Ask HTM – Newlywed Downpayment Debate, Good Car Loans, and Failing to Max Retirement Account #1072 - How to Money

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money. I'm Joel, and I am that.
Today we're going to answer your listener questions happy, gloomy,

(00:25):
dreary Monday.

Speaker 2 (00:26):
Joel, do you think not the nicest one for last season,
at least where we are.

Speaker 1 (00:31):
Do you think people can tell when it's rainy outside?
I think my voice does get a little deeper. I
was taking less peppy. You just get less. Really, I
was gonna say, I feel like you tried to. Did
you try to counter that with like the pep in
your voice at the beginning. You came in with more
energy than I've been feeling all morning. That's all I'm
gonna say. I think it just was average, but it
felt like it was over the top given the fair things. Yeah,

(00:51):
I get that. This is an ask How to Money
Monday episode. We're going to talk about actually a newlywed couple.
They're having a down payment debate, and Joel is going
to step in the middle. He's going to settle this.
Score love to solve marital arguments. Usually I don't think
they're arguing. I just wanted to say down payment. But
if anybody out there is having a merrital spat, holler
at me. I'll help, Joel. He will do it for free.

(01:13):
There's gonna be a car payments or a car loan
that a listener signed up for that I actually might
approve of. Yeah, can you believe that, Joel. We'll get
to that one. Another listener is wondering whether or not
it matters that he is able to or no longer
able to max out some of his retirement accounts. So
we'll get to that one plus more during our episode today. Quickly,

(01:36):
before we get started, though, I want to share the
most middle aged dad when that I've recently experienced, Joel.
So was it last last weekend coming back from Thanksgiving
or driving home? And I look down? Do you do this?
Do you do you hit the Do you reset the
trip meter on your car when you go on trips? Now?

(01:56):
I don't you should? I should? You know why you
should be. It's a good practice because it helps you
to see what you're basically what your baseline is as
far as what your vehicle is getting from a miles
per gallon standpoint. Okay, so let's say you always know
that you you get it like twenty five and my
car has it always showing, and I can reset it.
I just never do, but yeah I should. So you
hit because you got your running average, and that includes

(02:17):
driving around town. Yeah, but I also know what I
typically get when I'm on the interstate, and so you
reset it at the beginning of a trip that way.
If it's if it's like in the teens, you're like,
wait a minute, something's wrong if my car is not
running properly. I had the opposite problem.

Speaker 2 (02:31):
Are you typically, by the way, trying to like beat
your last effort. You're like, I got twenty five miles
to the gall last I'm to see if I get
twenty five.

Speaker 1 (02:37):
And a halfs Not really, I literally mainly do it
just as a data gathering exercise, just to know that
the old odyssey is chugging along like it's supposed to.
But what I found most recently was that it was
and I say significant, but it was like a couple
of miles per gallon higher than what I have ever
gotten interesting in that odyssey. So typically I'm like hyper miling. No,

(03:00):
I was just this is kind of the opposite. I
was like, we're flying because I wanted to get home,
and I looked down and we were like in the
mid twenty like around twenty six twenty six plus, which
I had never gotten before, and so I tried a
little So I did do this for a little bit
because I was like, I want to see it hit
twenty seven, which I've certainly never hit that pr before

(03:22):
as well on the with a Honda, and I didn't
want to dry that slow. So I was happy with
twenty six point seven. But what I realized with this,
this was the first trip that we've taken since we
had some work done to the van and where we
got it had a tune up where we had new
spark plugs, and that's a shame to say. It's not
something I had ever done. And this is like coming

(03:44):
up on ten years of car, I don't think it's
ever had new spark plugs. And so I'm assuming ingranted.
Come on, like I'm saying that this is a massive
like middle aged dad win. But at least is going
to save me like a couple bucks time per gallon
than average. So twenty six, like, what is that? What
is the normal? Normally it's like twenty four or something.

(04:05):
You're talking about two extra miles to the gallon. Yeah,
which again that's not that's that's hardly anything over, Like
when you are talking about filling up your car's not
gonna change your life. It's more. I mean, I know
that when I take care of the vehicle that it's
like that is how you keep the thing on the
road over the long haul, right. But it was just
also it was an emotional win for me to see that, oh, Okay,
I know this is going to allow it to last longer,

(04:25):
to allow it to hit two fifty three hundred. Maybe
someday fingers can be amazing if so. But it was
also just emotionally encouraging to see that, oh, this is
actually impacting, albeit in a very small way. This is
impacting my mousepera galln here on the interstate. That's cool.

Speaker 2 (04:41):
I was pumped about that cool. And it just makes
you love that thing even more. And the more you
love your old car, the more you are likely to
keep it around. Like I just put some I mentioned
recently on the on the show, I got some new
tires on my on the van and it just handles
so much better.

Speaker 1 (04:55):
And I got you got some new kicks, some new shoes.

Speaker 2 (04:57):
I don't know, man, I just like it more now.
I'm like, yeah, taking it on the Thanksgiving road trip.
It's a virtuous cycle, isn't it. Yeah, it is, it is.
So take care of those older vehicles, not just because
maybe it'll get you some more miles to the gallon,
also because you're gonna like that car more, which means
you're gonna keep it around longer, which.

Speaker 1 (05:13):
Means you're gonna say, more money. What kind of miles
are you getting with us? Mickey Thompson's on the Micky Thompson, No,
are they fancy or something? Those are the they're like
super off road. Okay, yeah, I remember, like as a
teenager who love jeeps, like the guys that would like
try to lift their trucks and they'd stick the Mickey Thompson.
They're like the super gnarly off road, like really thick

(05:34):
tread I do like Monster truck tires.

Speaker 2 (05:36):
Basically, I don't track the mouse per gallon on the van,
although I should. I'll let you know once I get
in there, and.

Speaker 1 (05:42):
You should hit the reset next time you go on
a road trip, or just when you're on the estate
for over an hour or two, and then you'll know
you got your baseline. I will I will say on
my fore Runner, my six fore Runner, it's it shows
it on the display, so I get nineteen point one
on the fore Runner, which it's mostly driving around town.
It's not bad. Probably what you should expect out of
a it's a V six, right, yeah, V six around town.

(06:04):
I mean you can't expect too much more than twenty.
Look at us out of the.

