else that needs to be mentioned, though, is
that they can still be valuable even if you stay
incredibly healthy and save too much, because that is I
think a worry mat that people are going to overfund
the HSA and then they're gonna be like, gosh, darn it,
I overdid it. What do I do with all this money?
And man, that's a nice problem to have, I guess, right,

(36:18):
if you're incredibly healthy and you don't wra have to
go to the doctor much. But like, if.

Speaker 2 (36:22):
You're this is one of the instances where you don't
let the tail wag the dog. You don't need to think, oh,
I've got a ton of money in the HSA. Time
to incur some medical expenses that are necessary in order
for me to be able.

Speaker 1 (36:32):
To tap this. Let me go bungee jumping and skydiving
and just hope that I you know, at least brain
an ankle.

Speaker 5 (36:36):
It.

Speaker 2 (36:36):
This is the incorrect approach to getting reimbursed from your HSA.

Speaker 1 (36:41):
Yeah, So I think if you want to be healthy, yeah,
if you're a retirement account maximalist contributing huge sums to
all of your available accounts, the HSA is just another
flexible arrow in your quiver. And then once you reach
the age of sixty five, your HSA, if you want,
can be treated just like a regular IRA if your
health iss top notch and you don't have many of
those medical expenses like we're talking about. So if you

(37:03):
if you're unable to use your HSA for qualified medical expenses,
you just wait till you're older and then you can
take those dollars out and you can pay ordinary income
tax on the withdraws. That's I think one more check
mark Matt in the pro category for the HSA. It's
got some of that flexibility right, allowing you then to say, ah, man,
I was so healthy that I just didn't have You

(37:24):
can still after the age of sixty five use it
for qualified medical expenses and avoid taxation on those withdraws.
But if you remain healthy and you want access to
those money, well just pay ordinary income tax. It's it
functions like a traditional IR.

Speaker 2 (37:36):
Or just keep on living because eventually you will have
some medical expenses. I mean, I guess I can't say
that across the board, but you know, the older you get,
the less likely you are to remain healthy, because when
you're in your twenties and your thirties and you're like,
I'm invincible, but stuff kind of stacks up. And I
will say we reached out to friend of the show
Sean mulaney, and like you said, you know, there's not

(37:56):
a whole lot of direct guidance just in how it
is that David asked his question, but Sean pointed us
to the irs. Notice two thousand and four Dash fifty,
where like one of my favorites, Man, I actually have
it printed out and SIT's on my night band. I
was gonna say I read it most nice before. But
like the Perus in the Evenings, they have the most

(38:18):
direct language and they explicitly spell out how there is
not a time limits on when it is that you
need to reimburse yourself for those healthcare expenses as long
as those healthcare expenses were incurred after the HSA was established.
And so that's in all the reading that we've done,
the irs outlines it the most clearly there, and we'll
linked We'll make sure to link to that in the

(38:38):
show notes if you want to see it directly from
the dot gov site itself.

Speaker 1 (38:41):
My favorite thing about Sean mulaney, by the way, and
there's a lot of things to like, his love for
the way for fast food and the way he eats it.
It's impressive when he goes to In.

Speaker 2 (38:50):
And Out or Wendy's, the Flying Dutchman, the fly so
not Wendy's specifically.

Speaker 1 (38:55):
He does Wendy's too. I've seen I've seen him his
posts on social media about it. Yes, does he just
strip off? You can't.

Speaker 2 (39:00):
It's like four double stacks or something instead of the
Flying Dutchman is like, it's a double cheeseburger. So he
orders four of them, so he's throwing down eight patties,
eight patties of beef. We love Sean, but that is
not a menu item. I have yet to try it.

Speaker 1 (39:14):
Nay, I might love it. It sounds kind of right
up my all on meat baby. I love the protein.
I love the protein. So yeah, thanks Sean for your
insight as well, and David, I hope that helps. Hope
that makes you feel more confident in continuing to invest
in your hsas, not worried about maybe some of those
technicalities that you might run a foul of. I don't
think you're going to based on everything we know about

(39:34):
HSA's yep.

Speaker 2 (39:35):
Well, and again I think, just to sum it up,
the worst case scenario, it's the traditional IRA that you
have to wait five and a half years long around
before you tap yeah boom exactly. But best case scenario
tax tury all of my baby. Yeah, all right, we've
got more to get to and let's talk about phone upgrades.

Speaker 1 (39:50):
How should you think about that? How much money should
you be willing to dedicate to that upgrade? We'll talk
about that in just a sec.

Speaker 2 (40:03):
I mean, we are that from the break and it
is now time for the Facebook Question of the Week.

