May 4, 2025 • 33 mins
A new Vanguard study finds that folks with $2k in savings are much more financially resilient. So don't neglect your savings.
Ask HTM: Ann in CA wants to avoid living paycheck to paycheck. Does she need a financial coach?
Slate Auto is launching a bare-bones electric truck for under $20k. Matt and Joel are excited!
Ask HTM: Phil is saving up for a down payment. Should he be using a money market account instead of a HYSA?
Ask HTM: Ann in CA wants to avoid living paycheck to paycheck. Does she need a financial coach?
Slate Auto is launching a bare-bones electric truck for under $20k. Matt and Joel are excited!
Ask HTM: Phil is saving up for a down payment. Should he be using a money market account instead of a HYSA?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kf 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 Larsguard and Matt.
Speaker 1 (00:18):
Altmes KFI AM six forty live everywhere on the iHeartRadio app.
(00:46):
This is how to Money. I am one of your hosts,
Joel Larsgard.
Speaker 3 (00:50):
And I am Matt Altmixed. By the way, you can
always find more money saving information over at howtomoney dot com.
Speaker 1 (00:56):
I want to start off mat with a quick frugler
cheap because our neighbors across the street just had their
their firstborn son just turned two, and we had a
birthday party with a little bouncy house and all that stuff,
and it was really fun fun my kids to take
you back dominated that bouncy house. I felt bad for
some of the other two year olds there, but got.
Speaker 3 (01:14):
Two hospital visits. Sorry again, Joel shall not be held
that's right.
Speaker 1 (01:18):
You can't sue me for that. But my my son
wanted to give their two year old son a bunch
of his old trucks, and so.
Speaker 4 (01:26):
Ah, that's sweet.
Speaker 1 (01:27):
We had like a we keep like a little section
of stuff to give away for birthday presents, like if
we found it and it was like on a great
sale or something like that, like pre buy it for
the future. Yeah, you're good about that.
Speaker 4 (01:37):
The birthday the present closet, birthday bind.
Speaker 1 (01:40):
Yeah, so the birthday.
Speaker 4 (01:41):
It's like the fun box in kindergarten, a out of a preschool.
You get a you get to take an item from
the birthday bin.
Speaker 1 (01:46):
So we gave him like played out thing, right, but
he's gonna be excited about. But apparently the gift he
was most excited about was the pre owned cars that
my son gave him. Uh he put him in a
separate and everything like that, and so that was the
most exciting president of the day. Was was a used gift?
How is I don't know, use use gifts to friends?
Speaker 3 (02:08):
Okay, Well, it completely depends on the relationship because if
you say.
Speaker 1 (02:13):
It's cheap, I'm blaming my son. By the way, it's
all his fault.
Speaker 3 (02:16):
I know these neighbors and I know y'all are pretty
tight with them, and like you're living life together and
stuff ends up in other people's homes and.
Speaker 1 (02:23):
Because of that, it feels more acceptable.
Speaker 3 (02:25):
I think it's if this was like a friend from
school and you're driving over to their house.
Speaker 4 (02:29):
If it's that sort of scenario, I think you go with.
Speaker 1 (02:33):
A new president where you're more acquaintancey.
Speaker 3 (02:35):
Yeah, exactly, when you're not as tight because I think here,
here's the deal. I think to younger Matt, and I
think younger Matt would have said, no, no matter what,
no matter who they are, secondhand gifts are fine. They're
gonna like it and you kind of force it upon them.
But that is the very that was one of the
very definitions when we did the original frugal Versus Cheap
episode of Cheapness is if you are imposing your quote
(02:56):
unquote frugality upon somebody else, that's when it and it
alchemy like way, becomes cheap.
Speaker 4 (03:02):
Yeah. I get that.
Speaker 1 (03:03):
Yeah, Yeah, that's.
Speaker 3 (03:04):
I think I would be more predisposed to buy new
with acquaintances like you mentioned. But certainly it's a good point.
Certainly with my kids. I think used gifts are fine.
You just need a the presentation matter, so you know,
like if it's like if it looks like a used
item as opposed to if it's you doll it up
a little bit dress it up, like if it's if
it's still in the eBay box and you haven't even
(03:26):
like opened the box and you're like, oh yeah, let's
see what's inside there that feels cheap versus taking the item,
putting it in a gift bag or something right to
where you are demonstrating that, hey, this thing still has value.
And not only does it still have value, yes, you've
put some thought into it, and it's cool to go
secondhand as well. There's like multiple messages that you can
kind of weave into that weather with your own kids,
(03:48):
but also with the right neighbor or with the right
friends as well.
Speaker 1 (03:52):
I think that's a really good point. And the more
you know them, the more they know you and your idiosyncrasies,
the more they're gonna be like, oh yeah, that's kind
of par for the course for them. And guess what
turned up The use trucks were his favorite gift anyway,
which that's awesome, kwesome.
Speaker 3 (04:05):
Plus I love the passing down of certain prized possessions
amongst kids in a neighborhood or something that is essentially
getting woven, like like your lives are getting woven together
in a kind of messy way, which feels like the
heart of any sort of community, right, Like, you want
an element of that.
Speaker 1 (04:21):
For sure, Joel.
Speaker 3 (04:23):
Let's talk about one of our favorite brokerages, one of
our favorite companies out there to invest with, Vanguard. They've
got this new study out turns out the strongest predictor
of financial wellbeing. It's not being a savvy investor, it's
not being a really good stock picker. It's also not
required to have a Mensa level IQ or anything like that.