Speaker 2 (06:07):
Going on car talk here, car talk like click and clack.
Let's go back to the beer talk, Matt. The beer
we're having on this episode is called a measured procession
of veracity. All right, it's an IPA from Burial, of course,
the most ridiculous names. We haven't had a ridiculous beer
from Burial, so time to scratch that itch. It's always
time for that. Look at our thoughts on this beer

(06:29):
at the end of the episode. And if you have
a money question, go to have money dot com, slash ask,
or just record your money conundrum on the voicemail app
of your phone and email it over to us at
how to moneypod at gmail dot com. Hopefully you can
take it next week on the show. Always looking for
fun and interesting listener questions. Your fellow listeners appreciate it too, Matt.

Speaker 1 (06:49):
Let's kick it off.

Speaker 2 (06:50):
Let's get to a question about how much to put
down when you're buying a home.

Speaker 3 (06:55):
Hey, Matt and Joel, my name is Max and I
live in Seattle, Washington. I've been on a long time
list of the show since the Poor and Out Poor Days,
and I'm getting ready to buy my first helm. My wife,
Rachel I got married over the summer, and we're grappling
with the question of how much to put towards a
down payment. Over the years, we've set aside money into
individual investment accounts into index funds, and that money has

(07:18):
grown over time. Our plan is to put down at
least twenty percent towards the down payment to avoid PMI.
But if we have the means, we're wondering, does it
make sense to try to put down thirty, forty, maybe
even fifty percent towards the down payment to lower our
monthly mortgage. To me, it comes down to this question
of do we let the money ride and the stock
market and then take it out of the index funds

(07:40):
as we need to cover that monthly mortgage, or do
we just throw as much as possible towards the down
payment to lower it right off the bat. We'd love
your feedback on what you think makes the most sense.
If you're ever out in Seattle, come check out the
Ballard Brewery District. It's a whole neighborhood that has thirteen,
fourteen different breweries, all within commile of each other, and

(08:01):
it's a great spot to find a good beer.

Speaker 2 (08:02):
Thanks so much, man, I'm ashamed to say this. I
was just in Ballard, Max over the summer. Suggest that
we go to Pallor check out the brewery district and
guess what Matt I stayed or Max, Max and Matt
I stayed in Ballard. I was in the heart of
the brewery district. And guess how many breweries I went to.

Speaker 1 (08:19):
Matt, you sound upset with yourself. I went to none,
like a total and complete loser. Rightly so, given the
fact that there's he said, there's thirteen or fourteen, Yeah,
within a half mile.

Speaker 3 (08:30):
I didn't.

Speaker 1 (08:31):
I've heard of this magical craft beer fantasy land. I
did not realize there were that many in such a
concentrated geographic ocation. I drove past some, I ran past some,
you think, and come on, I did not darken the
door of one, and I did go to the dip
In for a quick pint in the middle of a run.
I know, I should have got to get your priorities.

Speaker 2 (08:49):
Well, it was my I was there for only just
a couple of days and just really to explore with
my family and to for my cousin. Was there for
my cousin's wedding, and so tons of wedding festivities and
time with extended family stuff like that. That took up
the majority of my time. But I obviously need to
go back because what I need to do is a
pub crawl with Max.

Speaker 1 (09:06):
Will hit up all the breweries there. Yeah, see maybe
not one. You say it like that and then you're like, well,
that's so ridiculous. I'm never going to do that. That's awesome,
I know, but like in reality, are you actually gonna
do that? Come out? I am, I going to go
have beers. What you are more likely to do is
to go to a family friendly brewery where the kids
can run around, Like that's the that's how you walk
the line right there, like you find ways include the

(09:29):
like the brewery hangs where the kids can be free
and gosh, one of our favorite breweries Burial up in
North Carolina. There's a Volkswagen, like a gutted Volkswagen that
has benches in it that the kids can sit in
there and pretend to dry. So you on your beer
and they're just playing. Yes, yeah, all the sharp edges
have been filed off of the sheet metal of the vehicle.

(09:51):
But that's the kind of place where the kids are like,
oh yeah, we love that place. Regardless, Max, you are
newly married. You've got a substantial amount for down payment,
which is just amazing. Man, Kudos to you, you and your
new wife for making that happen. And by the way, Seattle,
it's not a cheap housing market, so it's even more
impressive that he's got that much on hand to be

(10:11):
able to put down.

Speaker 2 (10:12):
So he wasn't like I'm in Nowheresville, Alabama or something
like that, and not hating on Alabama, but it's just
legitimately much cheaper to buy a house in Alabama, cost.

Speaker 1 (10:20):
Of living much lower. But he's not only got twenty
percent put down, but he could he's even thinking about
putting down like half in cash on that new home. Amazing.
Because of that, I think Max has put himself in
a phenomenal position. And I'll say, when rates were lower,
the answer to this question was a bit more clear cut, right,
you just put down your twenty percent you stay invested

(10:42):
with the rest of the money. But it is not
as simple a decision now though that said, I still
lean towards the twenty percent down payment and perhaps investing
the rest. Yeah.

Speaker 2 (10:53):
I think that's because you mentioned rates are not as
good as they used to be, and that's true.

Speaker 1 (10:58):
Like that, that's that an understatement.

Speaker 2 (11:00):
As an understatement, people feel very locked into the home
purchase they've made if they have an incredibly low rated
It is part of what's created as stagnating housing market
in many ways, I think the further we get away
from two and a half three percent rates, the more
of the housing market is going to free up. But
you get the best rates in terms once you hit

(11:20):
the twenty percent down payment threshold. I think that's why
Matt we're so keen on that, not that it's like
a standard everyone has to meet, but for first time
home buyers, I think there's more flexibility. But if you
can hit the twenty percent down metric, you're able to
avoid PMI. You're able to if you do decide that
you want to sell that house on a shorter timeline,

(11:40):
you're not like messing yourself up financially in the same
way you would be if you had only put three
and a half percent down or something like that. And
it's also important to mention that if you shop around
with a few different lenders, which is always crucial when
you're talking about getting a mortgage, especially shopping with a
local credit union or two, you're likely to find rates
that actually aren't all that bad, that are kind of

(12:01):
coming back down into normal territory. We see like the
headline numbers, especially for like thirty year mortgage varieties. I
think I looked at the number the other day. The
average thirty year mortgage rate is like six point three percent,
so it has come down like half a point from
last year. But there are other mortgage varieties. It's not
just thirty your mortgages that are out there available to you.

