Money Gears: Ordering Your Money Decisions Properly (Bestie Ep) #1006

Episode Transcript
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Speaker 1 (00:00):
Welcome to How to Money. I'm Joel and I and Matt.
Today we're talking about the money gears ordering your money
decisions properly.

Speaker 2 (00:27):
That's right, buddy, We are revisiting the money gears. This
is a topic that we've touched on before. This is
actually a term, a phrase that we've coined, so this
is proprietary information. But the money gears are so important.
They are a core philosophy essentially, and how it is
that we talk about money here on the show. It
informs how we answer listener questions. It informs what you

(00:50):
and I what we do even with our money. Yeah,
and so because of the importance of this, it's been
I don't know, like two three hundred episodes since we've
last dedicated in high episode to the money gears, we
felt that they were certainly worth revisiting.

Speaker 1 (01:03):
They're that important. And it's it's April's Financial Literacy Month actually,
interestingly enough, that's right.

Speaker 2 (01:09):
So we're like, what, it's the only special month that
we know. I take that back, there's other special months
that we care about as well.

Speaker 1 (01:14):
I mean National i PA Day, that's something we care
a lot about. But I think it's important for us
to yeah, tackle this again because it's been a while,
and because, yeah, why not in the month of April
kind of talk about a subject that really, when you're
talking about like where you start from, knowing the order
of operations, when, when to do what with your money
is an important topic for us to cover.

Speaker 2 (01:32):
That's true, man. But first I wanted to share a
quick little story I guess with you. So last night
was our date night. Thank you by the way for
coming over and watching the kiddos.

Speaker 1 (01:41):
It was less eventful than the one before where there
was a sick.

Speaker 2 (01:45):
Kid on hand. Don't you don't share that one.

Speaker 1 (01:46):
I'm not going to share details. It was rough.

Speaker 2 (01:48):
You don't want to spoil anybody's meal. Maybe you're eating
your lunch right now as you're to the episode.

Speaker 1 (01:53):
Usually they're uneventful and I get to like listen to
a podcast or watch a movie.

Speaker 2 (01:56):
Sorry about that. That one was No one was was rough.
But either way, Kate I we were last night. We
were sitting there, we were talking and we were just
Kate was actually reflecting on how our lives right now.
They look a lot different than we could have foreseen
them looking like they and this is a good thing, right,
This is a good thing. Basically, she's been spending a
lot of a lot more time recently volunteering, and she

(02:18):
would not have expected that she would be doing that
as to the degree that she's doing. But we were
just reflecting on how awesome it is for her to
be able to do those things right, and like, we're
just so fortunate that we are in a decent financial place.
And it got me thinking about the show and how
it is that we do talk about money here because oftentimes,
like what the world tells us essentially right is just

(02:38):
to live for now. There aren't things in the future
that you should be thinking about, that you should care about.
And even if you're fairly responsible with your money, there's
always the thought that, oh, I can I can always
make more money off in the future, but really do
that's not guaranteed.

Speaker 1 (02:52):
It's like counting your chickens for the hatch.

Speaker 2 (02:54):
Yeah, and not only that, but so like you might
not be able to earn money. Like let's say something
bad comes long and yeah, like you've counted your chickens
before they've hatched, and you no longer have those But
just even when it comes to goal setting, I'm just
constantly reminded that our goals are constantly shifting. Like you
know that just generally speaking, your goals are off in
a certain direction, and that you're striving towards just health

(03:15):
in these different ways, but what specific things that you're
striving after that can change fairly dramatically, and so I
guess I'm just making an argument for folks. This is
one of the big reasons why we talk about handling
your money well here on the show, is because you
never know what different goals you might have for yourself,
often to the future.

Speaker 1 (03:32):
And that's where I think absorbing extra money that you
might have into your budget to spend in the here
and now when you're like it could be worth more
to you down the line at some point, depending on
what changes happen in your life. So I think it's
I think it's really it's a good point, Matt, Yeah,
and I think sometimes we are. And it looks different
for all sorts of folks, right, Like, I mean, it
could look vastly different depending on who you're talking to,

(03:54):
what their life you know, and what those future financial
goals might look like. But either way, the steps that
you take now to prepare for those things, those all
look similar and that actually kind of ties into what
we're talking about today, like with the money gears. Yeah,
but I too. I'm glad that I had such a
high savings rate, even though it cost me certain things
early on, because as our goals, as our lives have changed,

(04:15):
we just have a lot more flexibility than we otherwise
we have had. You know, if we had just kind
of spent all that money that was coming in or
most of it, and having a high saving storate really
gives you a lot more options, especially as the years progress.
So totally, man, Yeah, and having those conversations, having those
check ins is good, and it's good be reminded of
just like how are you come and the abilities that Yeah,
Like volunteering, man, that's the thing. A lot of people

(04:35):
wish they could do that, even when they get to
retirement age. They're like, man, I wish I could spend
more time volunteering, but I got to keep working, and
I hate that. That's a tough position to be in.

Speaker 2 (04:44):
That's why it's so good to prepare in advance, even
before you have some of these bigger, loftier goals that
you might be pursuing.

Speaker 1 (04:51):
Exactly, all right, So let's mention the beer or having
on this episode, This one is called Venology Simeon by
Money and I brewing very good. That's right, ry, okay, cool,
But Matt and I we drink a craft beer every
episode because it's something that we prioritize spending money on
in the here and now while we're also saving for
the future. It's kind of like the opposite of what
we just talked about. But you have to enjoy some

(05:13):
of the there's the fruits of your labor in the
here and now. There's a balance to strike, and that's
oftentimes what we're trying to do, which is always on the show.
There's always tension in that, yes, yeah, but it's a
good kind of tension that we all have to wrestle
with continually. But Matt, let's move on to the subject
at hand, which is the money gears. That's what we're
talking about, how to order your money decisions properly. And Matt,
I was listening to this podcast about history and this

(05:35):
guy listen to other podcasts, not many except for hours. Well,
I listen to ours on repeat, just you know, to
hammer everything. Okay, right, but no, this was this particular
episode of this history podcast was about the Vikings, and
they're like basically discovery of Greenland. And the cool thing
is before modern instruments of wayfinding were created, like folks

(05:58):
a thousand years ago, we're able to get to and
Norway and Greenland, which is just kind of mind boggling.
No Google maps or anything like that. They're able somehow
to get through this this these massive chunks of ice
and this incredibly long distance. I want to say it's
like fifteen hundred miles or something like that from pretty
Norway to great That's a long way to go in
like a rudimentary ship. And even some of them made

(06:19):
it all the way to North America one hundreds of
years before Columbus, who somehow gets all the credit. A.
Leif Errickson I think was the guy. Yeah you've heard
of that, that like the twelve hundreds, and there might
have even been people from from Norway before him. Yeah,
but they had incredible knowledge about wayfinding and it allowed
them to yet to navigate these treacherous waters. They were
using like Molana style ways to get around, right, which

(06:42):
is it, MAUI The teachers are how to navigate in
that movie? Oh yeah, I think I think so. Well,
so that be god right, and not completely without peril.
Some people got lost at sea never made it back,
but it's still impressive. And I think while some of
us might see our personal finances as like this limitless
ocean that feels completely unnavigable, too hazardous for us to
venture into, we want to help. And the thing is
knowing where you're starting from and where you're headed it

(07:04):
makes it a whole lot easier to find your way.