(04:43):
The Vanguard study found that just having two thousand dollars
in your savings account, that right there is actually the
strongest predictor of financial wellbeing. And here on the show
Man we talk about emergency funds pretty often, and this
highlights why it's another underrated reality of not having enough
money in your emergency fund, feeling that, oh, I'm gonna
(05:04):
have to actually tap some of those investments. I'm not
gonna let them cook, not gonna let them compound over
the year. But in addition to that, the distraction that's
created just from living with no margin in your life
as well is detrimental to our financial wellbeing. Vanguard found
that people with no savings that they spend over six
hours a week thinking and worrying about their finances while
(05:26):
on the job, as opposed to just one and a
half for folks who have cash on hands.
Speaker 1 (05:30):
It makes sense, makes sense because you're living on the
financial precipice. That one bill that comes in kind of
knocks you flat. And it is amazing how not having
cash in the bank just makes you more susceptible, more vulnerable,
more stressed.
Speaker 3 (05:43):
Out, more stressed. You're looking at then you're logging in
your credit card and be like, ooh, how much credit
do I have left?
Speaker 5 (05:49):
Oh?
Speaker 4 (05:49):
When's that payment due?
Speaker 3 (05:50):
Okay, dange the interest payments? About the play is working
on overdrive.
Speaker 1 (05:53):
It's yeah, it's harmful to a mess to you from
a stress standpoint, from an anxiety standpoint, This obviously has
an impact on the quality of work you do right
on your job security as well. If you're the kind
of person who is logging into their bank account to
try to figure this stuff out. If you're sleuthing on
your finances six hours a week while you're at work,
that's going to have an impact on your performance. It's
(06:13):
going to get noticed. It makes you think back to
some of the studies too. At some of the higher
level government or military jobs require you to have a
certain level of buttoned upness when it comes to your
finances because they want you to be less susceptible to bribery.
Speaker 3 (06:28):
If some carrots are being dangled in front of you
that have a whole lot of dollar signs on them,
you're going to be more likely to be I don't.
Speaker 4 (06:36):
Know, a foreign operative.
Speaker 1 (06:37):
Yeah, it's like the goal the gold bar shoved into
your pocket doesn't matter as much. Like you've got enough
cash on hand and you're like, no, I don't need this. Actually,
is that the little gold the New Jersey senator, that's right,
that's right. So he and his wife both found guilty
for that.
Speaker 3 (06:52):
Yeah, unfortunately, so fortunately, because we don't need to have
that thing going on, right, it's unfortunate that.
Speaker 1 (06:57):
They it happened. Yes, well, fifteen percent of people the
study with two thousand bucks said they were stressed about finances,
versus fifty one percent of folks who are stressed because
they didn't have the saving So it's just interesting. It
makes complete and total sense that if you have a
little bit of money on hand, you are far less
stressed out the value of an emergency fund just goes
far beyond having money to pay for what you need
(07:19):
if you find yourself in a financial bind. And it's
just fascinating too to see. I think some people think, well,
I'll be less stressed once I have this massive buffer
built up, once I have this much my network gets
to this point. Well, the truth is you're at least
eradicating the worst kinds of stresses with just a small
pittance in your in your savings camp two grant.
Speaker 3 (07:40):
That's why we talk about the basic emergency fund. That
is step number one creating some financial margin in your life.
Speaker 4 (07:45):
And it used to be two thousand.
Speaker 1 (07:47):
It's not just step number one, it's money gear number one.
I'm sorry, yeah, so off brand. Use the proprietary language, please, sir.
Speaker 3 (07:53):
It used to be two thousand, four undred and sixty
seven dollars. With inflation, especially that we've experienced over the
past several years, it is now three thousand.
Speaker 1 (08:00):
Forty five dollars. Thirty forty five.
Speaker 4 (08:02):
Remember that that's how much we want you to have
in your savings account.
Speaker 1 (08:04):
I like a specific sticky number when yeah, man, that
is gonna that's the thirty forty five way to go.
Vanguard with two grand, but we're going to say thirty
forty five is an even better number. Yes, it gives
you a little bit more money, but it's still achievable
for the vast majority of people.
Speaker 6 (08:19):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (08:26):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter. Matt, let's get to a question about living
paycheck to paycheck and how to escape that cycle.
Speaker 5 (08:38):
I'm ann and I'm in California. I'm a single woman,
sixty one years old. I believe that I'm in the
lower end of middle class. Lately, I find that I'm
living paycheck to paycheck.
Speaker 1 (08:51):
I looked into using a.
Speaker 5 (08:52):
Financial planner, However, I found that they really only work
with investments. I don't have any investments. What I'd like
as a financial coach someone who can help me with
budgeting and looking at my situation and then making suggestions.
I'd like to meet with a person for a low cost.
(09:13):
I'm not interested in an online worksheet type program. My
question is, is there such a person who can do this?
Thank you, bye bye.
Speaker 3 (09:23):
Oh Joe, what do you think about Ann hating on
all the worksheets and the different programs out there that
folks are well, folks are selling or sometimes giving away.
We've got worksheets on our website I can give away.
I think those can be really helpful.
Speaker 1 (09:35):
But I also get I get what she's saying, the
desire to have a one on one relationship with a
human who can help you out through this. Like that
makes sense to me. I think totally that's how I
work best. But a real life person, Yeah, I don't
want to talk to no AI chatbot. Give me a
real person with issues. I was literally talking about friend
the other day and he was like, you guys should
totally have an AI chatout. You have all the podcasts,
(09:56):
all the content on your website. You could feed it
in there and it could spit out. Matt and Joel
answers right and left to people, And I don't know, man,
I'm just kind of trying to avoid that AI game
as much as possible. That was one of the first questions.
Speaker 4 (10:07):
So, man, we're really going off the rails here.
Speaker 3 (10:08):
But back when we were talking to somebody we had
that we had hired to do some work on the site,
and one of our questions was about AI. We're talking
about these large language models. Can we create our own chatbot,
train it on our episodes and essentially have answers in
our voice the way that we would.