(12:23):
We mentioned like a fifteen to fifteen arm that exists
at a local credit union nearby where we live. The
rate right now is five point one two five percent.

Speaker 3 (12:30):
Nice.

Speaker 1 (12:31):
That's more than a full point lower than the thirty
year mortgage average. And so yeah, on like a million
dollar home, you'd say something like five hundred dollars a
month going with that fifteen to fifteen mortgage versus a
thirty year traditional you'd be putting a lot more money
towards principle because of that lower interest rate. And so
I think, what this makes me? What this pushes me towards? Max?

(12:51):
One I think maybe this should push you towards is
shopping extensively for a mortgage and thinking outside the box
when it comes to mortgage products. Arms used to be
this like flashing red light because you're like, it's so risky,
don't do it. But there are arms that are not
all that risky for people who are in a financially
secure position like you are. And that's probably where I
would be leaning towards. Yeah, And plus, most folks aren't

(13:14):
even in the home fifteen years down their road, or
if they, if they are in the same home, maybe
it's a different loan, like maybe they've refinanced. But you know,
with rates and the low fives, the optionality that you
gain would be incredibly powerful moving forward. And it's likely
that you'll be better off financially by staying invested with
let's say a low five percent mortgage given the historical

(13:36):
stock performance. So you'll kind of piggybacking off your numbers
here let's say if you were to put down an
additional two hundred thousand dollars on a one million dollar
purchase price, you would lower your monthly payments by just
over one thousand bucks and you would save almost two
hundred thousand dollars in interest, which is awesome. But if
you left that two hundred thousand dollars in the markets,

(13:56):
and this is just assuming average returns of a very
conservative of seven percent, you're gonna have five hundred and
fifty thousand dollars at the end of that. So the
difference is substantial over fifteen years, more than three hundred
and fifty thousand dollars in total. And on top of that,
you have the perk of liquidity, which is highly underrated.
Right now, Max, maybe you're thinking, we're newlyweds. We're gonna

(14:19):
get it. We're gonna get a house, we're going to
live here, we're going to stay in this job. We
love this neighborhood. We're going to stay near the Ballard district.

Speaker 2 (14:27):
Yeah, we're gonna love this place forever because it's got
so many breweries nearby.

Speaker 1 (14:30):
But priorities change, and when you are locked into a
house like that with a lot of equity. It can
constrain some of your options. And maybe you want to
do the trap, the no what is the digital nomad life,
Maybe you want to start a business. All of those
kinds of things are going to be tougher to do
when more of your money is tied up in your home. Yeah.

Speaker 2 (14:50):
Yeah, And that's not to say that like paying off debt,
don't do it, because you should keep that debt debt
around as long as possible. Home debt is I think different, Matt.
We treat it differently than almost every other kind of debt,
especially if you can get a reasonable mortgage product and
a reasonable rate on that mortgage. And the one thing
kind of what you're getting at too, meant that I
have learned, maybe the hard way, I don't know, but

(15:12):
just learned by growing up, is that the things you
thought were going to you were going to love forever,
or the places you were going to want to be,
we're going to be like this is a forever house
or this is a forever job. That's not necessarily true,
even if you really like those things. And so we
moved six months after we renovated our house in town,
and it was not like the smartest financial move, but

(15:33):
it was like, this is what our family needs to do,
and we have the financial ability to withstand. Not the
smartest decision at this point in time, and it's just
amazing how you're right. Like priorities and what you want
in life changes, and the more liquidity you have, the
more flexibility you have to kind of pull off that
and go in a different direction that maybe you weren't

(15:56):
thinking that's the path you were going to go down.

Speaker 1 (15:58):
It just gives you more margin. You're not counting on
everything going exactly right in order for the ship to
keep sailing.

Speaker 2 (16:04):
Yeah, yep, And you know, Max, we'd love to see
you with a manageable monthly payment while putting twenty percent down,
so that way you can leave the rest of those
dollars invest it and not feel like you have to
sell right, sell holdings if the market is having a
rough year to be able to afford the mortgage that
maybe is stretching you. That's like a really crummy position

(16:25):
to be in to be like, oh, yeah, I had
the money, I didn't sell when I could have put
more down, and now I have to sell when the
market is down thirty percent. That's the only way I
can afford the mortgage in the coming months. Like, that's
a tough position to be in. We wouldn't want you
to be there. And if you're leaning in that direction, though,
like we'd consider putting down a bit more of a

(16:45):
lump sum. Like if you're like, ah, I think we're
looking for a home that does stretch us from a
monthly payment perspective beyond what we feel really comfortable with
a twenty percent down payment, then maybe I just don't
like being put in that position. That feels like a
little too much of being in the house poor bucket.
So maybe put down thirty percent or thirty five percent

(17:05):
or something like that. If you're planning on buying a
little bit nice over a house so that you have
a monthly payment that feels eminently comfortable for years to come,
and if you're still in this loan fifteen years down
the line, let's say, if you do say I'm just
gonna put twenty percent down, you can always sell some
stock in order to pay off a big chunk of
your mortgage, then I guess, yeah, you lose optionality. But

(17:27):
if you are biting off more than you can chew
from a monthly payment, perspective, you really might need to
put more down just to feel like you can hack
it for month to month.

Speaker 1 (17:34):
And I would even encourage them too if if it
is looking like they're going to be a bit cash
strap when it comes to the payment, I would even
I would push them to consider living moving into a
smaller house. Similar to what you're saying, how our priorities change.
You think all this is gonna be the forever home,
going into the decision making process knowing that, all right,
this is going to work for us for the next
few years. Max. If you've ever thought about becoming a

(17:56):
rental property owner, a landlord, essentially the ability to transition this,
this primary home of y'all's into a rental property, If
that is something that you're interested in, this would be
a great way to do it. Yeah. And the typically
homes that are a bit smaller, not like the big
grand homes that you're thinking of. The smaller, more affordable
kind of homes tend to make better rentals from a

(18:17):
capitalization rate standpoint.

Speaker 2 (18:18):
Yeah, if you're so inclined, If you're like I think,
maybe being a landlord wouldn't be the worst thing in
the world. I could do that in addition to my
day job, well, owning a rental property in the Ballad
area in particular amazing, it's a good spot. I know
how much we paid for an airbnb that we shared
with like my sister and my sisters and their families.