Speaker 2 (07:06):
Yeah, you know, I don't even know if they had
maps back then. If so, I'm sure that they weren't
all that great. But this episode is essentially going to
be a map that is going to assist you in
reaching your financial goals. And though I don't know anything
about the Vikings, like I know that they didn't have smartphones, right, so.

Speaker 1 (07:23):
They also they did some pretty bad stuff too, And
those are my people. I'm not gonna lie, so maybe
I should feel bad about it. There's a lot of
good and bad when you look back into the past.
But so, like I'm talking about technology, I'm talking about smartphones,
and so that means that there were no modern apps
that we use on our phones all the time, right,
that we all take for granted. And one of the
greatest features about using ways or maps on your phone

(07:46):
is the ability to hit that little triangle that that
current location button and then it immediately zooms into where
you are at that very moment. And that, in a sense,
that's what we're doing today when it comes to you
and your finances. We're gonna help you to locate your
financial situation so that you can then start moving in
the right direction.

Speaker 2 (08:05):
Yeah.

Speaker 1 (08:05):
Yeah, And if you don't know kind of your starting point,
it's sure it's sure hard to figure out which direction
you're going right. And we we really believe that going
in the wrong order can screw up folks, even if
they have the best intentions. So if you start investing,
let's say, before you've saved a dime, you're getting things
out of whack. And it's similar to baking a cake, right,
putting ingredients in at the wrong time, you might screw
up the recipe. And Matt, you actually kind of did

(08:28):
this a little bit early on in your kind of
personal finance journey.

Speaker 2 (08:31):
Yeah, yeah, I mean so essentially it was so you're
talking about my roth Ira Yeah, okay, So, which we
love wroth IRA's and we want people to have a
roth Ira, but you maybe open one up too soon. Yeah,
And it's because I heard about investing and I thought, oh,
that's something I need to participate in. And I was
earning money, like from a real job for the first
time post graduating. That being said, I did not have
enough money on hand to get me through a little

(08:53):
like a little rough patch in my life where I
was changing locations. I was moving back to Atlanta, and
so that caused me to have to sell some funds
when otherwise I would not have wanted to do that. Yeah,
I would would have wanted to have kept that money
invested for the long Hauland so basically we're just we're
talking about this because we don't want you to become
like me, Yeah, the Faileys. We don't want to be
the poster chop for what not to do. We don't

(09:14):
want you to make the same mistakes. Right.

Speaker 1 (09:15):
Well, I did something similar in a way. I paid
off student loans that were at basically a two percent
interest rate before I prioritize other things. So we'll talk
about that too later on. But like all the different
topics that we cover on the show, are you know,
good practices and disciplines, it's not like, we're encouraging folks
to do anything that's going to take them further from
their financial goals, unless your craft beer habit maybe is

(09:36):
getting a little bit out of hand. Let's hope not.
But the order that you tackle all these different strategies
and practices is vitally important. It's going to make the
difference in how financially prepared you feel and how prepared
you actually are. And so if you can see the
plot points on the way to your destination, figure out
where you are, but then also be familiar with the
route that you're going to take, it makes a journey
far less daunting. And so, you know, we kind of

(09:57):
want to put these pieces together and say, yeah, we
talk about all these different things all the time, but
the order that you do them in just matters a lot.
And so like, let's lay that order out today.

Speaker 2 (10:05):
And that's right. And so let's talk about why we
call these the money gears, And the reason for that
is because biking specifically, that's one of our favorite things
to do. If you've been listening to the show for
any amount of time, you know that. And so it
just made sense for us to use bike gears as
a way to describe how we move through money decisions
within our lives. Joel, you and I we both bike

(10:26):
to work every single day. We encourage biking for physical
but also financial reasons. But the gears on a bike
are pivotal. Like that pivotal, It's extremely tough to bike
up a gargantuan hill just using like one of your
your big fast gears. Even honestly getting rolling to begin

(10:46):
with that can be extremely tough. If you're on too
high a marror. It can just be so incredibly frustrating
if you don't understand this basic concept. And so if
you properly use the gears on your bike, it's gonna
allow you to arrive at your destination a whole lot
less sweaty, and you're gonna have a whole lot more
fun in the process. And similarly, if you use your
money gears properly, we think there say, we know that

(11:09):
you will arrive at your financial destination with a whole
lot less financial stress along the way.

Speaker 1 (11:15):
Yeah, agreed. And every individual, by the way, is going
to move through the money gears at a different pace.
Some of you are shooting for fire movement, the financial independence,
retire early. You want to retire at thirty seven with
a million or more in your investment accounts more power
to you. And you might be saving fifty plus percent
of your income something like that, which is awesome. Others,
you might have just started learning about personal finance. This

(11:37):
might even be your first had of money episode. Who knows.
You might not even have an emergency fund set up
at all. You might have four kids or five kids
or something like that. More mouths to feed, which means
that progress is going to happen more slowly, Like everybody
is in a different boat. And there's no shame. That
is true. That shame is not a part of kind
of how we talk about money on this show. Our
goal at How to Money is to offer helpful advice

(11:59):
to folks all throughout that spectrum. And so the thing is,
the money gears are accessible for everyone, no matter where
you currently are and no matter how long it's likely
going to take you to reach those money goals that
you have.

Speaker 2 (12:10):
That's right, yeah, the money gears they make sense from
a like a purely rational and from a like a
numbers and monetary standpoint for sure. Right, Like what we're
going to share with you today, if you opt to
follow the order that we're laying out, they're going to
help you to build wealth over time while also reducing
how much you have to worry about money in general.
But the money gears they also help from a psychological

(12:30):
aspect as well. It's not that you're just making financial progress,
but that you are doing it in a way that's
emotionally satisfying. And when you're encouraged by your progress, you're
likely going to keep it up. You're going to keep
doing the thing that you're winning at, which is only
going to lead to even more financial progress. And so
it's important to point out too, that's not just the
numbers from a psychological from an emotional standpoint too, you

(12:52):
are going to be in a much healthier place.

