Ask HTM - Spending Cash Windfalls, Retirement Investing vs College Savings, & So You Think You Can Landlord?! #1024 - How to Money

Episode Transcript
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Speaker 1 (00:00):
Welcome to Hat of Money. I'm Joel, I'm Matt. Today
we're answering your listener questions. We're keeping the inflections elevated

(00:26):
slightly for you, our listener put the emphasis on the
different syllable Matt emphasis. Listener questions. Who knows what we're
going to get to during today's episode? Well, I know
because I picked these questions ahead of time. That's true.
I was gonna say. It's like, it's like a the
listeners don't know, it's like a box of chocolates. Yeah,
except that's not even true, because all boxes of chocolate

(00:46):
have the little roadmap on the back of the lid.
That's true. Yeah, so you know what you're getting. What
was all mister Gump saying? Would you ever blindfold yourself
though and pick? Because I don't know. I couldn't do that.
There were a lot of like wild cards in there
that I did not want to, you know, like the
ones loaded with chair. Yeah. I can'try. I can't handle
any of that stuff. I kind of like a chocolate purist,
so I'm gonna chcolate. I just want chocolate. I do
like a nice the fancy bars. They even sell them

(01:08):
at Aldy now the nicer bars are of dark chocolate
at like eighty five percent coco. Those are some good ones.
If I'm gonna eat chocolate dark chocolates where it's at,
maybe maybe a little sea salt tossed in there. Maybe
some almonds if I'm feeling crazy, Yeah, some nuts and potastios,
perhaps like the roadmap that you get on a box
of chocolates. I'm gonna give a little preview as to

(01:28):
the questions we're gonna get to today. Like a listener
is wondering what it is he should do with a
recent windfall. He's got some cash on hand, and he's
trying to figure out what to do with that money.
Another listener is thinking about putting his kid's college savings
on the back burner. Is that a smart move? Is
that something he should be doing? Another listener is considering
converting their primary residence to an investment property. Plus, we'll

(01:51):
take a couple listener questions from yeah comments there in
the Facebook group, which maybe I should I should go ahead
and plug If you haven't checked out the how to
money Facebook group on over in the meta sites, be
sure and search how to money? Does anyone actually refer
to Facebook? As meta other than investors. Okay, so let's
call it face. I think it's literally just investors. It's
like you don't alphabet something, no, no, no, you google it. Yeah, exactly,

(02:14):
there you go. Okay, One quick thing I wanted to
mention before we get to all the great listener questions
we have on board today is you know, I feel like, actually,
when you look at the most popular streaming services, YouTube
has surpassed everybody. So oh yeah, even Netflix, Like, people
spend more time watching YouTube than they spend watching Netflix,
Amazon Prime, any any of the other streaming services. Joel,

(02:35):
we don't have attention spans anymore. Right to be patient
and to wait for things, You're right. I was really
drawing that out to see if you would jump in,
jump in. I thought about how the patients to wait
you started to bore me. But Joel is about to
hit advance two x two X speedmat, which is probably
what some people are listening to us on right now.

(02:55):
But YouTube has of course, if you are frugal or cheap,
you probably don't pay for YouTube Premium, which allows you
to skip the ads. Although I think Brian for Aldy
we had him on and he mentioned he pays for
it because he watches a lot of YouTube, and he's like,
it's so worth the twelve or fourteen bucks a month.
I remember him saying that to have no ads on
specifically with his kids, He's just like, we just don't

(03:16):
want to sit there and wait anym. Yeah, it's such
a small amount for the which I get amount of
life that he's able to reclaim, and part of is
the time, but the other part of it. And I
do not pay for YouTube premium, so I do watch
the ads when I'm watching something on YouTube, but I
don't think I watched as much YouTube as Brian for
Aldy's kids, so I don't feel the need to pay
for it. But it's amazing the things that you get sold,
and some of the ads are quite catchy and convincing,

(03:36):
Like I went down the rabbit hole for a few
minutes of a nail clipper called Edgy. Have you seen
this Nope? So apparently it's like far superior to the
nail clipper fingerl clipper, yeah, clippers. Yeah, but it's my son.
His fingernails grow ridiculously fast. I feel like I'm chopping
his fingernails off every like third day. Yeah, that's an exaggeration,
but it's close to that. And so I saw this

(03:57):
ad for the Edgy and I was like, whoa, Okay,
this like stainless steel, and it's it's like slicing instead
of just kind of bending and pull the full nail off,
like it slices your nails instead of snip. Yeah. So
but okay, maybe I should look this up and see
if I in fact need this, because I don't like
the way that slicing my fingernails sounds. It doesn't sound good,
but then it is very convincing in the ad. I

(04:18):
did not end up buying one, but it's one of
those It just reminded me that sometimes, like frugal or cheap,
are we paying for to not watch the ads or
are we actually like paying, you know, not paying any
money to not watch ads. We're watching the ads, then
we get sucked into buying stuff. Again. I did not
buy one, but I considered it. I was like, wait
a second, have I've been cutting my nails wrong all
these years and sometimes they're the wrong method my entire life.

(04:40):
It's like they're putting forward a problem that you didn't
notice in the first place. I'm like, Honestly, I've never
had a problem cutting my nails with the ninety nine
cent ones from the drug store. But this is also
the model that our media landscape, that our world operates on, right, Like,
like YouTube ads aren't really all that different than what
we used to see on TV as kids when we
were growing up, except for the fact that they're more targeted.
So the question is why so here, Yeah, why were

(05:02):
you dished up? How did they know that those nail clippers? Specifically,
have you been spending more on beauty supplies over in
your household? Not that I know of, Yeah, maybe you are,
Actually we are. Actually I was just telling you this morning.
How uh. Over the weekend, I went shopping with one
of my oldest daughter, Yeah, and we went to Sephora.
So I'm trying to be an engaged dad who understands

(05:24):
what his preteen daughter is going through. And it was
kind of like a little special outing between the two
of us. And so speaking of ads, it's also kind
of fascinating to think through the different images that certainly
a young woman, you know, who's growing up, that she
is seeing there in the store and trying to like
and I'm personally trying to like, interpret, Okay, what is
she what is she thinking when she sees that? Or Oh,
there's this entire aisle dedicated to this one thing that

(05:46):
she didn't know she should be paying attention to, and
how is she responding to that? And what is super
fascinating is hearing kind of like an ongoing commentary because
like there's a section of like some body spray or something.
She's like, oh, this is real popular. I'm like, well,
how do you know about that? Likes? Because you know,
like little girls in the class right, Yes, exactly, she's
like a lot of a lot of the girls at school.
I think they use this, and she tried some of

(06:07):
them with the body scrubs and stuff, because my daughter,
what is it bath and body works? Back in the
cucumber melon that was the hot sound was the hot flavor.
But it was interesting hearing her sort of work through it.
And she's just really level headed. She's a lot like me,
and so I was encouraged with her specifically to see
how she responded to the different products and the different

(06:28):
ads and the different imaging out there. I'm not too
worried about her kind of going off the deep end,
but all kids are different. And I'm pretty sure we're
going to have a kid who's going to be like,
I need it all. But I don't know. There's a
part of not subscribing to the premium models of streaming
where our kids are exposed to some of the different
ads and products out there that where they're trying to