Speaker 1 (18:35):
Yes, so expensive. I was thinking long term leases, but
I mean if you wanted to consider even doing short
term and yeah, obviously that's even more of a part
time job than even a long term lease situation. But
something to consider if you're interested. I don't at all
want to push you in this direction. If this if
these are not thoughts that you've already had, but if
you've had these thoughts and it's something that y'all are

(18:57):
interested in, Uh see, if you can find a off
a nice affordable three too three to three, you know,
and that's that's where putting twenty percent down, living in
it for a while, and then guess what you make
that a rental start. I've already got the next down
payment massively started. Yeah, you move out of that thing,
but and then you're really thinking about this initial property
buy as kind of a place to live in, kind

(19:18):
of a future investment. And I love that mentality. Not
enough people think that way, and not that you have to,
but it really can jump start your ability to move
towards financial independence and have financial security and have really
income coming in from multiple different streams. So Max, hope
that helps.

Speaker 4 (19:34):
Matt.

Speaker 2 (19:34):
We got more to get to, including what about annuities,
like is that a good investment choice? We'll talk about
that and more right after this.

Speaker 1 (19:49):
All right, buddy, we are back from the break. We're
gonna take a listener question here in a second about
a special needs child. But first, let's here from a
listener who's gone through quite the arduous process when it
comes to purchasing a new vehicle. We don't typically take
questions like this. It's more of a it's almost like
a PSA. But we'll address some of his concerns. Let's
hear from Kevin.

Speaker 5 (20:10):
Hey, Joel, and Matt. This is Kevin from Toronto, longtime listener.
Love what you guys are doing, so thank you and
keep it up. I'm curious to hear your thoughts and
also raise awareness for your listeners about our experience I
had recently with buying a car. I'm well into money
gear number seven with excellent credit. Money set aside for
a while for a car for a car purchase that
I've been delaying. I have growing family with two kids,

(20:32):
and we're on a one car household. I'm a big
fan of biking, and I've been delaying the second car
or upsizing for as long as possible. Unfortunately, over the summer,
my family and I were in a car accident on
day one of a vacation and our beloved ten year
old Subaru was totaled. We're all fine and walked away thankfully,
as did the other driver. So I began my replacement
car search with the intention of finding a newer but

(20:52):
still used car and paying cash from the insurance settlement
and the savings I mentioned. Several dealers these days offer
a thousand dollars disc out to finance, or in other words,
it would be an extra thousand dollars for a cash purchase.
This was disappointing to somebody that was pretty that was
prepared to pay cash.

Speaker 1 (21:09):
During a test.

Speaker 5 (21:10):
Drive, one of the salespeople told me that a lot
of people just stopped to finance and then pay off
their loan immediately, as it would be an open car loan.
So I was begrudgingly mentally prepared to finance and carried
on with the purchase of another major Japanese brand. So,
after the final negotiation with a salesperson and putting a
small deposit down to secure the deal, I was ushered
to the finance manager finalized paperwork. The finance manager advised

(21:32):
the minimum to finance was fifty percent, or about twenty
thousand Canadian dollars in my case, the remaining twenty k
would be at their used car financing rate. Even with
me being in the highest tier credit score of eight
point nine to nine percent. It's obviously obviously sky high,
but didn't think much of it, considering I intended to
pay it off immediately. However, the finance manager then told

(21:53):
me that I needed to have the loan for a
minimum of six months before I could pay it off,
with a bit of a wishy washy expt nation that
the title had to clear and the loan needed to
be registered so the lender knew where to apply the
payments and that typically takes six months. Coincidentally or not,
the back of the envelope math turns out to be
roughly one thousand dollars in interest for that principle interest

(22:14):
rate and term. Taking it further, I thought they probably
hope that buyers like me agreed to finance, even with
the attention of paying it off asap, but then forget
and pay even more interest over the term. So I
put on my cairen hat and marched over to the
general manager to explain my frustration with what felt like
a bait and switch sales tactic. The general manager conceded
slightly and let me put another few thousand dollars down

(22:36):
to reduce the financing amount, which I appreciated but also
thought at the same time that there doesn't seem to
be any firm policy if he just spent the rule
so easily. He also shared that it probably wouldn't take
six months, but maybe three. I asked how I would
know when the title clears, and I was told I
would just need to periodically call the lender to confirm.
This lack of clarity seemed pretty archaic, manual, and suspicious.

(22:57):
All that said, I opted to roll the dice in
finance for one thousand dollars discount, assuming that the interest
paid would be less than a thousand, so I'd be
ultimately net positive. Once the paperwork was signed, down, payment paid,
and direct debit set up for the financing payments that
was on my way. I immediately went home and searched
for the lender, which was associated with the dealership. I

(23:17):
very quickly found a robust online owner portal that can
be used to book service appointments, including making extra payments,
getting a payoff quote, and paying off a loan, with
the caveat that the first payment, which I set up
as bi weekly, would need to clear the bank before
I could download the payoff quote. While I was pleasantly
surprised to see this payoff option, this solidified this sleazy feeling,

(23:40):
as there was absolutely no mention of this amazing owner
portal that makes it easy to pay off a loan
when I was at the dealership or in my closing paperwork.
At this point, I was sure that they intentionally neglected
to tell me about the owner portal and or really
had no idea it was an option to pay off
the car after as little as fifteen days, which is
what I did. I ended up paying about one hundred
bucks an interest, and the owner portal immediately provided proof

(24:02):
of ownership enclosure of the loan. So sorry for the
long story, but was curious if you've heard about this,
what feels like an arbitrary Lucy Goosey six month or
three months financing minimum. I've been doing it over for
a couple of months now, debating whether to report it
to a consumer protection type of agency or something. So
thanks in advance for listening, and I appreciate your thoughts.

Speaker 1 (24:23):
So I was just taking notes here as Kevin was talking,
and he said it seems overly manual, archaic and suspicious.
And I would say, Kevin, that it's intentionally manual. It's
intentionally archaic, and yes, you should be suspicious because that's, yeah,
that's what's going on here.

Speaker 2 (24:39):
That's the car buying experience, at least done the old
school way, and so much of car buying is still
done that way, and there are companies trying to change that,
right CarMax, Carbana, especially on the used car salesfront, are
trying to make it a little bit.