Speaker 1 (12:55):
So I feel like I should use an illustration here
based on biking. And so when I go for neighborhood
ride with my kids, got daughters who are nine and seven,
and so they're on their geared bicycles and they can
lose steam if they're going up a hill and if
they're in the wrong gear, and it just feels so
defeating to be going up that gear. We're like usually
heading towards one of those little free libraries in the
neighborhood to see if there's like some free books or

(13:16):
something that we can snag. And I always like, when
one of my girls is struggling, I say, what gear
are you in? And I'm just encouraging them to pull
it down a couple notches, right, because if you're going
gear yeah, I think they have eight eight gear bikes
maybe or seven or eight gears, I forget how many
they have. But when they're in gear six trying to
go up a steep hill, man, you're talking about like

(13:38):
a real slog, a lot of sweat and just a
lot of frustration. But if they can dial it back
down to gear two, yeah, maybe the going is going
to be a little bit more slow, but actually not
really because while it feels like it's going more slow,
at least you're keeping study and at least you're moving
up the hill with regularity. And so yeah, that's just
something that's always the question, what gear are you in?

(14:00):
Can we move it back down so that you can
continue this momentum so you can keep climbing and not
basically have to like stop and walk your bike up
the hill, which just like, man, that's a that's a
frustrating thing too.

Speaker 2 (14:10):
Yeah, yes, of course. Yeah. And to extend the metaphor,
there is a place, there's a time and a place
for those taller gears. Yeah, but it's after you've it's
it's once you're going down the other side of the hill,
right like, and that's when it's fun. But oftentimes we're
trying to shortcut to what we think is going to
be the faster, funner gears, but we're not in the
position to be able to handle some of those taller gears.

(14:31):
And so that's just a preview that we will talk
about some of those more fun gears that hopefully everyone
listening to this episode, well we'll be able to attain
here in short order.

Speaker 1 (14:40):
Yeah, agreed. Well, in these gears, I want to say also,
they stand the test at time, like we came up
with them a few years ago. But the truth is,
no matter the economic environment, we've seen some changes, some
shifts in the economic environment over the past few years.
Of course, you can still use our money Gears formula
to decipher what it is you should be doing with
your money next. The macro economic reality might sometimes cause

(15:02):
us to make small tweaks in our decision making, but
when it comes to these broad based money gears, it
doesn't really have an impact. That's true on kind of
the order of operations that we feel is most important
for your money. Okay, so we are going to get
into all of the seven money gears. We're going to
describe them in detail, and we'll discuss how you should
be progressing the proper order for things. We'll get to
all the fine details on that right after this.

Speaker 2 (15:31):
All right, man, we are back from the break and
it is now time for us to dive into these
money gears. And so there's seven money gears, and of
course we're going to start with money gear number one,
which is the basic emergency fund. Let's kind of make
a case for having an emergency fund. There's a brand
new study from Secure Save, and they found that seventy
five percent of Americans are stressed about their finances and

(15:54):
then those increased levels of stress are then impacting their
productivity at work, which is not a good thing, of course,
And I mean saving up a basic emergency fund that's
not going to bring on like full on economic security
and relief to everyone out there, but it is an underrated,
massive first step to take that's going to really alleviate
a lot of money anxiety for folks out there. And

(16:15):
so when you've got that basic emergency fund of two thousand,
four hundred and sixty seven dollars set aside in your
savings account for any sort of emergency that could arise,
you've got the beginnings of some real financial power. And
so we don't want you to be a part of
And here's another stat of the fifty seven percent of
Americans who can't access one thousand dollars in a financial emergency. Essentially,

(16:37):
this is living paycheck to paycheck, which simply means you're
dependent on that next deposit showing up in your account
to you know, every two weeks. When you are living
in that kind of a state, when you're living on
the financial edge like that, it has all sorts of
cascading consequences, and we don't want you to be living
with that day to day stress.

Speaker 1 (16:54):
Yeah, there was another study recently about how a lot
of people if they lost their job tomorrow, they would
have a really hard time buy groceries, and so it's
very very similar. There's a lot of people living in
this sort of state in our country. And I will
say it's not always the fault of the individual, right,
But there are still a lot of things I think
we can do as individuals to bring power back into
our lives. And this is the first step. This is

(17:15):
the first way. This is the first part of the
process to get some of that financial power back in
your life. And really, when you think about it, when
you boil it down, this could be a reality for
more people. Even though the stats make it seem dire
that most people are not in this position, I think
more Americans really could get into this position, Matt, And
let's talk about the reason we picked the number twenty
four hundred and sixty seven, because it's very specific, very

(17:37):
very specific.

Speaker 2 (17:37):
It's not a random number we just decided up right.

Speaker 1 (17:39):
We didn't pull it straight out of our butts or
anything like that. But basically, economists did some research a
couple of years back, and they specifically found that having
this amount of money on hand would allow people to
navigate most financial emergencies without a problem, without breaking a sweat.
And so with inflation roaring, we might need to adjust
this number at some point. It might be like twenty

(18:01):
seven sixty seven or something, But right now we're gonna
stick with twenty four hundred and sixty seven. I think
partly I love that it's not a round number because
it makes it easier to remember. And if you've got
that much cash on hand, you're at a low risk
of not being able to afford an emergency that comes along,
which is really just a really really crucial thing for
most people. When most people aren't able to do this,
you're already living counterculturally, just achieving money year number one.

Speaker 2 (18:25):
Yes, And by the way, that money should be in
a high yield savings account, and typically you're going to
find that with an online bank because they pay the
best rates. We want you to ditch your local brick
and mortar one of the bigger banks like that because
they ain't paying jack well.

Speaker 1 (18:41):
Also, they're probably feeing you, which is prohibiting you from
being able to amass that sort of emergency fund we
need you to have.

Speaker 2 (18:46):
That's right, Yeah, And by the way, an emergency is
not needing Christmas presents here at the end of the year,
because that's a known expense. It happens same time every
single year. It's an expense that you should be budgeting for,
and you've got time to start saving. The emergency fund
is for bigger money and financial messes that pop up,

(19:07):
like a transmission failure on your car, but not the
oil change that you need, or not tires, because again,
those are things that you can plan for. It's for
something like a job loss, something that you're not expecting
to happen. Not for a regular expense.

Speaker 1 (19:22):
It's not because it tickets to Hawaii on sale, right exactly,
That's not what this is for.

Speaker 2 (19:26):
Yeah, And so in order to achieve this level, this
is going to involve you tracking your spending and cutting
back in some different areas and specifically, if you need
some ideas for the best places to start trimming, we'd
recommend for you to check out episode two sixty. That's
when we talked about seven specific things that you can
do this week in order to cut back and save.
And then we want you to put that money in
a special savings bucket. That's what they call them over

(19:48):
at ally. But essentially, we want you to put some
parameters around what it is that you can use this
money for, because we want you to use them for
actual emergencies, not just because you want to be able
to go hang out with your buds.

Speaker 1 (20:01):
Yeah, ear market for sure. So that it's really only
for that intended purpose. And if it takes siphoning fifty
bucks out of your account every month and putting it
into another bank altogether to build up this emergency fund,
this twenty four hundred and sixty seven dollars, do that, like,
whatever it takes to make sure you have this achieved
and that you're not going to touch it is important.
And then totally, if you're already here, congrats. If not,

(20:23):
this is the number one gulp.

Speaker 2 (20:24):
This is the first thing that you need to be
working on.

