February 10, 2025 • 46 mins
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Should I sell a rental property in order to make higher returns in the stock market?
2 - What FIRE books would you recommend as I’m interested in early retirement?
3 - How would you recommend paying for an expensive medical procedure for my dog?
4 - Do you recommend investing via crowdfunding platform Arrived?
5 - Does it make sense to pay off our car loan before attempting to sell it?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money. I'm Joel, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
That's right, buddy, it's personal finance time. It's always personal finance.
The clock over here at How to Money PFT for sure.
Speaker 1 (00:31):
Uh, we are in fact that it's its own distinct
time zone, Matt, PFT.
Speaker 2 (00:35):
It's maybe just like one click beyond Pacific, like somewhere
in between Hawaii and California. Yeah, is a PFT. That's
where we resigne. But we do have several listener questions
to get to. We've got a listener who's considering parlaying
her real estate equity gains into stocks. She's thinking about
selling while she feels ahead, while she's on top. Another
(00:56):
listener is interested in early retirement. He wants that life
of lee. We're gonna explain to him how he can
get that. And another listener is interested in unloading a
car with a loan. These are new waters for him
and his wife, so he's got some specific questions as
to how it is he should go about pulling that off.
We'll get to those plus more during today's episode.
Speaker 1 (01:15):
Plus pets are expensive, we'll talk about that too, Okay,
Froogler cheap for you real quick? Yes please Figler chiefs.
So you know that you're super into the health space.
Me not so much, but I know that sauna's especially
because of my Norwegian heritage.
Speaker 2 (01:28):
You can downplay your draw to becoming like Bay Area
tech bro who wants to live forever, but we know,
I know it's in your blood.
Speaker 1 (01:36):
Yeah, not interested, but I do think that I've heard
that saunas are good for your health. Literally, haven't read
on it, up on it much, haven't listened to the
podcast about it. But I've also been like, ooh, I
like warmth, and so I like warm wet air. So
saunas are of interest to me, unlike the cold plunge,
which just sounds like pain and terribleness. But okay, So
(01:56):
I have been looking over the years and I'm like, oh,
Costco sales, you can get a pretty decent sauna for
like two grand twenty five hundred bucks. I was like, Okay,
that'd be kind of cool. You know, maybe i'd use
it three four nights a week and be a nice
way to wind down before bed. But you know what
I found while perusing Costco's website. You tell me if
this is fouler cheap a portable sauna. So it's basically
(02:19):
a fabric tent that you hook like the acouter moments
up to it takes like fifteen minutes to get hot
and steamy, and then you sit in it. I could
even like literally set it up in my bedroom and
then take it down when I'm done. Thoughts on the
portable song Okay, full disclosure. Hundred twenty bucks by the way,
big difference, that's right, one hundred and twenty dollars. A
little peak behind the curtain.
Speaker 2 (02:38):
You told me about this a couple of weeks ago
when you were I guess maybe when it first popped
into your head and you're like, hey, what do you
think about this? And I'll be honest, when you first
told me, I thought it was a dumb idea. I
thought Hare's Joel with another one of the silly like
when you were thinking out when you're thinking about getting
the like the portable hot tub inflatable Oh yeah thing.
This is maybe two years ago, which I never did
that either. That was the Black Friday deal that you
(02:58):
missed out on. Yeah, evidently they only sold like five.
Speaker 1 (03:01):
Of them, Walmart. I'm so mad at you for screwing
me on Costco Walmart.
Speaker 2 (03:06):
Okay, So originally I thought this was dumb, and then
I clicked over and went over to Costco's website to
check it out, and I will say I wasn't swayed
by how it looked because it also looks pretty dumb,
even though they do have this this in the pictures.
There's a male model or you know, like a dude
in it, and he looks like Hugh Jackman. It's like,
maybe you're thinking, oh, there's a tough guy that looks
(03:28):
like Wolverine.
Speaker 1 (03:28):
Maybe I'll look like that after're using it myself.
Speaker 2 (03:31):
But that also wasn't selling it for me. Uh What
sold it or what changed my mind slightly on it
was the fact that below those below the pop up
sauna that you're considering is they've got a whole bunch
of those big wooden barrel looking yeah, like the real
deal saunas. And at a minimum, you're looking at those
calls like three thousand dollars. Sure, basically more likely five
(03:51):
or six thousand dollars if you're wunning one of the
bigger ones were like Emily could sit in there with you,
that kind of thing. Maybe it's a whole family affair,
like what's his name from frozen at the trading post
there with this whole family we're taking on my business
meetings in the sauna. But there's so expensive, and when
you look at the financial impact that it would take,
not only from a financial standpoint but also the space,
it's almost like getting a pool table, yeah, or like
(04:13):
a piano, Like you are committing to this giant thing from.
Speaker 1 (04:16):
A financial anispace perspective. Yeah, that's got that you have to.
Speaker 2 (04:18):
Commit to being somewhere and you can't easily change your mind,
as opposed to trying out a sauna in a way
that if it doesn't work out, no big deal. But
I know for me personally, like I've only been in
a sauna a few times in my whole life, definitely
never on a regular, consistent kind of basis. So now
I think it's a totally legit way to test the waters. Okay,
I am one hundred percent fine with Did you order one?
(04:40):
I haven't, so it's been out of stock. Sadly.
Speaker 1 (04:42):
It was like literally on sale for one twenty. I
think it's normally one fifty. I read the reviews four
point seven stars and I didn't just look at the
star level. I read the reviews and people, you're getting serious.
People seem to love it. If I mean, if it
was in stock, I would have bought it already for.
Speaker 2 (04:55):
Sure, especially this time of year when it's cold outside.
The thought of sitting in like a warm to be
so good for your sinuses, like that wet, healing warm air. Yeah,
well it sounds so good.
Speaker 1 (05:07):
I will say, if there's anybody out there listening who
has tried a portable sauna, let me know and you
get some feedback. Because I've read the reviews on some
of the other sites, and I guess what prevents me
from ordering from elsewhere is the return policy. And I know,
like the zippers are terrible on some of them or whatever,
so it broke in three uses, and I don't want
to do that. But I'm like, if I buy from Costco,
they got the return policy, and so if it ends
up not being up to stuff, I can.
Speaker 2 (05:28):
Take it back. Okay, is it up to stuff from
the standpoint of how tall it is? Because I noticed
that the dude just like sitting completely within this this
little pop up thing, whereas I've seen ones in the
past that where the collapsible kind and their head pops
out and it like zips around their neck or so.
Speaker 1 (05:42):
And you can like pop your hands out and read
a book. That those look even more goofy to me.
I'm not going to read a book in there. I'm
just gonna like close my eyes chill out.
Speaker 2 (05:50):
You have to like sit on the ground and like
fetal position. It comes like with a little little chair
or stool. You'd be able to sit in it though,
That's what I'm saying.
Speaker 1 (05:59):
Okay, I mean my head might be in the top,
but I don't know. All right, I'll let you guys
know if I get on any familiar on it, if
anybody out there listening has used it, it has thoughts,
let me.
Speaker 2 (06:08):
Know, all right, man. The beer that you and I
are going to enjoy during this episode is a bourbon
barrel drafty kilt. This is a Scotch sail by Monday
Night Brewing and who uh listener, Todd listener, Todd, Yeah,
my new running buddy. So that's right.
Speaker 1 (06:22):
We'll give our thoughts on on this one at the
end of the episode. Let's get to listener questions. If
you have a money question, we'd love to hear from you.
Just go to hodomoney dot com, slash ask, or simply
record your question on the voicemambo app of your phone
and send it over to us how to moneypod at
gmail dot com. All Matt, let's get to a question
specifically about selling one investment to fund another.
Speaker 3 (06:45):
I how to money folks, This selexis calling in from
New Jersey. Really appreciate you guys's opportunity for allowing us
to call in so cutting to the chase. My husband
and I own two homes. Our first home now is
used as a rental property. We purchased it in twenty
twenty for two hundred and sixty two thousand, five hundred dollars.
(07:09):
Today it's currently worth four hundred and seventy thousand, and
that's the amount that it was a praise for by
the bank. We have a rental contract right now and
we are currently receiving a profit of six hundred dollars
a month, which we typically then just reinvest. We're trying
(07:29):
to decide if we should keep doing that or should
we sell the home right now. Are the remaining mortgage
balance is like two hundred thousand on that, so we're
deciding should we keep just reinvesting the monthly profits, or
should we sell the home altogether and then take the
(07:50):
two hundred thousand dollars plus that we recruit and invest that.
We really appreciate your input. Thanks so much.
Speaker 2 (07:59):
Bye, all right, Alexis. First off, thank you so much
for listening to the podcast. Secondly, I love that you
opted to use your first home as a rental property
because it is amazing how holding on to that first home,
how saving up for another down payment for your second
property purchase, How that can jump start your wealth building efforts.
It is one of our favorite ways for folks to
become landlords. Underrated. Sure, if that is something that you
(08:22):
are interested in doing, it's how well, actually, I take
it back, it's how you Sometimes they get your stories
mixed up. It's how you became a landlord. So we
continue to live in our first property, and we love
that house so much we decided to stay in it
while we purchased.
Speaker 1 (08:36):
But eventually you did move out of that and rent
out that home and we still have it. But it
wasn't how I first dip my totally start to real
estate invest But for a lot of folks, I think
that's the best. It makes a lot of sense, especially
if you're in some sort of like starter home. It's
kind of smaller. You got it for a reasonable price,
you got a good locked in rate, which that will
come up. And the answer this question, Matt, it can
make sense. That's your stepping stone as you save up
(08:56):
that next down payment. Like you said, and I didn't
hear necessarily a reason of why Alexis wants to get
rid of this rental property. I don't know if you did, Matt,
Like I didn't necessarily hear some angst.
Speaker 2 (09:07):
Or anything like that. I think she's just wanted to
make sure she's doing the right thing.
Speaker 1 (09:09):
Yeah, exactly, And so like, is it because you think
you can make more money investing in the stock market
or is it because you don't like being a landlord?
My guess is it's the former one, Matt, that she
maybe thinks she can do better investing in the market,
because I just didn't hear those frustrations popping up in
the voice memo. But the question about which one is
going to be more profitable over time, that's a tough one. Like,
(09:32):
so in some ways it's saying like, well, where's our
what's our crystal ball?
Speaker 2 (09:35):
Say?
Speaker 1 (09:36):
Is the real estate market going to do better? Is
the stock market going to do better? And I think,
you know, buying a rental property now, right with prices
being inflated, with interest rates being sky high, or at least,
you know, relative to the last few years, their sky high.
It's it's one thing, but you already own your home
with favorable terms Alexis, and part of the appeal of
(09:58):
those terms is that you have a locked in low mortgage.
Speaker 2 (10:00):
Matt.
Speaker 1 (10:00):
I looked this up because I was curious. The average
interest rate in twenty twenty was on a thirty year
mortgage three point one percent.
Speaker 2 (10:07):
Oh my gosh.
Speaker 1 (10:08):
Anybody trying to buy home right now is like punching
themselves in the face because they're like, why didn't I
buy a home back then?
Speaker 2 (10:13):
Little lower than I would have guessed.
Speaker 1 (10:15):
It's it was crazy low, and a lot of that
was like pandemic induced uncertainty and stuff like that. So
Alexis likely has just an incredible rate locked in on
this home. You're borrowing literally Alexis at rates lower than
what the federal government can borrow at right now, and
so it's hard to assign a specific value to that
locked in low mortgage rate, but I think it's actually
(10:35):
one of the best protections you could have against inflation.
I'm reluctant to get rid of my low interest rate mortgages.
I think it's just worth mentioning that that's kind of
a mini little gold mine that you're sitting on right there.
Speaker 2 (10:46):
Totally. Yeah. So the other thing is that returns in
real estate are a little skewed because of leverage. So
you've seen the value of your home increase by more
than two hundred thousand dollars in less than five years,
which is awesome. Don't expect returns at that rate moving forward, Okay,
but I'm not sure what it is or how much
it is that you put down. But if you put
down let's say twenty percent, well that means you turned
(11:07):
fifty five thousand dollars into two hundred thousand dollars, which
is fantastic in half a decade. That's probably Yeah, kudos
to you. But keep in mind that leverage cuts both ways.
