May 18, 2025 • 34 mins
The #1 use case of AI is therapy and companionship. But AI bots are lying to users about having the credentials of a real therapist! We're a little worried about our tech overlords pushing AI on us at every turn.
Ask HTM: Yesel wants to know how to invest when she's on sabbatical.
Chinese tariffs have been delayed. That's good news. But this is only a temporary trade-war truce. We'll see how things shake out. But tariffs continue to be bad economic policy.
Ask HTM: What's the deal with a spousal Roth, and is it a smart move to fund one?
Ask HTM: Yesel wants to know how to invest when she's on sabbatical.
Chinese tariffs have been delayed. That's good news. But this is only a temporary trade-war truce. We'll see how things shake out. But tariffs continue to be bad economic policy.
Ask HTM: What's the deal with a spousal Roth, and is it a smart move to fund one?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kay.
Speaker 2 (00:01):
If I am six forty you're listening to how to
Money on demand on the iHeartRadio app.
Speaker 3 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel Lar's Guard and Matt Aultmis.
Speaker 2 (01:18):
I Am six forty live everywhere on the iHeartRadio app.
Speaker 4 (01:21):
This is how to Money. I'm your host, Joel Larsgard
and I am the other host, Matt Altmix. And if
you have a money question, we'll send it our way.
All you have to do is record your question on
the voice memo app there on your phone and send
it over via email. You can find the simple instructions
at howdomoney dot com.
Speaker 2 (01:38):
Forward slash ask. Now it's time for the ludicrous headline
of the week. This one comes from four oh four
Media and the headline reads Instagram's AI chatbots lie about
being licensed therapists. Dirty AI mad it lying to us.
Speaker 4 (01:51):
But this one really got under your skin, but also
the skin of your wife.
Speaker 2 (01:54):
Yes, I know. I told her about this and she
was like, yeah, let me tell you why this sucks.
So my wife literally just graduated this past weekend. Super
pumped for her. She is now officially a licensed therapist,
and the Harvard Business Review finds that the number one
use case right now for artificial intelligence. You would think
it's cheating on writing papers, but no, it's therapy and companionship. Well,
(02:16):
I do think that they are allow of there's a
lot of students outre who are cheating on Weren't you
shocked though, that therapy and companionship actually outranked? That is
a use for artificial intelligence from a I mean it
makes sense.
Speaker 4 (02:26):
I guess from an official like as a whole, as
an aggregate, Are there more students cheating on papers as
opposed to services being offered?
Speaker 2 (02:34):
Yes, I do think that that's certainly the case. So
maybe they didn't correct count the data correctly. I don't know,
but it's interesting that it's moving. Artificial intelligence is really
moving that hard into into this space. That was it
the movie Her back in the day with Scarlett Johansen
was the voice of the AI. That's like becoming real
life before our very eyes, and so like the lines
(02:54):
between what's real and what's not are being blurred. And
Psychology Today wrote about this on they said, hey, chatbots
lack nuanced empathy. They miss nonverbal cues, they avoid conflict,
and that actually can lead to worsening mental health risks.
So and on top of that, the fact that the
chatbots are trying to help in doing so poorly. I
think that's one thing. But they're trying to pass as
(03:16):
real humans with degrees and credentials. So if you push
back and you say, hey, where did you go to school?
What's your degree in? Doyn't make up lies that's yeah,
and tell you stuff like well, I went to this
school and here's my their licensed therapy therapy number, and
it's all fake and so it's a really weird thing.
I think it also shows two that people who are
(03:36):
in charge of these tech companies are taking this like
leisse fair approach to artificial intelligence. Yes, that's a little freaky.
Speaker 4 (03:42):
I don't blame the AI, because that's what it's programmed
to do, is the companies that are implementing Yes, you know,
like that's I think like AI does not have a
mind of its own. And it makes me think about man,
you've heard me talk about this too. It makes me
think about smartphones ten fifteen years ago, right, and it's
just like, oh.
Speaker 2 (03:58):
These are new tools we need to get our.
Speaker 4 (04:00):
Kids on these using these things, and now the generation
that went before us, I feel like I honestly feel
bad for him because it's something that was sort of unproven.
And this feels similar to me that in particular the
fact that it just test your mental health with these
AI chat bots and see what happened. They are experimenting
on the public at large, all in an attempt to
gain as much market share as possible, Like it's an
(04:21):
arms race crash test dummies over here, yes, yeah, And
who's to I mean, who's to benefit? Oh well, some
of these a lot of these companies. Who who has
the risk of being harmed? I think it's the obviously
the most vulnerable, those who are looking for some type
of counseling, but then also kids as well, which really
I don't know, it makes me feel makes me feel
weird about it.
Speaker 2 (04:39):
One of the things that my wife said to when
I asked her about the story was, well, the biggest thing,
the most important part of therapy is human to human interaction,
and it's it's the relationship with the therapist that is
a big part of the life change that takes shirts
for people. And so if you remove the human element,
like you remove the big catalyst that leads to change
for a whole lot of people. So could AI therapy
(05:01):
be potentially helpful for some folks. I'm not gonna say no.
Speaker 4 (05:05):
I could see it being used as a tool, yeah,
but not as a replacement, right right, Like I could
see an office.
Speaker 2 (05:09):
In the fact they're lying to us. It's just weird.
Mandy Moore, that's yeah.
Speaker 4 (05:12):
That's but again, that's like you ask any chat something
like that and it just makes it up and they're
called hallucinations, and it's like, well, no, that's it's just
that's how it's programmed to run. It's going to find
the information to make to satisfy your query. Basically, yeah,
you come up with something, yes, exactly, you talking about
like the relationship with a counselor like that is is embodiment.
(05:32):
It makes me think of a recent article you've seen
Zuck talking about oh ai AI best friends. I can't
hang out with you tonight, by the way, which seems
completely insane. I'm hanging out with my AI best friend now. Essentially,
he's pointing to the loneliness pandemic and how like, well,
actually people want to have more friends. They don't have
the time or ability to So you're gonna have a
virtual an AI best friend.
Speaker 2 (05:51):
Do you think he actually believes us? I don't know
if he actually believes this. That scares me. But maybe
he believes this to the tune of profit and dollar size.
That's that's I think that's what it comes to. That's
super frightening to think that that he thinks that AI
can be a replacement for friendship too.
Speaker 4 (06:06):
Like my good faith sort of argument is that he's
trying to he's just throwing stuff at the wall. He's
trying to innovate. Yeah, he's like, all right, the metaglasses
didn't really work out, so maybe we can double down
on the AI. But going back to like friction rubbing shoulders,
you don't have that with AI right right, Like what
you have is zero friction and so much so that
(06:26):
you're not challenged, Like that's what makes life interesting, like
the fact that we disagree about, Like what what do
comedians make jokes out of? It's the it's the friction,
it's like the tension, it's all the things that take
place in real embodied life, and you are not getting
that when it comes to these AI bots that are
basically it feels weird. Man, it's gonna be like this
sycophantic sort of just replies where they're just patting you
(06:49):
on the back.
Speaker 2 (06:50):
Do you have to like upgrade to get like the
the next level.
Speaker 4 (06:54):
More aware chap bot that's going to push back a
little bit? And then you're thinking, well, forget that. Why
am I paying you to argue with me?
Speaker 2 (07:01):
Yeah? Right, it's a scary dystopian future if Mark Zuckerberg
has his way. And yeah, just these two stories together
this week just have me thinking about, like, this is
why I have mostly avoided artificial intelligence. It's not because
I'm a luddite or don't care about proc technological progress.
It's that I just don't know that it's best for
(07:24):
me to engage with artificial intelligence on a regular basis,
and I think that are some real pitfalls to it. Agreed,
good news by the way on the tech overlord front,
though that will benefit millions of people. A judge just
ruled that the Apple Store, their app store, has been
engaging in anti competitive behavior and that they have to
stop restricting app developers from funneling users to their site
(07:45):
to make a sale. So basically, yeah, Apple was taking
this like blackmail like vig from every purchase that a
customer made of thirty percent, And it wasn't just in
the app. So if you downloaded the app and you
bought something through the app, signed up for a service
or something like that, even that seemed a little shady
to me. But if an app developer wanted you to
click over to its website in order to buy the
(08:07):
service or good there, Apple still wanted their cut. That's
the weird part, which is so dirty and so I
have hated this practice for a long time. It has
enriched Apple, much to the chagrin of many app developers.