Speaker 1 (20:26):
Gear number one. But let's move on, Matt, gear number
two stagging your company match. And we want all how
the money listeners to be investing, but we don't want
them to kind of hate to harp on your mistake,
but we don't want people to make that mistake of
opening up a retirement account before they're ready, that's right,
and because then you might need to pull that out.
You might need to pull that out, that money out
at a loss, and that's not a great position to

(20:46):
be and when you're getting started and so over the
long term, this is really how you grow wealth in
order to become truly financially free. Savings alone isn't going
to get you there, and so money Gear number one
gives you a taste of freedom, right, it gives you
more than you have living paycheck to paycheck. But Money
Year two is pushing you further in that direction. So
if you have a company retirement plan and if it

(21:07):
comes with an employer match, contributing enough to get the
full amount of free dollars is really important. That's clutch.
And so that's just the next move we want you
to make. Some companies they're going to offer a dollar
for dollar match, which I love. I think that's wonderful.
If yours does that, you're even better off. Others do
something like fifty cents on the dollar. If you contribute

(21:28):
something like six percent, they'll put in three. Either way, though,
it's impossible to get a better return on your money
than the company match, because even if it's just fifty
per cents on the dollar, where else are you going
to get a better return on your investment than that.
Then that's why this is such a huge financial priority,
and really it's Yeah, it's got to be number two
in the order of operations.

Speaker 2 (21:47):
Yeah, and you know, it also helps to just get
the ball rolling when it comes to investing, which is
of critical importance for your future. And so more companies
are automatically enrolling you into the different workplace retirement plans
that they offer, and a lot more employers actually will
be required to do this on your behalf starting next year.
But you may not even have a clue as to

(22:08):
how much money that you're putting in your FRO one
K or maybe your four or three B, and so
we would recommend for you to log into your companies
the back end right like the employee portal, make sure
to check how much you've got going towards your retirement savings,
and if you have the financial ability to cut back
in some areas in order to increase your contribution to

(22:29):
that full match level, we would highly recommend it, because again,
this is money, like you are not going to see
a return on your investment as much as you're going
to see with an employer match.

Speaker 1 (22:39):
Ye. And if it means cutting back on taco Tuesdays
where you go out to eat and you just make
tacos at home or stake Sundays, I don't know if
that's a thing, but I would like that to be
a thing. But if it means kind of cutting back
on some more expensive endeavors so that you can funnel
one or two percent more to make sure you're getting
the full match. We would say that's important, and that
is such a high financial priority, and really it's still

(23:00):
we're still the beginning of the money gears here, so
this is an important step that we want everyone to achieve.
We don't want you leaving, Like I said, that free
money and the best return on your money possible on
the table, And if you can't contribute enough to get
the full match right away, set a goal for when
you're going to be able to do it, like investing
two percent more every time you get a raise so

(23:20):
that you're able to hit this level in the next
year or so. And if you don't have a plan
for when you can achieve this, it's probably going to
fall off your radar. So making that plan to achieve
this money gear in the near future is crucial because
it means if you've got the plan and you're implementing it,
it's going to happen. As opposed to leaving it to chance,
which I don't know about you, Matt. When I leave
things a chance, they don't get done.

Speaker 2 (23:41):
And it's more wishful thinking at that point, knowing that
it's something that you should do as opposed to clear
actionable steps that you can take.

Speaker 1 (23:47):
Yeah, and it's important to mention a caveat here too,
because it make sure you take into consideration how long
it takes for any matching dollars that your employer contributes
to vest like how long is that vesting period? How
long have you been at that employer, because if it
takes a while, you don't plan on being with this
employer for long. If you're already shopping and looking for
jobs down the street, it doesn't necessarily make sense to
make this as high of a priority. But for most people,

(24:11):
this is the next money goal to be aiming for
after you've secured that basic emergency fund. And if you
don't get a company match at all, sorry, but you
can just keep pedaling and move on to money gear
number three, that's right.

Speaker 2 (24:22):
Which is paying off high interest rate debt and credit cards.
They're the likeliest culprit here. That being said, we're actually
fans of credit cards specifically as a method of payment
because of the different benefits and rewards protections that they offer.
But that being said, just about fifty percent of Americans,
they're not paying off their balance on time, they're not

(24:43):
paying those off in full, which means they've got lingering
credit card debts. They're carrying those balances over month to month.
And considering that the average credit card interest rate is
like in the twenty percent range, at this point, your
credit card debt has become a bigger problem than ever.
And ditching that debt as soon as possible that should
be a very high priority, not a top priority, because

(25:04):
that would be getting your emergency fund set aside. But
third down the list, paying off that high interest rate debt.
And personal loans or other like high interest car loans,
they can actually easily fall into this money gear as well,
as they tend to have some higher interest rates. But
it's important to point out that is not the type
of loan per se that causes it to go into
money gear three. But it's the rate that is associated

(25:27):
with the loan, those higher rates that should cause you
to set your sights upon it. And so typically we
define that as about seven percent or higher. Anything below
that we want you to kind of kick that can
down the road a little bit. There are some other
priorities that we want you to turn your attention to first,
but certainly anything in the double digits, and we would
say even you know, once you start getting around seven percent,

(25:48):
that's kind of up to you whether or not that's
something you want to tackle now, but definitely anything higher
than that falls into money gear number three.

Speaker 1 (25:54):
Yeah. I like how you said. It's not the type
of loan some people might say, Okay, what about my
auto loan? Well, it depends what the interest rate is
right now and whether or not that should be a
top priority or not. If you've got one of those
one point nine percent aprs on that car for four
years ago and you're almost done paying it off, well,
just paid off, as agreed, because that's actually that's not
bad at all. That's not a bad form of debt
necessarily at this point in time. But if you're like

(26:16):
I had bad credit I got that eighteen percent car loan,
that's a very very different ballgame that we're talking about.
And so it's really important to assess not the kind
of loan that it is necessarily, but more than anything,
the interest rate in the terms associated within.

Speaker 2 (26:30):
Us, right, it's about the numbers.

Speaker 1 (26:31):
Yeah, And I think this is also a time to
kind of tell people, Hey, we prefer you to stop
using these forms of debt altogether. And then if you
can't actually afford the vehicle without taking on some sort
of high priced loan, it's probably not worth it, and
it would behoove you to look towards a lower cost
form of transportation. And so we want all how to
Money listeners to hopefully avoid this kind of debt moving forward.

