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1 - Should I not take a higher paying job because of a 401k loan I still need to pay back?
2 - My wife and I are younger investors but are looking to ramp up the savings: 401k or Roth?
3 - Is it possible to leave match money on the table by front-loading the sacrifice?
4 - Will my homeowners premiums go up if I make a claim with my insurance company?
5 - What are some ways to curb our grocery and restaurant spending?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money.
Speaker 2 (00:01):
I'm Joel, I am Matt.
Speaker 1 (00:03):
And today we're answering your listener questions.
Speaker 2 (00:24):
All right, buddy, let's get to it. Your is your
throat all warmed up?
Speaker 1 (00:28):
I was born ready, Matt.
Speaker 2 (00:29):
We did just chat for about fifteen minutes about local
politics before before we actually I had already hit record
and then we got off topic, so went back over there, stopped, deleted,
started fresh from the beginning.
Speaker 1 (00:40):
Sometimes that happens, like we're friends who we just like
to catch up about random other stuff. Were yeah, that
that's happening in our lives or around town, and then
we're like, oh, wait, we're supposed to be recording a
podcast now, aren't we.
Speaker 2 (00:50):
Got to talk about a personal finance not local politic?
Yard signs is that we're.
Speaker 1 (00:55):
Just deliberating right now. Who's running for local school board?
Is the thing?
Speaker 2 (01:00):
Just stop? Stop?
Speaker 3 (01:02):
All right?
Speaker 1 (01:02):
We are endorse candidate right now. Hey, if you.
Speaker 2 (01:04):
Want to, you to go out on a limb and
no thanks, go for it. We're gonna talk about investing
when you are younger, when you're twenty five. We're gonna
specifically talk about some different accounts that this listener is
asking about we're going to discuss insurance coverage limits. Specifically,
we got some feedback from a listener. We will address
that and plus another point that she raised. Another listener
(01:25):
is asking what he should do about a four oh
one k loan that he has. We've got all of
that to get to plus more today. But buddy, I
want to share something really quick. Folks might remember. I
guess it was maybe two years ago that there is
a small part of me that was thinking we might
get a second vehicle, and I was considering a Tesla,
and I was just like, I want to I want
(01:46):
to drive it. I want to get to get to
see what it feels like and what's great.
Speaker 1 (01:50):
About if you're going to do it, do it quick
or that well?
Speaker 2 (01:52):
I know tax well that that time is it's no
longer something I want to do. Okay, But one of
the I don't know if you recall, but one of
the things I shared was that it was a ton
of fun to drive a Tesla, so much fun. I
really enjoyed it, but it was a pain in the butt.
So this was during a trip when we rented it,
which is all, isn't that a great way to try
out a car? By the way, while you are traveling
(02:12):
somewhere to try to get that particular vehicle before you
purchase the dang thing.
Speaker 1 (02:16):
Because like a twelve minute test drive, he giesn't tell
you nothing.
Speaker 2 (02:19):
Second multi day extended test drive, which is so much fun,
especially when it's a Tesla and you're not used to
an evy. It was a ton of fun, but it
was a pain in the butt to find the Tesla superchargers,
the charge points or whatever O.
Speaker 1 (02:31):
My friends in California say the opposite that were crazy.
Where I was, we had to go out of our
way to get to a charger.
Speaker 2 (02:37):
That was the downside as opposed to a gas station
on every single corner right, and not to mention because
you're tapping into the supercharger as opposed to trickle you know,
slow charging at home. If you weren't traveling, it ended
up being just as expensive as having filled up traditional
gas power vehicle right going to the gas station.
Speaker 1 (02:56):
Yeah, loading up on that battery at home.
Speaker 2 (02:59):
That's the way to do it. An of money.
Speaker 1 (03:00):
Yeah, if you're yeah, if you're filling up on the road, yeah,
you're gonna pay a lot.
Speaker 2 (03:04):
So basically, what I learned was that Okay, I don't
want a Tesla, and also I'm not gonna rent another
Tesla again because it just didn't really work out for
the type of trip that we were taking. Uh So
you might be surprised to hear that I just rented
another Tesla for a trip that Kate and I were taking.
Speaker 1 (03:20):
How you changed your tune?
Speaker 2 (03:21):
Here's the thing.
Speaker 1 (03:21):
In the span of three seconds.
Speaker 2 (03:23):
Would you rent a Tesla if it was substantially cheaper
than even the most affordable economy traditionally gas powered vehicle, Yes,
it would.
Speaker 1 (03:31):
And that's why I've been running evs lately. Rent a car,
it's so great, dude.
Speaker 2 (03:35):
So the I went to one of the site aggregators,
you know where it's got all the different different places
that you can rent from. And then I hopped to
one that I had rented from quite somewhat recently, just
to see directly on the site, and they had they
were running specials on electric vehicles specifically. It wasn't just Tesla,
it was also like the the Ford mack e.
Speaker 1 (03:57):
I rented a subru electric car recently.
Speaker 2 (04:00):
Money it was great, enjoyed it.
Speaker 1 (04:01):
Yeah, yeah, So here's the deal.
Speaker 2 (04:05):
It was ninety six dollars total for this rental, as
opposed to a little over three hundred oh my god,
for even the most economy whatever, gas powered vehicle.
Speaker 1 (04:16):
That's where it's a hassle man.
Speaker 2 (04:18):
Yes, well here, and here's the other thing. I of
course looked to where we were traveling, and there were
superchargers very close by to where we're planning to travel.
But I specifically paid like ten bucks more and got
the long range because I think there's a chance we
may not even need to charge at all, uh during
that trip, because because you know, they charge you if
you bring it back without over ninety percent battery life.
(04:39):
But it's only thirty five bucks, and so like I
might be able to save ten bucks or something. I
don't know, maybe it's only fifteen or twenty five bucks
to charge it myself. But the worst case scenario is
let's say we're tight on time, we gotta make it
back to the airport. What do you do? You just
take it back and they just charge you thirty five
bucks yah, which is still there is a still a
massive savings to be had there. Going with the EV
(05:00):
as opposed to a more traditional traditional vehicle. Last wanted
to share that I like that because I think there's
a there's good savings opportunity out there.
Speaker 1 (05:07):
I like that. I've been shocked at the discounts on
EV's too when you're running a car. And last I
was stayed at an Airbnb last time, and so I
just messaged with the folks ahead of time, and I said, Hey,
do you have a place I can plug in over there?
Just trickle chargings fine? And they were like, yeah, we'll
leave an extension cord out through the garage there you go.
So I was like fueling up for free, yes, and
so yeah, just ask the question of your host, if
(05:28):
for a hotel or wherever you're staying, just just check
and see. Maybe you don't even have to pay for
a supercharger. Maybe there's some place close by you can
charge up for free.
Speaker 2 (05:36):
In our case, we don't have it. It's not an Airbnb,
so there's not going to be the ability to run
that extension cord out otherwise.
Speaker 1 (05:43):
I don't know. Man, Did I tell you that go
to Low's get a tow hundred foot extension cord just
like tapp into this house near behind?
Speaker 2 (05:48):
Did I tell you that I literally threw an extension
cord in the minivan because we rented a plug in
hybrid for the road trip. Oh okay, and because I
wanted to have the option wherever we stayed, because we
stayed at Airbnb's the entire time to be able to
use the extension. Dude, we absolutely use that extension cord.
It was a smart thing that Chrysler Pacific, but yeah,
(06:08):
it was. This is just a piece of advice out
there for folks to make sure to shop around instead
of going with the default, even when the default tends
to be a money saver, like Kayak or Priceline or
skyscanner one of those sites that I did check. Sometimes
it pays to go directly to the business's website itself
and to find the best deal.
Speaker 1 (06:26):
Don't forget Costco's auto rental program as well. It's a
good place to look. All right, Let's mention the beer
we're having on this episode, Matt. This is called Marbits
by Southern Grist. It's a marshmallow IPA. We'll give our
thoughts later. Should be interesting, Yes we will, all right.
If you have a money question, we'd love to hear
from you, just go to how to money dot com
slash ask read the instructions or record your question on
the voicemail app of your phone. Email it over to
(06:47):
us at how to Moneypod at gmail dot com. We
want to hear from you. Hopefully we can take your
question next week on the show. Matt, let's get to
a question specifically about a four oh one K loan
UH and a nervousness about not being able to pay
it back in time.
Speaker 3 (07:03):
Hello, Matt and Joel. My name is Nathan Parkinson from Pocatello, Idaho.
I have a four to oh one k through my
work right now that I have a four to oh
one K loan through, and I was thinking about moving
jobs and one of the places I was planning on
(07:25):
going to doesn't have a four to oh one K.
The difference in pay might be at least thirty thousand dollars,
so I wasn't sure if I can't pay off that loan.
I've read that sixty to ninety days that you have
to pay it off or you might get charged on
(07:48):
your tax taxes. I just wanted to be able to
find out if I should be looking for a different
job that actually offers a four o one K loan
and how I might be able to find something that
can either get a match or if it doesn't have
a four to one k loan, how I go about
(08:11):
getting more into my IRA four oh one k.
Speaker 2 (08:17):
Thanks Matt and Joel. Oh, Nathan's in a tight spot here, Joel,
I certainly hate to see him not take this job
that pays a whole lot more because of this decision
that he's made here in the pasture. Honestly, these are
the sorts of situations. These are the things we want
folks to avoid completely, and it's why we tend to
be against four one k loans because the common refrain
(08:38):
that you hear when you talk about a four one
k loan is like, hey, you're just gonna pay yourself back,
no harm, no foul.
Speaker 1 (08:44):
Even that interest to your paying. Yeah, it's going back
to you.
Speaker 2 (08:47):
But the assumption is that because of that, I guess
it's just not that bad. But when you take the
money out, it's also not in the market, it's not
growing on your behalf, and then you might end up
in a situation like Nathan, where you are looking for
a new job, or maybe even worse, maybe you are
in a situation where you get laid off and oh
you know what, that four one k loan, it can
(09:09):
present a real issue. Yes, you don't have the ability
to pay it back pretty quickly.
Speaker 1 (09:13):
That's right. Yeah, So the four on k loan, it
sounds like the easiest way to get money. Hey, it's
better than a lot of other options. And it might
be depending on your you know, ability to pay back
how long it's going to take. But there are a
lot of potential downsides too. And think about the run
up we've seen in the market, Matt, what Nathan took
out not to you know, point into this source spot Nathan, Sorry,
(09:33):
but like it. The ruin is the market's been up
like what thirty five percent essentially over the past five
or six months. So Nathan's right, if he doesn't pay
this loan back in a timely fashion, he's gonna owe money,
right because it's going to be treated as a disbursement.
So I think he said in his email he owes
about fifty three hundred dollars toward this four O one
(09:55):
k loan. And so what does that look like, Well,
it means he's going to pay ordinary income tax on
that money, as well as a ten percent early would
draw penalty on top. So I don't think Nathan's fifty
nine and a half. Because of that, he is gonna
owe that extra ten percent. And that's I don't know.
To somebody like me, that feels like Harry Houdini got
(10:16):
punch Matt. You remember, That's that's how we ended up dying, right,
was like somebody punched him when he wasn't ready, and
was it.
Speaker 2 (10:21):
I thought it was like a canniball.
Speaker 1 (10:22):
I thought it was somebody. I think I think it
was like some young fella, because he would let people
come punch him as hard as as hard as he
could during his acts, and they were like, oh, I'm
going to punch her, and he wasn't. He wasn't ready,
he wasn't doing his act. It was like the kind
of sucker punched him exactly exactly.
Speaker 2 (10:35):
I don't like that.
Speaker 1 (10:35):
Of course, he wasn't ready, internal bleeding, all that kind
of stuff. That's what this feels like to me.
Speaker 2 (10:40):
You probably gotta feel pretty bad about yourself if you're
the guy that like Initially you're like, yeah, I gotcha,
but then you're like, oh, I'm.
Speaker 1 (10:46):
Sorry, dude, I killed the greatest musician magician of all time,
you know, killed the guy. Yeah, Well, in this specifics
matter here, by the way, because the IRS says that
you need to pay back this four one K loan
before you file taxes, and you could even wait until
October with an extension next year. That'd be fine with
the IRS. They're okay with that. But your employer likely
has more stringent requirements in their play in documents, and
(11:09):
that's what you're really going to want to pay attention to.
Most plans that you pay back that loan in full
right when you leave your job with no grace period
your employer, I don't know, Nathan mentioned like sixty or
ninety days. Yeah, there's a chance that your employer has
has that written into those planned documents. But don't count
your chickens before they hatch. Don't assume this. Make sure
(11:30):
that that's the case, that that's exactly how your employer
treats this dispartment disbursement. You want to just make sure
you're following the letter of the law here, because, like
we just said, the adverse consequences could be significant, and.
Speaker 2 (11:43):
This is one of those really important things where man
I would be willing to make a lot of sacrifices
in order to pay this four K loan back in
the required time period, Like, for instance, I might even
be willing to delay taking that new job, if that's
something you have any control over, in order to pay
this the sucker off, maybe even take out like I would.
I think I would certainly be willing to drain my
(12:04):
emergency fund, maybe even borrow from a helock in order
to avoid that negative outcome, and then of course make
a plan to replenish that e fund, make a plan
to pay back that he loock eight like as soon
as possible. I certain I don't think I would go
as far as like taking on a payday loan. Joel.
Speaker 1 (12:20):
Yeah, that feels a little a little too far, But like,
the only way I'm doing that, Matt, is if there's
some mob boss who's starting to break my knee caps
And in that case, I'd probably take out a payday loan,
But that's it.
Speaker 2 (12:29):
You might want to consider it, and.
Speaker 1 (12:30):
I'm not in that kind of trouble right now.
