Ask HTM - Preparing for a Wedding, Loopholes to Earn the Most Interest, & Teen Driver Insurance Premiums #820 - How to Money

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Hod of Money. I'm Joel, I'm Matt. Today
we're listening threw you off, I got you off your game.
We're answering your listener questions.

Speaker 2 (00:28):
Oh man, I got you. Honestly, it reminds me of
back in the day when we used to quote unquote
with voice for cast Box.

Speaker 1 (00:35):
Oh no cast box or no cats Pocket.

Speaker 2 (00:38):
That's they are still a solid app out there, so
maybe we should start pointing folks to, especially the old
folks at.

Speaker 1 (00:44):
Cast with Google podcast going the way to the show one.
If you're looking for a new app, that's one to
try out.

Speaker 2 (00:49):
I'm surprised that we were kind of just talking about
this recently, about some of the different budgeting.

Speaker 1 (00:54):
Apps that are out there. But it's a surprise that.

Speaker 2 (00:56):
More of the different smaller platforms I haven't stepped up
to the plate and really ramped up their marketing efforts
to make sure folks are finding their way over to them.

Speaker 1 (01:03):
There was a huge percentage of people because Mint was
free and because it was the first essentially that's what
we're referring to. So many people we're with Mint and now,
like all these other budgeting tools that could I think
feel the void like not many of them are stepping
up to the plate to put their names in that.
We've tried to do our best to tell people some
great out there for sure.

Speaker 2 (01:21):
Yeah, but this is a listener question Monday, and a
listener he's looking to financially prepare for a wedding. He
wants to see how he can save but still have
a nice wedding.

Speaker 1 (01:30):
Uh.

Speaker 2 (01:31):
Another listener she might be looking for a loophole to
earn the most in interest with her savings account. So
I'm looking forward to that one as well. As another
listener has the Unford. I mean, it's great to have teenagers,
but to have to pay for the insurance that you're
required to have once they start driving, that's a cost
of fortunes. So we're going to talk about that a
little bit later on as well.

Speaker 1 (01:50):
So I'm going to disown my children before they reach
that age at age fifteen. Yeah, yeah, that's a good year.
Like sorry, you're you're going to live elsewhere? Give you
up for adoption. To that point, before we get to
all the great questions, I just wanted to mention there
was this, uh listener Bill had asked he had reached
out to us via email and he said, Okay, cool,
you guys like scoffed at the idea of three months

(02:10):
worth of your income being what people are supposed to
spend on an engagement ring where they're looking to get
married to the person they love. So, how much is
it supposed to be? Guys and so? And he was like,
would you mind actually kept maybe like polling your audience
to see what they think. So I posted in the
how to Money Facebook group, got a ridiculous number of
responses and almost everybody, by the way, a lot of
women responded to that, they also thought it was silly.

(02:33):
Clearly this is like built around what to Beers. I
think de Beers was the first company that kind of
put this out there, and at one point I think
they tried to change it to six months worth of
yeah and nobody. People weren't having it. So they're like,
oh no, no, we just met three months and just joking.
But most how to Money listeners, almost everybody in there
were of the belief that that's way too much money
to spend on an engagement ring. And one thing that

(02:54):
I think the thing I learned the most in that thread,
something they didn't know was that there's apparently a diamond
equivalent sort of thing, and that so that not even
the lab grown diamonds. But there's another gem called moist
and nite and oh.

Speaker 2 (03:06):
Interesting, never heard of it. Not cz not Cubic Zirconia.

Speaker 1 (03:10):
Not Cubic zirconia. So this is a different thing that
a lot of people are grabbed. It's a literal stone
that you pull out of the earth. No, I think
it might be chemically engineered. Oh okay, so it's a
lab grown I think I'm an equivalent. Perhaps you're asking me,
I don't know. I yeah, that that's I should probably
have looked more into it, but I was.

Speaker 2 (03:27):
I mean, I guess either way, it doesn't if it
looks good. So do you think that perceptions are like,
generally speaking, are changing from spending a ton on an
engagement ring to where we are today, where it feels
like because here's the thing. You're pulling a bunch of
how money listeners and they're generally speaking fairly frugal. And
I will say me personally, when I was in my
early twenties, I kind of fell in fell into the trap.

Speaker 1 (03:49):
Like there's a whole lot of pressure, there's like there's.

Speaker 2 (03:51):
A weightiness to the engagement ring, at least there was
in my mind, and so like I felt like I
was doing.

Speaker 1 (03:57):
Something naughty by going like month and a half my income.

Speaker 2 (04:00):
I think, well, it has a lot to do with
the fact that I was making so little money. I
didn't tell my wife though, okay, but I did end
up spinning like I don't know the exact amount off
the top of my head, but it was closer to
three months. And looking back now and this is before,
I'll you know, I was still frugal, but I don't know. Again,
there was this pressure and it seemed like there was
so much sort of riding on the engagement ring that

(04:21):
I feel like has changed.

Speaker 1 (04:22):
Over the years.

Speaker 2 (04:23):
But I do we talk about financial regrets here on
the show, and I've never thought about the engagement ring before,
but in my mind, and I think Kate might even
agree to this to I might say, I mean, she
still loves the ring, but I would not be surprised
if she said, yeah, it probably wasn't necessary, even though
at the time you do feel like it's necessary.

Speaker 1 (04:41):
For sure. They always say so thought that counts, and
I think there's a lot of truth to that that,
Like if you try to get your your significant other
something that they will love and cherish for a long
time to come. It doesn't have to break the bank
to do that. And so by the way, moist to
night say naturally occurring silicone carbide. And so it is
a stone that you pull out of the ground. It's
a rare mineral discovered by French. I missed Henry Moisson.

(05:01):
I get the name of Moissan.

Speaker 2 (05:03):
Yeah, so Moissan. So yeah, so that's Kryston Nile's way off.

Speaker 1 (05:08):
But that's I guess that's a good alternative if you
want something it looks like a diamond, but you can
get I guess a much bigger one for a bunch
of smaller price.

Speaker 2 (05:14):
Okay, so here is I've got a question for you.
This is something else I don't think I've ever talked
about on the show. Have we talked about how we
have insurance on Kate's engagement ring?

Speaker 1 (05:22):
Oh? Really?

Speaker 3 (05:23):
No?

Speaker 2 (05:23):
Okay, all right, well yeah, let's talk about it real quick.
Because at the time, again, this was such a chunk
of my income as a twenty three year old or
however old I was when I got married, that I
couldn't replace that thing. And so it made sense, and
I got a quote and it was fairly affordable, probably
like fifty sixty bucks a year a year annually, literally
sixty dollars a year, and I think that's it made

(05:45):
It made a ton of sense. The kind of rings
were by one hundred percent exactly and good Like long
story short, it's a good thing that we actually got
that policy because Kate, she injured herself. Her finger was swelling.
She was out in the hospital or urgent care, and
they had to the ring off, and then the process
of prying the ring off her finger, it broke. It's

(06:05):
like he was bending it, bending it, bending it, and then.

Speaker 1 (06:08):
It literally broke.

Speaker 2 (06:10):
And I was there and I felt terrible for Kate
because she's in pain, but then also for myself because
we the engager ring just broke. There's a part of
me that also feels terrible for the doctor because he
didn't want to do that right, that wasn't his goal.

Speaker 1 (06:24):
But they of course replaced that ring, and so probably
more than you spent typically Oh I.

Speaker 2 (06:29):
Mean, I mean they replaced it. It was straight directly
with to the jeweler and so like it was a
custom ring, so the guy had to remake. He had
to like design it and cast it and do all
this thing.

Speaker 1 (06:38):
Wow.

Speaker 2 (06:39):
And so obviously at the time I would have said,
oh my gosh, best financial decision I've ever made. But
we still have that policy because it's still sixty dollars
every year.