(26:52):
The best possible thing once you get out of money
Gear three paying off this high interest rate debt would
be to ensure that you never fall back into that
by avoiding all these kinds of the worst kinds of
loans really in the future. And so to really tackle
money Year number three, it's important to create a debt
payoff plan. We just talked about Matt how important these
plans are. And writing down all your debts on a

(27:13):
piece of paper or in like a Google sheets or
Excel file that's going to go a long way, documenting
all those debts, listing out how much you owe, what
the interest rates are, so you can look up smack
dab in the face and see kind of what you're
dealing with. And if you want to go digital, that's
fine too. A site like ondebt dot it and that
can help you kind of come up with this plan
for the order and the approach for paying paying that

(27:34):
debt off. Facing the facts though, is just a necessity here,
and so whether you want to take the avalanche or
a snowball approach that can be really up to you. We've
got an article we'll linked to in the show notes
about kind of how to make that decision. The snowball
approach kind of prioritizes psychology. The avalanche approach prioritizes math,
and depending on kind of you know what debts you have,

(27:54):
what you owe, and what the interest rates are, it
is going to determine probably which route you choose to take.

Speaker 2 (27:59):
Yeah, well, I want to mention too that back in
the day, you and I would say one hundred percent
you should be taking the avalanche approach. You should be
focusing on the debts in your life that have the
absolute highest rates. But what we were discounting is the
psychology involved and the fact that if you were so
convinced by the different interest rates in the numbers, that
likely you wouldn't have gotten into debt in the first one. Yes,

(28:22):
a lot of times, just like with the money gears.
There are psychological wins that come along with kind of
taken getting some of those wins and then using the
momentum to build upon some of the bigger, more audacious
goals that you're striving after. The same thing can be
true when it comes to paying off your debts. A
lot of times by eliminating the smallest balances that can

(28:42):
add fuel to the fire and can give you the
kind of encouragement that you need to continue on with
that plan. And so math's great.

Speaker 1 (28:51):
But if math doesn't actually get the job done, because
it's not getting you to actually follow through and take
the action, then the math isn't enough.

Speaker 2 (28:58):
Absolutely.

Speaker 1 (28:58):
Yeah, So yeah, I think that's that's really important thing
to mention, and so I'm glad you brought that up.
And it's also important to mention that if you encounter
a setback, don't let that get you down. Don't let
that like push off money. Gear three. It's important to
keep pushing through because it took you a while to
get into this debt, it's gonna take a little a
little time to climb out of it. If let's say
a transmission goes bad in your car and you're working

(29:21):
diligently on money gear three, and it feels like you
got to go back to money gear number one for
a second because you got to re re up that
emergency fund. That happens, but just remember that's what the
emergency fund is there for. And boy, isn't it a
good thing you took that step before that emergency came
down the pike. We're all going to have financial setbacks
along the way, but that doesn't mean that we abandon

(29:42):
the gears and just throwing the towel. What we do
is we kind of go back at it and we
might have to dial back a gear in order to
continue making progress. But that doesn't mean we've lost. It
means we're just delayed in our effort to win, which
I feel like actually kind of sounds like a high
school Friday Night Lights coach that speech, But really that's
what's happening. It's really give us that pep talk drum. Yeah, well,

(30:05):
and we're we are going to be delayed. We're not
going to get there maybe as quickly as we thought.
But hey, that kind of stuff happens to like all
of this, Matt, you and I included like stuff, stuff
happens that we didn't expect, and it might push back
the timeline just a little bit, but it doesn't erase
the fact that we're still going hard for that same goal.

Speaker 2 (30:21):
That's right. Yeah, it doesn't erase the progress that we've
already made and so so far. The money gears we've
discussed are money gear number one, which is the basic
emergency fund, money year two, which is snagging that company match,
and the number money gear number three paying off high
interest rate debt. And no matter what, you need to
go in that order. But what do you do once
you have graduated from money year number three, once you've

(30:42):
paid off that last high interest rate debt? And that's
when things get maybe a little more fun. We'll talk
you through those gears right after this.

Speaker 1 (31:00):
Let's keep going with the money gears episode we talked
to the first three. I feel like the first three
it is kind of that uphill climb, right, you're kind
of getting and now we're starting to crest the hill
here as we get into four through seven, let's say four,
we're kind of at the top of the hill. That's
like kind of where we've reached equilibrium, and then five, six,
and seven is where we start kind of going downhill,

(31:20):
and that is just such a good feeling to have
kind of the wind flying in your face. You're it's
momentum is on your side when it starts getting.

Speaker 2 (31:28):
More fund us right, well, mostly because you're not. You're
you're paying much less of your money towards other people,
which is right, and that's the that's what.

Speaker 1 (31:35):
Feels like the up uphill slog right overcoming kind of
passed indiscretions typically in those first few money gears, and
now it's like boom, I'm proactively funding my future, which
is a completely different way of thinking about things. So yeah,
I agree, that's really that's a really important way way
to distinguish it. But money gear number four is when
you're able to fully fund your emergency fund with three

(31:56):
to six months worth of monthly expenses and say, and
there's kind of a bunch of little nuance we got
to talk about in this one too, But we're going
back to the savings well for money gear number four.
You know, that was kind of where we started at
money gear number one. But now it's like, okay, cool,
you saved a little, then you invested a little, then
you paid off the worst kinds of debt. Now it's

(32:17):
time to go back to saving a little bit, and
some might find our prioritization of savings before investing more
a bit controversial. I don't think so though, and like
we realize that there can be a degree of fomo
fear of missing out as you're seeing the market's climb
and you're just padding your bank account, But it makes
the most sense for you to have a solid savings
backup before you start to ramp up your investing efforts.

(32:39):
It's great that you kicked off your journey to financial
freedom with a basic efund, but two four hundred and
sixty seven dollars. While that will insulate you from some
of the worst possible financial emergencies, it's only going to
be able to get you so far right, and so
having that three to six months worth of backstop worth
of expenses set aside is going to be able to
provide you with it a lot of stability that would

(33:01):
allow you to weather most financial storms, like a lot
more than just two thousand bucks in the bank is
really really gonna do for you.

Speaker 2 (33:08):
But that being said, if you find yourself in a
financial situation where things are looking a little difficult, you
might find yourself reverting, like pairing back on your expenses
a little bit. And that's where it pays to have
a bare bones budget. We talked about that back in
episode three sixty two. But it's great knowing that you've
got a solved three to six months, but by knowing

(33:28):
that you can pair back a little bit, there's a
there's a chance you can even extend that to six
to nine months, yea even further. Yeah, of bare bones living,
but let's talk about whether you need three or whether
you need six months worth of saving it?

Speaker 1 (33:41):
Like, how do you That's a big gap. So people
are like, yeah, how do you decide? Which one? Do
I choose for myself?

Speaker 2 (33:45):
Guys? Well, some of it depends on your job. Some
of it depends on like it depends on the stability
of your income. For instance, are you a tenured professor
at a well respected university or are you like a
like a crypto TikTok influencer. The complexities of your specific
situation that should inform just how much you are socking

(34:07):
away within money year number four. Yeah, but there are
so many different factors that you need to take into account,
Like when it comes to income, does your spouse work right? Like,
do you have a partner or significant other and they're
also bringing an income, Well, guess what, you now have
diversified multiple streams of income. Or on top of that,
let's say you have an investment property and that also
generates some income as well. Well, maybe there's a I

(34:29):
don't know, maybe that's a bad example because there are
emergencies that pop up with the investment property capital laying
around for that that also Yeah, but like so like
the number of kids you have, the number of folks
who are dependent upon you earning an income. But it
also just comes down to how much appetite you have
for risk, because you could it could just be you
maybe you don't have a partner or a family, and

(34:49):
maybe you do have a job that is highly stable
and you've got a great income. Well that doesn't mean
that you should automatically only have three months worth of
living expenses. Depending on your personality, you I want to
have a side just no matter what. I want to
have a healthy six six months worth of expenses set aside.

