We’re kicking off the week by answering listener questions! And if you have a question that you’d like for us to answer on the show, we’d love for you to submit your own via HowToMoney.com/ask , send us your voice memo. Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Should I pay off my car loan early or use that money for a down payment on a house?
2 - Is Goodbill a legit medical bill negotiation site worth trying?
3 - As a travel nurse that doesn’t stay with any hospital all that long, how should I approach investing for retirement?
4 - My buddy thinks it’s weird that I pay $25 for a gym membership so I can shower after my bike commute to work- frugal or cheap?
5 - Is it worth depleting my IRA if I can avoid getting a pricey mortgage or even reduce the amount that I have to borrow?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joel and I am
matt and today we're answering your listener questions.
Speaker 2 (00:25):
Know what, buddy this is and ask how to Money episode.
This is a Monday episode. And by the way, speaking
of this coming on on Mondays, we're actually gonna make
a little tweak to the format of the show. Not
only will you be getting these listener question episodes every
other week, you're gonna be getting them every single week.
This is a change that we're making and every Monday
(00:47):
you can now expect and ask how to Money episode
here in your feed.
Speaker 1 (00:52):
Yeah, so by popular demand, Matthew, or just by edict,
by the two of us.
Speaker 2 (00:57):
We've decided. But also we have gotten so many great
listener questions, and that's really one of the main reasons
one of the funnest things for us to do here.
Speaker 1 (01:04):
Yeah, and so many people submit questions and we're not
able to get to all of them, and we're just hey,
if we tackled twice as many, then we'll probably get
to most of them, which is great.
Speaker 2 (01:13):
So we're talking to a friend about this and I
looked in our folder where we keep all basically all
of the listener questions that come in and then we
kind of mark the ones that we want to, you know,
we kind of line them up and depending on the content,
depending on the specific question. But there are over two
hundred and seventy unanswered listener questions that we have not
gotten to over and granted this is over the course
(01:33):
of five years, to our shame.
Speaker 1 (01:35):
In some way, it's unfortunately, so we Yeah, I think
in a way, it's where we feel bad that we
can't get to all the questions that people have. That's
what the Facebook group is for as well, by the way,
people can go in there help each other out. But
some of them are repeats, right, Like, some of them
are very similar to Okay, we've talked about it before.
Speaker 2 (01:49):
It would be fun to be able to get to more.
Speaker 1 (01:50):
Of them, exactly, And so I think that's really the
goal here, And so hopefully this encourages you too, if
you're like I might. I thought about submitting a listener question,
but man, they do whatever are they actually going to
get to mine? Well, hopefully we'll be able to get
to yours now. So yeah, feel more encouraged even to
submit a question to us that Matt and I can
take on the next Ask htm episode, which comes out
(02:11):
not two weeks from today, next Monday, one week from today.
Speaker 2 (02:13):
And by the way, this does not mean that we're
not going to have interviews. We'll be sharing more about
We're not going to spend the entire this entire episode
talking about the format of the show.
Speaker 1 (02:20):
Let's keep moving.
Speaker 2 (02:21):
I wanted to ask you, what do you think about
my new kids bike sitting against the office while I
actually forgot about it and it's sat there almost like
half the day before. You were like, why do you
have a kid's bike in Did you punch a kid
and take their bike? My new twenty four incher No,
I wanted to mention this. So it was Heavy's birthday
last week, and she had been mentioning for a while
(02:44):
that she doesn't have a bike that fits there anymore,
to my great shame, the fact that we haven't had
her properly outfitted, and it's literally kept us.
Speaker 1 (02:51):
From being able to go on family right, especially when
you and I and our families we prioritize biking so heavily.
Speaker 2 (02:56):
You know, it's something that we had just not gotten
to and we're like, all right, this is for her birthday.
We'll make sure to get her an awesome bike. I
was looking specifically at like this fancy lightweight specialized bike,
and I was getting really close to pulling the trigger
on it, and I thought, wait a minute, I need
to see if I can find this thing used. Hopped
on Facebook Marketplace and I didn't find that specific bike,
(03:17):
but I found one that was very, very similar. It
was also a twenty four inch, and I was able
to get an incredible deal. It was a It's an
Arii co Op twenty four inch rev City is the
specific bike. And I know the name because I looked
it up because I wanted to know the cost. Brand new,
these jokers are four hundred bucks. Currently they're on sale
Arii for like two hundred and eighty. I think I
(03:39):
was able to get this thing used. It actually was
an excellent condition for one hundred and thirty five bucks.
That's sweet, man, man. Yeah, the lady she had purchased
it for her daughter. I think during the pandemic. She
wrote it like four times. Quickly outgrew it and she's like,
I gotta unload those bike now.
Speaker 1 (03:55):
That's what happens with those kids. By You and I
were talking the other day, and it's the same thing
with kids shoes. I do not buy expensive shoes for
my kids because I grow in a matter of what
seems like weeks. I know it's probably more like months,
but still it feels like quaks. Yeah, and bikes are
some like buy but you also don't want to buy
them a super heavy, complete piece of crap because it'll disincentivize.
Speaker 2 (04:13):
Weight is one of the biggest things, because when they're
big and un and the kids can't handle them, it
makes it not very fun.
Speaker 1 (04:21):
I do feel like those Arii bikes are probably that
perfect middle of the road for a whole lot of
people where they're not crazy expensive. There's like five hundred
and six hundred dollars models you can get when they're
on sales or else the US. Yeah, okay, it makes sense,
but when you get amused, like you can get even better,
even less than that. So the only well, so the
only benefit of having four kids, I mean it's expensive
(04:42):
in lots of different ways, is that I can kind
of justify the money I spend on bikes because I'm like,
all right, there's a chance that at least three other
kids would ride this bike.
Speaker 2 (04:50):
That's a good point. Oh yeah, that's one thing. I
would have been willing to drop four or five hundred
bucks on a nicer bike knowing that, but I was
also glad that I didn't have to do that. So
just a reminder for folks out there, and there are
deals to be had on Facebook market.
Speaker 1 (05:02):
One of the random thing on Arii Bikes. I think
they have some sort of trade up system at a
lot of stores where they'll give you a decent chunk
off the next upgrade you make if your kid outgrows
that version, and so you least want to check in
and see, okay, cool if I buy it here and
I return it, I think with it. If you upgrade
within the next three years, they'll give you a substantial
discount on the next one. So that's cool too. I mean,
Aria is a great company, so absolutely making good stuff.
(05:25):
But Matt, all right, let's mention the beer we're having
on this episode. This is I'm gonna mispronounce this probably
Kanazawa Hiakomunga pale al. So this is another Japanese beer,
our last Japanese beer from listener Julia, I thought you
did well, Joel, thank you good. That was pathetic, really,
but we do our best here. But We're excited to
try this one, and we'll give our thoughts at the
(05:46):
end of the episode. But let's get the listener questions.
Of course, now we're doing this weekly, so feel free
to submit yours. You can submit at how to money
dot com slash ask that are simple instructions for you
to record a voice memo and get it sent our way.
But let's get to the question for today's episode, Matt.
This one is specifically car related.
Speaker 3 (06:04):
Hi, Matt and Joel. My name's Darlene. I'm calling from Montana.
I'm a longtime listener of your show and appreciate all
the advice you guys give your listeners. My question for
you guys is if I should pay off my car
Loan early versus keeping that money aside for a future
home purchase. I owe less on the car than it
is worth, and I have an interest rate of three
(06:25):
point seventy five percent. I have about fifteen percent saved
up for a house. Now. I'm about a year out
from that home purchase and it would be my first home,
so I know I don't necessarily need the full twenty percent,
but if I pay off this car, it would take
that savings from fifteen percent to about five And a
small backstory is I am thirty two years old. I'd
(06:48):
currently have no other debts besides this car, and I
didn't make the best decisions in my twenties, but now
at thirty two, I am making better decisions. I have
eight months worth of an emergency savings set aside separate
from that home savings, and I'm contributing to my four
O one k HSA and a ROTH and I just
(07:09):
want to make sure I'm making the best decision. I
don't want this to affect my credit score negatively or
my ability to get a home in the future. I'd
appreciate any advice you guys have or if I'm maybe
missing anything that you could point out. Thanks for all
you do, all.
Speaker 2 (07:24):
Right, Darlene, thank you so much for listening to the
show for so long. Now, and let's go ahead and
dive into it as to whether or not you should
pay off that car loan or not. For most folks,
we are fans of not having a car loan in
the first place. We don't like them, No, absolutely not. Yeah,
bottom line, we don't want you paying interest to a
financier a bank. But specifically this is important to keep
(07:47):
in mind, especially these days, like with car prices being
sky high and interest rates skyrocketing. With that in mind,
like it's tempting to finance a car or to take
out a longer loan in order to afford the car
that you that you want that you're looking at. And again,
it's not that it's never okay, It's just that we
want most folks thinking about how they can slash what
they spend on cars or transportation, which would in turn
(08:09):
allow them to funnel more money into income producing assets
instead of doing what everybody else is doing out there,
which is buying cars that they can't really afford.
Speaker 1 (08:17):
Yeah, and it's a mindset thing too. It's like how
much how little can I spend on a car so
I can do awesome other stuff, versus like, well, how
much am I allowed to spend on a car, which
is kind of the personal finance question most people ask.
Speaker 2 (08:27):
Yeah, so, Darline, I'm also a little I'm gonna apologize
for basically beating you up right out of the gate
and pointing out this mistake. And so with that in mind,
let's also mention that you've made some insanely awesome financial
progress since those early mistakes that you mentioned to be
in this position right, having this much saved in addition
to the amount that you have on hand for home
(08:49):
savings for a down payment, that is truly incredible.
Speaker 1 (08:51):
And by the way, she said, the rate on that
car loan is three point seventy five percent, which, although
we don't like car loans, that's not a bad rate,
especially in today's interest rate environment. You can make more
on that in savings, which is sweet. So yeah, no,
Darlene has been crushing it in recent years, that's for sure.
And eight months worth of savings right, that puts her
really far along the financial independent spectrum. That we get
(09:12):
a lot of cash on hand, which I love. We
talked about that a couple of months ago, and how
man that much will It gives you a lot of options,
more options than the average person. And so that dedication
has paid off in a bunch of added flexibility that
she's been able to garner. There's so much more mental
and time freedom that you can amass when you've been
able to save, when you be been able to stock
(09:33):
away that much. And in addition to that, Matt, like
I said, this car loan is more benign three point
seventy five at percent interest rate. It's like nobody's mad
about that right now because of what they can do
to make their money more productive if they've got low
interest rate debt. This is why we tell people, no,
don't bother, don't worry about, don't focus on paying off
that low interest rate mortgage early. There are more productive
(09:55):
things you can do with those dollars. And so, because
that's the case, Wed tell Darlene, there's just no reason
to pay off this debt more quickly. Then you need
to pay it off as agreed, we would rather see
you putting extra money towards saving for that home purchase.
And like you said, Darlene, like it's it's certainly not
a requirement to save twenty percent to put down on
that house. But it's a goal we're shooting for, right
(10:17):
and you're not too far off from that goal. So
by not paying off your car loan, it looks like
you might actually be able to get there because you're
you still got a little bit of time left to
hit that goal. If I were you, that's what I'd
be shooting for totally.
Speaker 2 (10:29):
Yeah, And she also mentioned her credit score at the
end of the question as well. That's another consideration. Were
you to pay that off, you'd be eliminating an installment
loan and your credit mix. And so that's another factor,
the fact that you know by eliminating this loan, it
would potentially ding your credit, especially if you've had that
car loan for a number of years.
Speaker 1 (10:47):
Yeah, you don't want to necessarily let the tail wag
the dog on the credit score thing. But if you
pay it off right before, right as you're applying for loans.
Speaker 2 (10:53):
It's going to have an impact, which then could really
come back to bite you in the butt and you're
stuck with a higher interest rate mortgage than maybe you
otherwise it would have been able to get your hands
on order or a.
Speaker 1 (11:02):
Half point higher. That makes a difference in those monthly
payments in the overall amount you pay for that house.
Speaker 2 (11:06):
Yeah. Yeah, and plus if you are able to get
to that twenty percent down, which again it sounds like
you should be able to. If not, I think even
considering a more affordable house might be the solution. But
if so, this means that you'll be able to avoid
PMI Private mortgage insurance if you're taking out a conventional loan,
which this expense it can be a pesky additional monthly cost.
(11:26):
How much that will be, it'll depend on the price
of the home that you're buying, but it could be
a couple hundred bucks every single month. And having that
extra cash to put down will also help you to
qualify for the best rates from a bank or a
credit union, and it's going to lower that monthly payment,
which we love to see. And so, considering where you're
at financially, and you know that you've got some time
before you start making offers, we think that you should
(11:49):
keep patting that down payment fund as opposed to getting
rid of that car loan from your life altogether.
Speaker 1 (11:54):
I also love how she said she was keeping those separate, right,
the eight months worth of savings versus the home down
payment fund. I like that they're not this like commingled. Ah,
we'll see what happens. Like there are separate goals for
money here and they're allocated accordingly, and so I think
that's a smart approach. And it sounds like, you know,
Darlene is being wise when it comes to saving for
(12:14):
this home. And I do think that that, yeah, you're right, Matt, like,
not paying off this car loan early is probably on
multiple levels, going to be the best bet helping her
to be able to buy this home with ease, get
the best rates, get the best terms, and you know what,
eventually that Carl's going to be gone anyway, it's going
to be out of her life in the not too
distant hutual guessing.
Speaker 2 (12:33):
Yeah, well, I'm glad that you mentioned that too, because
I think that it depends on Darlene's risk tolerance as well.
But eight months it's a little above and beyond the
standard three to six months yeah, worth of living expenses.
And so Darling, I mean, honestly, I feel like I
love keeping money categorized in separate and distinct from each other.
But I think it might be worth considering do I
(12:54):
need those additional two months worth of living expenses? Maybe
you can kind of. It doesn't have to it's not
a binary decisi and it's not a dichotomy, right, it's
not I'm going to completely deplete my emergency fund or
I'm not going to touch it at all. Maybe you
could shave a couple months worth off that way, you're
still you know, you still have a solid six months
worth of a living expenses on hand. But maybe that's
able to kind of juice that down payment a little
(13:17):
bit and kind of gives you that emotional win that
oh man, I am so close. If I, you know,
take two months worth of living expenses from over here,
that means I've only got maybe six, seven, eight, nine
months left before I've got that full twenty percent to
put down exactly.