It helps Apple's bottom line.
Speaker 4 (08:21):
But specifically Epic so folks might remember this going way
back to when it was Fortnite. Basically it was Epic
Games or whatever wanting to make sure that Apple wasn't
getting a cut of every single Fortnite download even when
it was taking place outside of the App Store.
Speaker 2 (08:34):
I think it was like, I think they're still getting
like twenty seven percent, yeah, something like that, which is
so I think pretty fact Fortnite is back on the
App Store now, or at least they petition to get
back on the App Store. This is one of those
things where maybe you don't notice it in the background,
that Apple is scheming and stealing money from consumers from companies,
and they're going to appeal this ruling, but I'm hoping
(08:56):
that it sticks because what Apple has been doing to
all of us.
Speaker 5 (09:01):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (09:08):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 4 (09:13):
All right, let's get to another listener question. Joel, is
here from a return caller. That's what they call it
in the business, a return caller. This is old school radio,
a listener who has prepared for a sabbatical. She's got
this plan break coming up and wants to know how
she should be investing.
Speaker 1 (09:29):
I met and Joel, this is Yessel from New York City.
I'm calling in with another question. Thanks again for everything
you've been doing for the how to Money community. So
we all know that the stock market indexes are falling
and the financial future is pretty shaky for a lot
of us. I've considered myself someone who can pretty much
keep my emotions out of my investing and saving strategies,
(09:49):
and I've been continuously investing a set amount twice a
month to my brokerage account, and last year I maxed
out my traditional IRA and my step IRA. I have
a fully funded emergency savings account and a fund for
the sabbatical which I've just started. So obviously, pausing on
making money while thinking of investing is kind of making
me nervous. Now, I'd like to hear your thoughts about
(10:12):
how I should go about contributing to my investment accounts
for the time being. What are your thoughts about how
to invest wisely? So should I pause for a period
of time while not touching the accounts? Should I continue
to invest just as I have been, or should I
continue to invest but maybe with less money. Just for context,
I have a Fidelity brokerage account that's invested in the
(10:35):
total US stock market at sixty percent, total international market
at twenty percent, and small cap index twenty percent, and
I have the same allocation breakdown for my step IRA
and traditional IRA. Thanks for your help, guys.
Speaker 2 (10:49):
Yes, we always get to hear from you, and I
love that you've been able to mostly keep your emotions
out of your investing, and that is something. I don't
know how often we talk about that map, but that's
like so important, right, And sometimes that looks like checking
your investments a whole lot less if you're keen to
like opening that for one case statement every month. I
(11:10):
don't know, if you follow the news and you're like, Eh,
doesn't seem like it was a great month, Maybe I
shouldn't look at the potentially substantial lower big number at
the very bottom of that statement for a minute, right,
because recoveries are always a reality. How long it takes
to get there, that's anybody's guess. But yeah, I think
it is easier said than done, but it's a really
(11:32):
important thing to do, basically trust the process, right.
Speaker 4 (11:36):
It's not easy. But like I think that that's I
feel like there's two there's a couple questions going on here,
and that's one of them. Because she's like citing the
unsteady economy and market fluctuations as causing her to second guess.
And while you might rationally know that you should be
continuing to invest like you normally would, what are you
actually doing in reality?
Speaker 5 (11:57):
Right?
Speaker 4 (11:57):
Like, Like A, that doesn't mean it's easy, you know,
you rashally know what it is that you should be doing.
But then the emotions kind of kick in a little
bit and you start getting a little bit nervous, especially
as she's I guess, experiencing some.
Speaker 2 (12:08):
Other life change that she has planned for.
Speaker 4 (12:11):
But still it's I guess it's sort of the confluence
of these multiple things that are taking place that I
think is causing her to second guess her investing.
Speaker 2 (12:18):
And I think it's I think it's helpful to look
at history because I get kind of someone might say, well,
what if someone was coming up to your face with
a and then we're gonna swing it at you, swing
a baseball bad at you, you would duck pretty quickly,
like you would react. And so I think a lot
of times when something fearful appears to be happening, action
seems like the best thing to do, right, It's like,
I'm gonna avoid the bad thing. But when you look
(12:39):
at the history of the stock market, the bad thing,
how long does it impact the stock market? Sometimes it's
for years, right, but even just look at the COVID
bounce back, or like, it didn't take that long for
markets to correct after a substantial drop. So and the
thing is that the worst possible reality is that you're
missing out because you try to avoid the pain, you're
(13:00):
missing out on the comeback, right that stocks will eventually
get around to.
Speaker 4 (13:05):
And aside from even because somebody might hear you say
that and be like, well, yeah, that's because the government
pumped tons of money into the economy to facilitate that
bounce back. But even like looking further back into history,
even looking back to like this is a world that
has endured the dropping of an atomic bomb, multiple atomic bombs, yeah,
and then decades beyond that, the threat of like nuclear annihilation,
(13:27):
like on.
Speaker 2 (13:27):
A global level, But what.
Speaker 4 (13:29):
Did the stock market continue to do? Like these are
things that we continue to move past. It has a
lot to do with I guess who you're reading, like
the headlines that you're looking at, because there's some folks
who say that, like, no, man, it's different this time,
But I think that's always the case, Like is the
classic first, it's the classic line, it's different this time,
But I don't think it's actually different this time. That's
that's I guess the more positive optimistic spence.
Speaker 2 (13:49):
Yeah, well, okay, so you know, we want most people
to continue to invest when markets aren't doing so great,
and I say most people, maybe not everyone and maybe not. Yes, well,
and I'll tell you why. Yes, Well, the average person
is by shares at a lower price. They're buying stocks
on sale when the market is down, which is great.
And we think that most people shouldn't change the thing,
Like most people listening out there right now, if nothing
(14:10):
has changed in your life, you should probably be investing
in the same way that you always have been, you know,
keep on dollar cost averaging into those low cost index
funds or the target date retirement fund of your choice.
But Matt, I think Yessel is in a little bit
of a different scenario. She's about to take a sabbatical,
which means no income. Right. Typically what a sabbatical means
is like, hey, I'm not going to get paid for
(14:31):
potentially an extended period of time, and so I get
the desire to keep investing, especially if you, yes, will
identify yourself as an investor, I'm gonna keep doing the
thing like that's that's what I'm doing. I'm building wealth
from my future. But with no income coming your way
for a little while, investing out of your excess savings,
it might not be the best choice. It could truncate
your sabbatical timeline or cause undue worry and unstress. Right,
(14:55):
it could even prompt you to feel like you had
to find a new job quickly when you're you are
ready to re enter the workforce, and you might have
to settle for something that's not ideal, maybe even that
pays less than you could have got if you'd been
able to hold out. I think investing on savings that
you might need to live off. I just don't know
that that's a great idea.
Speaker 4 (15:14):
Yeah, But I think that's the difference then, too, between
because what she was saying though, is that she not
only has maxed out her retirement accounts, which is great,
not only does she have a fully funded emergency fund,
but then she also has a separate fund for the
actual sabbatical. And that's where I feel like that this
feels to me more like an emotional response as opposed
to the actual dollars, because it looks like it sounds
(15:36):
like she's investing for her future off, way off into
the future, in which case you see the market, like
you said, on sale, and it's just like this is
a great opportunity as opposed to somebody who might be
nearing actual retirement right, not in many retirement, but like
the full blown, real, fully fledged retirement. That's the kind
of scenario where I think someone getting nervous about the
(15:56):
market and finding ways to diversify even more makes a
little bit more sense as opposed to I think the
situation that Yessel finds herself in, which so I guess,
at the end of the day, for me, like, I
don't see you needing to make any sort of change
to how it is that you're investing, assuming that you've
planned to invest because of the fact that you have
had those funds set aside.
Speaker 2 (16:15):
If you truly have enough money to do d all
the above, then keep keep on truck. I mean, don't
don't let.
Speaker 4 (16:21):
The current state of things freak you out exactly. That's
I think, that's I don't know, at least that's what
I'm picking.
Speaker 2 (16:26):
Up from Yesla's question. So we throw out another option though, Matt,
and this might be something It didn't sound like Yessel
had considered this, But I think this might be an
even better use of some of those dollars. Right now,
What if what if instead of investing new dollars, Yessel
consider doing strategic groth conversions instead. So when you're taking
a sabbatical. That means again that you're not making money.