(06:49):
convince them that, no, you're old clippers, they were inferior
Joel Amos almost to like immune and I and Amyne, Yeah,
is that the word I'm trying to say. I'm I'm
misspoken to thicken their skin a little bit when it
comes to them be able to kind of roll with
the punches as they're the onslaught of all the different
advertisements that they're hit with. Yeah, there's like I guess

(07:10):
in some ways you want to protect yourself from too
much advertising because the truth is we're all susceptible, at
least to a certain point. Obviously, I went down the
rabbit hole and I almost purchased because I was changed
my life. I think you're like twenty bucks, Like it's
expensive nail clippers, right, but would you have those clippers
for the rest of your life? Probably because you get
the cheap ones on Amazon and they start rusting. You know,
you leave them sitting there on the scenk, and so
they sitting there. Now you're telling me I really need

(07:31):
to get some edgies. I don't know rhymes with leggie,
which makes it awesome. The idea of slicing my fingernail
still doesn't appeal to me. A right, check it out.
Let me know what you think. I'm curious and if
anybody out there listening has one experience with the one
of the fancy ones, tell me if I'm really missing out,
and if it's superior, and if my nails are going
to be happier because of it. So the real question
is do they still make the clip sound when you

(07:51):
cut your fingernails, because that's such a satisfying sound. But
I bet it's an even more satisfying sound, or maybe
like an assassin. I don't know if they slice your nails.
I feel like they probably don't make that sound. It's
sort of like a vacuum cleaner when you're vacuuming how
much well I'm the one that does a vacuum me
in my house. I don't know if you vacuumate your house.
I love hearing I thought your robot vacuumed. Now we

(08:13):
got rid of Creature. Oh the roomba he broke so
so and you're not replacing him. I was looking ahead.
I saw the writing on the walls, just like, this
isn't gonna work out long term. We could sort of
do another round of replacement parts, get him some more edgebrushes.
The edgebrushes kind of broke and would wear down, and
he's kind of going s nile in his later years,
and so I'm like, why are we spending so much money?

(08:34):
And those things are kind of expensive to realize robots
got dementia like that. That's what we're joking because we
need him Creature after the House Elf from Harry Potter.
All the big old HP nerds out there are like
fist pumping, But that's what the ongoing joke was, like,
Oh Creature. But I'm thinking, why am I'm not going
to drop another several hundred dollars on a roomba when

(08:56):
I can just get the chairs off the ground and
do a quick sweep of the main floor on the
hardwoods boom. That's all we're doing for the most part, anyway,
got them anyway, vacuuming up dirt when you hit a
good cluster of some dirt that got tracked in so
sad it's the sound of it sucking up. In a
similar way, I'm saying that cutting your fingernails can be
a very satisfying sound like ASMR if you're the one

(09:17):
doing it, if you're the one snipping your own nails.
All right, let's get to listener questions, and we'll mention
the beer. The beer to quietly just tap on his microphone.
It's called Cordial for all the folks out there. It's
a sayson by the good people of Burial Brewing. We'll
give our thoughts on this one later. But if you
have a money question, we'd love to tackle it on
the show. Go to have money dot com slash ask

(09:37):
for the simple instructions. But hey, if you got a
money question, whether it's more practical in nature, whether it's
more philosophical in nature, we'd love to hear whatever money
can undrum you've got coming up. Your fellow listeners would
love to hear it too, So please do record your
voice memo, send it our way. Hopefully we can take
it next week on the pod. But Matt, let's get
to listener questions. Got some good ones on the show today.
Let's start out with a question. This one comes from

(10:00):
a listener who is trying to decide what to do
with this old house as he's buying a new one.

Speaker 2 (10:04):
Hey, Joel Matt, this is Jacob from Wisconsin. Thank you
for the podcast and all the help and advice you
give individuals. My current question is whether my wife and
I should rent our current house or sell. I've recently
got a new position and it's going to be about
an hour away from where we currently are, so manageable
driving distance. We could sell the house for about fifty thousand,

(10:28):
which is what we originally were going to do, and
put that towards a new house. We recently discover that
we can get an alone based on my credentials without
P ANDMI, regardless of how much we finance. We have
about thirty thousand in our bank account without touching our
emergency funds to kind of put down if we were

(10:50):
not to sell our house, if we were to rent it,
So what we're currently looking as, we could rent it
for anywhere from eighteen hundred to two month. Our current
mortgage is sitting on just over one thousand dollars, So
the question is should we sell it. Would it be
a good idea to sell it and get a fifty thousands,
put it towards the house and mess with our accounts

(11:12):
or rent it and kind of go from there. Any
thoughts on that would be greatly appreciated.

Speaker 1 (11:18):
Thank you, gentlemen. Peers. All right, Well, first of all,
I'll say congrats to Jacob Jill. He didn't call it
a promotion, but I didn't notice. We were talking. We
talk about inflection here on the podcast. When he said
new position, I feel like he said it with a
little bit of pep in his voice, right. He was
just like, I got a new position. I don't mean
to brag. Got a new position. Maybe becomes with the

(11:39):
pay raise perhaps, but Jacob, that means you're probably doing
a great job at work. So congrats to you. That's
much and it's amazing how much like my older sister
just got a promotion at work and just I'm so
pumped for her because like these, these money goals become
so much easier to reach as your income grows, Like
we talked with I talked with Nick Majulia, and he

(12:00):
was talking about how, especially at the front end of
the wealth ladder, that those pay increases they matter so much. Yeah,
it's like, Man, a twenty thousand dollars pay bump, which
is a lot, can just allow you to do so
much that you weren't able to do previously. So it's
like he's, yeah, just hitting the easy button. It's like,
all of a sudden, all these other goals are completely attainable.
The trick is to keep yourself from moving the goalpost.

(12:22):
That's when it remains just as difficult. If you ramp
your spending up commensurately, then it ain't gonna help much,
and in fact that it'll make things worse. But if
you keep everything else the same, let's talk about this
housing question, Matt, I love that Jacob can avoid PMI,
but I also wanted to know this that you know,
some loans don't require twenty percent down and they might
not charge PMI. Technically, there might be other inflated costs

(12:46):
to consider. For instance, Jacob might be getting hit with
a slightly higher interest rate, Like the lender might say, yeah,
don't worry, Jacob, we don't charge PMI, But then the
interest rate is worse than he'd be able to get
elsewhere with a lender that does charge PMI, and that's
private mortgage insurance for anybody who doesn't know who's listening,
which if you don't put down a sufficient down payment,

(13:07):
this is a way the lender protects himself. And so
it's important to get multiple quotes Jacob, to compare apples
to apples versus just kind of thanking your lucky stars
that you can avoid PMI because PMI and a lower
rate might be even better than what you're getting quoted
right now. So just make sure you're considering multiple loan options.
This is a placement that people cast themselves thousands, if

(13:29):
not tens of thousands of dollars over the life at
the loan by not shopping around on the front end.
And the thing about why PMI might be preferable with
the lower rate is because you can drop PMI by
paying off more of the balance of your loan, but
you can't really change the rate unless you refinance, and
you might not be able to refinance at a lower rate,
so that higher rate sticks with you for the life