Speaker 2 (12:32):
I don't think I would do this, But depending on
your situation, you might even want to, like maybe borrow
from a relative with the assurances. And this is obviously
assuming that you are taking this very seriously and you
plan to not borrow from yourself like this every again,
but just make assurances to them that they that you
will be paying them back regularly over the coming year
or so. But man, just that the difference in your
(12:55):
salary right there, that thirty thousand dollars is significant, and
I wouldn't let the four o one k loan keep
you tethered to that significantly lower paying job.
Speaker 4 (13:06):
You know.
Speaker 2 (13:06):
I think where there's a will, there's a way. But
certainly make it a high priority to completely eliminate this.
Speaker 1 (13:12):
Yeah, I mean, it'd be it'd be kind of like
a self inflicted wound to say, I'm gonna stay at
this job if I really want to move on, and
I'm going to get paid a lot more just because
of this four one k loan. There's there's got to
be a way. And you mentioned some good methods, Matt,
of finding the money to get rid of this four
one k loan so that you're not, you know, taking
keeping that money out of your four one k forever. Yeah,
(13:34):
and that you're also not paying the tax and penalty,
which is a big deal. You also mentioned, Nathan, that
you're holding out for another job or for an employer
that offers a four to one K, and.
Speaker 2 (13:45):
Which I will say, by the way, to reiterate, we're
talking about a four one K loan, not because at
one point he said, what if the new one doesn't
have a four one K loan? I think maybe he misspoke,
and I think he's specifically talking about a four one
K plan. Yeah, specifically, especially one with a match.
Speaker 1 (13:59):
And you do have to consider that, you know, you
and I talked regularly, Matt about the secondary benefits that
employers offer, and those benefits had up incredibly some you know,
some employers offering health insurance with a significant discount where
they'll pay like eighty or ninety percent of the premiums
for you and straight up free. Yeah.
Speaker 2 (14:18):
I got friends that are having babies and everything is
just like completely covered at super fancy employers. Has me
just weeping those Catillac health care plans. Knowing how much
money IVE spent on labor and delivery over my lifetime.
Speaker 1 (14:28):
I know, as self employed individuals the healthcare stuff.
Speaker 2 (14:32):
Had the privilege of being able to do that.
Speaker 1 (14:33):
Yes, yes, so those things really matter and a four
one K plan is incredibly helpful. I think not having
access to a workplace retirement account would be a bummer,
no match, no ability to shovel chunks of money into
a tax advantaged account. That's that's a downer. It's a
downer for anyone who wants to be smart with their money,
Like you're looking for that in an employer and you're
hoping that they're competitive in the right.
Speaker 2 (14:54):
But it's not a deal breaker though, No, especially especially
given the difference in income. So and here's the other
thing too that I want to address, Like, you can
still get really wealthy, Nathan with just an IRA. Yeah, yeah, so.
Speaker 1 (15:05):
I could be a roth Ira millionaire in what thirty
six years? Thirty five?
Speaker 2 (15:09):
Well, at seven and a half percent, it's thirty five years.
I was way off. It's a here right there. That's
pretty incredible in my opinion. And that's just the I mean,
I know for a lot of folks it might be
it it's difficult for them to max out an IRA
every single year as opposed to a four to one K.
You can become a four to one K millionaire in
(15:29):
as little as twenty years. But at the same time,
who's maxing out there four one k? I know some
folks are, but there's a lot of folks for saying
twenty three thousand, five hundred dollars. Dudes, I'm sorry, but
I ain't got that kind of money setting around, right.
Speaker 1 (15:43):
That'd be a third of my income, or that'd be
half of my income, and that seems impossible.
Speaker 2 (15:47):
But it's still possible, even just with the boring old
IRA at your disposal.
Speaker 1 (15:53):
And well, there's that, but let's just say this. Let's
say Nathan plans to invest at least half of just
the raise that he's getting, a thirty thousand dollars raise.
That's hey maxing out right there, a roth IRA every
year just became super easy. If he's got a high
deductible health care plan through the employer and HSA, he
can max that out too, And then he's got more
money left over toss into a taxable brokerage account as well.
(16:16):
So he's just got a whole bunch of accounts at
his disposal. It does not have to be the workplace
retirement account, the four to one K, or the TSP
at other employers, or a four to fifty seven B
like it can be some of these other accounts that
are widely accessible to almost everyone. It doesn't have to
be a tax advantage account through your employer. I think
(16:36):
that makes it easy because it's deducted from your paycheck.
It's automatic, right, and you don't really have to think
about it. That's one of the perks.
Speaker 2 (16:44):
You don't really feel it.
Speaker 1 (16:45):
That's right. So you're going to have to make a
proactive plan to save for yourself in some of these accounts,
including probably in all likelihood, automatic contributions monthly from your
bank account towards some of these accounts. I think you
can just you can still do an incredible job saving
for your future without an employer plan. It just takes
more intentionality and it falls more directly on your shoulders.
(17:06):
But I wouldn't let that, especially especially with a massive
pay increase like this. I would not let that be
a deal breaker by any stretch of the imagination.
Speaker 2 (17:15):
Sure, and again we're talking about investing in your ability
to grow wealth here, but let's make sure that that, Nathan,
that your first order of business is one hundred percent
to be able to pay off that for win k
loan and honestly just to be able to man, let's
just stay away from that altogether in the future as well.
Speaker 1 (17:30):
We've got more money questions to get to, Matt, including
a listener who wants to limit their grocery and restaurants spending.
We'll get to that and more. We'll get to that
in a whole lot more right after this. All right,
we are back from the break. We've got more listener
questions to get to Joel. This doesn't happen very often,
(17:53):
but we're going to hear from a listener who has
been listening to the podcast for quite a while, longer
than my mom's been listening to the podcast.
Speaker 2 (18:00):
Let's hear from Bryant.
Speaker 5 (18:01):
What's up, fellas. Briant here from Montana. Longtime listening to
the show about six years, and I really appreciate what
you guys do. I've just got another boring investment question
that nobody probably wants to hear about, but I've been
pretty curious and I'm going to shoot anyway. A little context.
My wife and I are both twenty five years old,
and we've been together since we were sophomores in high school,
and she actually just finished up her doctoral degree and
(18:22):
started her career. We are very fortunate and we were
able to get through school debt free, so we currently
do not have any debt as far as investing goes.
I currently max out my roth IRA and my HSA.
On top of that, I have a pretty solid pension
and I've been investing for about five years. My wife
is kind of in the opposite boat. She hasn't been
(18:44):
able to invest at all while she was in school,
but is looking to start now. Her employer offers her
a four oh one K with up to a five
percent match in an HSA. Of course, we plan to
put enough money into her traditional four oh one K
to get the mast and max out her HSA. That
would put us at about twenty percent of our income.
(19:05):
We're looking to up that to about twenty four percent,
and we were just curious whether we should put that
extra money into her four oh one K or whether
we should open a roth IRA for her. I'd really
appreciate some feedback, Pretty curious on what I should do.
I'm currently leaning towards the IRA, but would love to
get your guys' thoughts. Thanks.
Speaker 2 (19:26):
All right, Joel, is this just a yes or no
answer to to Bryant as to whether or not you
should go ahead with the IRA. Let's have some color?
Speaker 4 (19:34):
Yeah?
Speaker 1 (19:34):
Okay? Well, first off, high school sweethearts. I love I
love that. That's awesome. You guys been together for a
long time and their sophomores. Yes, and he's been listening
for a while too, Yes, sincebody's been listening since he
was a teenager.
Speaker 2 (19:46):
Yes, that's crazy. Yeah, he's like, finally I can enjoy
a craft beer, just.
Speaker 1 (19:49):
Like just like the buddy, the boys came right exactly,
And I mean it's no wonder that he's crushing it already, right,
and his wife has her doctorate at this young age
as well, graduating debt free. That's just an incredible way
to get started, like Tyra getting off on the right foot.
I mean, that's an understatement for where Brian and his
wifer are you going in life. I mean they're just
(20:11):
starting off with everything kind of going in their direction
to win at their backs.
Speaker 2 (20:15):
Yeah, they are doing all the right stuff already. The
guy the roth Ira, the HSA A pension as well,
So I guess he's got some sort of old school
government job perhaps I don't know, but he's doing basically
d all of the above, and it's helping him to
sock away quite a bit of money and in let's say,
very tax friendly vehicles as well. I'll say, Brian, a
guy wasn't necessarily picking up any of this in your voice.
(20:37):
But the fact that your wife hasn't started investing yet
is nothing to be too worried about. Man, Like, she's
been working her butt off, she's been getting that debt
free degree, which is incredible, and the higher likely income
that she is going to be able to earn that
she's gonna be able to garner will be well worth
it as far as a standard of living, how much
(20:58):
you're going to be able to invest, ultimately leading to
greater levels of financial freedom financial independence. So kudos to
you both for rushing it like that. I love too
that he said that twenty percent of his income. It
doesn't kind of feel like quite enough if he wants
to ramp it up to twenty four percent. And a
lot of folks, Matt, they continue to increase their standard
of living as that income goes up. And yeah, maybe
(21:20):
they kind of bump up their their four one K
contribution by one percent each year or something like that.
But even then, you're what's your the amount of money
you're investing, it might not be keeping pace with the
rate of pay increases that you're getting. So actually, as
a percentage of your income, you're not doing as well
as you were in those early years. And the truth
is not having any student loans, which is I think
(21:42):
rare for people, especially with the amount of degrees they've
gotten in their household. That's hard to come by. But
not having those student loans makes it even more feasible
to dedicate more of your resources towards investing for your future.
And there's just something incredibly powerful but delaying some of
those lifestyle upgrades intention right when you're doing it on
purpose for a missional purpose of having greater levels of
(22:06):
financial freedom earlier in your life. And speaking from the
other side of forty Bryant, like, especially if you plan
to have kids, funneling more money away now is going
to allow for those greater levels of work and life
flexibility when it has the most impact. Matt, You and
I talk about this regularly just as friends, but like
where the happiness curve, where it hits the bottom is
typically right where you and I are in life, and
(22:28):
we feel like we're living our best lives now because
we're not worried about we're not trying to build this
like nose of the grindstone career, and we're also not
worried about finances because we front loaded a lot of
that sacrifice. I think that's where a lot of people
find themselves is they're like, I guess I need to
start saving for retirement. I haven't done anything yet, and
so they just.
Speaker 1 (22:45):
Feel like they have to work all the time and
they're missing out on a lot of the relational and
familial things that really make life worth living in this
spot in life in particular.
Speaker 2 (22:54):
So yeah, yeah, there are just more responsibilities that are
thrust upon us as we're trying to achieve, oftentimes at
this age career. But then there's demands being asked of
us from as a kid or I'm sorry, like as
a son or a daughter, from our parents as they
are aging from the standpoint of what it is that
we're trying to be able to provide for our kids
for them as well. But I think keeping that lifestyle
(23:15):
creep in check is basically what you're alluding to. And
I think just like I picture the horse, you know,
like the horses pulling the carriages and the cities, and
they got the blinders on because it doesn't really matter.
All the craziness is going around them out there in
the city. All they need to be able to do
is just to walk exactly straight ahead. And I think
if you can kind of keep the blinders on from
a lifestyle standpoint, it's like, it doesn't really matter that
that guy over there or your old friends from high
(23:38):
school or college are going on this trip or they're
doing that. Man, such a great reason to get off
of social media so that you're not keeping up with
the lifestyle upgrades that lots of other folks are opting
to do, whether intentionally or not intentionally. But what we're
saying here is to continue to intentionally limit some of
your spending and it's going to make socking away more
money for future you just even more feasible. Easy.
Speaker 1 (24:01):
My buddy Jim just bought a boat. Maybe maybe that's
why I should do with my extra income.
Speaker 2 (24:04):
And it's like, oh, I guess it's time that we
all get both, right, Huh.
Speaker 1 (24:07):
It's like, no, enjoy your buddy Jim's boat, Like, don't
get one yourself and keep investing. It doesn't mean that
you can't, over time like increase your spending, right. I
think you and I have also found ways to loosen
the reins in regards to that. But yeah, you want
to do the right things first, and he's at a
particular age and place to be able to kind of
double down.
Speaker 2 (24:25):
On these efforts such yeah, I can have such a
massive impact. And for him, he's thinking about bumping it
up like five percent, right, Well, if you run the number,
is that simple increase five percent? It can cut five
years of your working timeline off. We'll link to a
classic Mister money Mustache post that really very clearly and
easily lays this out. But it might even incentivize you
(24:46):
to try to even increase your contribution amounts over time.
But the heart of your question here four one K
versus roth Ira. Yes, we are leaning the same direction
you are, and I'm going to say wroth Ira certainly
get the full match with your four one k, of course,
but then or I guess with your wife, but then
make sure that you are maxing out her wroth Ira,
(25:07):
and if you want to contribute more than that, increasing
four one K contributions after that can make sense. So
could opening a taxable brokerage account if early retirement is
a goal of years. But the taking the wroth route
is great because it's such a flexible account. It's giving
you greater levels of tax flexibility. In the future as well.
(25:28):
And actually, on the note of tax, like, you are
likely going to continue to earn more and more money,
so you are in a you're currently in a lower
tax bracket. Let's go ahead and buy the bullet, Now
pay the tax man, and never have to worry about
taxes in that account for the rest of your life.
Speaker 1 (25:41):
Well, at some point you might get to the point
where regular contributions to roth Ira aren't allowed. Yeah, And
so actually being able to fill that bucket up while
the bucket's accessible makes sense because at some point you
might lose access to that bucket. And I do too
the kind of having some pre tax some post tax
(26:02):
money it allows you that tax flexibility in the future.