(16:49):
Your income is dropped off a cliff, which means that
any money you do make is going to be taxed
at a much lower rate in all like in all
likelihood than it was the year prior. So you know,
if your single income up to forty eight thousand dollars
is going to be taxed at the twelve percent rate,
that's on top of the standard production. If you're married
filing jointly, any income up to ninety six thousand dollars
(17:11):
is going to receive that more favorable tax treatment. We'll
link to an article that we have on our website
about this. But this is one of those situations where
investing more is one way to go, but investing less,
doing strategic roth conversions and recategorizing that money and never
having to pay tax on it in the future could
(17:31):
be could be a better move than just continuing to
throw more dollars into those accounts. Totally agree.
Speaker 5 (17:38):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (17:45):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet. Well, you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool
you can find up on the website at howtomoney dot com.
Speaker 4 (18:02):
Joe, let's talk about terrafs and inflation, because I don't
know if you heard tariffs were put on hold. I
heard there's a delay that was announced earlier this week,
sending the markets up. A lot of folks may have
felt that as well when it came to their four
one k.
Speaker 2 (18:15):
And actually the market is back up over where it
was on Liberation Day. The market's been soaring.
Speaker 4 (18:21):
It's almost it's almost as if it didn't almost as
if it didn't didn't even happen.
Speaker 2 (18:25):
Joel.
Speaker 4 (18:26):
So, instead of one hundred and forty five percent tariffs
against China, they're down now to thirty percent. China they've
dialed back their terrafts on US goods to ten percent.
And some folks are calling it a trade deal, like
something that they've agreed to, but really it's this. It's
a temporary trade war truce for ninety days and depending
on how things end up shaking out in those talks.
(18:47):
We'll see if they actually hold for that long. I
personally can't imagine.
Speaker 2 (18:51):
I don't know.
Speaker 4 (18:52):
I feel like you've let the cat out of the
bag by walking back to the terraffs. You can't go
back at this point. I would be shocked to see that.
But still regardless, this is good news for businesses, especially
small ones who get a lot of supplies and inventory
from China. But then also for consumers alike if this
does lead to sustained bargains that allows for the free
flow of goods and not services, but of goods across borders, across.
Speaker 2 (19:16):
The Pacific specifically.
Speaker 4 (19:17):
And so it's still hard to know what the political,
what the economic goals are here, but for now, we
are happy to see things moving in the right direction.
I am personally encouraged because to think that, okay, does
the White House actually think that terrorists are the solution?
And to me this is evidence that like, oh, yeah,
it was all a gambit, It was all a part
of the negotiating. What will we actually receive out of
(19:39):
it that will hold? We will see, yeah, But at
least it's not a fundamental disagreement as to how it
is that free trade benefits everybody.
Speaker 2 (19:47):
But there's been more talk about the benefits of free
trade recently from the White House, which was not happening
as a breath of fresh air in the first cost.
That's the thing.
Speaker 4 (19:54):
You can't have those talks if you are also saying
out of one side of your mouth. You can't say
that and then out of the other side of your
mouth saying like oh no, no, no, terras, that's gonna
be what turns America around, you know, like, yeah, I
feel bad for what was it? Letnik the guy that
like man, he kind of he had to play the
bad cop essentially, like he had to be the one
that was just like, nah, guys, this is gonna be
(20:15):
great for everybody.
Speaker 2 (20:17):
And now they're like, all right, buddy, we're done with you. Yeah,
thank you for your service, thank you, peace out, well,
and we're seeing I think I've seen more articles, Matt
about this uptick of financial anxiety that people are experiencing,
and I think part of it is the headlines about tariffs,
the uncertainty that those are creating, the recession predictions. They're
causing some people to really reconsider some of their spending
(20:38):
habits and rain in some of their spending right now
because of the increased anxiety they're feeling. And then those
anecdotes that are being dropped in those articles will those
are backed up by the consumer Sentiment Index, which has plummeted.
People are like, ah, I feel so great about the
state of the economy right now. And I would say
you and I were not against making changes to your
(21:00):
spending habits to prepare for potentially more difficult times, but
we also don't want you living in fear. And so
if you've been like rolling through the money gears, which
you can find out how to money dot com. You
can click start here, you'll see the money gears there. Well,
if you're tracking your spending and your savings are robust
because you've been doing that, You've been investing over months
and years. Just I think I want to highlight the
(21:21):
fact that you shouldn't let vibes upend your life or
make you feel like you have to do more. And
I think sometimes MATP people get in this position where
they're like, I feel uncertain. I don't feel great about
where things are going or where or the state of
the economy right now, and so they just feel like
they have to do more and pinch further. But I
think for a lot of people the antidote to anxiety.
(21:43):
If you're doing the savings, you're doing the debt pay down,
you got that bare bones budget in your pocket, those
are important things. But it's not just that. It's also
about working to dial back on some of those anxious
thoughts and just maybe think of the episode we did,
episode six thirty one with Lindsey Brian Podvin about how
to reduce financial anxiety in our lives, and maybe that's
worth of re listen is a financial therapist. If you
(22:05):
or if you hadn't heard that one before, it's worth
checking that out because especially if you're feeling those if
those feelings are ramping up right now. Obviously the answer
is not to be like, hey, don't be anxious, That's
not what I'm saying, But go listen to that episode
because it might help you develop some skills to kind
of reduce the maybe the incessant anxiety, anxious thoughts that
you might you're feeling.
Speaker 4 (22:25):
You want to talk about something you got in the
mail recently, tell me about it.
Speaker 2 (22:28):
So I'm sure other people have gotten the mail are
like this, But there was a home warranty company sent
me something in the mail saying, hey, protect your stuff.
And actually what they said more than protect your stuff
specifically on the flyer was protect your budget with a
home warr ancy.
Speaker 4 (22:43):
Oh they're tappening into some of our language.
Speaker 2 (22:47):
That's right, that's the term that we would use. When
I saw that you got a plan, you got a
budget for these kind of expenses, I was like, Oh,
that's a pretty smart marketing tactic because most people assume, oh, yeah,
if I get the home warranty and then my air
conditioner you know, bugs out and I've got to replace it. Well,
this home warranty is going to be there to back
me up or if maybe if it just needs repair,
it's going to minimize my repair costs. And so people
(23:08):
might might read that and might say, like, great, sign
me up. What is it five hundred bucks a year?
Speaker 4 (23:13):
Well, I'll probably you know, get more than I'm that
I'm paying to from that home warranty service.
Speaker 2 (23:19):
I don't do it. Truth is no, you know you
shouldn't be doing that. So what's what's so crafty language?
Speaker 5 (23:24):
Man?
Speaker 4 (23:24):
It's the language That's what I want to focus on here,
is because what their home shield is projecting that you
are responsible.
Speaker 2 (23:30):
You are a responsible citizen.
Speaker 4 (23:32):
Of course you have been budgeting for some of the
different expenses you have in your life, but there are
things outside of that that will blow your budget. And
so you read that and you think, oh, yeah, somehow
they have made me feel good about myself.
Speaker 2 (23:44):
Just buy the.
Speaker 4 (23:44):
Language that they've used. Yeah, they're assuming, assuming the best.
And we've talked about the store on the show. But
just what these home warranties do. How one, it's really
hard to get an actual replacement. How sometimes the repairs
can take a really long time, Like they're not very responsive,
assuming that they don't deny the claim, right, Yeah, it's
not good.
Speaker 2 (24:01):
There are typically fees associated with trying to get those
repair people out as well. So what's covered, what's not? Like,
it's just better to have money in your emergency fund
and not trust that one of these home warranty companies
is going to save your bacon and save your budget.
Totally agree.
Speaker 4 (24:16):
Okay, while we're talking about home stuff, I want to
give a quick little update on our Home Edition renovation
because we're getting really close to the end of it,
and recently we were we were talking about home expenses
that kind of stuff, and dude, I am proud to
say that. So we've got an awesome contractor and we
have come under budget. Wow, have you ever heard of
that renovation or audition coming under budget?
Speaker 2 (24:36):
No, it's usually six months longer and what twenty percent over.
Speaker 4 (24:39):
And to cap it off, it was done sooner than
they had originally planned. Man, which granted, like we're still
punch listing stuff, but I'm going by when were we
able to occupy that space? Like, I know that they're
going to be small things here and there that we
have to address, but the overall time frame and as
far as coming under budget, not just like fifty bucks
or something like a significant amount, significant enough for me
(24:59):
to take note, and I will give our contractor his
due right. The fact that they were able to get
some quotes and to realistically plan for what some of
these expenses are, right, I think that's a big part
of it. But also Kate and I at every chance
we could purchase things ourselves as opposed to letting the
contractor purchase them going through the usual distributors, sources, different
(25:22):
companies that they typically use.