Speaker 1 (35:06):
Or you might have a friend that you could always
move in with who's like, hey, I've got this pool
house or something like that, You're always welcome to hang. Yeah,
and that might give you more confidence to have a
little bit less cash.

Speaker 2 (35:15):
Or family, like if you have family in the area
who are there to support you as well.

Speaker 1 (35:18):
That like all of that, I know, I can always
pitch your tent in your backyard, and that means I
need less cash on hand.

Speaker 2 (35:24):
Right, you can write, Matt camp out in the little
playhouse there and you're more than welcome to stay.

Speaker 1 (35:28):
Yeah. See that gives me family tosses you out hopefully. Yeah,
if it was all of us, we need a bigger tent,
I think. But but yeah, so that's money. Gear number
four is that that fully funded emergency fund going beyond
just the basic two four sixty seven number, which we
outline as kind of the bare minimum. And I think
that's going to give you even more confidence moving forward
when it comes to changing jobs or maybe even going

(35:50):
out to pursue your own work, saying, you know what,
I'm ready to leave my job start my own business. Well,
if you the more cash you have on hand, the better, Right,
it gives you runway and time to maybe make income
that's not quite as robust. And I mean ideally, if
you're going out there to start your own thing, you
probably save even more than that, because this is really
just an emergency fund. You're going to want to plan
on top of that. But that's money gear number four

(36:12):
is having more money in savings, in liquid savings in
a bank account, and Matt, you mentioned the online bank
accounts being the best. Well, money gear number five, that's
what you're moving into next once you kind of got
that one taken care of, and that's to invest more
intact sheltered retirement accounts. And then now we're getting back
to investing. So you can see how it's kind of
like we're running the gamut up and then we go

(36:32):
back to kind of square one to a certain extent,
but just like a heightened version of that thing. So yeah,
going to now investing step number two, which is money
year five.

Speaker 2 (36:41):
It kind of makes me think of like moving a
piece of furniture, Like you move one side up a
little bit and then you move the other side a
little bit, Like if you're trying to fit into a
tight corn. Yeah, like if you're trying to move addresser
in or something like that, you don't just like slam
it in like all one side and then do the
other like you kind of like ease it in and
you go back and forth. I feel like that's what
we're doing with our money here.

Speaker 1 (36:57):
Yeah, exactly. And when you do it incrementally and kind
of go back and forth between saving, investing and debt payoff,
it's going to ensure that you're not going too hard
on one. Leaving yourself exposed in another area of your
finances keeps you from scuffing up your financial walls, yes,
or breaking off a leg of that mid century dresser,
which we've all done if you've move it inappropriately, right.

(37:19):
But yeah, I think one of the biggest mistakes that
folks make is that they often go straight to money
gear number five because once they learn about investing, they
immediately think this is what they should be doing, but
they haven't laid really that financial foundation that's required to
dedicate more dollars in this direction.

Speaker 2 (37:34):
You keep beating that Matt invested into roth Iry too
soon for a bunch it. I just want to make
you look as bad as possible in this episode. That's
what I'm going for.

Speaker 1 (37:40):
But like they always talk about putting the KRT before
the horse, and I don't think we all know instinctually
what that means, even though I've never actually in person
seen a horse pulling a cart.

Speaker 2 (37:51):
But like we need some new modern day examples.

Speaker 1 (37:54):
I think we do. But if we start investing before
we have the proper cash reserves in the bank, we
could be leaving ourselves, like I said, exposed. And so
which tax sheltered accounts are we talking about here? We're
talking about hsas, iras and four oh one k's in particular.
We have an article all about hsa is up on
the website, which are one of our top favorite retirement

(38:14):
accounts that most people don't think of as a retirement account.
And if you're in the military, we're talking about funneling
money into your TSP, your thrift savings plan, and so
pumping more dollars into these accounts, these tax advantished retirement accounts,
increasing your contribution level is going to over the years,
pay huge dividends in your pursuit of financial independence. But
it's money gear number five for a reason. You really

(38:35):
got to do those first four first.

Speaker 2 (38:37):
That's right, man. Yeah, So let's talk now about how
much money to invest within these tax sheltered retirement accounts
Because a lot of money experts out there, they're going
to say that ten percent that that is the number
to strive for. I was going to go on doctor
Evil and say one million. Wells, maybe for you, depending
on what your what your five number is, But when
it comes to how much you should be socking away

(38:58):
towards retirement, we think fifteen percent, that that is a
much better goal to have. It's going to allow you
to achieve your destination of financial freedom much sooner, Like
we're talking about years, like even decades. By being able
to increase the amount that you're putting towards retirement.

Speaker 1 (39:14):
You can shave somewhere close to ten years off of
your kind of retirement goals by investing just five percent more.

Speaker 2 (39:20):
That's right, Yeah, so fifteen percent of your income. And
for some higher earning folks out there, this is going
to mean that they will quickly max out their contributions
to these different tax advantaged accounts fairly quickly, assuming that
you have a much higher income. But others out there
might find that they hit that fifteen percent of their
income invested mark and they still have some room left

(39:42):
in those accounts to contribute, and that's okay, right, Like,
if that's you, we actually don't want you investing any
more than that because there are some other financial priorities
that we think that you should get to before an
even higher percentage of your income is going towards retirement.
We don't want you again, like you're moving that dresser
into the corner. We don't want you to get too

(40:02):
far ahead of things with one side before you kind
of make a small correction on the other.

Speaker 1 (40:06):
You don't want to snap that hairpin leg, those beautiful
mid century hairpin legs. Don't want to do that. And
it's important too to give a quick word of warning here, Matt,
because a lot of people think of investing as socking
money into that account, and that is part of it.
But it turns out that fifty three percent of Americans
have at least some of their retirement dollars in straight
up savings account vehicles savings like vehicles inside of that

(40:27):
tax advantaged account, like a roth IRA or a four
to oh one K. And that's not good. Like, we
want to make sure that your retirement money isn't just
put into the right vehicle and then left to sit
in a money market account, although some of those are
earning a little more than they used to. I think
Fidelity is paying a suitet rate to return, but it's
still not as high over the years as you're going
to get investing in the stock market as a whole.

(40:48):
And this is not an investing episode, so we're not
going to go into a bunch of details, but we
have an article about investing for beginners up on the
site at how to money dot com. We'll link to
that article in the show notes. But make sure that, yeah,
you're not just like throwing some money in that account
and calling it a day. You're actually buying funds, preferably
low cost index funds inside of those retirement accounts.

