April 13, 2025 • 33 mins
Prioritizing cultural events in your budget can help alleviate depression. And they don't always have to cost big bucks!
Ask HTM: Chelsey wants to know what to do when her employer changes their 401k match.
Consumer Reports put out a list of the best new cars. We also discuss the best low-cost used cars. Opting for a used ride will massively help your transportation budget stay intact!
Ask HTM: Mike wants to know if his company's long-term disability policy will give him enough coverage.
Ask HTM: Chelsey wants to know what to do when her employer changes their 401k match.
Consumer Reports put out a list of the best new cars. We also discuss the best low-cost used cars. Opting for a used ride will massively help your transportation budget stay intact!
Ask HTM: Mike wants to know if his company's long-term disability policy will give him enough coverage.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
K if I AM six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel Lar's Guard and Matt Ullmax.
Speaker 3 (01:03):
KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 4 (01:07):
This is how to Money. I am Matt Altmis.
Speaker 1 (01:09):
And I'm Joel Larsgard. Don't forget to sign up for
the how to Money newsletter. You can find that up
at how tomoney dot com slash newsletter. Can we start
off by talking about something that I've been prioritizing in
my budget over the past I don't know a year
and a half, I'll say, and that is to enjoy
more more cultural events. And I have literally called them
(01:30):
cultural events. This is the thing that I've been shooting for.
Speaker 4 (01:33):
Is up the line item on your non budget? Yeah?
Speaker 3 (01:35):
Yes, that you don't have. He just any time Emily
questions you about something, You're like, baby, that's that's part
of my cultural events spending. That's exactly right, That's exactly right.
That's botta, that was my cultural event. Sounds like the
expenses are spending coming out of like a parks and
reg departments.
Speaker 4 (01:48):
Maybe yeah, so.
Speaker 1 (01:49):
Okay, you joke. But I have been attempting to pull off.
And I made it initially once a quarter goal and
then I said, you know what, No, I want to
I want to try to do this once a month,
the cultural event, and so that could you start that
this year? I started that last year. Okay, so you
put what it could be a concert. All the concert
ticket prices have gone up substantially. It could be going
(02:11):
into the debt for that. Yeah that Actually, it could
be going to see a play. It could be like
I took my daughter to see a Shakespeare play at
the Shakespeare Tavern recently and it was awesome. We being
the best time, and they're just I think cultural events
are are underrated. And there was actually, as I told
my wife about kind of why we're I want to
(02:32):
prioritize this more and more, she said, actually, I just
read something the other day. You should check this out,
and there was here's the headline, psychiatrist discovered doing this
just once a month cut your risk of depression in half?
Speaker 3 (02:44):
Was it cultural event? Cultural events? Taking a cultural event?
So not even to defend your own case, she's done
it for you.
Speaker 1 (02:51):
That's right, So thank you Emily for contributing to the
show here. But they what they said was if you
do one outing when cultural events outing every few months,
like I was doing once a quarter initially, it reduces
your risk of depression by thirty two percent. If you
instead prioritize a cultural event on a monthly basis, that
could be by the way, a museum mounting, going to
(03:11):
the botanical gardens. There are so many ways that you
can use that culture plan. It doesn't even have to
be expensive. It will, though, cause your risk of depression
to fall by nearly half, by forty eight percent.
Speaker 3 (03:21):
So do they also call them cultural events? They literally
call them cultural events. Body in there because that's what
I'd been labeling them. I didn't know what else to
call them. That's pretty hilarious, and so I think maybe
this can hopefully incentivize people to think about I think
it could also think about the wanderlust.
Speaker 4 (03:37):
That people feel. Matt.
Speaker 1 (03:38):
They they're like, I got to go to Europe, I
got to get out of here. There's something about instituting
more regular cultural events into your life and into your
budget that maybe feels like you don't have to take
the big swing on the expensive.
Speaker 4 (03:49):
Vacation splurges more often.
Speaker 3 (03:51):
I totally love that, and I love that you specifically
have identified this for you. But I will say I
think it was like it is important to be a
stay depressed. No, I'm just saying, like, the argument I'm
going to make is that it's not like I do
think folks would probably push themselves to do something like that.
But you know, for you, it moves the needle significantly. Yeah,
I think for some folks they're gonna be like, nah,
(04:12):
I don't I don't really want to. For some folks
it's like, well, I'd rather go on a cruise. I
just like sitting there, going to island hopping that kind
of thing. I think there might be some folks who
are just like, well, when I have some time and money,
I just like to go shopping, Like that's how I unwind.
And I don't think we would consider either of those
cultural cultural event.
Speaker 4 (04:30):
No, I wouldn't. So just they're in a different category
for sure.
Speaker 3 (04:33):
Yeah, So just to identify that for some folks, spending
I think can look a little bit different and it
may not move the needle as much for them. But
whatever that is for you figure out what that thing is.
But I thought it was interesting to see this data
because I do think the average person it is going
to move the needle, and maybe you don't think about
it like that. I think too, about the before, like
looking up forward to the cultural event that's upcoming. I
(04:55):
get to think about it for months, typically because I
bought a ticket or something look forward to, Yeah, it's
on the calendar, and then I get to look back
at that event and say, oh, man, think.
Speaker 4 (05:05):
About how great that wu. Do you remember when we
did that? It was so good? Kind of like a vacation.
Speaker 1 (05:08):
I mean, that's one of the things that our friends
Scott Kay's talks about with vacations is like half the
fun is planning and getting ready for it, not just
the taking of the vacation.
Speaker 3 (05:16):
I do wonder if they accounted for this social sort
of spillover or crossover, like in the ven diagram between
cultural events and the relationships and community. How much overlap
is there, because like I said, so, I do think
for some people they're kind of like, eh, I don't know,
like that it sounds like it would be fun, but
maybe for me less. So I do think and there
has been tons and there continues to be research that
(05:38):
points to the fact that that we.
Speaker 4 (05:40):
Have fewer relationships than ever.
Speaker 3 (05:42):
Yeah, and that when we do prioritize, though, is that
we tend to live happier longer lies that increases life satisfaction,
And that's regardless if you are an introvert or an extrovert.
I think that there is a degree of us needing
to push ourselves a little bit more than what we
think we need when it comes to social interactions. But
that's not the paser that we find ourselves on. Right.
I can think about the what is the Harvard Longitudal
(06:04):
Happiness Study, and the number one thing that leads to
the highest amounts of happiness and self satisfaction and fulfilling
life are those relationships. And often a lot of cases,
I think what you're finding in these different cultural events
they include other people. So is it the ticket? Is
it ensure there's a certain amount of enjoyment. I think
it's personal development that you're getting out of that. But
(06:26):
there's a whole lot of friendship and community and being
around other people that in my mind directly overlays the
you know those two circles. Yeah, might be highly overlapping
worth something worth considering as well.
Speaker 4 (06:38):
We've got a little.
Speaker 3 (06:39):
So what I'm saying is that a cultural outing or
event could be even be buying some cured meats at
al d and having a picnic in the park with
some friends.
Speaker 1 (06:46):
Right, But I love to overthink it and don't think
that you got to go see Beyonce when she comes
to town and spend nine hundred dollars on that ticket.
Speaker 4 (06:53):
That's insane.
Speaker 1 (06:54):
To enjoy a cultural event with your friends like you
don't have to. There's affordable ways of doing it, and
sometimes it might be a semi expensive concert ticket, but
other times it can be a whole lot cheaper totally
or potentially free.
Speaker 4 (07:05):
Especially I was just thinking about this too.
Speaker 3 (07:06):
And especially if you're not dropping big money on those
expensive occations, I think.
Speaker 1 (07:10):
In the library has offers the ability to go to
get some of those cultural events for free, potentially like
going to the zoo or the aquarium, more the botanical gardens.
Speaker 3 (07:18):
You might be able to pull off that cultural event
for zero dallas and enjoy. We're even going to the library, Like, yeah,
our kids after school sometimes they're just like meeting up
there hanging out and again there's that social element.
Speaker 1 (07:29):
Yeah, I love it all right, cultural events for the win.
We got more money saving information to get to.
Speaker 2 (07:35):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (07:42):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (07:47):
Matt, let's get to a question specifically about what to
do when your employer changes the four oh and K
match that you're eligible for. By the way, this comes
from listener Chelsea hi Jeling.
Speaker 5 (07:59):
Matt, I had a question about an update that my
company is making to the four to one K plan,
specifically how they structure the matching of employee contributions.
Speaker 4 (08:12):
So previously, the way it worked.
Speaker 5 (08:13):
Was that the company matched contributions up to seven percent
of eligible pay and now they are dividing that into
a three percent non elective contribution. So the company contributes
three percent whether or not an employee pays into the
four one K plan or not, and then they're also
adding a four percent elective dollar for dollar match on
(08:36):
top of that, so everybody gets three percent, and then
if an employee contributes more of their own then they
can get the full match up to seven percent, and
previously I don't believe there was any non elective contribution.