Speaker 1 (13:31):
I think you can pull some from it. You just
don't want to deplete it to buy the house of
your dreams and be house for it right like that
would be ill advised. But if you're pulling a little
bit because ay, six months is still plenty then and
you can always work on building that up after the facts.
But getting that twenty percent marked is huge, and you know,
not many first time home buyers achieve it, but I
think if you can, it's it's worth it's worth doing.
(13:52):
And the fact too that you're also investing, you know,
you're contributing to your HSA or four O O K,
you're wroth, You're doing all of the above, which is
which is a great news. And because choosing to not
pay down debt, the truth is it's only a wise
move if you have better options, and there are some
people out there who might call in and they would say, hey,
should I leave let this debt linger, But they don't
(14:12):
necessarily have better things to do with the money. They're like,
I was thinking about buying a jet ski or something
like that, or I was gonna try to go up
in space with Richard Brandson and something like that. Spend
the money on just something to goof off or whatever.
It's probably not a good thing to do while you
still got debt lingering in your life. And so what
you choose to do with the money instead of paying
off the debt. That is kind of at the crux
(14:33):
of this question too. Man, that's all the difference in
the world. Yeah, because if somebody's got a gambling problem
where they're like, I'm just gonna spend it on clothes
if I don't pay off this debt, whether it's big
or small, then we would say, go ahead and pay
off the debt, because there's a there's a direct return
on your money. It's better than just frittering it away.
But it sounds like, of course, Darlene has demonstrated a
(14:54):
high level of discipline and she's doing really smart things
with her money. She's got meaningful, good goals, and so
I would say, she's got what it takes to handle
her money in a more nuanced manner, letting this debt
linger while she socks away more in savings to hit
that twenty percent mark so she can buy that awesome house.
Speaker 2 (15:10):
Yes, right, Yeah, And by the way, I think it's
worth missing too. I don't want to add to the
cult of home ownership, and I think there are a
lot of options for folks out there, Darlene. I don't
want to, like, I don't want this just necessarily to
be a slam dung decision, because you know that this
is like quote unquote, the wise thing to do, because
in some cases it may not be the wise thing
to do, because if you're only looking at the numbers,
(15:32):
maybe it makes sense for you to rent as cheaply
as possible.
Speaker 1 (15:35):
Or we talked about that not too long ago, how
renting makes sense in almost.
Speaker 2 (15:39):
All a lot of major markets.
Speaker 1 (15:40):
So it has to be a personal choice, something that
you really want to do. Yeah, you're not buying the
home because it's the quote unquote smart personal finance me.
Speaker 2 (15:46):
Yeah. And so the reason I highlight that is because
I think it's worth owning and addressing the fact that
when you buy a home, there is some consumption involved.
You are doing this as a lifestyle upgrade in part.
It just so happens that this life style I'll purchase
is one that typically appreciates in value as opposed to depreciating,
which is pretty much everything else that you can spend
your money up if you're not investing it. And so
(16:09):
we want you to make sure that you're approaching the
home buying process from the right angle as well, not
just like as a default assumption that this is something
that you've got to do for sure.
Speaker 1 (16:18):
All right, Matt, We got more money questions to get to,
including investing advice for a travel nurse. We'll get to
that and more right after this.
Speaker 2 (16:34):
Yeah, I just realized we didn't tease to some of
the questions here at the top of the episode because
we're all caught up talking about the format of the show.
But we do have plenty of additional questions to get to.
We're gonna be hearing from a listener who's actually asking
about basically a frugal or cheap when it comes to biking.
We'll get to that one here in a second, but
first let's hear from a listener who is using this
(16:54):
new hospital bill negotiating service, or specifically, he's wondering if
he should use it, is a legit. Let's hear it.
Speaker 4 (17:01):
Hey, guys. Joe NuGen here from Newego, Michigan. I had
a question for you about a company I recently learned
about called good Bill. I had to take my eighteen
month old son into the emergency room. He was having
an allergic reaction. Thankfully, by the time we got in there,
everything had kind of calmed down and they really didn't
have to do anything to him. They just saw him
and gave him some benadryl. But we got a large
(17:26):
emergency bill for that less than an hour visit that
we did. And I was doing some googling and found
a company called good Bill that will negotiate to save
you money on your health healthcare bills, and they will
charge you twenty percent of whatever they save you. So
just calm to see if you guys have heard anything
(17:47):
about this or any recommendations you would have. All right,
thanks guys. Again, that company is called good Bill. Thanks ye.
Speaker 2 (17:55):
I'm guessing that's some expensive benadril?
Speaker 1 (17:58):
Is that seriously?
Speaker 2 (17:59):
I that you're paid for it?
Speaker 1 (18:00):
The emergency rooms? I don't know if you've noticed. They
don't charge like fair reasonable prices.
Speaker 2 (18:05):
It's ridiculous.
Speaker 1 (18:06):
It's like one hundred and fifty dollars sor an ipprof
and I can't imagine what benadil costs.
Speaker 5 (18:09):
Was.
Speaker 1 (18:09):
That's a specialty, right exactly. I mean, yeah, it can
be crazy, crazy expensive. Joe, We're glad your son is okay, yes,
And just note really to everyone else out there. I mean,
first off, take any sort of medical advice that we
give with a grain of salt, any advice that you
think we might be giving, right, they're going to solve.
Even the money advice like you should you should do
your due diligence is for entertainment purposes only, Joel, I
mean kind of, well, but we we do legally, yes,
(18:34):
but there's a whole lot that you know, we want
you to to learn a lot and then but we
also want you to to second guess us and think
for yourself and and go to other sources at the
same time. But on the medical front, speaking to kind
of what Joe was talking about at the beginning, going
to the emergency room is a really really expensive thing,
and there are cheaper options out there, so urgent care
(18:56):
is often a better option because you're gonna get seen
more quickly. Your bill is going to be a whole
lot lefs then it would be if you if you
go straight to the er. But so much depends on
what sort of you know, injury or health issue you're
dealing with. Sometimes just going to your local grocery store
or pharmacy, the dock in the box sort of thing,
those can be enough, just depends on what time to
day it is and what's going on. I know, and
especially Joe, I sympathize with you when when you got
(19:18):
a little kiddo who can't talk, we one percent get
the reason for taking him in totally. It's better safe
than sorry, right of course, but just a plug for
some of those in between services that can make sense.
In many cases, if you go to the wrong one,
you could be stuck with a bill, and that's it's
much much larger, many times larger than if you just
gone to the right place at the very beginning.
Speaker 2 (19:36):
Yeah, which which Chris Farley movie was it where he
sits gig like gets on the plane or the helicophany,
he sits back against the bee is it black sheep,
Black Sheep or Tommy Boy one of the Yeah, not
because Tommy Boy. They're like, yeah, the car salesman stuff.
So yeah, if your kids swelling up like Chris Farley
and Black Sheep, better safe than sorry. But the problem
is is that this kind of thing, it happens to
(19:57):
folks across the country all the time. We are not considering,
I guess some of the additional ramifications of visiting an
actual er at the quote unquote hospital that everybody knows.
And then it just shows how messed up our healthcare
system is. It ends up costing folks like Joe and
his family thousands of dollars that they hadn't budgeted for
(20:17):
medical debt. It's the leading cause of bankruptcy in our country.
But the truth is that it's possible to fight back
against some egregious bills like this, but just most folks
just don't know how to go about doing it, and
so because of that, they get on a payment plan
they want to do. It's rights pay that sucker off
a lot of times on the first bill, and that's
one of the things we've talked about with Marshall Allen.
Never pay the first bill. We understand the desire to
(20:39):
want to pay for the services that were rendered to you.
Speaker 1 (20:43):
But there are ways for you to get that cost down. Well,
sometimes a lot of people they can't pay it when
the first bill comes. Yeah, so they get on this
payment plan they pay it for years off into the
future for this one time medical procedure or in Joe's case,
this one time administration of bendrill, which is tough to say, right,
and that is what puts people over a barrel and
what ultimately leads to the ruination of a lot of
(21:05):
people's finances. It's a massive problem. So, yeah, these er bills,
they are they're no joke, and it is cool to
see companies like good Bill come along. This is what
Joe mentioned in his question, Right. It addresses a real
need to help people be able to advocate for themselves
in a system that is opaque, that is like hard
to make headway in. The Good Bill is trying to
(21:28):
do this on your behalf, And I do want to
say up upfront, the truth is you could do this
on your own.
Speaker 2 (21:33):
Right.
Speaker 1 (21:33):
You can ask for an itemized bill, which in and
of itself it might reduce the total bill amount.
Speaker 2 (21:38):
Right.
Speaker 1 (21:38):
You can talk to a patient advocate at the hospital
where the procedure was done. You might be able to
get some or all of the bill written off, maybe
completely forgiven, right, depending on your family size and your income,
like when you look at the number of something like
a family of four making one hundred thousand dollars, they
could qualify for what's known as charity care in the industry.
And so you just got to know that it exists,
(22:00):
and you've got to apply for it in order to
make it happen. If you just get the bill, you
start making payments, you have undone your rights, right, you
have forsaken your ability to get a better deal on
that care. So, you know, fighting medical bills that can
it can be kind of like learning a new language,
though it can take a lot of time, a lot
of energy. And that's why Good Bill launched, it seems.
(22:21):
And by the way, one of the cool things about
Good Bill they say, if they can't save you money,
you don't pay a dime. So that is nice, right,
You're giving them very little risk and yeah, giving them
a chance to argue on your behalf. And if they say, eh, sorry,
we got frustrated too, there was nothing. There's nothing we
can do. This bill is what it is, Well, at
least you don't owe Good Bill any money exactly.
Speaker 2 (22:41):
Yeah, Good Bill. It seems like they've kind of gotten
this down to a science where they're able to get
results in a relatively short amount of time. But how
it works is that they take your billing records and
they perform a review, including they have a medical coder
look for billing errors, and by doing this this holds
the hospital or the doctor's office accountable for any upbilling
or any undocumented charges that might have actually been added
(23:04):
to the bill. They also do a pricing review to
ensure that you're not being billed at an inflated rate
for those services. And so with all that, all that
they're able to provide I think taking twenty percent of
the savings in order to do that work, that seems
pretty dang reasonable to us. There's another service out there,
co Patient. There is less written about co Patient. It
(23:27):
seems like it's been out for a lot longer, but
Good Bill seems to be they're newer, but they seem
to be doing a good job. I guess that's my
only hesitation with Good Bill is that they are newer.
But that being said, they've got awesome reviews upon BBB,
upon the Better Business Bureau, and you see them responding
to folks, You see that they are able to save money,
(23:47):
save folks money. I mean anywhere from like a few
hundred dollars to like thousands of dollars of folks who
have actually used good bill. So if feels me I
would because of that, like I wouldn't have any hesitation
at least giving it a shot, upload my bill, seeing
if they can negotiate it down some.
Speaker 1 (24:02):
Yeah, Matt, this kind of kind of makes me think
that you could probably translate your favorite Russian novel into
English on your own, or you could just go buy
the copy that's already been translated by someone else, because
that would that would just require you a whole lot
of like learning a new language, and a whole lot
of time and effort.
Speaker 2 (24:19):
And I think like learning literally a new language, as
opposed to learning the quote unquote hospital coding language exactly, yeah,
which is similarly hard to understand a complex. Right, So yes,
it's possible. Yes, there are resources out there that can
help you to diy this thing. But think about your time,
how much your time is worth, and how much effort
you want to put into this, And probably a lot
(24:39):
of it depends on how big that bill actually is
and how much you know, and how mad you are,
because sometimes you're just willing to fight and you're like,
I'm gonna I'm gonna do this on my own. I
have the gumption, I have the courage whatever it is
that's making you mad to actually follow through. Sort of
like Darlene's question about, well, what would you do with
the money that you would have used to pay down
your car?
Speaker 6 (24:58):
Long?
Speaker 2 (24:58):
Right? So for for you, Joe, how would you spend
that time otherwise? Because if you would actually put the
time in to fight this thing, then man, more power
to you go for it. But I think a lot
of folks aren't going to give it any time at all, right,
And so they're they're kind of looking for the thing
that's going to get you eighty percent of the way there, and.
Speaker 1 (25:14):
Literally this is what they do. Give it a shot,
charge you twenty percent of whatever they say, give it
a shot for a minute. If it doesn't work out,
turn it over to good Bill then. But if yeah,
like if you're going to just kick your feet up
and watch regular seas in baseball, and while good Bill
handles it. I don't know, maybe make a couple of
phone calls yourself, but good Bill definitely seems like a
solid service worth relying on. If you like you're butting
your head against a wall, that's right, all.
Speaker 2 (25:35):
Right, Joel. Our next question is from a nurse who
has effectively doubled the amount of money that she makes.
But she's got a problem. She's having a tough time investing.
Let's hear this question.
Speaker 5 (25:45):
Hey, Matt and Joel. My name is Kayla and I
live in Kansas. I have been listening to your podcast
for about five months now, and I have a question
for you. I'm a travel nurse and I have been
trying to look into starting my retirement fund. The issue
that I have is that I am not a contract worker.
I do not own my own business. I get a
W two from these companies, so I don't qualify for
(26:06):
a SETIRA or a solo four one K and most
of these companies either do not offer retirement benefits, or
if they do, like where I am now, they require
you to be employed with them for at least a
year to qualify for the benefit and to be able
to start contributing. But each job assignment is about three
months long, and sometimes I change jobs in companies two
(26:28):
or three times a year, depending on the job, the pay,
the needs of the hospital. So I don't know what
to do because I'm not with the company long enough
to start contributing, or I'm not offered the benefit. And
if I do stay long enough to qualify, and then
I have to quit shortly after and go with another company,
(26:49):
then I have to wait a whole another year to
be able to roll over the old account to a
new account. I'm just a little confused on all of it,
and I don't know what to do. So if you
could help me out, i'd really appreciate it. I love
the podcast. It's the only money podcast that I've listened
to that kind of simplifies the financial goals to make
me feel like they're actually achievable. So thank you for
(27:11):
your helping my question, and thank you for creating a
great show. Matt.