Speaker 1 (24:55):
Although they've got finance flancing now. Because I think about
when I've I mean, it's been the the Odyssey's gonna
allow to love this episode. When we purchased ours, they
didn't have a financing department, and so the ability to
walk in pay cash not literal you know cash. I
didn't drop in on twenty thousand dollars, but they didn't
have financing, but they do now, so I would be
surprised if they do something similar to that as well,
where it's just like, hey, if you if you finance

(25:16):
with us, you gotta you get a discount, I think.
And that's because like this is a profit center for
so many dealerships, right, they want you to take out
a loan with them, and in fact, they're going to
often charge you more for paying in cash. Makes me
think of conversation we had with Zach and Ray Schevska
the episode eight forty five, and they man so much knowledge.

(25:42):
Ray was a former car dealer and car salesman, which
one was Ray?

Speaker 2 (25:46):
Ray was the dad, the dad, and so he and
side I know that it was the dad who was
they used to work at the dealers.

Speaker 1 (25:51):
Yeah, but I get their names.

Speaker 2 (25:53):
The two of them basically started a website to help
consumers shop well for a car, and it's because they
have the insider knowledge of like how people use to
rate people over the coals to ensure that they got
what they wanted and that consumers were ultimately paying more
than they thought. And so yeah, they're hoping that you
forget to pay off the loan in short order, as

(26:13):
you mentioned, right, then you'll rack up more in interest charges.
They also get money for originating a new loan. They
often get kickbacks for writing a higher interest rate loan
you mentioned the eight point nine percent or whatever. If
you pay with cash, that profit center for the dealership disappears.
Most people just don't push back the way you did.
They accept what they're told. But that's exactly why they're

(26:35):
trying to get you to think about paying the car
off on a longer timeline, not immediately. They're like that
Kevin seems like a smart dude, Like he's gonna pay
this loan off real quick. Let's not give him all
the details because he'll probably cost us a lot of
money if he does.

Speaker 3 (26:48):
It.

Speaker 2 (26:48):
Sounds like you did about as well as you could have,
given kind of the funky nature of dealership sales and financing.

Speaker 1 (26:54):
Yeah, that's right. Yeah, And going back to ray Inzach, like,
that's why they mentioned in that episode that many people
they essentially pretend that they're going to finance when they
are negotiating the deal, but then they reveal that they
are a cash buyer after they've agreed to a deal
that they're happy with after a big term, which but
on the opposite way, yeah, but I mean, it's true
that the loan is funded within a week of your purchase,

(27:17):
typically within forty eight hours, and some dealerships do have
early payoff restrictions baked into the contract, and so if you,
let's say you pay the loan off within ninety days
of funding, you could be subject to having that discount avoided.
And so it's important to know the terms. But if not, man,
you did the right thing by advocating for yourself and
by not not buying every line coming out of the

(27:38):
salesperson's mouth. And by the way, this man, this question
is coming out a good time of years as well,
because we're talking about the the insider knowledge that Ray
and Zach had and they I mean them talking about
how the dealerships man the lots they're trying to move inventory,
and how essentially the end of the month is better,
it's better time to buy than the beginning of the month,
and to the quarter is better than that the beginning
of the quarter, and then the ultimate is the end

(28:01):
of the year is a better time to buy than
at the beginning of the year. So right now, if
you are in the market for a new to you,
hopefully vehicle certified pre owned is great use vehicle from
a dealership. Now is a great time to potentially snag
a deal. But make sure you know the terms of
the financing if you're taking the path of trying to

(28:23):
negotiate this discount, but you got to finance it. And
to Kevin's point, the fact, he said he did some
rough back of a napkin math and it's just like, oh, yeah,
it turns out I'm going to pay a thousand dollars
an interest where I had to keep this around for
three months. This exact thing happened to my in laws, yes,
and three months. And he's very very much a commentary.
It was a thirteen hundred dollars discount, and he calculated

(28:45):
the exact math and it was exactly it was thirteen
hundred dollars. And I love the approach that the dealership
for them, that they took. It sounds like they took
a slightly more honest approach. They just asked them if
you could keep the loan around for a Chentleman's agree
at least for three months. But then they're like that's
not in the contract. So is there is there a
pre payment penalty? Like are we able to eliminate this immediately?

(29:10):
And they're like, yep, you can, but we ask you
please to keep this are out. It's like, okay, I
think I have all the information.

Speaker 2 (29:16):
Yeah I need It's more like a doo me a
salad if you don't mind, you know, I don't know.

Speaker 1 (29:21):
Probably not. Not if it's gonna cost me thirteen hundred bucks,
I'm not going to do it. Of appreciate the honesty though,
as opposed to like the run around and not sharing
the information.

Speaker 2 (29:29):
Yeah, I respect that a little bit more. Yeah, me too.
And so Kevin said, we'll shod to report this dealership
to a consumer agency.

Speaker 1 (29:35):
Probably not.

Speaker 2 (29:36):
I mean these are fairly normal tactics that you're mentioning here,
like it's the classic car sales dance. And so you
handle yourself well right, paying a hundred bucks an interest
to get a thousand dollars discount. It sounds like it
was worth the annoyance and the frustration and putting on
your Karen hat, which you said, which that was that
was funny. You can always leave an accurate Google review.
I would leave like a one star review and talk

(29:57):
smack but maybe like three stars, and mentioned kind of
the annoying financing combo. Help your fellow potential car buyers
out that that can just you know, make a difference
for them, people who are out there thinking about buying
a car in the future from that dealership. And we
hope you enjoy this car. I hope it lasts you
a long time. It just makes me think when a
used car that you love, when you get into an accident,
when if someone runs into your car or something like that,

(30:19):
it is such a bummer because oftentimes the value you
get from the insurance company for that car, it doesn't
match up to the value in your head, in your
heart for what that car is worth, like at least
for me, Like if one of my cars were to
get damaged right now, like our van is worth I
looked up the value of the other day. I was shocked,
it's worth like fifty five hundred dollars. To me, it's
worth way more than that. And so if I get
is slammed in that car and that's the cash I get,

(30:43):
I'll be bumped.

Speaker 1 (30:44):
So so that happened to you. Joel's here from another
listener This is a listener with a new baby in tow,
and he wants to make sure he's taking the proper
financial steps to prepare for this baby's future.