I think that's underrated because later in life you can
kind of sort of it's like a choose your own
adventure when it comes to how much you pay in
tax depending on which buckets you're withdrawing from. And I
do think that's that can be a really smart way
to apportion your funds. And it just makes sense too
in regards to a four one K, get the match
(26:23):
or sticking some money in there, then go into the
roth are and then go back into the four one K,
and you know you might be kind of neck and
neck those accounts with how much money you're setting aside
in both of them over time, and then when it
comes time to tap them, you've got a lot of options, right,
And so yeah, that flexibility comes in quite handy. We've
had different guests on the show, Matt who have different
(26:44):
post tax and pre tax preferences. I think there's a
compelling case for both. But I do think that combo
of the four one K get the match the rothncks.
It's like this lethal in a good way option for people,
and I think it's the route that most people should consider.
There's certainly outliers right where if you're super low income
earner you might want to go roth Ira and Roth
(27:04):
for one K. If you are an incredibly high income
earner like you.
Speaker 2 (27:09):
Might be time to get the tax break on both. Yeah.
Speaker 1 (27:11):
Yeah, so so those are It's there is no one
size fits all, but I do think for the average
person that that's the comba that makes the most.
Speaker 2 (27:19):
Sense, and specifically for Bryant's situation, sounds it sounds like,
based on what he told us, that's what I would do.
One caveat though, like we've been I was just praising
his desire to want to increase his percentage of saving
and investing. I will say this is just assuming like
you are the one that has listened to us for
so long, and so I'm just assuming that your wife
is also on the same page. That being said, just
(27:41):
for the sake of argument here, let's say that she's
starting to kind of change your tune a little bit.
It's just like, man, we've been working so hard and
I want to be able to go with two ply
toilet paper, or like, maybe it's time for a second car.
What's something else that comes into's and comes into Joel.
I don't know, but I want twins. That'd be a
much bigger expect that would be for many.
Speaker 1 (28:02):
Years to come.
Speaker 2 (28:03):
I just want to say that it's not just about
what your goals are. Obviously, Like y'all are a team, right,
I mean, y'all are married, y'all are y'all are partners
for a life, and so don't be overly frugal, uh
And maybe what she would potentially call cheap in an
effort to sort of win this little battle, and you
end up losing the war decades down the road. Like,
(28:23):
the goal is for y'all to a mass an incredible
amount of wealth, so that decades on the road, you've
won the war. You're both living the life. You're proud,
and you can look back fondly on the sacrifices that
you've made as a couple. I just wanted to throw
that out there. Yeah, I just want to make sure
that you are reaching some of those goals that you'll
have together, that they are in fact both of Y'all's what.
Speaker 1 (28:42):
You're saying is he should be telling his wife, Matt
and Joel told me to save sixty percent of my income.
She hates us because we just ruined her life and
like that. But that's I think where some people get
sometimes when they start learning about the compounding returns and
what that can do, and they're like, I'm just gonna
like put all my a in that one basket. You've
seen the truth and you can't unsee it. And compounding
(29:03):
returns are awesome. But you know, we would also say
life has to be lived. It's you want to take
advantage of both those things, living an awesome life and
saving and investing for the future. But Bryant, best of
luck to you to your wife. You guys are doing
awesome and I'm sure you'll continue to do so. Matt,
let's get to another question. This one comes from someone
who's in the money advice space.
Speaker 4 (29:24):
Hi, Matt, angel this is Angela and Richmond Hill, Georgia.
I've been listening to your show for several years now
and want to thank you for your thoughtful content. I'm
in a credit financial counselor and I really like your
ask how to Money episodes as it makes me think
about how I would respond if they were my clients.
I did want to comment on two listener questions. The
first was from around January of this year, and I
(29:44):
just haven't gotten around to doing a voice memo. The
listener was asking about maxing out their TSP. Well, maxing
out early might seem like a good idea. Once the
TSP is max the employee can't contribute anymore, which means
they can't be matched for the rest of the year,
so they're basically essentially leaving money on the table. The
second question had to do with lowering insurance costs for
(30:06):
a vehicle the listener called a few weeks ago. One
of the things a listener mentioned was lowering his liability
to the state minimum, and I don't know that that
was clearly addressed. While lowering are even canceling property assurance
comprehensive and collision, especially on the Honda makes sense. Lowering
the liability is exposing him to much greater risk. I
(30:28):
find that most people don't understand the difference between property
and liability on their policies and was curious about your thoughts.
Thanks so much, Have a.
Speaker 2 (30:35):
Great day, all right, Joel, what do you think about
Angela's feedback? Should we start a new segment called Joel
Matt stinks?
Speaker 1 (30:44):
I don't think so, Okay, Yeah, that might be ripping
off somebody else's okay, we Joel Matt suck. I don't
know that. Yeah, that's a different or are totally awful
Joe matter totally offul Maybe that no, But if you
do have like I love stuff like this, we're like, oh, yeah,
it's a good forum, I think right now.
Speaker 2 (31:00):
And it helps me to realize too that if we
haven't parsed out, I don't know, there's nuance and a
lot of these questions, and sometimes we sometimes will gloss
over certain aspects of.
Speaker 1 (31:09):
We'll miss something in a question. Sure, and it's kind
of important, and so maybe we like answered it three
quarters of the way and we certainly left out a
quarter or some people just disagree with our advice sometimes
and they think that, maybe, yeah, we really could stand
to be informed. So we appreciate appreciate this sort of
feedback of it all.
Speaker 2 (31:26):
Yeah.
Speaker 1 (31:26):
I think we try to say regularly too that that
there's a lot of subjective nature, just like in our
answer to the last question to our advice, and even
the way we view some of these things has changed
since we started the podcast in terms of like balance
and in terms of how we think about retirement and work,
and that's informing how we answer questions do you.
Speaker 2 (31:47):
Think about life?
Speaker 1 (31:48):
Yeah?
Speaker 2 (31:48):
Yeah, it just depends on what aspect of life that
you are taken into account. Like there's you got the
financial side of things, but then you've kind of got
the life fulfillment side of things, and you've got the
work satisfaction side of things, and are a ton of
different factors for sure.
Speaker 1 (32:01):
By the way, one thing Angela mentioned she said that
she was a what she says, she was a budget
coach or a money counselor money counselor right, And I
think that's I think that's super cool. You and I.
We've had people in her position on the show in
the past for interview segments, and I think a lot
of times knee jerk people go to financial advisors. They
think that's the pro they need, and financial advisors can
(32:22):
be expensive and it might not make the most sense
for them where they're out on their wealth building journey,
but a money counselor or a budget coach can often
be a great use of your money for a specific
period of time as you're trying to learn the ropes
and you want some personal, one on one feedback. So Angela,
we're glad you're out there doing your thing, and really
do appreciate your feedback.
Speaker 2 (32:41):
That's right. Yeah, And Angela is right about maxing out
your workplace retirement accounts too early, like for instance, a
four to one K or a TSP that she mentioned.
And so again, for many folks, it sounds impossible, right,
Like we're again we're talking about over twenty three thousand
dollars over the course of a year. I think a
lot of folks are thinking, how am I supposed to
(33:02):
make that happen, let alone doing.
Speaker 1 (33:04):
It faster than over the course of a year, right,
My problem is not that I contributed too quickly. Yeah,
retirement accounts like.
Speaker 2 (33:10):
The worst tumble brag of all time. But there are
some go get our financial independence minded folks out there
who really do attempt this, and so in an effort
to just get that out of the way, they just
ratchet up their contribution amounts to the sky, getting much
smaller paychecks for a while until they hit that max
early on, which maybe emotionally feels really good. But it
(33:32):
certainly seems like you're doing the right thing here, but
you might be leaving money on the table. Like Angela mentioned,
if you max out your contributions let's say by June, well,
you run the risk of missing out on any mash
dollars that would have been yours had you taken just
the steadier taurus approach.
Speaker 1 (33:51):
Over the course of the year. And similar to an
earlier question, I mean, so much depends on your employer's
plan documents, because in some cases you won't be missing
out on the match, and others who will, right, And
so the best approach is typically to figure out what
your biweekly contribution should be in order to make twenty
six equal investments with each paycheck that leaves nothing to chance, right,
(34:11):
you are doing equal investment amounts. And yes, Matt, you
talk about funding the WROTH in full on day one
of the year, right as soon as as soon as
you possibly can, because that way, your money is invested
for a longer time. And I think like people want
to optimize all the way. That's kind of what they're
going for here, to fund their account early. But if
it means yeah, your money's invested longer, but you have
(34:33):
fewer dollars to invest because you're not getting the full match,
that's a problem and you want to avoid that. But
then some companies will have language in their play around
something known as true ups where they'll ensure that you
get the full match, even if you stuffed all that
money into your four to one K early on, and
they'll basically cut a check at the end of the
year for whatever match you might have missed out on
(34:53):
during that year. As long as you max it out,
you're going to get the full amount of the match
that the employer offers you. I know what your plan
documents say, because some are generous in that way, others
are not. And you don't want to make a mistake
and miss out on matching dollars because you funded too early.
Speaker 2 (35:08):
Exactly, And this might be something you have to dig
into a little bit because there probably aren't going to
be a ton of folks at your company who are
investing in this way.
Speaker 1 (35:16):
So the question the HR person does not often get
to see exactly.
Speaker 2 (35:19):
So you certainly reached out to them, but it might
take you doing a little command f assertion some of
these terms like true ups and having to dig in
deep to become a little to become an expert there
on your specific plan. Angel also referenced insurance, and this
is a case where you don't want to be cheap, right,
I think, especially if your vehicle is older, you might
want to eliminate comprehensive coverage in order to save on
(35:41):
insurance costs in order to keep that money there in savings.
But it's one thing to shop around and compare rates
with other insurance companies. But if you are cheap, you
might opt for inferior coverage amounts, putting you at a
significant financial risk. And we're specifically talking about liability insurance
here because as state minimums, they are not indicative of
(36:03):
what your coverage should be. There is no there's no
one size fits all answer to how much you should
be insured for, because my answer would be very different.
If I was, like a previous caller, twenty or twenty
five years old, my net worth is like zero or
even negative. Right, If I've got ten twenty thirty thousand
student loans, there's a big difference between that and where
(36:24):
I've been. After let's say, decades and decades of investing
regularly in the.
Speaker 1 (36:29):
Market, insurance becomes more important.
Speaker 2 (36:31):
Yeah, it's more. Initially it just kind of seems like
a nuisance. It's like, oh, this is thing that you
have to do. But the older you get and the
more wealthy build, it's like I see it with rosier
color glasses.
Speaker 1 (36:43):
As I get older, it's.
Speaker 2 (36:44):
Like, oh, man, what a great thing to have to
be able to make sure that I've mitigated that risk.
We won't get into specifics here, but when it comes
to the liability insurance that we have on our old
one hundred and ninety thousand mile minivan, Joel, I've got
twenty times what our state limit is. Wow, which sounds
kind of crazy, but not when you consider the fact,
I don't know, some folks are just more litigious than others. Right,
(37:06):
it doesn't really matter if you've got an old, ratty
look in minivan, they're gonna try to come after you.
But specifically, I mean, we live close to a fairly
you know, we live in a big city or near
a big city where there are like Lamborghinis driving down
the Interstate. And when I see that, when I'm sharing
a lane, yeah, sharing the Interstate highway lane with like
(37:26):
a Lambeau.
Speaker 1 (37:28):
Hey you try to raise them.
Speaker 2 (37:30):
Hey, I'm getting into a different lane because I don't
want to be behind them. But be like, that's a
really expensive vehicle, and you could easily blow through not
just your statement of THEMS, but like I mean, like
something that's even substantially, even something that's ten or twenty x,
it would not be difficult to blow through some of
those liability minimums. And so you need to keep all
this into account. Where you live that matters, right, And
(37:53):
so I guess that's what I'm getting here. Like, for instance,
if you lived in a small little town where you
know everybody and nobody's really soon ay each other, and
everyone drives ten year old tell you how to pickup trucks, Okay,
you probably don't need to go with like some super
off the charts coverage amount. Yeah, but it's just another
instance where your context and specifically where you live and
where you're driving it matters.
Speaker 1 (38:13):
I think a lot of times frugal people are they're
getting the quotes, and they aren't getting quotes for state
minimum coverage, and they're not thinking about, well, how much
do what are my insurance needs? And so it's they're
just comparing prices between the lowest common denominator insurance policy
and they probably need to get quotes for insurance that's
going to cover them in case of a more substantial
(38:34):
claim or encounter with a Lamborghini or something like that. Right, So, yeah,
you do need to be careful. And it's kind of
like you must be over forty eight inches to ride
this ride or something like that. They still let people
as tall as me ride those rides, right, And so
I think you don't want the bare minimum. That's not
going to be enough for a whole lot of people.
So I do appreciate Angela mentioning that I'm not sure
(38:57):
why we didn't address and answer that question. I don't
even remember that question right now on that, but I
think it also it might make sense if you're kind
of confused, you're not sure how do I decide what
sort of coverage I need? This is going to very
person a person kind of like you're you're mentioning you
might want to hire an independent insurance agent, not just
to help you shop rates with a bunch of companies,
but to offer some advice right about what kind of
(39:17):
coverage limits you might need given your financial situation. And
my guess is an independent insurance agent should be able
to help you on that front.
Speaker 2 (39:24):
Yep, independent broker. Yeah, like even with like homeowners, the
ability to talk through replacement costs, right price per square foot,
what just kind of what the trends are. I think
that can be really helpful.
Speaker 1 (39:32):
For what are the trade offs between me going with
a two thousand dollars deductible versus a five thousand dollars deductible?
What are the premium changes can I self ensure for that?
Those are good questions to ask. And then there's Yeah,
there's a site called Trusted choice dot com where you
can find an independent insurance agent near you, So be
sure to check that out. That that could be an
important task for you to look into this week or
(39:54):
in the coming weeks.