Speaker 1 (06:47):
It's so cheap.

Speaker 2 (06:48):
Like literally, we've very really spent one thousand dollars I
guess over the years in premiums for it. And so
I mean, granted, we could easily replace that now, but
there's a part of me where I'm just like, sixty
dollars annually that's I mean, it's hardly nothing. So because
of that, I've kept it around. So yeah, No, it's
not like car insurance where over the years you're basically

(07:08):
it's the cost of a vehicle where you have to
replace it yourself. Right, just be in a few years.
But if you if you also have collision, yeah on
there anyway, just don't let out.

Speaker 1 (07:20):
Yeah. I just think it's an interesting discussion. And thanks
to Bill for opening that can of worms. And it
was just good to see everybody way in they had
the money Facebook read. Yeah, a lot of cool people
in there. So if you're not in that group, please
do consider joining and moist and night. Who knew. I
didn't know. I've never heard of it. Always learning from
the how of Money community.

Speaker 2 (07:34):
I feel like we kind of even jump the gun
a little bit when it comes to talking about weddings,
because we do have a have a wedding question here
later on, and we're not even going to talk about rings,
right unless you want to now we get that in
two seconds.

Speaker 1 (07:45):
But one other thing. A lot of people said that
actually they think that maybe there's an inverse relationship between
what you spend on a wedding ring and how long
the marriage lasts. So it's almost like the less you spend,
the more likely your marriage is to thrive. And I
bet it's a U curve. Yeah. If you're like, no,
maybe piece of string that's all it takes. Yeah, then
maybe they're.

Speaker 2 (08:05):
Like, I'm guessing maybe those marriages didn't work.

Speaker 1 (08:07):
You're cheap that I'm gonna last now. Yeah.

Speaker 2 (08:09):
No, but I think you're right, Like, if it's seventeen
years over here for us, this year went two to
three months.

Speaker 1 (08:14):
Congratulations? Thanks? Yeah, all right, well good just food for thought.
So all right, what's mentioned the beer we're having on
this episode? This is a Keller Pills it's by High
Wire Brewing out of Asheville, North Carolina. We'll give our
thoughts on this one at the end of the episode,
but let's get to your listener questions. If you have
a money question, we'd love to take it on an
upcoming episode. Just got a hot tomoney dot com slash ask,
or just record a voice memo on your phone and

(08:35):
email it to us. This first one comes from a
listener who is planning on getting married but doesn't want
to spend an arm and a leg on multiple weddings.

Speaker 4 (08:44):
Hey guys, my name is Victor from Tarzana, California. I
had a quick question for you all. I recently got
engaged and we're going to have a small ish wedding
here in the States in a couple of months and
then save up for a bigger wedding in the Philippine
in two to three years so that more of my
fiance's family can show up and because it's quite frankly

(09:06):
a little cheaper to do it over there. So my
big question to you guys is what can we do
to ensure that we reach our goal so that we
have a nice wedding, Like, do you have any tips
or strategies that we should use. And then my second
question is we see a lot of tiktoks telling us
that we should have one credit card that we should

(09:29):
put all of our purchases on so that then we
can redeem points for travel and things like that, maybe
something for a honeymoon. What do you think about that?
And if you like that idea, which credit cards should
we use? And for reference in that, I currently have
the Built MasterCard for rent and the American Express Blue
Cash Preferred Card for groceries, as personally recommended by Joe Larsgard. Thanks, guys,

(09:55):
really appreciate it.

Speaker 2 (09:56):
Personal recommendation. This is some one on one coaching that y'all.

Speaker 1 (10:00):
Yeah, it's very expensive one on one coaching that you
can buy for two thousand dollars an hour if I'm
just kidding.

Speaker 2 (10:04):
No.

Speaker 1 (10:05):
Victor and I used to work together, and so Victor,
thanks for submitting this question. Congrats on getting engaged. And
he mentioned a couple of credit cards that he's currently using.
He's using some good ones that we've talked about on
the show before. Matt, the Built card is the best
card that we know of for paying for rent.

Speaker 2 (10:19):
I think it's like the one of the only cards
that you can use to pay rent because of the
platform that they've created.

Speaker 1 (10:24):
I think it's the only one that I know of
at least, so, which is cool. So you can earn
rewards for paying rent. And then he mentioned the blue
Cash preferred that one rocks for groceries. Of course six percent,
no card paying better than that. So yeah, Victor already
knows what he's doing. He's been listening. They's been listening
every time. But I also wanted to say that I
like that Victor is doing two weddings. I kind of
like taking this route, and he's kind of taken the

(10:45):
cheaper route essentially, but he's also getting everyone involved in
that day or even having multiple days, especially since his
wife is from another country, and makes this all about people,
not about having the most fanciful wedding a scientist event. Yeah,
so I think that's a wise decision. Yeah, totally.

Speaker 2 (11:00):
So I'll kick things off by talking about what Victor
you call a quote unquote nice wedding because I think that, Yes, yeah,
I think it's so important for you and your fiance
to talk this through because I think the problem and
the thing that could end up happening is that you
end up spending tons and tons of money on something
that you don't necessarily value. And so I think what's

(11:22):
going to be so important is before y'all do anything
is to I mean, you've already obviously talked this through
some in the ability for y'all to have multiple, you know,
a wedding here in the States and one abroad. So again, yeah,
y'all have already started the conversation, but continuing to talk
about even the one here in the States, like what
it is that you want that to look like obviously
is going to be smaller. It's probably going to be

(11:43):
for your close friends, victor maybe for your family if
their local. But to think through the aspects and the
things that you're drawn to, right, Like, so it makes
me think about dancing. If you are into that, all right, well,
maybe it's going to make sense for you to hire
like a great DJ or a great band. Maybe you
don't like dancing at all, but you're really into food. Like,
if you are a foodie, you might end up booking

(12:04):
a quote unquote reception a wedding party at a really
nice restaurant, or not even a really nice restaurant, but
maybe one where you know, the folks and they have
awesome food, because that is what's important to you. I
don't know, spend a lot of time thinking through what
you envisioned the day to look like. And I guess
one of the reasons that I'm leading with this is
because you mentioned something about TikTok when it comes to

(12:25):
credit cards, and we'll get to the credit card aspect
here in a minute. But you want to make sure
that you're doing what it is that you care about,
not what everybody else is doing out there. And I
think something like TikTok can be helpful when it comes
to getting new ideas and interesting ways to save money
and just creative solutions. But simultaneously, you don't want to
get sucked into that and start thinking, oh, well, we've
got to do it like this because man, this is

(12:46):
what everyone's doing, or man, I just discovered this other
thing that we could do as well it only costs
us an extra fifteen twenty five hundred dollars, Like, maybe
we should do that. I think that's also really important
to make sure that you are eliminating some of the
things from your our weding budget that aren't important to you.

Speaker 1 (13:01):
I think it can be a slippery slope.

Speaker 2 (13:02):
Right.