(13:51):
at a loan. That's right. Yeah, I think optional at
eighty percent, mandatory I believe at seventy eight percent. But
do get quotes from multiple lenders out there. Sounds like Jacobs,
he's up there in Wisconsin. Check with a local credit union,
maybe a local bank. Ask around, see if somebody's got
a mortgage broker that they would recommend. And if you
can hold on to your your current home as a

(14:11):
rental and still get solid terms on that new house.
I think that could be a great idea. But there
are downsides to hanging onto that house, for instance, becoming
a default landlord. I guess if you aren't interested in
becoming a landlord, then it's default. Otherwise you are proactively
choosing it. It sounds like he's at least a little
interested a question, but I get he sounds neutral. But

(14:34):
some people are like, no, no, no, no, I'm I'm gonna
ho for this. I'm ready, which is great to take
on that part time job. And other people are like, well,
that's the thing. It worries me. That's the thing, the
part time job part of it. Like, there is a
big difference between just passive investing in the market and
owning and managing a rental property. Managing is key, I think,
for at least for the first years in terms of

(14:55):
profit and just learning the ropes. But if you get
excited about the upper ortunity if you are willing to
put in the work. I think this rental property could
help you to reach financial independence at a faster pace.
And certainly that's because of the fact that you are
leveraging this debt. It just requires more attention and whether
or not you know you've got this new job, whether
or not you've got that time on your hand on

(15:16):
your hands to be able to pull that off. That
kind of comes down to lifestyle, whether or not that's
something that you want to continue doing it. And maybe
you do because you've got friends there still at the
you know, like in your old neighborhood, so you're like, well,
I'm going to be going back anyway. In that case,
I could see that being maybe a little bit more
of a no brainer. I did think when Jacob said
manageable driving distance, like he's willing to go back when

(15:38):
it's necessary. And the truth is, the better you get
at managing a rental property and finding good tenants, the
less you have to be there. It doesn't mean you
never have to be there, but you might find that
you only have to be there once a quarter or
something like that. And if you're willing to commit to
that and maybe a little more frequently in the first
years you're kind of getting established. But if it's a
reasonable distance for you to drive, I think it puts

(16:00):
a check mark in the corner of like, yeah, keep
it or it just depends on what reasonable is. Because
he's didn't he say like about an hour. Yeah, it's
like maybe an hour for him that's reasonable. Maybe for
him that's reasonable. But like round Trape, you're looking at
two hours. Not to mention the time that you're gonna
be there. Let's say you're showing the property. Obviously that's
a couple hours or so. Let's say you're just meeting
a contractor there. I mean you're looking at gosh, you
know throughout like their boom, there goes your at least

(16:22):
like half your work day if it's during the week,
if it's on the weekend, like, there goes your Saturday morning. Sure, right,
And so even though it seems like it's not that
far away, I guess account for the total amount of
time that you might have to carve out in order
to manage that yourself. But that time you spend could
kind of, like you alluded to Matt payoff in additional
returns over time, better returns than you might get in

(16:43):
the market. I think, you know, would be wise to
see how good the numbers look for your current property
as a rental Jacob. You mentioned a little bit, but
you got to know how much wiggle room there is
between your mortgage and the monthly rental amount. We have
talked in the past, Matt about the one percent rule,
which is something that we used to strive for, which
is essentially that the monthly rental amount equates to one

(17:05):
percent of the overall purchase price. But that's hard to
come by these days.

Speaker 3 (17:09):
Right.

Speaker 1 (17:09):
It's still possible, I guess in some parts of the country,
but I would say especially in major cities, Yeah, not
going to happen. And in many parts of the country,
a new landlord is likely going to lose money month
after month, and their only real goal of profit can
be price appreciation. I don't think that's going to be
the case in Wisconsin where Jacob is. If that is
the case, though, you know, it can work out, but

(17:30):
it's riskier and it's not worth the hassle. I don't
think for the most part of being a landlord. But
Jacob's not going to be losing money. Sounds like he's
going to be able to clear something like eight hundred
plus dollars making money hanover fifty a month like expenses. Yeah,
just budget for repairs, Jacob. And you know better than
anybody else what kind of condition the home is in.
But you have to budget for that stuff because it
doesn't mean like, hey, if I do this eight hundred

(17:51):
bucks a month in profit on a recurring basis is mine.
Your home is still actually going to despite that profit margin,
lose money in some years because I have properties that
have maybe like probably I would say a similar discrepancy
between the mortgage amount and the rent. But when you
have to replace a roof for an HVAC system, water heater,
new bathroom, new cabinets, new bathroom, all that kind of stuff,

(18:13):
you have to factor that stuff in. It will eat
into your profits. You're hoping over time still that it
makes sense. But this is a long term investment. It's you.
It's not like you're trying to make a quick buck here.
That is true. But obviously he's just got the advantage
due of being able to roll that primary into an investment, right,
meaning that he's got better financing terms to be You're
going to get a better mortgage when it's owner occupied.

(18:34):
So being able to hold onto that first house, Joel,
that's how you got into it. That's actually not how
I purchased my first rental property because we're like, actually
we like this house, we're not gonna move, so we
ended up buying another place. But then you did eventually
turn that house also into a rental, which yeah, which
I'm actually in them. So that was you did it
the first time, but you did do it. I did
do it the second time. That is true. And man,
I'll tell you what, it's been awesome to maintain that

(18:54):
incredibly low mortgage rate. And there's something property about holding
on to that house if you love it, like I
really liked that feels like you got history. Yet every
time you step back in there, like shed a little tear,
there's something there's something nice about it. For sure. I
was gonna say this is fresh on my mind though too,
because actually that this particular house that I'm thinking of,

(19:15):
I've had a render in there for eight years and
she finally was like, yeah, I'm finally moving out. I
thought she was going to be a lifer, man, I was.
I thought maybe she just didn't want to own her
own place, but I think she was just working on
her career. She you know, was ended up being a great,
great property for her. But what that means, though, is
that there's some deferred maintenance that needs to take place.

(19:35):
In said this sort of like you're saying, this is
one of those years I think I'm gonna end up
spending a chunk of money there on that property. Not
to mention, we had a waterline main bust there earlier
in the year, so I'm already sort of underwater a
little bit with with that one. Yeah, But what I
was gonna say, so kind of going back to the
part time job aspect of this, Jacob, what's key? So
this is a great just general tactical tip, but make

(19:58):
sure to put a lock box there out the property
because that can be something that you can so easily save,
save yourself at least two hours drive him back and forth,
because hey, if you need to get some work done, Hey,
in my case, I literally was texting this morning with
a painter. I didn't need to meet him down there,
just gave him the code, did the lock box, He
looked through it. So prioritize contractors who are good at communicating. Obviously,

(20:22):
contractors that you trust to when it comes to doing
some of that work, because that with this being an
hour away, that can save you a ton of time
and you can kind of have your cake of self
managing and eat it too. I still remember the first
time I didn't move away. I was just out of
town and something happened at one of my rental properties,
and that I normally would have because it was right
around the corner. I normally would have just just pop up,