Speaker 1 (10:25):
Talk about it.
Speaker 3 (10:26):
It's a unique proposition is but he's just like, we're
not quite there yet. Maybe we are now because that
wasn't again the rate at which things go. Yeah, it
might actually be a reality. But and I've got to say,
your desire here to avoid a financial advisor and instead
to work with a money coach specifically is brilliant. Most
folks they tend to think of advisors as the only
(10:47):
game in town when it comes to help with their money.
But the average advisor they don't do a whole lot
with household budgets and holding people accountable. So your desire
to find like a coach is totally It makes a
ton of sense. Advisors are going to be more interested
in helping you to invest, and then the vast majority
like they're not even gonna want to work with you
unless you've got like six figures of investable assets to
(11:09):
your name either.
Speaker 1 (11:11):
This is also why rebo advisors.
Speaker 3 (11:12):
They found a nice niche as well for them to
people who don't have a ton of money but they
are looking for some of that additional help, not unlike
an AI Chatbotjie.
Speaker 1 (11:20):
Kind of in between step there for a lot of
newbi investors totally.
Speaker 3 (11:24):
And plus you would likely pay way too much money
if you ended up going with a financial advisor as well,
So a budget coach I think that makes a whole
lot more sense.
Speaker 1 (11:34):
Yeah, The cheapest model we know of, essentially to get
a financial advisor on your team to help you out
basically is a minimum one hundred and fifty dollars per
hour long session, and that's through the website Hello Necktreen.
But even they it used to be flat fee hundred
and fifty. Now it's flat fee one fifty to three hundred,
and so the price to hire a financial advisor is
incredibly steep. We've had budget coaches Matt on the show before,
(11:56):
and you know, one of those folks or one of
those types of folks is likely the right choice for you.
An it's just it's such a great segment of the
finance base and it doesn't get enough love. Like nobody
talks about budget coaches or money coaches. These folks they offer.
They're often offering services because they've had a meaningful financial
awakening themselves. They've had to go through a debt payoff
(12:18):
journey that was a multi year long slog. They learned
a whole lot through trial and error in the DIY process,
and so they've also, on top of that, been through
the emotional roller coaster right that can be and often
is living to pay paycheck to paycheck. They know the
right questions to ask and that often allows them to
better speak to how to turn the ship around, right
(12:40):
to speak into your life about what's going on because
of what they've gone through themselves. And typically they get paid, yeah,
like an hourly rate, or they charge for a specific
number of sessions. I don't know, maybe like three hundred
and fifty bucks for four sessions something like that. But
I do think that budget coach. One it's going to
be cheaper, and two, it's going to be more highly
targeted to what you're going through. It's going to be
(13:02):
more relevant. A couple of specific folks we've had on
the show, or even ones that we haven't looked, that
we can recommend Erica Jung, she's been on the show,
Elena Fengal. She's also been on the show, and then
this couple who runs a podcast called The Price of
Avocado Toast. There are awesome folks and they're also financial
coaches on the side too.
Speaker 3 (13:18):
So that being said, and doesn't have a ton of money,
so I also want to point her towards free and
cheap resources from some different nonprofits. In particular, I'm thinking
of MMI, which is Money Management International, which by the way,
sounds super fancy and like wealth advisory, but they're not.
They're there to help folks deal with that and turn
their finances around. Also, National Foundation for Credit Counseling. These
(13:42):
are both excellent resources in order for you to gain credit,
to gain some budget counseling, you can get one on
one advice from a certified counselor there with those organizations,
and they'll typically help you to create a personalized plan
kind of like like if you're looking for a roadmap
for moving forward, if you know you find yourself kind
of spinning your tires a little bit, perhaps this is
(14:04):
going to allow you to gain some of that traction.
And I'm not sure how much debt you specifically have,
but I think they can help you to create a
debt management plan to get rid of it more quickly,
but don't trust some of the for profit companies who
make these massive promises and end up under delivering. I
will also say a money coach is no substitute for
you learning some of this yourself, and so I'm talking
(14:26):
about a DIY education.
Speaker 4 (14:28):
It makes me think of someone who's interested in becoming.
Speaker 3 (14:30):
A real estate investor who opts to, let's say, hire
a property manager. Well, if that were to be you,
like you wouldn't even know the important questions to ask
in order to hire a good property manager because you've
never been.
Speaker 4 (14:42):
Exposed to this at all.
Speaker 3 (14:44):
And so I think listening to podcasts like this, reading
books this is still crucial. We've actually got a link
to some different resources up on the website to where
I don't know. I think that can help you to
get you your journey started. One other free resource too.
Don't underestimate the hour of community and friendship. I think
the ability to link up with somebody or to man.
(15:06):
This isn't something that we said in a long time,
but one of the goals for our show is for
money personal finances to not be taboo, and when it is,
people are afraid to talk about it, and when it's not,
it's something that you talk about, you engage with, you
challenge each other, you hold each other accountable, and it
allows you to see incredible progress, I think on a
very truncated timeline.
Speaker 4 (15:26):
So not to mention this is something we've talked about recently.
Speaker 3 (15:30):
But the fact that relationships are always key to long
lasting happiness, and so you're kind of like doing like
a two for one here by talking to your friends
about personal finances. It should be something we engage with
and ask each other questions about, as opposed to it
never coming up.
Speaker 1 (15:45):
I think there's also a lot of shame and for
a lot of people when it comes to their personal finances,
and the more we can kind of normalize talking about it,
the more we can kind of take some of that
shame away, bring out those mistakes into the light because
guess what everybody has made similar mistakes right sore is
it's not uncommon, and there's also nothing to feel ashamed about.