Speaker 1 (13:02):
Yeah, there's more and more ideas popping in your head,
and all those things cost money. But hopefully there are
ways that you can eliminate some of the more expensive things.
Like one of the things we did, Matt back when
we got married, this will be fourteen years this year
for us. Well, instead of real flowers, we did paper
flowers and we made them ourselves and that was a
big cost savings and they look kind of cool, a

(13:24):
little crafty, right element to this centerpieces. These are all
sorts of things that maybe unless you're following some of
these creative people, creative frugal people, you might not know
that that's even an option. You might not even thought
about that. So I do like that, but be careful
who you're following, and then start to create a wedding
sinking fund victory. You said you've got two or three
years before the big day before you're going to celebrate

(13:45):
in the Philippines. This gives you a lot of time
to save and plan, which is awesome. Kind of makes
you think about the rivian that I'm potentially buying, Matt,
we'll see, but the fact that I have two years
to save up because it doesn't come out n till
twenty twenty six, makes it like a lot an easier
pill to swallow, set of picking up pennies today. That's right,
that's right, that's right. And so I would just say, Victor,
get a good idea of what you want to spend

(14:06):
and if that lines up with reality by checking prices locally,
specifically in the Philippines, and then set that specific savings goal.
So if you're like, I'm pretty sure twelve thousand will
be enough factor in inflation, by the way, and we're
three years away, well, that means you need to save
something like four thousand dollars a year or three hundred
and thirty three dollars a month. And when you know
that specific goal, this specific amount you need to save up,

(14:30):
funneling that exact amount into a high held savings account
is going to help you treat those funds as sacred
and special. It's going to help you ensure that you
have the cash to pay for everything when you need to.
But it all starts with kind of the end goal
in mind and then dialing it back to Okay, what
does that mean I need to do in the here
and now to meet that goal? Years down the line.

Speaker 2 (14:49):
That's right, man, It's all about trade offs and victor.
Especially in some of those earlier years, every dollar does matter,
and I think the ability for y'all to keep your
your lifestyle creep to a minimum is going to be
really important for you to reach this goal of having
a quote unquote nice wedding, the kind of wedding that's
going to be important to y'all. But kind of lean
into the young married years because I think they can

(15:09):
be so great. They can be tighter from a financial standpoint,
but lean into the scrappyiness of it, right, Like, be creative,
find ways to enjoy each other, find ways to enjoy
your newfound bliss together that don't involve big spending. But
then over time, as you gain more margin, as you
gain more financial freedom, then you can loosen the purse strings.
I think those early savings habits, they will give you

(15:32):
more options in the coming years. And that's what we
want to emphasize here, those habits, and hopefully we're not
like discouraging you, but over time, like try to balance
your saving and investing because like, yes, you do want
to save for the wedding. This is a great near
term goal of yours, but we want you to also
work on your emergency fund if you don't have one
of those, for instance, right, we want you to be
funneling money into retirement accounts as well, And it's possible

(15:54):
to let the sooner financial need or just want goal
of yours here with this, you know the upcoming weddings,
but those goals can impact your ability to prioritize the
long term, and we believe that you can and should
be working on both simultaneously. At the very least getting
the full match, for instance, with a four one K
with via an employer, if you have access to one

(16:16):
of those, that's something that you are most of it
definitely going to do. Alongside is saving up for this
big I keep saying big wedding. It's a big goal
of yours, but not necessarily going to be a big web.

Speaker 1 (16:26):
I'm sure it's going to be less than what the
average person spends on a wedding, which I don't know.
When you look at the numbers from the not it's
somewhere in the thirty thousand dollars range. I want to say,
upper twenties, low thirty something like that. It's really expensive,
like most people's weddings and if you don't have family
help to cover a portion of the cost, if you're
saving up for that all on your own, it can
be daunting. And you have to talk about the trade
offs the other priorities that you have as a couple

(16:49):
and dialing back the wedding so you can enjoy other things.
Maybe part of that's travel, Maybe that's just making sure
you don't upend your investing goals, and that'll help you
kind of thing, kind of come to a conclusion about
how much you can actually spend on the wedding without
going overboard totally. Matt, you mentioned habits, and I think
that's like the pattern of how you treat your money
that you establish now it is probably going to continue

(17:10):
for a long time to come. So these early years together,
as you're forming the habit, like you're putting some stress
on that relationship in a good way to figure out
what sort of financial habits you're going to have as
a couple.

Speaker 2 (17:21):
Hey, you're laying the framework for how it is that
you'll handle your money. Like, I think that's why this
is such a sort of clutch period of time, because
like it is important, I think to set dollars aside
to invest, but like there's not a whole lot of
compounding that takes.

Speaker 1 (17:33):
Place in the first few years.

Speaker 2 (17:35):
Like it's good to not leave money on the table,
especially if there's an employee that's got to match. But
more than anything, it's the behavior, it's the patterns, it's
the expectations that you're setting together.

Speaker 1 (17:44):
As a couple. Yeah, agreed. I think the habit formation
is so important because you're kind of starting new habits together.
You might have had your old habits and then it's
just kind of like maybe if you had your old traditions, well,
now you're combining your life with somebody else, and you
guys are going to form new traditions together. It's the
same thing with how you handle your money. And so
those early years are really important. How you talk about
those things, how you come to conclusions, and you know

(18:05):
what sorts of ground rules you establish at the get go.

Speaker 2 (18:08):
Yeah, yeah, who who does Victor two point zero look like? Right?

Speaker 1 (18:12):
Yeah? Married Victor? Right? Yeah, exactly. And I just want
to recognize too, the fact that that Victor and other
people who were kind of in his position, they might
listen to this show and at times they might get discouraged.
Like some of the listeners who reach out with questions,
they might be further ahead of you, further along the path,
closer towards financial independence. They seem to like be doing
it all, Like how are they maxing out all like

(18:33):
three different retirement accounts physically possible. I would just say,
don't let those stories get you down, like let them
inspire you instead, because like Matt, the two of us,
like we were, we were in Victor shoes back in
the day. We didn't come out of the womb with
fully funded roth iras or anything like that. And so
building wealth is a slow activity, doing the right things consistently.

(18:55):
That is what leads to progress. And it's just hard
to spot really for many years until I look back
and I'm like, oh, snap, like that really does work.
It really makes a difference. But those first few years,
it's hard to see movement. It's hard to see progress,
even as like you're doing the right thing and putting
one foot in front of the other. That's true.

Speaker 2 (19:11):
Yeah, And so Victor on the credit card front, all right,
you're hearing from all the folks there on TikTok telling
you what to do.

Speaker 1 (19:16):
There.

Speaker 2 (19:17):
I like the idea of putting wedding charges on the card,
but I'm not totally sure about the one card thing.
So of course, if you are putting charges wedding expenses
on a card, you want to make sure that you're
paying that balance off on time and in full every
single month. Oh actually, one other thing too, It might
be worth preemptively seeing if you can raise your limit
as you are going to have maybe outsize expenses on

(19:40):
your card. That way you aren't utilizing a higher percentage
of that overall balance or overall limit that you're allowed.
But don't let that be an excuse for you to
spend all nearly Willy Willy, nilly.

Speaker 1 (19:51):
I got backwards.

Speaker 2 (19:52):
But our credit card tool, I want to mention that
because I think that could be helpful for you to
go in there kind of hone in on some of
the different specs, some of the different rewards, maybe even
different airlines that you want to prioritize. But the couple
that come to mind the venture X card, the Chase
Cefire preferred. These cards are great travel cards, like all

(20:13):
around travel cards, and they might even help y'all get
the flights that you're looking for to the Philippines.

Speaker 1 (20:18):
For free, especially since you have time, right, Yes, you've
got years on your side to banks, oh my gosh. Yeah.

Speaker 2 (20:23):
But as far as like putting all the charges on
one card, I think maybe one of the reasons that
that is recommended is because it's just easy. It's just
an easy way to manage all of your expenses. The
other person knows what the other is spending. You're keeping
track of those expenses. It's a shared language. It's a
way for y'all to communicate and talk about you both
have the log And perhaps it just depends on how

(20:43):
advanced you are though when it comes to credit card optimization,
because let's imagine you are someone who's been taking advantage
and maximizing the benefits you receive from your.

Speaker 1 (20:52):
Credit cards for years.