So to me, it seems like the company is now
paying more into the employee's four O one K accounts,
(09:00):
basically a three percent for everybody. It doesn't affect me
because they've always contributed more than seven percent and gotten
the full match. But I guess I'm just wondering why
they would make this change. I'm sure it maybe has
tax implications or something, but yeah, just curious and wondering
if you could clear that up for me. Thank you.
Speaker 4 (09:20):
Oh.
Speaker 3 (09:20):
I think Chelsea's got a suspicious streaking her. She's thinking, Hey,
you guys are going to pull the wall over my eyes.
Speaker 4 (09:27):
No, that's I don't think that's actually the case.
Speaker 1 (09:28):
I think Chelsea I get that instinct because it feels
like in the financial world, like they're trying to dupe
yet there's there gotcha's they're trying to get one over.
Speaker 4 (09:34):
Yet yeah, all over the.
Speaker 1 (09:35):
Place, you and I we highlight scams or we highlight
people who get taken advantage of, and so Chelsea's just alert.
Speaker 3 (09:41):
I don't want to become that person totally. No, I
don't think that that's actually what's happening. It sounds like Chelsea,
and you didn't share what company you work for, but
it sounds like it's a just a generous, solid company.
It doesn't sound like that they're trying to trick you
or anything. I think they might be paying a bit more. Right,
So you're saying, well, like, why would they do this?
There are many reasons, I think that we'll get to,
(10:02):
but bottom line, they're just making some of those matching
funds easier to access, no matter what the financial status
of the individual employee is. You, of course, you were
brilliant to have always gotten the free money. You've always
gotten the full match and that means that you've been
contributing with the employer money included at least fourteen percent.
Speaker 4 (10:22):
Of your overall salary each year.
Speaker 3 (10:24):
Because I think she said she was even going above
and beyond that, and so that's amazing, that's fantastic.
Speaker 1 (10:29):
That's ultimately where we want everyone to be. The fact
that Chelsea was there even before she got an added
incentive from her employer is great, it's laudable, and it's
truly what most people should shoot for. Is I think
a minimum saving trade of fifteen percent, and that you
kind of alluded to this. Let's talk about why her
employer is doing this. I think, at least in part,
(10:50):
they're probably doing it to ensure that every single employee
is at least saving something for their future. This is,
especially with Secure two point zero, kind of part of
the push to get the average employee invested, many of
whom don't invest at all if there's not an automatic
opt in. And so, you know, financial literacy in our
(11:11):
country is pretty bad. That's pretty self evident. And your employer, well,
they might see that a decent chunk of folks are
missing out on this perk altogether, like they're just not
banking anything for their future. And maybe it sounds a
little paternalistic, but I think of it as a good
thing for employers to kind of watch out for that
segment of the population and kind of force their hand
(11:32):
in that way, although really it's the employer forcing their
own hand to make those contributions.
Speaker 3 (11:36):
And sure, and you can always opt out. It's not
like you don't have a choice, like you automatically get
reroll but enrolled. But if you don't want to continue
to do that, it's just back out.
Speaker 4 (11:44):
You can back out. It's just a nudge in the
right direction. There's a yeah, right, I.
Speaker 1 (11:47):
Think this is this is going to help right the
ship at least for some of those people at least
a little bit right, getting them to invest something. And
then you know, with these automatic contribution requirements becoming normal,
this is just an on trend move for your employer, Chelsea,
and it could also make budgeting more simple for your employer.
This is another reason that they might be interested in
doing this.
Speaker 4 (12:07):
Right.
Speaker 1 (12:07):
With elective contributions, it's hard to know what percentage of
folks are going to invest and how much they're going
to invest, And so the employer's like, wait, is Chelsea
going to max her four one K and we're going
to be giving the full match to her? And what
about other people? What are they going to do? Well,
now they're going to have at least a better idea
of how much the match overall each year is likely
going to cost them. I think it just makes for
(12:28):
easier financial planning for your employer. So maybe it feels
a little more generous, and it also just gives them
a little more future knowledge about what they're going to
have to fork over.
Speaker 4 (12:37):
Yeah, I think that's definitely true.
Speaker 3 (12:38):
It's both for the benefit I think of the employer,
but also the employee, because from an employee standpoint, it's like, hey,
we're all in this together, like.
Speaker 4 (12:47):
We are all saving for our future.
Speaker 3 (12:48):
There's like a cohesive team sort of like can do
attitude sure, And I think that that is well, especially
for new hires. You know, Let's say you look, you're
considering a few different employers and you've got this one
and they're saying, Hey, no matter what, and this isn't
going to affect your pay, but you're.
Speaker 4 (13:04):
Going to be enrolled in a FOURMU and K where
you get a three percent match of your salary. It
feels like free money.
Speaker 3 (13:08):
There's something that's really attractive, attractive about that that I
think I would be drawn to, especially if I was
early in my career.
Speaker 1 (13:15):
Well, I think the other thing that maybe goes underrated,
undernoticed is those benevolent employers.
Speaker 4 (13:21):
They tend to get good street cred.
Speaker 1 (13:22):
I think about the employers in our town, matt where
we live, and there are companies who just constantly make
the headlines about being great places to work, and part
of that is often what the benefits are. And some
of these companies just have superior matches or better, four
one K plans and.
Speaker 3 (13:39):
Completely free healthcare where everything is covered, including dude.
Speaker 4 (13:43):
Man, the word gets around in your network.
Speaker 3 (13:45):
And people are like, oh, you should come over here
to work at mail Trimp because hey, they got these
like cool benefits that most people don't offer, and that's
just great press for anybody out there who's looking for work.
Speaker 4 (13:54):
They're like, yeah, maybe well apply over there.
Speaker 3 (13:55):
It's funny that you mention that's totally what I was
thinking of when I mentioned the healthcare one, because I
get like, I can say they're applying for a job
like a long time bega because I had a bunch
of friends. So you're gonna say last week I was
gonna do last week. Well, that's the thing that this
was years ago. I don't know if they've changed their
benefits since they were purchased by the big company that
took them over, but even still, yes, like you said,
I think that's something that absolutely that is worth considering.
Speaker 4 (14:18):
It's like that halo effect.
Speaker 1 (14:19):
Right for the company gets and the more generous they
are with their employees, the more likely they are to
get lauded for that, and that's going to attract more
great employees.
Speaker 3 (14:28):
Totally and it's again, so it's not just for the
benefit of the employee, but for the employer as well.
I think you're talking about budgeting, but I think it's
just going to be more. I think it could be
easier to administer as well, when you know that everyone
is on board and that out of minimum they're getting
a three percent match. Like you said, it's good from
a planning standpoint, but it's gonna be much easier to administer.
I think the other big thing that this could do
(14:48):
for your employer is that it allows them to achieve
us known.
Speaker 4 (14:51):
As safe harbor status.
Speaker 3 (14:53):
By contributing to everyone's for one K who works throughout
the company, they can avoid certain non discrimination testing requirements,
and this can be a just a big pain in
the butt that the something that the IRS requires. Many
small businesses ought to go this route, and basically it's
just easier to ensure that their plan is completely compliant
with government regulations.
Speaker 4 (15:12):
And the cool thing for employees about a safe Harbor.
Speaker 3 (15:16):
Four one K is that the three percent match also
vests immediately. It happens right away, so there's no need
to wait a year or two to ensure that those
funds are actually years before they have the ability to
claw them back.
Speaker 5 (15:28):
Yeah.
Speaker 1 (15:28):
Yeah, and I were easily count on the dollars being yours.
You and I were actually talking about that at lunchtime,
and just how with the job hopping that happens so
much in today's world, especially younger workers not staying at
jobs nearly as long those You've got to look at
the fine print of how long it takes for that
match to vest because if it's two years, if it's
(15:49):
three or four years and you're not there that long,
all those match dollars could just like fly away, vanish
out the window. And so that it's nice to know
than in one of these sorts of four one K plans,
the match is vested immediately, there's no risk of losing it.
Speaker 3 (16:02):
Yeah, i'd call those phantom four one case. Yeah, that'd
be the Friday flight headliner. That's a it's a good term.
I'm sure it's been used before. Just take that one away, okay, yeah,
I actually probably have already used that. I probably stole
it from somebody just unknowingly. There's I think maybe a
potential downside for you, and that I just want to
highlight that you could dial back your paycheck deduction two
four percent right to where you're still getting the full
(16:24):
seven percent from your employer because of this change, but
your overall savings rate would go down, you know, And
I would just say, we're okay with you taking the
extra money and putting it into like, let's say, a
roth IRA or an HSA or a different retirement vehicle
if your funds would be better suited. If you're like, hey,
I'm gonna get the full match, which means I can
reduce my overall contribution, but hey, I'm gonna take those
(16:45):
funds and put them in another vehicle that's going to
be just as.
Speaker 4 (16:48):
Good for my future.
Speaker 1 (16:49):
That's great, But don't let this non elective match change
cause you to save and invest less overall. That's the
only way I think this could have a negative impact.