(20:44):
pop on over, meet the plumber, right like. But it
was the first time I wasn't there and couldn't do it,
and it opened my eyes to the fact that if
I created the right systems, I wouldn't have to drive
over there, even though it was a mile away. And
now you and I we live a little bit further
from our rental property, so we got to be able
to do that. I have to have those systems, and
so Jacob's gonna have to learn those from the get go,
and having a lock box that his trusted contractors can

(21:07):
access will make a big deal. Yeah, I think that's
a good tip. MAP. I also want to mention to
Jacob as he's kind of trying to figure out what
he wants to do here, and I think he could
go really either way. But don't forget about taxes, because
you know, before you commit one way or the other,
it's important to at least recognize and know what the
two in five rule is, which essentially means that if

(21:29):
you've lived in your house as your primary residence for
two of the past five years, you can avoid capital
gains tax on the profit of that home when you sell.
So let's say you try your hand at renting this
place out. You're like, I'm going to give it a go,
we'll list it, I'm going to manage it. You're a
year in and you're like, I hate this, Like the
tenants have been bothering me to no end. I've had

(21:50):
more repairs through on the unit than I thought. I
got to put this on the market and sell it. Well,
the great thing is you can still avoid paying Uncle
Sam fifteen percent of the gain that your home has
experienced since initial purchase because you lived in it recently.
But if you go beyond that mark, and let's say
you've run it out for four years and then you
sell the property, well, you're going to owe the capital
gains tax on all the games you've experienced since you

(22:11):
bought it. So that's basically like having your computer die
one day out of warranty. That's right, that's right. Oh,
we should have done it yesterday. Yes, that's exactly right.
Except for one you can control. On the other you can't.
I guess right, that's true, so make sure you know that.
But yeah, other than that, I think if you if
you paid a reasonable amount for your home, you got
a solid locked in interest rate, you're keen to become

(22:32):
a landlord, Jacob. I think there's a lot of plus signs,
especially if you don't mind that drive once or twice
a quarter to go back there and check on your baby,
your investment. I think you might be happy to being
a landlord, and you might see better financial returns from
it too. Jo, we've got what to get to you.
We're gonna hear from a listener who is on the
other side of the world. He has an investing question.
We'll get to that and more right after this. I'm

(23:01):
not we're back. Let's get some more listener questions. Let's
hear from a listener who loves his kids but isn't
sure he wants to save for them.

Speaker 4 (23:07):
Hey, guys, thanks for taking my call. So my situation is,
I've got a high school junior and a high school freshman,
and of course, like many adults parents, we didn't start
saving as soon as we could in the five twenty nine,
which I did start recently, But now, because of my
sense that the market is volatile, I'm not sure if

(23:30):
that's the best option. So I want to get your
thoughts on that. But more importantly, I guess what I'm
wondering is I'm going back and forth between the idea
of whether or not to start saving as much as
I can, in other words, stop maybe putting as much
in my retirement account, which is pretty aggressive in that regard,
So I think if I pulled back a little bit,

(23:50):
it wouldn't you know, be a traumatic thing. But thinking
that maybe.

Speaker 5 (23:55):
What I could do is basically just have her pay
for it and use that extra money to continue to
go aggressively in the market, thinking that it's better to
take out a loan and probably pay it off at
a lower interest rate than the money I could extra
money I could make when my retirement account and just

(24:17):
start pulling that out.

Speaker 4 (24:18):
I'm sixty one, so It's not like I would suffer
any penalties in a few years if I start pulling
out other than just the regular taxes. So that's in
a nutshell, just kind of want to figure out what's
my best option at this late stage in the game.

Speaker 1 (24:33):
All right, Thanks, all right, Joe. Let's get to Scott
and one of the things that he said, I think
he said something like, my sense is that the market
is volatile right now, and I think it is going
to be okay for him to pull back on how
much he's putting into the market. If he's been investing
a pretty large percentage of his income for a long time.
I just don't want to see him reducing his contributions

(24:53):
just because he's worried about a pullback. Because he's reading
the news, the headlines he's thinking about Like, when you're
younger and you're just building up that wealth, you probably
aren't paying too much attention to what's going on. What's
the news and markets right, like how are Terriff's impacting
the stock market? But as you get closer to needing
that money like he is. He said he's got a
freshman as well as a junior, h you start thinking about, oh,

(25:15):
how oh, what does that mean for this? What does
it mean for that? Well, I mentioned terrists specifically. I'm
thinking aback to all the headline predictions about tariff's and
the impact of those on the economy. And you know,
we're still not fans of terriffs in general. I do
think they will certainly slow down growth. But the twenty
percent pullback that we experienced back when, back Liberation day, Joel,

(25:36):
do you remember this seems like it seems like it
was so long ago. I remember the fun signage that
was held up Fier President. It was so based on
trade deficits as but that pullback was I don't know.
It feels like it bounced back so quickly, and we've
recently reached record highs. This happens all the time. The volatility,

(25:57):
Scott that you're experiencing, that is just the price of admission,
and the higher returns are just the reward that you
get for dealing with these greater levels of risk. And
so I'm just here to say, I don't know if
this time, like everyone always says, this time is different,
I don't I'm proposing the idea that this time isn't
really all that different from all the other previous times. Yeah,

(26:18):
and like, will the stock market bounce back in no
time flat like it did with COVID and like it
did with tariffs?

Speaker 3 (26:24):
No?

Speaker 1 (26:25):
Maybe not, Like there will probably be downturns in the
stock market and in the economy, the last longer than
what we've experienced recently, but still like just pointing to
being like, oh, it feels like the market's more volatile
than normal. I don't think it is. I think maybe
it's it's easy as an investor who's got your finger
on the pulse to feel like that, but I don't
necessarily think that makes it true. Yeah, and I really

(26:46):
do think it's the older you get to and the
closer you start eyeing some of your retirement goals or
in this case, goals for his kid, you start thinking
about it a little more where you're just like, well, shoot, actually,
do I actually want to take all the risk that
is available, all the riskless the table? I used to say, yes,
give me, gimme, gimme, but now it's just like, oh,
maybe you know I'm gonna say no to seconds at
the time. He kind of likes slide back from the

(27:08):
table a little bit. At some point. That's a smart
idea to de risk right as you're getting closer than
needing that money, which brings me to the question at
hand about saving for your kids. I first just want
to tell Scott not to beat himself up for not
starting a five to twenty nine plan sooner. And this,
this might sound harsh to other listeners, but saving for
your kids really should be a lower priority than your

(27:29):
own personal retirement accounts. And no, it's not because you
don't love your kids, but it's because there are so
many other ways to pay for a higher education. You know,
we talked with with Jocelyn Pearson back in episode eight
sixty about getting scholarships, and that's only one episode. We've
had multiple episodes, many episodes on paying for college. Ron
Leber from The New York Times on the show, there

(27:50):
are so many different ways to reduce the cost of college,
to find other ways to pay for college that aren't
just like personal investments in a five to twenty nine plan.
But when it comes to your retirement, sorry, that stuff
doesn't exist, and so that is the priority. And it's
not selfish to suggest that. We just don't suggest making
meaningful contributions to five twenty nine accounts for your kids

(28:13):
until you reach money Gear's number seven, which if you
look at them on our website, that's the last money gear.
So it's very far along in the order of operations
if you haven't done basically all the other priorities first, like,
you shouldn't be doing it. There's just too many other
financial goals that take precedent. Yeah, let's take a minute
two to talk about five twenty nine accounts than just
how much better those plans have gotten. First of all,

(28:35):
they have become more flexible. You can even in time
turn some of the contributions into roth Ira dollars for
them if it's in fact not needed for their schooling.
So because of that, we like five twenty nine's more
than we used to and many of them come with
just incredibly low cost investments. But not every parent cares
about that. Not every parent wants to say for their

(28:57):
kids retirement. And to be honest, in your case, Scott,
you don't want to invest the dollars that you are
contributing anyway because of how quickly it is that you
are most likely going to need these dollars for your
kids higher education. That's a good point you're talking about
like Scott getting closer to needing the money he's sticking
in his retirement accounts. I mean, hopefully he's still got
decades of retirement left. But for his kids, we're talking
about spending that money actually in the fairly near future.