Speaker 2 (20:54):
Well, you definitely don't need to be only looking at
a single card. You might already have like three or
four or five car cards. If that's the case, then
this might be an opportunity for you to go big.
Like maybe you're looking at like the American Express Platinum
card because you know some of the travel benefits that
you're that you're bound to receive, and so I wouldn't
necessarily let the all right, we're gonna keep things simple.

(21:18):
You gotta put all your your charges on one card.
I think that could work for a couple who's maybe
not done this before.

Speaker 1 (21:26):
But otherwise I think there are ways for you.

Speaker 2 (21:27):
To maybe take a little more of an optimized approach
when it comes to your card spending.

Speaker 1 (21:32):
Yeah, the reason not to do just a single card
and to open up a card in each of your
names would be because then you have different spending bonuses
that are available to you, and to x the bonus. Yeah,
lots of times there's a huge slew of either cash
back or or travel rewards that you're gonna get with
when you open a new credit card, And so if
you open one together, I guess you're limited to one

(21:53):
x the rewards if you open separate cards. Even if
you open the same card separately, you get to two
extra rewards when you meet the spending threshold. And so
that can be a reason I would say to open
up multiple cards absolutely one each. And let's say, for instance,
like the best affairs to the Philippines from Los Angeles
are on delta. I'm just making this up, but let's

(22:15):
just assume that, well, maybe you each get a Delta
Skymiles card to earn the sign up bonus. You got
a bunch of Delta points and then guess what you're
getting to and from your second wedding. You know that's
in your wife's home country for free. And again, you
have so much time to rack up some of these
rewards and to maybe open multiple credit cards each to
pay for some of these wedding things. Again, you ultimately
want to have the cash to cover those purchases because

(22:36):
you don't want to be in credit card debt to
start your marriage. But taking that approach multiple credit cards
each over time as you're pre paying and buying things
for your wedding, I think can help you be more
optimized and can help mitigate a lot of the cost
of some of the traveler maybe some of the other
things you're gonna need to buy.

Speaker 2 (22:52):
Absolutely, yeah, so Victor, let us know how it goes. Man, Joel,
are you invited to the wedding and the Philippines?

Speaker 1 (22:58):
I told him I'm either best man or performing the ceremony,
nothing else. I've never been to that personally, so I
would love to go, but that means I'm not invited. Yeah,
I ask you're not going? But now we've got more
to get to, and you.

Speaker 2 (23:09):
Know, we kind of touched on the fact that there
are listeners who are totally crushing it when it comes
to all the different retirement accounts that they're funding. We
got one of those questions plus more to get to
right after the break.

Speaker 1 (23:28):
Our Matt, We're back. We got more money questions we
got to get to on this episode. And next question.
This one's kind of a nuanced one about order of
operations and which account you want your money sitting in.

Speaker 5 (23:40):
Hi, Matt, Joel, It's Jen from Ulna, me big fan
of the show. Thank you so much for sharing the
information that you do and for striking a really wonderful
balance between financial independence and growing wealth but not necessarily
living in that mindset of like how to be a
trillion There that really high level financial advice is super

(24:05):
interesting but also can be a little bit nerve wracking sometimes.
I don't know if I want to be a trillionaire.
I think post buyer sounds really nice. So that being said,
my question today is about high old savings account interest.
This month, my husband and I made a large purchase
on our credit card. We pay our credit card off

(24:28):
at the end of the billing cycle every month. We
have it on auto pay. However, we made this additional
large purchase which we do have the money to pay for.
Is it smarter to put the money for that additional
purchase into our high heeld savings account and let it
grow interest for the next three weeks or do we

(24:54):
make you know, do we just leave it in our
checking account or make an early payment on the credit card? No,
there's no fear with their Highield Savings account moving stuff
back and forth into our brick and mortar checking account.
And also our percentagery is four point six percent and
our apy so am I gaining interest on that money

(25:17):
for the period of time it sits in the account?
Or do you only gain interest in a HIGHLD savings
account on the money that's there in the last day
of the month. Thank you so much, have a good day.

Speaker 2 (25:27):
Ah See, that last part is the potential loophole that
I felt like that Jen was looking for.

Speaker 1 (25:31):
So we'll address that here in a minute.

Speaker 2 (25:33):
But Jen, we appreciate your words because like you your
words about us and just how we approach talking about
personal finances, because I think that bent is really important
to how it is we talk about money, because I
think most folks out there, they're in your camp, they're
in our camp. They don't necessarily want to be trillionaires,
but they still end up getting sucked into the nose

(25:54):
to the grindstone mentality. And when I say that we
don't necessarily want to be trillionaires, like I wouldn't mind it, right,
Like whouldn't mind? Like I would have plenty of things
to do with that money, plenty of organizations.

Speaker 1 (26:03):
That I would give it away to.

Speaker 2 (26:04):
Yeah, I meani vocations to the Philippines to visit people weddings.

Speaker 1 (26:08):
Who's wedding? I wasn't even invited to things like that,
don't even know you yet, but I'm coming to your wedding.

Speaker 2 (26:12):
But I think potentially, like a more helpful conversation or
maybe a mind experiment or thought process to go through
is like even if it were possible, right, imagine that
because you say trillions and you're like, all right, well
that's not that's not that's not possible. But let's imagine
it was. Let's say you had the skill set, let's
say you had the whatever it took to make forget trillions.
Let's let's say even millions. I think the more the

(26:34):
more important question to ask is are you willing to
do what it takes to then earn those millions, Because
just because you can earn millions of dollars doesn't necessarily
mean that.

Speaker 1 (26:43):
You should or that you would do that.

Speaker 2 (26:45):
Are you willing, for instance, to work a job that's
going to be crazy stressful where you're working like nights
and weekends in order to secure that next promotion, that
that next paymump?

Speaker 1 (26:55):
Are you?

Speaker 2 (26:56):
Are you willing to sacrifice when it comes to your family,
your kids, your friends, physical health, like mental health, like
all the different things that we say are important to us,
And no joke, it really is a trap that you
can kind of get sucked into. And I don't think
this is just a pointless mind exercise because we can
apply the same principles I think to the small things that.

Speaker 1 (27:15):
We're faced with basically, right like, because we're.

Speaker 2 (27:17):
Faced with these small sort of questions of ourselves when
it comes to our you know, just like our day
to day kind of work and the different different things
that we're presented with. So yeah, I guess I just
don't want to discount the whole trillion's thing because it's like, well,
hopefully at a similar level, we're still answering the same
principles and addressing the same principles and asking the same
questions of listeners, regardless of the amount of money that

(27:39):
they're making or not making.

Speaker 1 (27:40):
I think I disagree with you a little bit on that,
because I do think that it actually having too much
money can become burdensome. And I think we've seen that
in different people throughout history. You read the book Fortune's Children.
I've listened to some of that on audio.

Speaker 2 (27:52):
But I think it comes down to how it is
you receive that money, right, because it's like like in
the Fortune, like with the Vanderbilts, it was basically like
an inherited lottery ticket.

Speaker 1 (28:00):
Yeah, right.

Speaker 2 (28:00):
And similarly, folks who do win the lottery, it's like,
I don't know what the percentages.

Speaker 1 (28:04):
On becoming ago.

Speaker 2 (28:05):
The vast majority of them don't have that money anymore
as opposed to something that you work for and that
but one of the how, I guess the how matters
more to me than the what, one of the things
William Vanderbilt says, and I will read just a small
section of the book that he talks about well, and
there's another point where he talks about giving the wealth
on too the next generation, and he talks about the
burden they inherit when they inherit the money.

Speaker 1 (28:27):
So he's just fascinating how he thinks about this. But
he says, I have my house, my pictures, and my horses,
and so do they. You talking about his neighbors who
have a lot less money than him. I can have
esteem me out if I want to, but it would
give me no pleasure, and I don't care for it,
he said, we're talking about his neighbor. He says, he's
not worth a hundred a hundred as much as I am,
but he has more of the real pleasures of life
than I have. His house is just as cover all
as mind, even if it didn't cost so much. Like
and then he continues to go on and on and on.