If you like, cool, I'm just gonna die my contributions back.
I'm investing instead of that fourteen percent, only eleven percent,
and I'm just gonna consume the rest and upupgrade my
budget increase by spending. That is truly as I thought
(17:11):
about it. The real only downside from your perspective that
I could think totally agree.
Speaker 2 (17:16):
You're listening to how to money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:23):
Don't forget to sign up for the how to Money
newsletter over at how tomoney dot com slash newsletter. Okay,
Consumer Reports, they just put out their list of the
best new cars for twenty twenty five. Toyota and Subaru
were both well represented. This continues my streak of wanting
to own a Toyota, specifically, Jel. I've been on this Toyota.
Speaker 4 (17:41):
Kick for a while. They're pretty great. They're so evidently
they're like super you know, supposed to be super reliable.
Speaker 3 (17:46):
I'm wait until the U want to I want to
see in a hybrid is what I I want a
minivan that's a hybrid where I'm getting better gas knowledge
than what I'm getting right now because I'm waiting for
those solid drive solid state evs that Toyota's gonna put out.
So when's that gonna be, like twenty twenty eight. I
think it's going to continue to get kicked on the RESPUSS. Well,
I mean, look at the current administration. You know they're
cutting some of that, but that doesn't mean that toilet
technology is going to be Yeah, there's there's fewer incentives
(18:07):
Toileta basically said we're going to bet on hybrids now yeah,
and we're going to push towards better EV technology, and
when that comes down the pike, it's going to be
a game changer for vis I do whenever it does
actually get implemented and start where they start selling it
to the masses.
Speaker 4 (18:21):
Yes, I totally agree.
Speaker 3 (18:22):
Back to Consumer Reports though, the cheapest new car that
they highlighted is the Nissan CenTra, which it can be
had for not much more than twenty thousand dollars, which
is car When I first met her, the centrals look
better than they used to back in the day. Like
I see centers now, I'm just like, that's a sharp
looking car.
Speaker 4 (18:39):
Man. Reliability, fuel economy, they.
Speaker 3 (18:42):
Were two of the top metrics that Consumer Reports was
keeping in mind. But still we would prefer to hear
folks in the direction of buying used cars, not these
new select twenty twenty five cars. I'll say, I think
the exception is if you're worried about perhaps maybe buying
a lemon, and you're willing to keep that new car
for at least ten years if you can. I don't know, man,
(19:04):
even part of that makes me at a little hesitant.
It's not gonna be the best financial move, but it's
such a reasonable one, and there's just such a financial
hit that you're taking with that those first three years,
especially of depreciation, that really like you need to be
in such a solid position financially in order before you're
buying a new car, even a new Nissan CenTra. But
if you are keen on buying something brand new, opting
(19:24):
for one of Consumer reports favorites, I think that would
be totally wise. Yeah, while we're talking about cars, Icy Cars,
which is like a data aggregate, I don't know, the
really surveys and lots of data that we like to
look at. Icy Cars also released a new study of
the most reliable used cars, and at the top of
the list Honda Fit Baby. It's got the best five
(19:45):
and ten year track record.
Speaker 1 (19:47):
I think the ten year old car was like, what
eleven thousand dollars for a ten year old time to
fit with super affordable.
Speaker 4 (19:52):
The average used vehicle now is fourteen years old. That's
on the road.
Speaker 3 (19:57):
And when I came across that, dude completely blew my mind,
specifically because I always saw myself as like someone who's
an average car yes, in this case older than average. Yeah,
And I'm like, wait a minute, I got a twenty twelve.
That means my van is only thirteen years old. There's
a bunch of folks out there who were beating me.
It makes me want to keep that car on the
road even longer because I'm just like, wait a minute,
(20:18):
I'm barely average.
Speaker 4 (20:19):
You gotta do better.
Speaker 3 (20:19):
But it, I know, does it make you want to
sell that and you go get like a two thousand
and six or something? Not at all, But it does
make me want to take care of that thing. Wait,
I never posted pictures. Remember I talked about making the
side mirrors like I was gonna seeing them down especially.
Speaker 4 (20:33):
I totally did that.
Speaker 3 (20:34):
And like these small little things to maintain your vehicle,
it makes you feel better about it, sort of like
when you're talking about cleaning up, cleaning up your blackstone,
getting all the grease off.
Speaker 4 (20:42):
You're like, wait a.
Speaker 3 (20:42):
Minute, this is a solid grill. That's how I feel
about our ride now, So I'm going to keep it
on the road.
Speaker 4 (20:47):
Maintenance goes a long way.
Speaker 3 (20:48):
For much much longer, many more years of life on
that things. Sticking with the car stuff.
Speaker 1 (20:53):
If you get in a wreck, which I hope nobody
out there listening does, especially if you're driving right now,
pay attention right there's a higher likelihood actually that your
car is going to be totaled these days.
Speaker 4 (21:02):
If you do end up in an accident.
Speaker 1 (21:04):
Instead of getting that car repaired, it's likely to be scrapped.
And that's at least partially because cars come with more
expensive parts these days and smarter computer elements. I think
it's also just mat the rising costs of labor in
that sector.
Speaker 4 (21:17):
Oh yeah.
Speaker 1 (21:17):
Electric vehicles are also part of the reason why why
this is the case as well, because battery damage can
cause repair prices to sore significantly. That EV gets in
an accident and the battery elements get damaged and boomshock
a loca. You're talking about replacing the whole arm battery
that ain't cheap?
Speaker 4 (21:35):
Is the when the solid state rolls around?
Speaker 3 (21:36):
Is that gonna is that gonna impact the ability to
replace certain elements.
Speaker 4 (21:40):
That's a good question.
Speaker 1 (21:41):
If you could just replace certain like the damaged portion
of the some of the cells that are damaged, instead
of replacing.
Speaker 3 (21:46):
The whole pack, that in mind, that would I would
be smart. I'd be a games shu you could just
like pop out a few bricks like a bunch of legos.
Speaker 1 (21:51):
Yep, that sounds cool. That'd be brilliant. But this also means,
you know, repair times are increasing. I think the average
repair weight is like close to a month now, which
is crazy.
Speaker 4 (22:00):
Je, what is this all me?
Speaker 5 (22:01):
Man?
Speaker 3 (22:01):
I believe that one of my neighbors he's been driving
a rental vehicle. I don't think his car gott in
a wreck, but maybe it had a recall, so it's
back at the I'm assuming it's back out of the
dealership because it's like a new pickup truck and he's
been driving this other pickup truck and it's been a
few weeks now, so I did not even think about it.
Speaker 1 (22:16):
I think about your fat in law when he had
an issue with his car, and man, it was in.
Speaker 3 (22:21):
There for months, yeah, like multiple months, and they had
an actual lemon. Yeah, they ended up having to actually
make a claim with the dealership and have that thing.
Speaker 4 (22:29):
They bought it back. Basic.
Speaker 1 (22:30):
Yeah, don't sleep on lemon laws in your state if
you need it. But this is I think just another
data point that points that we're going to see higher
car insurance prices that will likely outpace general inflation moving forward.
Speaker 4 (22:41):
That's right, buddy.
Speaker 2 (22:43):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (22:49):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group. This next question is specifically about the
benefit that you get from your employer, but is it
going to be enough to cover you in a time
of need?
Speaker 6 (23:05):
A Hi, guys, this is Mike Tromaryland, longtime listener, and
I love the show. My question for you is about
long term disability policies. I'm a healthcare worker and I
bought a disability policy three years ago that pays out
about one hundred thousand a year with riders to automatically
injust for inflation. I recently became a federal employee, and
(23:25):
reading through my benefit package, I saw that I have
the opportunity to buy into a policy through the federal government.
If you were in my position, would you drop the
private policy and join the government policy. There's a couple
of reasons I'm hesitant to drop my policy. One is
I work for an agency that the current administration is
not very fond of and being a new employee in
(23:48):
the probationary period, even though it's a federal job, I'm
not one hundred percent sure how secure my job is.
Second is I prefer not to rely on my employer
completely when it comes to my livelihood sample. I could
purchase mouth practice insurance through my employer, but I always
keep a private policy because in the end, I don't
think the company will always have my best interests in mind.
(24:09):
And third is, I've never stated at a job for
more than two years, sustained twenty years, and keeping the
policy seems daunting and I know will be more expensive
to restart the policy when I'm older. Curious to know
what you think.
Speaker 4 (24:20):
Thanks all right, long term disability insurance.
Speaker 1 (24:24):
Policy, and I start one thing out there before we
get into long term dispelling Sure. Just when Mike mentioned
he works for the federal governments and we talked about
this on a recent Friday flight with what doge has
been up to, Well, that's true. Just prioritize your savings
and be prepared for whatever might come down the pike.
It sounds like in Mike's case, his position and might
be disfavored. So I just want to, yeah, put that
(24:48):
blinking in red on his radar, just to be prepared
in case he were to lose his job or something
like that.