Speaker 4 (30:55):
Hey guys, Casey from Utah here. My wife and I
recently had a son with Down syndrome, and she needed
to quit her job to help care for his needs.
It's likely that he will live with us for the
rest of our lives, and we want to ensure that
he is provided for and that whoever cares for him
after we are gone has the resources they need. At
the same time, I would still like to retire someday.

(31:17):
How can I plan for retirement for three people instead
of two, especially with the reduced household income. Any thoughts
would be appreciated.

Speaker 2 (31:25):
Thanks man, Casey. First off, I just want to say
it sounds like you're being intentional to love your son. Well, yeah,
and I love how he's approaching yes this question, and
it's going to throw a wrench in things financially like
this is this changes your future, your family's future, your
financial future. Saving for retirement of course is still necessarily
and important, but the family is the top priority and

(31:47):
so this is going to make it harder. Like you said,
but I think I just want to say that I'm
impressed by your dedication to make sure that your son
is well taken care of, even if it means rearranging
finances so your wife can stay at home. Like, those
are the big kinds of decisions, Matt, that people face.
They just don't get talked about all that much. And
so I'm glad Casey brought this up so we can

(32:08):
address it, address it on the show totally. Yeah, And
so I don't at all want to discount how hard
it might be for Casey. I grew up with a
special needs sister, so I certainly know. But at the
same time, and she needs care for the rest of
her days from your absolutely, and you have to probably
be a part of that at some point in the future.

Speaker 1 (32:26):
Absolutely. That being said, it's almost like like the ability
for Casey to know that now and have years and
like decades ahead of him to prepare for that. I
think it's almost like, I think I would rather that
happen than let's say, if you had a kid then
something happened when they're like eighteen and then all of
a sudden, Like what I'm saying is that if you've

(32:46):
got twenty years ahead of you to prepare, and you've
got time on your side, and compounding that is totally
doable as opposed to like, hey, we got to do
this thing that needs to be fixed by next year.
There's not a lot that you can do within such
a just such a quick turnaround.

Speaker 2 (33:01):
But the small rudder changes you can make now to
the course of the ship, like you're going to get
there over the course of twenty years. You have to
make a much harder turn right to get there in
less and like a year or two exactly.

Speaker 1 (33:11):
Yeah, So Casey mentioned saving for his son. He wants
to obviously make sure that he's taken care of in
the future. Casey, I'm not sure if you've heard of
an able account, but you have certainly heard it now.
That is going to be the best way to stock
money away for his future. Anyone who has a disability
that is diagnosed before the age of twenty six qualifies

(33:33):
for an able account. It's basically it's akin to the
five twenty nine accounts out there, but was created specifically
to help family save money for disabled children without losing
out on federal benefits like Social Security income and Medicaid
as well. But so Casey specifically lives in Utah, so

(33:53):
you can head over to the website ableut dot com
and they've got pretty good options over there. Expense ratios,
the fees, they're fairly low, and that is going to
be the best account to help your son to save
up a nest egg for his future. And we're specifically
mentioning Utah's account because Casey, you get a state deduction

(34:14):
for dollars that you contribute to that account. If you
live in a state that didn't have a deduction, that's
when you would want to start looking at other state plans,
just like we do with five twenty nine accounts, right, Yeah,
And so when it comes to able accounts, I think
Ohio has a really good one. I think Florida has
a really good one as well. So for everyone else
out there who's interested in an able account you don't
get the in state deduction, make sure to look to

(34:36):
some of those better options out there. But UTAs seems
pretty solid.

Speaker 2 (34:39):
Yeah, And that's one piece of the puzzle, right Matt
is saving for the third member of the family, for
their son. It's like a practical accounts yeah, answer, that's
something that has to be has to be mentioned, and
it is one of the places you want to start
funneling some amount of money to help him save for
his own future. Because yeah, it's different than you talk

(35:00):
regularly about whether or not we're going to invest for
our children's future, and we kind of waffle on that,
and we do a little bit, but not a whole lot,
and we think our children should largely be responsible for
funding their own retirement. But it's different, like when you
have a special needs child who is going to need
a lot more care and won't be able to do
some of those things for himself. At the same time, Casey,

(35:21):
you're also worried about your own future. Understandably, you're going
to have higher expenses because your son is likely going
to live with you for a long long time. You've
also gone down to being a one income household, which
makes it harder to make ends meet and to deal
with those escalating costs that we're all experiencing, and at
the same time to save well for your own retirement.
That it feels like a mountain of necessities. And it's

(35:46):
not that it isn't possible, it's just that it will
inevitably take longer, which is why the time portion matters
so much that Matt talked about. So I think the
first piece of advice I would say is to maybe
give yourself some grace realizing that you're circumstances are going
to delay your path to financial independence and that's okay, Like, yeah,
I think it could be demoralizing. Don't let it be demoralizing.

(36:08):
You just have new goals in your life that you
need to address.

Speaker 1 (36:11):
Yeah, No, I think thinking about it in that way
is really helpful because it just shows that there are
all different types of goals that we set for ourselves,
and so how do we sacrifice into here now to
make sure that we're able to achieve those goals?

Speaker 4 (36:23):
Right?

Speaker 1 (36:23):
Like, that's how we are able to realize the life
we envision for ourselves. And so practically speaking, I think
what that can look like is just I don't want
to This seems so like small and petty, but like
budgeting is what I'm thinking about, right, Like assessing your income,
assessing your expenses. You've certainly lost some income and you

(36:46):
could stop prioritizing retirement al together in order to meet
your current needs. That would be an understandable reaction, but
I think it would be a bad one for your future,
for your desire to be financially independent and retire someday.
And instead I'd be asking, like, how can I reduce
my expenses so that I'm not going to negatively impact
my life in a significant way. Just start trimming wherever

(37:09):
you can, wherever possible to create more margin. And I
think this will be important as you just build up
your savings, you are able to continue investing and also
start saving for your son's future as well. It may
not take, depending on how tight of a budget and
how type of a ship that you're running within, that
you might find, Holy cow, all of a sudden, all

(37:31):
of these dollars that were kind of just getting spent
willy nilly, we're able to funnel and harness in a
way that's going to lead to significant wealth down the road.
If you were already really on top of your budget,
then I would say maybe it take, like maybe some
bigger cuts, some more drastic changes in your life, as
opposed to just trimming around the margins.