Speaker 1 (27:15):
You know I'm partial to alliteration. She's Kayla and Kansas,
which I dig I guess say I like that.
Speaker 2 (27:20):
And she's a traveler, so she might end up being Kleene, Connecticut.
She could be Kaylene Colorado. There's so many possibilities here. Well,
and we're so glad to hear the podcast have been helpful, Kayla,
thank you for listening. And yeah, making money relevant, simplifying
the complex, that's the goal, man, that's the heart of
what we try to do here. And Kayla, Matt is
in an interesting position here, right, because that one year
(27:41):
timeline to be able to contribute to a workplace retirement
account at least to score the match. That's fairly standard, right,
And so the called a vesting period. And it might
take two, three, four years that your employer says, eh,
we will contribute a match. But if you leave before this, you.
Speaker 1 (27:57):
Don't actually get it, right.
Speaker 2 (27:58):
You got to prove your loyalty, right, We're willing to
give you that extra little cream on top.
Speaker 1 (28:02):
And travel nurses are disloyal by nature, like that is
what they do. And I don't mean I don't mean that,
like in the best way possibly. They can't be an
awesome pet owner or a long time girlfriend and boyfriend
even get married, right, I'm not saying that, But that's
the heart of what they do is they're working two, three,
four different jobs every single year. And since you're never
in one place that long, you're just never going to
(28:22):
qualify and which puts you at a slight disadvantage when
it comes to saving for retirement, which so I get
the annoyance, right, but it also I will say, doesn't mean, Kayla,
that you can't invest your future, right, So we'll offer
our best advice to help you get started, to help
you get going down that path.
Speaker 2 (28:37):
Yeah. Well, and she even mentioned too how she might
be eligible. But even still after she leaves, she can't
roll it over for another year, which would just be
a massive pain in the butt if you're at multiple
hospitals over the course of the course of the year.
So even if you could do that and you were
willing to stay there for whatever period of time, just
leaving a trail of four to one ks that you
have to keep up with and roll over. Honestly, it
(29:00):
seems like a massive pain in the butt. I would
want something that is my own that I never have
to worry about as far as rolling over. But one
of the perks of being a travel nurse, besides getting
to see a lot of the country wherever it is
that you're taking a job any place it starts with
a seat or a kay only for her, you get
to enjoy these cool places that you might not get
to visit otherwise. I think that's great, but you also
(29:21):
often get paid way more than a nurse who is
going to stay in one place that's going to stay.
Put data from the BLS they show that on average,
travel nurses are making roughly twice as much as staff nurses,
So it's roughly thirty two hundred dollars a week versus
sixteen hundred dollars a week, and in some states it's
even more. It's more than that. It's like, yeah, substantially
(29:43):
morning pos Kyla, I'd go to Kawai. I would see
if they pay there. Surprisingly, the gap is the least
in Hawaii because that's where all the travel nurses want
to go. I think that's why. But Kaylee, kudos to
you for forgetting your nursing degree, maxing your income by
going this route. And uh, yeah, while you may not
be able to take advantage of a traditional or a
solo for one K, there are certainly other ways that
(30:05):
you can invest on top of just some of the
other benefits that a lot of hospitals are paying out
to travel nurses as well, like stipend for housing or
free housing in some cases. But if not free housing,
a stipend for housing, relocation expenses, paying for mileage as well.
There's just a lot of like I didn't even know
a lot of these benefits existed, but there's a host
of sweet benefits. And travel nursing is looking like seriously
(30:29):
like this life hack. You thinking about going back and
get in your degree, I'm thinking about it. Yeah, I
mean my mother in law did that very thing. She
was She went down to Saint Thomas and was a
travel nurse there for I think eighteen months or something,
which is longer than Klea stints. But it was a
way to pretty sweet get to live in Paradise for
a year and a half, not have to fully commit
to something. But yeah, she got paid more than a
(30:51):
lot of the staff nurses there, for sure. But really, Matt,
while you're talking about here, another one of the ways
that we would encourage Kayla to invest is through her
IRA right preferably a roth IRA. YEP, it's individual retirement account,
which means that your employer has no oversight, no involvement
in this account at all. Doesn't matter who you work for.
Speaker 1 (31:08):
Yeah, it's you and the custodian of that account that
you want to open it up with, and so it's
one of our favorite retirement accounts. It comes with a
lot of flexibility. We'd make that your preferred account to
start with, open it up, max it out like clockwork
each and every year, preferably with one of our low
cost favorites like Fidelity, Vanguard or Schwab. But the one
downside ti your roth Ira is that there's an annual
(31:29):
contribution limit of sixty five hundred dollars. So if you're
looking to stock away more than that, and let's be honest,
Matt travelers just making bank, they might be, Yeah, I
want to stock away more than that, Kayla.
Speaker 2 (31:40):
Really, Kayla's problem is what I do with all my money? Yeah,
I'm making bank.
Speaker 1 (31:45):
Yeah, And so you can't do it with this account
because you can't contribute more than that in a given year.
But your first goal for retirement savings should be the
maxis account out, preferably investing in low cost index funds
or a total stock market fund. After that, things do
get a little bit murk here.
Speaker 2 (32:00):
That's right. Yeah, So Kayla maxing out a roth ira
that like, honestly, that is a huge goal for many folks.
And I think going beyond that, it is probably going
to seem unattainable for most folks. But I think for you,
maybe this is the situation that you're finding yourself in.
And so we just talked about the ROTH. One thing
we didn't mention is the HSA, which has a triple
(32:20):
tax advantage. But this is where things do get a
little bit murky, KYLEA, because given that you work for
different hospitals, maybe you get an awesome Cadillac Health Insurance
health care plan that's included, and if so, then an
HSA is not something you want to consider. And honestly,
even if it is a plan that is a high
deductible plan and you do want an open you do
(32:42):
want to open an HSA, things get a little trickier
there as well, because similar to opening a four and
K with an employer, you're stuck with the paperwork in
the hassle of going from one to another to another,
and you've got all of these different accounts. But that
being said, if you have the high deductible plan, say
the Healthcare Gov, you've got your own high deductible health
(33:02):
care plan that you are carrying with you than an HSA.
A health savings account could possibly be an awesome way
for you to really take advantage of some of the
tax breaks that are given to you for socking some
of this money away that you're investing. You're not using
this money to actually pay for your healthcare costs, and
with you being younger, maybe this might seem especially appealing
(33:23):
given that, you know, maybe you aren't spending a ton
of money on actual healthcare.
Speaker 1 (33:27):
Yeah, And that way, if you do have your own
health insurance high deductible health insurance plan, you can open
up that HSA directly with a low cost company like
Lively or Fidelity. Those are the two are the best.
And that way, the record keeping is a whole lot
easier as opposed to, like you said, Matt, having like
five inch hsas a year, which just gets confusing and
overwhelming for sure.
Speaker 2 (33:46):
Exactly. Yeah. So, but beyond those two, right beyond the row,
beyond the HSA, the next account you should consider. It's
probably just a plain old taxable brokerage account. They don't
get as much press as our favorite tax advantage ones
out there, but they're pretty good too. Honestly, there's a
I mean a lot of folks who are quite wealthy,
who are millionaires, who are living off of their investments
a lot. Most of their money is typically in brokerage
(34:08):
accounts because they haven't been able to amass such a
stockpile within the different retirement accounts that have limits placed
on them.
Speaker 1 (34:14):
Well, the nice thing about brokerage accounts too, is added flexibility.
So let's say some of that money you can you
can even invest for a future home purchase that isn't
going to happen when you reach retirement age because you
can access those funds before fifteen nine and a half,
which is which is nice.
Speaker 2 (34:28):
That might be a goal that you have seven eight
years off into the future. And that's something that if
you do have a goal of invest that far in advance,
you do want to invest that money, and this is
how you would invest that money. Speaking of houses, like
I'm thinking about real estate like that probably isn't a
good option given your line of work, right buying an
investment property you're traveling all the time, you probably don't
(34:49):
want to again be tied to a specific location. So
that taxable brokeg account that's probably your next best bets.
And again, there are no contribution limits, which means that
you can sock away as much as you want to
after you've maxed out your rough contributions, of course. But
I'm glad Kayla that you brought up travel nursing as
an option for a lot of folks, because it really
(35:10):
does feel like this awesome life hack, right, like the
ability to make bank in your twenties while you're younger.
You're traveling around a lot, which is fun. You're not
necessarily looking to put down roots. And granted, I don't
think travel nursing is paying quite as much as it
was during the pandemic. I feel like it hit a
peak because hospitals were severely understaffed there was a shortage
(35:31):
of nurses. But that being said, it seems like that
the pay is still significantly higher for travel nurses versus
a staff nurse.
Speaker 1 (35:39):
For sure. Yeah, so it sounds like Kayla's doing it right.
She just needs to funnel more money into accounts for
her future, letting those letting that money grow and compound.
And I think the combo of the ROTH and a
taxable brokerage account maybe that HSA, depending on the specifics,
makes a lot of sense. But Matt, we got a
couple more questions to get to, including one about speaking
out real estate using an IRA to pay for a house?
Speaker 4 (36:01):
Is that smart?
Speaker 1 (36:02):
We'll discuss that and more ride up for this.
Speaker 2 (36:13):
We are back and yes, we do have a couple
more questions to get to, including that one abouts of
that real estate purchase. But Joel, first we're gonna hear
from a listener. This one is from a man after
our own heart.
Speaker 6 (36:25):
Hi, man, Joel, this is Wayne from Philadelphia. It's actually
the third question that you're answering for me, which I
think puts me in the coveted three question club. I
expect my membership card is in the mail. All right,
enough shenanigans to the topic or the question at hand.
So I have a coworker that I am trying to
convince to bike into the office. During one of the
(36:48):
conversations that I had with this coworker, he expressed something
odd to me and I wanted to run it past
you guys. Figure to be a good fruggler cheap Basically,
I pay twenty five dollars a month so when I
get to the office, I can use the gym that
my office is partnered with, so I don't smell like
a terrible man who just biked into the office. My
(37:10):
coworker friend says that I am the outlier that he
doesn't know anyone who bikes into the office and takes
a shower before working, sands me, of course, So my
assumption was is that if you bike into the office,
you have to take a shower, just kind of part
of that unspoken office hygiene rule kind of deal. So
(37:32):
is my buddy being frugal or cheap? Am I weird
with my showering? Ways?
Speaker 7 (37:37):
Should I take that twenty five dollars and throw it
into like my roth Ira? Well the questions ever end. No,
I will contact you again. But hey, thanks for taking
time to listen to this. And uh yeah very much
so looking forward to seeing what you guys think. Wayne
out kind of like best friends out but Wayne.
Speaker 6 (37:57):
Or shop it.
Speaker 2 (37:58):
We get it, Wayne, he's Wade's an honorary bestie. Oh yeah,
for sure.
Speaker 1 (38:02):
It's so funny too, like I like sense of humor
Wayne and h And by the way, the first rule
of the Three Question Club is to not talk about
the Three Question Club. I thought you knew that, and
now it's public knowledge and this is not good. Honorary
membership revoked? Yeah, sorry, kicking me to the curb, Wayne, no,
but feel free to hollo out for ten seconds there anytime.
We love taking repeat questions from people who have been
listening for a while. So and also frugler cheap questions.
(38:24):
They're always fun because they're the kind of things that
people who are trying to get their finances in order
are inevitably going to struggle with. I love frugal or
cheap as a concept, Matt and as a way of
thinking through things. And you know what, if you're really
trying to acts expenses, you're probably going to have some
of those frugal or cheap conundrums in your life. So yeah,
I don't know, I like it. I like this question.
(38:46):
Is his friend right or is his friend going too far?
Speaker 2 (38:48):
I think I think maybe perhaps his friend is the
one being she because that's like, that's what he's asking.
He's not saying, is it frugal or cheap that I
bit to work? He's saying, is my friend being frugal
or cheap? Because I am you know, I'm coming in
a shower.
Speaker 1 (39:00):
Nothing wrong with biking doork?
Speaker 8 (39:01):
No?
Speaker 2 (39:02):
Yeah, So if that's what you're asking, I mean, I
guess there's a couple of things tied up in here.
Tied up in this question the fact that your you know,
your coworker doesn't know anybody else who bikes into work, well,
who cares Like, we're huge fans of more biking. We
love that you're spreading the gospel of biking into work specifically,
And the reason we bring this up there have been
some anti bike screeds in some of the major publications recently.
(39:24):
We're looking at you, New York Times.
Speaker 1 (39:25):
The Wall Street Journal had one too. I'm just so
annoyed everyone's hayting on the bikers, how dangerous and bad
biking is. We need more people on bikes, not less.
And as you know, you can save a good bit
of money by biking. But what about showering after your
bike ride? I think that depends on a few things,
specifically the length of your commute, Joel, You and I like,
we don't have to bike all that far these days,
(39:47):
which means we don't work up all that much sweat, right,
we don't get too stinky. Plus, it's just you and me, right, Like,
we're not in some corporate office. We're only offending each other,
our best friends, not the entire staff. Are not the
entire department where you've got multiple opinions and differences of
opinion that you have to contend with many more nostrils
(40:07):
that you could potentially offend exactly. Yeah, so no, I agree.
And part of it maybe how hilly is that commute,
because the more hills, the more sweat, How hot is
the day. I mean, there's a lot of things to
take into consideration, but overall, I would say, Matt, you're right,
like the longer, the sweatier, the worse your commute actually is,
the more likely you're going to want to actually take
that shower more than anything, just to be conscientious of
(40:28):
others around you. I used to bike to work. It
was about, I want to say, like seven miles each way,
seven and a half miles each way, but it was
really flat, and so if sometimes I would buy hard
and then I would feel the need to get cleaned up.