There's also a way forward, what it comes down to,
(16:07):
and to get this ship right back on the right path,
it's going to take changing some habits right, feeling some
pain along the way, as well. Right, you might need
to go on a bare bones budget, which we have
articles about on our website if you want to check
it out for a few months to gain some savings,
to gain some stability. And I think it's important to
mention that for most folks getting into a financial hole
(16:28):
where they're living paycheck to paycheck or where they're in
debt that they didn't see coming that they weren't planning
on taking on, well, it often took. It was little
things over the course of many many months, if not
many many years, and then once the light dawns on you, hey,
I'm ready to make a change. A lot of people think,
all right, how am I going to get out of
this in the next three months, And it's just it's
(16:48):
just not possible. Right, So you also have to have
a realistic time frame and expectations about how long it's
going to take to turn this thing around. All right,
We've got actually more to get to on today's show.
Speaker 6 (16:59):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (17:05):
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.
Speaker 3 (17:14):
So, Joe, something you and I were both really excited
about last week towards the end of the week was
the unveiling of that awesome EV or specifically an electric truck.
This is a twenty thousand dollars affordable EV and it's
not even the supposedly fantastic ones that BYD is creating
over there in China, which doesn't even really matter because
I doubt we're going to see any.
Speaker 4 (17:34):
Of those times.
Speaker 3 (17:36):
But a Jeff Bezos back startup called Slate Auto is
launching a bare bones electric truck that, if the current
electric vehicle instead of remain is supposedly going to cost
less than twenty thousand dollars. Incredible, and evidently they're going
to start delivering these things next year. And holy cow man,
(17:56):
I'm so excited. I don't think I've been excited for
the Tesla's are cool. Certainly when the ribbeans came out,
I was the gorgeous. Yeah, we're kind of drooling over them.
I'm just like, I don't know how I'm gonna Why
do all evs have to be luxury vehicles? And that's
the difference here because these things are incredibly cheap. The
reason being is because they are very minimalistic. They don't
(18:18):
have stereos, they don't have power windows, which was my
favorite feature, the fact that they don't have power at home.
I love those little roller things. I'm totally down to
my windows school dude. There's no big screen in the
center of the dash. It specifically called out manual AC
and heat controls like the old school buttons, just like
we are currently rocking in our old vans. Basically, the
(18:41):
car is a blank slate, so it's called slate Auto,
but it's you know, it's kind of like a blank slate. Yeah,
if you want to spice it up, you can. It's
got all these different accessories that you can add on.
You can even turn it into a five seater suv,
which I think it's like five grand to add those
I see.
Speaker 1 (18:57):
I think I saw that in one article about it
because I was I was concerned, or at least interested, Well,
how much is that.
Speaker 3 (19:02):
Going to TV medal is going to cost you? Thirty
five r Wait, how'd you go from twenty to thirty five? Yeah,
but apparently it's it's an extra five grand add on
we can get behind that twenty five thousand for a
five seater suv even just like a little truck, a
little like I can so see Kate and I having
one of these, just the putts around town. And just
given the amount of gardening that we do, to be
able to load mulch in the back of the truck bed,
to be able to.
Speaker 1 (19:22):
Put four by eight sheets of plywood back there. Man,
this is I love it. And it's a smaller truck.
When you look at the size, it's not as small
as a what do they call the Japanese are they
the K trucks?
Speaker 2 (19:33):
Yeah?
Speaker 4 (19:33):
Cars?
Speaker 1 (19:33):
It's not quite as small as that, which is good
for me. I might actually be fit in it as
someone who's.
Speaker 3 (19:38):
Six with six those are comically small, whereas this is
just like reasonably small, like nineteen eighties Toyota small, which
those are like the coolest trucks anyway, like the small
Toyota's from the eighties.
Speaker 1 (19:48):
This is huge groundbreaking. I think I'm so glad to
see someone launching a car finally at like the lower
end of the costs spectrump for people who and I
think there's probably more people than just us two money
nerds who are interested in this, Matt, I don't think so,
especially as car costs have been rocketing upwards and people
are like, yeah, I'd be down to do the ev thing,
but they're really expensive, and so yeah, I think this
(20:11):
is this is going to reach a lot of people.
You and I we both plunk down a fifty dollars
deposit to purchase one. It's refundable, not to go with it, right,
And you might be thinking, wait a second, Matt and Joel,
they're always talking smack about new cars. Who are these
guys who who really might buy this new truck when
it comes out. Well, this new car would be less
(20:31):
than half the price of the average new car, and
it would be cheaper than the average cost of a
used car.
Speaker 4 (20:39):
So I love it.
Speaker 1 (20:41):
Not that I would spend that much anyway typically, but
like the problem with new cars is that they keep
getting bigger, they keep getting fancy, Yes, power, everything becomes standard.
I just think that the market is crying out for
a bare bones creation process, and in what that does
essentially to the pricing of the automobiles, it allows them
to price them this competitively. Uh, And that no frill
(21:05):
segment of the population has been completely ignored in the
car buying population. So uh, I really think, Matt, that
this has a lot of legs to it. I'm curious
to see what one looks like in person. I'm curious
to see how this launch goes.
Speaker 4 (21:18):
It's like so cool, but I.
Speaker 1 (21:19):
Have a feeling a lot of how to money listeners
are like, yeah, I just kind of want something that's
going to get me around and be a little comfortable.
I don't mind if I have to stick my own
Bluetooth speaker and there to listen to my music because
guess what I'm.
Speaker 3 (21:30):
Doing that all that's my recommendation for you last year
where you're just like, oh, it's kind of annoying that
I had I listened to it from my phone.
Speaker 1 (21:36):
Doesn't get you a Bluetooth speaker.