Speaker 4 (24:53):
Sure, Well, the fact is Mike has done his homework.
Speaker 3 (24:56):
You know, he's purchased his own long term disability policy
before you taking this job. And we think that most folks,
not everyone out there, but we think most folks need
term life insurance. We talk about it fairly regularly, but
disability insurance.
Speaker 4 (25:11):
Kind of gets a short end of the stick.
Speaker 3 (25:13):
Talk about it much, Yeah, nearly as much, and it
might even be more crucial. And that's because stats show
that one in four folks will actually become disabled at
least for a short period of time before they retire.
And so Mike, if you were to become disabled for
a couple of years, well that's going to have a
significant impact on your income most likely. And while there
might be some different programs out there, like state or
(25:35):
government benefits that might be open to you, getting those
benefits is a it can be a hassle, it's a process,
and they likely won't provide anything close to what your
current long term insurance policy.
Speaker 4 (25:46):
Is willing to pay out.
Speaker 1 (25:47):
Yeah, it might be a drop in the bucket, right
compared to what you need compared to your current income,
and so that could help, but it's certainly not going
to cover the vast majority of your expenses. So having
a disability insurance policy, yeah, I could could help you
if you can't work for an extended period of time.
But you might not need the one you purchased on
the open market anymore thanks to this new policy offered
(26:08):
by your work.
Speaker 4 (26:09):
I say, you might not.
Speaker 1 (26:10):
But there are a few caveats here, by the way,
in our opinion, most folks don't need a short term
disability policy.
Speaker 3 (26:16):
There are oh good opportunity to talk about the duck insurance,
that's right.
Speaker 1 (26:20):
Yeah, yeah, yeah, that's what that's that's what AFLAC is
typically trying to sell you, Like if you get hurt.
I try to avoid the actual names of those companies
just in case they want to spidus on the podcast.
Speaker 4 (26:30):
Well, but you will not hear us voicing for a flag,
that's for sure true.
Speaker 1 (26:34):
And so yeah, that's that's what an emergency fund is
supposed to help with. So some folks might say, oh, yeah,
let me give the short term disability policy just in
case I get injured, but it doesn't last that long. Well,
the emergency fund, we think of that as self insuring,
is essentially your short term disability policy that you are
covering with funds that you have in a high yield
savings account. We like the idea right of self insuring
(26:54):
for a potential six six month work drought or something
like that, if you were to lose your job. It's
why we're so keen on saving up a substantial emergency fund,
and it's part of our money gears if you check
it out at how money dot com. But a long
term disability policy that can particu something we're more keen on.
It's something that can help if something happens to you
and you can't work for quite a while, for an
(27:16):
extended period of time, and my given your particular circumstances,
I'd be reluctant. I would say to let go of
this individual policy right now.
Speaker 3 (27:24):
Well, and I think that it's clear that Mike is
he's hesitant to give this thing up. And I think
this in part comes down to your risk tolerance and
how comfortable you are playing around the edges.
Speaker 4 (27:35):
Essentially clisse to the edge of the cliff.
Speaker 3 (27:37):
And so if you are someone who likes to be
a bit more independent, or if you don't have others
who you can count on for income, this is absolutely
something that you're going to be more drawn towards. But
at the same time, like, let's say you're thinking, Okay,
what would happen if I couldn't work, if I couldn't
earn an income for a couple of years, what would
that scenario look like? And if you've got a mom
who would like basically make you move home and fight
(28:00):
take care of you and help cover your expenses or
something like that, Okay, well maybe or you know, you've
got some parents who are like, man, I know that
they would love to have me back back home in
my hometown, back in my childhood bedroom. You know, like
if that's the kind of scenario that and there's like
in a really solid financial position, well guess what, I
don't think long term disability is something that you wouldn't
(28:20):
necessarily want to consider all that much. And so, yeah,
a lot of other backstops. A lot of it comes
down to your individual situation.
Speaker 1 (28:26):
Yeah, yeah, and just especially with the price of it,
which is something we need to talk about too totally.
And it comes down to like, if you have a
I don't hear him mentioning a partner necessarily, and so
it's kind of it comes down to him and his
ability to earn an income. But if you have a partner,
a partner who can work or who is currently working,
it's like, Okay, well we're not going to necessarily be
in dire strace. If the worst were to happen to me,
that dephrased some of that risk. The emergency funds as
(28:48):
well as another paycheck coming into the household, maybe not
having kids yet that you would also have to support,
less responsibility. Yeah, all those things would allow you to
take a little bit more risk. And it sounds like
one of the things said is he doesn't necessarily plan
on staying in this job for too long, or any
job for too long. And I think even if you
wanted to, Mike, it sounds like your job might not
(29:09):
be super secure. But if neither of those things were true,
we might have different advice. Because opting for the work
provided policy only, you'd likely be paying a fair amount
less every single month for that coverage. But for everyone listening,
I would say, double check and see what the actual
coverage includes. Because employer provided insurance policies rarely provide enough
(29:31):
coverage on both the life and disability front. So you
might say, oh, great, a free plan from my employer, fantastic,
I don't have to buy my own policy because I
am covered. And that's just like maybe but probably not right.
Sometimes doubling up actually makes the most sense. I think,
you know, taking the minimum amount of life insurance, for instance,
(29:52):
for most employer plans and getting extra coverage on your
own often makes the most sense.
Speaker 4 (29:57):
Matt.
Speaker 1 (29:57):
Back when I worked for a getting a W two,
they offered life insurance at one x your pay and
so that just wasn't enough life insurance. But you could
buy more through the company, But the race that they
would charge if you were to buy through the company
were far in excess of what I could get on
the private market. And so let's say I was uninsurable,
(30:17):
that I'd had, you know, a bunch of different health catastrophes,
then maybe it would make sense for me to get
life insurance, more life insurance through my employer, because it
would be prohibitively expensive on the open market. But for
young healthy people in particular, not getting more insurance through
your employer and getting it on the private market means
you're going to have enough coverage, it means it's going
to cost less.
Speaker 3 (30:38):
Yeah, just because there's a policy available to you through
your employer doesn't mean it's the best nor necessarily the
most cost effective way to go about it. And it
sounds like Mike's you know that he's got his own
solid policy there that's going to pay out well if
he does encounter a disability. And he also mentioned the
inflation adjustment as well. There's an inflation adjustment clause and
that's pretty massive, Like, that's a huge deal.
Speaker 4 (30:59):
And so I.
Speaker 3 (31:00):
Think if I were actually these days, yeah, yeah, well hopefully, yeah,
hopefully we pass the worst of it, but man, it's inflation.
It is sticky. If I were you, Mike, I would
hang on to that policy at least for now. And
by the way, for folks out there who might be
considering this, if you are looking into it, just know
that a policy out there on the open market, it's
not cheap. It often costs one to three percent of
(31:21):
your annual salary. It depends on a number of factors
and elimination periods and things like that are built into
your specific policy. But given the stats, it is an
insurance policy that more folks should consider. That being said,
I don't want to discourage folks, but I don't personally
have a long term disability policy in play shoal do
you know? I do not either, But I will say
we're risky dudes. I guess if I lost.
Speaker 1 (31:43):
My voice completely that would be uh, that potentially put
me in a bad position.
Speaker 4 (31:48):
But talking about kind of how much risk we can.
Speaker 3 (31:50):
There's also other things well here before you keep moving, Yeah,
like you're touching on like a specialized career, right, and
if you, let's say you're like a concert pianist and
like this is the only thing that you can do
and you make a ton of money doing that, that's
the kind of scenario, the kind of situation where it
might pay to go with some long term disability.
Speaker 1 (32:07):
Or they're literally people who have like football players pianists,
who have insurance policies on the parts of their body
that make them income. Right, they're specialized policies for those people.
And you and I don't think we qualify to get
that sort of level of insurance from our you know,
from our carriers.
Speaker 3 (32:25):
But anybody can can talk like I do, and most
folks actually can speak a little bit better.
Speaker 4 (32:30):
Than I can Dole.
Speaker 3 (32:31):
But that's an important consideration though, like if you are
flexible to doing other like I've done lots of different
things in my life. I don't have like a career
that looks incredibly specialized.
Speaker 4 (32:42):
I'm very open to being flexible to trying new things.
Speaker 3 (32:45):
Okay, and I we've even talked about this and she's like, well,
I would go go to work if something happened to you.
It's like, okay, cool, these are conversations that are important,
and if you broke your back, maybe I would host
for by myself for a little bit and then you'd
be back on the mic hopefully a no time, like
they're a host from the bed. Just be like, all right,
this is it's just what it looks like.
Speaker 4 (33:01):
Now we could do that.
Speaker 1 (33:03):
I think the other thing to note of why like
I don't have a policy is I'm comfortable holding on
to more cash self ensuring more even for long term
potential disability needs. And you're right, Matt, there's just a
lot of flexibility I think that we have that maybe
not everybody has exactly, and so I would say, yeah,
it's not for everyone, but more people should consider it. Yeah,
that's true.