Speaker 2 (39:55):
Absolutely, Joe, we got more to get. See, we're going
to hear from a listener who's interested in cutting back
on their grocery spending as well as how much they're
spending going out to eat. We'll get to that and
more right after this Harbor.
Speaker 1 (40:14):
Back from the break, Matt, it's time for the Facebook
question of the week. This one comes from Stephen. He says,
homeowner's insurance question. Do premiums go up on homeowner's insurance
for using it the same way they do on car insurance?
Our house was struck by lightning. Oh, some appliances are fried.
That sounds terrible. It's one of those active god things
you can't do much about, right, Yeah, he says, in
(40:34):
the siding where it got hit is going to need
to be repaired to our deductible as five thousand dollars.
Any guidance or advice is appreciated.
Speaker 2 (40:42):
Five thousand bucks. All right. That's does is bring back
are you having PTSD? Does is bringing back bad memories? Jo? Now,
as so, your house didn't get struck by lightning, but
the tree.
Speaker 1 (40:52):
Got struck by lightning, got struck.
Speaker 2 (40:53):
Which is why came through the roof.
Speaker 1 (40:55):
That's right, no awful, honestly, Like, it was not a
fun experience, but it it could have been a lot worse.
Speaker 2 (41:01):
I did not.
Speaker 1 (41:03):
I don't have terrible memories about it that situation.
Speaker 2 (41:05):
Yeah.
Speaker 1 (41:06):
Fortunately unfortunately weren't in the house when it happened, or
else I probably would have worse memories.
Speaker 2 (41:09):
Sure, yeah, so, But to answer Stephen, I mean, it
varies from state to state because every state is going
to have an insurance commissioner and it's their job to
regulate the insurance companies and enforce the rules. In most states. Finally,
a claim will cause your insurance premiums to increase, but
how much it partly depends on the insurance companies. Some
may not bump up the rates all that much, while
(41:30):
others might consider dropping you all together. Like you use it,
and you use it, you lose it, right Like, That's
one of the one of the refrains that you sometimes hear.
It's not common after a single claim, but it can happen,
which means that in your case, you do need to
be careful before you file a claim. I would be
considering the long term consequences. And in your case, j
(41:51):
it wasn't just like a couple of appliances that got fried, right,
having to repaint the siding where it got charred. It
was much more substantial than.
Speaker 1 (41:59):
That flooring framing.
Speaker 2 (42:02):
Yeah, it was water damage touched a.
Speaker 1 (42:04):
Whole lot of areas, which made meant the price tag
went up, which meant the reality of claiming and filing
claim made a whole lot more sense. And so yeah,
how much your premiums can increase depends on a lot
of factors, right, including the ad fault nature, which this
is not the case. Even this wasn't so in your fault, right,
this was, like I said, an act of God. The
overall claim amount that can impact to the how much
(42:27):
premiums go up for you. And rates have already been
subject to higher increases over the past couple of years.
Insurance companies are feeling the pain of higher payouts. You
we read about the wildfires in Los Angeles, read about
the hurricane damage right in the Southeast. I mean, it
just feels like we're experiencing greater levels of more natural
(42:47):
disasters and then so which means higher claim amounts. And
we're also talking about just everything costing more right after
a significant bout of inflation, So a premium increase of
twenty to forty percent. I don't think that would be
out of the question. And if you're paying let's take
let's say three thousand dollars a year for your homemotos
insurance right now, well they might say, hey, you actually
(43:08):
need to pay four grand or forty two hundred forty
five hundred starting next year. I don't like it, and
it's important to mention that this claim is going to
stick on your clue report, which would likely up your
rates when getting quotes from other insurance companies in the future.
SEA might say, Hey, definitely don't like that. I'm going
to file a claim. I'm going to get paid out,
and then at some point, maybe six months down the road,
after I've like gotten far enough away from this incident
(43:31):
and fixing everything back up, I'm going to go to
another insurance company. And that's how I'm gonna be able
to lower my rates. Maybe maybe, but maybe not, because
they're all going to know about the claim you filed
and that's going to impact the quotes they give you too.
Speaker 2 (43:42):
That's right. Yeah, so let's go back to the deductible
five thousand dollars. This is a good thing because it's
actually helping to keep your premiums lower. And on top
of that, it makes it less likely that you are
going to file the claim steven which keeps your premiums reasonable.
Like we just discussed, and so I would run some numbers.
How much is it going to cost for you to
get these repairs done? Because if we're talking let's say
(44:05):
seven thousand dollars in total or six certainly five? Right, like,
you don't file a claim that would not make much
financial sense in this case. Self insurance would be the
right call. But let's say if oh, actually it's not
just the sighting, some of the framing got charred or something. Oh,
it's all the appliances, they're all on the fritz. Oh
(44:25):
the electricals damage now too, Oh my gosh. Yeah, now
we got to upgrade all We got upgrade our panel.
And the service is actually I don't know, I'm just
making these are terms i've heard as I've renovated at homes.
The service coming from the street, there's something wrong with that. Well,
if that were to be the case, and the replacement
expenses and cost is coming in a good bit higher,
then I think filing a claim could be this minus move.
Speaker 1 (44:47):
And there's always a great area here, Like it's never
like the exact formula, I don't think, but I do think.
I think of insurance homeowners insurance as mostly there for
catastrophic reasons. If something significant happens that's incredibly beyond your
ability to pay for or doesn't make any financial sense
(45:07):
to file acclaim. So I think you're right, mat If
it's like kind of close to that deductible amount, yeah,
that's something you cover. You don't involve insurance at all
because you don't want it on your clue report and
you don't want to raise your premiums. And then but
if that's not the case, and you've got a good
bit of cash sitting on which hopefully you do have
a good bit of cash, having a deductible that high,
that means you're willing to take on the responsibility of
self insurance. I think hopefully you can handle this on
(45:30):
your own. But again, there's always a gray area, and
there a sliding scale. It can be difficult to know
the exact way to proceed.
Speaker 2 (45:36):
All right, Let's get to one more quick one. This
is from Grace, and she writes, we are trying to
find a way to limit our grocery and restaurant spending.
And we thought we had a winning idea of getting
Visa gift cards. Because the card won't let you pay
when you run out of money, we could get one
for each family member and not important but a bonus.
Then in our real budget there is just the buying
(45:56):
of the gift card for this purpose instead of a
million little transactions. Grace, I hear you as the one
who keeps up with the budget. All those small expenses
get on my nerves, but she writes, then it turned
out that there are fees to get the cards. They
were quite prohibitive. Any other ideas, Cash isn't great because
you can't use it to order door dash or anything
like that, but maybe we will have to try it
(46:18):
any other ideas well. I see the benefit of not
being able to I see not being able to get
door dash as a positive. Yes of going with cash.
Let's go ahead and address that one right out of
the gate. Don't do door dash.
Speaker 1 (46:30):
Yeah, if you're really trying to limit your hate door dash, man,
how much you spend eating out or just on food in.
Speaker 2 (46:36):
General, don't make it so easy.
Speaker 1 (46:38):
This is the number one thing you want to eliminate.
And there are other other things you can do, of course,
which we'll talk about to reduce your grocery spend, but
you know, doing the app based takeout orders is one
of the worst things you do. So I do think
actually moving the cash is a reasonable choice here, dude,
because it's going to to prevent the worst thing in
the world that you can do, and it's also going
to put those limits on you. Yeah, that don't come
(46:59):
with fees.
Speaker 2 (47:00):
I will say, if you're looking for more convenience, because
folks are thinking, well, I don't want to like roll
with hundreds of dollars in my wallet or in my
purse kick at old school, and only put the amount
of money that you want to spend on discretionary spending
in your checking and or whatever, like spending account. Like
sometimes newer banks these days are calling them spending accounts,
(47:20):
but like that's that's kind of how these accounts were
created back in the day, and I think most people,
including myself, I only kind of it's random the amounts
of money I have in my checking account and my
spending account versus my savings. Like basically I try to
keep as little in my checking account as possible so
I can earn the interest in the savings account, right Like,
that's what us optimizers are out here doing. But I
(47:41):
think you can take a more methodical approach. And if
you so, it sounds like she is tracking her spending anyway,
because she's talking about all the purchases that she's inundated
with at the end of the month, and maybe she
hates them just as much as I do. But that
being said, you probably know how much you're spending every
single month on eating out and groceries and things like that,
and so simply just move that amount of money to
your checking account and then you are going to roll
(48:03):
with your debit card. And I think that can be
a nice Granted, there are always going to be workarounds,
right Like you could just say, oh, well, then I
could just go in there and transfer that money over. Well,
in a similar way, you could also go to the ATM,
that's right and pull more cash.
Speaker 1 (48:16):
There's always a way to circumvent your desire to save money.
Speaker 2 (48:18):
You are still potentially your own worst enemy here. Nothing
is you proof.
Speaker 1 (48:23):
There's no complete cure for humanity that Matt has found
yet or that I found it. But I think making
it harder on yourself to do the things that are
in your worst interest in terms of saving on your
grocery bill makes a lot of sense. And then where
you shot matters to talk about that all the time.
No cost grocery stores Aldy in Legal in particular Trader
Joe's solid for savings. Just find a grocery store where
(48:45):
you can buy stuff for less and buy the off
brand stuff the store brand stuff, I guess you might say,
and I think also, Matt, at least what we've found
is planning ahead just saves our butts. Like the more
we're flying by the seat of ours, the more likely
we are to make a bad decision on a whim.
And so we've been taken to like on the smoker
(49:06):
smoking like two chickens or something like that on the weekend.
It's like ten dollars for two chickens right at Costco,
and then I smoke both of them, and we have
like three or four meals we plan to make out
of those chickens throughout the week, and so it's not
very expensive, but it does take a little bit of foresight.
And so yeah, I did, I think just the more
you can plan and figure out multiple meals with the
(49:28):
limited range of ingredients the weekend ahead of time, that
that'll save your bacon too, And because eating out really,
when it comes down to it, I think for most
it is the worst man the grocery store savings. You
can save money there, but the biggest savings is just
eating out less and eating at home more.
Speaker 2 (49:43):
At the end of the day. I will also say
that I am not totally completely against these prepay cards
if it allows you to save even more money by
the fact that you're not eating out as much, or
maybe splurge purchases like buying stuff like on a whim
in the grocery store. I think that, hey, you got
to spend three bucks. Oh, you got to spend five
(50:03):
bucks a month in order to have this card. Okay, Well,
if it allows you to save fifty dollars two hundred
bucks by not eating out, then I think that might
just for you be the price of admission here in
order to kind of implement some behavior change.
Speaker 1 (50:17):
And some of those grocery stores will. If you buy
the groceries online and you opt to go pick them up,
someone else actually does the shopping for you. It's much
easier to stick to your list if you're not going
into the grocery store itself, you're much less likely to succumb.
You're actually it's pretty impossible to come to like the
shelf on the side.
Speaker 2 (50:35):
Right, we're buying on a whim.
Speaker 1 (50:36):
Well, hey, the chips are two for five dollars to
this week, I should stock up. You're gonna do that
if you go in the store. But if you just
buy online the stuff that's on your list, and then
you opt to go pick up at some grocery stores,
you're not paying a dollar more, you're not paying anything.
They'll just add that on as a service for you
bring the groceries out to your car. That can be
the best of both worlds for a lot of folks,
I think, when it comes to to making it easier
(50:58):
to eat at home and to save me money the
same time.
Speaker 2 (51:00):
Yeah, that's right, so Grace, we hope that helps let
us know what you end up doing toocause I'm kind
of curious to see if like go going with the
old school cash envelopes, if that, if that's the what's
required in order for you to just stick to the budget. Joel,
let's get back to the beer that you and I enjoyed,
which was a mar bits By Southern Grist, which I'll say,
this isn't the first Southern. We've had a lot of
Southern Grists.
Speaker 3 (51:20):
Are you.
Speaker 2 (51:20):
I think you're drawn to the Southern Grist brewery labels.
Is that is that at the labels?
Speaker 1 (51:26):
That must be the name of the But I also
saw I'm also we've had so many beers. I want
to try something that's unique, something I've never had before,
and so this was a marshmallow infused IPA.
Speaker 2 (51:36):
Indeed, it was.
Speaker 1 (51:36):
I think this is takeoff on Lucky Charms. It looks
like it with the rainbow on the front and stuff.
Speaker 2 (51:43):
It's literally, yeah, it's got like a little four leaf
clover all over the place. It's got like the little
like graveyard headstone looking at marshmallow, you know, the kind
of fake marshmallow that we're talking about, the crunchy kind
of marshmallows.
Speaker 1 (51:54):
So, what are your thoughts?
Speaker 2 (51:55):
One of my favorite?
Speaker 1 (51:56):
Yeah, I mean neither. I was gonna say one of
my least favorit it's actually it's got I think I
just don't like marshmallows either.
Speaker 2 (52:03):
I think that's it. Like, it's very It's not often
that I'm like, oh, yeah, what's the marshmallows, like even
when you kind of toast it just right when you're
doing uh smores or whatever, that's not really that's not
my jam. But I will say the creaminess lends itself
to to the ipa as far as the because sometimes
you will have IPAs that have lactos in there. But
there's something about this one with a bitterness from the
(52:24):
hops that seemed to kind of kind of ruffle. Yeah,
that kind of clashed with the marshmallow the sweetness that
they're trying to pull out there. So it's you know,
there's like almost two competing flavor profiles that we're going
head to head. Yeah, a little bit, but yeah, it's
still fun to fun to enjoy and drink.
Speaker 1 (52:39):
It's good to experiment. This experiment felt flat on its face.
Speaker 2 (52:42):
We shared it. So it's the sixteen ounce? Can I
drink my eight ounces? Looks like you left one ounce?
Speaker 1 (52:47):
Might not finish? Yeah, all right, that's going to do it, Matt.