Speaker 2 (41:08):
That's right. So after that, you're going to be moving
on to money your number six, which is knocking out
some of that lower interest rate debt and specifically, like
we're talking about student loans, maybe some of those more
attractive car loans, basically any of the debts that you
have in your life that you did not address back
in money of your number three. It's important to note
here that you could put your mortgage in this category,

(41:29):
but they are typically the least important debt to pay
off early, especially because you can you can probably earn
more even just in a basic savings account than what
your current mortgage interest rate.

Speaker 1 (41:40):
Is most people have a mortgage rate of less than
four percent, A lot of people have it in the
low threes, and you can straight up easy in savings
earn four plus percent.

Speaker 2 (41:49):
Ninety I think ninety nine percent of all outstanding mortgages.
Mortgages right now are currently less than what the thirty
year rate is at the moment. Makes sense, that being said,
like at this point, you've already got the worst debts
paid off, but now you can focus on some of
these lower priorities, some of these low hanging debts, some
of this low hanging debt fruit and student loans, they
would typically be included here. But that being said, we've

(42:10):
got all these caveats. You don't want to be paying
off your student loans now because of course the payment
pause and the potential for forgiveness, but even still, we
want you to save up in case that doesn't actually
go through. It's helpful for you to sort of, like
we talked about setting up that initial emergency fund where
you are making small withdrawals or making a payment to
yourself into another account, you also want to do something

(42:31):
similar with the payment the amount that might resume once
student loans fire. Back up. We want you to be
prepared for those student loans resuming, but car loans he locks.
These are all good examples of some of that low
hanging debt that is not so ridiculous that you knocked
it out earlier.

Speaker 1 (42:48):
Ya, your he lock rate might have gone from three
and a half to six and a half percent or
maybe even a little bit higher, and so it might
have been a lower priority a couple of years ago,
and now it's becoming a higher priority. And so you
find yourself money year six and you say, great, now
it's time for me to knock this thing off because
I've got that money money saved, I've got I'm investing
a decent chunk fifteen percent of my pay now, so

(43:10):
that he lock now, I got my eyes sat on
that joker or same thing with a with a car
loan and let's say it's four or five percent money
gear number six is the time to kind of knock
that thing out, get rid of it, because being debt
free other than mortgages is a great goal to have
kind of at this point in when it comes to
your financial progress.

Speaker 2 (43:27):
Right. Yeah, I want to mention too that there is
a chance that you stall out here in money gear
number six, or honestly even like money gear number five,
where you're investing more in those retirement accounts. It takes
a lot of work to invest up to fifteen percent
of your income and even fully funding and overnight, yeah,
even fully funding your emergency fund. We've got three to
six months worth of expenses. I mean, there's a chance
that you could be in these money gears for years,

(43:49):
depending on your your financial situation. And so whereas the
first three money gears are designed for you to get
some of those quick wins and you're able to build
off of that momentum, some of these later money gears
might be yeah, years where you're slogging away where it
doesn't feel like that you're making much financial.

Speaker 1 (44:06):
Progress, but you are making progress, and that's so important.
But you're right, it feels like it if you're like, man,
it's month number fifteen of me trying to get to
that three month worth of expenses in my savings account.
That makes sense, Like it makes sense that it takes
a while to get there. And again, I think it's
important to come up with like a plan of attack
when it comes to paying off these lower interest rate

(44:27):
debts too. Pay the minimums on all of them except
for one that you're prioritizing the most. That gives you
more focus when you're just kind of assailing one at
a time as opposed to kind of spreading your resources
thin trying to pay a little bit more on every
single debt. And then once you get one paid off,
you set your sights solely on another one, and oftentimes

(44:47):
that's going to give you the most success and it's
going to help you advance more rapidly when it comes
to paying off those debts.

Speaker 2 (44:54):
That's right, man. Yeah, So after money gear number six,
where you're knocking out that lower interest rate debt, you
are then moving on to money gear number seven, where
you were going after some of those bigger financial goals
like you just mentioned, j all, like, this is an
awesome place to be.

Speaker 1 (45:07):
This is when you're going downhill on your bike at
like thirty miles an hour full on. Like especially you met.

Speaker 2 (45:12):
With your long hair just blowing in the wind, blowing
in the wind. Man, you've paid off all the debts
in your life except for maybe that mortgage. If you
own a home, you're also investing quite a bit already too. Basically,
the world is your oyster. You can look to funnel
maybe some money towards starting your own business, if that's
something you've always wanted to do, changing how it is
that you get to spend your time and the folks

(45:33):
you get to help. Maybe that mean just a sweet
renovation there at your home because that's something that you've
always wanted to do. It could mean going on in
international vacation doing that if that's something that you want
to prioritize in your life. Or even honestly, just having
a larger cash cushion where you are removing some of
the potential for financial insecurity in the future, right, just

(45:56):
having some more of that money on hand that gives
you the options to participate in an opportunity that might
come up that you're not even aware of, sort of
like we were talking about there at the beginning of
the episode.

Speaker 1 (46:06):
But yeah, money Gears number seven opens up just the
whole world of possibilities. It can mean giving more money away,
which is awesome absolutely, Like what's your favorite nonprofit You're like,
wish I could give them five grand a year. Maybe
now you can. Or maybe it could say you could
say I've always wanted to work thirty hours a week,
But man, I just have not been able to. But
once you get to this place of financial security, you
don't have nearly as many deaths in your life, except

(46:28):
maybe that mortgage still hangs around. But you've been contributing
to retirement accounts for quite a while, You've got a
lot of cash in the bank, and you say, great,
now does the time I can live now on a
smaller salary, Like, there are all sorts of just options
that open up to you when you hit money gear
number seven, which is a beautiful thing to see and
a beautiful thing to be able to enjoy.

Speaker 2 (46:46):
Yeah, and by the way you mentioned giving, I want
to mention too, I mean personally, you and I like
we've given money throughout all the different money gears. I
wanted to point out that it's probably a good idea
to not wait until money gear seven where you feel
like that you are in a position of financial security
in order to give out of abundance, as opposed to
that being a discipline and a practice that you participate

(47:06):
in throughout your personal finance struments.

Speaker 1 (47:09):
This just allows you to do it, maybe in a
bigger way than you've been able to do up in
exactly right and this could be a great time too
to start saving up for your kids because up until now,
really the priority, the priority should be funding your own
retirement and should be kind of making sure that your
home is financially a financially secure place that you're not
going to have to be dependent on your kids when

(47:29):
you kind of do reach retirement age when your work
life is over. But the next thing, and some people
want to get the cart before the horse on this
one too, Matt, and they want to start saving for
their kids when they're in money Gear two, three or
four when it's.

Speaker 2 (47:41):
Is the time yet because it feels like the selfless things.