Speaker 4 (33:23):
Man.
Speaker 1 (33:23):
You've been listening to How To Money with Joel Larsgard.
You can always hear us live on KFI AM six
forty twelve pm to two pm on Sunday, and anytime
on demand on the iHeartRadio app
K if I AM six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel Lar's Guard and Matt Ullmax.
Speaker 3 (01:03):
KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 4 (01:07):
This is how to Money. I am Matt Altmis.
Speaker 1 (01:09):
And I'm Joel Larsgard. Don't forget to sign up for
the how to Money newsletter. You can find that up
at how tomoney dot com slash newsletter. Can we start
off by talking about something that I've been prioritizing in
my budget over the past I don't know a year
and a half, I'll say, and that is to enjoy
more more cultural events. And I have literally called them
(01:30):
cultural events. This is the thing that I've been shooting for.
Speaker 4 (01:33):
Is up the line item on your non budget? Yeah?
Speaker 3 (01:35):
Yes, that you don't have. He just any time Emily
questions you about something, You're like, baby, that's that's part
of my cultural events spending. That's exactly right, That's exactly right.
That's botta, that was my cultural event. Sounds like the
expenses are spending coming out of like a parks and
reg departments.
Speaker 4 (01:48):
Maybe yeah, so.
Speaker 1 (01:49):
Okay, you joke. But I have been attempting to pull off.
And I made it initially once a quarter goal and
then I said, you know what, No, I want to
I want to try to do this once a month,
the cultural event, and so that could you start that
this year? I started that last year. Okay, so you
put what it could be a concert. All the concert
ticket prices have gone up substantially. It could be going
(02:11):
into the debt for that. Yeah that Actually, it could
be going to see a play. It could be like
I took my daughter to see a Shakespeare play at
the Shakespeare Tavern recently and it was awesome. We being
the best time, and they're just I think cultural events
are are underrated. And there was actually, as I told
my wife about kind of why we're I want to
(02:32):
prioritize this more and more, she said, actually, I just
read something the other day. You should check this out,
and there was here's the headline, psychiatrist discovered doing this
just once a month cut your risk of depression in half?
Speaker 3 (02:44):
Was it cultural event? Cultural events? Taking a cultural event?
So not even to defend your own case, she's done
it for you.
Speaker 1 (02:51):
That's right, So thank you Emily for contributing to the
show here. But they what they said was if you
do one outing when cultural events outing every few months,
like I was doing once a quarter initially, it reduces
your risk of depression by thirty two percent. If you
instead prioritize a cultural event on a monthly basis, that
could be by the way, a museum mounting, going to
(03:11):
the botanical gardens. There are so many ways that you
can use that culture plan. It doesn't even have to
be expensive. It will, though, cause your risk of depression
to fall by nearly half, by forty eight percent.
Speaker 3 (03:21):
So do they also call them cultural events? They literally
call them cultural events. Body in there because that's what
I'd been labeling them. I didn't know what else to
call them. That's pretty hilarious, and so I think maybe
this can hopefully incentivize people to think about I think
it could also think about the wanderlust.
Speaker 4 (03:37):
That people feel. Matt.
Speaker 1 (03:38):
They they're like, I got to go to Europe, I
got to get out of here. There's something about instituting
more regular cultural events into your life and into your
budget that maybe feels like you don't have to take
the big swing on the expensive.
Speaker 4 (03:49):
Vacation splurges more often.
Speaker 3 (03:51):
I totally love that, and I love that you specifically
have identified this for you. But I will say I
think it was like it is important to be a
stay depressed. No, I'm just saying, like, the argument I'm
going to make is that it's not like I do
think folks would probably push themselves to do something like that.
But you know, for you, it moves the needle significantly. Yeah,
I think for some folks they're gonna be like, nah,
(04:12):
I don't I don't really want to. For some folks
it's like, well, I'd rather go on a cruise. I
just like sitting there, going to island hopping that kind
of thing. I think there might be some folks who
are just like, well, when I have some time and money,
I just like to go shopping, Like that's how I unwind.
And I don't think we would consider either of those
cultural cultural event.
Speaker 4 (04:30):
No, I wouldn't. So just they're in a different category
for sure.
Speaker 3 (04:33):
Yeah, So just to identify that for some folks, spending
I think can look a little bit different and it
may not move the needle as much for them. But
whatever that is for you figure out what that thing is.
But I thought it was interesting to see this data
because I do think the average person it is going
to move the needle, and maybe you don't think about
it like that. I think too, about the before, like
looking up forward to the cultural event that's upcoming. I
(04:55):
get to think about it for months, typically because I
bought a ticket or something look forward to, Yeah, it's
on the calendar, and then I get to look back
at that event and say, oh, man, think.
Speaker 4 (05:05):
About how great that wu. Do you remember when we
did that? It was so good? Kind of like a vacation.
Speaker 1 (05:08):
I mean, that's one of the things that our friends
Scott Kay's talks about with vacations is like half the
fun is planning and getting ready for it, not just
the taking of the vacation.
Speaker 3 (05:16):
I do wonder if they accounted for this social sort
of spillover or crossover, like in the ven diagram between
cultural events and the relationships and community. How much overlap
is there, because like I said, so, I do think
for some people they're kind of like, eh, I don't know,
like that it sounds like it would be fun, but
maybe for me less. So I do think and there
has been tons and there continues to be research that
(05:38):
points to the fact that that we.
Speaker 4 (05:40):
Have fewer relationships than ever.
Speaker 3 (05:42):
Yeah, and that when we do prioritize, though, is that
we tend to live happier longer lies that increases life satisfaction,
And that's regardless if you are an introvert or an extrovert.
I think that there is a degree of us needing
to push ourselves a little bit more than what we
think we need when it comes to social interactions. But
that's not the paser that we find ourselves on. Right.
I can think about the what is the Harvard Longitudal
(06:04):
Happiness Study, and the number one thing that leads to
the highest amounts of happiness and self satisfaction and fulfilling
life are those relationships. And often a lot of cases,
I think what you're finding in these different cultural events
they include other people. So is it the ticket? Is
it ensure there's a certain amount of enjoyment. I think
it's personal development that you're getting out of that. But
(06:26):
there's a whole lot of friendship and community and being
around other people that in my mind directly overlays the
you know those two circles. Yeah, might be highly overlapping
worth something worth considering as well.
Speaker 4 (06:38):
We've got a little.
Speaker 3 (06:39):
So what I'm saying is that a cultural outing or
event could be even be buying some cured meats at
al d and having a picnic in the park with
some friends.
Speaker 1 (06:46):
Right, But I love to overthink it and don't think
that you got to go see Beyonce when she comes
to town and spend nine hundred dollars on that ticket.
Speaker 4 (06:53):
That's insane.
Speaker 1 (06:54):
To enjoy a cultural event with your friends like you
don't have to. There's affordable ways of doing it, and
sometimes it might be a semi expensive concert ticket, but
other times it can be a whole lot cheaper totally
or potentially free.
Speaker 4 (07:05):
Especially I was just thinking about this too.
Speaker 3 (07:06):
And especially if you're not dropping big money on those
expensive occations, I think.
Speaker 1 (07:10):
In the library has offers the ability to go to
get some of those cultural events for free, potentially like
going to the zoo or the aquarium, more the botanical gardens.
Speaker 3 (07:18):
You might be able to pull off that cultural event
for zero dallas and enjoy. We're even going to the library, Like, yeah,
our kids after school sometimes they're just like meeting up
there hanging out and again there's that social element.
Speaker 1 (07:29):
Yeah, I love it all right, cultural events for the win.
We got more money saving information to get to.
Speaker 2 (07:35):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (07:42):
By the way, you can always find more money saving
information over at howtomoney dot com.
Speaker 1 (07:47):
Matt, let's get to a question specifically about what to
do when your employer changes the four oh and K
match that you're eligible for. By the way, this comes
from listener Chelsea hi Jeling.
Speaker 5 (07:59):
Matt, I had a question about an update that my
company is making to the four to one K plan,
specifically how they structure the matching of employee contributions.
Speaker 4 (08:12):
So previously, the way it worked.
Speaker 5 (08:13):
Was that the company matched contributions up to seven percent
of eligible pay and now they are dividing that into
a three percent non elective contribution. So the company contributes
three percent whether or not an employee pays into the
four one K plan or not, and then they're also
adding a four percent elective dollar for dollar match on
(08:36):
top of that, so everybody gets three percent, and then
if an employee contributes more of their own then they
can get the full match up to seven percent, and
previously I don't believe there was any non elective contribution.
So to me, it seems like the company is now
paying more into the employee's four O one K accounts,
(09:00):
basically a three percent for everybody. It doesn't affect me
because they've always contributed more than seven percent and gotten
the full match. But I guess I'm just wondering why
they would make this change. I'm sure it maybe has
tax implications or something, but yeah, just curious and wondering
if you could clear that up for me. Thank you.