Speaker 2 (25:23):
Could you're able to get better deals?
Speaker 4 (25:24):
Yes, to get better deals and so at every I mean,
because they are just constantly buying stuff. They find it,
they order it, it's shipped of the house they're looking
to make And that's a big part of how things
are able to move quickly, right. But the ability to
save one hundred bucks here, one hundred bucks there, five
hundred bucks here, five hundred bucks there. I think that
also had a lot to do with why we were
able to save some money. And specifically, I will say
(25:46):
one of those things that we purchased ourselves, that was
one of the big items. So we built out to a studio,
an art studio for Kate. We wanted to get some
counters in there. You've seen it looks pretty solid, right,
and a we didn't go with like the fancier counter
company that the contractors used to going to, so we
went to more.
Speaker 2 (26:04):
I don't know, maybe more of a discount the big
loss that's the fly of counter companies.
Speaker 4 (26:08):
But then on top of that, we we searched the yard,
the lot or whatever where they've got all the slabs,
and we found this piece of stone that looked awesome,
but you could tell had been sitting there for a
long time. It's kind of busted up on the sides.
It's real dirty, look like even there's some staining, and
they're like, oh no, no, no, all that will come out,
and in fact, we'll give you a discount as well.
And so we're like, all right, they cleaned it up,
(26:29):
and guess what, some of that staining didn't come out,
and so we were able to talk them down even
more and it ended up paying like less than half
of what that stone per square Originally it was like
one thirty a square foot and one thirty five, and
we got that junk for sixty dollars a square foot. Great,
I mean that's like a two thousand you know, one
fifteen hundred, two thousand dollars.
Speaker 2 (26:47):
Wigs, Yeah right there just one thing.
Speaker 4 (26:49):
Yeah, So it's a little bit more of a hassle
for folks to do some of that work, right, you
placed in those orders, but like it's not too difficult
to search some of the different lighting fixtures or plumbing.
Speaker 2 (26:59):
Fixtures to to save a buck. Well, your patial in
there East Wing looks amazing.
Speaker 4 (27:03):
It's uh, we're finally getting to enjoy it, which is
it's a ton of fun.
Speaker 2 (27:07):
That's nice. All right, We've got more to get to
on today's show.
Speaker 5 (27:11):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (27:17):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 2 (27:22):
Let's get to the Facebook question of the week. This
one comes from Matthew, who said, my wife was about
to make a contribution to her roth ira, but she
didn't make any money herself, as she stays at home
with our son. Does my income count as her income?
And can she invest in a roth ira? Or am
I the only one able to invest in a roth
ira as I have income and not her classic.
Speaker 4 (27:45):
I think Matthews isn't the only listener Joel who's been
confused by this because you're told that to invest in
a roth ira, we may have even said this today,
you have to have earned income, and so your wife
isn't currently working, she doesn't have earned it seems like
she would be ineligible, But of course that is not
the case, because these things are never quite as straightforward
(28:07):
as they seem. The IRS recognizes the shortcomings of that rule.
Your wife is eligible to contribute to a roth ira
in the form of what's called a spousal wrath. So
that's the wrath account that we rarely talk about, Joel,
even if she didn't actually personally earn a dime in
that given year.
Speaker 2 (28:23):
True. Yeah, that is specifically the perk when you are
married filing jointly. So just remember that your total agi
your justin gross income would have to be above what
you contribute both accounts, which I'm assuming it is. I'm
assuming that you're making more than fourteen thousand dollars a year.
Seems reasonable, you know, making contributions to one for you
(28:45):
and one for her. That's obviously a really smart move.
We want couples across the country to continue striving towards
that goal of maxing out two wrath iras every single year.
And the fact is that even if one person in
the house stays home, they are uh, they're doing a
valuable service to the family, and they also deserve to
and are allowed to legally contribute to that wroth. So
(29:08):
what if it's a throuttle jewel. That's a good good
question is twenty one thousand dollars can you marry? I
don't think you can married.
Speaker 4 (29:15):
Filing multiples like no, No, I don't think that ascounts that.
Don't forget in the back end of your brokerage account
or in your brokerage where you do your investing, not
your brokerage account, you're not going to actually see something
that's that's labeled or titled, or there's not going to
be a link that says open spousal WROTH. You just
contribute to a regular old roth IRA for her like
you would for yourself. There's no actual special designation. This
(29:37):
isn't some sort of special account. It's that's how it's
more of a process as opposed to like an actual account.
Speaker 2 (29:42):
It's a colloquial way of talking about it, even though
when you go in the back end of the account
to open it or to contribute to it, that's not
how it's going to be label Yeah, you're not going
to find that there.
Speaker 4 (29:51):
So I agree that maxing out two roths year and
year out, if possible, that's going to garnery you some
incredible financial freedom over the decades.
Speaker 2 (29:59):
Get at Matthew Joel.
Speaker 4 (30:00):
Let's hear from another poster from Anonymous who writes, one
of my financial fails is having my e fund in
a credit union savings account earning less than one percent.
Speaker 2 (30:11):
I just threw up a little.
Speaker 4 (30:13):
I know I need to move to a high yield
savings account. Something about an online bank versus a brick
and mortar local credit union seems scary for an emergency fund,
even though I know we could transfer as needed. Has
anyone else had this hesitancy?
Speaker 2 (30:28):
What you think, Joel? Have you ever felt this? Honestly? Now,
I had a roadblock. I have zero need for brick
and mortar institutions or some institutions, but not banks in
my life. And I guess I get why some people
might feel, especially like if you own a small business,
you're regularly making deposits of that physical bank or something
like that, you might be reticent to kind of do
(30:51):
away from that sort of Oh, I go to my
bank to do things relationship. But I think most people
don't have any need for it, And so first off,
I do want to stress that we love credit unions right,
but also they're better for borrowing than they are for
saving most of the time. Need not alone. Credit union
is a great place to go mortgage or a helock.
(31:13):
I would look to a credit union first. A high
old savings account that, though I would say is best
done at an online bank They're different tools for different purposes,
and I want to use the right tool for the
right problem. Our favorite online banks are typically although maybe
not always, but typically better for savings purposes. I would
love to see folks you utilizing both of these institutions
(31:35):
for what they do best. I have a relationship with
a credit union, I have had one for a decade
and a half, and I will continue to have that relationship.
I've had a relationship with an online a high old
savings account at an online bank for a decade and
a half two probably at this point, and I maybe longer,
and I will just continue to have both those relationships
and they will just serve me for different needs that
(31:57):
I have. Totally. Yeah, it's also.
Speaker 4 (31:59):
Important that even in an emergency, you don't typically need
to pull cash out like right away, like right now. Instead,
you can use a credit card, which buys you time
right like you still have the cash on hand in
your account to back it up. But I can't think
of too many money financial emergencies that I've encountered that
required me to get a load of cash from a
bank as soon as humanly possible. And then on top
(32:21):
of that, our favorite online banks, they tend to have
good fee free ATM networks as well, So if you
actually are in a situation where you do need the
cash on the spot, you should be able to access
at the very least hundreds of dollars in a day.
The branch doesn't even need to be open, like you
just go to the ATM, that's a part of the network.
That being said, if you do, I think another way
(32:42):
to alleviate this problem would be just to have some
cash at home, because if you do feel that there's
some comfort in having that, I don't know, like literally
one thousand bucks, a couple thousand dollars hidden away somewhere
in a secure spot. If that allows you to then
move the thousands of dollars of your actual emergency fund
over to a high old savings account where you are
experiencing or earning interest, I think that could be a
(33:05):
way to hide your cake and eat it too.
Speaker 2 (33:07):
That's why you have all those gold bars buried in
the backyard exactly just in case, right, Yes, no, you
never know what's going to happen. It's it's so unlikely
for that. Actually, the crazy embers what if the Last
of Us becomes real life event?
Speaker 4 (33:18):
To take place, it's far more dramatic but very unlikely
to happen. Whereas inflation and your saving is getting eaten
away by that inflation, it is much much less dramatic
but very likely. That is very likely to happen. So
we want you to be prepared for both, I guess
in a way, but for you to not pay the
financial price for having all of your cash in a
(33:40):
local credit union branch.