For this episode, we'll put links to the show notes,
some of the some of the stuff we mentioned up
on our website at howtmoney dot com.
Speaker 2 (52:56):
That's right, buddy, that's it. So until next time, Best
Friends Out best friends out
Welcome to How the Money.
Speaker 2 (00:01):
I'm Joel, I am Matt.
Speaker 1 (00:03):
And today we're answering your listener questions.
Speaker 2 (00:24):
All right, buddy, let's get to it. Your is your
throat all warmed up?
Speaker 1 (00:28):
I was born ready, Matt.
Speaker 2 (00:29):
We did just chat for about fifteen minutes about local
politics before before we actually I had already hit record
and then we got off topic, so went back over there, stopped, deleted,
started fresh from the beginning.
Speaker 1 (00:40):
Sometimes that happens, like we're friends who we just like
to catch up about random other stuff. Were yeah, that
that's happening in our lives or around town, and then
we're like, oh, wait, we're supposed to be recording a
podcast now, aren't we.
Speaker 2 (00:50):
Got to talk about a personal finance not local politic?
Yard signs is that we're.
Speaker 1 (00:55):
Just deliberating right now. Who's running for local school board?
Is the thing?
Speaker 2 (01:00):
Just stop? Stop?
Speaker 3 (01:02):
All right?
Speaker 1 (01:02):
We are endorse candidate right now. Hey, if you.
Speaker 2 (01:04):
Want to, you to go out on a limb and
no thanks, go for it. We're gonna talk about investing
when you are younger, when you're twenty five. We're gonna
specifically talk about some different accounts that this listener is
asking about we're going to discuss insurance coverage limits. Specifically,
we got some feedback from a listener. We will address
that and plus another point that she raised. Another listener
(01:25):
is asking what he should do about a four oh
one k loan that he has. We've got all of
that to get to plus more today. But buddy, I
want to share something really quick. Folks might remember. I
guess it was maybe two years ago that there is
a small part of me that was thinking we might
get a second vehicle, and I was considering a Tesla,
and I was just like, I want to I want
(01:46):
to drive it. I want to get to get to
see what it feels like and what's great.
Speaker 1 (01:50):
About if you're going to do it, do it quick
or that well?
Speaker 2 (01:52):
I know tax well that that time is it's no
longer something I want to do. Okay, But one of
the I don't know if you recall, but one of
the things I shared was that it was a ton
of fun to drive a Tesla, so much fun. I
really enjoyed it, but it was a pain in the butt.
So this was during a trip when we rented it,
which is all, isn't that a great way to try
out a car? By the way, while you are traveling
(02:12):
somewhere to try to get that particular vehicle before you
purchase the dang thing.
Speaker 1 (02:16):
Because like a twelve minute test drive, he giesn't tell
you nothing.
Speaker 2 (02:19):
Second multi day extended test drive, which is so much fun,
especially when it's a Tesla and you're not used to
an evy. It was a ton of fun, but it
was a pain in the butt to find the Tesla superchargers,
the charge points or whatever O.
Speaker 1 (02:31):
My friends in California say the opposite that were crazy.
Where I was, we had to go out of our
way to get to a charger.
Speaker 2 (02:37):
That was the downside as opposed to a gas station
on every single corner right, and not to mention because
you're tapping into the supercharger as opposed to trickle you know,
slow charging at home. If you weren't traveling, it ended
up being just as expensive as having filled up traditional
gas power vehicle right going to the gas station.
Speaker 1 (02:56):
Yeah, loading up on that battery at home.
Speaker 2 (02:59):
That's the way to do it. An of money.
Speaker 1 (03:00):
Yeah, if you're yeah, if you're filling up on the road, yeah,
you're gonna pay a lot.
Speaker 2 (03:04):
So basically, what I learned was that Okay, I don't
want a Tesla, and also I'm not gonna rent another
Tesla again because it just didn't really work out for
the type of trip that we were taking. Uh So
you might be surprised to hear that I just rented
another Tesla for a trip that Kate and I were taking.
Speaker 1 (03:20):
How you changed your tune?
Speaker 2 (03:21):
Here's the thing.
Speaker 1 (03:21):
In the span of three seconds.
Speaker 2 (03:23):
Would you rent a Tesla if it was substantially cheaper
than even the most affordable economy traditionally gas powered vehicle, Yes,
it would.
Speaker 1 (03:31):
And that's why I've been running evs lately. Rent a car,
it's so great, dude.
Speaker 2 (03:35):
So the I went to one of the site aggregators,
you know where it's got all the different different places
that you can rent from. And then I hopped to
one that I had rented from quite somewhat recently, just
to see directly on the site, and they had they
were running specials on electric vehicles specifically. It wasn't just Tesla,
it was also like the the Ford mack e.
Speaker 1 (03:57):
I rented a subru electric car recently.
Speaker 2 (04:00):
Money it was great, enjoyed it.
Speaker 1 (04:01):
Yeah, yeah, So here's the deal.
Speaker 2 (04:05):
It was ninety six dollars total for this rental, as
opposed to a little over three hundred oh my god,
for even the most economy whatever, gas powered vehicle.
Speaker 1 (04:16):
That's where it's a hassle man.
Speaker 2 (04:18):
Yes, well here, and here's the other thing. I of
course looked to where we were traveling, and there were
superchargers very close by to where we're planning to travel.
But I specifically paid like ten bucks more and got
the long range because I think there's a chance we
may not even need to charge at all, uh during
that trip, because because you know, they charge you if
you bring it back without over ninety percent battery life.
(04:39):
But it's only thirty five bucks, and so like I
might be able to save ten bucks or something. I
don't know, maybe it's only fifteen or twenty five bucks
to charge it myself. But the worst case scenario is
let's say we're tight on time, we gotta make it
back to the airport. What do you do? You just
take it back and they just charge you thirty five
bucks yah, which is still there is a still a
massive savings to be had there. Going with the EV
(05:00):
as opposed to a more traditional traditional vehicle. Last wanted
to share that I like that because I think there's
a there's good savings opportunity out there.
Speaker 1 (05:07):
I like that. I've been shocked at the discounts on
EV's too when you're running a car. And last I
was stayed at an Airbnb last time, and so I
just messaged with the folks ahead of time, and I said, Hey,
do you have a place I can plug in over there?
Just trickle chargings fine? And they were like, yeah, we'll
leave an extension cord out through the garage there you go.
So I was like fueling up for free, yes, and
so yeah, just ask the question of your host, if
(05:28):
for a hotel or wherever you're staying, just just check
and see. Maybe you don't even have to pay for
a supercharger. Maybe there's some place close by you can
charge up for free.
Speaker 2 (05:36):
In our case, we don't have it. It's not an Airbnb,
so there's not going to be the ability to run
that extension cord out otherwise.
Speaker 1 (05:43):
I don't know. Man, Did I tell you that go
to Low's get a tow hundred foot extension cord just
like tapp into this house near behind?
Speaker 2 (05:48):
Did I tell you that I literally threw an extension
cord in the minivan because we rented a plug in
hybrid for the road trip. Oh okay, and because I
wanted to have the option wherever we stayed, because we
stayed at Airbnb's the entire time to be able to
use the extension. Dude, we absolutely use that extension cord.
It was a smart thing that Chrysler Pacific, but yeah,
(06:08):
it was. This is just a piece of advice out
there for folks to make sure to shop around instead
of going with the default, even when the default tends
to be a money saver, like Kayak or Priceline or
skyscanner one of those sites that I did check. Sometimes
it pays to go directly to the business's website itself
and to find the best deal.
Speaker 1 (06:26):
Don't forget Costco's auto rental program as well. It's a
good place to look. All right, Let's mention the beer
we're having on this episode, Matt. This is called Marbits
by Southern Grist. It's a marshmallow IPA. We'll give our
thoughts later. Should be interesting, Yes we will, all right.
If you have a money question, we'd love to hear
from you, just go to how to money dot com
slash ask read the instructions or record your question on
the voicemail app of your phone. Email it over to
(06:47):
us at how to Moneypod at gmail dot com. We
want to hear from you. Hopefully we can take your
question next week on the show. Matt, let's get to
a question specifically about a four oh one K loan
UH and a nervousness about not being able to pay
it back in time.
Speaker 3 (07:03):
Hello, Matt and Joel. My name is Nathan Parkinson from Pocatello, Idaho.
I have a four to oh one k through my
work right now that I have a four to oh
one K loan through, and I was thinking about moving
jobs and one of the places I was planning on
(07:25):
going to doesn't have a four to oh one K.
The difference in pay might be at least thirty thousand dollars,
so I wasn't sure if I can't pay off that loan.
I've read that sixty to ninety days that you have
to pay it off or you might get charged on
(07:48):
your tax taxes. I just wanted to be able to
find out if I should be looking for a different
job that actually offers a four o one K loan
and how I might be able to find something that
can either get a match or if it doesn't have
a four to one k loan, how I go about
(08:11):
getting more into my IRA four oh one k.
Speaker 2 (08:17):
Thanks Matt and Joel. Oh, Nathan's in a tight spot here, Joel,
I certainly hate to see him not take this job
that pays a whole lot more because of this decision
that he's made here in the pasture. Honestly, these are
the sorts of situations. These are the things we want
folks to avoid completely, and it's why we tend to
be against four one k loans because the common refrain
(08:38):
that you hear when you talk about a four one
k loan is like, hey, you're just gonna pay yourself back,
no harm, no foul.
Speaker 1 (08:44):
Even that interest to your paying. Yeah, it's going back
to you.
Speaker 2 (08:47):
But the assumption is that because of that, I guess
it's just not that bad. But when you take the
money out, it's also not in the market, it's not
growing on your behalf, and then you might end up
in a situation like Nathan, where you are looking for
a new job, or maybe even worse, maybe you are
in a situation where you get laid off and oh
you know what, that four one k loan, it can
(09:09):
present a real issue. Yes, you don't have the ability
to pay it back pretty quickly.
Speaker 1 (09:13):
That's right. Yeah, So the four on k loan, it
sounds like the easiest way to get money. Hey, it's
better than a lot of other options. And it might
be depending on your you know, ability to pay back
how long it's going to take. But there are a
lot of potential downsides too. And think about the run
up we've seen in the market, Matt, what Nathan took
out not to you know, point into this source spot Nathan, Sorry,
(09:33):
but like it. The ruin is the market's been up
like what thirty five percent essentially over the past five
or six months. So Nathan's right, if he doesn't pay
this loan back in a timely fashion, he's gonna owe money,
right because it's going to be treated as a disbursement.
So I think he said in his email he owes
about fifty three hundred dollars toward this four O one
(09:55):
k loan. And so what does that look like, Well,
it means he's going to pay ordinary income tax on
that money, as well as a ten percent early would
draw penalty on top. So I don't think Nathan's fifty
nine and a half. Because of that, he is gonna
owe that extra ten percent. And that's I don't know.
To somebody like me, that feels like Harry Houdini got
(10:16):
punch Matt. You remember, That's that's how we ended up dying, right,
was like somebody punched him when he wasn't ready, and
was it.
Speaker 2 (10:21):
I thought it was like a canniball.
Speaker 1 (10:22):
I thought it was somebody. I think I think it
was like some young fella, because he would let people
come punch him as hard as as hard as he
could during his acts, and they were like, oh, I'm
going to punch her, and he wasn't. He wasn't ready,
he wasn't doing his act. It was like the kind
of sucker punched him exactly exactly.
Speaker 2 (10:35):
I don't like that.
Speaker 1 (10:35):
Of course, he wasn't ready, internal bleeding, all that kind
of stuff. That's what this feels like to me.
Speaker 2 (10:40):
You probably gotta feel pretty bad about yourself if you're
the guy that like Initially you're like, yeah, I gotcha,
but then you're like, oh, I'm.
Speaker 1 (10:46):
Sorry, dude, I killed the greatest musician magician of all time,
you know, killed the guy. Yeah, Well, in this specifics
matter here, by the way, because the IRS says that
you need to pay back this four one K loan
before you file taxes, and you could even wait until
October with an extension next year. That'd be fine with
the IRS. They're okay with that. But your employer likely
has more stringent requirements in their play in documents, and
(11:09):
that's what you're really going to want to pay attention to.
Most plans that you pay back that loan in full
right when you leave your job with no grace period
your employer, I don't know, Nathan mentioned like sixty or
ninety days. Yeah, there's a chance that your employer has
has that written into those planned documents. But don't count
your chickens before they hatch. Don't assume this. Make sure
(11:30):
that that's the case, that that's exactly how your employer
treats this dispartment disbursement. You want to just make sure
you're following the letter of the law here, because, like
we just said, the adverse consequences could be significant, and.
Speaker 2 (11:43):
This is one of those really important things where man
I would be willing to make a lot of sacrifices
in order to pay this four K loan back in
the required time period, Like, for instance, I might even
be willing to delay taking that new job, if that's
something you have any control over, in order to pay
this the sucker off, maybe even take out like I would.
I think I would certainly be willing to drain my
(12:04):
emergency fund, maybe even borrow from a helock in order
to avoid that negative outcome, and then of course make
a plan to replenish that e fund, make a plan
to pay back that he loock eight like as soon
as possible. I certain I don't think I would go
as far as like taking on a payday loan. Joel.
Speaker 1 (12:20):
Yeah, that feels a little a little too far, But like,
the only way I'm doing that, Matt, is if there's
some mob boss who's starting to break my knee caps
And in that case, I'd probably take out a payday loan,
But that's it.
Speaker 2 (12:29):
You might want to consider it, and.
Speaker 1 (12:30):
I'm not in that kind of trouble right now.
Speaker 2 (12:32):
I don't think I would do this, But depending on
your situation, you might even want to, like maybe borrow
from a relative with the assurances. And this is obviously
assuming that you are taking this very seriously and you
plan to not borrow from yourself like this every again,
but just make assurances to them that they that you
will be paying them back regularly over the coming year
or so. But man, just that the difference in your
(12:55):
salary right there, that thirty thousand dollars is significant, and
I wouldn't let the four o one k loan keep
you tethered to that significantly lower paying job.