In the case of real estate investors over the last
decade or so, it's been a massive boon to their
bottom line, but it didn't necessarily it could not have
gone that way.
Speaker 1 (11:25):
Talk to someone who bought a house in two thousand
and six and seven exactly.
Speaker 2 (11:28):
So let's say that let's compare those returns out to
the stock market, because let's say if you had invested
that money within the S and P five hundred instead,
you would have seen some fantastic growth compounding over the
past five years that would have doubled your money. It's
just not quite as much as what you've experienced though
there with that first property. Both leverage and also the
(11:49):
market conditions that we've experienced have been in your favor,
Like when did your back baby? It's so nice, But
there are still some reasons, however, to consider selling that.
I guess it's not a slam dunk to say, like
you said early Joel, like you're sitting on a gold mine.
You've seen incredible growth. That doesn't necessarily mean you should
be hanging on to this thing forever, though.
Speaker 1 (12:06):
At some point you cash out the gold mine. I
guess to live a life of leisure, maybe that's what
Alexis is trying to do and maybe simplify her life,
which I totally get getting out of the real estate
game for that because it has more part part time
job aspects and usually Matt, we don't let the tax
tail wag the investment dog, because, yeah, taxes certainly factor
into our strategy. But I think if you overthink the
(12:28):
tax thing, you might be liable to make mistakes just
in terms of how you invest in what you invest in.
But in this case, the tax bill for selling it
could be so significant that it really does weigh heavily
into the discussion. And that is because of a really
important thing Alexis said initially and what we talked about
at the very beginning, the fact that this house was
(12:48):
a primary residence to begin with. Right, So because of that,
if Alexis lived in this house for at least two years,
she could potentially avoid tax altogether if she sells the
property soon. The key for her is to meet the
what's known as the two in five rule, and it
basically states that if you live in the home for
at least seven hundred and thirty days of the past
(13:10):
eight hundred and twenty six days, Matt, that's two out
of the last five years. If you follow up right, yeah,
you won't owe capital gains tax on the appreciation that
you've seen, which is quite a bit, right, more than
two hundred thousand dollars in appreciation. So basically, if alexist
in taxes soll soon right, she could save herself roughly
thirty thousand dollars in tax that she would otherwise, oh
(13:31):
if she waited.
Speaker 2 (13:32):
Just a bit longer.
Speaker 1 (13:33):
And you know, that's not insignificant, and it's one of
the only investment moves you can make that can help
you avoid taxation no matter what. And so it really
is that, Hey, I owned the primary home, I lived
in it for a couple of years, I rent it
out for a couple of years. Now I'm selling and
boomshaka laca. All of those proceeds still accrue to you
without paying a dime in tax. That's why our buddy
(13:54):
Carl Matt, we've talked to him on the show about this,
why he does live in flips Because if he lives
in the house for two years and he's renovated it
all the while, he has a place to stay, and
when he sells market appreciation and forced appreciation, he's able
to garner all the money that he gets from that
sale and not pay a diamond tax.
Speaker 2 (14:10):
It's pretty sweet. Yeah, so taxes are at least one consideration.
But you said you still have a balance on that property.
You likely owe two hundred thousand dollars at a really
awesome interest rate. Again, you're making money every single month
your property. It's appreciating in value. There are real reasons
to hang on to this home as well. And so
I think my biggest question for you and your husband
(14:30):
is whether or not you could see yourselves renting this
property out for the next like literally for decades to come.
It could continue to do really well for you. But
just and you barely mentioned this earlier, Joel, but not
everyone appreciates or likes that part time the part time
job element of owning investment property. Yes, it's much less
passive than just putting your money in the market.
Speaker 1 (14:52):
And Alexis has to look at the duration and how
long she lived in the house and how long she's
rented it out. She's got to run those numbers for
herself to make sure that she would be able to
sell this and not incur any any sort of capital
gains tax. But I think what we're getting down to
is if she if that's the case, either sell it
now or don't sell it at all.
Speaker 2 (15:09):
I kind of think literally it is now or never.
Speaker 1 (15:11):
Yeah, you don't you don't want to rethink this in
two years and be like, you know what I think.
Now it's time to sell. And then you got this
too late, forty thousand dollars tax bomb that you would
have avoided. That'd be a real bummer. We don't want
you to face that, So make that decision quick, But
make that decision for partially for tax purposes and partially
for lifestyle purposes. I would kind of take both of
those into consideration. But Matt, we've got more to get
(15:35):
to on this episode, including a listener wants to know
about a really expensive surgery for her dog, kind of
save on that. We'll get to that and more right
after this. All right, Joel, we are back for the break.
Speaker 2 (15:52):
We've got more to get to, including a listener asking
them abouts maybe moving down to one car. This may
or may not be the secret to my success, Joel,
there's so many secrets, no matter. I don't know if
I want to boil it all down to that.
Speaker 1 (16:02):
They're going to all come out in your tell all
memoir one of these days.
Speaker 2 (16:05):
But let's now hear from a listener who is interested
in retiring maybe a little bit early.
Speaker 4 (16:11):
Hey, Matt and Joel, This is Evan Brooks from Omaha, Nebraska,
a longtime listener of the podcast. My wife and I
have really enjoyed all the advice you've given us over
the years. My question is, we're interested in early retirement
and aren't quite ready to pay a financial advisor yet. However,
(16:32):
I'm sure there are some amazing books out there for
early retirement. Can you suggest a book or two that
I can read to get the basics down and under
my belt before I go talk to a professional for
six thousand dollars? Just seems like a good place to
start might be to read and educate myself at a
(16:53):
level of detail that you don't typically get from just listening.
Thanks for all the help you've given us thus far,
and hope to see you guys in Omaha, Nebraska someday.
Speaker 1 (17:05):
So yeah, oh, matt Omaha, Nebraska. We might we actually
might be an Omaha in May for the Berkshire Hathaway
Annual Meeting. So last week we talked with David Clark,
who is the resident Warren Buffett expert. He's written a
ton of books on Warren Buffett on value investing, and
he actually invited us to the annual Berkshire Hathaway shareholder
(17:26):
meeting and.
Speaker 2 (17:27):
Not every day that happens. No, it's I guess we
could attend if we owned at least one share of
the company. But how much Doesway go for it?
Speaker 1 (17:35):
It only has to be B shares. I read it, really,
and I think as much as that costs four hund
and sixty five bucks something like that, too bad.
Speaker 2 (17:40):
It's not bad just to throw some you know, throw
some money Warren's way. He doesn't have enough. He deserves it.
Speaker 1 (17:46):
So yeah, Evan will let you know if that happens.
And I love Matt that he said he's not willing
to pay an advisor yet he realizes that maybe at
some point in his financial journey he will want to.
And given where he's at now, though he's curious, he's
wanting to pursue this path of fire. He's kind of
in the DIY information gathering stage. And so I do
think the right way to move forward is that individual approach,
(18:08):
not necessarily hiring someone expensive to help you yet, but yeah,
maybe maybe that becomes necessary or at least helpful down
the road.
Speaker 2 (18:16):
And especially given to the fact that he's talking about
early retirement, I think if he was like purely focused
on financial independence, where maybe and maybe that I don't know,
maybe for him it's synonymous, right, Like maybe it's one
and the same thing. But there's a whole lot of
thought around early retirement that I think you could do
on your own. And if I were in your shoes,
what I would do is I would read some folks
who have put in the hard work to achieve financial
(18:38):
independence or retiring early first, because there's going to be
there's positive experiences out there, but there's also negative experiences
because some folks feel like that they gave up on
too many good things in life in order to retire early,
like along the way, maybe the things that make life
worth living. But they wish that they had extended the
timeline of bits to where maybe they weren't quite as extreme.
Speaker 1 (18:59):
Yeah, maybe there wasn't nosed to the grindstone as hard
and maybe they know, takeing the foot off the pedal
so they could enjoy life in the here and now
and in the future.
Speaker 2 (19:07):
Yeah. For more than one person who has retired early
has told me that they wish that they would have
prioritized their health, for instance, all along the way as
opposed to having this chunk of time now at the
sort of tail end of I mean, not the tail
end of their life, but like they're in midlife and
now they realize that, man, there's a whole lot of
habits that I wish it would have implemented earlier on.
But then others have reached fire and have found that
(19:27):
work like the actual job that you had, at least
in some capacity, that it provided meaning for them. And
so because of that, they feel a bit aimless. They
feel a little unmoored after hitting their net worth milestone,
after hitting their number calling it quits.
Speaker 1 (19:40):
We've talked about friends who hit Fire, Matt and they
had great jobs or whatever, and then they start driving
for Uber just to have that kind of relational connection, right,
And it's one of those things that you wouldn't expect that,
but people do end up there.
Speaker 2 (19:51):
Yeah. I think knowing why you want to achieve fire
like that is an important place to start in order
to make sure that you just aren't chasing something that
will actually make you ha in the end. Like think
through sort of like all the different implications of achieving
financial independence and retiring early.
Speaker 1 (20:06):
I guess the type of books that we would recommend
first would probably be the ones that take that full
human picture into account. I think your money or your life.
That's kind of an original firebook, and rightly so, you know,
it's less technical, and it has stories that help drive
home the point, and you know, after reading that, I
would pivot to maybe something like Jail Collins The Simple
Path to Wealth. I'd love Jail's writing. It's such a
(20:28):
down to earth kind of folksy vibe, and it's very approachable,
even though it's a book on investing simple investing. It's
just I think it's really helpful to have someone explain
in depth just how simple building wealth can be, because simplicity,
on its face, I think it can seem like you're
making a silly or ill informed choice because sometimes simplicity
it's like, well, you haven't thought through this enough, right,
(20:49):
But when you get a detailed why behind opting for
the simple approach, it all clicks, I think. And I
think Jail's book is really good for people who are saying,
but isn't that just not diversified enough? Isn't that just
too basic? And you read his book and you're like,
oh no, no, there's a lot of good reasons for going
that route.
Speaker 2 (21:07):
Totally yeah, and so yeah, the Jail Collins book is
a little more kind of like nuts and boltzy, whereas
Vicki Robbins like her book or Vicky robin her book
was more I feel like it was a bit more inspirational.
It's similar to that, I would say, quit like a millionaire.
That's another great book in the fire category. Actually, we
had her, so this was written by Christy Sheen. We
had her as well as Jail Collins on the show
(21:28):
over the years, but Christie's episode was one to eighteen,
so this is a while back. She's awesome, but her
story is incredible and it helps you to see that
almost anyone out there can achieve fire.
Speaker 1 (21:39):
Yeah, her stories of growing up in China dirt poor,
I mean all inspiring.
Speaker 2 (21:45):
Like what I remember is her talking about how she
like as a kid, she would play basically out a landfill,
but it's a landfill where there was medical waste, waste
like went medical trash, which man, sounds horrifying. But what
other book that will throw at you. And this is
also another guest that we've had on the show is
The Psychology of Money, which is by Morgan Household. It's
(22:08):
not a fire specific book, but I think it's well
worth the read because it just delves into the way
you think about money, which we're always pushing folks out
there to think about. Like the nuts and bolts are crucial,
but books like Christie's or Morgan Housel's, I think they
can help you to even sort of broaden how it
is that you're thinking about your work and money, and
(22:28):
just once you are investing, once you are able to
get past kind of like the nuts and bolts of it,
to be able to help identify maybe the why behind
what it is that you're doing. The jail Colin is
a simple path to wealth. It's not all that difficult,
but I think the harder aspects of it are more
of the psychological aspects that are difficult for us to
get past basically.
Speaker 1 (22:45):
And you want to make sure you know what you're
signing up porn Evand it's kind of like you were saying,
Matt will begin with the end in mind. And you
can always give these books on the library of course,
or you know, you get the audiobooks for free on
Libby if and hopefully your library has these within their selection,
but you know, if you love them, you want your
own copy buy them used on eBay. You also mentioned,
by the way, six thousand bucks to talk to a pro.
(23:07):
I don't think it needs to cost that much. And
this is something we talk about regularly on the show.