(28:48):
It's his fascinating diet driver, where he's like, listen, my
neighbor lives such a better life than me, and he
has so much less money than me. And isn't that
the truth that some of the unhappiest people are the
richest people in this world and the money isn't doing
the satisfying They look upon people who have simplicity, happiness,
good familiar relationships, and they're like, man, I would treat
it all for that, but it's brick by brick that

(29:08):
we lay those foundations of good relationships and stuff like that,
and it's really hard to have it all, I guess.

Speaker 2 (29:13):
I mean, I wouldn't just jump to conclusions that just
because someone has millions or billions or even trillion. You know,
there's nobody that has trillions, right, like the richest elon
what they're saying, like around three hundred to five hundred billion. Yeah,
we're not at a trillion level yet on an individual level,
but I would I'm just hesitant to judge folks and
how they feel about it because maybe they have a
perfectly well adjusted approach or mindset when it comes to

(29:35):
their money, which is rare. I do think it's probably
more challenging because most likely the things that allowed you
to be really good to accumulate that money.

Speaker 1 (29:42):
Is likely to be thought of as what's going to.

Speaker 2 (29:44):
Solve your other problems that you have, you know, And
so I do agree with you there, But I don't
know how Bezez feels about.

Speaker 1 (29:52):
The amount of money he has. Maybe he's a good question.
Maybe he feels great about it. I mean, he's working less,
living on his yacht more. I don't really know what's
going on with emotional state. I'm not a therapist, but
beesus is in that post achievement life. Yeah, I guess
in some ways. But like you, across the way, across
the time, things get broken most of the time for
people who seek great wealth or people who end up
getting great wealth. Think about Warren Buffett and what happened

(30:14):
to his family, and we love Warren in so many ways,
but like, I don't know, at the end of the day,
is it worth it? And it's not the kind of yeah,
what we aspire.

Speaker 2 (30:21):
I don't aspire to be a buffet father figure, right,
even though a lot of people do strive to be
a buffet wealth maker.

Speaker 1 (30:27):
And oftentimes when you strive for that, you get the
other part too. Because it's true, you got a heavy
focus on the first part. But okay, let's get to
the heart of your question. Jen. You are earning money,
by the way, on those dollars that are in your
savings account, even if they're there only for a few weeks,
or even if they're only there for just a few days. Basically,
you're earning in the interest even though you won't receive
the interest in your account until the end of the month.

(30:50):
So let's say, for example, you had a thousand bucks
in your account for half the month, and then two
thousand bucks in your account for the other half, smack
dab in the middle, and so your apy was five percent.
These are all just kind of theoretical numbers, nice round,
easy to calculate. Essentially, the bank would treat it as
though you had fifteen hundred bucks in the account for
the entire month, because one half he had a thousand bucks,

(31:12):
the other half he had a two thousand bucks, and
you would still net six dollars and twenty five cents
worth of interest at the end of the month when
you make those calculations. So, yes, there is a point
in moving money from checking to saving, even if it's
just for a few weeks, because you'll make interest on it.
That's right.

Speaker 2 (31:26):
But there isn't a loophole in that if you get
all that money over into your highild savings just before
the day that you receive your interest, you're not gonna
it's not like you're gonna get counted for the entire month.
What Joel's pointing to is the fact that the amount
of time that you are in there, it does, it
does have an impact on the interest that you receive.
It's commensurate for the amounts of time that you have
that money in there.

Speaker 1 (31:46):
You can just like pop a million bucks in there
the last day of the month and then like, oh sweet.

Speaker 2 (31:49):
You got five percent on a million bucks divided by
twelve essentially. But yeah, I mean, I think the big
takeaway here is just to not underestimate the power of
a highyield savings account, because, like she mentioned, maybe moving
money back and forth from her brick and mortar checking
over to her high yield savings well, two strikes against
what she said about her checking account.

Speaker 1 (32:10):
One that is, brick and mortar.

Speaker 2 (32:13):
They're likely paying even less than some of the online
banks when it comes to the checking account. But also
that's true, we want you to minimize the amount of
money that you have in that checking account because you
most likely aren't getting paid hardly anything within that account,
and so the ability to funnel more and more of
your dollars into the highield savings account. Like if you

(32:33):
think about I think the average America or the average
family of four in the US, their monthly expenses are
something like seven thousand dollars a month. So let's just say,
all right, people out there, they're still ramping up their
emergency fund. They're building up to that forty two thousand
in savings for their emergency fund. On top of that,
you consider the fact that there are some other life
goals that you're probably saving for as well, not just

(32:54):
your emergency fund. You're easily over fifty thousand dollars five
percent on that money every single month. That's over well
over two hundred dollars a month. And so what I'm
highlighting here is for all the folks out there who
are ramping up their emergency funds, Man, what an awesome
incentive you are being You're being paid hundreds of dollars
a month just to be responsible ye with your money,
just by funneling these dollars into your highield savings.

Speaker 1 (33:17):
Far cry from five years ago.

Speaker 2 (33:18):
I know, it's and it's guaranteed. I mean, granted the
rate could change, but like you, no matter what, you
are going to get that money. And as folks do
find themselves in a stronger and stronger financial position, you're
going to start seeing those interest payments balloon.

Speaker 1 (33:31):
It's going to.

Speaker 2 (33:32):
Feel so good and hopefully it'll only encourage more savvy
financial maneuvers.

Speaker 1 (33:36):
And if you have like recurring expenses that come out
of your checking account, here's how I treat it, Matt.
I keep the money in savings, and then I have
an automatic transfer to that I scheduled at the beginning
of every month, because I know roughly how much is
going towards like mortgage and credit card statement.

Speaker 2 (33:51):
The first is right around the corner about to get pooring.

Speaker 1 (33:53):
That's right, that's right, yeah, exactly, So I kind of
do it that way so that it's sitting in my
savings account for the whole month as long as possible,
and then it goes into checking like it on an
as needed approach. But I also have it automatically scheduled,
because yeah, I basically know about how much it's going
to be. You don't have to forget. It makes it
really easy and you you don't have to remember you
don't want to forget, right, And that way your checking
account isn't like swole when it doesn't need to be.

(34:15):
You can just reduce it down to size, make sure
you're able to cover so you're not overdrawing that account,
but have the majority of your funds in the HIO
savings account so that you are getting max interest payments.
And by the way, Jen mentioned paying off the credit
card early, that's another option. There's just not really any
necessity to do that if you have a great credit score.
But I guess if you're trying to improve your credit

(34:36):
score because you're about to, I don't know, finance a
car or something which don't do that. Don't fund is
the car pay cash? Yes? Or let's say you're going
to apply for a new mortgage. Well, that's when that
might be the best option. I mean, a major purchase
can change your utilization rate and it can send your
score down a handful of points. And we're likely not
talking about a massive drop, but every point counts if

(34:57):
you're not already in premo territory. And so if that's
not the case for you, I would say stick the
money in savings for a few weeks and earn that interest. Otherwise, Yeah,
maybe pay off the credit card early so that it
is helping your score out.

Speaker 2 (35:08):
Yeah, And I think your strategy for keeping that spending,
that's what ally calls it these days, spending or checking
account keep those balances pretty meager, and of course that
would allow you to earn the most possible in interest.

Speaker 1 (35:20):
Jen.

Speaker 2 (35:20):
But Joel, let's get to our next question. This is
from a listener who's looking to maximize. He's looking to
optimize his investing dollars.