Other times I would just take a nice, leisurely paced
enjoy myself. And because even though it was like eight,
you know, seven and a half miles, I was able
(40:48):
to do it in a way that I didn't work
out much of a sweat because of how flat it
was for most of the way, pretty chill. You gotta
take that into consideration as well. But the truth is,
if you're a commute is longer, more arduous, and your
sweat levels are bordering on offensive, showering makes sense. It's
a polite thing to do, and honestly, I think it
might actually help you come out ahead financially in the
long run. You might get disrespected around your office, right
(41:10):
if you are you know, show up in your spandex
and you smell like boh, Right, I mean I think
that that could be a real problem or real hindrance
to you advancing in your career. Right, if you're known
as a sweaty biker guy, it might draw more ire
from the people around you, your bosses, your coworkers than respect.
And so yeah, think of that twenty five dollars as
an investment in those relationships, right and maybe even in
(41:33):
your career. No, you're not throwing it away, right, You're
prioritizing those relationships and your future earnings possibilities.
Speaker 2 (41:39):
Social norms, in addition to the amount that you might
be able to earn in.
Speaker 1 (41:42):
The future just by being clean and decent. Right, And
so twenty five bucks is a small price to pay
to not anger them, right, to lose friends, but also
to potentially lose career opportunities. And yeah, there's also the
add of value of a gym membership, right that you
can take advantage of two. So yeah, maybe it's not
just the shower, but you can pump some iron and
hop on the rolling machine whatever you want to do
while you're as well. So in my mind, all signs
(42:04):
point to spend the money, take the shower if if
you feel like you need it, and maybe maybe even
if you feel like.
Speaker 2 (42:11):
You don't, that's right, it's not weird at all. And plus,
I mean, wouldn't you just feel better taking a shower
as well just being fresh and clean? But I think
part of this depends on how well you know your bud,
your coworker there. Because it's okay to have an honest
conversation about office hygiene, I think it's also totally fine
to make different decisions, right, Like, if your coworker decides, well,
(42:32):
it's not that it's weird for me to bit to work,
but it's just weird that you take a shower, I
think that's odd. But if that's what he wants to do,
let him be the sweaty, sweaty biker dude. Right. If
he wants to be. It doesn't mean that you have
to follow his suit. Maybe what he's getting at is
that he thinks it's just weird to take a shower
outside of the house, because I feel like that's more
(42:53):
of like a tradition, Like it makes me think of
old like sports. I never I didn't grow up playing
like football or anything like that, and so I grow
up spending time in the locker room right where you're
like standing around with a bunch of other naked dudes.
I'll be honest, It's not something I'm used to.
Speaker 1 (43:06):
So when you randomly end up at the YMCA and
you're in the locker room, it probably feels it might
be shocking. Yeah, it probably feels a little bit weird.
But I also say this because the gym that I
go to, there's an awesome locker room there with like
six or eight showers, And I go there and I
work out three days a week, and the number of
times there is even a single person in that locker
(43:28):
room taking a shower, Dude, it's incredibly rare, Like nobody
is in there, And I think, I guess I just
wonder if that is what his coworker thinks is weird
as well, the fact that like, oh man, you'd actually
like go to the gym and take a shower. I
think for a lot of folks it's not necessarily in vogue.
It feels like something from the seventies or.
Speaker 2 (43:47):
The eighties, you know. But that big said, it's for
me at least, it's something that's a perk that's totally offered.
It's included in the price of what I pay every
single month. And so, dude, you better believe I'm there
taking a shower after I work out. It's funny, Actually
I take a shower after I work out, but before
I bike here. But again it's because our commute, our
bike commutees really short. Far not trying to brag or
(44:08):
anything like that, but I've got it.
Speaker 1 (44:09):
I've got it real good, the cleanest dude, I know.
Yes that's true. Well, yeah, so Wayne would I would
do what you think if you think it's right to shower,
and then do it. And it's really we're not talking
about a super significant amount of money, and like I said,
like it could it could be money well spent helping
you endear yourself to your coworkers. Then maybe they're more
(44:29):
likely to to join you on the bike in the
future because they're like, ah, bikers are cool, not sneaking.
Speaker 2 (44:34):
You hit that critical mass, yeah, and then all of
a sudden there's a whole office of all of y'all
biking to work. And then when y'all are all doing that,
there's other, you know, other benefits for bikers that y'all
could potentially advocate.
Speaker 1 (44:45):
Right, the more coworkers you get to partake in biking,
the more you can lobby for better benefits from your employer, Like.
Speaker 2 (44:51):
How about an actual bike rack? Right lock up er bikes.
Speaker 1 (44:53):
There's some cool companies out there who will pay people
money every every single day they commute, or they will
help fund a new if you commute a certain number
of days. So those are the kind of things you
can say, Hey, a quarter of us now like to
work because I've been so instrumental in spearheading this effort,
Why wy'n't you help us out here? And maybe it's
it's good for their you know how much they pay
(45:14):
for health insurance plans, and it's good for morale all
that kind of stuff. They might be more than willing
to do that. But good question, Wayne. We look forward
to question number four in the near future. But Matt,
let's get to our next question. This one is about
using a retirement account to pay for a real estate purchase.
Speaker 4 (45:32):
Hey, guys, this is Matt.
Speaker 8 (45:34):
I'm in Georgia and have a pretty straightforward question. I've
essentially made it through money Gear six. I'm looking to
buy my first home and I have a pretty good
stockpile in my IRA. I have enough to put down
twenty or fifty percent in some cases, I could even
pay cash for a house, just depending on what the
number is, and maybe still have some left over in
(45:55):
the IRA. And I'm going back and forth on where
to do that and how what that would look like,
and just wanted to get your thoughts on it. I'm
just not sure if I should do twenty percent, maybe
do fifty percent and take a loan, or if in
some places, you know, pay the cash and just have
less in my IRA that would I would have to
make up, of course, and would love to hear your opinions.
(46:15):
I think so much.
Speaker 2 (46:16):
Guys love the show all right, Matt and Georgia just
like me. Congrats on being in money Gear at number six.
That is awesome. Sounds like you've been dedicated to investing
for quite a while now, if you can potentially pay
for that house in cash with your IRA, that's seriously impressive.
Speaker 1 (46:33):
That's very impressive.
Speaker 2 (46:34):
You know, you might be looking at something cheaper, like
something that's more affordable, maybe you are in a more
country or rural part of the state, but with the
average price of a home in the US being in
the range of like four hundred and fifteen thousand dollars,
that's a pretty killer nest egg. Yeah. So if you've
got that much to you, Matt, Yeah, for sure.
Speaker 1 (46:52):
I mean, that's that's a lot of years of doing
the right thing, of maxing it out and of seeing
great gains. So and really a lot of our listeners, Matt,
are going to get to those multiple six figure levels
just by doing the right thing year after year after
year and socking money and index funds. But the heart
of Matt's question comes down to one thing. Is it
smart to liquidate your IRA in order to buy a home?
(47:15):
And the answer has some nuance, but the TLDR is
that if you've owned a home in the past couple
of years, you definitely should not use your IRA to
make this purchase. That's because there is a first time
home buyer exception that allows you to use some of
those funds up to ten thousand dollars without paying a
ten percent early withdraw penalty. If the money you're taking
out is used for the first time home purchase, that is,
(47:36):
you'll still owe taxes, so plan for that, but you
will avoid the ten percent penalty, which is nice. But
that's still a really small chunk of what he's saying,
I mean, a really really small amount.
Speaker 2 (47:46):
Yeah, it sounds like he's looking at above and beyond
that ten thousand yea, most likely.
Speaker 1 (47:50):
It sounds like it unless he's like literally buying a
tear down shrack or something, right. Yeah.
Speaker 2 (47:55):
So it's also worth noting that Matt, he didn't say
anything about this IRA being a wroth IRA, And this
is worth mentioning because if that was the case, well,
then he could pull any and all of his contributions
to the wroth without having to pay a penalty or
any taxes. There's no taxes because roths are funded with
(48:15):
post tax dollars. You've already paid taxes on that money.
And this flexibility is it's one of the massive benefits
of going with a wroth over a traditional IRA because
you can withdraw those contributions for any reason. But then
on top of that, you still have that first time
home buyer exception as well, So it's kind of there's
a double benefit for first time home buyers if you
have a WROTH as opposed to a traditional IRA.
Speaker 1 (48:37):
Yes, but that still begs the question, should you take
advantage of this loophole? This perk is some might think
of it.
Speaker 2 (48:44):
So we've identified the perk, it's there, Should you use it? Right?
Speaker 1 (48:48):
And probably not, is the answer. I mean, Matt has
he's got a lot of money in his IRA, so
he shouldn't feel bad about using ten thousand dollars of
it for this purpose of buying the home if it
helps him get to the place where, you know, he
feels like he has enough to put down, especially if
it gets into like that twenty percent down mark that
we talked about earlier. But most folks should avoid it altogether. Right,
Using more than the allotted ten thousand dollars of those
(49:09):
IRA funds, it would be a bad financial move given
the taxes and penalties you'd owe for cashing out early,
especially if it's a traditional IRA. Right, But even if
it's a ROTH, it's not necessarily a good idea to
take money out of that either to withdraw most of
those contributions you've been putting in over the years. So
the best thing to do if you've been a great
investor and now buying a home as your next goal,
(49:31):
is to build up more liquid savings to help you
get that new place, right, leaving your IRA fully or
at least mostly intact.
Speaker 2 (49:37):
Yeah. I don't want to jump to conclusions, but Matt
sounds pretty young, and if he has been able to
sock away that much money towards retirement, I think that
he would then be able to shift gears and turn
his laser like focus onto saving up a down payment
sure pretty quickly.
Speaker 1 (49:52):
Even if that means, by the way, cutting back a
little bit on contributions to retirement accounts. Now, that's okay,
because he's already done a great job at that. If
the home is his next goal, that's fine.
Speaker 2 (50:02):
Yeah. Well, I mean I think that's the other downside
of using some, most, or even all of your IRA
to buy a house is that you won't have much money,
if any, left over in your retirement nest egg, you know,
unless you have a sizeable four or one K or
something that you didn't mention. If that's the case, then
I don't know. Maybe he's got more, he's got additional
funds for actual retirement. But with interest rates having gone
(50:24):
up quite a bit, like I get the increased desire
to avoid getting a mortgage right, to avoid a home
loan altogether, but it's likely going to be a better
path to take than using money that's earmarked for your
future in order to make this happen. And with the
limited annual contribution amounts that you're able to, you know,
fund your retirement accounts with you, you can't get the
money back into your IRA. It's not like you can say,
(50:45):
all right, once I get that house, I'm gonna go
gangbusters on those tax advantaged retirement accounts can put the
genie back in the not going to be able to
do that, And so keeping your IRA intact, saving up
for that down payment within a high yield savings account again,
even if it does mean reduce seeing your current contributions
towards retirement savings, I think that makes the most sense.
Protect your retirement, don't actually touch your retirement accounts, yep.
Speaker 1 (51:07):
Don't mess with the IRA in order to do that.
And by the way, there is something known as a
self directed IRA, which allows you to invest in real
estate or even other things like private companies through with
your IRA money. And if you did this, your money
would still be inside of your IRA, just buying that asset.
But the rules are complex, it's not advisable in our opinion.
And by the way, you can't even buy personal real
(51:28):
estate either. But I just wanted to mention it because
you might hear someone say, well, why don't you use
it inside of a self directed IRA? And the truth
is you wouldn't qualify buying a personal residence doing that.
But I'm not a fan of the self directed DIRA
path anyway. I'd rather see you stick with the boring
traditional index funds inside of your IRA. But it's something
you might hear inklings about. And I don't think that's
(51:50):
for you either, That's.
Speaker 2 (51:51):
Right, But Matt, we hope that that gets you pointed
in the right direction. We hope that you are again
that it sounds like you have a laser like focus.
And I think if you are able to direct that
death ray onto onto amassing a down payment, that you
will be fully funded. You will have that twenty percent
down before you even realize that, but a best luck
to you.
Speaker 1 (52:10):
That mortgage might not be around long either. Once you
know exactly exactly. All right, let's get back to the beer, Joel,
that you and I enjoyed during this episode. I will
give it a shot.
Speaker 2 (52:21):
This was Canazawa Haya Kumengoku pale Ale.
Speaker 1 (52:26):
You did better than I did.
Speaker 2 (52:27):
But again, when you when you once you hear somebody
stumble through it, you're able to pick up the pieces.
And this is by Waku Waku Tezukuri Farm Kawakita. This
is a beer from Julia, the last of the three
beers that she sent our way there from Japan. Joel,
what were your thoughts on this one? This was super floral,
super botanical. It tasted like the pictures I've seen of
(52:51):
Japan and the cherry blossoms with there at full bloom.
That this beer tasted like that, like you're sitting in
lakeside gazing upon Mount Fuji exactly, you know, like you do.
Speaker 1 (53:03):
And we don't have like very we don't get to
drink many super botanical beers. This so this one was
like really really fun.
Speaker 2 (53:10):
I read it. Yeah. To me, this one tasted the
most familiar, like in my mind, it tasted the most
like beers we've had Stateside, whereas like the I PA
and then the first one that we had tasted like
they were from a different country. I feel like this
one was like, oh okay, this this tastes more like
maybe an American floral botanically American pale, but definitely got
(53:30):
glad we got to enjoy it. Oh. I Actually, so,
I was trying to figure out the name because obviously
it's all written in Japanese on the label. I came
across this brewery's website. They grow all of their malts locally,
so when it says whatever farm, it's because literally they're
not getting their grains shipped in or anything like that too.
So this is like, this is a farm to table,
(53:51):
farm to pine glass kind of beer. Very cool, we
can enjoy.
Speaker 1 (53:54):
I can dig that. I think Rogue out in Oregon
does something similar.
Speaker 2 (53:57):
Yeah.
Speaker 1 (53:58):
Yeah, so I loved their beers back in the nay,
but I haven't had one in a minute, So mine
need to get some Rogue beers on the show some
old dead guy ales, right, yeah a minute. And by
the way, or the hazel nut brown you know, oh yeah,
browns were Browns are a nice introduction to some of
the different craft beers out there. All right, let's gonna
do it for this episode again. We're gonna take more
of your listener questions on upcoming episodes. We're gonna be
(54:20):
taking them every week moving forward, So submit away. We'd
love to hear yours. Go to how to money dot
com slash ask for the instructions so that you can
record that voice memo. Get it sent over to us
so we can take it soon. We need your questions
and we look forward to hearing them.