Matt and I have talked about more and more. Is
that financial planners for some people who are further along
in progress reaching their financial goals, well, maybe they want
a second set of eyes. Maybe they do need the
help of a pro at that point. And you know,
Domain money has flat fee plans. Two out of the
three they offer our priced well below six thousand bucks.
Speaker 2 (23:28):
Hello.
Speaker 1 (23:28):
Nectaren is a site where you can meet with the
CFP for one hundred and fifty bucks an hour. If
you just need a couple of hours of advice, you
just pay for as much time as you need. So
I just want people to know there are options for
seeing a financial planner that don't involve signing in blood
to a one percent AUM sort of thing for in perpetuity.
But it sounds like you're looking for more inspiration and
(23:48):
insight Evan, and so yeah, I'd save that money to
fuel your path to financial independence for now, and then
as your nest egg grows and things get more and
more complicated and you feel like you do need somebody
else's opinion and how then that's when you want to
pivot there. But it sounds like that's not necessary right now.
Speaker 2 (24:05):
Yeah. One other thing too, don't discount bloggers. I just
think about how the simplest sort of path to figuring
out if you have enough money to retire is having
twenty five times your annual expenses on hand. And that
was I think most popularized by mister money Mustache. But
there's a lot of folks out there like him in
I mean, I guess a lot of the bloggers that
(24:26):
that I don't even keep up with anymore, but a
lot of times those folks like I also think about
the mad Fientists, who we've also had on the show,
because one of the things he said was that he
was looking for I guess at the level of detail
beyond what we talk about on the podcast, that's Brandon
all the way after Mad Fientists, because he dives in
deep when it comes to figuring out exactly how to
execute and pull off early retirement, like whether it comes
(24:47):
to accounts or how to set up a roth conversion ladder,
all of these things that take a little bit of
finessing in order to pull off. But don't discount those
folks as well. There's a lot of folks out there
that create that have written great book. But I think
some of the more specific detail that these creators and
these bloggers have written about, I think that might be
a really helpful. Man.
Speaker 1 (25:08):
You can get as nerdy as you want through with
some of those blogs. Yeah, I think, not super nerdy,
but still nerdy. Is is Carl's blog fifteen hundred days
and then he.
Speaker 2 (25:15):
Gets really specific and with his numbers as well. He
literally tracks his net worth and puts it out there.
It tells you where his numbers are on a month
and month basis. That's right.
Speaker 1 (25:22):
And if you want to get even nerdier than that,
early retirement now right or can I retire yet? Those
are other great like fire oriented blogs, so check those out.
Speaker 2 (25:30):
To crunching the numbers, yea, and not even like there's
other man, there's so many writers out there. It makes
me think of the Frugal Woods. Oh and like that's
a little bit more maybe lifestyle inspired or Vermont homesteading. Yeah, yeah,
which is like a little bit less of the number
crunching and more. Okay, what do I want my life
to look like. So it doesn't necessarily have to be
about the specific details. Maybe what you're looking for is
(25:52):
a little inspiration on the yeah, on the lifestyle front,
So don't discount all the all the great bloggers out there.
We can link to some of those inner show notes.
Speaker 1 (25:59):
The fire vibe be nice. Yeah, all right, Matt, let's
get to another question. This question comes from listener Sarah.
It's specifically about saving money on a really big expense.
Speaker 5 (26:08):
Hey, Matt and Joel, this is Sarah from South of Boston.
I've been listening to you guys since Poor Not Poorties,
and I've listened to almost every episode of this point.
I just have a few left in my playlist. I'm
excited to ask you guys a question, but pretty sad
that I actually have this reason to do so.
Speaker 4 (26:24):
So.
Speaker 5 (26:24):
I have a four year old Australian shepherd dog named
Maggie who has severe heart problems. At about six months old,
she had heart surgery which solved some of the problems
but didn't alleviate all of them. We have to go annually,
at least usually every six months to the animal hospital
to get a check up to make sure she's still good.
On our last appointment, we found out that her numbers
(26:46):
have been increasing and she's getting closer to pre surgery rates,
and so we should probably consider soon another heart surgery.
It's not really required at this moment, but it's more
of a preliminary precaution before she actually hits heart failure
or has a their issues. So we have time and
things to consider, but it probably should be done because
she is part of our family. My question to you
(27:07):
guys isn't about how to get the money or say
for it, since it is about seven to ten thousand dollars,
but about anything we could potentially do to help reduce
that cost. We're already going to teaching school for animal hospital,
so that helps reduce the cost. We tried to do
health insurance for a while on her, but since it
was a pre existing condition, it kind of didn't count
(27:29):
really for anything and it wasn't covered any other ideas
you have, but how we can reduce its expensive cost
would be greatly appreciated. Thank you. Best friends out Oh.
Speaker 1 (27:40):
Matt is Sarah an honorary best friend.
Speaker 2 (27:42):
I think so if you've been listening to us for
that long since the poorn up poor days. Oh, for sure,
you are an honorary bestie.
Speaker 1 (27:49):
You've put up with some crap at times, right, So, Shenanigan,
surprise you have not gotten tired of us.
Speaker 2 (27:54):
I will say, I'm sorry to hear about Maggie's health problems,
your dog there, Glad you had a bit of time
to plan a save for this really big expense. And Joel,
I'm gonna admit, I'm like, we're not experts on this,
but I think we can at least offer some of
our thoughts when it comes to finding ways to perhaps
pay less for this big, unwelcome expense.
Speaker 1 (28:14):
Let's start by talking about one thing that Sarah mentioned,
which is pet insurance. And this is something that I
have read enough about over the years where I feel
pretty confident in kind of where I've landed. And because
this is a pre existing condition, by the way, it's
highly unlikely that any insurance out there would allow you
to sign up and get a policy for Maggie and
then they're going to pay for the surgery. Right, And
(28:35):
it sounds like you know that Sarah so not telling
you anything you don't know. But here's the other thing.
Pet insurance isn't a great product. For most folks anyway,
we would rather see most pet owners self insured, and
that is going to mean typically having thousands of dollars
extra in savings as a plan for a worst case
scenario like this. And I think, Matt, some people believe
(28:58):
or want pet insurance to act like a security blanket,
but every analysis that I've read finds that they're just
not as great as they seem in the brochure or
on the pet insurers website, and that there are just
hoops to jump through. There are certain breeds that aren't covered,
there are certain surgery types that aren't covered, and the
costs cannot weigh the benefits. And so if something like
(29:19):
this happens and the insurer does pay well, then hey,
you may not like a bandit, but I think for
the average person, self ensuring is going to be a
better option than going with the pet insurance totally.
Speaker 2 (29:28):
Yeah. I also love that Sarah said that she is
at a or has been going to this teaching hospital,
which really should save you some serious money. But man,
I would totally be calling around a few other vets
there who performed the surgery in order to get a
quote as well. I don't know exactly what this surgery involves.
But based on a quick search, seven thousand dollars does
(29:49):
seem like a pretty dang good deal. It is worth
casting your net though out there to see what some
other well reviewed vets might charge you. Seems like you're
already getting a good rate. Way side that we would
encourage you to check out is pet helpfinder dot org.
You should be able to find a list of local
vets who offer discounted services, but they might also just
(30:09):
be for more regular and inexpensive services like getting what
is it kennel cough injections and different things that the
pets that your dogs and cats need on a more
annual basis.
Speaker 1 (30:20):
I think about this, Matt, when I have like a
bigger expense for my car. Let's say, I mean you
just had recently had a timing belt replaced, right, And
sometimes I'll just google and be like, well, okay, what
should the average price be for this? And there are
websites that list out that information of what mechanics in
your area typically charge, And then I'll use that to say, oh,
does this seem like a good price or not? And
(30:40):
then I'll even just call other mechanics that I know
and trust that are close by and say, hey, listen,
this is what I'm looking to have done, And oftentimes
I'll give me a quote over the phone, like I
don't even have to bring the car in, right, because
that does sound like a pain. You might be able
to do the same thing here, Sarah, just by calling
a few vets and saying, here's kind of the surgery
we're up against. Can you tell me roughly how much
it costs to perform this on my dog age and
(31:02):
breed right totally?
Speaker 2 (31:02):
Which I will say, I think there might be some criticism,
some pushback if some folks who are like dudes, that's
like way too pragmatic, Like that's why this isn't car insurance,
this isn't a car repair. This is like you know,
a pet that who I love dearly. This is like
a member of the family. But the fact is we
say the same thing when it comes to personal healthcare
as well, like when as far as calling around even
doing medical tourism, and the fact that this isn't like
(31:24):
an emergency surgery or a procedure that needs to be
done right now. Man, You've got time on your side
to be able to call around and like if how
a Healthcare blue Book is for for humans. Yes, I
would be completely willing to go to a different city
or even drive to a nearby state if it was
going to save me a few thousand dollars because of
the ability to not only find the best care that
(31:44):
might be out there for my pet, but also to
get the best price too.
Speaker 1 (31:48):
Yeah, and I totally get the desire to shop around
and say, I think it's a good desire.
Speaker 2 (31:52):
I mean, I think that is.
Speaker 1 (31:53):
When you're in the caf art seat, when you have
time on your side, which in this case, Sarah, I
would be doing the same thing. So give it a go,
but know that the savings might be slimmed to non existent,
kind of like you pointed out, Matt, that then maybe
the rate you're getting is actually pretty good based on
a quick Google search from US. And if you tell
your vet maybe that the surgery is expensive, and you
(32:14):
ask them for options for discounts, there's a good chance
that they're going to recommend a payment plan or a
credit card, and we would advise against that because like
one of the bigger companies in this space care credit
they charge rates north of thirty percent. They're higher than
what a credit card would cost you, and yeah, maybe
(32:35):
they're going to offer some sort of intro rate, but
still it sounds like you have the money, Sarah. We
just prefer you to get the service more cheaply if possible,
might not be, but just to pay cash in full
when the time comes. Just rather you suck it up
and fork the cash over than try to lessen the
blow by paying off the surgery over time. It's kind
of like buy now, pay later for your pet or
(32:55):
something like that. And you're like, oh, I can pay
an installments. It just won't feel as painful. And I
get that it is to do that, but I just
don't think it's the best financial decision.
Speaker 2 (33:03):
I would also use this opportunity again because it's not
you're not on a tight time schedule. Head over to
howdimoney dot com for it slash credit card tool and
get you a card that's going to work for you
from a like a points or reward standpoint. Because again,
this is something that you know you're going to spend.
You got the cash on hand, so and like the
way we use credit cards, there's no harm at all
to make the most of these dollars that you're spending
(33:24):
use you.
Speaker 1 (33:24):
Can pay it off in one fell swoop when you're done,
and heck, yeah, maybe you got some pre flights out
of it, or a nice sweet sign up bonus and
a new credit card that's going to offer you some
perks moving forward to totally.
Speaker 2 (33:34):
And I think that this is a good heads up
to any aspiring pet owners, Like if you're like, man,
I really want a cat or a dog or horse
or I don't know, like whatever pet, that it might
have some of these expensive procedures, Like it costs a
lot of even if you are adopting a pet from
the pen, like there are additional you know, you got
your monthly medicines and food, the additional expenses that come
(33:56):
along with pet ownership. There's more responsibility, so just make
sure you're taking that into account before you got there.
And Adam member to your family reminds me of our episode.
Everything costs more than you think. Pets cost more than
you think. A plastic episode Joel specifically, my buddy Mark
just brought home a little Golden Retriever puppy, the cutest
thing ever. O C got to play with it on
New Year's Eve and then I ran it to him
(34:18):
two days later and I was like, how's it going, buddy,
and he said, oh, just spent the night at the
emergency vet and I spent like nine hundred dollars because
he had some sort of stomach issue and he had
been trying to convince me he had been trying to
get He's like, there's more in the litter. You can
get one.
Speaker 1 (34:33):
Too, And I was like, oh my gosh, you almost
won my heart these Golden Retriever puppy pictures, but alast
I said.
Speaker 2 (34:39):
No, and they think I'm good.
Speaker 1 (34:40):
When I had that combo with him, I was like,
I made the right decision, even though yeah, it's a cute.