(29:21):
You said your kids are in high school, right, junior
and freshmen, Well, that means that investing that money would
be too much of a gamble, especially for that junior
if you're going to need that money in a couple
of years, or at least some of that money, right, Yeah, freshman,
maybe you can take some more risks there, but yeah,
definitely not the junior, right exactly. Yeah, I think with
the freshman you might be able to do a conservative

(29:41):
mix of investments because you have more years that you
can let those investments ride. But needing those funds in
short order means investing doesn't make much sense, and which
means the five twenty nine account doesn't make as much
sense right now. I think the only way I'd prioritize
it is if you felt like you were really ahead
of the game as far as your own personal and
workplace retirement accounts, Like, hey, I've crushed it so well

(30:04):
that even though my kids are this far along in
high school, I guess I can take my foot off
the pedal and toss some money in there. And the
only other reason I would consider it is if your
state offers a sweet tax deduction. Oh yeah, because if
you live in a state without any tax income tax benefits,
I just don't really see the point of putting money
in a five twenty nine pound but account. But if
you do, you can just like literally consider it as

(30:25):
a tax evasion vehicle. And I don't act evasion. Yeah,
I don't miss. This is how you launder money, Scott.
It's a very legal way. But like we did that
with some of Emily's Yeah, some emilies grad school. We
just like stuck it in and took it out pretty quickly.
It goes in here, it says there for a day. Yeah,
that it goes out of We had to actually pay
the school bill. Okay, So two things that makes me

(30:46):
think that. First of all, Scott didn't say his name
at the beginning, so this listener question is being presented
here by Scott. But secondly, we always try to get
folks to say where they're from as well, because it
helps that just as a little bit of color right,
So the and so normally we information exactly because like
let's say Scott lives in California or Tennessee, well, yeah,

(31:08):
he's not getting a state break, right, but if he
lives in Georgia, or if he lives in New York,
you are going to get a deduction on your state
income tax there. And so that would have been something
that would have been helpful, helpful to know. But I
like how we're talking about this. It's money laundering because
there is a certain amount of that and it can
be significant away in a very legal way. But just

(31:29):
depending on how much he's looking he didn't say specific numbers,
but I mean we're talking about a large amount of money,
depending again, if he gets that state deduction. Were he
to if he's looking at socking away some serious amounts
of money, we could be talking thousands of dollars here.
But I agreed, and I also just think, don't don't
feel compelled to do this. And I love what he

(31:49):
said at the end. Then he was like, maybe maybe
my kids pay for pay for their home college. And
I think when we say yeah, that's a great idea,
some people might be like, why are you rooting against
his kids? To succeed. Why doesn't Scott owe his kids that?
And I just gotta say no, I don't think any
parent owes their kids paying for their higher education. I
just don't think that is something that comes with the

(32:11):
territory of procreating. But I think in some ways, actually
you're doing them a better service by allowing them to
pay for a lot of their own school, or at
least have to think through it. It forces them to
think about applying for scholarships, to reconsider which school they
choose to go to based on what sort of financial
aid packages each school offers them, and just as opposed

(32:32):
to like a blank check sort of mentality of right, well,
if I got in, that means I'm going to go there, right,
I'm going to go to the best school I got
into right right, Which also makes me think that maybe
that they're going to take more control of their education
and have more appreciation for it. My guess is my guess,
And this is just a stab in the dark, Matt.
The kids who have to think more about and pay
for more of their own education graduate in less time.

(32:54):
Maybe aren't taking the five or six year plan. I
think just more skin in the game is a good thing,
and so always on the back end, help your kids
pay off some of that student loan debt with some
of the money you've invested in and saved up. And
I think that's kind of what he's getting at. Yeah,
it was a little unclear at the end what he
was specifically asking, But if that's the case, then I
think I'm all for that. I think what he would
need to make sure that he avoids is getting bumped

(33:17):
up into a higher tax bracket. Right, Let's see, he's
still working. It sounds like he's like, oh, I'm still
earning money, I'm still contributing to my retirement accounts. If
he's got that income coming. But then on top of that,
he's taking money from retirement because again with him being
in those quote unquote retirement years, he's an older earner
and father. I guess you don't often consider the fact

(33:39):
that you are over sixty one or sixty two in
his case, while you have kids in college. But that
would be the problem, or that would be the only
potential problem that I could think of, is the fact
that that might bump him up. It's going to increase
his income for those years. But I really do love
the flexibility that that gives him down the road to say, hmm,
you've got these loans now as opposed to having sort

(34:01):
of front loaded or like pre funded college education. It's
the way to do it on the back end and
the flexibility of like waiting for the market to correct.
Let's say that, oh man, he's entering into a period
where my guy's not doing so well, so maybe you know,
how about you just keep making payments on the student
loans for a couple of years and let's see if
the market rebounds, and you know, I'll help you out
at that point it does, It's like, oh, hey, I

(34:23):
got a ten thousand dollars lump sum. I'm willing to
contribute towards paying on the student loans. So it really
it builds on how good the market does, sweetie. Yeah,
when I think so much comes down to the way
you talk about this with your kids. Yeah. Communication, And
it's not like this, hey, guess what I want you
to defend for yourself, Like I don't even think you
want to have the conversation like that, but it is

(34:44):
something along the lines of like, hey, I'm prioritizing this
may maybe I'll be able to help out in the future.
I can't write now, but let's have some thoughtful discussions
about what it looks like to find a great school
for you that doesn't cost an arm and a leg.
And I do think again, yeah, there will a greater
level of appreciation for that education if they have more
skin in the game from the get go. Totally agree.

(35:05):
I think you could land anywhere on that spectrum of
how much you end up paying for your kids college,
as long as you've talked about it well and they
understand why it is that that you're making that decision
when it comes to your finances. But Joe, let's keep moving.
Let's hear from a listener now who has recently found
himself with some additional cash on hand. What should he
do with those dollars?