Speaker 4 (09:20):
Oh.
Speaker 3 (09:20):
I think Chelsea's got a suspicious streaking her. She's thinking, Hey,
you guys are going to pull the wall over my eyes.
Speaker 4 (09:27):
No, that's I don't think that's actually the case.
Speaker 1 (09:28):
I think Chelsea I get that instinct because it feels
like in the financial world, like they're trying to dupe
yet there's there gotcha's they're trying to get one over.
Speaker 4 (09:34):
Yet yeah, all over the.
Speaker 1 (09:35):
Place, you and I we highlight scams or we highlight
people who get taken advantage of, and so Chelsea's just alert.
Speaker 3 (09:41):
I don't want to become that person totally. No, I
don't think that that's actually what's happening. It sounds like Chelsea,
and you didn't share what company you work for, but
it sounds like it's a just a generous, solid company.
It doesn't sound like that they're trying to trick you
or anything. I think they might be paying a bit more. Right,
So you're saying, well, like, why would they do this?
There are many reasons, I think that we'll get to,
(10:02):
but bottom line, they're just making some of those matching
funds easier to access, no matter what the financial status
of the individual employee is. You, of course, you were
brilliant to have always gotten the free money. You've always
gotten the full match and that means that you've been
contributing with the employer money included at least fourteen percent.
Speaker 4 (10:22):
Of your overall salary each year.
Speaker 3 (10:24):
Because I think she said she was even going above
and beyond that, and so that's amazing, that's fantastic.
Speaker 1 (10:29):
That's ultimately where we want everyone to be. The fact
that Chelsea was there even before she got an added
incentive from her employer is great, it's laudable, and it's
truly what most people should shoot for. Is I think
a minimum saving trade of fifteen percent, and that you
kind of alluded to this. Let's talk about why her
employer is doing this. I think, at least in part,
(10:50):
they're probably doing it to ensure that every single employee
is at least saving something for their future. This is,
especially with Secure two point zero, kind of part of
the push to get the average employee invested, many of
whom don't invest at all if there's not an automatic
opt in. And so, you know, financial literacy in our
(11:11):
country is pretty bad. That's pretty self evident. And your employer, well,
they might see that a decent chunk of folks are
missing out on this perk altogether, like they're just not
banking anything for their future. And maybe it sounds a
little paternalistic, but I think of it as a good
thing for employers to kind of watch out for that
segment of the population and kind of force their hand
(11:32):
in that way, although really it's the employer forcing their
own hand to make those contributions.
Speaker 3 (11:36):
And sure, and you can always opt out. It's not
like you don't have a choice, like you automatically get
reroll but enrolled. But if you don't want to continue
to do that, it's just back out.
Speaker 4 (11:44):
You can back out. It's just a nudge in the
right direction. There's a yeah, right, I.
Speaker 1 (11:47):
Think this is this is going to help right the
ship at least for some of those people at least
a little bit right, getting them to invest something. And
then you know, with these automatic contribution requirements becoming normal,
this is just an on trend move for your employer, Chelsea,
and it could also make budgeting more simple for your employer.
This is another reason that they might be interested in
doing this.
Speaker 4 (12:07):
Right.
Speaker 1 (12:07):
With elective contributions, it's hard to know what percentage of
folks are going to invest and how much they're going
to invest, And so the employer's like, wait, is Chelsea
going to max her four one K and we're going
to be giving the full match to her? And what
about other people? What are they going to do? Well,
now they're going to have at least a better idea
of how much the match overall each year is likely
going to cost them. I think it just makes for
(12:28):
easier financial planning for your employer. So maybe it feels
a little more generous, and it also just gives them
a little more future knowledge about what they're going to
have to fork over.
Speaker 4 (12:37):
Yeah, I think that's definitely true.
Speaker 3 (12:38):
It's both for the benefit I think of the employer,
but also the employee, because from an employee standpoint, it's like, hey,
we're all in this together, like.
Speaker 4 (12:47):
We are all saving for our future.
Speaker 3 (12:48):
There's like a cohesive team sort of like can do
attitude sure, And I think that that is well, especially
for new hires. You know, Let's say you look, you're
considering a few different employers and you've got this one
and they're saying, Hey, no matter what, and this isn't
going to affect your pay, but you're.
Speaker 4 (13:04):
Going to be enrolled in a FOURMU and K where
you get a three percent match of your salary. It
feels like free money.
Speaker 3 (13:08):
There's something that's really attractive, attractive about that that I
think I would be drawn to, especially if I was
early in my career.
Speaker 1 (13:15):
Well, I think the other thing that maybe goes underrated,
undernoticed is those benevolent employers.
Speaker 4 (13:21):
They tend to get good street cred.
Speaker 1 (13:22):
I think about the employers in our town, matt where
we live, and there are companies who just constantly make
the headlines about being great places to work, and part
of that is often what the benefits are. And some
of these companies just have superior matches or better, four
one K plans and.
Speaker 3 (13:39):
Completely free healthcare where everything is covered, including dude.
Speaker 4 (13:43):
Man, the word gets around in your network.
Speaker 3 (13:45):
And people are like, oh, you should come over here
to work at mail Trimp because hey, they got these
like cool benefits that most people don't offer, and that's
just great press for anybody out there who's looking for work.
Speaker 4 (13:54):
They're like, yeah, maybe well apply over there.
Speaker 3 (13:55):
It's funny that you mention that's totally what I was
thinking of when I mentioned the healthcare one, because I
get like, I can say they're applying for a job
like a long time bega because I had a bunch
of friends. So you're gonna say last week I was
gonna do last week. Well, that's the thing that this
was years ago. I don't know if they've changed their
benefits since they were purchased by the big company that
took them over, but even still, yes, like you said,
I think that's something that absolutely that is worth considering.
Speaker 4 (14:18):
It's like that halo effect.
Speaker 1 (14:19):
Right for the company gets and the more generous they
are with their employees, the more likely they are to
get lauded for that, and that's going to attract more
great employees.
Speaker 3 (14:28):
Totally and it's again, so it's not just for the
benefit of the employee, but for the employer as well.
I think you're talking about budgeting, but I think it's
just going to be more. I think it could be
easier to administer as well, when you know that everyone
is on board and that out of minimum they're getting
a three percent match. Like you said, it's good from
a planning standpoint, but it's gonna be much easier to administer.
I think the other big thing that this could do
(14:48):
for your employer is that it allows them to achieve
us known.
Speaker 4 (14:51):
As safe harbor status.
Speaker 3 (14:53):
By contributing to everyone's for one K who works throughout
the company, they can avoid certain non discrimination testing requirements,
and this can be a just a big pain in
the butt that the something that the IRS requires. Many
small businesses ought to go this route, and basically it's
just easier to ensure that their plan is completely compliant
with government regulations.
Speaker 4 (15:12):
And the cool thing for employees about a safe Harbor.
Speaker 3 (15:16):
Four one K is that the three percent match also
vests immediately. It happens right away, so there's no need
to wait a year or two to ensure that those
funds are actually years before they have the ability to
claw them back.
Speaker 5 (15:28):
Yeah.
Speaker 1 (15:28):
Yeah, and I were easily count on the dollars being yours.
You and I were actually talking about that at lunchtime,
and just how with the job hopping that happens so
much in today's world, especially younger workers not staying at
jobs nearly as long those You've got to look at
the fine print of how long it takes for that
match to vest because if it's two years, if it's
(15:49):
three or four years and you're not there that long,
all those match dollars could just like fly away, vanish
out the window. And so that it's nice to know
than in one of these sorts of four one K plans,
the match is vested immediately, there's no risk of losing it.
Speaker 3 (16:02):
Yeah, i'd call those phantom four one case. Yeah, that'd
be the Friday flight headliner. That's a it's a good term.
I'm sure it's been used before. Just take that one away, okay, yeah,
I actually probably have already used that. I probably stole
it from somebody just unknowingly. There's I think maybe a
potential downside for you, and that I just want to
highlight that you could dial back your paycheck deduction two
four percent right to where you're still getting the full
(16:24):
seven percent from your employer because of this change, but
your overall savings rate would go down, you know, And
I would just say, we're okay with you taking the
extra money and putting it into like, let's say, a
roth IRA or an HSA or a different retirement vehicle
if your funds would be better suited. If you're like, hey,
I'm gonna get the full match, which means I can
reduce my overall contribution, but hey, I'm gonna take those
(16:45):
funds and put them in another vehicle that's going to
be just as.
Speaker 4 (16:48):
Good for my future.
Speaker 1 (16:49):
That's great, But don't let this non elective match change
cause you to save and invest less overall. That's the
only way I think this could have a negative impact.
If you like, cool, I'm just gonna die my contributions back.
I'm investing instead of that fourteen percent, only eleven percent,
and I'm just gonna consume the rest and upupgrade my
budget increase by spending. That is truly as I thought
(17:11):
about it. The real only downside from your perspective that
I could think totally agree.