It's a cute pupp and animals are awesome. We've got
two cats ourselves, but they're cheaper than dogs.
Speaker 2 (34:49):
You don't need to throw a dog into it. Not
right now, at least. All right, we've got more to
get to. We're gonna talk about some crowd source real
estate investing. We'll get to that and more right after this.
Speaker 1 (35:05):
All right, Matt, we're back. Now let's get to the
Facebook question of the week. This one comes from Celeste.
And by the way, if you're not a member of
the how to Money Facebook group, go check it out.
Speaker 2 (35:15):
How's he doing it with your life? I know?
Speaker 1 (35:16):
So here's her question, justa has anyone invested with Arrived
would like to know your thoughts on this crowdsourcing style
of real estate investing.
Speaker 2 (35:25):
Matt, you want to kick this office a short one. Yeah,
these different crowdfunding like I mean, there's apps, but there's
sites as well. This is a common question. Our answer
is essentially always don't do it real estate. It always
comes with fees, but the fees are even bigger when
other people are sourcing the properties for you. When there's
other people out there who are managing the properties, and
(35:46):
that's certainly true with Arrived.
Speaker 1 (35:49):
Layers of bureaucracy. You have the fund right yeah.
Speaker 2 (35:51):
Yeah, So like as it's under management fees, there are
sourcing fees, gross rents fees, property management fees. All of
that is going to lead to you receiving less money
from this company. But then on top of that the
liquidity that is also minimal when you invest in real
estate via a crowdfunded website. And the same is true
certainly with Arrived. We just don't see enough of an
(36:14):
upside to justify the fees as well as locking up
your funds for years on end.
Speaker 1 (36:19):
Yeah, yeah, right, And I think they can charge this
much because they're selling a turn key solution to investing
in real estate. And so I think there are some
people who just glorify this real estate investing in general, Matt,
and they think of, oh, this is the way for
me to build wealth. And if I don't have some
skin of the game, some exposure to real estate, then
I'm just not doing it right. Stocks they're so mid right,
(36:41):
they're so beta. I don't know what the gen z
are just saying these days. But when you dig into
the returns of the site, the returns of specific investments
on arrived, they make those public. We can link to
that page in the show notes. The average total returns
are not going to blow you away. And I think
it just sounds see at least a certain type of
person to become a real estate investor. And again, Matt
(37:03):
and I, we are real estate investors. We just don't
sell it in a way that is unseemly and we
don't talk about it in a way that isn't based
in reality. But you know, our take is that the
whole goal of investing is to make money, Yeah, not
to like think you're cool, and so you know, we
think that investing in boring all index funds is going
(37:24):
to take up less brain space, it's going to lead
to better results. And by investing through specific real estate
properties through Arrived, yeah, maybe you'll do well, and you'll
probably do better than sticking it in a same use
account with a big bank, of course. But those are
apples and tomatoes, right, Like, those are not even close compared.
I guess they're both read and about the same size.
(37:45):
So maybe maybe it's actually like fruit apples and broccoli,
But yeah, I would say they're they're very different things.
And the returns for a lot of the properties on
a Arrive don't don't even close to blow me away.
Speaker 2 (37:57):
No, well on the top of it. So I actually,
you know how I am with numbers, and so I
actually created Google sheets because I wanted to figure out like, okay,
like there are some on here that are pretty impressive,
but then there's a whole lot of them that aren't.
And if you average every single investment that they have
listed there and calculate the annualized returns based on the
timeframe that the money is invested, on average, you're looking
(38:18):
at three point three percent.
Speaker 1 (38:20):
That does not take into account appreciation of the property,
though yes it does it.
Speaker 2 (38:24):
It takes appreciation profits paid out basically the total return
on investments of those properties. All right, Like, yes, there
are rand the numbers. There are some that and of
course they're closer to the top, right, but like there
are a couple where it's like annualized out to be
something like close to sixty percent, I think, or but
literally it's only two of them, and there's over three
hundred projects and properties on there, and some of those
(38:46):
are negative and some of those are really down close
to zero.
Speaker 1 (38:49):
So maybe a HILD savings account is better, Yeah, especially.
Speaker 2 (38:52):
NETA fees, and I think like sometimes we'll mention reets
as well, So specifically Vanguard's V and Q that can
offer you some real estate exposure for a low price
if you are completely set on having some real estate
in your portfolio. But even still, like if you head
over there, you are like over the past ten years,
you're looking at an average analyzed rate of five percent return.
(39:13):
And again that's not that far from three point three
percent compared to guess what the SMPGOL has done over
the past ten years.
Speaker 1 (39:20):
Past second, say, uh, fourteen point two, so close over
thirteen percent. Okay, what I was gonna say thirteen point eight, but.
Speaker 2 (39:27):
Like, come on, man, like yes, I will say reads
are better because, like you're looking at a pretty low
expense ratio compared to the fees that you typically get
with somebody like Arrived or even fund Raise, because Fundriise
is pretty good from a fee standpoint, like their fees
are the lowest. But even still, I would not necessarily
recommend it. I would recommend to save up invest in
real estate where you live, because I think that's where
(39:48):
you can get some of that edge of investing in
real estate. But of course it comes with a little
bit more of a hands on, part time job like quality.
But maybe in addition to that, like finishing out your BA,
maybe turning it into an airbnb, maybe buying a duplex
around the corner, maybe your first property, saving up a
little bit more, and you buy the duplex, you live
in half of it, you ran out the other half.
I just think there are just too many downsides to
(40:10):
the crowdfunded version of real estate investing. Yes, it's easy,
but you pay for that eaither there's a lot of
middle men, right, and you're right like all, the advantages
of real estate typically come from owning the property yourself
and being able to make a good buy on the
front end because that market is less efficient than the
stock market, and you can with leverage and smart smart
purchases of real estate come out ahead over time, maybe
(40:33):
not even on a month to month basis, but over
the decades. And so it is a long term play
owning real estate. But I think if you want to
get into that, the crowdfunded sites are just not the
way to go. Yeah, let's take another quick one. This
one is from Josh and he wrote, my wife and
I have decided to get rid of our second car,
but we've never sold a car before. The car still
has about twelve hundred dollars due on the loan, which
(40:55):
we could pay off now if we wanted to. Should
we pay off the loan before selling or just sell
it with the loan still active? The car is a
twenty twenty Hyundai Elantra Joel, What would you do?
Speaker 1 (41:05):
Well, Normally, Matt, we would say don't sell that car.
Speaker 2 (41:08):
It's a baby.
Speaker 1 (41:08):
But if you're selling it because and you're not adding
a different car into your fleet, this is money in
the bank. Yeah, yeah, and this is what did you say,
this is your claim to wealth and riches, like owning
one car for what how long? Now?
Speaker 2 (41:19):
Oh, over seventeen years? Yeah, like literally, I don't mean,
I don't want to boil it down to that, but
because of the additional costs associated with owning a car,
there's a lot to be gained were you to invest
that money rather than see it depreciate.
Speaker 1 (41:31):
I mean, if you think on the very very very
low side insurance taxes depreciation, let's say you saved eight
thousand dollars a year, which I'm for most people to
be even more than that eight times. I mean, you're
talking about having saved.
Speaker 2 (41:43):
Like a lot of money, almost sudden.
Speaker 1 (41:45):
Yeah, and then when you talk about investing that money,
it's amazing how quickly it adds up just having one
fewer vehicle in your life. Granted, it's a big decision,
big life change, and it obviously doesn't work for everyone,
but man, Matt more, people really really really should consider
going down this route totally.
Speaker 2 (41:59):
Yeah, And I would just paying off the loan first
before listing it for sale. I think it'll just make
selling the car that much easier. Where you have the
title in hand, that seems like it would make for
a smoother process because I think there might be folks
out there who try to sell a car that they
can't pay off in advance. They're kind of stuck between
a rock and a hard place. And it's totally doable,
(42:19):
but you've got to include the lender in that process.
But without a third party involved, I think you can
just take that cash, you sign over the title, you've
got it there on hand. That's the route that I
would take, at least like from a simplicity standpoint and
even from like a marketing sort of standpoint, to not
have to be able to field all of these questions
where folks are like, hey, like what's the status of
the title of the car, and being like, well, you know,
(42:41):
you don't want to have to start with well just
to be like, oh, yeah, I've got it clean title. Yeah, Hey,
I can meet you essentially wherever you want to. That's
public versus actually we got to go to my credit union,
or we got to go to you got to meet
at my bank. And the minivan that we bought a
few years back. Matt the twenty twelve or twenty thirteen hotysy,
I forget what you're is I think a thirteen.
Speaker 1 (43:00):
But yeah, I got a thirteen. I had to drive
over to the Ladies credit union. She still had a
loan on the thing, and it wasn't that big of
a deal and it was a great car, but it's
one of those things that just throw an extra wrench
in the whole situation. If you only have twelve hundred bucks,
pay that thing off, the make the sales process just
a whole lot easier, and you won't have to you
won't have to deal with the third party when you're
selling it.
Speaker 2 (43:20):
Yeah, for someone who maybe wasn't so intent on getting
such a great deal like you were on the van,
they may have walked away. Like you're probably excluding a
certain number of buyers.
Speaker 1 (43:28):
I think you probably expect that a little more with
newer cars, but especially if it's like ten years old.
Wait wait, you still have a loan on this, so
people might expect it with a twenty twenty. But still,
anything you can do, especially since it's a limited amount
of money, like pay it off, be done with it,
and just make the process easier for yourself.
Speaker 2 (43:46):
Totally all right, man, Bourbon barrel draft to kill it?
What'd you think? Man? I enjoyed it.
Speaker 1 (43:51):
It was a little bit thinner than I expected. But
then I remembered, wait a second, this is a scotchhale.
I was thinking stout. Yeah, it's exactly. I was like,
it's because it was bourbon barrely. I was assuming it
was going to be this super duper thick stout, and
then I was like, no, no, wait, this is just
there's there's Scotch ail thrown into barrels, and that is
a style I gravitate towards. I love a good Scotch
jale because you get some of those darker, roastier flavors
(44:12):
without some of the super duper thick vibes of a stout.
And to me, this was a much better version of
their drafty kill because it came with some of those boozy,
oaky notes attached to it.
Speaker 2 (44:23):
So I liked it. It's so good man, like, is
it possible for you to have like taste memory? Is
that a thing? I think so? For me when I
drink this beer, like it just brings back old like
early craft beer day nostalgia. And I will say that
early early. I'm not going to say all is responsible
for this beer, but like Oz Friends with the Monday
Night Brewery guys, and literally this was their first like
(44:44):
awesome beer that they were making. They owe you everything
to you, I think, so, man, I think that, but like,
and this one specifically, I think this was their first
beer that they won any awards. I think they won
like a I don't know, silver medal or something, not
the Great American Beer Fest way back in the day.
But it just it's so good. It's not overly sweet,
but it's got these multi oaky, woody notes. He got
(45:04):
some like it reminds me of eating. Like imagine if
there's like a candy bar that you loved as a
kid and you haven't had it in forever, but then
you go back to it and you take a bite
of it and.
Speaker 1 (45:12):
You're like, oh, yeah, this is so good.
Speaker 2 (45:15):
Like there's something about that with this beer specifically, at
least for me every.
Speaker 1 (45:18):
Time I have a three Musketeers, which you make fun
of me for. So yeah, I'm not a big It's
like the most dumb down version of a candy bar,
I guess, but I still like it. You love you
love that nugat I do, But yeah, big. Thanks to
Todd for sharing this one with us and Matt Todd's
gonna help me run my first marathon this year, so
oh yeah, is he He's gonna give me some input.
Speaker 2 (45:36):
In I mentioned that he's like he's a trainer. He's
going to train you up.
Speaker 1 (45:39):
Well, I don't know about that, but i'd probably pay
for services, but maybe I'll give me a tip or too.
So okay, thanks Todd, appreciate it, and don't take the
cheap path, Joel. Maybe you want to be frugal ask
for the discount, but don't don't. I'm just gonna go
expect it for I'm just going to go Forest Gump
and run a lot. That's my plan do it. But
all right, that's gonna do it for this episode. For
folks who want the show notes and links to some
(46:00):
of the resources we mentioned, we'll put those up on
the show notes at howtomoney dot com.