Speaker 3 (21:37):
Yeah, And it's so cool that that's literally a part
of their like want to listen to music.
Speaker 1 (21:41):
From the ground up.
Speaker 4 (21:42):
Oh my gosh.
Speaker 3 (21:42):
Of course, like there are just simpler, more bare bones
ways to accomplish the things that we thought required all
the technology or all the factory settings to be just
the defaults. I mean, we've talked about this recently too,
Just how like when did kitchens get so nice? Yeah,
and we've I don't want to change the conversation and
switch to homes, but like think about homes from the
(22:03):
eighties and the seventies and the sixties, even versus kitchens.
Speaker 4 (22:06):
Now maybe we consider.
Speaker 1 (22:08):
Normal is it's so long luxury fifteen twenty years ago.
Speaker 3 (22:12):
That's great if you can afford it, But man, I
want to see more fews out there sometimes.
Speaker 1 (22:16):
Sure it's like I'd rather find my money on other things.
Speaker 3 (22:18):
So yeah, yeah, I love it, and I hope that
we are not the only ones that are going to
get excited about this. I really want to see this
little company out of Troy, Michigan takeoff.
Speaker 1 (22:27):
You too.
Speaker 3 (22:27):
This is Troy because that's what it said on the
credit card statement. Not really, it always like says like
the name of the company and specifically where they are.
Speaker 1 (22:34):
Yeah, yeah, trum. I was like thrilled to put fifty
bucks down on this list and yeah, my riv and
R two. It might be I got a.
Speaker 3 (22:41):
Whole lot less attractive, less attract I'm gonna ahead and
pull that deposit back.
Speaker 1 (22:44):
Yeah, we'll see.
Speaker 6 (22:45):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty don't forget.
Speaker 3 (22:52):
To sign up for the how to Money newsletter over
at how tomoney dot com slash newsletter.
Speaker 1 (22:56):
All right, let's take this question from listener Phil Matt.
He has a question about saving for his down payment,
and he highlights an account you and I don't talk about,
maybe as much as he'd like him at Joel.
Speaker 7 (23:07):
I'm in the process of saving for a down payment
for a house, and I've been advised to put some
of my money into a money market account. I don't
hear you guys talk a lot about these, and I
was curious if it's something you don't recommend, or if
you do recommend, and why or why not. I have
looked online for some information, but haven't found a lot
of information about money markets. The account that I was
(23:28):
recommended was pcoxx and it's average about a five and
a half percent return this last year, and the year
before was about six and a half percent, and I
assume with the interest rates going down, it'll lower a
little bit this year. That being said, I have a
high interest checking account with Lake Michigan Credit Union and
(23:48):
it offers three percent apy but only up to fifteen K.
So since I'm over that in saving for a down
payment on my house. I'm looking for a single place
to put all my money. I did look it up
with Dave Ramsey and he suggests a CD over a
money market account, but didn't really explain why other than
he said the rates were better. However, I don't see
(24:10):
that the rates are better in CDs right now. Just
for reference sake, I'm planning to purchase a house in
twelve to eighteen months, so I'm looking to have this
money available and liquid easily. And from what I understand,
money market accounts you can get the money back relatively
quickly when you need it.
Speaker 1 (24:29):
Thanks for your help, I appreciate everything, Phil.
Speaker 4 (24:33):
Joel's actually going to make a donation.
Speaker 3 (24:34):
If you could just put together a gofund me for
hum down payment, YE going to pitch.
Speaker 1 (24:40):
In about thirty two cents. That's what I can spare.
Speaker 4 (24:43):
Right by the way, did Phil did he actually say
his name?
Speaker 3 (24:45):
I don't know if he said his name, but we
know his name because he sent us the email, of course.
Speaker 4 (24:48):
But Phil, good question.
Speaker 3 (24:49):
There are a lot of different places where you can
save your down payment these days. You can save your
money over in Joel's account and he'll that's right.
Speaker 1 (24:58):
No, the interest rates much worse than what Phil's.
Speaker 3 (25:00):
Debscribe CDs, money markets savings. These are all different accounts.
Each one of these exists for different reasons, so we'll
do our best to explain which one might make the
most sense for you.
Speaker 1 (25:10):
Yeah, they sure have a lot of similarities, I will say,
but they have distinctive qualities that Phil's kind of looking at.
Parse the details, So Matt, let's parse the details. Let's
start off by talking about CDs, and I think they're
out for Phil, right, I think he knows that too.
But because he said he needs liquid cash for the
home purchase, that's really not in the too far distant future.
(25:33):
You could, I guess, feel op for a short term CD,
since you said you need the money and like, let's
say twelve to eighteen months, But hey, what if you
put it in a twelve month CD. You found the
perfect home in eleven months and you're like, man, I
need to that down payment, Like, now, what's just not
worth the loss of the interest you would take by
breaking that CD would typically you forfeit the last three
(25:54):
months of interest, which would mean hey, basically, any other
savings vehicle you picked would have been better than this
I think it's just a non starter, Like I wouldn't
even consider it. There are Matt, you know this well
because you're an ALLY customer. There are no penalty CDs
from Ally, which I believe you put your money in
at one point, but you pay right for that more
flexible product by agreeing to a lower starting interest rate.
(26:17):
There's something. I don't think it's quite half a point,
but there's a there's a decent gap between signing up
for a CD that doesn't have a no penalty writer
on it, essentially through Ally, and so yeah, you're just
going to get paid less on your money, and it
just doesn't make sense for what you're trying to accomplish here.
Although CDs might still make sense for other people right,
especially if they need downside protection against the possibility of
(26:41):
following interest rates for their cash. That's when a CD
makes sense, but only if like, hey, you can lock
it up. You know you're not going to need to
touch it before him, And that's just not the case
that fills in.