Speaker 1 (40:09):
This one is from Chrissy and need interchange it to
the Meta Question of the Week mat because they changed
their you know, the company, the parent company.

Speaker 2 (40:16):
It's not like X and Twitter where it's really confusing
because on one hand, it's X branding, but it's still
Twitter dot com.

Speaker 1 (40:23):
What's what's what gives? Well? I think it redirects to
X dot com. Oh does that?

Speaker 5 (40:27):
No?

Speaker 2 (40:27):
No, if you go to X dot com, it redirects
to Twitter. Oh really, last I checked. Okay, I could
be wrong. You're on Twitter more than I am. But
whereas it's still Facebook, it's my soul doesn't get irreparably damaged.
Facebook's doing like the alphabet slash Google thing.

Speaker 1 (40:40):
Yeah, it's still Google.

Speaker 2 (40:42):
The same thing with it's still Facebook. Actually reminds me
of Office. Did you ever watch The Office? Back in
the day, Jim was dressed up as the popular social
media platform book face. He had a book on his
daze and that makes all the sense in the world, Right,
this one's doing.

Speaker 1 (40:58):
A reboot of that, by the way, are they? Yeah?

Speaker 2 (41:00):
It might be worth revisiting. But uh, okay, let's get
to Chrissy's question, and she writes, looking to upgrade my phone,
I have an iPhone twelve Pro. I don't need the
latest and greatest and want the best deal. Of course,
anyone have opinions on which one I should get? Want
the best photos an iPhone can deliver ultimately thirteen, fourteen
or fifteen. If sixteen is coming out soon, should I

(41:21):
just wait for that so the fifteen becomes cheaper? And
then of those the regular, the Pro, the Pro Max,
I don't know much about them or the price differences.
I'm with Verizon, and of course have heard that buying
refurbished is great, So I'll look on Amazon.

Speaker 1 (41:35):
Or should I trade in.

Speaker 2 (41:36):
With Verizon for monthly payments? I have no time to
do this research, so if you've already done it, I'd
be so grateful for your thoughts and for your opinions. Joel,
what's the first part of this question? Do you want
to get to there's?

Speaker 1 (41:48):
Yeah, there, we'll talk about the phone thing. You have
recent experience with that with your wife's phone. Now we'll
get to that. Yeah, But the first thing it has
to be called out is, Chrissy, do you have to
be with Verizon. I'm a little less worried about what
you're gonna spend on the phone, and I'm more worried
about the recurring monthly cost. If you love Verizon service,
check out Visible because you can get unlimited everything from

(42:10):
Visible for twenty five bucks a month. It's on Verizon's
network versus paying I think something like sixty five bucks
a month with Verizon. That's a massive savings. And I
don't know, I think the whole phone service combo. I
think if it's similar to combining investments with insurance, right,
handle those things separately, pay the real price for the phone,
and find the cheapest plan that works for your needs.
If you don't need Verizons network or you know some

(42:33):
sort of unlimited service, you can pay even less like
fifteen bucks a month with Mint Mobile. So that's what
us dudes do. That's right. We love Mint. It's super
tooer cheap, and I think that's the first thing that
I just have to say anytime someone's like, I'm on Verizon,
I I like.

Speaker 2 (42:47):
Drop Verizon, go with Visible. I feel I don't need Visible,
go with Mint. I got to preach the gospel, Yeah,
of low cost. We just got to keep having. Well,
it's just such low hanging fruit too. I feel like
for a lot of folks who are for like just
getting into personal finance, it's one of those changes that
you can do and that you can implement in a
way that moves the needle pretty substantially. Like on a
month to month recurring Like, I mean, we're talking about
hundreds of dollars annually here just by making this one.

Speaker 1 (43:10):
Say forty bucks, I mean that's almost five hundred bucks year. Yes,
that's a lot of money exactly.

Speaker 2 (43:13):
And then, Chrissy, when it comes to the actual phone,
you know, you mentioned a few tactics. Obviously getting an
older model is going to save you more so waiting
for the new generation.

Speaker 1 (43:22):
To come out and then buying an older model.

Speaker 2 (43:24):
I think both are routes worth pursuing, but be careful
if you're trying to find one on Facebook marketplace, specifically,
because there are so many scams there these days. It's
like one of the highest transact like electronics and specifically
iPhones are one of the transactions were because everybody's looking
to buy I used iPhone, and so wherever there's a
lot of money flow and wherever there's a lot of demand,

(43:44):
there's always going to be a large number of scammers.
But you're talking about the new sixteen coming out, it
seems that September is going to be when Apple is
going to announce the new phone, the new sixteen, and
so price cuts tend to start happening around the so
something to keep in mind if you are looking, say
for the fifteen. But I'll be honest, I would be

(44:06):
even willing to push back on that a little bit
because you specifically mentioned that you've got a twelve pro
that's a really good iPhone, like literally a few years
ago that was like the Krem Dela Crem iPhone, like
it was the state of the art, top of the line, and.