Speaker 2 (46:04):
You know it, buddy, So until next time, best Friends Out,
Best Friends Out,
Welcome to How the Money. I'm Joel, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
That's right, buddy, it's personal finance time. It's always personal finance.
The clock over here at How to Money PFT for sure.
Speaker 1 (00:31):
Uh, we are in fact that it's its own distinct
time zone, Matt, PFT.
Speaker 2 (00:35):
It's maybe just like one click beyond Pacific, like somewhere
in between Hawaii and California. Yeah, is a PFT. That's
where we resigne. But we do have several listener questions
to get to. We've got a listener who's considering parlaying
her real estate equity gains into stocks. She's thinking about
selling while she feels ahead, while she's on top. Another
(00:56):
listener is interested in early retirement. He wants that life
of lee. We're gonna explain to him how he can
get that. And another listener is interested in unloading a
car with a loan. These are new waters for him
and his wife, so he's got some specific questions as
to how it is he should go about pulling that off.
We'll get to those plus more during today's episode.
Speaker 1 (01:15):
Plus pets are expensive, we'll talk about that too, Okay,
Froogler cheap for you real quick? Yes please Figler chiefs.
So you know that you're super into the health space.
Me not so much, but I know that sauna's especially
because of my Norwegian heritage.
Speaker 2 (01:28):
You can downplay your draw to becoming like Bay Area
tech bro who wants to live forever, but we know,
I know it's in your blood.
Speaker 1 (01:36):
Yeah, not interested, but I do think that I've heard
that saunas are good for your health. Literally, haven't read
on it, up on it much, haven't listened to the
podcast about it. But I've also been like, ooh, I
like warmth, and so I like warm wet air. So
saunas are of interest to me, unlike the cold plunge,
which just sounds like pain and terribleness. But okay, So
(01:56):
I have been looking over the years and I'm like, oh,
Costco sales, you can get a pretty decent sauna for
like two grand twenty five hundred bucks. I was like, Okay,
that'd be kind of cool. You know, maybe i'd use
it three four nights a week and be a nice
way to wind down before bed. But you know what
I found while perusing Costco's website. You tell me if
this is fouler cheap a portable sauna. So it's basically
(02:19):
a fabric tent that you hook like the acouter moments
up to it takes like fifteen minutes to get hot
and steamy, and then you sit in it. I could
even like literally set it up in my bedroom and
then take it down when I'm done. Thoughts on the
portable song Okay, full disclosure. Hundred twenty bucks by the way,
big difference, that's right, one hundred and twenty dollars. A
little peak behind the curtain.
Speaker 2 (02:38):
You told me about this a couple of weeks ago
when you were I guess maybe when it first popped
into your head and you're like, hey, what do you
think about this? And I'll be honest, when you first
told me, I thought it was a dumb idea. I
thought Hare's Joel with another one of the silly like
when you were thinking out when you're thinking about getting
the like the portable hot tub inflatable Oh yeah thing.
This is maybe two years ago, which I never did
that either. That was the Black Friday deal that you
(02:58):
missed out on. Yeah, evidently they only sold like five.
Speaker 1 (03:01):
Of them, Walmart. I'm so mad at you for screwing
me on Costco Walmart.
Speaker 2 (03:06):
Okay, So originally I thought this was dumb, and then
I clicked over and went over to Costco's website to
check it out, and I will say I wasn't swayed
by how it looked because it also looks pretty dumb,
even though they do have this this in the pictures.
There's a male model or you know, like a dude
in it, and he looks like Hugh Jackman. It's like,
maybe you're thinking, oh, there's a tough guy that looks
(03:28):
like Wolverine.
Speaker 1 (03:28):
Maybe I'll look like that after're using it myself.
Speaker 2 (03:31):
But that also wasn't selling it for me. Uh What
sold it or what changed my mind slightly on it
was the fact that below those below the pop up
sauna that you're considering is they've got a whole bunch
of those big wooden barrel looking yeah, like the real
deal saunas. And at a minimum, you're looking at those
calls like three thousand dollars. Sure, basically more likely five
(03:51):
or six thousand dollars if you're wunning one of the
bigger ones were like Emily could sit in there with you,
that kind of thing. Maybe it's a whole family affair,
like what's his name from frozen at the trading post
there with this whole family we're taking on my business
meetings in the sauna. But there's so expensive, and when
you look at the financial impact that it would take,
not only from a financial standpoint but also the space,
it's almost like getting a pool table, yeah, or like
(04:13):
a piano, Like you are committing to this giant thing from.
Speaker 1 (04:16):
A financial anispace perspective. Yeah, that's got that you have to.
Speaker 2 (04:18):
Commit to being somewhere and you can't easily change your mind,
as opposed to trying out a sauna in a way
that if it doesn't work out, no big deal. But
I know for me personally, like I've only been in
a sauna a few times in my whole life, definitely
never on a regular, consistent kind of basis. So now
I think it's a totally legit way to test the waters. Okay,
I am one hundred percent fine with Did you order one?
(04:40):
I haven't, so it's been out of stock. Sadly.
Speaker 1 (04:42):
It was like literally on sale for one twenty. I
think it's normally one fifty. I read the reviews four
point seven stars and I didn't just look at the
star level. I read the reviews and people, you're getting serious.
People seem to love it. If I mean, if it
was in stock, I would have bought it already for.
Speaker 2 (04:55):
Sure, especially this time of year when it's cold outside.
The thought of sitting in like a warm to be
so good for your sinuses, like that wet, healing warm air. Yeah,
well it sounds so good.
Speaker 1 (05:07):
I will say, if there's anybody out there listening who
has tried a portable sauna, let me know and you
get some feedback. Because I've read the reviews on some
of the other sites, and I guess what prevents me
from ordering from elsewhere is the return policy. And I know,
like the zippers are terrible on some of them or whatever,
so it broke in three uses, and I don't want
to do that. But I'm like, if I buy from Costco,
they got the return policy, and so if it ends
up not being up to stuff, I can.
Speaker 2 (05:28):
Take it back. Okay, is it up to stuff from
the standpoint of how tall it is? Because I noticed
that the dude just like sitting completely within this this
little pop up thing, whereas I've seen ones in the
past that where the collapsible kind and their head pops
out and it like zips around their neck or so.
Speaker 1 (05:42):
And you can like pop your hands out and read
a book. That those look even more goofy to me.
I'm not going to read a book in there. I'm
just gonna like close my eyes chill out.
Speaker 2 (05:50):
You have to like sit on the ground and like
fetal position. It comes like with a little little chair
or stool. You'd be able to sit in it though,
That's what I'm saying.
Speaker 1 (05:59):
Okay, I mean my head might be in the top,
but I don't know. All right, I'll let you guys
know if I get on any familiar on it, if
anybody out there listening has used it, it has thoughts,
let me.
Speaker 2 (06:08):
Know, all right, man. The beer that you and I
are going to enjoy during this episode is a bourbon
barrel drafty kilt. This is a Scotch sail by Monday
Night Brewing and who uh listener, Todd listener, Todd, Yeah,
my new running buddy. So that's right.
Speaker 1 (06:22):
We'll give our thoughts on on this one at the
end of the episode. Let's get to listener questions. If
you have a money question, we'd love to hear from you.
Just go to hodomoney dot com, slash ask, or simply
record your question on the voicemambo app of your phone
and send it over to us how to moneypod at
gmail dot com. All Matt, let's get to a question
specifically about selling one investment to fund another.
Speaker 3 (06:45):
I how to money folks, This selexis calling in from
New Jersey. Really appreciate you guys's opportunity for allowing us
to call in so cutting to the chase. My husband
and I own two homes. Our first home now is
used as a rental property. We purchased it in twenty
twenty for two hundred and sixty two thousand, five hundred dollars.
(07:09):
Today it's currently worth four hundred and seventy thousand, and
that's the amount that it was a praise for by
the bank. We have a rental contract right now and
we are currently receiving a profit of six hundred dollars
a month, which we typically then just reinvest. We're trying
(07:29):
to decide if we should keep doing that or should
we sell the home right now. Are the remaining mortgage
balance is like two hundred thousand on that, so we're
deciding should we keep just reinvesting the monthly profits, or
should we sell the home altogether and then take the
(07:50):
two hundred thousand dollars plus that we recruit and invest that.
We really appreciate your input. Thanks so much.
Speaker 2 (07:59):
Bye, all right, Alexis. First off, thank you so much
for listening to the podcast. Secondly, I love that you
opted to use your first home as a rental property
because it is amazing how holding on to that first home,
how saving up for another down payment for your second
property purchase, How that can jump start your wealth building efforts.
It is one of our favorite ways for folks to
become landlords. Underrated. Sure, if that is something that you
(08:22):
are interested in doing, it's how well, actually, I take
it back, it's how you Sometimes they get your stories
mixed up. It's how you became a landlord. So we
continue to live in our first property, and we love
that house so much we decided to stay in it
while we purchased.
Speaker 1 (08:36):
But eventually you did move out of that and rent
out that home and we still have it. But it
wasn't how I first dip my totally start to real
estate invest But for a lot of folks, I think
that's the best. It makes a lot of sense, especially
if you're in some sort of like starter home. It's
kind of smaller. You got it for a reasonable price,
you got a good locked in rate, which that will
come up. And the answer this question, Matt, it can
make sense. That's your stepping stone as you save up
(08:56):
that next down payment. Like you said, and I didn't
hear necessarily a reason of why Alexis wants to get
rid of this rental property. I don't know if you did, Matt,
Like I didn't necessarily hear some angst.
Speaker 2 (09:07):
Or anything like that. I think she's just wanted to
make sure she's doing the right thing.
Speaker 1 (09:09):
Yeah, exactly, And so like, is it because you think
you can make more money investing in the stock market
or is it because you don't like being a landlord?
My guess is it's the former one, Matt, that she
maybe thinks she can do better investing in the market,
because I just didn't hear those frustrations popping up in
the voice memo. But the question about which one is
going to be more profitable over time, that's a tough one. Like,
(09:32):
so in some ways it's saying like, well, where's our
what's our crystal ball?
Speaker 2 (09:35):
Say?
Speaker 1 (09:36):
Is the real estate market going to do better? Is
the stock market going to do better? And I think,
you know, buying a rental property now, right with prices
being inflated, with interest rates being sky high, or at least,
you know, relative to the last few years, their sky high.
It's it's one thing, but you already own your home
with favorable terms Alexis, and part of the appeal of
(09:58):
those terms is that you have a locked in low mortgage.
Speaker 2 (10:00):
Matt.
Speaker 1 (10:00):
I looked this up because I was curious. The average
interest rate in twenty twenty was on a thirty year
mortgage three point one percent.
Speaker 2 (10:07):
Oh my gosh.
Speaker 1 (10:08):
Anybody trying to buy home right now is like punching
themselves in the face because they're like, why didn't I
buy a home back then?
Speaker 2 (10:13):
Little lower than I would have guessed.
Speaker 1 (10:15):
It's it was crazy low, and a lot of that
was like pandemic induced uncertainty and stuff like that. So
Alexis likely has just an incredible rate locked in on
this home. You're borrowing literally Alexis at rates lower than
what the federal government can borrow at right now, and
so it's hard to assign a specific value to that
locked in low mortgage rate, but I think it's actually
(10:35):
one of the best protections you could have against inflation.
I'm reluctant to get rid of my low interest rate mortgages.
I think it's just worth mentioning that that's kind of
a mini little gold mine that you're sitting on right there.
Speaker 2 (10:46):
Totally. Yeah. So the other thing is that returns in
real estate are a little skewed because of leverage. So
you've seen the value of your home increase by more
than two hundred thousand dollars in less than five years,
which is awesome. Don't expect returns at that rate moving forward, Okay,
but I'm not sure what it is or how much
it is that you put down. But if you put
down let's say twenty percent, well that means you turned
(11:07):
fifty five thousand dollars into two hundred thousand dollars, which
is fantastic in half a decade. That's probably Yeah, kudos
to you. But keep in mind that leverage cuts both ways.