Speaker 1 (47:43):
Right right, But the reality is it's the oxygen mask
that we always talk about on the airplane. You got
to do put the oxygen mask on yourself first before
you put it on the child next to you. I mean,
that's what they recommend on the airplane videos. And so
I'm just going to trust that they know what they're
talking about. And I think the same thing is true
when it comes to your money. So money Gear number
seven is a right time to start prioritizing a five
point twenty nine plan for your kid if you expect

(48:05):
them to go to college, or if you want to
kind of get the ball rolling to put money into
an IRA for them or roth ira. So just to
note that's where this fits in. If you're planning on
saving money for your kids, it kind of falls under
money gear seven as well, that's right.

Speaker 2 (48:19):
Yeah, and just we hope that you get to enjoy
the ride down that mountain because this is where you
shouldn't be stressed about this stuff. No, yeah, it should
be fun decisions. This is a part of the ride
where we're almost where gravity is almost working more for
you than what you can actually accomplish by pumping your
legs as hard as you possibly can. Yeah, this is
almost at the point to where you're financially independent, which
is where your money is actually working harder for you

(48:41):
than what it is that you can actually accomplish with
the hours that you've got that are allotted to you
during the day. And so you know, with the money gears,
it's just important to note that going out of order,
it can honestly, it can be like throwing a wrench
into your personal fundance situation. But smoothly shifting through the
money gears that can help you to make progress more
swiftly and so no matter where you are, there's always

(49:03):
going to be room for progress. And Jill, you know
you were talking about going out of order. You mentioned
baking or what do you say something about cooking.

Speaker 1 (49:10):
Yeah, if you put the ingredients in at the wrong time, wrong,
especially when you're mixing wet and dry. Apparently I'm not
like a hardcore baker, but I know that that can
kind of throw things off.

Speaker 2 (49:18):
Kate, is your cake like when it comes to like
making sauces, that you can like break the sauce. I
think that's the term, okay, like, but essentially what we're
talking about here is this mathematical term, which is commutativity.
And that's this concept where the order where it doesn't matter,
right Like, that's like three plus two and two plus
three that's going to give you the same result. But

(49:39):
this doesn't work as the complexity ramps up. But when
it comes to your personal finances, the order it matters
in a major way, right Like, we're not talking about
something as simple as was one plus one, and we
want to make sure that you are on the right track,
that you are doing things in the right order. There
truly is an optimal way to go about achieving your
different financial goals.

Speaker 1 (49:58):
Yeah, if you're looking for a visual by the way, this,
you can go to howdmoney dot com. You can click
start here and you can kind of we list out
the money gears. So if you're saying, hey, I appreciate
the audio, guys, I'd like to see a visual setup
of what this looks like. Well you can kind of
run through them all. You can even print it out
or whatever, keep it on hand. But I think it's
going to be helpful for a lot of people met
to hear this and then to actually visually see it,

(50:20):
and then to identify again where they're at inside of
this order of operation, so they can know kind of
what they're tackling. And just like we're talking about when
you coming up with a debt payoff plan, well, if
you know where you're at in this money order of operations,
inside of these money gears, it basically tells you what
to work on, It tells you what's next, gives you
insight into where you are, which I think can be
like so helpful, so profound if you're kind of like

(50:42):
I don't know where to go from here, which a
lot of people find themselves even if no matter which
money gear they're in that sometimes you can feel stymied
because you're just not sure what the next step to
take is. And if you start going in the wrong direction.

Speaker 2 (50:54):
It feels like there's a thousand things that you could
possibly do, but really there's just the truly is one
thing that you should be doing right.

Speaker 1 (51:01):
So, yeah, I think that this is just hopefully helpful
as people are trying to figure out, based on their
own specific personal finance scenario, where they are and kind
of what they should be tackling immediately when it comes
to their money. But let's get back to the beer
mat that we had on this episode. This was a
venology semyon by Monday Night Brewing, like a kind of

(51:21):
a beer wine hybrid. Yeah, what was your take on
this one?

Speaker 2 (51:24):
Yeah, it's a hybridized American wild flavored ale and I'm
not sure about that whole flavored part, but as opposed
to like an actual ale.

Speaker 1 (51:32):
But I guess flavors in this beer are solid.

Speaker 2 (51:34):
I think there are different requirements as to what you
can call an ale, and so if they're actually taking
it and then like maybe mixing it, I think maybe
they actually have to say it's flavored as opposed to
brood gotcha. But yeah, man, this had some serious I
don't know what kind of grapes are semione, but I
would say white wine grapes. It definitely drank like, OK, yeah,

(51:56):
some of the I don't I know, like very little
about white wine.

Speaker 1 (51:59):
Same but there are more beers coming out there trying
to be like wine beer hybrids, and I kind of
appreciate that the direction this is going, and I guess
it doesn't make me actually kind of want to try
more funky wines because I've had a couple and I'm like, man,
these actually some of the funkier wines I've had lean
more in the craft beer direction, and this almost leads
more in the wine direction. So there's almost like some overlapmans.

Speaker 2 (52:20):
Like you're meeting in the middle.

Speaker 1 (52:21):
Yeah, yeah, which is fascinating, and this one is like
super tart, but yeah, also a little oaki, so oh definitely.

Speaker 2 (52:28):
Yeah, I had a lot of OA going on. It
reminded me of some of the different So a lot
of beers they'll age them in footers, which are these
basically like giant giant wine barrels, and so if you
happen maybe you're listening and you're just laughing at us
because we know nothing about wine. Look for some of
those different ales that are food or age, because they're
gonna have a lot of those oaky characteristics that are

(52:49):
oftentimes associated with wines. You're gonna then find those similar
notes within those beers.

Speaker 1 (52:55):
Yeah, I think a lot of wine lovers can get
into some kinds of beer. A lot of beer lovers
can get into some kind of wine. I think there's
more overlapp than maybe we give it credit for. And
sure I just made very it's a very maybe still
like a space in my brain culture for it.

Speaker 2 (53:07):
I think that's the biggest thing is the like in
my mind, you know, what do you picture when you
think of a vineyard, It's like, you know, it's kind
of uppercrust, it's kind of fancy wrass.

Speaker 1 (53:16):
Craft beer it feels it feels more like I take
a lot of like beards and plaid. So that's when
I think of when I think about the craft beer culture.
But yes, that's gonna do it for this episode. If
you want, show notes with links to some of the
stuff we mentioned, including kind of seeing the money gears
like written out so that you can consume them that way.
We'll have those at your disposal on our website at
howtomoney dot com.

Speaker 2 (53:35):
That's right, and we'll see you back here on Friday
with our Friday Flight episode, where we're gonna tackle some
of the biggest stories that we've come across this week
how those stories impact your money. So don't forget to
hit the subscribe button if you are not already subscribed
to the podcast. But buddy, that's gonna be it for
this one until next time. Best Friends Out, best Friends Out,

(54:00):
the Open, the upp

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Joel Larsgaard

Matthew Altmix

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Money Gears: Ordering Your Money Decisions Properly (Bestie Ep) #1006