Speaker 3 (35:27):
Hey Manjel, this is Jordan from Orlando, Florida. I just
wanted to say I love the podcast, newsletter, Facebook group,
and everything you guys are doing. My question is around
where do invest my extra money each month after I
max out my employeer sponsored four oh one K. My
employer matches up to six percent in a traditional four
to one K, and I do max that out, but
after the six percent, my company does offer an HSA

(35:48):
with a HGHP and a WROTH for one K, both
of which I am not currently using, and they do
not provide a match for those. I could also invest
in a separate WROTH for one K outside of work,
but not sure if there any benefits to that since
the expense ratios are the exact same. My company uses
Fidelity and traditionally I'd liked Vanguard, but not sure it's
worth opening another account over those other options. My understanding

(36:12):
would be to prioritize the HSA and max that out
and invest those funds first before moving to a wrath
of any sort. But please let me know if I'm
wrong or there any other paths I should be using.
For some additional background, I'm probably at my peak earning
years and don't expect to make more as the years
go on, or at least not much more. I'm forty
now and targeting forty eight to retire, and like would

(36:34):
like to have access to funds prior to the traditional
retirement age limits. Thanks for all you do and keep
up the great work.

Speaker 1 (36:41):
Dang Matt Jordan is like mainlining everything out of money.

Speaker 2 (36:44):
He's does he have the how of money socks?

Speaker 3 (36:47):
Oh?

Speaker 1 (36:48):
We'll send you some, Jordan.

Speaker 2 (36:49):
Oh, just for sending in a what's the question?

Speaker 1 (36:52):
Just because he's awesome, send us an email. We'll send
you some how to money socks? Nice?

Speaker 2 (36:55):
Yeah, okay, so you're so generous drill.

Speaker 1 (36:58):
Well, he deserves them because it consumes all things out
of money. Seriously, he's a diehard. Well all right, let's
let's move on. Let's just mention all your accounts are
with Fidelity, which is great, and why not through all
your business in one place because you are with one
of the goats, the greatest of all time investment firms.
I mean, Vanguard's great too, but they're so similar in
what they offer and how they work. I just say,
keep it simple, keep it all under one roof. There's

(37:19):
just no point to if you really wanted to complicate things,
you could, and you could be like you know, then
you use it as bragging rights to your friends. I'm
a Schwap Vanguard in fidelity what now? But I just
don't know that it really does anything for your finances
to go in that direction.

Speaker 2 (37:32):
Yeah, and it's been particular because they are so similar.
It would be different if you're talking about opening a
Robinhood account because you want to get a roth Ira
match and they're one of the few who are actually
doing that and doing it well. But that's that's a
completely different story.

Speaker 1 (37:46):
That's got the Robin robin Hood feather tattoo on its face.
Now I'm the one looking for the robin Hood sauce. Yeah,
Jordan's up there with the head of many sacks. Okay, Jordan,
that last bit of what you mentioned, I think that's
really important. You said that you want to access your
retirement funds a decade early, and so we'll focus mostly
on accounts that offer more flexibility. And I would recommend
it go ahead and keep contributing to your fourrol wink

(38:09):
in order to score that match, of course, And even
though it's harder to get money out of that account, well,
you still need to be saving for the more distant
retirement decades as well, not just the forty eight to
fifty nine and a half years. That is the mistake
that some people in the fire can't make. They think about, oh,
I need all this flexibility, and you do need some flexibility,
of course, but you also need money that you're investing

(38:31):
for sixty to ninety plus years old.

Speaker 2 (38:33):
But then Jordan, after that, think about the HSA that
you have access to. And that's not just because of
the triple tax advantage nature of it, but also because
of the flexibility that it offers as well. Again, the
name of the game here, it's flexibility. And even with
no match or even with no employer incentives, hsas are
still awesome because you can invest those dollars, you can

(38:54):
take them out with maximum flexibility as you need or
as you want, with no no or without any sort
of time restriction or age requirements as long as you
have qualified medical expenses in that amount. And for that reason,
I don't know, as you are thinking, it seems like
in my mind like you're picturing retirement as this sort

(39:14):
of like I don't know, something that you're you're hoping
to achieve is certainly sounds like you're going to hit
it way well before the traditional retirement age, but that
you're not totally sure when it's going to be. So
this gives you, I think, maximum flexibility as to when
you want to pull the trigger on withdrawing some of
this country.

Speaker 1 (39:30):
What I kind of love about this is it's like
a puzzle to solve and there are all sorts of
different ways. Actually, unlike a traditional puzzle, I guess that
you could piece those things together to kind of solve
it in the way that's best for you. It's not
just a one size fits all approach. But I think
you're right, Matt, flexibility is in the name of the game.
Don't neglect those retirement accounts that slap you on the
hand if you tap them too early, but make sure

(39:51):
you have a nice little balance of both, which you're
talking about with the HSA is essentially the shoebox method
where you pay for current medical expenses out of pocket,
but you hold on to the receipt for those medical
expenses and then yeah, you can take the money out
of the HSA two years from now or twenty years
from now, it doesn't matter. You get the pick, which
is kind of cool. You choose your own adventure on
that front. And it also makes me think, Matt, that

(40:12):
the roth IRA is a slam duck account for Jordan
to have access to as well in addition to the HSA,
because then you can take out the contributions at any time,
tax and penalty free. So let's say over the course
of a decade, you invest seventy thousand bucks into a
roth Ira seven thousand bucks a year, that's the current cap,
and you've got one hundred and fifty thousand dollars in

(40:33):
that roth Ira down the road. That's awesome, congratulations. Well,
you can take out seventy thousand bucks whenever you want
the contributions you made, and you can let the rest
of the money continue to work on your behalf for
those future retirement years. So I think that combo of
HSA and roth iray offers a lot of flexibility as
well as tax savings. And then the four one K

(40:54):
you think about that as like the after burner vehicle
to help you fund and fuel those later retirement years.

Speaker 2 (40:59):
Yeah, well not just your late later retirement years as well,
because there are other I mean, so it's tough to
know because he said that he's maxing the match.

Speaker 1 (41:07):
I think is what he said.

Speaker 2 (41:08):
And so it's like, wait, are you maxing out your
actual four one k or you are getting up to
the match? And I think that's what he's saying. And
so there is a whole lot of room you're left
to continue to contribute to his four one k and
still get those pre tax dollars in there.

Speaker 1 (41:21):
As those dollars grow tax free. If you want to
retire in your forties, you might need to take it
in all the above approach.

Speaker 2 (41:26):
Yeah, that's right, And that's because there are additional options
for you to tap those four one ks early by
doing something like a Roth conversion ladder. Where like you said,
you're thinking about retiring that say age forty eight, well
you are going to have a bunch of low income
years most likely after you quit your work. Well that
is when you would start a rock conversion ladder where
you are converting funds from a four to one k

(41:48):
a pre tax four one k or traditional four one
k into a roth ira and technically those converted dollars
act as contributions to that roth and as long as
you let those dollars age and sit in there for
five years, you get to take that money out just
like you would with regular, plain old vanilla contributions to
you to your roth iray. So that's something important to

(42:09):
keep in mind.

Speaker 1 (42:09):
Actually, just put an article up on how to money
dot com listing out some of those ways. There's actually
we listed eight different ways that you can get access
to gain access to those funds without paying the ten
percent penalty, which is understandably a reason you wouldn't want
to tap those funds early. But there are some creative
ways to get those retirement dollars out before fifty nine
and a half, and it's worth looking into those. So

(42:31):
at least check that article out. We'll put it in
the show notes. But it's just worth knowing some of
the nuances some of the rules around ways to tap
retirement accounts that won't tackle on that extra ten percent penalty,
which is which is reason enough they'll leave it alone.