Speaker 2 (33:42):
Yeah, totally okay. Thank you as always for listening to
the show. We appreciate your time and attention. You can
always find more money saving information up on our website
at howtomoney dot com. We'll see you back here next week.
You've been listening to how to Money with Joel Larsgard.
You can always hear us live on KFI A six
forty twelve pm to two pm on Sunday and anytime
(34:03):
on demand on the iHeartRadio app.
Kay.
Speaker 2 (00:01):
If I am six forty you're listening to how to
Money on demand on the iHeartRadio app.
Speaker 3 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel Lar's Guard and Matt Aultmis.
Speaker 2 (01:18):
I Am six forty live everywhere on the iHeartRadio app.
Speaker 4 (01:21):
This is how to Money. I'm your host, Joel Larsgard
and I am the other host, Matt Altmix. And if
you have a money question, we'll send it our way.
All you have to do is record your question on
the voice memo app there on your phone and send
it over via email. You can find the simple instructions
at howdomoney dot com.
Speaker 2 (01:38):
Forward slash ask. Now it's time for the ludicrous headline
of the week. This one comes from four oh four
Media and the headline reads Instagram's AI chatbots lie about
being licensed therapists. Dirty AI mad it lying to us.
Speaker 4 (01:51):
But this one really got under your skin, but also
the skin of your wife.
Speaker 2 (01:54):
Yes, I know. I told her about this and she
was like, yeah, let me tell you why this sucks.
So my wife literally just graduated this past weekend. Super
pumped for her. She is now officially a licensed therapist,
and the Harvard Business Review finds that the number one
use case right now for artificial intelligence. You would think
it's cheating on writing papers, but no, it's therapy and companionship. Well,
(02:16):
I do think that they are allow of there's a
lot of students outre who are cheating on Weren't you
shocked though, that therapy and companionship actually outranked? That is
a use for artificial intelligence from a I mean it
makes sense.
Speaker 4 (02:26):
I guess from an official like as a whole, as
an aggregate, Are there more students cheating on papers as
opposed to services being offered?
Speaker 2 (02:34):
Yes, I do think that that's certainly the case. So
maybe they didn't correct count the data correctly. I don't know,
but it's interesting that it's moving. Artificial intelligence is really
moving that hard into into this space. That was it
the movie Her back in the day with Scarlett Johansen
was the voice of the AI. That's like becoming real
life before our very eyes, and so like the lines
(02:54):
between what's real and what's not are being blurred. And
Psychology Today wrote about this on they said, hey, chatbots
lack nuanced empathy. They miss nonverbal cues, they avoid conflict,
and that actually can lead to worsening mental health risks.
So and on top of that, the fact that the
chatbots are trying to help in doing so poorly. I
think that's one thing. But they're trying to pass as
(03:16):
real humans with degrees and credentials. So if you push
back and you say, hey, where did you go to school?
What's your degree in? Doyn't make up lies that's yeah,
and tell you stuff like well, I went to this
school and here's my their licensed therapy therapy number, and
it's all fake and so it's a really weird thing.
I think it also shows two that people who are
(03:36):
in charge of these tech companies are taking this like
leisse fair approach to artificial intelligence. Yes, that's a little freaky.
Speaker 4 (03:42):
I don't blame the AI, because that's what it's programmed
to do, is the companies that are implementing Yes, you know,
like that's I think like AI does not have a
mind of its own. And it makes me think about man,
you've heard me talk about this too. It makes me
think about smartphones ten fifteen years ago, right, and it's
just like, oh.
Speaker 2 (03:58):
These are new tools we need to get our.
Speaker 4 (04:00):
Kids on these using these things, and now the generation
that went before us, I feel like I honestly feel
bad for him because it's something that was sort of unproven.
And this feels similar to me that in particular the
fact that it just test your mental health with these
AI chat bots and see what happened. They are experimenting
on the public at large, all in an attempt to
gain as much market share as possible, Like it's an
(04:21):
arms race crash test dummies over here, yes, yeah, And
who's to I mean, who's to benefit? Oh well, some
of these a lot of these companies. Who who has
the risk of being harmed? I think it's the obviously
the most vulnerable, those who are looking for some type
of counseling, but then also kids as well, which really
I don't know, it makes me feel makes me feel
weird about it.
Speaker 2 (04:39):
One of the things that my wife said to when
I asked her about the story was, well, the biggest thing,
the most important part of therapy is human to human interaction,
and it's it's the relationship with the therapist that is
a big part of the life change that takes shirts
for people. And so if you remove the human element,
like you remove the big catalyst that leads to change
for a whole lot of people. So could AI therapy
(05:01):
be potentially helpful for some folks. I'm not gonna say no.
Speaker 4 (05:05):
I could see it being used as a tool, yeah,
but not as a replacement, right right, Like I could
see an office.
Speaker 2 (05:09):
In the fact they're lying to us. It's just weird.
Mandy Moore, that's yeah.
Speaker 4 (05:12):
That's but again, that's like you ask any chat something
like that and it just makes it up and they're
called hallucinations, and it's like, well, no, that's it's just
that's how it's programmed to run. It's going to find
the information to make to satisfy your query. Basically, yeah,
you come up with something, yes, exactly, you talking about
like the relationship with a counselor like that is is embodiment.
(05:32):
It makes me think of a recent article you've seen
Zuck talking about oh ai AI best friends. I can't
hang out with you tonight, by the way, which seems
completely insane. I'm hanging out with my AI best friend now. Essentially,
he's pointing to the loneliness pandemic and how like, well,
actually people want to have more friends. They don't have
the time or ability to So you're gonna have a
virtual an AI best friend.
Speaker 2 (05:51):
Do you think he actually believes us? I don't know
if he actually believes this. That scares me. But maybe
he believes this to the tune of profit and dollar size.
That's that's I think that's what it comes to. That's
super frightening to think that that he thinks that AI
can be a replacement for friendship too.
Speaker 4 (06:06):
Like my good faith sort of argument is that he's
trying to he's just throwing stuff at the wall. He's
trying to innovate. Yeah, he's like, all right, the metaglasses
didn't really work out, so maybe we can double down
on the AI. But going back to like friction rubbing shoulders,
you don't have that with AI right right, Like what
you have is zero friction and so much so that
(06:26):
you're not challenged, Like that's what makes life interesting, like
the fact that we disagree about, Like what what do
comedians make jokes out of? It's the it's the friction,
it's like the tension, it's all the things that take
place in real embodied life, and you are not getting
that when it comes to these AI bots that are
basically it feels weird. Man, it's gonna be like this
sycophantic sort of just replies where they're just patting you
(06:49):
on the back.
Speaker 2 (06:50):
Do you have to like upgrade to get like the
the next level.
Speaker 4 (06:54):
More aware chap bot that's going to push back a
little bit? And then you're thinking, well, forget that. Why
am I paying you to argue with me?
Speaker 2 (07:01):
Yeah? Right, it's a scary dystopian future if Mark Zuckerberg
has his way. And yeah, just these two stories together
this week just have me thinking about, like, this is
why I have mostly avoided artificial intelligence. It's not because
I'm a luddite or don't care about proc technological progress.
It's that I just don't know that it's best for
(07:24):
me to engage with artificial intelligence on a regular basis,
and I think that are some real pitfalls to it. Agreed,
good news by the way on the tech overlord front,
though that will benefit millions of people. A judge just
ruled that the Apple Store, their app store, has been
engaging in anti competitive behavior and that they have to
stop restricting app developers from funneling users to their site
(07:45):
to make a sale. So basically, yeah, Apple was taking
this like blackmail like vig from every purchase that a
customer made of thirty percent, And it wasn't just in
the app. So if you downloaded the app and you
bought something through the app, signed up for a service
or something like that, even that seemed a little shady
to me. But if an app developer wanted you to
click over to its website in order to buy the
(08:07):
service or good there, Apple still wanted their cut. That's
the weird part, which is so dirty and so I
have hated this practice for a long time. It has
enriched Apple, much to the chagrin of many app developers.
It helps Apple's bottom line.
Speaker 4 (08:21):
But specifically Epic so folks might remember this going way
back to when it was Fortnite. Basically it was Epic
Games or whatever wanting to make sure that Apple wasn't
getting a cut of every single Fortnite download even when
it was taking place outside of the App Store.