Speaker 2 (37:50):
Yeah, well, I think this is going to buy necessity,
involve some more communication between you and your wife, right,
And it's often an incumbent on the stay at home
spouse to create that more frugal environment. I think it's
going to take both of you really all hands on
deck sort of approach in order to feel comfortable to
still invest for yourself while taking care of your son

(38:11):
and you, like you mentioned, Matt, you'll probably have to
look beyond even low hanging fruit. I'm thinking about something like, Okay,
your wife is staying at home now, depending on your
work situation, casey, can y'all go down to being a
one car family? Like that's one of those things that
it's not just selling the car. It's the fact that
you're not paying insurance on that car anymore. Like it's
not a depreciating asset sitting in your driveway. So like,

(38:33):
what can you do that maybe might be a little
outside the box that you haven't You really haven't thought about.

Speaker 1 (38:39):
Even a lower cost of living area, you know. I mean,
maybe you're thinking before now it's not that important that
we're not close to family. Oh maybe all of a sudden,
you're realizing that it's much more important for us to
be closer to family because of the assistance that they're
going to be able to provide. For sure.

Speaker 2 (38:54):
I think ultimately financial independence is still doable over a
longer timeline. It's going to mean thinking more about your
own earning potential and working to increase your primary income
as well. Especially since you are going to be the
sole breadwinner, You're probably gonna need to reduce some of
your retirement contributions for a while, make sure you're still
getting the match though, and then increase them steadily over
time as you get more comfortable with the one income lifestyle.

(39:18):
So yeah, I tend mostly your own investments, some to
the investing on your son's behalf as well. We wish
you the best and man, it sounds like these new
goals are going to be more difficult, but these are
goals that are going to be worthwhile for your family
to thrive.

Speaker 1 (39:35):
That's right, Joe. We've got more to get to. We're
going to take a question about maximizing your retirement accounts.
Maybe we'll even talk about annuities. We'll get to all
that and more. Right after this all we're back. Let's
get to the Facebook question of the week.

Speaker 2 (39:54):
This one comes from Connie says, what do you think
about annuities? Two different banks have advised me to get these.
I understand they probably get a nice commission, but they've
offered it as a safe alternative investment. Matt, what's your take.

Speaker 1 (40:05):
I like that two different banks have recommended them. So
she's been out there doing her shopping and she's like, well,
the first time I thought no, no, thank you. But
then when the second bank was just like, oh, yeah, yeah,
you need an annuity, it's probably like everybody's saying, maybe
there's some truth here. No. Well, first off, I mean
I guess even the fact that she's going to a bank, right,

(40:26):
Like getting financial advice from a financial institution like a
bank is I mean, it's always a bad idea. Where
it is that you get your financial advice matters so much,
and the incentives often determine the kind of advice that
you're going to receive. So, as you mentioned, if the
commission is deep, there is a much higher chance that
they're going to recommend that product, whether or not it

(40:48):
is in your your best interest. And so the fees
that banks realize on annuities, like variable annuities, think they
can be massive and I'm talking like in the two
to three percent range annually. And so I would say
the first mistake was even going to your local banker
and saying, hey, sell me a financial products. Yeah, yeah,

(41:08):
that's something you want to avoid generally speak a greed.
Stay away from banks for financial advice. Also, an annuity,
it's kind of an investment, but it's also an insurance product.
With many forms of annuities, like an indexed annuity, your
investment returns are capped and so you know, think about
the returns you would have been losing out on in
this fantastic market run if you were to have opted

(41:31):
for an annuity instead of putting your dollars in an annuity,
instead of investing them in the market, right, you would
have gotten creamed. From a returns perspective. You would have
lost out on so much upside aiming for security and
not and trying to avoid risk. And so if you're
looking for an investment, annuities are not the best place
to look. If you're looking, though, to create income based

(41:55):
on the investment dollars you've been able to grow as
you get closer to retirement age's and I stress some
some some, A few low cost types of annuities might
maybe a decent choice for steady income, but annuities just
are not a great choice for most folks. And if
you're looking for a smart investing strategy, They're just not

(42:15):
really a reasonable choice at all. So they are an
inferior financial product.

Speaker 2 (42:20):
Boo annuities. And if you do step into that space
later in life seeking that sort of like income like
clockwork every single month, just be really really careful and
to your due diligence and know that you need to
opt for a really low cost one and you're probably
not going to get that at your bank.

Speaker 1 (42:40):
That's right, Joel's take a question from an anonymous poster
in the Facebook group. Is anyone else finding it harder
to keep maxing out hsas and roths as the contribution
limits increase? I don't think we can comfortably do it
next year. Company raises have been non existent for two years,
and costs for everything are up, including health and insurance.

(43:00):
I'm glad we can still get some money in there,
and super grateful for the past years we could max
it out. It's feeling a bit sad that we can't
hit the goal next year, though, Joe, what do you think?

Speaker 2 (43:10):
Yeah, I mean, you're not alone, anonymous. I think that's
the first thing I want to mention, especially you talk
about the rising cost of health insurance. Depending on where
you work, you might be seeing a double digit increase
in what you're expected to pay for health insurance. And
it makes sense with that being such a large expense,
You're like, it's got to come from somewhere, and I
feel like I have to dial it back on retirement
account contributions. Also want to say, I'm so glad that

(43:34):
you want to max out all those accounts that you've
been able to. Yeah, right, even if you can't do
it every single year, the fact that that is your goal,
that's what you're striving after, it means a lot. It
means that your heart's in the right place, you're shovling
your money in the right place, and you're setting yourself
up for an awesome future, even if you can't do
it to perfection.

Speaker 1 (43:50):
You know, yeah, you know what this makes me think of.
This makes me think of James Clear Atomic Habits, where
he talks about identity based habits, right, And so there
are times when we latch onto certain habits and things
that we're trying to implement because there's some sort of
external marker, right, And in this case, I think for
this anonymous poster, maybe the external marker is being able

(44:11):
to say that I maxed out the roth IRA or
I maxed out the HSA. But what I think is
more important is the fact that this person sees themselves
as an investor, right Like this is because something that
they do because I'm an investor, Like because I am
intelligent and I understand the power of compounding returns. I
understand how tax advantage accounts lead to more wealth for

(44:34):
me and my family down the road. I understand delayed gratification.
Like these are all the kind of tenants that are
at the core no means to be an investor. The
optionality I'm building for myself. Yes, every year that I
get at least close to maxing those houns. Yeah, And
so I mean, personally, I wouldn't beat myself up if
I wasn't able to hit the new max amounts, especially

(44:54):
if you're you know, contributing the same amount that you
didn let's say last year or the year before, but
the have just gone up and so you're quote quote
unquote not maxing it out anymore, but you're you know,
investing pretty dang close to what you're investing before. Well,
on doesn't matter, like you don't have the title anymore.
But I don't know. I'm not My wife doesn't given
me like a gold star for maxing up our retirement accounts,

(45:19):
so I don't know. I don't hopefully that that is helpful, Like, yes,
please still do invest, but I personally I wouldn't beat
myself up over not being able to quote unquote max
those accounts.