Speaker 3 (35:24):
Hey, Joel and Matt, it's Qui again, still all the
way from Shanjan, China. While we were working on things
with immigration for my wife, we were hit with a
devastating surprise. My mom passed away this past October. Grief aside.
My stepfather just paid me my mom's minority share of
the equity from their retirement property they moved into less

(35:46):
than a year ago. That equity amounts to just north
of one hundred thousand dollars. This brings up two questions
for my wife and me. The first is how to
approach this influx of money with the we pushed ourselves
in the money year five. We have no debts besides
my student loans that are still on the borrow defense
program and a mortgage that has been turned into a

(36:09):
somewhat profitable investment property. We have a long term goal
of four to seven years from now. We'll want to
get a house and plant roots in America, but we
could make that push to get our IRA and brokerage
accounts to one hundred thousand dollars or more. We know
that getting around that area tilts the compounding heavily in

(36:30):
our favor. So what should we do with the extra
money and where should we put it? Last quick question
is a lot shorter. What are the tax applications for
twenty twenty five after receiving this money? Are there any
Thanks y'all for any thoughts and suggestions during these ups
and downs over the last couple of years.

Speaker 1 (36:51):
Man Quay has been listening for a long time and
pretty sure Quay is a holder of how the money
socks holder of where I hope you wear. Hope you
six months feet because if you just like hold him up,
it doesn't really do much. Yeah, but Quai, thanks for
thanks for listening for so long. So sorry to hear
about your mom's passing. And as anybody knows, everybody knows
who's lost somebody, like money doesn't make up for it.

(37:13):
But it is also true that a six figure lump
sum it can make a big difference in your ability
to hit your financial goal. So I think you can
even think about how you use this money as a
way to honor your mom's legacy. I like that. So, yeah,
well we'll offer a few ways to potentially use that
inheritance wisely to grow your wealth. And I don't know, Matt,

(37:34):
but before we talk about like investing it, maybe you
have like a you don't want to be prudent with
like every dollar that you get from an inheritance. What
do you think, yes, he should you think? So? Yeah, yeah, Quays,
he's been doing the right thing for a long time
and he's just going to continue to do the right
thing for Yeah. No, I do think like truly because
of the fact that we kind of know Quay and
he's been making smart moves with his money. It's okay

(37:56):
to occasionally like just let off the gas a little bit, right,
and so to take a little bit of that money
and just spend a little bit a bit more frivolously,
maybe on something that you otherwise wouldn't spend money on. Quay,
It's kind of like all work and no play makes
Jack a dull boy. I think, especially when it's a
sum of money that you weren't expecting and all you

(38:17):
do is bear down and do the quote unquote right
thing with it, I think he can take some luster
out of it. It just depends on the person, though, Like
there's a lot of folks who are just like, Nope,
that money is just like all the rest of my money,
and it's going to enter into the machine. In the
machine is going I mean, that's more of my approach, yeah,
where like I'm not going to necessarily change my life.
But I do understand how for some folks, especially I

(38:40):
don't know, it's something that's tied more to an individual
like that, that that could be a way for them
to set apart some funds away, for them to remember that,
you know, that individual that loved one in a way
that brings back good memories. Sure, I had a friend
HiT's a trip or even like an imouth just thinking
like what if quay about knee bike and every time
you rode that bike you thought about his mom. It's
kind of like when I go on vacation and I

(39:01):
get an article of clothing, whether it's like a hat
or a shirt. I love that versus something that is
like an inanimate object in my house because like every
time I put it on, I smile on my face
because I think about that trip. And maybe it's the
same thing. Really happens when the shirt wears out there
and you throw it away? Do you forget? Do you
forget about this question? I probably forget about the trip.
Then you're like, oh, what a vacation? Yeah? Yeah, well,

(39:22):
I guess in a similar way, I was gonna mention
a friend of mine when his grandma died. He used
some he was like really into watches, or I think
he was maybe wanting to get into watches, and so
he used some of that money to buy himself a
nice time piece that he wears to this day. And
every time, yeah he looks at that, he just remembers
the legacy that she was able to set up, and

(39:42):
in their case it was had a lot to do
with real estate as well, So I don't know, I
felt like that was a was the first time I
had heard one of my peers doing something similar to
that as well. But I think that's worth considering, especially
given that Quay has been making a lot of the
right money moves over a pretty long period of time. Yeah,
don't go, but a small splurge with a portion of

(40:02):
this money could be smart and quite It sounds like
your home purchase is far enough away that other priorities
make more sense than to be like funneling money into
a savings account for a down payment, And I like
the goal of getting your tax advantaged accounts ROTH IRA,
hopefully you said, Ira, I'm not sure if it's a
ROTH and your taxbile brokerage account into six figures that

(40:23):
I'm just reminded. I think maybe I mentioned this quote recently,
but Charlie Munger talks about you should do everything humanly
possible to get to that first hundred K. Whether it's
like walking and using coupons, it doesn't matter. Do whatever
it takes to get there, because that is it is
an important, important threshold across, so that then, yes, your
money started. It just feels like your money is working
for you in a more significant way once you get

(40:46):
to that level of wealth. And the WROTH, I think
in particular, is a killer account because if your personal
finance situation continues to make progress, you might never need
to tap it in order to buy that house five
plus years from now. You might be like, oh, yeah,
we were maxing out the ROTH, but we also were
of savement on the side, and so we did both
things at once. But you're also going to have the
ability to use some of those WROTH contribution dollars to

(41:09):
help fund a payment a down payment if you have to.
And so the flexibility of the WROTH is one of
the key attributes that make it excellent. So our goal
will be to max that out I think before contributing
really anything to your taxable broker's account and then putting
that in second place. So I would just kind of
make a plan to max it out each and every year,
to hold on to enough cash to fully fund it,

(41:29):
and you know, twenty twenty six and then twenty twenty
seven as well, just so that you're you're not missing
out on any dollar that you can stick into your wroth. Yeah,
we're unfortunate circumstances to arise. You can still max out
that account. I wanted to speak. You mentioned kind of
the Charlie Munger quote and the six figure retirement portfolio amount.
I don't think there's any magic to hitting one hundred k.

(41:52):
I do mental magic, I think it is. Yeah, I
think I do think there's some like some numbers behind
it as well, right, But I just the fact that
you get to, say, six figures though, that's just a
lot of fun. Going from five figures that you've been
at for quite a while to six figures. It just
psychologically it feels like a money win. But I think
one of the things that happens once you get around

(42:12):
and again it's not hitting that six figure mark, but
once you start getting a portfolio that's around one hundred
thousand dollars, is that the returns on your investment start
to equal roughly about what it is that you can
contribute yourself, right, And so it's sort of like this
this point and it's again it's not like a hard
line that you're crossing, but you know, once you start

(42:34):
getting up there close to seventy eighty ninety thousand, it
feels like somebody else is contributing to your retirement account
in addition to you, where it feels like the wins
at your back a little bit. And obviously the more
it builds beyond that, it's it's even better. Those like
sub thirty or forty thousand dollars accounts, you still feel
like you're doing all the heavy liftings, so you're right,
sounds like you're spitting into the wind. Yeah, and then
once you get towards like the seven figure mark, that's

(42:57):
where it starts to feel like the portfolio doing more
work than you are in your day jus game. Yeah,
and yeah, not just when it comes to your contributions,
but how much you could potentially even earn at your
full time job. But you mentioned maybe sticking the additional
funds into that brokerage. I like what you said about
just sort of earmarking that cash and just kind of
having it on hand, because I will say, Quay mentioned