Speaker 2 (54:33):
That's right, The weirder the better. We will link to
any resources that we mentioned during this episode up on
the show notes at how tomoney dot com. But buddy,
that's gonna be it for this one. Until next time.
Best friends out and best friends out. Yeah,
Welcome to How to Money. I'm Joel and I am
matt and today we're answering your listener questions.
Speaker 2 (00:25):
Know what, buddy this is and ask how to Money episode.
This is a Monday episode. And by the way, speaking
of this coming on on Mondays, we're actually gonna make
a little tweak to the format of the show. Not
only will you be getting these listener question episodes every
other week, you're gonna be getting them every single week.
This is a change that we're making and every Monday
(00:47):
you can now expect and ask how to Money episode
here in your feed.
Speaker 1 (00:52):
Yeah, so by popular demand, Matthew, or just by edict,
by the two of us.
Speaker 2 (00:57):
We've decided. But also we have gotten so many great
listener questions, and that's really one of the main reasons
one of the funnest things for us to do here.
Speaker 1 (01:04):
Yeah, and so many people submit questions and we're not
able to get to all of them, and we're just hey,
if we tackled twice as many, then we'll probably get
to most of them, which is great.
Speaker 2 (01:13):
So we're talking to a friend about this and I
looked in our folder where we keep all basically all
of the listener questions that come in and then we
kind of mark the ones that we want to, you know,
we kind of line them up and depending on the content,
depending on the specific question. But there are over two
hundred and seventy unanswered listener questions that we have not
gotten to over and granted this is over the course
(01:33):
of five years, to our shame.
Speaker 1 (01:35):
In some way, it's unfortunately, so we Yeah, I think
in a way, it's where we feel bad that we
can't get to all the questions that people have. That's
what the Facebook group is for as well, by the way,
people can go in there help each other out. But
some of them are repeats, right, Like, some of them
are very similar to Okay, we've talked about it before.
Speaker 2 (01:49):
It would be fun to be able to get to more.
Speaker 1 (01:50):
Of them, exactly, And so I think that's really the
goal here, And so hopefully this encourages you too, if
you're like I might. I thought about submitting a listener question,
but man, they do whatever are they actually going to
get to mine? Well, hopefully we'll be able to get
to yours now. So yeah, feel more encouraged even to
submit a question to us that Matt and I can
take on the next Ask htm episode, which comes out
(02:11):
not two weeks from today, next Monday, one week from today.
Speaker 2 (02:13):
And by the way, this does not mean that we're
not going to have interviews. We'll be sharing more about
We're not going to spend the entire this entire episode
talking about the format of the show.
Speaker 1 (02:20):
Let's keep moving.
Speaker 2 (02:21):
I wanted to ask you, what do you think about
my new kids bike sitting against the office while I
actually forgot about it and it's sat there almost like
half the day before. You were like, why do you
have a kid's bike in Did you punch a kid
and take their bike? My new twenty four incher No,
I wanted to mention this. So it was Heavy's birthday
last week, and she had been mentioning for a while
(02:44):
that she doesn't have a bike that fits there anymore,
to my great shame, the fact that we haven't had
her properly outfitted, and it's literally kept us.
Speaker 1 (02:51):
From being able to go on family right, especially when
you and I and our families we prioritize biking so heavily.
Speaker 2 (02:56):
You know, it's something that we had just not gotten
to and we're like, all right, this is for her birthday.
We'll make sure to get her an awesome bike. I
was looking specifically at like this fancy lightweight specialized bike,
and I was getting really close to pulling the trigger
on it, and I thought, wait a minute, I need
to see if I can find this thing used. Hopped
on Facebook Marketplace and I didn't find that specific bike,
(03:17):
but I found one that was very, very similar. It
was also a twenty four inch, and I was able
to get an incredible deal. It was a It's an
Arii co Op twenty four inch rev City is the
specific bike. And I know the name because I looked
it up because I wanted to know the cost. Brand new,
these jokers are four hundred bucks. Currently they're on sale
Arii for like two hundred and eighty. I think I
(03:39):
was able to get this thing used. It actually was
an excellent condition for one hundred and thirty five bucks.
That's sweet, man, man. Yeah, the lady she had purchased
it for her daughter. I think during the pandemic. She
wrote it like four times. Quickly outgrew it and she's like,
I gotta unload those bike now.
Speaker 1 (03:55):
That's what happens with those kids. By You and I
were talking the other day, and it's the same thing
with kids shoes. I do not buy expensive shoes for
my kids because I grow in a matter of what
seems like weeks. I know it's probably more like months,
but still it feels like quaks. Yeah, and bikes are
some like buy but you also don't want to buy
them a super heavy, complete piece of crap because it'll disincentivize.
Speaker 2 (04:13):
Weight is one of the biggest things, because when they're
big and un and the kids can't handle them, it
makes it not very fun.
Speaker 1 (04:21):
I do feel like those Arii bikes are probably that
perfect middle of the road for a whole lot of
people where they're not crazy expensive. There's like five hundred
and six hundred dollars models you can get when they're
on sales or else the US. Yeah, okay, it makes sense,
but when you get amused, like you can get even better,
even less than that. So the only well, so the
only benefit of having four kids, I mean it's expensive
(04:42):
in lots of different ways, is that I can kind
of justify the money I spend on bikes because I'm like,
all right, there's a chance that at least three other
kids would ride this bike.
Speaker 2 (04:50):
That's a good point. Oh yeah, that's one thing. I
would have been willing to drop four or five hundred
bucks on a nicer bike knowing that, but I was
also glad that I didn't have to do that. So
just a reminder for folks out there, and there are
deals to be had on Facebook market.
Speaker 1 (05:02):
One of the random thing on Arii Bikes. I think
they have some sort of trade up system at a
lot of stores where they'll give you a decent chunk
off the next upgrade you make if your kid outgrows
that version, and so you least want to check in
and see, okay, cool if I buy it here and
I return it, I think with it. If you upgrade
within the next three years, they'll give you a substantial
discount on the next one. So that's cool too. I mean,
Aria is a great company, so absolutely making good stuff.
(05:25):
But Matt, all right, let's mention the beer we're having
on this episode. This is I'm gonna mispronounce this probably
Kanazawa Hiakomunga pale al. So this is another Japanese beer,
our last Japanese beer from listener Julia, I thought you
did well, Joel, thank you good. That was pathetic, really,
but we do our best here. But We're excited to
try this one, and we'll give our thoughts at the
(05:46):
end of the episode. But let's get the listener questions.
Of course, now we're doing this weekly, so feel free
to submit yours. You can submit at how to money
dot com slash ask that are simple instructions for you
to record a voice memo and get it sent our way.
But let's get to the question for today's episode, Matt.
This one is specifically car related.
Speaker 3 (06:04):
Hi, Matt and Joel. My name's Darlene. I'm calling from Montana.
I'm a longtime listener of your show and appreciate all
the advice you guys give your listeners. My question for
you guys is if I should pay off my car
Loan early versus keeping that money aside for a future
home purchase. I owe less on the car than it
is worth, and I have an interest rate of three
(06:25):
point seventy five percent. I have about fifteen percent saved
up for a house. Now. I'm about a year out
from that home purchase and it would be my first home,
so I know I don't necessarily need the full twenty percent,
but if I pay off this car, it would take
that savings from fifteen percent to about five And a
small backstory is I am thirty two years old. I'd
(06:48):
currently have no other debts besides this car, and I
didn't make the best decisions in my twenties, but now
at thirty two, I am making better decisions. I have
eight months worth of an emergency savings set aside separate
from that home savings, and I'm contributing to my four
O one k HSA and a ROTH and I just
(07:09):
want to make sure I'm making the best decision. I
don't want this to affect my credit score negatively or
my ability to get a home in the future. I'd
appreciate any advice you guys have or if I'm maybe
missing anything that you could point out. Thanks for all
you do, all.
Speaker 2 (07:24):
Right, Darlene, thank you so much for listening to the
show for so long. Now, and let's go ahead and
dive into it as to whether or not you should
pay off that car loan or not. For most folks,
we are fans of not having a car loan in
the first place. We don't like them, No, absolutely not. Yeah,
bottom line, we don't want you paying interest to a
financier a bank. But specifically this is important to keep
(07:47):
in mind, especially these days, like with car prices being
sky high and interest rates skyrocketing. With that in mind,
like it's tempting to finance a car or to take
out a longer loan in order to afford the car
that you that you want that you're looking at. And again,
it's not that it's never okay, It's just that we
want most folks thinking about how they can slash what
they spend on cars or transportation, which would in turn
(08:09):
allow them to funnel more money into income producing assets
instead of doing what everybody else is doing out there,
which is buying cars that they can't really afford.
Speaker 1 (08:17):
Yeah, and it's a mindset thing too. It's like how
much how little can I spend on a car so
I can do awesome other stuff, versus like, well, how
much am I allowed to spend on a car, which
is kind of the personal finance question most people ask.
Speaker 2 (08:27):
Yeah, so, Darline, I'm also a little I'm gonna apologize
for basically beating you up right out of the gate
and pointing out this mistake. And so with that in mind,
let's also mention that you've made some insanely awesome financial
progress since those early mistakes that you mentioned to be
in this position right, having this much saved in addition
to the amount that you have on hand for home
(08:49):
savings for a down payment, that is truly incredible.
Speaker 1 (08:51):
And by the way, she said, the rate on that
car loan is three point seventy five percent, which, although
we don't like car loans, that's not a bad rate,
especially in today's interest rate environment. You can make more
on that in savings, which is sweet. So yeah, no,
Darlene has been crushing it in recent years, that's for sure.
And eight months worth of savings right, that puts her
really far along the financial independent spectrum. That we get
(09:12):
a lot of cash on hand, which I love. We
talked about that a couple of months ago, and how
man that much will It gives you a lot of options,
more options than the average person. And so that dedication
has paid off in a bunch of added flexibility that
she's been able to garner. There's so much more mental
and time freedom that you can amass when you've been
able to save, when you be been able to stock
(09:33):
away that much. And in addition to that, Matt, like
I said, this car loan is more benign three point
seventy five at percent interest rate. It's like nobody's mad
about that right now because of what they can do
to make their money more productive if they've got low
interest rate debt. This is why we tell people, no,
don't bother, don't worry about, don't focus on paying off
that low interest rate mortgage early. There are more productive
(09:55):
things you can do with those dollars. And so, because
that's the case, Wed tell Darlene, there's just no reason
to pay off this debt more quickly. Then you need
to pay it off as agreed, we would rather see
you putting extra money towards saving for that home purchase.
And like you said, Darlene, like it's it's certainly not
a requirement to save twenty percent to put down on
that house. But it's a goal we're shooting for, right
(10:17):
and you're not too far off from that goal. So
by not paying off your car loan, it looks like
you might actually be able to get there because you're
you still got a little bit of time left to
hit that goal. If I were you, that's what I'd
be shooting for totally.
Speaker 2 (10:29):
Yeah, And she also mentioned her credit score at the
end of the question as well. That's another consideration. Were
you to pay that off, you'd be eliminating an installment
loan and your credit mix. And so that's another factor,
the fact that you know by eliminating this loan, it
would potentially ding your credit, especially if you've had that
car loan for a number of years.
Speaker 1 (10:47):
Yeah, you don't want to necessarily let the tail wag
the dog on the credit score thing. But if you
pay it off right before, right as you're applying for loans.
Speaker 2 (10:53):
It's going to have an impact, which then could really
come back to bite you in the butt and you're
stuck with a higher interest rate mortgage than maybe you
otherwise it would have been able to get your hands
on order or a.
Speaker 1 (11:02):
Half point higher. That makes a difference in those monthly
payments in the overall amount you pay for that house.
Speaker 2 (11:06):
Yeah. Yeah, and plus if you are able to get
to that twenty percent down, which again it sounds like
you should be able to. If not, I think even
considering a more affordable house might be the solution. But
if so, this means that you'll be able to avoid
PMI Private mortgage insurance if you're taking out a conventional loan,
which this expense it can be a pesky additional monthly cost.
(11:26):
How much that will be, it'll depend on the price
of the home that you're buying, but it could be
a couple hundred bucks every single month. And having that
extra cash to put down will also help you to
qualify for the best rates from a bank or a
credit union, and it's going to lower that monthly payment,
which we love to see. And so, considering where you're
at financially, and you know that you've got some time
before you start making offers, we think that you should
(11:49):
keep patting that down payment fund as opposed to getting
rid of that car loan from your life altogether.
Speaker 1 (11:54):
I also love how she said she was keeping those separate, right,
the eight months worth of savings versus the home down
payment fund. I like that they're not this like commingled. Ah,
we'll see what happens. Like there are separate goals for
money here and they're allocated accordingly, and so I think
that's a smart approach. And it sounds like, you know,
Darlene is being wise when it comes to saving for
(12:14):
this home. And I do think that that, yeah, you're right, Matt, like,
not paying off this car loan early is probably on
multiple levels, going to be the best bet helping her
to be able to buy this home with ease, get
the best rates, get the best terms, and you know what,
eventually that Carl's going to be gone anyway, it's going
to be out of her life in the not too
distant hutual guessing.
Speaker 2 (12:33):
Yeah, well, I'm glad that you mentioned that too, because
I think that it depends on Darlene's risk tolerance as well.
But eight months it's a little above and beyond the
standard three to six months yeah, worth of living expenses.
And so Darling, I mean, honestly, I feel like I
love keeping money categorized in separate and distinct from each other.
But I think it might be worth considering do I
(12:54):
need those additional two months worth of living expenses? Maybe
you can kind of. It doesn't have to it's not
a binary decisi and it's not a dichotomy, right, it's
not I'm going to completely deplete my emergency fund or
I'm not going to touch it at all. Maybe you
could shave a couple months worth off that way, you're
still you know, you still have a solid six months
worth of a living expenses on hand. But maybe that's
able to kind of juice that down payment a little
(13:17):
bit and kind of gives you that emotional win that
oh man, I am so close. If I, you know,
take two months worth of living expenses from over here,
that means I've only got maybe six, seven, eight, nine
months left before I've got that full twenty percent to
put down exactly.