Speaker 2 (17:16):
You're listening to how to money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:23):
Don't forget to sign up for the how to Money
newsletter over at how tomoney dot com slash newsletter. Okay,
Consumer Reports, they just put out their list of the
best new cars for twenty twenty five. Toyota and Subaru
were both well represented. This continues my streak of wanting
to own a Toyota, specifically, Jel. I've been on this Toyota.
Speaker 4 (17:41):
Kick for a while. They're pretty great. They're so evidently
they're like super you know, supposed to be super reliable.
Speaker 3 (17:46):
I'm wait until the U want to I want to
see in a hybrid is what I I want a
minivan that's a hybrid where I'm getting better gas knowledge
than what I'm getting right now because I'm waiting for
those solid drive solid state evs that Toyota's gonna put out.
So when's that gonna be, like twenty twenty eight. I
think it's going to continue to get kicked on the RESPUSS. Well,
I mean, look at the current administration. You know they're
cutting some of that, but that doesn't mean that toilet
technology is going to be Yeah, there's there's fewer incentives
(18:07):
Toileta basically said we're going to bet on hybrids now yeah,
and we're going to push towards better EV technology, and
when that comes down the pike, it's going to be
a game changer for vis I do whenever it does
actually get implemented and start where they start selling it
to the masses.
Speaker 4 (18:21):
Yes, I totally agree.
Speaker 3 (18:22):
Back to Consumer Reports though, the cheapest new car that
they highlighted is the Nissan CenTra, which it can be
had for not much more than twenty thousand dollars, which
is car When I first met her, the centrals look
better than they used to back in the day. Like
I see centers now, I'm just like, that's a sharp
looking car.
Speaker 4 (18:39):
Man. Reliability, fuel economy, they.
Speaker 3 (18:42):
Were two of the top metrics that Consumer Reports was
keeping in mind. But still we would prefer to hear
folks in the direction of buying used cars, not these
new select twenty twenty five cars. I'll say, I think
the exception is if you're worried about perhaps maybe buying
a lemon, and you're willing to keep that new car
for at least ten years if you can. I don't know, man,
(19:04):
even part of that makes me at a little hesitant.
It's not gonna be the best financial move, but it's
such a reasonable one, and there's just such a financial
hit that you're taking with that those first three years,
especially of depreciation, that really like you need to be
in such a solid position financially in order before you're
buying a new car, even a new Nissan CenTra. But
if you are keen on buying something brand new, opting
(19:24):
for one of Consumer reports favorites, I think that would
be totally wise. Yeah, while we're talking about cars, Icy Cars,
which is like a data aggregate, I don't know, the
really surveys and lots of data that we like to
look at. Icy Cars also released a new study of
the most reliable used cars, and at the top of
the list Honda Fit Baby. It's got the best five
(19:45):
and ten year track record.
Speaker 1 (19:47):
I think the ten year old car was like, what
eleven thousand dollars for a ten year old time to
fit with super affordable.
Speaker 4 (19:52):
The average used vehicle now is fourteen years old. That's
on the road.
Speaker 3 (19:57):
And when I came across that, dude completely blew my mind,
specifically because I always saw myself as like someone who's
an average car yes, in this case older than average. Yeah,
And I'm like, wait a minute, I got a twenty twelve.
That means my van is only thirteen years old. There's
a bunch of folks out there who were beating me.
It makes me want to keep that car on the
road even longer because I'm just like, wait a minute,
(20:18):
I'm barely average.
Speaker 4 (20:19):
You gotta do better.
Speaker 3 (20:19):
But it, I know, does it make you want to
sell that and you go get like a two thousand
and six or something? Not at all, But it does
make me want to take care of that thing. Wait,
I never posted pictures. Remember I talked about making the
side mirrors like I was gonna seeing them down especially.
Speaker 4 (20:33):
I totally did that.
Speaker 3 (20:34):
And like these small little things to maintain your vehicle,
it makes you feel better about it, sort of like
when you're talking about cleaning up, cleaning up your blackstone,
getting all the grease off.
Speaker 4 (20:42):
You're like, wait a.
Speaker 3 (20:42):
Minute, this is a solid grill. That's how I feel
about our ride now, So I'm going to keep it
on the road.
Speaker 4 (20:47):
Maintenance goes a long way.
Speaker 3 (20:48):
For much much longer, many more years of life on
that things. Sticking with the car stuff.
Speaker 1 (20:53):
If you get in a wreck, which I hope nobody
out there listening does, especially if you're driving right now,
pay attention right there's a higher likelihood actually that your
car is going to be totaled these days.
Speaker 4 (21:02):
If you do end up in an accident.
Speaker 1 (21:04):
Instead of getting that car repaired, it's likely to be scrapped.
And that's at least partially because cars come with more
expensive parts these days and smarter computer elements. I think
it's also just mat the rising costs of labor in
that sector.
Speaker 4 (21:17):
Oh yeah.
Speaker 1 (21:17):
Electric vehicles are also part of the reason why why
this is the case as well, because battery damage can
cause repair prices to sore significantly. That EV gets in
an accident and the battery elements get damaged and boomshock
a loca. You're talking about replacing the whole arm battery
that ain't cheap?
Speaker 4 (21:35):
Is the when the solid state rolls around?
Speaker 3 (21:36):
Is that gonna is that gonna impact the ability to
replace certain elements.
Speaker 4 (21:40):
That's a good question.
Speaker 1 (21:41):
If you could just replace certain like the damaged portion
of the some of the cells that are damaged, instead
of replacing.
Speaker 3 (21:46):
The whole pack, that in mind, that would I would
be smart. I'd be a games shu you could just
like pop out a few bricks like a bunch of legos.
Speaker 1 (21:51):
Yep, that sounds cool. That'd be brilliant. But this also means,
you know, repair times are increasing. I think the average
repair weight is like close to a month now, which
is crazy.
Speaker 4 (22:00):
Je, what is this all me?
Speaker 5 (22:01):
Man?
Speaker 3 (22:01):
I believe that one of my neighbors he's been driving
a rental vehicle. I don't think his car gott in
a wreck, but maybe it had a recall, so it's
back at the I'm assuming it's back out of the
dealership because it's like a new pickup truck and he's
been driving this other pickup truck and it's been a
few weeks now, so I did not even think about it.
Speaker 1 (22:16):
I think about your fat in law when he had
an issue with his car, and man, it was in.
Speaker 3 (22:21):
There for months, yeah, like multiple months, and they had
an actual lemon. Yeah, they ended up having to actually
make a claim with the dealership and have that thing.
Speaker 4 (22:29):
They bought it back. Basic.
Speaker 1 (22:30):
Yeah, don't sleep on lemon laws in your state if
you need it. But this is I think just another
data point that points that we're going to see higher
car insurance prices that will likely outpace general inflation moving forward.
Speaker 4 (22:41):
That's right, buddy.
Speaker 2 (22:43):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (22:49):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group. This next question is specifically about the
benefit that you get from your employer, but is it
going to be enough to cover you in a time
of need?
Speaker 6 (23:05):
A Hi, guys, this is Mike Tromaryland, longtime listener, and
I love the show. My question for you is about
long term disability policies. I'm a healthcare worker and I
bought a disability policy three years ago that pays out
about one hundred thousand a year with riders to automatically
injust for inflation. I recently became a federal employee, and
(23:25):
reading through my benefit package, I saw that I have
the opportunity to buy into a policy through the federal government.
If you were in my position, would you drop the
private policy and join the government policy. There's a couple
of reasons I'm hesitant to drop my policy. One is
I work for an agency that the current administration is
not very fond of and being a new employee in
(23:48):
the probationary period, even though it's a federal job, I'm
not one hundred percent sure how secure my job is.
Second is I prefer not to rely on my employer
completely when it comes to my livelihood sample. I could
purchase mouth practice insurance through my employer, but I always
keep a private policy because in the end, I don't
think the company will always have my best interests in mind.
(24:09):
And third is, I've never stated at a job for
more than two years, sustained twenty years, and keeping the
policy seems daunting and I know will be more expensive
to restart the policy when I'm older. Curious to know
what you think.
Speaker 4 (24:20):
Thanks all right, long term disability insurance.
Speaker 1 (24:24):
Policy, and I start one thing out there before we
get into long term dispelling Sure. Just when Mike mentioned
he works for the federal governments and we talked about
this on a recent Friday flight with what doge has
been up to, Well, that's true. Just prioritize your savings
and be prepared for whatever might come down the pike.
It sounds like in Mike's case, his position and might
be disfavored. So I just want to, yeah, put that
(24:48):
blinking in red on his radar, just to be prepared
in case he were to lose his job or something
like that.
Speaker 4 (24:53):
Sure, Well, the fact is Mike has done his homework.
Speaker 3 (24:56):
You know, he's purchased his own long term disability policy
before you taking this job. And we think that most folks,
not everyone out there, but we think most folks need
term life insurance. We talk about it fairly regularly, but
disability insurance.