(43:18):
that in something like four to seven years they want
to buy that house, and if you wanted to take
a more conservative approach to ensuring that you had enough
money on hand to purchase that home, I think if
it was me. It would depend on how married to
that idea I was. And I don't know your situation, quay,
And if you think there's a chance that you're going

(43:40):
to be I mean, he's living over in China. How
permanent is your stay over? Like could it be that
in like, oh, hey, you got to be out of
this country in three months sort of thing. If that
were to be the case, I think I would start
looking to some of the cities or towns that he
knows he might want to want to live, get a
feel for some of the just what home prices are,
and I would personally, I think I would sleep better

(44:01):
at night knowing that I've got a down payment in
like basically on hand ready to deploy. Were we to
have to move back home earlier than expected, there's I
don't know, there's just some peace of mind. Is that
timeline that is exact? Right? So if the timeline is like, yeah,
it's probably five to eight years, but I don't know,
it could be two, well then that does things or
even less. Yeah, But also how married is he to

(44:23):
the idea of buying a house. That's another important question
because it was like, I don't know if if the
if the money made sense, we buy. But if it
didn't and we can finally good spot, we rent. So
if that's the case, then the down payment savings really
doesn't make as much sense. Yeah, so much. There's a
few other factors to keep into mind. Let's tackle the
last thing Quay asked about on the tax front, taxes,
tax consequence. There should not be any tax consequences, and

(44:45):
that's because the federal estate tax it's highly unlikely to
be an issue giving the amount we're talking about. I
believe the threshold typically for estate taxes like inheritance of
like fourteen million. I'm not sure where you file your taxes, Quay,
but a few states to have their own inheritance inheritance tax,
so I think it's six states, so just be aware
of that. But it's unlikely, right, So, probably no tax consequences.

(45:09):
Best of luck, though, as you proceed, and we hope
you're able to achieve those goals that you've set out
for yourself. Or Now we've got a couple more questions
to get to, specifically, actually two different questions about money
for kids in interesting scenarios. We'll get to those right
after this. All right, buddy, we are back from the break,

(45:36):
and now we're gonna get to the Facebook question of
the week. This one is from Janie, and she wrote,
I have a sixteen year old daughter that is traveling
to Europe with her orchestra group in March. I was
thinking it would be easier to send her with a
credit card to avoid her having to have cash on hand.
I'm looking for a free credit card with no foreign
transaction fees. Or is it better to just add her

(45:58):
as a user to our current credit card? What do
you think, Joel? First things first, new card. High school
trips have gotten way better since I was in high school.
I didn't takeny high school trips when I went to
New York City with the Marching Band. Really, yeah, did
y'all play in the Macy's Dave Paride thing. I'm trying
to remember where we played. Wait, you wouldn't have remembered
if you played in the No, I didn't play. Thanks,

(46:19):
it wasn't that right before we played though? Why were
we there? I don't even remember. It's so long ago.
My memory is terrible. My nephew just went to Japan
and Korea for like a week and a half with
his school. Oh my gosh, I was like how much
that cost? It was, but very cool that the school
trips have gotten this good nephew whose mom just got
a raise, right, and she's like, I know, goodness, I

(46:42):
got a massive fat bonus to pay for them, exactly
right for that trip. So specifically, though, on Jamie's question, though,
authorized user status on one of your cards, that should
just be the way to go here, because she'd need
to be eighteen to apply for her own credit card. Yeah,
it's not like it used to be where I'm pretty
sure I got my first credit card and I was
like thirteen, fourteen years old. I'm serious, I remember getting
when you probably lied on the application, that's probably. I

(47:03):
don't even think I did. I think the credit card
company was just like, yeah, whatever, I am used to
give them out like candy. I am not even kidding.
Oh for sure, definitely still in the house. Definitely not
in college. That was before the Card Act passed, so
sure they're a little more flexibility there. But you know,
by having authorized user status on your card, you're going
to be helping her actually to build a good credit
standing early, which is clutch. Yep. And that's assuming you

(47:26):
handle your credit card well and you've got a good
credit score. But if so, she'll start to look like
a good borrower by proxy thanks to you. And it's
just this wonderful thing to be able to do for
your kid. It takes a very little effort for some parents,
by the way, for everyone else out there listening. Some
cards don't let you do it until your kids turn thirteen.
Others will allow it for basically kids of any age,
even your newborns. Yeah, so just look at my kids

(47:49):
are authorized users on what I can remember which card
it was, but they're all they're authorized. You know what's
funny is one of our cards recently expired and I
evidently I had one of our kids on there as
an authorized user. And Kate was like, wait, how come
I'm not on this line? She doesn't have that card,
but one of the kids does. She was just annoyed.

(48:10):
She's like, where's my card? But I think this is
also a great time for your daughter, Jamie to just
practice and to test and see what it's like for
her to have a credit card, because obviously it's going
to be attached to your account, so you can see
how she's using it and then any mistakes that she makes,
well she's under your roof. That is going to be
easier to remedy and to teach her about it than

(48:32):
where they, you know, were she to get her first
card while she's away at college. It's sort of like
having bumpers on at the bowling alley, like you are participating,
you're throwing the ball. I always score higher that way.
Do you haven't bowled in forever? It's been a long time, man.
Bowling is such an underrated I want to take the
family bowling at some point. It is fun, but it
always feels like a nice winter sort of activity, Like
I don't want to go bowling when it's beautiful outside

(48:53):
January perfect bowling month, January February perhaps, But I think
that could be a great way for her just to
test the waters a little bit, kind of get used
to what it's like to make mistakes or maybe overspend
in a way. Yep, while your eyes are on this
is on this card as opposed to when it's completely
in her name and you don't have any visibility into
that basically, and if yes, for no foreign transaction fee

(49:15):
cards are gonna that's what you're gonna want. You probably
already have one or two Jamie. I would look because
I feel like the majority of cards now have zero
foreign transaction fees, but not all of them, So definitely
prioritize adding her as an authorized user to one of
the cards that doesn't charge for spending when she's abroad.
You might also want to center her with a debit
card that also comes with no foreign transaction fees so

(49:38):
she can get some cash out because our society is
pretty plastic centric. I actually met gave my daughter some
cash yesterday to get a popsicle at a neighborhood event,
and they came back and they were like, they don't
take cash, and that is like why. I know that
is a common occurrence here in our country, but it's
less common I think in other parts of the world.

(49:58):
You don't want her carrying too much because of potential theft,
so make sure you talk about security and keeping that
money close. But the best way to get cash is
at N ATM once she lands. So if you have
a debit card, typically the ones Capital one we've talked
about that bank discover those are zero percent foreign transaction
feed debit cards. If you have a bank account there,

(50:18):
send her with that debit card and have her pull
out one hundred and fifty two hundred bucks maybe so
that she does have some spending cash. But she has
the credit card too if she needs real quick. Let's
take this one from Patricia. She wrote, I want a
phone for my eleven year old that will allow her
to call or text me as well as our friends,
but that doesn't have Internet access and won't let her
get on social media. Kidos to you Patricia for that.