In the case of real estate investors over the last
decade or so, it's been a massive boon to their
bottom line, but it didn't necessarily it could not have
gone that way.
Speaker 1 (11:25):
Talk to someone who bought a house in two thousand
and six and seven exactly.
Speaker 2 (11:28):
So let's say that let's compare those returns out to
the stock market, because let's say if you had invested
that money within the S and P five hundred instead,
you would have seen some fantastic growth compounding over the
past five years that would have doubled your money. It's
just not quite as much as what you've experienced though
there with that first property. Both leverage and also the
(11:49):
market conditions that we've experienced have been in your favor,
Like when did your back baby? It's so nice, But
there are still some reasons, however, to consider selling that.
I guess it's not a slam dunk to say, like
you said early Joel, like you're sitting on a gold mine.
You've seen incredible growth. That doesn't necessarily mean you should
be hanging on to this thing forever, though.
Speaker 1 (12:06):
At some point you cash out the gold mine. I
guess to live a life of leisure, maybe that's what
Alexis is trying to do and maybe simplify her life,
which I totally get getting out of the real estate
game for that because it has more part part time
job aspects and usually Matt, we don't let the tax
tail wag the investment dog, because, yeah, taxes certainly factor
into our strategy. But I think if you overthink the
(12:28):
tax thing, you might be liable to make mistakes just
in terms of how you invest in what you invest in.
But in this case, the tax bill for selling it
could be so significant that it really does weigh heavily
into the discussion. And that is because of a really
important thing Alexis said initially and what we talked about
at the very beginning, the fact that this house was
(12:48):
a primary residence to begin with. Right, So because of that,
if Alexis lived in this house for at least two years,
she could potentially avoid tax altogether if she sells the
property soon. The key for her is to meet the
what's known as the two in five rule, and it
basically states that if you live in the home for
at least seven hundred and thirty days of the past
(13:10):
eight hundred and twenty six days, Matt, that's two out
of the last five years. If you follow up right, yeah,
you won't owe capital gains tax on the appreciation that
you've seen, which is quite a bit, right, more than
two hundred thousand dollars in appreciation. So basically, if alexist
in taxes soll soon right, she could save herself roughly
thirty thousand dollars in tax that she would otherwise, oh
(13:31):
if she waited.
Speaker 2 (13:32):
Just a bit longer.
Speaker 1 (13:33):
And you know, that's not insignificant, and it's one of
the only investment moves you can make that can help
you avoid taxation no matter what. And so it really
is that, Hey, I owned the primary home, I lived
in it for a couple of years, I rent it
out for a couple of years. Now I'm selling and
boomshaka laca. All of those proceeds still accrue to you
without paying a dime in tax. That's why our buddy
(13:54):
Carl Matt, we've talked to him on the show about this,
why he does live in flips Because if he lives
in the house for two years and he's renovated it
all the while, he has a place to stay, and
when he sells market appreciation and forced appreciation, he's able
to garner all the money that he gets from that
sale and not pay a diamond tax.
Speaker 2 (14:10):
It's pretty sweet. Yeah, so taxes are at least one consideration.
But you said you still have a balance on that property.
You likely owe two hundred thousand dollars at a really
awesome interest rate. Again, you're making money every single month
your property. It's appreciating in value. There are real reasons
to hang on to this home as well. And so
I think my biggest question for you and your husband
(14:30):
is whether or not you could see yourselves renting this
property out for the next like literally for decades to come.
It could continue to do really well for you. But
just and you barely mentioned this earlier, Joel, but not
everyone appreciates or likes that part time the part time
job element of owning investment property. Yes, it's much less
passive than just putting your money in the market.
Speaker 1 (14:52):
And Alexis has to look at the duration and how
long she lived in the house and how long she's
rented it out. She's got to run those numbers for
herself to make sure that she would be able to
sell this and not incur any any sort of capital
gains tax. But I think what we're getting down to
is if she if that's the case, either sell it
now or don't sell it at all.
Speaker 2 (15:09):
I kind of think literally it is now or never.
Speaker 1 (15:11):
Yeah, you don't you don't want to rethink this in
two years and be like, you know what I think.
Now it's time to sell. And then you got this
too late, forty thousand dollars tax bomb that you would
have avoided. That'd be a real bummer. We don't want
you to face that, So make that decision quick, But
make that decision for partially for tax purposes and partially
for lifestyle purposes. I would kind of take both of
those into consideration. But Matt, we've got more to get
(15:35):
to on this episode, including a listener wants to know
about a really expensive surgery for her dog, kind of
save on that. We'll get to that and more right
after this. All right, Joel, we are back for the break.
Speaker 2 (15:52):
We've got more to get to, including a listener asking
them abouts maybe moving down to one car. This may
or may not be the secret to my success, Joel,
there's so many secrets, no matter. I don't know if
I want to boil it all down to that.
Speaker 1 (16:02):
They're going to all come out in your tell all
memoir one of these days.
Speaker 2 (16:05):
But let's now hear from a listener who is interested
in retiring maybe a little bit early.
Speaker 4 (16:11):
Hey, Matt and Joel, This is Evan Brooks from Omaha, Nebraska,
a longtime listener of the podcast. My wife and I
have really enjoyed all the advice you've given us over
the years. My question is, we're interested in early retirement
and aren't quite ready to pay a financial advisor yet. However,
(16:32):
I'm sure there are some amazing books out there for
early retirement. Can you suggest a book or two that
I can read to get the basics down and under
my belt before I go talk to a professional for
six thousand dollars? Just seems like a good place to
start might be to read and educate myself at a
(16:53):
level of detail that you don't typically get from just listening.
Thanks for all the help you've given us thus far,
and hope to see you guys in Omaha, Nebraska someday.
Speaker 1 (17:05):
So yeah, oh, matt Omaha, Nebraska. We might we actually
might be an Omaha in May for the Berkshire Hathaway
Annual Meeting. So last week we talked with David Clark,
who is the resident Warren Buffett expert. He's written a
ton of books on Warren Buffett on value investing, and
he actually invited us to the annual Berkshire Hathaway shareholder
(17:26):
meeting and.
Speaker 2 (17:27):
Not every day that happens. No, it's I guess we
could attend if we owned at least one share of
the company. But how much Doesway go for it?
Speaker 1 (17:35):
It only has to be B shares. I read it, really,
and I think as much as that costs four hund
and sixty five bucks something like that, too bad.
Speaker 2 (17:40):
It's not bad just to throw some you know, throw
some money Warren's way. He doesn't have enough. He deserves it.
Speaker 1 (17:46):
So yeah, Evan will let you know if that happens.
And I love Matt that he said he's not willing
to pay an advisor yet he realizes that maybe at
some point in his financial journey he will want to.
And given where he's at now, though he's curious, he's
wanting to pursue this path of fire. He's kind of
in the DIY information gathering stage. And so I do
think the right way to move forward is that individual approach,
(18:08):
not necessarily hiring someone expensive to help you yet, but yeah,
maybe maybe that becomes necessary or at least helpful down
the road.
Speaker 2 (18:16):
And especially given to the fact that he's talking about
early retirement, I think if he was like purely focused
on financial independence, where maybe and maybe that I don't know,
maybe for him it's synonymous, right, Like maybe it's one
and the same thing. But there's a whole lot of
thought around early retirement that I think you could do
on your own. And if I were in your shoes,
what I would do is I would read some folks
who have put in the hard work to achieve financial
(18:38):
independence or retiring early first, because there's going to be
there's positive experiences out there, but there's also negative experiences
because some folks feel like that they gave up on
too many good things in life in order to retire early,
like along the way, maybe the things that make life
worth living. But they wish that they had extended the
timeline of bits to where maybe they weren't quite as extreme.
Speaker 1 (18:59):
Yeah, maybe there wasn't nosed to the grindstone as hard
and maybe they know, takeing the foot off the pedal
so they could enjoy life in the here and now
and in the future.
Speaker 2 (19:07):
Yeah. For more than one person who has retired early
has told me that they wish that they would have
prioritized their health, for instance, all along the way as
opposed to having this chunk of time now at the
sort of tail end of I mean, not the tail
end of their life, but like they're in midlife and
now they realize that, man, there's a whole lot of
habits that I wish it would have implemented earlier on.
But then others have reached fire and have found that
(19:27):
work like the actual job that you had, at least
in some capacity, that it provided meaning for them. And
so because of that, they feel a bit aimless. They
feel a little unmoored after hitting their net worth milestone,
after hitting their number calling it quits.
Speaker 1 (19:40):
We've talked about friends who hit Fire, Matt and they
had great jobs or whatever, and then they start driving
for Uber just to have that kind of relational connection, right,
And it's one of those things that you wouldn't expect that,
but people do end up there.
Speaker 2 (19:51):
Yeah. I think knowing why you want to achieve fire
like that is an important place to start in order
to make sure that you just aren't chasing something that
will actually make you ha in the end. Like think
through sort of like all the different implications of achieving
financial independence and retiring early.
Speaker 1 (20:06):
I guess the type of books that we would recommend
first would probably be the ones that take that full
human picture into account. I think your money or your life.
That's kind of an original firebook, and rightly so, you know,
it's less technical, and it has stories that help drive
home the point, and you know, after reading that, I
would pivot to maybe something like Jail Collins The Simple
Path to Wealth. I'd love Jail's writing. It's such a
(20:28):
down to earth kind of folksy vibe, and it's very approachable,
even though it's a book on investing simple investing. It's
just I think it's really helpful to have someone explain
in depth just how simple building wealth can be, because simplicity,
on its face, I think it can seem like you're
making a silly or ill informed choice because sometimes simplicity
it's like, well, you haven't thought through this enough, right,
(20:49):
But when you get a detailed why behind opting for
the simple approach, it all clicks, I think. And I
think Jail's book is really good for people who are saying,
but isn't that just not diversified enough? Isn't that just
too basic? And you read his book and you're like,
oh no, no, there's a lot of good reasons for going
that route.
Speaker 2 (21:07):
Totally yeah, and so yeah, the Jail Collins book is
a little more kind of like nuts and boltzy, whereas
Vicki Robbins like her book or Vicky robin her book
was more I feel like it was a bit more inspirational.
It's similar to that, I would say, quit like a millionaire.
That's another great book in the fire category. Actually, we
had her, so this was written by Christy Sheen. We
had her as well as Jail Collins on the show
(21:28):
over the years, but Christie's episode was one to eighteen,
so this is a while back. She's awesome, but her
story is incredible and it helps you to see that
almost anyone out there can achieve fire.
Speaker 1 (21:39):
Yeah, her stories of growing up in China dirt poor,
I mean all inspiring.
Speaker 2 (21:45):
Like what I remember is her talking about how she
like as a kid, she would play basically out a landfill,
but it's a landfill where there was medical waste, waste
like went medical trash, which man, sounds horrifying. But what
other book that will throw at you. And this is
also another guest that we've had on the show is
The Psychology of Money, which is by Morgan Household. It's
(22:08):
not a fire specific book, but I think it's well
worth the read because it just delves into the way
you think about money, which we're always pushing folks out
there to think about. Like the nuts and bolts are crucial,
but books like Christie's or Morgan Housel's, I think they
can help you to even sort of broaden how it
is that you're thinking about your work and money, and
(22:28):
just once you are investing, once you are able to
get past kind of like the nuts and bolts of it,
to be able to help identify maybe the why behind
what it is that you're doing. The jail Colin is
a simple path to wealth. It's not all that difficult,
but I think the harder aspects of it are more
of the psychological aspects that are difficult for us to
get past basically.
Speaker 1 (22:45):
And you want to make sure you know what you're
signing up porn Evand it's kind of like you were saying,
Matt will begin with the end in mind. And you
can always give these books on the library of course,
or you know, you get the audiobooks for free on
Libby if and hopefully your library has these within their selection,
but you know, if you love them, you want your
own copy buy them used on eBay. You also mentioned,
by the way, six thousand bucks to talk to a pro.
(23:07):
I don't think it needs to cost that much. And
this is something we talk about regularly on the show.
Matt and I have talked about more and more. Is
that financial planners for some people who are further along
in progress reaching their financial goals, well, maybe they want
a second set of eyes. Maybe they do need the
help of a pro at that point. And you know,
Domain money has flat fee plans. Two out of the
three they offer our priced well below six thousand bucks.