Speaker 2 (08:34):
I think it was like, I think they're still getting
like twenty seven percent, yeah, something like that, which is
so I think pretty fact Fortnite is back on the
App Store now, or at least they petition to get
back on the App Store. This is one of those
things where maybe you don't notice it in the background,
that Apple is scheming and stealing money from consumers from companies,
and they're going to appeal this ruling, but I'm hoping
(08:56):
that it sticks because what Apple has been doing to
all of us.
Speaker 5 (09:01):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (09:08):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 4 (09:13):
All right, let's get to another listener question. Joel, is
here from a return caller. That's what they call it
in the business, a return caller. This is old school radio,
a listener who has prepared for a sabbatical. She's got
this plan break coming up and wants to know how
she should be investing.
Speaker 1 (09:29):
I met and Joel, this is Yessel from New York City.
I'm calling in with another question. Thanks again for everything
you've been doing for the how to Money community. So
we all know that the stock market indexes are falling
and the financial future is pretty shaky for a lot
of us. I've considered myself someone who can pretty much
keep my emotions out of my investing and saving strategies,
(09:49):
and I've been continuously investing a set amount twice a
month to my brokerage account, and last year I maxed
out my traditional IRA and my step IRA. I have
a fully funded emergency savings account and a fund for
the sabbatical which I've just started. So obviously, pausing on
making money while thinking of investing is kind of making
me nervous. Now, I'd like to hear your thoughts about
(10:12):
how I should go about contributing to my investment accounts
for the time being. What are your thoughts about how
to invest wisely? So should I pause for a period
of time while not touching the accounts? Should I continue
to invest just as I have been, or should I
continue to invest but maybe with less money. Just for context,
I have a Fidelity brokerage account that's invested in the
(10:35):
total US stock market at sixty percent, total international market
at twenty percent, and small cap index twenty percent, and
I have the same allocation breakdown for my step IRA
and traditional IRA. Thanks for your help, guys.
Speaker 2 (10:49):
Yes, we always get to hear from you, and I
love that you've been able to mostly keep your emotions
out of your investing, and that is something. I don't
know how often we talk about that map, but that's
like so important, right, And sometimes that looks like checking
your investments a whole lot less if you're keen to
like opening that for one case statement every month. I
(11:10):
don't know, if you follow the news and you're like, Eh,
doesn't seem like it was a great month, Maybe I
shouldn't look at the potentially substantial lower big number at
the very bottom of that statement for a minute, right,
because recoveries are always a reality. How long it takes
to get there, that's anybody's guess. But yeah, I think
it is easier said than done, but it's a really
(11:32):
important thing to do, basically trust the process, right.
Speaker 4 (11:36):
It's not easy. But like I think that that's I
feel like there's two there's a couple questions going on here,
and that's one of them. Because she's like citing the
unsteady economy and market fluctuations as causing her to second guess.
And while you might rationally know that you should be
continuing to invest like you normally would, what are you
actually doing in reality?
Speaker 5 (11:57):
Right?
Speaker 4 (11:57):
Like, Like A, that doesn't mean it's easy, you know,
you rashally know what it is that you should be doing.
But then the emotions kind of kick in a little
bit and you start getting a little bit nervous, especially
as she's I guess, experiencing some.
Speaker 2 (12:08):
Other life change that she has planned for.
Speaker 4 (12:11):
But still it's I guess it's sort of the confluence
of these multiple things that are taking place that I
think is causing her to second guess her investing.
Speaker 2 (12:18):
And I think it's I think it's helpful to look
at history because I get kind of someone might say, well,
what if someone was coming up to your face with
a and then we're gonna swing it at you, swing
a baseball bad at you, you would duck pretty quickly,
like you would react. And so I think a lot
of times when something fearful appears to be happening, action
seems like the best thing to do, right, It's like,
I'm gonna avoid the bad thing. But when you look
(12:39):
at the history of the stock market, the bad thing,
how long does it impact the stock market? Sometimes it's
for years, right, but even just look at the COVID
bounce back, or like, it didn't take that long for
markets to correct after a substantial drop. So and the
thing is that the worst possible reality is that you're
missing out because you try to avoid the pain, you're
(13:00):
missing out on the comeback, right that stocks will eventually
get around to.
Speaker 4 (13:05):
And aside from even because somebody might hear you say
that and be like, well, yeah, that's because the government
pumped tons of money into the economy to facilitate that
bounce back. But even like looking further back into history,
even looking back to like this is a world that
has endured the dropping of an atomic bomb, multiple atomic bombs, yeah,
and then decades beyond that, the threat of like nuclear annihilation,
(13:27):
like on.
Speaker 2 (13:27):
A global level, But what.
Speaker 4 (13:29):
Did the stock market continue to do? Like these are
things that we continue to move past. It has a
lot to do with I guess who you're reading, like
the headlines that you're looking at, because there's some folks
who say that, like, no, man, it's different this time,
But I think that's always the case, Like is the
classic first, it's the classic line, it's different this time,
But I don't think it's actually different this time. That's
that's I guess the more positive optimistic spence.
Speaker 2 (13:49):
Yeah, well, okay, so you know, we want most people
to continue to invest when markets aren't doing so great,
and I say most people, maybe not everyone and maybe not. Yes, well,
and I'll tell you why. Yes, Well, the average person
is by shares at a lower price. They're buying stocks
on sale when the market is down, which is great.
And we think that most people shouldn't change the thing,
Like most people listening out there right now, if nothing
(14:10):
has changed in your life, you should probably be investing
in the same way that you always have been, you know,
keep on dollar cost averaging into those low cost index
funds or the target date retirement fund of your choice.
But Matt, I think Yessel is in a little bit
of a different scenario. She's about to take a sabbatical,
which means no income. Right. Typically what a sabbatical means
is like, hey, I'm not going to get paid for
(14:31):
potentially an extended period of time, and so I get
the desire to keep investing, especially if you, yes, will
identify yourself as an investor, I'm gonna keep doing the
thing like that's that's what I'm doing. I'm building wealth
from my future. But with no income coming your way
for a little while, investing out of your excess savings,
it might not be the best choice. It could truncate
your sabbatical timeline or cause undue worry and unstress. Right,
(14:55):
it could even prompt you to feel like you had
to find a new job quickly when you're you are
ready to re enter the workforce, and you might have
to settle for something that's not ideal, maybe even that
pays less than you could have got if you'd been
able to hold out. I think investing on savings that
you might need to live off. I just don't know
that that's a great idea.
Speaker 4 (15:14):
Yeah, But I think that's the difference then, too, between
because what she was saying though, is that she not
only has maxed out her retirement accounts, which is great,
not only does she have a fully funded emergency fund,
but then she also has a separate fund for the
actual sabbatical. And that's where I feel like that this
feels to me more like an emotional response as opposed
to the actual dollars, because it looks like it sounds
(15:36):
like she's investing for her future off, way off into
the future, in which case you see the market, like
you said, on sale, and it's just like this is
a great opportunity as opposed to somebody who might be
nearing actual retirement right, not in many retirement, but like
the full blown, real, fully fledged retirement. That's the kind
of scenario where I think someone getting nervous about the
(15:56):
market and finding ways to diversify even more makes a
little bit more sense as opposed to I think the
situation that Yessel finds herself in, which so I guess,
at the end of the day, for me, like, I
don't see you needing to make any sort of change
to how it is that you're investing, assuming that you've
planned to invest because of the fact that you have
had those funds set aside.
Speaker 2 (16:15):
If you truly have enough money to do d all
the above, then keep keep on truck. I mean, don't
don't let.
Speaker 4 (16:21):
The current state of things freak you out exactly. That's
I think, that's I don't know, at least that's what
I'm picking.
Speaker 2 (16:26):
Up from Yesla's question. So we throw out another option though, Matt,
and this might be something It didn't sound like Yessel
had considered this, But I think this might be an
even better use of some of those dollars. Right now,
What if what if instead of investing new dollars, Yessel
consider doing strategic groth conversions instead. So when you're taking
a sabbatical. That means again that you're not making money.
(16:49):
Your income is dropped off a cliff, which means that
any money you do make is going to be taxed
at a much lower rate in all like in all
likelihood than it was the year prior. So you know,
if your single income up to forty eight thousand dollars
is going to be taxed at the twelve percent rate,
that's on top of the standard production. If you're married
filing jointly, any income up to ninety six thousand dollars
(17:11):
is going to receive that more favorable tax treatment. We'll
link to an article that we have on our website
about this. But this is one of those situations where
investing more is one way to go, but investing less,
doing strategic roth conversions and recategorizing that money and never
having to pay tax on it in the future could
(17:31):
be could be a better move than just continuing to
throw more dollars into those accounts. Totally agree.