Speaker 4 (13:06):
You know.
Speaker 2 (13:06):
I think where there's a will, there's a way. But
certainly make it a high priority to completely eliminate this.
Speaker 1 (13:12):
Yeah, I mean, it'd be it'd be kind of like
a self inflicted wound to say, I'm gonna stay at
this job if I really want to move on, and
I'm going to get paid a lot more just because
of this four one k loan. There's there's got to
be a way. And you mentioned some good methods, Matt,
of finding the money to get rid of this four
one k loan so that you're not, you know, taking
keeping that money out of your four one k forever. Yeah,
(13:34):
and that you're also not paying the tax and penalty,
which is a big deal. You also mentioned, Nathan, that
you're holding out for another job or for an employer
that offers a four to one K, and.
Speaker 2 (13:45):
Which I will say, by the way, to reiterate, we're
talking about a four one K loan, not because at
one point he said, what if the new one doesn't
have a four one K loan? I think maybe he misspoke,
and I think he's specifically talking about a four one
K plan. Yeah, specifically, especially one with a match.
Speaker 1 (13:59):
And you do have to consider that, you know, you
and I talked regularly, Matt about the secondary benefits that
employers offer, and those benefits had up incredibly some you know,
some employers offering health insurance with a significant discount where
they'll pay like eighty or ninety percent of the premiums
for you and straight up free. Yeah.
Speaker 2 (14:18):
I got friends that are having babies and everything is
just like completely covered at super fancy employers. Has me
just weeping those Catillac health care plans. Knowing how much
money IVE spent on labor and delivery over my lifetime.
Speaker 1 (14:28):
I know, as self employed individuals the healthcare stuff.
Speaker 2 (14:32):
Had the privilege of being able to do that.
Speaker 1 (14:33):
Yes, yes, so those things really matter and a four
one K plan is incredibly helpful. I think not having
access to a workplace retirement account would be a bummer,
no match, no ability to shovel chunks of money into
a tax advantaged account. That's that's a downer. It's a
downer for anyone who wants to be smart with their money,
Like you're looking for that in an employer and you're
hoping that they're competitive in the right.
Speaker 2 (14:54):
But it's not a deal breaker though, No, especially especially
given the difference in income. So and here's the other
thing too that I want to address, Like, you can
still get really wealthy, Nathan with just an IRA. Yeah, yeah, so.
Speaker 1 (15:05):
I could be a roth Ira millionaire in what thirty
six years? Thirty five?
Speaker 2 (15:09):
Well, at seven and a half percent, it's thirty five years.
I was way off. It's a here right there. That's
pretty incredible in my opinion. And that's just the I mean,
I know for a lot of folks it might be
it it's difficult for them to max out an IRA
every single year as opposed to a four to one K.
You can become a four to one K millionaire in
(15:29):
as little as twenty years. But at the same time,
who's maxing out there four one k? I know some
folks are, but there's a lot of folks for saying
twenty three thousand, five hundred dollars. Dudes, I'm sorry, but
I ain't got that kind of money setting around, right.
Speaker 1 (15:43):
That'd be a third of my income, or that'd be
half of my income, and that seems impossible.
Speaker 2 (15:47):
But it's still possible, even just with the boring old
IRA at your disposal.
Speaker 1 (15:53):
And well, there's that, but let's just say this. Let's
say Nathan plans to invest at least half of just
the raise that he's getting, a thirty thousand dollars raise.
That's hey maxing out right there, a roth IRA every
year just became super easy. If he's got a high
deductible health care plan through the employer and HSA, he
can max that out too, And then he's got more
money left over toss into a taxable brokerage account as well.
(16:16):
So he's just got a whole bunch of accounts at
his disposal. It does not have to be the workplace
retirement account, the four to one K, or the TSP
at other employers, or a four to fifty seven B
like it can be some of these other accounts that
are widely accessible to almost everyone. It doesn't have to
be a tax advantage account through your employer. I think
(16:36):
that makes it easy because it's deducted from your paycheck.
It's automatic, right, and you don't really have to think
about it. That's one of the perks.
Speaker 2 (16:44):
You don't really feel it.
Speaker 1 (16:45):
That's right. So you're going to have to make a
proactive plan to save for yourself in some of these accounts,
including probably in all likelihood, automatic contributions monthly from your
bank account towards some of these accounts. I think you
can just you can still do an incredible job saving
for your future without an employer plan. It just takes
more intentionality and it falls more directly on your shoulders.
(17:06):
But I wouldn't let that, especially especially with a massive
pay increase like this. I would not let that be
a deal breaker by any stretch of the imagination.
Speaker 2 (17:15):
Sure, and again we're talking about investing in your ability
to grow wealth here, but let's make sure that that, Nathan,
that your first order of business is one hundred percent
to be able to pay off that for win k
loan and honestly just to be able to man, let's
just stay away from that altogether in the future as well.
Speaker 1 (17:30):
We've got more money questions to get to, Matt, including
a listener who wants to limit their grocery and restaurants spending.
We'll get to that and more. We'll get to that
in a whole lot more right after this. All right,
we are back from the break. We've got more listener
questions to get to Joel. This doesn't happen very often,
(17:53):
but we're going to hear from a listener who has
been listening to the podcast for quite a while, longer
than my mom's been listening to the podcast.
Speaker 2 (18:00):
Let's hear from Bryant.
Speaker 5 (18:01):
What's up, fellas. Briant here from Montana. Longtime listening to
the show about six years, and I really appreciate what
you guys do. I've just got another boring investment question
that nobody probably wants to hear about, but I've been
pretty curious and I'm going to shoot anyway. A little context.
My wife and I are both twenty five years old,
and we've been together since we were sophomores in high school,
and she actually just finished up her doctoral degree and
(18:22):
started her career. We are very fortunate and we were
able to get through school debt free, so we currently
do not have any debt as far as investing goes.
I currently max out my roth IRA and my HSA.
On top of that, I have a pretty solid pension
and I've been investing for about five years. My wife
is kind of in the opposite boat. She hasn't been
(18:44):
able to invest at all while she was in school,
but is looking to start now. Her employer offers her
a four oh one K with up to a five
percent match in an HSA. Of course, we plan to
put enough money into her traditional four oh one K
to get the mast and max out her HSA. That
would put us at about twenty percent of our income.
(19:05):
We're looking to up that to about twenty four percent,
and we were just curious whether we should put that
extra money into her four oh one K or whether
we should open a roth IRA for her. I'd really
appreciate some feedback, Pretty curious on what I should do.
I'm currently leaning towards the IRA, but would love to
get your guys' thoughts. Thanks.
Speaker 2 (19:26):
All right, Joel, is this just a yes or no
answer to to Bryant as to whether or not you
should go ahead with the IRA. Let's have some color?
Speaker 4 (19:34):
Yeah?
Speaker 1 (19:34):
Okay? Well, first off, high school sweethearts. I love I
love that. That's awesome. You guys been together for a
long time and their sophomores. Yes, and he's been listening
for a while too, Yes, sincebody's been listening since he
was a teenager.
Speaker 2 (19:46):
Yes, that's crazy. Yeah, he's like, finally I can enjoy
a craft beer, just.
Speaker 1 (19:49):
Like just like the buddy, the boys came right exactly,
And I mean it's no wonder that he's crushing it already, right,
and his wife has her doctorate at this young age
as well, graduating debt free. That's just an incredible way
to get started, like Tyra getting off on the right foot.
I mean, that's an understatement for where Brian and his
wifer are you going in life. I mean they're just
(20:11):
starting off with everything kind of going in their direction
to win at their backs.
Speaker 2 (20:15):
Yeah, they are doing all the right stuff already. The
guy the roth Ira, the HSA A pension as well,
So I guess he's got some sort of old school
government job perhaps I don't know, but he's doing basically
d all of the above, and it's helping him to
sock away quite a bit of money and in let's say,
very tax friendly vehicles as well. I'll say, Brian, a
guy wasn't necessarily picking up any of this in your voice.
(20:37):
But the fact that your wife hasn't started investing yet
is nothing to be too worried about. Man, Like, she's
been working her butt off, she's been getting that debt
free degree, which is incredible, and the higher likely income
that she is going to be able to earn that
she's gonna be able to garner will be well worth
it as far as a standard of living, how much
(20:58):
you're going to be able to invest, ultimately leading to
greater levels of financial freedom financial independence. So kudos to
you both for rushing it like that. I love too
that he said that twenty percent of his income. It
doesn't kind of feel like quite enough if he wants
to ramp it up to twenty four percent. And a
lot of folks, Matt, they continue to increase their standard
of living as that income goes up. And yeah, maybe
(21:20):
they kind of bump up their their four one K
contribution by one percent each year or something like that.
But even then, you're what's your the amount of money
you're investing, it might not be keeping pace with the
rate of pay increases that you're getting. So actually, as
a percentage of your income, you're not doing as well
as you were in those early years. And the truth
is not having any student loans, which is I think
(21:42):
rare for people, especially with the amount of degrees they've
gotten in their household. That's hard to come by. But
not having those student loans makes it even more feasible
to dedicate more of your resources towards investing for your future.
And there's just something incredibly powerful but delaying some of
those lifestyle upgrades intention right when you're doing it on
purpose for a missional purpose of having greater levels of
(22:06):
financial freedom earlier in your life. And speaking from the
other side of forty Bryant, like, especially if you plan
to have kids, funneling more money away now is going
to allow for those greater levels of work and life
flexibility when it has the most impact. Matt, You and
I talk about this regularly just as friends, but like
where the happiness curve, where it hits the bottom is
typically right where you and I are in life, and
(22:28):
we feel like we're living our best lives now because
we're not worried about we're not trying to build this
like nose of the grindstone career, and we're also not
worried about finances because we front loaded a lot of
that sacrifice. I think that's where a lot of people
find themselves is they're like, I guess I need to
start saving for retirement. I haven't done anything yet, and
so they just.
Speaker 1 (22:45):
Feel like they have to work all the time and
they're missing out on a lot of the relational and
familial things that really make life worth living in this
spot in life in particular.
Speaker 2 (22:54):
So yeah, yeah, there are just more responsibilities that are
thrust upon us as we're trying to achieve, oftentimes at
this age career. But then there's demands being asked of
us from as a kid or I'm sorry, like as
a son or a daughter, from our parents as they
are aging from the standpoint of what it is that
we're trying to be able to provide for our kids
for them as well. But I think keeping that lifestyle
(23:15):
creep in check is basically what you're alluding to. And
I think just like I picture the horse, you know,
like the horses pulling the carriages and the cities, and
they got the blinders on because it doesn't really matter.
All the craziness is going around them out there in
the city. All they need to be able to do
is just to walk exactly straight ahead. And I think
if you can kind of keep the blinders on from
a lifestyle standpoint, it's like, it doesn't really matter that
that guy over there or your old friends from high
(23:38):
school or college are going on this trip or they're
doing that. Man, such a great reason to get off
of social media so that you're not keeping up with
the lifestyle upgrades that lots of other folks are opting
to do, whether intentionally or not intentionally. But what we're
saying here is to continue to intentionally limit some of
your spending and it's going to make socking away more
money for future you just even more feasible. Easy.
Speaker 1 (24:01):
My buddy Jim just bought a boat. Maybe maybe that's
why I should do with my extra income.
Speaker 2 (24:04):
And it's like, oh, I guess it's time that we
all get both, right, Huh.
Speaker 1 (24:07):
It's like, no, enjoy your buddy Jim's boat, Like, don't
get one yourself and keep investing. It doesn't mean that
you can't, over time like increase your spending, right. I
think you and I have also found ways to loosen
the reins in regards to that. But yeah, you want
to do the right things first, and he's at a
particular age and place to be able to kind of
double down.
Speaker 2 (24:25):
On these efforts such yeah, I can have such a
massive impact. And for him, he's thinking about bumping it
up like five percent, right, Well, if you run the number,
is that simple increase five percent? It can cut five
years of your working timeline off. We'll link to a
classic Mister money Mustache post that really very clearly and
easily lays this out. But it might even incentivize you
(24:46):
to try to even increase your contribution amounts over time.
But the heart of your question here four one K
versus roth Ira. Yes, we are leaning the same direction
you are, and I'm going to say wroth Ira certainly
get the full match with your four one k, of course,
but then or I guess with your wife, but then
make sure that you are maxing out her wroth Ira,
(25:07):
and if you want to contribute more than that, increasing
four one K contributions after that can make sense. So
could opening a taxable brokerage account if early retirement is
a goal of years. But the taking the wroth route
is great because it's such a flexible account. It's giving
you greater levels of tax flexibility. In the future as well.
(25:28):
And actually, on the note of tax, like, you are
likely going to continue to earn more and more money,
so you are in a you're currently in a lower
tax bracket. Let's go ahead and buy the bullet, Now
pay the tax man, and never have to worry about
taxes in that account for the rest of your life.
Speaker 1 (25:41):
Well, at some point you might get to the point
where regular contributions to roth Ira aren't allowed. Yeah, And
so actually being able to fill that bucket up while
the bucket's accessible makes sense because at some point you
might lose access to that bucket. And I do too
the kind of having some pre tax some post tax
(26:02):
money it allows you that tax flexibility in the future.
I think that's underrated because later in life you can
kind of sort of it's like a choose your own
adventure when it comes to how much you pay in
tax depending on which buckets you're withdrawing from. And I
do think that's that can be a really smart way
to apportion your funds. And it just makes sense too
in regards to a four one K, get the match
(26:23):
or sticking some money in there, then go into the
roth are and then go back into the four one K,
and you know you might be kind of neck and
neck those accounts with how much money you're setting aside
in both of them over time, and then when it
comes time to tap them, you've got a lot of options, right,
And so yeah, that flexibility comes in quite handy. We've
had different guests on the show, Matt who have different
(26:44):
post tax and pre tax preferences. I think there's a
compelling case for both. But I do think that combo
of the four one K get the match the rothncks.