Speaker 2 (42:42):
Us, right, Yeah, And Jordan, we love that you've got
this problem of it's not a problem. I guess, like
you've just got all this money on hand and trying
to figure out how to how to invest more of
your dollars. It's not normally a problem folks have. And
kind of going back to what we started a whole
the whole episode with when we were talking with Victor,
and I think there are a lot of folks on
the other end of the spectrum. They're thinking, dudes, that is
not a problem to have, like that's a luxury. And well,

(43:04):
that's true if someone like Jordan didn't get there from
just kicking back and not making sacrifices on the front
and to be able to earn and invest more of
his dollars.

Speaker 1 (43:13):
One similar to Victor having that timeline two to three years,
Victor's got an eight year timeline to reach this goal, right,
So he's got a lot of time that he can
put in to funnel a lot of dough into these accounts.
And if you wants to retire forty eight, he'll probably
need to write because that is a big goal that
most people find it hard to accomplish. But if Jordan
sets his mind to it, man, and he's got a
massive savings, right, he can totally do it. That's right.
All right, we got more to get to.

Speaker 2 (43:34):
We're gonna talk about ways to get your insurance premiums down.
We'll get to that and more right after this.

Speaker 1 (43:48):
All right, Matt, we're back. We're let's talk about insurance
here for a seconds. Round it out. There's been a
lot written about how expensive insurance is, getting home insurance,
car insurance, and that is one of the things like
that is making inflation feel even stickier. Especially over the
past year, rates on both of those things have gone
up sky high, especially in a couple of states in particular.
But that prompts us to take the Facebook question of

(44:10):
the week. This one comes from James and he says,
we are entering the world of teen drivers soon enough.
What is the best way to approach insurance with teen drivers?
Separate policies, separate vehicles titled in their name and insured separately.
At what point am I obligated to inform insurers that
a teen is driving in driver's training once they get
their permit, et cetera. Or any other advice y'all might

(44:30):
have for me regarding teens in car insurance.

Speaker 2 (44:32):
Thanks, oh, James, good luck here. You don't need to
hear us say this. Obviously, adding a teen driver to
your policy is likely going to increase your premiums significantly.

Speaker 1 (44:42):
I feel like, James, I can't commiserate to the same extent.
But we're starting to get into orthodontia now in our households,
and I'm feeling your pain because orthodontia is one of
those things that you like, you hope your kids have
perfect teeth. They don't, and it costs a lot of
money to, yeah, make me fix them up. Not gonna
lie frugal cheap Joel. We haven't.

Speaker 2 (45:01):
We still haven't taken our kids in to.

Speaker 1 (45:02):
See the dentist at all. And so it's one of those.

Speaker 2 (45:04):
Things where I'm like, I kind of like the British
way of doing things, like the European way. Do you
Does everyone need to have perfectly straight teeth?

Speaker 1 (45:10):
I don't know, coming from a guy who didn't have
to have racist and as perfectly straight teeth, perfectly straight
teeth like pretty much do though.

Speaker 2 (45:16):
Okay, I'll take that as a frugal compliment.

Speaker 1 (45:19):
I'm saying if they were jacked up.

Speaker 2 (45:22):
I agree, I totally understand. Maybe I'm speaking from a
position of having a privileged smile. Perhaps droll it's periodontal
privilege here. Isn't that something else?

Speaker 1 (45:32):
I don't know.

Speaker 2 (45:33):
So first of all, we're talking about when to notify
your ensure, Like I don't think you need to add
them until they actually have an official license, but you
need to check with your state's rules and so like,
for instance, I know in Georgia you don't necessarily have
to add them to the policy until you have a
until you have the license, Like while they are trying
it out and they're learning and they've got the learners permit,

(45:53):
you don't need to yet experience the increased height premiums
at that point.

Speaker 1 (45:57):
Which is nice because my nephew is in that space
right now. He's got the permit, not the license. You
don't have to add him yet and spend all that
extra money. But you still drive, you still learn along
the way.

Speaker 2 (46:06):
Yeah, I couldn't imagine. I knew that kid when he
was just like a little guy, and I actually haven't
seen him in years, so it's crazy. He told me
he's really tall, right, Yeah, he's.

Speaker 1 (46:14):
Getting it, which doesn't he's a Lars card.

Speaker 2 (46:18):
But James, the direction I want to go is to
ask the question do your kids really want to drive?
And the reason I bring this up is because it's
it's a relatively new phenomenon that kids are delaying doing
different things in life, like getting a license. They are
less interested in driving, and in many ways I don't
get it because our generation was just itching to get

(46:40):
behind the wheel.

Speaker 1 (46:41):
I think the new version of childhood freedom is like
Xbox Live or something like that. Or he used to
be hopping in the car. He used to be having
your license and be able to go anywhere you want it.
That's true.

Speaker 2 (46:50):
So the reason I bring this up, though, is because
I want you to ask yourself if biking or if
walking micro modes of transportation, if those make more sense
for where you live, because I think it's worth having
the discussion considering how much it costs to have a
teenage driver in the house. This is so it's funny
because you're talking about the orthodontia, the proximity to like

(47:10):
our little town square, Joel, like that our town center.

Speaker 1 (47:13):
It's literally something.

Speaker 2 (47:14):
It's a conversation that Kate and are having as we
are considering whether or not we move or not, or
whether you know, like right now, you know I've shared
this recently. We're planning to move forward with an addition.
But a part of the decision making process was, like
there's a check in the box and the column side
of stay and add on was the proximity to plentiful
options for our teenagers to be able to walk or

(47:36):
ride bikes or e bikes to work via paths and
trails and even on the road, which I'm sure there's
a lot of folks that are like my kids would
be horrified to hear that I would make them bike
or walk toward. But we're fortunate to be pre dang
close to some great restaurants where there's a lot of
teenagers scoop and ice cream doing that kind of thing.
And so it's literally it needs to be a part

(47:58):
of the decision making process on the front and before
something like a move.

Speaker 1 (48:01):
Perhaps.

Speaker 2 (48:01):
Yeah, I know it's not much consolation if this is
the situation that you already find yourself in, But I
guess I'm putting this out there for folks who might
be in our sort of vote, right like where you've
got elementary age kids and you're thinking about maybe making
the switch, moving somewhere where maybe you're a little more isolated,
but it does give you more room. Well, there are
other additional costs associated with that, and I think having

(48:23):
multiple vehicles, multiple kids who are insured as like a
base minimum, that's something to consider, especially when you considered
how much money you're going to spend doing this.

Speaker 1 (48:32):
We're always thinking and that's part of the reason we
moved to the burd We moved to matt was it
had the most walkable, bikeable action for us, so we
could you could remain in one car family, and it
makes a huge difference in quality of life to be
able to walk and bike to most of the places
you want to visit. And so yeah, maybe in James
and his teenager's case that's not possible. I don't know,
but it's at least with then worth asking the question, well,

(48:52):
how badly do you want to drive? Because hey, let's
talk about how much it's actually going to cost. It's
worth having and you need to have a frank discussion
about how much extra money this is going to cost
your family as you enter this new phase. You're not
trying to make your kid feel bad like I don't
blame my eight year old about her orthodontia needs and
you cost me three grand this month. Right, I'm not

(49:13):
telling her that is this is who I am, Right,
But you do want them to understand and not with
orthodontic because again that's not really something you can change,
but you want them to understand the financial reality of
the situation. Listener Billy Matt in the comments to this one,
he said that he makes his kids pay for the
increased cost of insurance and fuel. He basically said, Hey,
I used to pay this, Now I pay this, And

(49:33):
I think that's a totally fine approach. Parents often feel
like that's an expense they have to take on that
they have to shoulder, and you certainly can, I guess
if you want to be an incredibly benevolent parent, But
there's nothing wrong with having a discussion about how badly
your kids want to drive and how much extra it's
going to cost the family and their role in that, right.
I think it's a good idea, no matter what, to

(49:54):
at least ask them to pitch in cover a portion
of the costs. Money, of course, we all know doesn't
grow on trees, but you got to be able to
and willing to talk about those things openly, so your
child understands the tradeoffs, not like wait a second, Okay, yeah,
I was hoping to drive, but I didn't realize it
was going to cost. And I think that average to
the average students, like two fifty a month to add
a teenager to your insurance. Do they want to drive

(50:15):
that bad three grand a years? Do they want to
fork that over? It depends and that's before, by the way,
we've been talking about the cost of the car.