Speaker 1 (13:31):
I think you can pull some from it. You just
don't want to deplete it to buy the house of
your dreams and be house for it right like that
would be ill advised. But if you're pulling a little
bit because ay, six months is still plenty then and
you can always work on building that up after the facts.
But getting that twenty percent marked is huge, and you know,
not many first time home buyers achieve it, but I
think if you can, it's it's worth it's worth doing.
(13:52):
And the fact too that you're also investing, you know,
you're contributing to your HSA or four O O K,
you're wroth, You're doing all of the above, which is
which is a great news. And because choosing to not
pay down debt, the truth is it's only a wise
move if you have better options, and there are some
people out there who might call in and they would say, hey,
should I leave let this debt linger, But they don't
(14:12):
necessarily have better things to do with the money. They're like,
I was thinking about buying a jet ski or something
like that, or I was gonna try to go up
in space with Richard Brandson and something like that. Spend
the money on just something to goof off or whatever.
It's probably not a good thing to do while you
still got debt lingering in your life. And so what
you choose to do with the money instead of paying
off the debt. That is kind of at the crux
(14:33):
of this question too. Man, that's all the difference in
the world. Yeah, because if somebody's got a gambling problem
where they're like, I'm just gonna spend it on clothes
if I don't pay off this debt, whether it's big
or small, then we would say, go ahead and pay
off the debt, because there's a there's a direct return
on your money. It's better than just frittering it away.
But it sounds like, of course, Darlene has demonstrated a
(14:54):
high level of discipline and she's doing really smart things
with her money. She's got meaningful, good goals, and so
I would say, she's got what it takes to handle
her money in a more nuanced manner, letting this debt
linger while she socks away more in savings to hit
that twenty percent mark so she can buy that awesome house.
Speaker 2 (15:10):
Yes, right, Yeah, And by the way, I think it's
worth missing too. I don't want to add to the
cult of home ownership, and I think there are a
lot of options for folks out there, Darlene. I don't
want to, like, I don't want this just necessarily to
be a slam dung decision, because you know that this
is like quote unquote, the wise thing to do, because
in some cases it may not be the wise thing
to do, because if you're only looking at the numbers,
(15:32):
maybe it makes sense for you to rent as cheaply
as possible.
Speaker 1 (15:35):
Or we talked about that not too long ago, how
renting makes sense in almost.
Speaker 2 (15:39):
All a lot of major markets.
Speaker 1 (15:40):
So it has to be a personal choice, something that
you really want to do. Yeah, you're not buying the
home because it's the quote unquote smart personal finance me.
Speaker 2 (15:46):
Yeah. And so the reason I highlight that is because
I think it's worth owning and addressing the fact that
when you buy a home, there is some consumption involved.
You are doing this as a lifestyle upgrade in part.
It just so happens that this life style I'll purchase
is one that typically appreciates in value as opposed to depreciating,
which is pretty much everything else that you can spend
your money up if you're not investing it. And so
(16:09):
we want you to make sure that you're approaching the
home buying process from the right angle as well, not
just like as a default assumption that this is something
that you've got to do for sure.
Speaker 1 (16:18):
All right, Matt, We got more money questions to get to,
including investing advice for a travel nurse. We'll get to
that and more right after this.
Speaker 2 (16:34):
Yeah, I just realized we didn't tease to some of
the questions here at the top of the episode because
we're all caught up talking about the format of the show.
But we do have plenty of additional questions to get to.
We're gonna be hearing from a listener who's actually asking
about basically a frugal or cheap when it comes to biking.
We'll get to that one here in a second, but
first let's hear from a listener who is using this
(16:54):
new hospital bill negotiating service, or specifically, he's wondering if
he should use it, is a legit. Let's hear it.
Speaker 4 (17:01):
Hey, guys. Joe NuGen here from Newego, Michigan. I had
a question for you about a company I recently learned
about called good Bill. I had to take my eighteen
month old son into the emergency room. He was having
an allergic reaction. Thankfully, by the time we got in there,
everything had kind of calmed down and they really didn't
have to do anything to him. They just saw him
and gave him some benadryl. But we got a large
(17:26):
emergency bill for that less than an hour visit that
we did. And I was doing some googling and found
a company called good Bill that will negotiate to save
you money on your health healthcare bills, and they will
charge you twenty percent of whatever they save you. So
just calm to see if you guys have heard anything
(17:47):
about this or any recommendations you would have. All right,
thanks guys. Again, that company is called good Bill. Thanks ye.
Speaker 2 (17:55):
I'm guessing that's some expensive benadril?
Speaker 1 (17:58):
Is that seriously?
Speaker 2 (17:59):
I that you're paid for it?
Speaker 1 (18:00):
The emergency rooms? I don't know if you've noticed. They
don't charge like fair reasonable prices.
Speaker 2 (18:05):
It's ridiculous.
Speaker 1 (18:06):
It's like one hundred and fifty dollars sor an ipprof
and I can't imagine what benadil costs.
Speaker 5 (18:09):
Was.
Speaker 1 (18:09):
That's a specialty, right exactly. I mean, yeah, it can
be crazy, crazy expensive. Joe, We're glad your son is okay, yes,
And just note really to everyone else out there. I mean,
first off, take any sort of medical advice that we
give with a grain of salt, any advice that you
think we might be giving, right, they're going to solve.
Even the money advice like you should you should do
your due diligence is for entertainment purposes only, Joel, I
mean kind of, well, but we we do legally, yes,
(18:34):
but there's a whole lot that you know, we want
you to to learn a lot and then but we
also want you to to second guess us and think
for yourself and and go to other sources at the
same time. But on the medical front, speaking to kind
of what Joe was talking about at the beginning, going
to the emergency room is a really really expensive thing,
and there are cheaper options out there, so urgent care
(18:56):
is often a better option because you're gonna get seen
more quickly. Your bill is going to be a whole
lot lefs then it would be if you if you
go straight to the er. But so much depends on
what sort of you know, injury or health issue you're
dealing with. Sometimes just going to your local grocery store
or pharmacy, the dock in the box sort of thing,
those can be enough, just depends on what time to
day it is and what's going on. I know, and
especially Joe, I sympathize with you when when you got
(19:18):
a little kiddo who can't talk, we one percent get
the reason for taking him in totally. It's better safe
than sorry, right of course, but just a plug for
some of those in between services that can make sense.
In many cases, if you go to the wrong one,
you could be stuck with a bill, and that's it's
much much larger, many times larger than if you just
gone to the right place at the very beginning.
Speaker 2 (19:36):
Yeah, which which Chris Farley movie was it where he
sits gig like gets on the plane or the helicophany,
he sits back against the bee is it black sheep,
Black Sheep or Tommy Boy one of the Yeah, not
because Tommy Boy. They're like, yeah, the car salesman stuff.
So yeah, if your kids swelling up like Chris Farley
and Black Sheep, better safe than sorry. But the problem
is is that this kind of thing, it happens to
(19:57):
folks across the country all the time. We are not considering,
I guess some of the additional ramifications of visiting an
actual er at the quote unquote hospital that everybody knows.
And then it just shows how messed up our healthcare
system is. It ends up costing folks like Joe and
his family thousands of dollars that they hadn't budgeted for
(20:17):
medical debt. It's the leading cause of bankruptcy in our country.
But the truth is that it's possible to fight back
against some egregious bills like this, but just most folks
just don't know how to go about doing it, and
so because of that, they get on a payment plan
they want to do. It's rights pay that sucker off
a lot of times on the first bill, and that's
one of the things we've talked about with Marshall Allen.
Never pay the first bill. We understand the desire to
(20:39):
want to pay for the services that were rendered to you.
Speaker 1 (20:43):
But there are ways for you to get that cost down. Well,
sometimes a lot of people they can't pay it when
the first bill comes. Yeah, so they get on this
payment plan they pay it for years off into the
future for this one time medical procedure or in Joe's case,
this one time administration of bendrill, which is tough to say, right,
and that is what puts people over a barrel and
what ultimately leads to the ruination of a lot of
(21:05):
people's finances. It's a massive problem. So, yeah, these er bills,
they are they're no joke, and it is cool to
see companies like good Bill come along. This is what
Joe mentioned in his question, Right. It addresses a real
need to help people be able to advocate for themselves
in a system that is opaque, that is like hard
to make headway in. The Good Bill is trying to
(21:28):
do this on your behalf, And I do want to
say up upfront, the truth is you could do this
on your own.
Speaker 2 (21:33):
Right.
Speaker 1 (21:33):
You can ask for an itemized bill, which in and
of itself it might reduce the total bill amount.
Speaker 2 (21:38):
Right.
Speaker 1 (21:38):
You can talk to a patient advocate at the hospital
where the procedure was done. You might be able to
get some or all of the bill written off, maybe
completely forgiven, right, depending on your family size and your income,
like when you look at the number of something like
a family of four making one hundred thousand dollars, they
could qualify for what's known as charity care in the industry.
And so you just got to know that it exists,
(22:00):
and you've got to apply for it in order to
make it happen. If you just get the bill, you
start making payments, you have undone your rights, right, you
have forsaken your ability to get a better deal on
that care. So, you know, fighting medical bills that can
it can be kind of like learning a new language,
though it can take a lot of time, a lot
of energy. And that's why Good Bill launched, it seems.
(22:21):
And by the way, one of the cool things about
Good Bill they say, if they can't save you money,
you don't pay a dime. So that is nice, right,
You're giving them very little risk and yeah, giving them
a chance to argue on your behalf. And if they say, eh, sorry,
we got frustrated too, there was nothing. There's nothing we
can do. This bill is what it is, Well, at
least you don't owe Good Bill any money exactly.
Speaker 2 (22:41):
Yeah, Good Bill. It seems like they've kind of gotten
this down to a science where they're able to get
results in a relatively short amount of time. But how
it works is that they take your billing records and
they perform a review, including they have a medical coder
look for billing errors, and by doing this this holds
the hospital or the doctor's office accountable for any upbilling
or any undocumented charges that might have actually been added
(23:04):
to the bill. They also do a pricing review to
ensure that you're not being billed at an inflated rate
for those services. And so with all that, all that
they're able to provide I think taking twenty percent of
the savings in order to do that work, that seems
pretty dang reasonable to us. There's another service out there,
co Patient. There is less written about co Patient. It
(23:27):
seems like it's been out for a lot longer, but
Good Bill seems to be they're newer, but they seem
to be doing a good job. I guess that's my
only hesitation with Good Bill is that they are newer.
But that being said, they've got awesome reviews upon BBB,
upon the Better Business Bureau, and you see them responding
to folks, You see that they are able to save money,
(23:47):
save folks money. I mean anywhere from like a few
hundred dollars to like thousands of dollars of folks who
have actually used good bill. So if feels me I
would because of that, like I wouldn't have any hesitation
at least giving it a shot, upload my bill, seeing
if they can negotiate it down some.
Speaker 1 (24:02):
Yeah, Matt, this kind of kind of makes me think
that you could probably translate your favorite Russian novel into
English on your own, or you could just go buy
the copy that's already been translated by someone else, because
that would that would just require you a whole lot
of like learning a new language, and a whole lot
of time and effort.
Speaker 2 (24:19):
And I think like learning literally a new language, as
opposed to learning the quote unquote hospital coding language exactly, yeah,
which is similarly hard to understand a complex. Right, So yes,
it's possible. Yes, there are resources out there that can
help you to diy this thing. But think about your time,
how much your time is worth, and how much effort
you want to put into this, And probably a lot
(24:39):
of it depends on how big that bill actually is
and how much you know, and how mad you are,
because sometimes you're just willing to fight and you're like,
I'm gonna I'm gonna do this on my own. I
have the gumption, I have the courage whatever it is
that's making you mad to actually follow through. Sort of
like Darlene's question about, well, what would you do with
the money that you would have used to pay down
your car?
Speaker 6 (24:58):
Long?
Speaker 2 (24:58):
Right? So for for you, Joe, how would you spend
that time otherwise? Because if you would actually put the
time in to fight this thing, then man, more power
to you go for it. But I think a lot
of folks aren't going to give it any time at all, right,
And so they're they're kind of looking for the thing
that's going to get you eighty percent of the way there, and.
Speaker 1 (25:14):
Literally this is what they do. Give it a shot,
charge you twenty percent of whatever they say, give it
a shot for a minute. If it doesn't work out,
turn it over to good Bill then. But if yeah,
like if you're going to just kick your feet up
and watch regular seas in baseball, and while good Bill
handles it. I don't know, maybe make a couple of
phone calls yourself, but good Bill definitely seems like a
solid service worth relying on. If you like you're butting
your head against a wall, that's right, all.
Speaker 2 (25:35):
Right, Joel. Our next question is from a nurse who
has effectively doubled the amount of money that she makes.
But she's got a problem. She's having a tough time investing.
Let's hear this question.
Speaker 5 (25:45):
Hey, Matt and Joel. My name is Kayla and I
live in Kansas. I have been listening to your podcast
for about five months now, and I have a question
for you. I'm a travel nurse and I have been
trying to look into starting my retirement fund. The issue
that I have is that I am not a contract worker.
I do not own my own business. I get a
W two from these companies, so I don't qualify for
(26:06):
a SETIRA or a solo four one K and most
of these companies either do not offer retirement benefits, or
if they do, like where I am now, they require
you to be employed with them for at least a
year to qualify for the benefit and to be able
to start contributing. But each job assignment is about three
months long, and sometimes I change jobs in companies two
(26:28):
or three times a year, depending on the job, the pay,
the needs of the hospital. So I don't know what
to do because I'm not with the company long enough
to start contributing, or I'm not offered the benefit. And
if I do stay long enough to qualify, and then
I have to quit shortly after and go with another company,
(26:49):
then I have to wait a whole another year to
be able to roll over the old account to a
new account. I'm just a little confused on all of it,
and I don't know what to do. So if you
could help me out, i'd really appreciate it. I love
the podcast. It's the only money podcast that I've listened
to that kind of simplifies the financial goals to make
me feel like they're actually achievable. So thank you for
(27:11):
your helping my question, and thank you for creating a
great show. Matt.
Speaker 1 (27:15):
You know I'm partial to alliteration. She's Kayla and Kansas,
which I dig I guess say I like that.