Speaker 2 (23:28):
Hello.
Speaker 1 (23:28):
Nectaren is a site where you can meet with the
CFP for one hundred and fifty bucks an hour. If
you just need a couple of hours of advice, you
just pay for as much time as you need. So
I just want people to know there are options for
seeing a financial planner that don't involve signing in blood
to a one percent AUM sort of thing for in perpetuity.
But it sounds like you're looking for more inspiration and
(23:48):
insight Evan, and so yeah, I'd save that money to
fuel your path to financial independence for now, and then
as your nest egg grows and things get more and
more complicated and you feel like you do need somebody
else's opinion and how then that's when you want to
pivot there. But it sounds like that's not necessary right now.
Speaker 2 (24:05):
Yeah. One other thing too, don't discount bloggers. I just
think about how the simplest sort of path to figuring
out if you have enough money to retire is having
twenty five times your annual expenses on hand. And that
was I think most popularized by mister money Mustache. But
there's a lot of folks out there like him in
I mean, I guess a lot of the bloggers that
(24:26):
that I don't even keep up with anymore, but a
lot of times those folks like I also think about
the mad Fientists, who we've also had on the show,
because one of the things he said was that he
was looking for I guess at the level of detail
beyond what we talk about on the podcast, that's Brandon
all the way after Mad Fientists, because he dives in
deep when it comes to figuring out exactly how to
execute and pull off early retirement, like whether it comes
(24:47):
to accounts or how to set up a roth conversion ladder,
all of these things that take a little bit of
finessing in order to pull off. But don't discount those
folks as well. There's a lot of folks out there
that create that have written great book. But I think
some of the more specific detail that these creators and
these bloggers have written about, I think that might be
a really helpful. Man.
Speaker 1 (25:08):
You can get as nerdy as you want through with
some of those blogs. Yeah, I think, not super nerdy,
but still nerdy. Is is Carl's blog fifteen hundred days
and then he.
Speaker 2 (25:15):
Gets really specific and with his numbers as well. He
literally tracks his net worth and puts it out there.
It tells you where his numbers are on a month
and month basis. That's right.
Speaker 1 (25:22):
And if you want to get even nerdier than that,
early retirement now right or can I retire yet? Those
are other great like fire oriented blogs, so check those out.
Speaker 2 (25:30):
To crunching the numbers, yea, and not even like there's
other man, there's so many writers out there. It makes
me think of the Frugal Woods. Oh and like that's
a little bit more maybe lifestyle inspired or Vermont homesteading. Yeah, yeah,
which is like a little bit less of the number
crunching and more. Okay, what do I want my life
to look like. So it doesn't necessarily have to be
about the specific details. Maybe what you're looking for is
(25:52):
a little inspiration on the yeah, on the lifestyle front,
So don't discount all the all the great bloggers out there.
We can link to some of those inner show notes.
Speaker 1 (25:59):
The fire vibe be nice. Yeah, all right, Matt, let's
get to another question. This question comes from listener Sarah.
It's specifically about saving money on a really big expense.
Speaker 5 (26:08):
Hey, Matt and Joel, this is Sarah from South of Boston.
I've been listening to you guys since Poor Not Poorties,
and I've listened to almost every episode of this point.
I just have a few left in my playlist. I'm
excited to ask you guys a question, but pretty sad
that I actually have this reason to do so.
Speaker 4 (26:24):
So.
Speaker 5 (26:24):
I have a four year old Australian shepherd dog named
Maggie who has severe heart problems. At about six months old,
she had heart surgery which solved some of the problems
but didn't alleviate all of them. We have to go annually,
at least usually every six months to the animal hospital
to get a check up to make sure she's still good.
On our last appointment, we found out that her numbers
(26:46):
have been increasing and she's getting closer to pre surgery rates,
and so we should probably consider soon another heart surgery.
It's not really required at this moment, but it's more
of a preliminary precaution before she actually hits heart failure
or has a their issues. So we have time and
things to consider, but it probably should be done because
she is part of our family. My question to you
(27:07):
guys isn't about how to get the money or say
for it, since it is about seven to ten thousand dollars,
but about anything we could potentially do to help reduce
that cost. We're already going to teaching school for animal hospital,
so that helps reduce the cost. We tried to do
health insurance for a while on her, but since it
was a pre existing condition, it kind of didn't count
(27:29):
really for anything and it wasn't covered any other ideas
you have, but how we can reduce its expensive cost
would be greatly appreciated. Thank you. Best friends out Oh.
Speaker 1 (27:40):
Matt is Sarah an honorary best friend.
Speaker 2 (27:42):
I think so if you've been listening to us for
that long since the poorn up poor days. Oh, for sure,
you are an honorary bestie.
Speaker 1 (27:49):
You've put up with some crap at times, right, So, Shenanigan,
surprise you have not gotten tired of us.
Speaker 2 (27:54):
I will say, I'm sorry to hear about Maggie's health problems,
your dog there, Glad you had a bit of time
to plan a save for this really big expense. And Joel,
I'm gonna admit, I'm like, we're not experts on this,
but I think we can at least offer some of
our thoughts when it comes to finding ways to perhaps
pay less for this big, unwelcome expense.
Speaker 1 (28:14):
Let's start by talking about one thing that Sarah mentioned,
which is pet insurance. And this is something that I
have read enough about over the years where I feel
pretty confident in kind of where I've landed. And because
this is a pre existing condition, by the way, it's
highly unlikely that any insurance out there would allow you
to sign up and get a policy for Maggie and
then they're going to pay for the surgery. Right, And
(28:35):
it sounds like you know that Sarah so not telling
you anything you don't know. But here's the other thing.
Pet insurance isn't a great product. For most folks anyway,
we would rather see most pet owners self insured, and
that is going to mean typically having thousands of dollars
extra in savings as a plan for a worst case
scenario like this. And I think, Matt, some people believe
(28:58):
or want pet insurance to act like a security blanket,
but every analysis that I've read finds that they're just
not as great as they seem in the brochure or
on the pet insurers website, and that there are just
hoops to jump through. There are certain breeds that aren't covered,
there are certain surgery types that aren't covered, and the
costs cannot weigh the benefits. And so if something like
(29:19):
this happens and the insurer does pay well, then hey,
you may not like a bandit, but I think for
the average person, self ensuring is going to be a
better option than going with the pet insurance totally.
Speaker 2 (29:28):
Yeah. I also love that Sarah said that she is
at a or has been going to this teaching hospital,
which really should save you some serious money. But man,
I would totally be calling around a few other vets
there who performed the surgery in order to get a
quote as well. I don't know exactly what this surgery involves.
But based on a quick search, seven thousand dollars does
(29:49):
seem like a pretty dang good deal. It is worth
casting your net though out there to see what some
other well reviewed vets might charge you. Seems like you're
already getting a good rate. Way side that we would
encourage you to check out is pet helpfinder dot org.
You should be able to find a list of local
vets who offer discounted services, but they might also just
(30:09):
be for more regular and inexpensive services like getting what
is it kennel cough injections and different things that the
pets that your dogs and cats need on a more
annual basis.
Speaker 1 (30:20):
I think about this, Matt, when I have like a
bigger expense for my car. Let's say, I mean you
just had recently had a timing belt replaced, right, And
sometimes I'll just google and be like, well, okay, what
should the average price be for this? And there are
websites that list out that information of what mechanics in
your area typically charge, And then I'll use that to say, oh,
does this seem like a good price or not? And
(30:40):
then I'll even just call other mechanics that I know
and trust that are close by and say, hey, listen,
this is what I'm looking to have done, And oftentimes
I'll give me a quote over the phone, like I
don't even have to bring the car in, right, because
that does sound like a pain. You might be able
to do the same thing here, Sarah, just by calling
a few vets and saying, here's kind of the surgery
we're up against. Can you tell me roughly how much
it costs to perform this on my dog age and
(31:02):
breed right totally?
Speaker 2 (31:02):
Which I will say, I think there might be some criticism,
some pushback if some folks who are like dudes, that's
like way too pragmatic, Like that's why this isn't car insurance,
this isn't a car repair. This is like you know,
a pet that who I love dearly. This is like
a member of the family. But the fact is we
say the same thing when it comes to personal healthcare
as well, like when as far as calling around even
doing medical tourism, and the fact that this isn't like
(31:24):
an emergency surgery or a procedure that needs to be
done right now. Man, You've got time on your side
to be able to call around and like if how
a Healthcare blue Book is for for humans. Yes, I
would be completely willing to go to a different city
or even drive to a nearby state if it was
going to save me a few thousand dollars because of
the ability to not only find the best care that
(31:44):
might be out there for my pet, but also to
get the best price too.
Speaker 1 (31:48):
Yeah, and I totally get the desire to shop around
and say, I think it's a good desire.
Speaker 2 (31:52):
I mean, I think that is.
Speaker 1 (31:53):
When you're in the caf art seat, when you have
time on your side, which in this case, Sarah, I
would be doing the same thing. So give it a go,
but know that the savings might be slimmed to non existent,
kind of like you pointed out, Matt, that then maybe
the rate you're getting is actually pretty good based on
a quick Google search from US. And if you tell
your vet maybe that the surgery is expensive, and you
(32:14):
ask them for options for discounts, there's a good chance
that they're going to recommend a payment plan or a
credit card, and we would advise against that because like
one of the bigger companies in this space care credit
they charge rates north of thirty percent. They're higher than
what a credit card would cost you, and yeah, maybe
(32:35):
they're going to offer some sort of intro rate, but
still it sounds like you have the money, Sarah. We
just prefer you to get the service more cheaply if possible,
might not be, but just to pay cash in full
when the time comes. Just rather you suck it up
and fork the cash over than try to lessen the
blow by paying off the surgery over time. It's kind
of like buy now, pay later for your pet or
(32:55):
something like that. And you're like, oh, I can pay
an installments. It just won't feel as painful. And I
get that it is to do that, but I just
don't think it's the best financial decision.
Speaker 2 (33:03):
I would also use this opportunity again because it's not
you're not on a tight time schedule. Head over to
howdimoney dot com for it slash credit card tool and
get you a card that's going to work for you
from a like a points or reward standpoint. Because again,
this is something that you know you're going to spend.
You got the cash on hand, so and like the
way we use credit cards, there's no harm at all
to make the most of these dollars that you're spending
(33:24):
use you.
Speaker 1 (33:24):
Can pay it off in one fell swoop when you're done,
and heck, yeah, maybe you got some pre flights out
of it, or a nice sweet sign up bonus and
a new credit card that's going to offer you some
perks moving forward to totally.
Speaker 2 (33:34):
And I think that this is a good heads up
to any aspiring pet owners, Like if you're like, man,
I really want a cat or a dog or horse
or I don't know, like whatever pet, that it might
have some of these expensive procedures, Like it costs a
lot of even if you are adopting a pet from
the pen, like there are additional you know, you got
your monthly medicines and food, the additional expenses that come
(33:56):
along with pet ownership. There's more responsibility, so just make
sure you're taking that into account before you got there.
And Adam member to your family reminds me of our episode.
Everything costs more than you think. Pets cost more than
you think. A plastic episode Joel specifically, my buddy Mark
just brought home a little Golden Retriever puppy, the cutest
thing ever. O C got to play with it on
New Year's Eve and then I ran it to him
(34:18):
two days later and I was like, how's it going, buddy,
and he said, oh, just spent the night at the
emergency vet and I spent like nine hundred dollars because
he had some sort of stomach issue and he had
been trying to convince me he had been trying to
get He's like, there's more in the litter. You can
get one.
Speaker 1 (34:33):
Too, And I was like, oh my gosh, you almost
won my heart these Golden Retriever puppy pictures, but alast
I said.
Speaker 2 (34:39):
No, and they think I'm good.
Speaker 1 (34:40):
When I had that combo with him, I was like,
I made the right decision, even though yeah, it's a cute.
It's a cute pupp and animals are awesome. We've got
two cats ourselves, but they're cheaper than dogs.