Speaker 4 (26:50):
Yeah, he wants to be ready.
Speaker 3 (26:51):
To pounce and we're gonna not recommend CDs because Dave
Ramsey sounded like he recommended that to fill so we're
going to immediately just say the opposite of it.
Speaker 4 (27:00):
Whatever Day says. Now, that doesn't surprise me.
Speaker 1 (27:03):
Did Dave tell you save for retirement?
Speaker 4 (27:05):
Don't do it? Phil? You better? You better not.
Speaker 3 (27:07):
It makes sense that Dave or someone you know over
that was a part of his crew mentioned that because
just I feel like, generally speaking, they're a little bit
more risk averse, at least when it comes to debt
taking on. Well, yeah, I guess we're not talking about
debt here. We're talking about savings. But there are a
lot of things that we do agree with when it
comes to Dave and some of his principles. But there's
some things that we don't agree with, like credit cards, namely,
(27:28):
but I'd pay.
Speaker 1 (27:30):
Your mortgage right there. Yeah, I get the.
Speaker 3 (27:32):
Desire wanting to cross check some of these different recommendations.
But when it comes to high yield savings accounts versus
money market funds, I'm gonna.
Speaker 4 (27:41):
Say that we're probably a bit more partial.
Speaker 3 (27:42):
To highield savings, but you truly you can't go wrong
either way here because they're very similar account types. One
is offered by brokerages, that being money market funds, and
the others is going to be banks.
Speaker 4 (27:54):
The high old savings account.
Speaker 3 (27:55):
Of course, Vanguard's v m f x X is actually
a fantastic choice on the money market front. You do
have to have an account at Vanguard, but the holdings
of that fund are in very stable assets like cash,
government securities as well. Fidelity they've got a cash management account.
That's that's pretty good.
Speaker 4 (28:16):
Uh. And one perk of that that specs.
Speaker 3 (28:19):
Yeah, not spankspas spax uh Huh. A perk of that
versus a high old savings account is you can use
a debit card and you can write checks directly from that,
which you typically can't do from a highyield savings account.
Speaker 2 (28:32):
Ah.
Speaker 3 (28:33):
That being said, it is not too difficult to transfer
money over from the high old savings directly to a
checking account, assuming you also have a checking account with
that particular institution and they offer free checks. But the
returns they're close to or sometimes oftentimes I guess at
least lately, they've exceeded some of the highest returns on
high yields savings accounts as well. So if you are
(28:54):
a Vanguard or if you are a Fidelity customer, this
is a I would say, a very reasonable place to stash.
Speaker 4 (29:00):
Or cash that you're gonna need for a down payment.
Speaker 1 (29:03):
Yeah, So I think money market funds definitely a recent option,
and there's a reason I think more and more people
have gravitated towards having doing essentially all of their money
business with a low cost brokerage firm because it's like, hey,
I'm gonna invest there, I'm to have my cash management account.
I'm just going to have it literally all under one roof.
And the perks of some of those cash management accounts
(29:25):
at the brokenge firms, So I've gotten really good right
when it comes to like no fees, free atm with rawls.
I think Schwab kind of started at Fidelity has a
great option now too. So more and more people are
saying that's that works for me, and they're just saying
I don't think I need a bank at all. I
also just want to say I think banks do a
really good Some banks do a really good job on
the front, obviously not the big banks. So we love CI.
(29:46):
We talked about CIT regularly when you've got lots of money,
like an down payment fund, because they've been paying top
notch returns that are at or above some of these
money market fund rates. If we're talking about like small
time savings, like, hey, I've got fifteen hundred bucks to save,
should I move banks? Well, the stakes are lowered there,
right if you don't have a lot of money on hand.
But if you've got a lot of cash because you're
saving for to buy a house, then every half a
(30:09):
point or something like that matters quite a bit when
it comes to your overall amount of returns, how much
money your money is making. There's just no reason to
not be with an online bank that offers highly competitive rates.
Phil mentioned that he has a three percent checking account
with strict limits. What fifteen k, Matt, you can't earn
above that? Probably over fifteen k you're making point zero
(30:30):
one percent or something like that. Well, now it's the
perfect time to move. Get out of that. Credit unions
are great for borrowing, they're not great for savers. And
so there are just great highled savings accounts out there
for you, Phil that are going to you know, you're
going to get a good bit more on your money
with zero caps, so you're going to make the full
four plus percent on all the money that you have
(30:52):
right in that account. We don't want folks jumping around
all the time to score slightly higher interest rate. But
moving your funds and your business to a bank that
consistently pays customers incredibly well, I think. I think it's
a no brainer.
Speaker 3 (31:04):
Yeah, specifically because it's something that you want to do regardless.
It's not like you're only doing it for this down payment.
This is just good general personal finance hygiene essentially. Also,
Betterment's got a pretty solid cash management account too. I
think right now you can snag an extra half a
percent as a new customer for three months for a
total of four and a half percent right now.
Speaker 4 (31:23):
So that's pretty cool.
Speaker 1 (31:24):
That's ye, like about the best I know of it.
Speaker 3 (31:26):
Yeah, of course I want to point out here with
your timeline, Phil, do not invest any of these dollars,
and which might bring up a small note when it
comes to the semantics here, because there is a technical
difference between a money market deposit account versus a money
market fund and the one that you specifically called out.
(31:46):
Technically it is an investment, but it's an investment that
is very very unlikely to ever.
Speaker 4 (31:53):
Go down in value.
Speaker 3 (31:55):
So a deposit account is actually FDIC ensured, whereas the
fund is technically an investment and technically that means you
could see that go down, but effectively it's not gonna
go down.
Speaker 4 (32:04):
Yeah, so I wouldn't I.