(50:39):
I see a lot of flip phones available, but I'm
not sure which ones are good, what kind of plan
to get, which services to use. My husband and I
are on Visible, which I like that man Visible, that's
one of those mvn o's for sure. Visible rocks and
v and O by the way, Mobile Virtual Network Operator.
And let's not rid our kids' brains out with social media.
Try and avoid that for my kids. Hey, whin, we're
gonna upon the bandwagon. And I don't know how long

(51:02):
you can hold off on this. A sixteen sixteen I
think is a first You got wait till eight that's
the cell phone, so wait till eighth grade, and then
that's the Jonathan Height recommendation sixteen for that makes sense
to me? Or wait even longer. Yeah, well, let's there's
There were some good suggestions in the Facebook group on this.
We actually had one of the suggestions that a lot
of people offered was gab Gabb, which was we used

(51:24):
a Gab watch for our middle child. It has limited capability,
but it made it easy for her to call and
text from that watch. They have smartphones too, and that
was what we wanted. But here was the part that
rubbed me the wrong way. Matt. It was expensive. The
watch was free, is kind of this fremium sort of model,
but then the service ended up being more than I
wanted to pay. It was seventeen dollars a month, maybe

(51:45):
almost nineteen after taxis. Yeah, I didn't like that because
given how much she used it, I mean it was
it felt overly priced. And we actually just got an
Apple Watch for my oldest daughter. We put her on
a US Mobile plan for six dollars and fifty cents
a month. That to me was a good happy medium. Yes,
the watch has more capability, but uh, that's where I

(52:10):
think parental guidance and controls come in. Well, that's the thing.
I think that's the best option. I think for a
lot of folks. They've already got an old iPhone laying
around the house, and so I would recommend that Patricia
just go straight with the old iPhone and reset it
to be a kid's phone, and you've got much more
ability to block the web, any website, like literally, we've

(52:30):
done this on one of the family devices that we
allow our kids to use under our roof, but then
they don't have the ability to download any apps either,
and so that I don't know. I think that one
of the benefits here too is that if you're looking
at getting one of these dumb you know, like the
dumb down phones, and I don't really care what the
other kids think. But that being said, if you've got
like a fake I don't know what the kids call it,

(52:52):
but like a fake device, that's like I think even
just having the screen like a color screen, it looks like,
I don't know, you're not even given you're not standing
out like a sore thumb. Yeah, as opposed to being
like on your old, old school looking LCD flip phone. Well,
which if that's what you want to do, I am
all for that, And it's not like it costs that
much more at this point in time, Like a lot
of those whether it's an old iPhone or whether it's

(53:15):
some sort of Android. A lot of those you've already
taken the hit from a depreciation standpoint on the actual device.
And then the service you can get for crazy cheap
with one of the low cost providers, like the Apple
Watch we bought for my daughter because it was many,
many generations old. Yeah, it was pretty inexpensive. There you go,
and then on top of that, you also have the
ability to try out well, maybe we don't even need
to buy service, because I know for us, we're thinking

(53:36):
about letting our oldest it's at school to get picked
up because back in the day, when I needed to
get picked up from school, what did I use the payphone?
But you're gonna say pager? No, schools don't have payphones
in you I'm a little bit older than you, my friend,
But do you have a pager for a while? Or
I never had a pajor Okay, I skipped the pager
and went straight to the cell phone and when I
went off to college. But there's no pay phones anywhere,

(53:59):
so you can't plunk the co order and there you
can even you can't even do one eight hundred collect,
which is what I also used to do that. My
parents knew that were they to receive a collect request,
that it was just time to go get Matt. Yeah yeah, yeah,
even if they did not, even if they just hung up.
I don't know is that ethically sort of a But

(54:19):
what I was going to say though, is that with
an old iPhone, you can still use it on Wi
Fi and it's in schools have Wi Fi. Our local
downtown Little Square jol has public Wi Fi. A lot
of the local businesses have Wi Fi, so the ability
for them to do a lot of what they need
to do in order to text, in order to FaceTime,
you can do that without hardly even getting serviced, especially

(54:39):
if they're in sort of a confine, like just an
area where you know that they're going to be. But
then even even beyond that, the newer phones have GPS
built into the actual device to where you don't need
to be on Wi Fi or cellular data like your phone.
You got the fourteen, right, Yeah, so I think it
was starting with the fourteen. The GPS is built into

(55:00):
the actual device. You have to set it up ahead
of time, but that's pretty stink and cool, and it
almost renders service that you need to pay on a
monthly basis obsolete. But if you want real service and
you want your child to be able to call or
text from anywhere, I would say US Mobile has essentially
something that equates to eight dollars a month prepaid if
you pay for an entire year. And if you want

(55:22):
something even cheaper than that, and you want zero data,
like you don't even want any data to come with
the plan because you think that'll be a temptation, then
tell O Mobile has a good option one hundred minutes
talk and unlimited text for five bucks a month. So
those are two really good options. Affordable. Yeah, So if
you do go with the flip phone because that you're
really you're anti screen and which I totally get. I

(55:45):
am not mad about that, But you want the cheapest
possible service, I think Tello might qualify for kind of
the absolute bare minimum. Just don't overpay for one of
those light phones, you know, those super sweet looking minimalists,
and it's just like the ink and they cost just
as much as like a nice new phone. They cost
like as much as iPhones. Dude. Yeah, like the old

(56:05):
the old model. I looked it up. Three hundred bucks
for the old model the new one that they just released,
which I think they're pre order now, seven hundred dollars.
You and I talked about this a few months ago
because I remember seeing that and I was like, I can't,
no way, I saw it. I saw it again and
I was just dumbfounded. I was just shocked. But I
think for especially some adults who have the money, and
they're just like, no, no, no, I need to be
able to I need a hard barrier between all the

(56:28):
other things that are out there, kind of the sirens
call of the world and notifications and all that's. That's
certainly a clear way to to step away from all that.
It sounds like in a lot of ways, that's what
Patricia is trying to prevent for her child, and I
just do it affordably, though. Yeah. I just appreciate that
level of thoughtfulness because I want to have the same
with my kids, because I see it in the adults
around me, just inability to put their phone down. Absolutely.

(56:51):
All right, let's get to the beer. You and I
we enjoyed a Cordial, which is a saison a beer
here by Burial. I have never had Essayson by Burial before.
It's almost always brutally beautiful IPAs or insane stouts. Yeah
most of the time. But yeah, I definitely enjoyed this,
which you think. Yeah, I wrote down three adjectives gentle, floral,

(57:12):
and biscuity skiddy. Yeah it was very golden. Yeah, it
kind of almost drinks like a golden ail. That's that's
what kept coming to my mind with the tiniest bit
of funk there as I was I was tasting it,
but really good, really delicious. I do prefer the funkier
Seyson's like it as you put a lot of funk
in it, and I'm gonna be more interested. But I

(57:32):
still enjoyed this as just kind of nice, laid back beer,
golden and clear, super delicious. Glad you know I got
to enjoy it today. But that's gonna be it for
this episode. You can find our show notes up on
the website at howtomoney dot com. That's gonna be it.
So until next time, Best Friends Out, Best Friends Out.

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Ask HTM - Spending Cash Windfalls, Retirement Investing vs College Savings, & So You Think You Can Landlord?! #1024

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