Speaker 2 (45:29):
I think it's just also important to note that as
we make progress towards financial goals, it's not always up
into the right endeavor. That means, like, even as a
serious investors, your net worth is going to go down
year of a year, sometimes not through any fault of
your own, but just because hey, twenty twenty two was
a rough year in the markets, and guess what to
even though I contributed, I'm worth less today than I
was a year ago. And that's just like a frustrating

(45:51):
thing to encounter, or like, yeah, i can't put as
much in as I did last year, but I'm still
doing my best. Like that's okay. And as long as
like you're doing your best, you're still prioritizing, contributing, and
setting money aside for your future, then I think you
are creating a bright financial future for yourself, and you

(46:11):
are taking the right tactic totally.

Speaker 1 (46:13):
And not to mention too over the years, it's less
about your contributions and it's more about the nest egg
that you've accumulated and how much how much weight that
that thing is pulling for you here right like once
your investments are working harder for you than you are.
Like the maximum contribution limits, they matter less and less

(46:35):
the further along the further down your financial journey journey
you travel. I think it's always good to look back
at how far you've come to, like, Hey, what have
I done over the past six, seven, eight years? Celebrate
those wins?

Speaker 2 (46:45):
Yeah, as like my main goal has to been to
maxos out that I think will hearten you. You're like, man,
I have been crushing it. So the fact that this
is a minor blip of five hundred dollars that I
can't get to to max it out overall, I'm still
crushing it.

Speaker 1 (47:00):
Totally, agree, Joe. Let's get back to the beer that
you and I enjoy. I'm going to say this time,
which was I'm measured?

Speaker 3 (47:06):
What was it?

Speaker 1 (47:07):
Press procession? You need a new prescription for your well
It is very tiny type and it's written in like uh, handwritten. Yeah,
precession measured procession of veracity. This is an I P
A by Burial, A seven percenter. What do you think, buddy?

Speaker 2 (47:24):
And I'm gonna say this was gentle. It was luscious,
like laying down in a bed of hops. And uh,
it's just not as abrasive as some of the double
dry hopped I pas that you might expect from Burial,
but still like packed to the gill with hot flavor,
but just not It didn't quite have that what do
you usually call it, like blue cheese.

Speaker 1 (47:45):
Yeah, that sharpness, that sharpness did quite have. That didn't
have that sharpness. It almost had like it seemed a
little bit sweeter than usual. Like it there's it almost
had like a fried I don't know why I'm thinking
of this, and it made me almost think of it
like a fried donut, like a to it like almost
like a waffle house waffle. Yeah, there's like a paste
tastes like a donut. Yeah, there's something about it. I
don't I don't know what. It is certainly delicious and

(48:07):
had the hops and all that going on, and like
this isn't a pastry stout or you know, it's pastry
sour Patriot pa yet did they make pastry?

Speaker 4 (48:14):
I pas?

Speaker 1 (48:14):
I don't even know if that's the thing. I bet
somebody has, somebody one of those wacky beers that you
can get off the shelves. But yeah, something about this
reminded me of like stepping into like a small hipster
donut shop or something like that. But it was really good. Glad,
you know. I don't know if I've ever been in
a small donut hipster shop, like you've never been to
like a local, locally owned donut place. I have, it

(48:35):
wasn't Did we talk to that owned I can't remember
if that was both of us who interviewed her, or
if that was just you her husband shop Christen Karat shop.
I wonder if it's hipster. I don't know, but one
of these days, by defaults it is because it's a locally,
responsibly sustainly owned and operated. Yeah right, That's what I'm
just trying to do as a small business owner. I'm

(48:57):
just not a huge donut guy.

Speaker 2 (48:58):
So unless it's hot and fresh off the cre speakream
line like not interested, you can't beat the mouthfeel on
the Krispy Creme just melts. Man, Oh my gosh, that's
so good.

Speaker 1 (49:05):
Straight in so good. How do you feel about toasted
marshmallows because that has a similar mouthfeel.

Speaker 2 (49:11):
I think marshmallows are a worthless food we should all
avoid completely.

Speaker 1 (49:16):
Yeah, I don't know that heat. I think it's something
that kids like.

Speaker 2 (49:19):
And then you even think back to Thanksgiving not long ago,
and I'm like, there's so many random foods with marshmallows
on them.

Speaker 1 (49:25):
Just get them out of my Facebook. So many? How
many sides did you like? At least too?

Speaker 2 (49:28):
There's like there's like a fruit dessert with like or
or you side with marshmallows, and there's like the sweet potato.

Speaker 1 (49:35):
Yeah pie is that's a little more traditional with the marshmallows.
I'm trying to figure out what else he stuck marshmallows on.
I know you didn't personally stick them on there. It's
indicative of avoided them your southern heritage. I guess it
is perhaps that everything had is that marshmallows on top
of the turkey. Let's go not cool.

Speaker 2 (49:52):
You can put bacon on the turkey, just not marshmallows.
All right, that's gonna do it for this episode. Thank
you as always for listening. We'll put links to some
of the resources we mentioned up in the show notes
on our website at howtomoney dot com. You guys to
sign up for the Head of Money newsletter.

Speaker 1 (50:05):
You know it, do it. It's great, all right. That'll
be though, until next time. Best friends out, Best friends Out,

All Episodes

Ask HTM – Newlywed Downpayment Debate, Good Car Loans, and Failing to Max Retirement Account #1072

Episode Transcript

Hosts And Creators

Joel Larsgaard

Matthew Altmix

Popular Podcasts

Stuff You Should Know

My Favorite Murder with Karen Kilgariff and Georgia Hardstark

Dateline NBC

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Ask HTM – Newlywed Downpayment Debate, Good Car Loans, and Failing to Max Retirement Account #1072