Speaker 5 (17:38):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (17:45):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet. Well, you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool
you can find up on the website at howtomoney dot com.
Speaker 4 (18:02):
Joe, let's talk about terrafs and inflation, because I don't
know if you heard tariffs were put on hold. I
heard there's a delay that was announced earlier this week,
sending the markets up. A lot of folks may have
felt that as well when it came to their four
one k.
Speaker 2 (18:15):
And actually the market is back up over where it
was on Liberation Day. The market's been soaring.
Speaker 4 (18:21):
It's almost it's almost as if it didn't almost as
if it didn't didn't even happen.
Speaker 2 (18:25):
Joel.
Speaker 4 (18:26):
So, instead of one hundred and forty five percent tariffs
against China, they're down now to thirty percent. China they've
dialed back their terrafts on US goods to ten percent.
And some folks are calling it a trade deal, like
something that they've agreed to, but really it's this. It's
a temporary trade war truce for ninety days and depending
on how things end up shaking out in those talks.
(18:47):
We'll see if they actually hold for that long. I
personally can't imagine.
Speaker 2 (18:51):
I don't know.
Speaker 4 (18:52):
I feel like you've let the cat out of the
bag by walking back to the terraffs. You can't go
back at this point. I would be shocked to see that.
But still regardless, this is good news for businesses, especially
small ones who get a lot of supplies and inventory
from China. But then also for consumers alike if this
does lead to sustained bargains that allows for the free
flow of goods and not services, but of goods across borders, across.
Speaker 2 (19:16):
The Pacific specifically.
Speaker 4 (19:17):
And so it's still hard to know what the political,
what the economic goals are here, but for now, we
are happy to see things moving in the right direction.
I am personally encouraged because to think that, okay, does
the White House actually think that terrorists are the solution?
And to me this is evidence that like, oh, yeah,
it was all a gambit, It was all a part
of the negotiating. What will we actually receive out of
(19:39):
it that will hold? We will see, yeah, But at
least it's not a fundamental disagreement as to how it
is that free trade benefits everybody.
Speaker 2 (19:47):
But there's been more talk about the benefits of free
trade recently from the White House, which was not happening
as a breath of fresh air in the first cost.
That's the thing.
Speaker 4 (19:54):
You can't have those talks if you are also saying
out of one side of your mouth. You can't say
that and then out of the other side of your
mouth saying like oh no, no, no, terras, that's gonna
be what turns America around, you know, like, yeah, I
feel bad for what was it? Letnik the guy that
like man, he kind of he had to play the
bad cop essentially, like he had to be the one
that was just like, nah, guys, this is gonna be
(20:15):
great for everybody.
Speaker 2 (20:17):
And now they're like, all right, buddy, we're done with you. Yeah,
thank you for your service, thank you, peace out, well,
and we're seeing I think I've seen more articles, Matt
about this uptick of financial anxiety that people are experiencing,
and I think part of it is the headlines about tariffs,
the uncertainty that those are creating, the recession predictions. They're
causing some people to really reconsider some of their spending
(20:38):
habits and rain in some of their spending right now
because of the increased anxiety they're feeling. And then those
anecdotes that are being dropped in those articles will those
are backed up by the consumer Sentiment Index, which has plummeted.
People are like, ah, I feel so great about the
state of the economy right now. And I would say
you and I were not against making changes to your
(21:00):
spending habits to prepare for potentially more difficult times, but
we also don't want you living in fear. And so
if you've been like rolling through the money gears, which
you can find out how to money dot com. You
can click start here, you'll see the money gears there. Well,
if you're tracking your spending and your savings are robust
because you've been doing that, You've been investing over months
and years. Just I think I want to highlight the
(21:21):
fact that you shouldn't let vibes upend your life or
make you feel like you have to do more. And
I think sometimes MATP people get in this position where
they're like, I feel uncertain. I don't feel great about
where things are going or where or the state of
the economy right now, and so they just feel like
they have to do more and pinch further. But I
think for a lot of people the antidote to anxiety.
(21:43):
If you're doing the savings, you're doing the debt pay down,
you got that bare bones budget in your pocket, those
are important things. But it's not just that. It's also
about working to dial back on some of those anxious
thoughts and just maybe think of the episode we did,
episode six thirty one with Lindsey Brian Podvin about how
to reduce financial anxiety in our lives, and maybe that's
worth of re listen is a financial therapist. If you
(22:05):
or if you hadn't heard that one before, it's worth
checking that out because especially if you're feeling those if
those feelings are ramping up right now. Obviously the answer
is not to be like, hey, don't be anxious, That's
not what I'm saying, But go listen to that episode
because it might help you develop some skills to kind
of reduce the maybe the incessant anxiety, anxious thoughts that
you might you're feeling.
Speaker 4 (22:25):
You want to talk about something you got in the
mail recently, tell me about it.
Speaker 2 (22:28):
So I'm sure other people have gotten the mail are
like this, But there was a home warranty company sent
me something in the mail saying, hey, protect your stuff.
And actually what they said more than protect your stuff
specifically on the flyer was protect your budget with a
home warr ancy.
Speaker 4 (22:43):
Oh they're tappening into some of our language.
Speaker 2 (22:47):
That's right, that's the term that we would use. When
I saw that you got a plan, you got a
budget for these kind of expenses, I was like, Oh,
that's a pretty smart marketing tactic because most people assume, oh, yeah,
if I get the home warranty and then my air
conditioner you know, bugs out and I've got to replace it. Well,
this home warranty is going to be there to back
me up or if maybe if it just needs repair,
it's going to minimize my repair costs. And so people
(23:08):
might might read that and might say, like, great, sign
me up. What is it five hundred bucks a year?
Speaker 4 (23:13):
Well, I'll probably you know, get more than I'm that
I'm paying to from that home warranty service.
Speaker 2 (23:19):
I don't do it. Truth is no, you know you
shouldn't be doing that. So what's what's so crafty language?
Speaker 5 (23:24):
Man?
Speaker 4 (23:24):
It's the language That's what I want to focus on here,
is because what their home shield is projecting that you
are responsible.
Speaker 2 (23:30):
You are a responsible citizen.
Speaker 4 (23:32):
Of course you have been budgeting for some of the
different expenses you have in your life, but there are
things outside of that that will blow your budget. And
so you read that and you think, oh, yeah, somehow
they have made me feel good about myself.
Speaker 2 (23:44):
Just buy the.
Speaker 4 (23:44):
Language that they've used. Yeah, they're assuming, assuming the best.
And we've talked about the store on the show. But
just what these home warranties do. How one, it's really
hard to get an actual replacement. How sometimes the repairs
can take a really long time, Like they're not very responsive,
assuming that they don't deny the claim, right, Yeah, it's
not good.
Speaker 2 (24:01):
There are typically fees associated with trying to get those
repair people out as well. So what's covered, what's not? Like,
it's just better to have money in your emergency fund
and not trust that one of these home warranty companies
is going to save your bacon and save your budget.
Totally agree.
Speaker 4 (24:16):
Okay, while we're talking about home stuff, I want to
give a quick little update on our Home Edition renovation
because we're getting really close to the end of it,
and recently we were we were talking about home expenses
that kind of stuff, and dude, I am proud to
say that. So we've got an awesome contractor and we
have come under budget. Wow, have you ever heard of
that renovation or audition coming under budget?
Speaker 2 (24:36):
No, it's usually six months longer and what twenty percent over.
Speaker 4 (24:39):
And to cap it off, it was done sooner than
they had originally planned. Man, which granted, like we're still
punch listing stuff, but I'm going by when were we
able to occupy that space? Like, I know that they're
going to be small things here and there that we
have to address, but the overall time frame and as
far as coming under budget, not just like fifty bucks
or something like a significant amount, significant enough for me
(24:59):
to take note, and I will give our contractor his
due right. The fact that they were able to get
some quotes and to realistically plan for what some of
these expenses are, right, I think that's a big part
of it. But also Kate and I at every chance
we could purchase things ourselves as opposed to letting the
contractor purchase them going through the usual distributors, sources, different
(25:22):
companies that they typically use.
Speaker 2 (25:23):
Could you're able to get better deals?