It's like this lethal in a good way option for people,
and I think it's the route that most people should consider.
There's certainly outliers right where if you're super low income
earner you might want to go roth Ira and Roth
(27:04):
for one K. If you are an incredibly high income
earner like you.
Speaker 2 (27:09):
Might be time to get the tax break on both. Yeah.
Speaker 1 (27:11):
Yeah, so so those are It's there is no one
size fits all, but I do think for the average
person that that's the comba that makes the most.
Speaker 2 (27:19):
Sense, and specifically for Bryant's situation, sounds it sounds like,
based on what he told us, that's what I would do.
One caveat though, like we've been I was just praising
his desire to want to increase his percentage of saving
and investing. I will say this is just assuming like
you are the one that has listened to us for
so long, and so I'm just assuming that your wife
is also on the same page. That being said, just
(27:41):
for the sake of argument here, let's say that she's
starting to kind of change your tune a little bit.
It's just like, man, we've been working so hard and
I want to be able to go with two ply
toilet paper, or like, maybe it's time for a second car.
What's something else that comes into's and comes into Joel.
I don't know, but I want twins. That'd be a
much bigger expect that would be for many.
Speaker 1 (28:02):
Years to come.
Speaker 2 (28:03):
I just want to say that it's not just about
what your goals are. Obviously, Like y'all are a team, right,
I mean, y'all are married, y'all are y'all are partners
for a life, and so don't be overly frugal, uh
And maybe what she would potentially call cheap in an
effort to sort of win this little battle, and you
end up losing the war decades down the road. Like,
(28:23):
the goal is for y'all to a mass an incredible
amount of wealth, so that decades on the road, you've
won the war. You're both living the life. You're proud,
and you can look back fondly on the sacrifices that
you've made as a couple. I just wanted to throw
that out there. Yeah, I just want to make sure
that you are reaching some of those goals that you'll
have together, that they are in fact both of Y'all's what.
Speaker 1 (28:42):
You're saying is he should be telling his wife, Matt
and Joel told me to save sixty percent of my income.
She hates us because we just ruined her life and
like that. But that's I think where some people get
sometimes when they start learning about the compounding returns and
what that can do, and they're like, I'm just gonna
like put all my a in that one basket. You've
seen the truth and you can't unsee it. And compounding
(29:03):
returns are awesome. But you know, we would also say
life has to be lived. It's you want to take
advantage of both those things, living an awesome life and
saving and investing for the future. But Bryant, best of
luck to you to your wife. You guys are doing
awesome and I'm sure you'll continue to do so. Matt,
let's get to another question. This one comes from someone
who's in the money advice space.
Speaker 4 (29:24):
Hi, Matt, angel this is Angela and Richmond Hill, Georgia.
I've been listening to your show for several years now
and want to thank you for your thoughtful content. I'm
in a credit financial counselor and I really like your
ask how to Money episodes as it makes me think
about how I would respond if they were my clients.
I did want to comment on two listener questions. The
first was from around January of this year, and I
(29:44):
just haven't gotten around to doing a voice memo. The
listener was asking about maxing out their TSP. Well, maxing
out early might seem like a good idea. Once the
TSP is max the employee can't contribute anymore, which means
they can't be matched for the rest of the year,
so they're basically essentially leaving money on the table. The
second question had to do with lowering insurance costs for
(30:06):
a vehicle the listener called a few weeks ago. One
of the things a listener mentioned was lowering his liability
to the state minimum, and I don't know that that
was clearly addressed. While lowering are even canceling property assurance
comprehensive and collision, especially on the Honda makes sense. Lowering
the liability is exposing him to much greater risk. I
(30:28):
find that most people don't understand the difference between property
and liability on their policies and was curious about your thoughts.
Thanks so much, Have a.
Speaker 2 (30:35):
Great day, all right, Joel, what do you think about
Angela's feedback? Should we start a new segment called Joel
Matt stinks?
Speaker 1 (30:44):
I don't think so, Okay, Yeah, that might be ripping
off somebody else's okay, we Joel Matt suck. I don't
know that. Yeah, that's a different or are totally awful
Joe matter totally offul Maybe that no, But if you
do have like I love stuff like this, we're like, oh, yeah,
it's a good forum, I think right now.
Speaker 2 (31:00):
And it helps me to realize too that if we
haven't parsed out, I don't know, there's nuance and a
lot of these questions, and sometimes we sometimes will gloss
over certain aspects of.
Speaker 1 (31:09):
We'll miss something in a question. Sure, and it's kind
of important, and so maybe we like answered it three
quarters of the way and we certainly left out a
quarter or some people just disagree with our advice sometimes
and they think that, maybe, yeah, we really could stand
to be informed. So we appreciate appreciate this sort of
feedback of it all.
Speaker 2 (31:26):
Yeah.
Speaker 1 (31:26):
I think we try to say regularly too that that
there's a lot of subjective nature, just like in our
answer to the last question to our advice, and even
the way we view some of these things has changed
since we started the podcast in terms of like balance
and in terms of how we think about retirement and work,
and that's informing how we answer questions do you.
Speaker 2 (31:47):
Think about life?
Speaker 1 (31:48):
Yeah?
Speaker 2 (31:48):
Yeah, it just depends on what aspect of life that
you are taken into account. Like there's you got the
financial side of things, but then you've kind of got
the life fulfillment side of things, and you've got the
work satisfaction side of things, and are a ton of
different factors for sure.
Speaker 1 (32:01):
By the way, one thing Angela mentioned she said that
she was a what she says, she was a budget
coach or a money counselor money counselor right, And I
think that's I think that's super cool. You and I.
We've had people in her position on the show in
the past for interview segments, and I think a lot
of times knee jerk people go to financial advisors. They
think that's the pro they need, and financial advisors can
(32:22):
be expensive and it might not make the most sense
for them where they're out on their wealth building journey,
but a money counselor or a budget coach can often
be a great use of your money for a specific
period of time as you're trying to learn the ropes
and you want some personal, one on one feedback. So Angela,
we're glad you're out there doing your thing, and really
do appreciate your feedback.
Speaker 2 (32:41):
That's right. Yeah, And Angela is right about maxing out
your workplace retirement accounts too early, like for instance, a
four to one K or a TSP that she mentioned.
And so again, for many folks, it sounds impossible, right,
Like we're again we're talking about over twenty three thousand
dollars over the course of a year. I think a
lot of folks are thinking, how am I supposed to
(33:02):
make that happen, let alone doing.
Speaker 1 (33:04):
It faster than over the course of a year, right,
My problem is not that I contributed too quickly. Yeah,
retirement accounts like.
Speaker 2 (33:10):
The worst tumble brag of all time. But there are
some go get our financial independence minded folks out there
who really do attempt this, and so in an effort
to just get that out of the way, they just
ratchet up their contribution amounts to the sky, getting much
smaller paychecks for a while until they hit that max
early on, which maybe emotionally feels really good. But it
(33:32):
certainly seems like you're doing the right thing here, but
you might be leaving money on the table. Like Angela mentioned,
if you max out your contributions let's say by June, well,
you run the risk of missing out on any mash
dollars that would have been yours had you taken just
the steadier taurus approach.
Speaker 1 (33:51):
Over the course of the year. And similar to an
earlier question, I mean, so much depends on your employer's
plan documents, because in some cases you won't be missing
out on the match, and others who will, right, And
so the best approach is typically to figure out what
your biweekly contribution should be in order to make twenty
six equal investments with each paycheck that leaves nothing to chance, right,
(34:11):
you are doing equal investment amounts. And yes, Matt, you
talk about funding the WROTH in full on day one
of the year, right as soon as as soon as
you possibly can, because that way, your money is invested
for a longer time. And I think like people want
to optimize all the way. That's kind of what they're
going for here, to fund their account early. But if
it means yeah, your money's invested longer, but you have
(34:33):
fewer dollars to invest because you're not getting the full match,
that's a problem and you want to avoid that. But
then some companies will have language in their play around
something known as true ups where they'll ensure that you
get the full match, even if you stuffed all that
money into your four to one K early on, and
they'll basically cut a check at the end of the
year for whatever match you might have missed out on
(34:53):
during that year. As long as you max it out,
you're going to get the full amount of the match
that the employer offers you. I know what your plan
documents say, because some are generous in that way, others
are not. And you don't want to make a mistake
and miss out on matching dollars because you funded too early.
Speaker 2 (35:08):
Exactly, And this might be something you have to dig
into a little bit because there probably aren't going to
be a ton of folks at your company who are
investing in this way.
Speaker 1 (35:16):
So the question the HR person does not often get
to see exactly.
Speaker 2 (35:19):
So you certainly reached out to them, but it might
take you doing a little command f assertion some of
these terms like true ups and having to dig in
deep to become a little to become an expert there
on your specific plan. Angel also referenced insurance, and this
is a case where you don't want to be cheap, right,
I think, especially if your vehicle is older, you might
want to eliminate comprehensive coverage in order to save on
(35:41):
insurance costs in order to keep that money there in savings.
But it's one thing to shop around and compare rates
with other insurance companies. But if you are cheap, you
might opt for inferior coverage amounts, putting you at a
significant financial risk. And we're specifically talking about liability insurance
here because as state minimums, they are not indicative of
(36:03):
what your coverage should be. There is no there's no
one size fits all answer to how much you should
be insured for, because my answer would be very different.
If I was, like a previous caller, twenty or twenty
five years old, my net worth is like zero or
even negative. Right, If I've got ten twenty thirty thousand
student loans, there's a big difference between that and where
(36:24):
I've been. After let's say, decades and decades of investing
regularly in the.
Speaker 1 (36:29):
Market, insurance becomes more important.
Speaker 2 (36:31):
Yeah, it's more. Initially it just kind of seems like
a nuisance. It's like, oh, this is thing that you
have to do. But the older you get and the
more wealthy build, it's like I see it with rosier
color glasses.
Speaker 1 (36:43):
As I get older, it's.
Speaker 2 (36:44):
Like, oh, man, what a great thing to have to
be able to make sure that I've mitigated that risk.
We won't get into specifics here, but when it comes
to the liability insurance that we have on our old
one hundred and ninety thousand mile minivan, Joel, I've got
twenty times what our state limit is. Wow, which sounds
kind of crazy, but not when you consider the fact,
I don't know, some folks are just more litigious than others. Right,
(37:06):
it doesn't really matter if you've got an old, ratty
look in minivan, they're gonna try to come after you.
But specifically, I mean, we live close to a fairly
you know, we live in a big city or near
a big city where there are like Lamborghinis driving down
the Interstate. And when I see that, when I'm sharing
a lane, yeah, sharing the Interstate highway lane with like
(37:26):
a Lambeau.
Speaker 1 (37:28):
Hey you try to raise them.
Speaker 2 (37:30):
Hey, I'm getting into a different lane because I don't
want to be behind them. But be like, that's a
really expensive vehicle, and you could easily blow through not
just your statement of THEMS, but like I mean, like
something that's even substantially, even something that's ten or twenty x,
it would not be difficult to blow through some of
those liability minimums. And so you need to keep all
this into account. Where you live that matters, right, And
(37:53):
so I guess that's what I'm getting here. Like, for instance,
if you lived in a small little town where you
know everybody and nobody's really soon ay each other, and
everyone drives ten year old tell you how to pickup trucks, Okay,
you probably don't need to go with like some super
off the charts coverage amount. Yeah, but it's just another
instance where your context and specifically where you live and
where you're driving it matters.
Speaker 1 (38:13):
I think a lot of times frugal people are they're
getting the quotes, and they aren't getting quotes for state
minimum coverage, and they're not thinking about, well, how much
do what are my insurance needs? And so it's they're
just comparing prices between the lowest common denominator insurance policy
and they probably need to get quotes for insurance that's
going to cover them in case of a more substantial
(38:34):
claim or encounter with a Lamborghini or something like that. Right, So, yeah,
you do need to be careful. And it's kind of
like you must be over forty eight inches to ride
this ride or something like that. They still let people
as tall as me ride those rides, right, And so
I think you don't want the bare minimum. That's not
going to be enough for a whole lot of people.
So I do appreciate Angela mentioning that I'm not sure
(38:57):
why we didn't address and answer that question. I don't
even remember that question right now on that, but I
think it also it might make sense if you're kind
of confused, you're not sure how do I decide what
sort of coverage I need? This is going to very
person a person kind of like you're you're mentioning you
might want to hire an independent insurance agent, not just
to help you shop rates with a bunch of companies,
but to offer some advice right about what kind of
(39:17):
coverage limits you might need given your financial situation. And
my guess is an independent insurance agent should be able
to help you on that front.
Speaker 2 (39:24):
Yep, independent broker. Yeah, like even with like homeowners, the
ability to talk through replacement costs, right price per square foot,
what just kind of what the trends are. I think
that can be really helpful.
Speaker 1 (39:32):
For what are the trade offs between me going with
a two thousand dollars deductible versus a five thousand dollars deductible?
What are the premium changes can I self ensure for that?
Those are good questions to ask. And then there's Yeah,
there's a site called Trusted choice dot com where you
can find an independent insurance agent near you, So be
sure to check that out. That that could be an
important task for you to look into this week or
(39:54):
in the coming weeks.
Speaker 2 (39:55):
Absolutely, Joe, we got more to get. See, we're going
to hear from a listener who's interested in cutting back
on their grocery spending as well as how much they're
spending going out to eat. We'll get to that and
more right after this Harbor.