Speaker 3 (32:05):
Wouldn't worry too much about that because the Fed they're
gonna come swooping in. They're gonna save the day, which
is what happened. I think the last time was that
like two thousand and nine. So yeah, there's the Great
Recession when that was the case, happened to what one
or two of those accounts, And yeah, it was a
big deal then, but it's not something you have to
effectively worry about now, even though technically I'm saying not
to invest, but you are investing just a small note
(32:28):
something to be aware of.
Speaker 1 (32:29):
And that's another just parsing of the details between hygal
same THEWS accounts and some of these money market funds.
And you also notice that these different brokerage firms have
multiple different versions of cash management accounts or money market
funds and they're all created a little differently, so know
what you're getting into. That's why I think for most people, Matt,
the simplicity of a Hio SAMES account with one of
our favorite online banks that consistently pays high rate.
Speaker 4 (32:51):
It's tough to beat.
Speaker 1 (32:51):
Yeah, it's tough to be but I'm glad these other
options exist, and I do think the cash management accounts
at some of these low cost brokerage firms have only
gotten better and better and better they become a more
compelling product in recenters. Nice 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.
Kf 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 Larsguard and Matt.
Speaker 1 (00:18):
Altmes KFI AM six forty live everywhere on the iHeartRadio app.
(00:46):
This is how to Money. I am one of your hosts,
Joel Larsgard.
Speaker 3 (00:50):
And I am Matt Altmixed. By the way, you can
always find more money saving information over at howtomoney dot com.
Speaker 1 (00:56):
I want to start off mat with a quick frugler
cheap because our neighbors across the street just had their
their firstborn son just turned two, and we had a
birthday party with a little bouncy house and all that stuff,
and it was really fun fun my kids to take
you back dominated that bouncy house. I felt bad for
some of the other two year olds there, but got.
Speaker 3 (01:14):
Two hospital visits. Sorry again, Joel shall not be held
that's right.
Speaker 1 (01:18):
You can't sue me for that. But my my son
wanted to give their two year old son a bunch
of his old trucks, and so.
Speaker 4 (01:26):
Ah, that's sweet.
Speaker 1 (01:27):
We had like a we keep like a little section
of stuff to give away for birthday presents, like if
we found it and it was like on a great
sale or something like that, like pre buy it for
the future. Yeah, you're good about that.
Speaker 4 (01:37):
The birthday the present closet, birthday bind.
Speaker 1 (01:40):
Yeah, so the birthday.
Speaker 4 (01:41):
It's like the fun box in kindergarten, a out of a preschool.
You get a you get to take an item from
the birthday bin.
Speaker 1 (01:46):
So we gave him like played out thing, right, but
he's gonna be excited about. But apparently the gift he
was most excited about was the pre owned cars that
my son gave him. Uh he put him in a
separate and everything like that, and so that was the
most exciting president of the day. Was was a used gift?
How is I don't know, use use gifts to friends?
Speaker 3 (02:08):
Okay, Well, it completely depends on the relationship because if
you say.
Speaker 1 (02:13):
It's cheap, I'm blaming my son. By the way, it's
all his fault.
Speaker 3 (02:16):
I know these neighbors and I know y'all are pretty
tight with them, and like you're living life together and
stuff ends up in other people's homes and.
Speaker 1 (02:23):
Because of that, it feels more acceptable.
Speaker 3 (02:25):
I think it's if this was like a friend from
school and you're driving over to their house.
Speaker 4 (02:29):
If it's that sort of scenario, I think you go with.
Speaker 1 (02:33):
A new president where you're more acquaintancey.
Speaker 3 (02:35):
Yeah, exactly, when you're not as tight because I think here,
here's the deal. I think to younger Matt, and I
think younger Matt would have said, no, no matter what,
no matter who they are, secondhand gifts are fine. They're
gonna like it and you kind of force it upon them.
But that is the very that was one of the
very definitions when we did the original frugal Versus Cheap
episode of Cheapness is if you are imposing your quote
(02:56):
unquote frugality upon somebody else, that's when it and it
alchemy like way, becomes cheap.
Speaker 4 (03:02):
Yeah. I get that.
Speaker 1 (03:03):
Yeah, Yeah, that's.
Speaker 3 (03:04):
I think I would be more predisposed to buy new
with acquaintances like you mentioned. But certainly it's a good point.
Certainly with my kids. I think used gifts are fine.
You just need a the presentation matter, so you know,
like if it's like if it looks like a used
item as opposed to if it's you doll it up
a little bit dress it up, like if it's if
it's still in the eBay box and you haven't even
(03:26):
like opened the box and you're like, oh yeah, let's
see what's inside there that feels cheap versus taking the item,
putting it in a gift bag or something right to
where you are demonstrating that, hey, this thing still has value.
And not only does it still have value, yes, you've
put some thought into it, and it's cool to go
secondhand as well. There's like multiple messages that you can
kind of weave into that weather with your own kids,
(03:48):
but also with the right neighbor or with the right
friends as well.
Speaker 1 (03:52):
I think that's a really good point. And the more
you know them, the more they know you and your idiosyncrasies,
the more they're gonna be like, oh yeah, that's kind
of par for the course for them. And guess what
turned up The use trucks were his favorite gift anyway,
which that's awesome, kwesome.
Speaker 3 (04:05):
Plus I love the passing down of certain prized possessions
amongst kids in a neighborhood or something that is essentially
getting woven, like like your lives are getting woven together
in a kind of messy way, which feels like the
heart of any sort of community, right, Like, you want
an element of that.
Speaker 1 (04:21):
For sure, Joel.