Speaker 4 (25:24):
Yes, to get better deals and so at every I mean,
because they are just constantly buying stuff. They find it,
they order it, it's shipped of the house they're looking
to make And that's a big part of how things
are able to move quickly, right. But the ability to
save one hundred bucks here, one hundred bucks there, five
hundred bucks here, five hundred bucks there. I think that
also had a lot to do with why we were
able to save some money. And specifically, I will say
(25:46):
one of those things that we purchased ourselves, that was
one of the big items. So we built out to a studio,
an art studio for Kate. We wanted to get some
counters in there. You've seen it looks pretty solid, right,
and a we didn't go with like the fancier counter
company that the contractors used to going to, so we
went to more.
Speaker 2 (26:04):
I don't know, maybe more of a discount the big
loss that's the fly of counter companies.
Speaker 4 (26:08):
But then on top of that, we we searched the yard,
the lot or whatever where they've got all the slabs,
and we found this piece of stone that looked awesome,
but you could tell had been sitting there for a
long time. It's kind of busted up on the sides.
It's real dirty, look like even there's some staining, and
they're like, oh no, no, no, all that will come out,
and in fact, we'll give you a discount as well.
And so we're like, all right, they cleaned it up,
(26:29):
and guess what, some of that staining didn't come out,
and so we were able to talk them down even
more and it ended up paying like less than half
of what that stone per square Originally it was like
one thirty a square foot and one thirty five, and
we got that junk for sixty dollars a square foot. Great,
I mean that's like a two thousand you know, one
fifteen hundred, two thousand dollars.
Speaker 2 (26:47):
Wigs, Yeah right there just one thing.
Speaker 4 (26:49):
Yeah, So it's a little bit more of a hassle
for folks to do some of that work, right, you
placed in those orders, but like it's not too difficult
to search some of the different lighting fixtures or plumbing.
Speaker 2 (26:59):
Fixtures to to save a buck. Well, your patial in
there East Wing looks amazing.
Speaker 4 (27:03):
It's uh, we're finally getting to enjoy it, which is
it's a ton of fun.
Speaker 2 (27:07):
That's nice. All right, We've got more to get to
on today's show.
Speaker 5 (27:11):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 4 (27:17):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 2 (27:22):
Let's get to the Facebook question of the week. This
one comes from Matthew, who said, my wife was about
to make a contribution to her roth ira, but she
didn't make any money herself, as she stays at home
with our son. Does my income count as her income?
And can she invest in a roth ira? Or am
I the only one able to invest in a roth
ira as I have income and not her classic.
Speaker 4 (27:45):
I think Matthews isn't the only listener Joel who's been
confused by this because you're told that to invest in
a roth ira, we may have even said this today,
you have to have earned income, and so your wife
isn't currently working, she doesn't have earned it seems like
she would be ineligible, But of course that is not
the case, because these things are never quite as straightforward
(28:07):
as they seem. The IRS recognizes the shortcomings of that rule.
Your wife is eligible to contribute to a roth ira
in the form of what's called a spousal wrath. So
that's the wrath account that we rarely talk about, Joel,
even if she didn't actually personally earn a dime in
that given year.
Speaker 2 (28:23):
True. Yeah, that is specifically the perk when you are
married filing jointly. So just remember that your total agi
your justin gross income would have to be above what
you contribute both accounts, which I'm assuming it is. I'm
assuming that you're making more than fourteen thousand dollars a year.
Seems reasonable, you know, making contributions to one for you
(28:45):
and one for her. That's obviously a really smart move.
We want couples across the country to continue striving towards
that goal of maxing out two wrath iras every single year.
And the fact is that even if one person in
the house stays home, they are uh, they're doing a
valuable service to the family, and they also deserve to
and are allowed to legally contribute to that wroth. So
(29:08):
what if it's a throuttle jewel. That's a good good
question is twenty one thousand dollars can you marry? I
don't think you can married.
Speaker 4 (29:15):
Filing multiples like no, No, I don't think that ascounts that.
Don't forget in the back end of your brokerage account
or in your brokerage where you do your investing, not
your brokerage account, you're not going to actually see something
that's that's labeled or titled, or there's not going to
be a link that says open spousal WROTH. You just
contribute to a regular old roth IRA for her like
you would for yourself. There's no actual special designation. This
(29:37):
isn't some sort of special account. It's that's how it's
more of a process as opposed to like an actual account.
Speaker 2 (29:42):
It's a colloquial way of talking about it, even though
when you go in the back end of the account
to open it or to contribute to it, that's not
how it's going to be label Yeah, you're not going
to find that there.
Speaker 4 (29:51):
So I agree that maxing out two roths year and
year out, if possible, that's going to garnery you some
incredible financial freedom over the decades.
Speaker 2 (29:59):
Get at Matthew Joel.
Speaker 4 (30:00):
Let's hear from another poster from Anonymous who writes, one
of my financial fails is having my e fund in
a credit union savings account earning less than one percent.
Speaker 2 (30:11):
I just threw up a little.
Speaker 4 (30:13):
I know I need to move to a high yield
savings account. Something about an online bank versus a brick
and mortar local credit union seems scary for an emergency fund,
even though I know we could transfer as needed. Has
anyone else had this hesitancy?
Speaker 2 (30:28):
What you think, Joel? Have you ever felt this? Honestly? Now,
I had a roadblock. I have zero need for brick
and mortar institutions or some institutions, but not banks in
my life. And I guess I get why some people
might feel, especially like if you own a small business,
you're regularly making deposits of that physical bank or something
like that, you might be reticent to kind of do
(30:51):
away from that sort of Oh, I go to my
bank to do things relationship. But I think most people
don't have any need for it, And so first off,
I do want to stress that we love credit unions right,
but also they're better for borrowing than they are for
saving most of the time. Need not alone. Credit union
is a great place to go mortgage or a helock.
(31:13):
I would look to a credit union first. A high
old savings account that, though I would say is best
done at an online bank They're different tools for different purposes,
and I want to use the right tool for the
right problem. Our favorite online banks are typically although maybe
not always, but typically better for savings purposes. I would
love to see folks you utilizing both of these institutions
(31:35):
for what they do best. I have a relationship with
a credit union, I have had one for a decade
and a half, and I will continue to have that relationship.
I've had a relationship with an online a high old
savings account at an online bank for a decade and
a half two probably at this point, and I maybe longer,
and I will just continue to have both those relationships
and they will just serve me for different needs that
(31:57):
I have. Totally. Yeah, it's also.
Speaker 4 (31:59):
Important that even in an emergency, you don't typically need
to pull cash out like right away, like right now. Instead,
you can use a credit card, which buys you time
right like you still have the cash on hand in
your account to back it up. But I can't think
of too many money financial emergencies that I've encountered that
required me to get a load of cash from a
bank as soon as humanly possible. And then on top
(32:21):
of that, our favorite online banks, they tend to have
good fee free ATM networks as well, So if you
actually are in a situation where you do need the
cash on the spot, you should be able to access
at the very least hundreds of dollars in a day.
The branch doesn't even need to be open, like you
just go to the ATM, that's a part of the network.
That being said, if you do, I think another way
(32:42):
to alleviate this problem would be just to have some
cash at home, because if you do feel that there's
some comfort in having that, I don't know, like literally
one thousand bucks, a couple thousand dollars hidden away somewhere
in a secure spot. If that allows you to then
move the thousands of dollars of your actual emergency fund
over to a high old savings account where you are
experiencing or earning interest, I think that could be a
(33:05):
way to hide your cake and eat it too.
Speaker 2 (33:07):
That's why you have all those gold bars buried in
the backyard exactly just in case, right, Yes, no, you
never know what's going to happen. It's it's so unlikely
for that. Actually, the crazy embers what if the Last
of Us becomes real life event?
Speaker 4 (33:18):
To take place, it's far more dramatic but very unlikely
to happen. Whereas inflation and your saving is getting eaten
away by that inflation, it is much much less dramatic
but very likely. That is very likely to happen. So
we want you to be prepared for both, I guess
in a way, but for you to not pay the
financial price for having all of your cash in a
(33:40):
local credit union branch.
Speaker 2 (33:42):
Yeah, totally okay. Thank you as always for listening to
the show. We appreciate your time and attention. You can
always find more money saving information up on our website
at howtomoney dot com. We'll see you back here next week.
You've been listening to how to Money with Joel Larsgard.
You can always hear us live on KFI A six
forty twelve pm to two pm on Sunday and anytime
(34:03):
on demand on the iHeartRadio app.
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