Speaker 4 (25:11):
Kind of gets a short end of the stick.
Speaker 3 (25:13):
Talk about it much, Yeah, nearly as much, and it
might even be more crucial. And that's because stats show
that one in four folks will actually become disabled at
least for a short period of time before they retire.
And so Mike, if you were to become disabled for
a couple of years, well that's going to have a
significant impact on your income most likely. And while there
might be some different programs out there, like state or
(25:35):
government benefits that might be open to you, getting those
benefits is a it can be a hassle, it's a process,
and they likely won't provide anything close to what your
current long term insurance policy.
Speaker 4 (25:46):
Is willing to pay out.
Speaker 1 (25:47):
Yeah, it might be a drop in the bucket, right
compared to what you need compared to your current income,
and so that could help, but it's certainly not going
to cover the vast majority of your expenses. So having
a disability insurance policy, yeah, I could could help you
if you can't work for an extended period of time.
But you might not need the one you purchased on
the open market anymore thanks to this new policy offered
(26:08):
by your work.
Speaker 4 (26:09):
I say, you might not.
Speaker 1 (26:10):
But there are a few caveats here, by the way,
in our opinion, most folks don't need a short term
disability policy.
Speaker 3 (26:16):
There are oh good opportunity to talk about the duck insurance,
that's right.
Speaker 1 (26:20):
Yeah, yeah, yeah, that's what that's that's what AFLAC is
typically trying to sell you, Like if you get hurt.
I try to avoid the actual names of those companies
just in case they want to spidus on the podcast.
Speaker 4 (26:30):
Well, but you will not hear us voicing for a flag,
that's for sure true.
Speaker 1 (26:34):
And so yeah, that's that's what an emergency fund is
supposed to help with. So some folks might say, oh, yeah,
let me give the short term disability policy just in
case I get injured, but it doesn't last that long. Well,
the emergency fund, we think of that as self insuring,
is essentially your short term disability policy that you are
covering with funds that you have in a high yield
savings account. We like the idea right of self insuring
(26:54):
for a potential six six month work drought or something
like that, if you were to lose your job. It's
why we're so keen on saving up a substantial emergency fund,
and it's part of our money gears if you check
it out at how money dot com. But a long
term disability policy that can particu something we're more keen on.
It's something that can help if something happens to you
and you can't work for quite a while, for an
(27:16):
extended period of time, and my given your particular circumstances,
I'd be reluctant. I would say to let go of
this individual policy right now.
Speaker 3 (27:24):
Well, and I think that it's clear that Mike is
he's hesitant to give this thing up. And I think
this in part comes down to your risk tolerance and
how comfortable you are playing around the edges.
Speaker 4 (27:35):
Essentially clisse to the edge of the cliff.
Speaker 3 (27:37):
And so if you are someone who likes to be
a bit more independent, or if you don't have others
who you can count on for income, this is absolutely
something that you're going to be more drawn towards. But
at the same time, like, let's say you're thinking, Okay,
what would happen if I couldn't work, if I couldn't
earn an income for a couple of years, what would
that scenario look like? And if you've got a mom
who would like basically make you move home and fight
(28:00):
take care of you and help cover your expenses or
something like that, Okay, well maybe or you know, you've
got some parents who are like, man, I know that
they would love to have me back back home in
my hometown, back in my childhood bedroom. You know, like
if that's the kind of scenario that and there's like
in a really solid financial position, well guess what, I
don't think long term disability is something that you wouldn't
(28:20):
necessarily want to consider all that much. And so, yeah,
a lot of other backstops. A lot of it comes
down to your individual situation.
Speaker 1 (28:26):
Yeah, yeah, and just especially with the price of it,
which is something we need to talk about too totally.
And it comes down to like, if you have a
I don't hear him mentioning a partner necessarily, and so
it's kind of it comes down to him and his
ability to earn an income. But if you have a partner,
a partner who can work or who is currently working,
it's like, Okay, well we're not going to necessarily be
in dire strace. If the worst were to happen to me,
that dephrased some of that risk. The emergency funds as
(28:48):
well as another paycheck coming into the household, maybe not
having kids yet that you would also have to support,
less responsibility. Yeah, all those things would allow you to
take a little bit more risk. And it sounds like
one of the things said is he doesn't necessarily plan
on staying in this job for too long, or any
job for too long. And I think even if you
wanted to, Mike, it sounds like your job might not
(29:09):
be super secure. But if neither of those things were true,
we might have different advice. Because opting for the work
provided policy only, you'd likely be paying a fair amount
less every single month for that coverage. But for everyone listening,
I would say, double check and see what the actual
coverage includes. Because employer provided insurance policies rarely provide enough
(29:31):
coverage on both the life and disability front. So you
might say, oh, great, a free plan from my employer, fantastic,
I don't have to buy my own policy because I
am covered. And that's just like maybe but probably not right.
Sometimes doubling up actually makes the most sense. I think,
you know, taking the minimum amount of life insurance, for instance,
(29:52):
for most employer plans and getting extra coverage on your
own often makes the most sense.
Speaker 4 (29:57):
Matt.
Speaker 1 (29:57):
Back when I worked for a getting a W two,
they offered life insurance at one x your pay and
so that just wasn't enough life insurance. But you could
buy more through the company, But the race that they
would charge if you were to buy through the company
were far in excess of what I could get on
the private market. And so let's say I was uninsurable,
(30:17):
that I'd had, you know, a bunch of different health catastrophes,
then maybe it would make sense for me to get
life insurance, more life insurance through my employer, because it
would be prohibitively expensive on the open market. But for
young healthy people in particular, not getting more insurance through
your employer and getting it on the private market means
you're going to have enough coverage, it means it's going
to cost less.
Speaker 3 (30:38):
Yeah, just because there's a policy available to you through
your employer doesn't mean it's the best nor necessarily the
most cost effective way to go about it. And it
sounds like Mike's you know that he's got his own
solid policy there that's going to pay out well if
he does encounter a disability. And he also mentioned the
inflation adjustment as well. There's an inflation adjustment clause and
that's pretty massive, Like, that's a huge deal.
Speaker 4 (30:59):
And so I.
Speaker 3 (31:00):
Think if I were actually these days, yeah, yeah, well hopefully, yeah,
hopefully we pass the worst of it, but man, it's inflation.
It is sticky. If I were you, Mike, I would
hang on to that policy at least for now. And
by the way, for folks out there who might be
considering this, if you are looking into it, just know
that a policy out there on the open market, it's
not cheap. It often costs one to three percent of
(31:21):
your annual salary. It depends on a number of factors
and elimination periods and things like that are built into
your specific policy. But given the stats, it is an
insurance policy that more folks should consider. That being said,
I don't want to discourage folks, but I don't personally
have a long term disability policy in play shoal do
you know? I do not either, But I will say
we're risky dudes. I guess if I lost.
Speaker 1 (31:43):
My voice completely that would be uh, that potentially put
me in a bad position.
Speaker 4 (31:48):
But talking about kind of how much risk we can.
Speaker 3 (31:50):
There's also other things well here before you keep moving, Yeah,
like you're touching on like a specialized career, right, and
if you, let's say you're like a concert pianist and
like this is the only thing that you can do
and you make a ton of money doing that, that's
the kind of scenario, the kind of situation where it
might pay to go with some long term disability.
Speaker 1 (32:07):
Or they're literally people who have like football players pianists,
who have insurance policies on the parts of their body
that make them income. Right, they're specialized policies for those people.
And you and I don't think we qualify to get
that sort of level of insurance from our you know,
from our carriers.
Speaker 3 (32:25):
But anybody can can talk like I do, and most
folks actually can speak a little bit better.
Speaker 4 (32:30):
Than I can Dole.
Speaker 3 (32:31):
But that's an important consideration though, like if you are
flexible to doing other like I've done lots of different
things in my life. I don't have like a career
that looks incredibly specialized.
Speaker 4 (32:42):
I'm very open to being flexible to trying new things.
Speaker 3 (32:45):
Okay, and I we've even talked about this and she's like, well,
I would go go to work if something happened to you.
It's like, okay, cool, these are conversations that are important,
and if you broke your back, maybe I would host
for by myself for a little bit and then you'd
be back on the mic hopefully a no time, like
they're a host from the bed. Just be like, all right,
this is it's just what it looks like.
Speaker 4 (33:01):
Now we could do that.
Speaker 1 (33:03):
I think the other thing to note of why like
I don't have a policy is I'm comfortable holding on
to more cash self ensuring more even for long term
potential disability needs. And you're right, Matt, there's just a
lot of flexibility I think that we have that maybe
not everybody has exactly, and so I would say, yeah,
it's not for everyone, but more people should consider it. Yeah,
that's true.
Speaker 4 (33:23):
Man.
Speaker 1 (33:23):
You've been listening to How To Money with Joel Larsgard.
You can always hear us live on KFI AM six
forty twelve pm to two pm on Sunday, and anytime
on demand on the iHeartRadio app
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