Speaker 2 (27:20):
And she's a traveler, so she might end up being Kleene, Connecticut.
She could be Kaylene Colorado. There's so many possibilities here. Well,
and we're so glad to hear the podcast have been helpful, Kayla,
thank you for listening. And yeah, making money relevant, simplifying
the complex, that's the goal, man, that's the heart of
what we try to do here. And Kayla, Matt is
in an interesting position here, right, because that one year
(27:41):
timeline to be able to contribute to a workplace retirement
account at least to score the match. That's fairly standard, right,
And so the called a vesting period. And it might
take two, three, four years that your employer says, eh,
we will contribute a match. But if you leave before this, you.
Speaker 1 (27:57):
Don't actually get it, right.
Speaker 2 (27:58):
You got to prove your loyalty, right, We're willing to
give you that extra little cream on top.
Speaker 1 (28:02):
And travel nurses are disloyal by nature, like that is
what they do. And I don't mean I don't mean that,
like in the best way possibly. They can't be an
awesome pet owner or a long time girlfriend and boyfriend
even get married, right, I'm not saying that, But that's
the heart of what they do is they're working two, three,
four different jobs every single year. And since you're never
in one place that long, you're just never going to
(28:22):
qualify and which puts you at a slight disadvantage when
it comes to saving for retirement, which so I get
the annoyance, right, but it also I will say, doesn't mean, Kayla,
that you can't invest your future, right, So we'll offer
our best advice to help you get started, to help
you get going down that path.
Speaker 2 (28:37):
Yeah. Well, and she even mentioned too how she might
be eligible. But even still after she leaves, she can't
roll it over for another year, which would just be
a massive pain in the butt if you're at multiple
hospitals over the course of the course of the year.
So even if you could do that and you were
willing to stay there for whatever period of time, just
leaving a trail of four to one ks that you
have to keep up with and roll over. Honestly, it
(29:00):
seems like a massive pain in the butt. I would
want something that is my own that I never have
to worry about as far as rolling over. But one
of the perks of being a travel nurse, besides getting
to see a lot of the country wherever it is
that you're taking a job any place it starts with
a seat or a kay only for her, you get
to enjoy these cool places that you might not get
to visit otherwise. I think that's great, but you also
(29:21):
often get paid way more than a nurse who is
going to stay in one place that's going to stay.
Put data from the BLS they show that on average,
travel nurses are making roughly twice as much as staff nurses,
So it's roughly thirty two hundred dollars a week versus
sixteen hundred dollars a week, and in some states it's
even more. It's more than that. It's like, yeah, substantially
(29:43):
morning pos Kyla, I'd go to Kawai. I would see
if they pay there. Surprisingly, the gap is the least
in Hawaii because that's where all the travel nurses want
to go. I think that's why. But Kaylee, kudos to
you for forgetting your nursing degree, maxing your income by
going this route. And uh, yeah, while you may not
be able to take advantage of a traditional or a
solo for one K, there are certainly other ways that
(30:05):
you can invest on top of just some of the
other benefits that a lot of hospitals are paying out
to travel nurses as well, like stipend for housing or
free housing in some cases. But if not free housing,
a stipend for housing, relocation expenses, paying for mileage as well.
There's just a lot of like I didn't even know
a lot of these benefits existed, but there's a host
of sweet benefits. And travel nursing is looking like seriously
(30:29):
like this life hack. You thinking about going back and
get in your degree, I'm thinking about it. Yeah, I
mean my mother in law did that very thing. She
was She went down to Saint Thomas and was a
travel nurse there for I think eighteen months or something,
which is longer than Klea stints. But it was a
way to pretty sweet get to live in Paradise for
a year and a half, not have to fully commit
to something. But yeah, she got paid more than a
(30:51):
lot of the staff nurses there, for sure. But really, Matt,
while you're talking about here, another one of the ways
that we would encourage Kayla to invest is through her
IRA right preferably a roth IRA. YEP, it's individual retirement account,
which means that your employer has no oversight, no involvement
in this account at all. Doesn't matter who you work for.
Speaker 1 (31:08):
Yeah, it's you and the custodian of that account that
you want to open it up with, and so it's
one of our favorite retirement accounts. It comes with a
lot of flexibility. We'd make that your preferred account to
start with, open it up, max it out like clockwork
each and every year, preferably with one of our low
cost favorites like Fidelity, Vanguard or Schwab. But the one
downside ti your roth Ira is that there's an annual
(31:29):
contribution limit of sixty five hundred dollars. So if you're
looking to stock away more than that, and let's be honest,
Matt travelers just making bank, they might be, Yeah, I
want to stock away more than that, Kayla.
Speaker 2 (31:40):
Really, Kayla's problem is what I do with all my money? Yeah,
I'm making bank.
Speaker 1 (31:45):
Yeah, And so you can't do it with this account
because you can't contribute more than that in a given year.
But your first goal for retirement savings should be the
maxis account out, preferably investing in low cost index funds
or a total stock market fund. After that, things do
get a little bit murk here.
Speaker 2 (32:00):
That's right. Yeah, So Kayla maxing out a roth ira
that like, honestly, that is a huge goal for many folks.
And I think going beyond that, it is probably going
to seem unattainable for most folks. But I think for you,
maybe this is the situation that you're finding yourself in.
And so we just talked about the ROTH. One thing
we didn't mention is the HSA, which has a triple
(32:20):
tax advantage. But this is where things do get a
little bit murky, KYLEA, because given that you work for
different hospitals, maybe you get an awesome Cadillac Health Insurance
health care plan that's included, and if so, then an
HSA is not something you want to consider. And honestly,
even if it is a plan that is a high
deductible plan and you do want an open you do
(32:42):
want to open an HSA, things get a little trickier
there as well, because similar to opening a four and
K with an employer, you're stuck with the paperwork in
the hassle of going from one to another to another,
and you've got all of these different accounts. But that
being said, if you have the high deductible plan, say
the Healthcare Gov, you've got your own high deductible health
(33:02):
care plan that you are carrying with you than an HSA.
A health savings account could possibly be an awesome way
for you to really take advantage of some of the
tax breaks that are given to you for socking some
of this money away that you're investing. You're not using
this money to actually pay for your healthcare costs, and
with you being younger, maybe this might seem especially appealing
(33:23):
given that, you know, maybe you aren't spending a ton
of money on actual healthcare.
Speaker 1 (33:27):
Yeah, And that way, if you do have your own
health insurance high deductible health insurance plan, you can open
up that HSA directly with a low cost company like
Lively or Fidelity. Those are the two are the best.
And that way, the record keeping is a whole lot
easier as opposed to, like you said, Matt, having like
five inch hsas a year, which just gets confusing and
overwhelming for sure.
Speaker 2 (33:46):
Exactly. Yeah. So, but beyond those two, right beyond the row,
beyond the HSA, the next account you should consider. It's
probably just a plain old taxable brokerage account. They don't
get as much press as our favorite tax advantage ones
out there, but they're pretty good too. Honestly, there's a
I mean a lot of folks who are quite wealthy,
who are millionaires, who are living off of their investments
a lot. Most of their money is typically in brokerage
(34:08):
accounts because they haven't been able to amass such a
stockpile within the different retirement accounts that have limits placed
on them.
Speaker 1 (34:14):
Well, the nice thing about brokerage accounts too, is added flexibility.
So let's say some of that money you can you
can even invest for a future home purchase that isn't
going to happen when you reach retirement age because you
can access those funds before fifteen nine and a half,
which is which is nice.
Speaker 2 (34:28):
That might be a goal that you have seven eight
years off into the future. And that's something that if
you do have a goal of invest that far in advance,
you do want to invest that money, and this is
how you would invest that money. Speaking of houses, like
I'm thinking about real estate like that probably isn't a
good option given your line of work, right buying an
investment property you're traveling all the time, you probably don't
(34:49):
want to again be tied to a specific location. So
that taxable brokeg account that's probably your next best bets.
And again, there are no contribution limits, which means that
you can sock away as much as you want to
after you've maxed out your rough contributions, of course. But
I'm glad Kayla that you brought up travel nursing as
an option for a lot of folks, because it really
(35:10):
does feel like this awesome life hack, right, like the
ability to make bank in your twenties while you're younger.
You're traveling around a lot, which is fun. You're not
necessarily looking to put down roots. And granted, I don't
think travel nursing is paying quite as much as it
was during the pandemic. I feel like it hit a
peak because hospitals were severely understaffed there was a shortage
(35:31):
of nurses. But that being said, it seems like that
the pay is still significantly higher for travel nurses versus
a staff nurse.
Speaker 1 (35:39):
For sure. Yeah, so it sounds like Kayla's doing it right.
She just needs to funnel more money into accounts for
her future, letting those letting that money grow and compound.
And I think the combo of the ROTH and a
taxable brokerage account maybe that HSA, depending on the specifics,
makes a lot of sense. But Matt, we got a
couple more questions to get to, including one about speaking
out real estate using an IRA to pay for a house?
Speaker 4 (36:01):
Is that smart?
Speaker 1 (36:02):
We'll discuss that and more ride up for this.
Speaker 2 (36:13):
We are back and yes, we do have a couple
more questions to get to, including that one abouts of
that real estate purchase. But Joel, first we're gonna hear
from a listener. This one is from a man after
our own heart.
Speaker 6 (36:25):
Hi, man, Joel, this is Wayne from Philadelphia. It's actually
the third question that you're answering for me, which I
think puts me in the coveted three question club. I
expect my membership card is in the mail. All right,
enough shenanigans to the topic or the question at hand.
So I have a coworker that I am trying to
convince to bike into the office. During one of the
(36:48):
conversations that I had with this coworker, he expressed something
odd to me and I wanted to run it past
you guys. Figure to be a good fruggler cheap Basically,
I pay twenty five dollars a month so when I
get to the office, I can use the gym that
my office is partnered with, so I don't smell like
a terrible man who just biked into the office. My
(37:10):
coworker friend says that I am the outlier that he
doesn't know anyone who bikes into the office and takes
a shower before working, sands me, of course, So my
assumption was is that if you bike into the office,
you have to take a shower, just kind of part
of that unspoken office hygiene rule kind of deal. So
(37:32):
is my buddy being frugal or cheap? Am I weird
with my showering? Ways?
Speaker 7 (37:37):
Should I take that twenty five dollars and throw it
into like my roth Ira? Well the questions ever end. No,
I will contact you again. But hey, thanks for taking
time to listen to this. And uh yeah very much
so looking forward to seeing what you guys think. Wayne
out kind of like best friends out but Wayne.
Speaker 6 (37:57):
Or shop it.
Speaker 2 (37:58):
We get it, Wayne, he's Wade's an honorary bestie. Oh yeah,
for sure.
Speaker 1 (38:02):
It's so funny too, like I like sense of humor
Wayne and h And by the way, the first rule
of the Three Question Club is to not talk about
the Three Question Club. I thought you knew that, and
now it's public knowledge and this is not good. Honorary
membership revoked? Yeah, sorry, kicking me to the curb, Wayne, no,
but feel free to hollo out for ten seconds there anytime.
We love taking repeat questions from people who have been
listening for a while. So and also frugler cheap questions.
(38:24):
They're always fun because they're the kind of things that
people who are trying to get their finances in order
are inevitably going to struggle with. I love frugal or
cheap as a concept, Matt and as a way of
thinking through things. And you know what, if you're really
trying to acts expenses, you're probably going to have some
of those frugal or cheap conundrums in your life. So yeah,
I don't know, I like it. I like this question.
(38:46):
Is his friend right or is his friend going too far?
Speaker 2 (38:48):
I think I think maybe perhaps his friend is the
one being she because that's like, that's what he's asking.
He's not saying, is it frugal or cheap that I
bit to work? He's saying, is my friend being frugal
or cheap? Because I am you know, I'm coming in
a shower.
Speaker 1 (39:00):
Nothing wrong with biking doork?
Speaker 8 (39:01):
No?
Speaker 2 (39:02):
Yeah, So if that's what you're asking, I mean, I
guess there's a couple of things tied up in here.
Tied up in this question the fact that your you know,
your coworker doesn't know anybody else who bikes into work, well,
who cares Like, we're huge fans of more biking. We
love that you're spreading the gospel of biking into work specifically,
And the reason we bring this up there have been
some anti bike screeds in some of the major publications recently.
(39:24):
We're looking at you, New York Times.
Speaker 1 (39:25):
The Wall Street Journal had one too. I'm just so
annoyed everyone's hayting on the bikers, how dangerous and bad
biking is. We need more people on bikes, not less.
And as you know, you can save a good bit
of money by biking. But what about showering after your
bike ride? I think that depends on a few things,
specifically the length of your commute, Joel, You and I like,
we don't have to bike all that far these days,
(39:47):
which means we don't work up all that much sweat, right,
we don't get too stinky. Plus, it's just you and me, right, Like,
we're not in some corporate office. We're only offending each other,
our best friends, not the entire staff. Are not the
entire department where you've got multiple opinions and differences of
opinion that you have to contend with many more nostrils
(40:07):
that you could potentially offend exactly. Yeah, so no, I agree.
And part of it maybe how hilly is that commute,
because the more hills, the more sweat, How hot is
the day. I mean, there's a lot of things to
take into consideration, but overall, I would say, Matt, you're right,
like the longer, the sweatier, the worse your commute actually is,
the more likely you're going to want to actually take
that shower more than anything, just to be conscientious of
(40:28):
others around you. I used to bike to work. It
was about, I want to say, like seven miles each way,
seven and a half miles each way, but it was
really flat, and so if sometimes I would buy hard
and then I would feel the need to get cleaned up.
Other times I would just take a nice, leisurely paced
enjoy myself. And because even though it was like eight,
you know, seven and a half miles, I was able
(40:48):
to do it in a way that I didn't work
out much of a sweat because of how flat it
was for most of the way, pretty chill. You gotta
take that into consideration as well. But the truth is,
if you're a commute is longer, more arduous, and your
sweat levels are bordering on offensive, showering makes sense. It's
a polite thing to do, and honestly, I think it
might actually help you come out ahead financially in the
long run. You might get disrespected around your office, right
(41:10):
if you are you know, show up in your spandex
and you smell like boh, Right, I mean I think
that that could be a real problem or real hindrance
to you advancing in your career. Right, if you're known
as a sweaty biker guy, it might draw more ire
from the people around you, your bosses, your coworkers than respect.