Speaker 2 (50:21):
They might be sure, yeah, dude, So I don't know.
I can't remember if I've shared the actual figures of
my buddy. They've got four kids. Uh, the oldest is
in college, but he spends eleven thousand dollars, oh my god,
annually on car insurance. So this is and this is
after the biggest discount that he gets, which is by
pre paying it like paying it all up front, which
is an eighteen hundred dollars discount. So it's a massive discount.

(50:44):
But he's still paying eleven thousand dollars. Granted, there's maybe
some tickets or some accidents involved, maybe some claims.

Speaker 1 (50:50):
They're often are there's teenagers on.

Speaker 2 (50:53):
It.

Speaker 1 (50:53):
For my parents.

Speaker 2 (50:54):
I counted for some of those additional that additional premium hike,
but man, that for me was the wake up to realize, oh, well,
if we move like it's not even going to be
an option most likely to not have cars for the kids.
And again, granted, I'm sure if this was a conversation,
an active conversation I was having with a sixteen year
old or a seventeen year old, it would be very different,

(51:15):
and they are certainly going to have their own opinions
as well. But I think the guy that you mentioned
where they're getting the kids and the family in on
the action to help them to understand what this is
costing the family, that's a healthy way to approach it.
But I would say the number one tip after maybe
not insuring kids because they're not driving, is to just
shop around. Right, assuming they are, you are going to

(51:36):
take more of the traditional route. Hey, what they are
going to get a car? Well, look around see how
much adding a team to your policy is going to cost.
You get quotes from multiple providers. Trusted Choice. That's a
great site to find a local independent agent who isn't
tied to one particular insurance company. I really like that
where they're they're not beholden, they're not trying to sell
specific policies. They're just trying to get you the best price.

(51:57):
But with insurance rates, just going through the roof, loyalty
should be out the window, which is why shopping around
is going to.

Speaker 1 (52:03):
Yield you the best results. Man, I'm very promiscuous on
the insurance front, heay.

Speaker 2 (52:07):
In this case, it doesn't pay to be faithful, but
check with your current insurance provided because I think you
might be able to get a small concession. But just
shopping the open market like that is going to be
the best way to find the biggest savings. It's hard
to predict upfront who is going to give you the
best deal, and so in this way it pays like
you want to try, you want to knock on a

(52:28):
bunch of different doors, you want to make a ton
of different phone calls, you want to send a bunch
of different emails, because it just kind of depends on
some of the different programs that they have and what
it is that they're willing to credit you. Like, they're
just a lot of different ways you can get discounts
as well.

Speaker 1 (52:40):
Yeah, like does your child have great grades and be
average is what most insurers are looking for that can
help lower the cost. Can they take a safe driving
course like a lot of those can be done online
that can also help. And you asked about separate policies
versus putting them on your own policy. It's typically best
to include them on your specific policy, at least if
we're talking about minimizing the amount out of pocket for

(53:02):
insurance costs overall. But it's at least worth getting a quote.
I would say in the other direction, like never hurts,
dip your toe in the waters and just see. But
like heeding them on yours is going to allow them
to also drive your other vehicles that are also covered
under that policy. If that's something you care about.

Speaker 2 (53:17):
Yeah, let's not forget increasing your deductibles because you don't
want to have that set out less five hundred dollars
because the idea is that you aren't going to make
any claims.

Speaker 1 (53:26):
Is that that also means self ensuring, which means having
more money in same ash because guess what with a
teenage driver, likelihood of an accident goes up to.

Speaker 2 (53:33):
And it means not necessarily putting them in the nicest vehicle,
Like guess what a vehicle that you drove ten years
ago because it was safe, still predating safe today. It's
not likely the safest thing that's out there on the road,
but obviously you don't want to stick them in a
two year old Chevy Corvette or something.

Speaker 1 (53:49):
So my little sister is selling her twenty twelve Honda Cibek.
She's upgrading to a new Tesla, but her twenty twelve
siven ain see it might go to twenty twelve Civic.

Speaker 2 (54:00):
What a great car for my nephew or a teenage driver.
This first car that's perfect makes so much sense. It's
a beautiful thing.

Speaker 1 (54:06):
And then when you're talking about something that's got that
many miles, it's that old, you're talking about not having
to have full coverage on it, which means, yeah, you're
gonna save one it save a buttload. Dude.

Speaker 2 (54:14):
I'm so happy for your older sister that has the
nephew he's getting ready to drive, not because she's going
to have to start paying to ensure him because he
wants to drive, but because to have a twenty Dude. Seriously,
I feel like a twenty twelve like a what was
that a twelve year old Honda Civic that's like, is
there a better starter car.

Speaker 1 (54:33):
For a teenager to learn on gray fuel economy?

Speaker 2 (54:36):
Too?

Speaker 1 (54:36):
Right? And just super cheap, super cheap to ensure and
all of those sorts of things are going to help
produce this massive cost that you incur when your kid
turns of age.

Speaker 2 (54:45):
That's right, it's perfection. So, James, we hope that gives
you a lot to consider. But Joel, something else that's
perfection is this Keller Pills. This is an unfiltered pilsner
by High Wire Brewing Thoughts.

Speaker 1 (54:57):
I'm a fan of unfiltered because unfiltered means more flavor. Yeah,
that's exactly how I would in filter my beer. Man,
all right, this one was refreshing. It was low key,
but it also was packed full of pills, and the
flavor lots of pills can be like almost watery. This
one was not. This one tastes like beer.

Speaker 2 (55:12):
It strikes the right balance. Yeah, it's much. It's a
pretty dang light beer. But this is like the I
don't know, I'm not watching a whole lot of sports
these days in my life, but like, this is the
kind of beer I want to enjoy, Like when I'm
watching a baseball game, yeah, or watching a soccer match
on TV. There's flavor, but not enough flavor to distract
you from what really matters, from yelling goal. Yeah, yeah,
exactly if you've not had Have we had a Highware

(55:34):
beer on the show before?

Speaker 1 (55:35):
I would hope we have.

Speaker 2 (55:36):
Yeah, I'll maybe I'll look it up.

Speaker 1 (55:38):
But they're out of Asheville, North Carolina, so if you
are in the area, look them up. They make some
good stuff. Southeastern Beer Mecca. All right, man, that's gonna
do it for this one. We'll have links to some
of the resources we mentioned up in the show notes
on our website at howtomoney dot com, and don't forget
to sign up for the how to Money newsletter also
at how to money dot com slash newsletter.

Speaker 2 (55:58):
That's right, buddy, But yeah, that'll be it for the
episode until next time. Best Friends out, Best Friends out, How.

Speaker 1 (56:17):
The Money newsletter at howmoney dot com slash You said
something funny, how Money now? Brown Cow? How about how
Shakespeare

All Episodes

Ask HTM - Preparing for a Wedding, Loopholes to Earn the Most Interest, & Teen Driver Insurance Premiums #820

Episode Transcript

Popular Podcasts

Dateline NBC

The Nikki Glaser Podcast

Stuff You Should Know

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

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Ask HTM - Preparing for a Wedding, Loopholes to Earn the Most Interest, & Teen Driver Insurance Premiums #820