Speaker 2 (34:49):
You don't need to throw a dog into it. Not
right now, at least. All right, we've got more to
get to. We're gonna talk about some crowd source real
estate investing. We'll get to that and more right after this.
Speaker 1 (35:05):
All right, Matt, we're back. Now let's get to the
Facebook question of the week. This one comes from Celeste.
And by the way, if you're not a member of
the how to Money Facebook group, go check it out.
Speaker 2 (35:15):
How's he doing it with your life? I know?
Speaker 1 (35:16):
So here's her question, justa has anyone invested with Arrived
would like to know your thoughts on this crowdsourcing style
of real estate investing.
Speaker 2 (35:25):
Matt, you want to kick this office a short one. Yeah,
these different crowdfunding like I mean, there's apps, but there's
sites as well. This is a common question. Our answer
is essentially always don't do it real estate. It always
comes with fees, but the fees are even bigger when
other people are sourcing the properties for you. When there's
other people out there who are managing the properties, and
(35:46):
that's certainly true with Arrived.
Speaker 1 (35:49):
Layers of bureaucracy. You have the fund right yeah.
Speaker 2 (35:51):
Yeah, So like as it's under management fees, there are
sourcing fees, gross rents fees, property management fees. All of
that is going to lead to you receiving less money
from this company. But then on top of that the
liquidity that is also minimal when you invest in real
estate via a crowdfunded website. And the same is true
certainly with Arrived. We just don't see enough of an
(36:14):
upside to justify the fees as well as locking up
your funds for years on end.
Speaker 1 (36:19):
Yeah, yeah, right, And I think they can charge this
much because they're selling a turn key solution to investing
in real estate. And so I think there are some
people who just glorify this real estate investing in general, Matt,
and they think of, oh, this is the way for
me to build wealth. And if I don't have some
skin of the game, some exposure to real estate, then
I'm just not doing it right. Stocks they're so mid right,
(36:41):
they're so beta. I don't know what the gen z
are just saying these days. But when you dig into
the returns of the site, the returns of specific investments
on arrived, they make those public. We can link to
that page in the show notes. The average total returns
are not going to blow you away. And I think
it just sounds see at least a certain type of
person to become a real estate investor. And again, Matt
(37:03):
and I, we are real estate investors. We just don't
sell it in a way that is unseemly and we
don't talk about it in a way that isn't based
in reality. But you know, our take is that the
whole goal of investing is to make money, Yeah, not
to like think you're cool, and so you know, we
think that investing in boring all index funds is going
(37:24):
to take up less brain space, it's going to lead
to better results. And by investing through specific real estate
properties through Arrived, yeah, maybe you'll do well, and you'll
probably do better than sticking it in a same use
account with a big bank, of course. But those are
apples and tomatoes, right, Like, those are not even close compared.
I guess they're both read and about the same size.
(37:45):
So maybe maybe it's actually like fruit apples and broccoli,
But yeah, I would say they're they're very different things.
And the returns for a lot of the properties on
a Arrive don't don't even close to blow me away.
Speaker 2 (37:57):
No, well on the top of it. So I actually,
you know how I am with numbers, and so I
actually created Google sheets because I wanted to figure out like, okay,
like there are some on here that are pretty impressive,
but then there's a whole lot of them that aren't.
And if you average every single investment that they have
listed there and calculate the annualized returns based on the
timeframe that the money is invested, on average, you're looking
(38:18):
at three point three percent.
Speaker 1 (38:20):
That does not take into account appreciation of the property,
though yes it does it.
Speaker 2 (38:24):
It takes appreciation profits paid out basically the total return
on investments of those properties. All right, Like, yes, there
are rand the numbers. There are some that and of
course they're closer to the top, right, but like there
are a couple where it's like annualized out to be
something like close to sixty percent, I think, or but
literally it's only two of them, and there's over three
hundred projects and properties on there, and some of those
(38:46):
are negative and some of those are really down close
to zero.
Speaker 1 (38:49):
So maybe a HILD savings account is better, Yeah, especially.
Speaker 2 (38:52):
NETA fees, and I think like sometimes we'll mention reets
as well, So specifically Vanguard's V and Q that can
offer you some real estate exposure for a low price
if you are completely set on having some real estate
in your portfolio. But even still, like if you head
over there, you are like over the past ten years,
you're looking at an average analyzed rate of five percent return.
(39:13):
And again that's not that far from three point three
percent compared to guess what the SMPGOL has done over
the past ten years.
Speaker 1 (39:20):
Past second, say, uh, fourteen point two, so close over
thirteen percent. Okay, what I was gonna say thirteen point eight, but.
Speaker 2 (39:27):
Like, come on, man, like yes, I will say reads
are better because, like you're looking at a pretty low
expense ratio compared to the fees that you typically get
with somebody like Arrived or even fund Raise, because Fundriise
is pretty good from a fee standpoint, like their fees
are the lowest. But even still, I would not necessarily
recommend it. I would recommend to save up invest in
real estate where you live, because I think that's where
(39:48):
you can get some of that edge of investing in
real estate. But of course it comes with a little
bit more of a hands on, part time job like quality.
But maybe in addition to that, like finishing out your BA,
maybe turning it into an airbnb, maybe buying a duplex
around the corner, maybe your first property, saving up a
little bit more, and you buy the duplex, you live
in half of it, you ran out the other half.
I just think there are just too many downsides to
(40:10):
the crowdfunded version of real estate investing. Yes, it's easy,
but you pay for that eaither there's a lot of
middle men, right, and you're right like all, the advantages
of real estate typically come from owning the property yourself
and being able to make a good buy on the
front end because that market is less efficient than the
stock market, and you can with leverage and smart smart
purchases of real estate come out ahead over time, maybe
(40:33):
not even on a month to month basis, but over
the decades. And so it is a long term play
owning real estate. But I think if you want to
get into that, the crowdfunded sites are just not the
way to go. Yeah, let's take another quick one. This
one is from Josh and he wrote, my wife and
I have decided to get rid of our second car,
but we've never sold a car before. The car still
has about twelve hundred dollars due on the loan, which
(40:55):
we could pay off now if we wanted to. Should
we pay off the loan before selling or just sell
it with the loan still active? The car is a
twenty twenty Hyundai Elantra Joel, What would you do?
Speaker 1 (41:05):
Well, Normally, Matt, we would say don't sell that car.
Speaker 2 (41:08):
It's a baby.
Speaker 1 (41:08):
But if you're selling it because and you're not adding
a different car into your fleet, this is money in
the bank. Yeah, yeah, and this is what did you say,
this is your claim to wealth and riches, like owning
one car for what how long? Now?
Speaker 2 (41:19):
Oh, over seventeen years? Yeah, like literally, I don't mean,
I don't want to boil it down to that, but
because of the additional costs associated with owning a car,
there's a lot to be gained were you to invest
that money rather than see it depreciate.
Speaker 1 (41:31):
I mean, if you think on the very very very
low side insurance taxes depreciation, let's say you saved eight
thousand dollars a year, which I'm for most people to
be even more than that eight times. I mean, you're
talking about having saved.
Speaker 2 (41:43):
Like a lot of money, almost sudden.
Speaker 1 (41:45):
Yeah, and then when you talk about investing that money,
it's amazing how quickly it adds up just having one
fewer vehicle in your life. Granted, it's a big decision,
big life change, and it obviously doesn't work for everyone,
but man, Matt more, people really really really should consider
going down this route totally.
Speaker 2 (41:59):
Yeah, And I would just paying off the loan first
before listing it for sale. I think it'll just make
selling the car that much easier. Where you have the
title in hand, that seems like it would make for
a smoother process because I think there might be folks
out there who try to sell a car that they
can't pay off in advance. They're kind of stuck between
a rock and a hard place. And it's totally doable,
(42:19):
but you've got to include the lender in that process.
But without a third party involved, I think you can
just take that cash, you sign over the title, you've
got it there on hand. That's the route that I
would take, at least like from a simplicity standpoint and
even from like a marketing sort of standpoint, to not
have to be able to field all of these questions
where folks are like, hey, like what's the status of
the title of the car, and being like, well, you know,
(42:41):
you don't want to have to start with well just
to be like, oh, yeah, I've got it clean title. Yeah, Hey,
I can meet you essentially wherever you want to. That's
public versus actually we got to go to my credit union,
or we got to go to you got to meet
at my bank. And the minivan that we bought a
few years back. Matt the twenty twelve or twenty thirteen hotysy,
I forget what you're is I think a thirteen.
Speaker 1 (43:00):
But yeah, I got a thirteen. I had to drive
over to the Ladies credit union. She still had a
loan on the thing, and it wasn't that big of
a deal and it was a great car, but it's
one of those things that just throw an extra wrench
in the whole situation. If you only have twelve hundred bucks,
pay that thing off, the make the sales process just
a whole lot easier, and you won't have to you
won't have to deal with the third party when you're
selling it.
Speaker 2 (43:20):
Yeah, for someone who maybe wasn't so intent on getting
such a great deal like you were on the van,
they may have walked away. Like you're probably excluding a
certain number of buyers.
Speaker 1 (43:28):
I think you probably expect that a little more with
newer cars, but especially if it's like ten years old.
Wait wait, you still have a loan on this, so
people might expect it with a twenty twenty. But still,
anything you can do, especially since it's a limited amount
of money, like pay it off, be done with it,
and just make the process easier for yourself.
Speaker 2 (43:46):
Totally all right, man, Bourbon barrel draft to kill it?
What'd you think? Man? I enjoyed it.
Speaker 1 (43:51):
It was a little bit thinner than I expected. But
then I remembered, wait a second, this is a scotchhale.
I was thinking stout. Yeah, it's exactly. I was like,
it's because it was bourbon barrely. I was assuming it
was going to be this super duper thick stout, and
then I was like, no, no, wait, this is just
there's there's Scotch ail thrown into barrels, and that is
a style I gravitate towards. I love a good Scotch
jale because you get some of those darker, roastier flavors
(44:12):
without some of the super duper thick vibes of a stout.
And to me, this was a much better version of
their drafty kill because it came with some of those boozy,
oaky notes attached to it.
Speaker 2 (44:23):
So I liked it. It's so good man, like, is
it possible for you to have like taste memory? Is
that a thing? I think so? For me when I
drink this beer, like it just brings back old like
early craft beer day nostalgia. And I will say that
early early. I'm not going to say all is responsible
for this beer, but like Oz Friends with the Monday
Night Brewery guys, and literally this was their first like
(44:44):
awesome beer that they were making. They owe you everything
to you, I think, so, man, I think that, but like,
and this one specifically, I think this was their first
beer that they won any awards. I think they won
like a I don't know, silver medal or something, not
the Great American Beer Fest way back in the day.
But it just it's so good. It's not overly sweet,
but it's got these multi oaky, woody notes. He got
(45:04):
some like it reminds me of eating. Like imagine if
there's like a candy bar that you loved as a
kid and you haven't had it in forever, but then
you go back to it and you take a bite
of it and.
Speaker 1 (45:12):
You're like, oh, yeah, this is so good.
Speaker 2 (45:15):
Like there's something about that with this beer specifically, at
least for me every.
Speaker 1 (45:18):
Time I have a three Musketeers, which you make fun
of me for. So yeah, I'm not a big It's
like the most dumb down version of a candy bar,
I guess, but I still like it. You love you
love that nugat I do, But yeah, big. Thanks to
Todd for sharing this one with us and Matt Todd's
gonna help me run my first marathon this year, so
oh yeah, is he He's gonna give me some input.
Speaker 2 (45:36):
In I mentioned that he's like he's a trainer. He's
going to train you up.
Speaker 1 (45:39):
Well, I don't know about that, but i'd probably pay
for services, but maybe I'll give me a tip or too.
So okay, thanks Todd, appreciate it, and don't take the
cheap path, Joel. Maybe you want to be frugal ask
for the discount, but don't don't. I'm just gonna go
expect it for I'm just going to go Forest Gump
and run a lot. That's my plan do it. But
all right, that's gonna do it for this episode. For
folks who want the show notes and links to some
(46:00):
of the resources we mentioned, we'll put those up on
the show notes at howtomoney dot com.
Speaker 2 (46:04):
You know it, buddy, So until next time, best Friends Out,
Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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