And so yeah, think of that twenty five dollars as
an investment in those relationships, right and maybe even in
(41:33):
your career. No, you're not throwing it away, right, You're
prioritizing those relationships and your future earnings possibilities.
Speaker 2 (41:39):
Social norms, in addition to the amount that you might
be able to earn in.
Speaker 1 (41:42):
The future just by being clean and decent. Right, And
so twenty five bucks is a small price to pay
to not anger them, right, to lose friends, but also
to potentially lose career opportunities. And yeah, there's also the
add of value of a gym membership, right that you
can take advantage of two. So yeah, maybe it's not
just the shower, but you can pump some iron and
hop on the rolling machine whatever you want to do
while you're as well. So in my mind, all signs
(42:04):
point to spend the money, take the shower if if
you feel like you need it, and maybe maybe even
if you feel like.
Speaker 2 (42:11):
You don't, that's right, it's not weird at all. And plus,
I mean, wouldn't you just feel better taking a shower
as well just being fresh and clean? But I think
part of this depends on how well you know your bud,
your coworker there. Because it's okay to have an honest
conversation about office hygiene, I think it's also totally fine
to make different decisions, right, Like, if your coworker decides, well,
(42:32):
it's not that it's weird for me to bit to work,
but it's just weird that you take a shower, I
think that's odd. But if that's what he wants to do,
let him be the sweaty, sweaty biker dude. Right. If
he wants to be. It doesn't mean that you have
to follow his suit. Maybe what he's getting at is
that he thinks it's just weird to take a shower
outside of the house, because I feel like that's more
(42:53):
of like a tradition, Like it makes me think of
old like sports. I never I didn't grow up playing
like football or anything like that, and so I grow
up spending time in the locker room right where you're
like standing around with a bunch of other naked dudes.
I'll be honest, It's not something I'm used to.
Speaker 1 (43:06):
So when you randomly end up at the YMCA and
you're in the locker room, it probably feels it might
be shocking. Yeah, it probably feels a little bit weird.
But I also say this because the gym that I
go to, there's an awesome locker room there with like
six or eight showers, And I go there and I
work out three days a week, and the number of
times there is even a single person in that locker
(43:28):
room taking a shower, Dude, it's incredibly rare, Like nobody
is in there, And I think, I guess I just
wonder if that is what his coworker thinks is weird
as well, the fact that like, oh man, you'd actually
like go to the gym and take a shower. I
think for a lot of folks it's not necessarily in vogue.
It feels like something from the seventies or.
Speaker 2 (43:47):
The eighties, you know. But that big said, it's for
me at least, it's something that's a perk that's totally offered.
It's included in the price of what I pay every
single month. And so, dude, you better believe I'm there
taking a shower after I work out. It's funny, Actually
I take a shower after I work out, but before
I bike here. But again it's because our commute, our
bike commutees really short. Far not trying to brag or
(44:08):
anything like that, but I've got it.
Speaker 1 (44:09):
I've got it real good, the cleanest dude, I know.
Yes that's true. Well, yeah, so Wayne would I would
do what you think if you think it's right to shower,
and then do it. And it's really we're not talking
about a super significant amount of money, and like I said,
like it could it could be money well spent helping
you endear yourself to your coworkers. Then maybe they're more
(44:29):
likely to to join you on the bike in the
future because they're like, ah, bikers are cool, not sneaking.
Speaker 2 (44:34):
You hit that critical mass, yeah, and then all of
a sudden there's a whole office of all of y'all
biking to work. And then when y'all are all doing that,
there's other, you know, other benefits for bikers that y'all
could potentially advocate.
Speaker 1 (44:45):
Right, the more coworkers you get to partake in biking,
the more you can lobby for better benefits from your employer, Like.
Speaker 2 (44:51):
How about an actual bike rack? Right lock up er bikes.
Speaker 1 (44:53):
There's some cool companies out there who will pay people
money every every single day they commute, or they will
help fund a new if you commute a certain number
of days. So those are the kind of things you
can say, Hey, a quarter of us now like to
work because I've been so instrumental in spearheading this effort,
Why wy'n't you help us out here? And maybe it's
it's good for their you know how much they pay
(45:14):
for health insurance plans, and it's good for morale all
that kind of stuff. They might be more than willing
to do that. But good question, Wayne. We look forward
to question number four in the near future. But Matt,
let's get to our next question. This one is about
using a retirement account to pay for a real estate purchase.
Speaker 4 (45:32):
Hey, guys, this is Matt.
Speaker 8 (45:34):
I'm in Georgia and have a pretty straightforward question. I've
essentially made it through money Gear six. I'm looking to
buy my first home and I have a pretty good
stockpile in my IRA. I have enough to put down
twenty or fifty percent in some cases, I could even
pay cash for a house, just depending on what the
number is, and maybe still have some left over in
(45:55):
the IRA. And I'm going back and forth on where
to do that and how what that would look like,
and just wanted to get your thoughts on it. I'm
just not sure if I should do twenty percent, maybe
do fifty percent and take a loan, or if in
some places, you know, pay the cash and just have
less in my IRA that would I would have to
make up, of course, and would love to hear your opinions.
(46:15):
I think so much.
Speaker 2 (46:16):
Guys love the show all right, Matt and Georgia just
like me. Congrats on being in money Gear at number six.
That is awesome. Sounds like you've been dedicated to investing
for quite a while now, if you can potentially pay
for that house in cash with your IRA, that's seriously impressive.
Speaker 1 (46:33):
That's very impressive.
Speaker 2 (46:34):
You know, you might be looking at something cheaper, like
something that's more affordable, maybe you are in a more
country or rural part of the state, but with the
average price of a home in the US being in
the range of like four hundred and fifteen thousand dollars,
that's a pretty killer nest egg. Yeah. So if you've
got that much to you, Matt, Yeah, for sure.
Speaker 1 (46:52):
I mean, that's that's a lot of years of doing
the right thing, of maxing it out and of seeing
great gains. So and really a lot of our listeners, Matt,
are going to get to those multiple six figure levels
just by doing the right thing year after year after
year and socking money and index funds. But the heart
of Matt's question comes down to one thing. Is it
smart to liquidate your IRA in order to buy a home?
(47:15):
And the answer has some nuance, but the TLDR is
that if you've owned a home in the past couple
of years, you definitely should not use your IRA to
make this purchase. That's because there is a first time
home buyer exception that allows you to use some of
those funds up to ten thousand dollars without paying a
ten percent early withdraw penalty. If the money you're taking
out is used for the first time home purchase, that is,
(47:36):
you'll still owe taxes, so plan for that, but you
will avoid the ten percent penalty, which is nice. But
that's still a really small chunk of what he's saying,
I mean, a really really small amount.
Speaker 2 (47:46):
Yeah, it sounds like he's looking at above and beyond
that ten thousand yea, most likely.
Speaker 1 (47:50):
It sounds like it unless he's like literally buying a
tear down shrack or something, right. Yeah.
Speaker 2 (47:55):
So it's also worth noting that Matt, he didn't say
anything about this IRA being a wroth IRA, And this
is worth mentioning because if that was the case, well,
then he could pull any and all of his contributions
to the wroth without having to pay a penalty or
any taxes. There's no taxes because roths are funded with
(48:15):
post tax dollars. You've already paid taxes on that money.
And this flexibility is it's one of the massive benefits
of going with a wroth over a traditional IRA because
you can withdraw those contributions for any reason. But then
on top of that, you still have that first time
home buyer exception as well, So it's kind of there's
a double benefit for first time home buyers if you
have a WROTH as opposed to a traditional IRA.
Speaker 1 (48:37):
Yes, but that still begs the question, should you take
advantage of this loophole? This perk is some might think
of it.
Speaker 2 (48:44):
So we've identified the perk, it's there, Should you use it? Right?
Speaker 1 (48:48):
And probably not, is the answer. I mean, Matt has
he's got a lot of money in his IRA, so
he shouldn't feel bad about using ten thousand dollars of
it for this purpose of buying the home if it
helps him get to the place where, you know, he
feels like he has enough to put down, especially if
it gets into like that twenty percent down mark that
we talked about earlier. But most folks should avoid it altogether. Right,
Using more than the allotted ten thousand dollars of those
(49:09):
IRA funds, it would be a bad financial move given
the taxes and penalties you'd owe for cashing out early,
especially if it's a traditional IRA. Right, But even if
it's a ROTH, it's not necessarily a good idea to
take money out of that either to withdraw most of
those contributions you've been putting in over the years. So
the best thing to do if you've been a great
investor and now buying a home as your next goal,
(49:31):
is to build up more liquid savings to help you
get that new place, right, leaving your IRA fully or
at least mostly intact.
Speaker 2 (49:37):
Yeah. I don't want to jump to conclusions, but Matt
sounds pretty young, and if he has been able to
sock away that much money towards retirement, I think that
he would then be able to shift gears and turn
his laser like focus onto saving up a down payment
sure pretty quickly.
Speaker 1 (49:52):
Even if that means, by the way, cutting back a
little bit on contributions to retirement accounts. Now, that's okay,
because he's already done a great job at that. If
the home is his next goal, that's fine.
Speaker 2 (50:02):
Yeah. Well, I mean I think that's the other downside
of using some, most, or even all of your IRA
to buy a house is that you won't have much money,
if any, left over in your retirement nest egg, you know,
unless you have a sizeable four or one K or
something that you didn't mention. If that's the case, then
I don't know. Maybe he's got more, he's got additional
funds for actual retirement. But with interest rates having gone
(50:24):
up quite a bit, like I get the increased desire
to avoid getting a mortgage right, to avoid a home
loan altogether, but it's likely going to be a better
path to take than using money that's earmarked for your
future in order to make this happen. And with the
limited annual contribution amounts that you're able to, you know,
fund your retirement accounts with you, you can't get the
money back into your IRA. It's not like you can say,
(50:45):
all right, once I get that house, I'm gonna go
gangbusters on those tax advantaged retirement accounts can put the
genie back in the not going to be able to
do that, And so keeping your IRA intact, saving up
for that down payment within a high yield savings account again,
even if it does mean reduce seeing your current contributions
towards retirement savings, I think that makes the most sense.
Protect your retirement, don't actually touch your retirement accounts, yep.
Speaker 1 (51:07):
Don't mess with the IRA in order to do that.
And by the way, there is something known as a
self directed IRA, which allows you to invest in real
estate or even other things like private companies through with
your IRA money. And if you did this, your money
would still be inside of your IRA, just buying that asset.
But the rules are complex, it's not advisable in our opinion.
And by the way, you can't even buy personal real
(51:28):
estate either. But I just wanted to mention it because
you might hear someone say, well, why don't you use
it inside of a self directed IRA? And the truth
is you wouldn't qualify buying a personal residence doing that.
But I'm not a fan of the self directed DIRA
path anyway. I'd rather see you stick with the boring
traditional index funds inside of your IRA. But it's something
you might hear inklings about. And I don't think that's
(51:50):
for you either, That's.
Speaker 2 (51:51):
Right, But Matt, we hope that that gets you pointed
in the right direction. We hope that you are again
that it sounds like you have a laser like focus.
And I think if you are able to direct that
death ray onto onto amassing a down payment, that you
will be fully funded. You will have that twenty percent
down before you even realize that, but a best luck
to you.
Speaker 1 (52:10):
That mortgage might not be around long either. Once you
know exactly exactly. All right, let's get back to the beer, Joel,
that you and I enjoyed during this episode. I will
give it a shot.
Speaker 2 (52:21):
This was Canazawa Haya Kumengoku pale Ale.
Speaker 1 (52:26):
You did better than I did.
Speaker 2 (52:27):
But again, when you when you once you hear somebody
stumble through it, you're able to pick up the pieces.
And this is by Waku Waku Tezukuri Farm Kawakita. This
is a beer from Julia, the last of the three
beers that she sent our way there from Japan. Joel,
what were your thoughts on this one? This was super floral,
super botanical. It tasted like the pictures I've seen of
(52:51):
Japan and the cherry blossoms with there at full bloom.
That this beer tasted like that, like you're sitting in
lakeside gazing upon Mount Fuji exactly, you know, like you do.
Speaker 1 (53:03):
And we don't have like very we don't get to
drink many super botanical beers. This so this one was
like really really fun.
Speaker 2 (53:10):
I read it. Yeah. To me, this one tasted the
most familiar, like in my mind, it tasted the most
like beers we've had Stateside, whereas like the I PA
and then the first one that we had tasted like
they were from a different country. I feel like this
one was like, oh okay, this this tastes more like
maybe an American floral botanically American pale, but definitely got
(53:30):
glad we got to enjoy it. Oh. I Actually, so,
I was trying to figure out the name because obviously
it's all written in Japanese on the label. I came
across this brewery's website. They grow all of their malts locally,
so when it says whatever farm, it's because literally they're
not getting their grains shipped in or anything like that too.
So this is like, this is a farm to table,
(53:51):
farm to pine glass kind of beer. Very cool, we
can enjoy.
Speaker 1 (53:54):
I can dig that. I think Rogue out in Oregon
does something similar.
Speaker 2 (53:57):
Yeah.
Speaker 1 (53:58):
Yeah, so I loved their beers back in the nay,
but I haven't had one in a minute, So mine
need to get some Rogue beers on the show some
old dead guy ales, right, yeah a minute. And by
the way, or the hazel nut brown you know, oh yeah,
browns were Browns are a nice introduction to some of
the different craft beers out there. All right, let's gonna
do it for this episode again. We're gonna take more
of your listener questions on upcoming episodes. We're gonna be
(54:20):
taking them every week moving forward, So submit away. We'd
love to hear yours. Go to how to money dot
com slash ask for the instructions so that you can
record that voice memo. Get it sent over to us
so we can take it soon. We need your questions
and we look forward to hearing them.
Speaker 2 (54:33):
That's right, The weirder the better. We will link to
any resources that we mentioned during this episode up on
the show notes at how tomoney dot com. But buddy,
that's gonna be it for this one. Until next time.
Best friends out and best friends out. Yeah,
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