Speaker 1 (44:20):
Honestly, they haven't improved significantly that.

Speaker 2 (44:22):
The improvements are so incremental they are immaterial. And literally,
specifically starting with the twelve is when they implemented the
ceramic shield, glass screen, Because what's the number one thing
that people are why are they looking for a new phone?
Oftentimes it's because they have a cracked screen. As long
as you have a twelve Pro, you are unlikely and
not even a twelve Pro like any of the twelves,

(44:43):
you were unlikely going to need, actually truly need to
get a new phone.

Speaker 1 (44:48):
Especially if you put a five or ten dollar case on.
That joker is going to last a whole lot longer.

Speaker 2 (44:51):
And I'd be curious to know how many shattered front screen,
you know, screens different Apple or some of the different
repair places have installed, because, like I remember a c net.
This is why this stood up in my mind so much.
When the twelves came out, they were doing drop tests
with the Twelves. They're dropping it from like nine or
ten feet over and over onto the face of the phone,

(45:14):
and it was not breaking. I was not cracking. It's incredible,
so hard to crack.

Speaker 1 (45:17):
Yeah, yeah, no, And that's all that being said.

Speaker 2 (45:18):
The twelve pro is a great phone, So Chrissy, I'm
just pointing out that you don't even necessarily need anything
beyond the twelve, which is.

Speaker 1 (45:24):
What you already have. Can you get an extra year
or two out of it? Yeah, It's like a good
goal to have a good frugal, light money saving goal.
I th also, Matt, I know to anyone who has
an iPhone, this might sound like heresy, But what if
you considered an Android. I know you're gonna mention this.
I have to. I have to, And like, the value
proposition isn't quite as good as it was back when
I was on Android. That's part of the reason I

(45:45):
actually migrated over to iPhone. Well, I'm working on a
Mac here at work anyway. My wife had like a
Mac laptop. I'm like I feel like I'm just in
this orbit anyway, Like maybe it's time for me to
leave the android world behind.

Speaker 2 (45:57):
The bill quality is like there's a big difference in
the bill quality I think between You're right, like when
you're looking at the droids and the iPhones. And again,
I will readily admit that I'm a mac iPhone fanboy,
but I've felt the sense of conviction over the years
in the material waste that goes into cheaper products that
after a couple of years, like, truly, it's not turning

(46:18):
on anymore. Oh, I can't plug it into charge anymore
because the charging port is all jacked up. You know,
if you have the ability, I think, to be able
to afford something like an iPhone that you are going
to be able to keep for longer, I think it's
worth considering doing that. I know some folks don't have
the ability, and truly they are looking for the cheapest
phones out there, the most affordable phones out there, which
unfortunately are the cheapest yet. But something else to take

(46:38):
into account as well. Actual pixel phones. Sadly, they used
to be a whole lot cheaper. So like when Pixel
six A came out, I think it was like two
hundred fifty bucks, and now the Pixel eight A is
like five hundred bucks. And so those lower end phones
that were actually pretty good, they were some of the
best lower end phones. They were still reasonably priced not
too long ago, but the price has gone up so
much that it makes them less of a value bet

(46:59):
than they used to be. So I loved the A
models of the Pixels, and now I'm like, eh, if
there were two fifty still or three hundred bucks, then
maybe I would point more people in that direction. But
the price has gone up so significantly. I just don't
know that it makes as much financial sense for people
at the five hundred dollars price point. Yeah, I get it.
And so you mentioned Kate needing a new phone. So
here's a tip for everyone out there. Don't take your

(47:19):
iPhone into the ocean bit by Shark, right, Yeah exactly.
It not just the ocean, but even even the pool.
Because here's something that we learned. Even though it's rated
and it's like, oh, it can last six ft underwater
for thirty minutes or whatever. The I don't even is
it like IP three or IP four IPSI they've got
like these, I don't know. But the one year, like

(47:40):
the Apple warranty, you know, the manufacture's warranty. Guess what,
it doesn't include any water damage. And so even though
it says on there that hell, you can take pictures
in video underwater, which I have done, like literally, I've
done that with my phone and even with Kate's in
pools where the kids are jumping underwater and swimming and
feels like a bit of a rug pool. Well, it's
crazy that there's saying that you can.

Speaker 1 (48:00):
Do this thing.