Speaker 1 (40:14):
Back from the break, Matt, it's time for the Facebook
question of the week. This one comes from Stephen. He says,
homeowner's insurance question. Do premiums go up on homeowner's insurance
for using it the same way they do on car insurance?
Our house was struck by lightning. Oh, some appliances are fried.
That sounds terrible. It's one of those active god things
you can't do much about, right, Yeah, he says, in
(40:34):
the siding where it got hit is going to need
to be repaired to our deductible as five thousand dollars.
Any guidance or advice is appreciated.
Speaker 2 (40:42):
Five thousand bucks. All right. That's does is bring back
are you having PTSD? Does is bringing back bad memories? Jo? Now,
as so, your house didn't get struck by lightning, but
the tree.
Speaker 1 (40:52):
Got struck by lightning, got struck.
Speaker 2 (40:53):
Which is why came through the roof.
Speaker 1 (40:55):
That's right, no awful, honestly, Like, it was not a
fun experience, but it it could have been a lot worse.
Speaker 2 (41:01):
I did not.
Speaker 1 (41:03):
I don't have terrible memories about it that situation.
Speaker 2 (41:05):
Yeah.
Speaker 1 (41:06):
Fortunately unfortunately weren't in the house when it happened, or
else I probably would have worse memories.
Speaker 2 (41:09):
Sure, yeah, so, But to answer Stephen, I mean, it
varies from state to state because every state is going
to have an insurance commissioner and it's their job to
regulate the insurance companies and enforce the rules. In most states. Finally,
a claim will cause your insurance premiums to increase, but
how much it partly depends on the insurance companies. Some
may not bump up the rates all that much, while
(41:30):
others might consider dropping you all together. Like you use it,
and you use it, you lose it, right Like, That's
one of the one of the refrains that you sometimes hear.
It's not common after a single claim, but it can happen,
which means that in your case, you do need to
be careful before you file a claim. I would be
considering the long term consequences. And in your case, j
(41:51):
it wasn't just like a couple of appliances that got fried, right,
having to repaint the siding where it got charred. It
was much more substantial than.
Speaker 1 (41:59):
That flooring framing.
Speaker 2 (42:02):
Yeah, it was water damage touched a.
Speaker 1 (42:04):
Whole lot of areas, which made meant the price tag
went up, which meant the reality of claiming and filing
claim made a whole lot more sense. And so yeah,
how much your premiums can increase depends on a lot
of factors, right, including the ad fault nature, which this
is not the case. Even this wasn't so in your fault, right,
this was, like I said, an act of God. The
overall claim amount that can impact to the how much
(42:27):
premiums go up for you. And rates have already been
subject to higher increases over the past couple of years.
Insurance companies are feeling the pain of higher payouts. You
we read about the wildfires in Los Angeles, read about
the hurricane damage right in the Southeast. I mean, it
just feels like we're experiencing greater levels of more natural
(42:47):
disasters and then so which means higher claim amounts. And
we're also talking about just everything costing more right after
a significant bout of inflation, So a premium increase of
twenty to forty percent. I don't think that would be
out of the question. And if you're paying let's take
let's say three thousand dollars a year for your homemotos
insurance right now, well they might say, hey, you actually
(43:08):
need to pay four grand or forty two hundred forty
five hundred starting next year. I don't like it, and
it's important to mention that this claim is going to
stick on your clue report, which would likely up your
rates when getting quotes from other insurance companies in the future.
SEA might say, Hey, definitely don't like that. I'm going
to file a claim. I'm going to get paid out,
and then at some point, maybe six months down the road,
after I've like gotten far enough away from this incident
(43:31):
and fixing everything back up, I'm going to go to
another insurance company. And that's how I'm gonna be able
to lower my rates. Maybe maybe, but maybe not, because
they're all going to know about the claim you filed
and that's going to impact the quotes they give you too.
Speaker 2 (43:42):
That's right. Yeah, so let's go back to the deductible
five thousand dollars. This is a good thing because it's
actually helping to keep your premiums lower. And on top
of that, it makes it less likely that you are
going to file the claim steven which keeps your premiums reasonable.
Like we just discussed, and so I would run some numbers.
How much is it going to cost for you to
get these repairs done? Because if we're talking let's say
(44:05):
seven thousand dollars in total or six certainly five? Right, like,
you don't file a claim that would not make much
financial sense in this case. Self insurance would be the
right call. But let's say if oh, actually it's not
just the sighting, some of the framing got charred or something. Oh,
it's all the appliances, they're all on the fritz. Oh
(44:25):
the electricals damage now too, Oh my gosh. Yeah, now
we got to upgrade all We got upgrade our panel.
And the service is actually I don't know, I'm just
making these are terms i've heard as I've renovated at homes.
The service coming from the street, there's something wrong with that. Well,
if that were to be the case, and the replacement
expenses and cost is coming in a good bit higher,
then I think filing a claim could be this minus move.
Speaker 1 (44:47):
And there's always a great area here, Like it's never
like the exact formula, I don't think, but I do think.
I think of insurance homeowners insurance as mostly there for
catastrophic reasons. If something significant happens that's incredibly beyond your
ability to pay for or doesn't make any financial sense
(45:07):
to file acclaim. So I think you're right, mat If
it's like kind of close to that deductible amount, yeah,
that's something you cover. You don't involve insurance at all
because you don't want it on your clue report and
you don't want to raise your premiums. And then but
if that's not the case, and you've got a good
bit of cash sitting on which hopefully you do have
a good bit of cash, having a deductible that high,
that means you're willing to take on the responsibility of
self insurance. I think hopefully you can handle this on
(45:30):
your own. But again, there's always a gray area, and
there a sliding scale. It can be difficult to know
the exact way to proceed.
Speaker 2 (45:36):
All right, Let's get to one more quick one. This
is from Grace, and she writes, we are trying to
find a way to limit our grocery and restaurant spending.
And we thought we had a winning idea of getting
Visa gift cards. Because the card won't let you pay
when you run out of money, we could get one
for each family member and not important but a bonus.
Then in our real budget there is just the buying
(45:56):
of the gift card for this purpose instead of a
million little transactions. Grace, I hear you as the one
who keeps up with the budget. All those small expenses
get on my nerves, but she writes, then it turned
out that there are fees to get the cards. They
were quite prohibitive. Any other ideas, Cash isn't great because
you can't use it to order door dash or anything
like that, but maybe we will have to try it
(46:18):
any other ideas well. I see the benefit of not
being able to I see not being able to get
door dash as a positive. Yes of going with cash.
Let's go ahead and address that one right out of
the gate. Don't do door dash.
Speaker 1 (46:30):
Yeah, if you're really trying to limit your hate door dash, man,
how much you spend eating out or just on food in.
Speaker 2 (46:36):
General, don't make it so easy.
Speaker 1 (46:38):
This is the number one thing you want to eliminate.
And there are other other things you can do, of course,
which we'll talk about to reduce your grocery spend, but
you know, doing the app based takeout orders is one
of the worst things you do. So I do think
actually moving the cash is a reasonable choice here, dude,
because it's going to to prevent the worst thing in
the world that you can do, and it's also going
to put those limits on you. Yeah, that don't come
(46:59):
with fees.
Speaker 2 (47:00):
I will say, if you're looking for more convenience, because
folks are thinking, well, I don't want to like roll
with hundreds of dollars in my wallet or in my
purse kick at old school, and only put the amount
of money that you want to spend on discretionary spending
in your checking and or whatever, like spending account. Like
sometimes newer banks these days are calling them spending accounts,
(47:20):
but like that's that's kind of how these accounts were
created back in the day, and I think most people,
including myself, I only kind of it's random the amounts
of money I have in my checking account and my
spending account versus my savings. Like basically I try to
keep as little in my checking account as possible so
I can earn the interest in the savings account, right Like,
that's what us optimizers are out here doing. But I
(47:41):
think you can take a more methodical approach. And if
you so, it sounds like she is tracking her spending anyway,
because she's talking about all the purchases that she's inundated
with at the end of the month, and maybe she
hates them just as much as I do. But that
being said, you probably know how much you're spending every
single month on eating out and groceries and things like that,
and so simply just move that amount of money to
your checking account and then you are going to roll
(48:03):
with your debit card. And I think that can be
a nice Granted, there are always going to be workarounds,
right Like you could just say, oh, well, then I
could just go in there and transfer that money over. Well,
in a similar way, you could also go to the ATM,
that's right and pull more cash.
Speaker 1 (48:16):
There's always a way to circumvent your desire to save money.
Speaker 2 (48:18):
You are still potentially your own worst enemy here. Nothing
is you proof.
Speaker 1 (48:23):
There's no complete cure for humanity that Matt has found
yet or that I found it. But I think making
it harder on yourself to do the things that are
in your worst interest in terms of saving on your
grocery bill makes a lot of sense. And then where
you shot matters to talk about that all the time.
No cost grocery stores Aldy in Legal in particular Trader
Joe's solid for savings. Just find a grocery store where
(48:45):
you can buy stuff for less and buy the off
brand stuff the store brand stuff, I guess you might say,
and I think also, Matt, at least what we've found
is planning ahead just saves our butts. Like the more
we're flying by the seat of ours, the more likely
we are to make a bad decision on a whim.
And so we've been taken to like on the smoker
(49:06):
smoking like two chickens or something like that on the weekend.
It's like ten dollars for two chickens right at Costco,
and then I smoke both of them, and we have
like three or four meals we plan to make out
of those chickens throughout the week, and so it's not
very expensive, but it does take a little bit of foresight.
And so yeah, I did, I think just the more
you can plan and figure out multiple meals with the
(49:28):
limited range of ingredients the weekend ahead of time, that
that'll save your bacon too, And because eating out really,
when it comes down to it, I think for most
it is the worst man the grocery store savings. You
can save money there, but the biggest savings is just
eating out less and eating at home more.
Speaker 2 (49:43):
At the end of the day. I will also say
that I am not totally completely against these prepay cards
if it allows you to save even more money by
the fact that you're not eating out as much, or
maybe splurge purchases like buying stuff like on a whim
in the grocery store. I think that, hey, you got
to spend three bucks. Oh, you got to spend five
(50:03):
bucks a month in order to have this card. Okay, Well,
if it allows you to save fifty dollars two hundred
bucks by not eating out, then I think that might
just for you be the price of admission here in
order to kind of implement some behavior change.
Speaker 1 (50:17):
And some of those grocery stores will. If you buy
the groceries online and you opt to go pick them up,
someone else actually does the shopping for you. It's much
easier to stick to your list if you're not going
into the grocery store itself, you're much less likely to succumb.
You're actually it's pretty impossible to come to like the
shelf on the side.
Speaker 2 (50:35):
Right, we're buying on a whim.
Speaker 1 (50:36):
Well, hey, the chips are two for five dollars to
this week, I should stock up. You're gonna do that
if you go in the store. But if you just
buy online the stuff that's on your list, and then
you opt to go pick up at some grocery stores,
you're not paying a dollar more, you're not paying anything.
They'll just add that on as a service for you
bring the groceries out to your car. That can be
the best of both worlds for a lot of folks,
I think, when it comes to to making it easier
(50:58):
to eat at home and to save me money the
same time.
Speaker 2 (51:00):
Yeah, that's right, so Grace, we hope that helps let
us know what you end up doing toocause I'm kind
of curious to see if like go going with the
old school cash envelopes, if that, if that's the what's
required in order for you to just stick to the budget. Joel,
let's get back to the beer that you and I enjoyed,
which was a mar bits By Southern Grist, which I'll say,
this isn't the first Southern. We've had a lot of
Southern Grists.
Speaker 3 (51:20):
Are you.
Speaker 2 (51:20):
I think you're drawn to the Southern Grist brewery labels.
Is that is that at the labels?
Speaker 1 (51:26):
That must be the name of the But I also
saw I'm also we've had so many beers. I want
to try something that's unique, something I've never had before,
and so this was a marshmallow infused IPA.
Speaker 2 (51:36):
Indeed, it was.
Speaker 1 (51:36):
I think this is takeoff on Lucky Charms. It looks
like it with the rainbow on the front and stuff.
Speaker 2 (51:43):
It's literally, yeah, it's got like a little four leaf
clover all over the place. It's got like the little
like graveyard headstone looking at marshmallow, you know, the kind
of fake marshmallow that we're talking about, the crunchy kind
of marshmallows.
Speaker 1 (51:54):
So, what are your thoughts?
Speaker 2 (51:55):
One of my favorite?
Speaker 1 (51:56):
Yeah, I mean neither. I was gonna say one of
my least favorit it's actually it's got I think I
just don't like marshmallows either.
Speaker 2 (52:03):
I think that's it. Like, it's very It's not often
that I'm like, oh, yeah, what's the marshmallows, like even
when you kind of toast it just right when you're
doing uh smores or whatever, that's not really that's not
my jam. But I will say the creaminess lends itself
to to the ipa as far as the because sometimes
you will have IPAs that have lactos in there. But
there's something about this one with a bitterness from the
(52:24):
hops that seemed to kind of kind of ruffle. Yeah,
that kind of clashed with the marshmallow the sweetness that
they're trying to pull out there. So it's you know,
there's like almost two competing flavor profiles that we're going
head to head. Yeah, a little bit, but yeah, it's
still fun to fun to enjoy and drink.
Speaker 1 (52:39):
It's good to experiment. This experiment felt flat on its face.
Speaker 2 (52:42):
We shared it. So it's the sixteen ounce? Can I
drink my eight ounces? Looks like you left one ounce?
Speaker 1 (52:47):
Might not finish? Yeah, all right, that's going to do it, Matt.
For this episode, we'll put links to the show notes,
some of the some of the stuff we mentioned up
on our website at howtmoney dot com.
Speaker 2 (52:56):
That's right, buddy, that's it. So until next time, Best
Friends Out best friends out
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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