Speaker 2 (48:01):
But then, oh, by the way, if your phone gets
damaged because of that though, water damage isn't covered, and
so hey, keep that in mind, because we had to
shell out a bunch of money. And I'll say, the
route that we took, Chrissy is we got a renewed
phone from Amazon, and so you had mentioned that. For sure,
I think that's worth looking at. It's a great way
to save some money. But make sure that you are

(48:22):
paying attention to the details of that renewed phone because
they have renewed premium and then they've got renewed excellent, great, fair,
I don't know whatever, but only the renewed premium comes
with a one year Amazon warranty. Essentially so it's got
a similar warranty as Apple, where it's just hey, if
anything goes wrong, you can send it back within a year.
The rest of those have ninety day warranties and so

(48:44):
those are great, but it's just up to you as
to whether or not you think that additional You're gonna
pay a premium for the premium.

Speaker 1 (48:50):
And run the numbers like how much extra am I
we paying? If exactly an extra two hudred bucks's like,
I'm probably not worth it, But if an extra like
forty bucks.

Speaker 2 (48:56):
For it might be worth that peace of mind, especially
considering Amazon doesn't guarantee that the parts that they replace
the iPhone with are original Apple parts, whereas when you
buy from Apple referbed, first of all, you get a
brand new battery on any of the Apple refurbished iPhones.
But then on top of that, of course all the
parts are actual manufactures OEM factory parts or whatever.

Speaker 1 (49:18):
Gonna costs more from Apple too, then, right.

Speaker 2 (49:19):
It's gonna cost a little bit more, But for that reason,
like I would one hundred percent by a referbed phone
from Apple and essentially feel like you're getting a brand
new phone, whereas the one I will say that we've
that that Kate received from Amazon, even though it was
the premium, something doesn't quite feel right on it, right
about it, So there's yeah, I'll report back. We might
end up sending that one back and yeah, I'll let

(49:41):
you know where things land with that.

Speaker 1 (49:43):
Well, Chrissy, best of luck. Hopefully you can keep this
phone around a little bit longer because it's pretty good phone,
and then maybe save up for that next one. And
while you're at it, just save some money on that
monthly service too. See ye, all right, I let's get
back to the beer that we had on this episode.
This was a pilsner, a Danish style pilsner from Carlsburg,
which I feel like anytime you go to Europe, this
is like the beer you see everywhere. Would you pick
this one up? By the way, total wine?

Speaker 5 (50:04):
Uh?

Speaker 1 (50:05):
Nice? Yeah, they have a lot of beers there. I
feel like this isn't a crap beer.

Speaker 2 (50:09):
This is this is more like kind of craft Like
I will say, it tastes pretty dang good.

Speaker 1 (50:13):
Well, the back of the can says probably the best
beer in the world. I think that's like, I'm not
going to disagree.

Speaker 2 (50:18):
This is a tasty bel Come on you meant for
this to be a crap beer, and I'm over here
enjoying the heck out of this.

Speaker 1 (50:23):
It's not bad, but this is in nowhere near the
best beer in the world. Come on, I'm not going to.

Speaker 2 (50:28):
Agree with their marketing where there were you know, they've
written that on the back. But compared to some of
the other widely available beers that you can buy in
most gas stations or grocery stores, this is It's a
lot better. There is clean drinking, dude, this is tasty.
It's a lot better than a lot of the US
macro pilsners. I will say, I agree, but still drink

(50:48):
really crisp and really clean for a euro pills yeah,
I will say. And maybe that's the difference between a
Danish pilsner and some of the other ones out there.

Speaker 1 (50:56):
Yeah, I don't know.

Speaker 2 (50:57):
This is dang refreshing. I would totally crush the sitting
around a pool or after cutting the grass or beer. Yeah,
or after digging some holes for in the garden for
Kate to plant some planes, that kind of thing.

Speaker 1 (51:06):
I'm gonna have to pick worst beer for our next Uh,
you have failed, j all.

Speaker 2 (51:10):
This is actually a tasty beer. I enjoyed this one.

Speaker 1 (51:12):
All right, I've not done my job appropriately. All Right,
that's gonna do it for this episode. Thank you as
always for listening. We'll put links to a lot of
the sites that we mentioned a lot of the resources
that we mentioned, including those beautiful IRS links Matthew you mentioned.
We'll put those up on the website at how toomoney
dot com.

Speaker 2 (51:28):
You know it, buddy. So until next time, best friends
out and best friends out.

Speaker 1 (51:44):
That's a good beer, not bad

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Ask HTM - iPhone Upgrades, Burden of the Gift Tax, & A Potential HSA ‘Gotcha’ #835

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Joel Larsgaard

Matthew Altmix

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Ask HTM - iPhone Upgrades, Burden of the Gift Tax, & A Potential HSA ‘Gotcha’ #835