Speaker 3 (04:23):
Let's talk about one of our favorite brokerages, one of
our favorite companies out there to invest with, Vanguard. They've
got this new study out turns out the strongest predictor
of financial wellbeing. It's not being a savvy investor, it's
not being a really good stock picker. It's also not
required to have a Mensa level IQ or anything like that.
(04:43):
The Vanguard study found that just having two thousand dollars
in your savings account, that right there is actually the
strongest predictor of financial wellbeing. And here on the show
Man we talk about emergency funds pretty often, and this
highlights why it's another underrated reality of not having enough
money in your emergency fund, feeling that, oh, I'm gonna
(05:04):
have to actually tap some of those investments. I'm not
gonna let them cook, not gonna let them compound over
the year. But in addition to that, the distraction that's
created just from living with no margin in your life
as well is detrimental to our financial wellbeing. Vanguard found
that people with no savings that they spend over six
hours a week thinking and worrying about their finances while
(05:26):
on the job, as opposed to just one and a
half for folks who have cash on hands.
Speaker 1 (05:30):
It makes sense, makes sense because you're living on the
financial precipice. That one bill that comes in kind of
knocks you flat. And it is amazing how not having
cash in the bank just makes you more susceptible, more vulnerable,
more stressed.
Speaker 3 (05:43):
Out, more stressed. You're looking at then you're logging in
your credit card and be like, ooh, how much credit
do I have left?
Speaker 5 (05:49):
Oh?
Speaker 4 (05:49):
When's that payment due?
Speaker 3 (05:50):
Okay, dange the interest payments? About the play is working
on overdrive.
Speaker 1 (05:53):
It's yeah, it's harmful to a mess to you from
a stress standpoint, from an anxiety standpoint, This obviously has
an impact on the quality of work you do right
on your job security as well. If you're the kind
of person who is logging into their bank account to
try to figure this stuff out. If you're sleuthing on
your finances six hours a week while you're at work,
that's going to have an impact on your performance. It's
(06:13):
going to get noticed. It makes you think back to
some of the studies too. At some of the higher
level government or military jobs require you to have a
certain level of buttoned upness when it comes to your
finances because they want you to be less susceptible to bribery.
Speaker 3 (06:28):
If some carrots are being dangled in front of you
that have a whole lot of dollar signs on them,
you're going to be more likely to be I don't.
Speaker 4 (06:36):
Know, a foreign operative.
Speaker 1 (06:37):
Yeah, it's like the goal the gold bar shoved into
your pocket doesn't matter as much. Like you've got enough
cash on hand and you're like, no, I don't need this. Actually,
is that the little gold the New Jersey senator, that's right,
that's right. So he and his wife both found guilty
for that.
Speaker 3 (06:52):
Yeah, unfortunately, so fortunately, because we don't need to have
that thing going on, right, it's unfortunate that.
Speaker 1 (06:57):
They it happened. Yes, well, fifteen percent of people the
study with two thousand bucks said they were stressed about finances,
versus fifty one percent of folks who are stressed because
they didn't have the saving So it's just interesting. It
makes complete and total sense that if you have a
little bit of money on hand, you are far less
stressed out the value of an emergency fund just goes
far beyond having money to pay for what you need
(07:19):
if you find yourself in a financial bind. And it's
just fascinating too to see. I think some people think, well,
I'll be less stressed once I have this massive buffer
built up, once I have this much my network gets
to this point. Well, the truth is you're at least
eradicating the worst kinds of stresses with just a small
pittance in your in your savings camp two grant.
Speaker 3 (07:40):
That's why we talk about the basic emergency fund. That
is step number one creating some financial margin in your life.
Speaker 4 (07:45):
And it used to be two thousand.
Speaker 1 (07:47):
It's not just step number one, it's money gear number one.
I'm sorry, yeah, so off brand. Use the proprietary language, please, sir.
Speaker 3 (07:53):
It used to be two thousand, four undred and sixty
seven dollars. With inflation, especially that we've experienced over the
past several years, it is now three thousand.
Speaker 1 (08:00):
Forty five dollars. Thirty forty five.
Speaker 4 (08:02):
Remember that that's how much we want you to have
in your savings account.
Speaker 1 (08:04):
I like a specific sticky number when yeah, man, that
is gonna that's the thirty forty five way to go.
Vanguard with two grand, but we're going to say thirty
forty five is an even better number. Yes, it gives
you a little bit more money, but it's still achievable
for the vast majority of people.
Speaker 6 (08:19):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (08:26):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter. Matt, let's get to a question about living
paycheck to paycheck and how to escape that cycle.
Speaker 5 (08:38):
I'm ann and I'm in California. I'm a single woman,
sixty one years old. I believe that I'm in the
lower end of middle class. Lately, I find that I'm
living paycheck to paycheck.
Speaker 1 (08:51):
I looked into using a.
Speaker 5 (08:52):
Financial planner, However, I found that they really only work
with investments. I don't have any investments. What I'd like
as a financial coach someone who can help me with
budgeting and looking at my situation and then making suggestions.
I'd like to meet with a person for a low cost.
(09:13):
I'm not interested in an online worksheet type program. My
question is, is there such a person who can do this?
Thank you, bye bye.
Speaker 3 (09:23):
Oh Joe, what do you think about Ann hating on
all the worksheets and the different programs out there that
folks are well, folks are selling or sometimes giving away.
We've got worksheets on our website I can give away.
I think those can be really helpful.
Speaker 1 (09:35):
But I also get I get what she's saying, the
desire to have a one on one relationship with a
human who can help you out through this. Like that
makes sense to me. I think totally that's how I
work best. But a real life person, Yeah, I don't
want to talk to no AI chatbot. Give me a
real person with issues. I was literally talking about friend
the other day and he was like, you guys should
totally have an AI chatout. You have all the podcasts,
(09:56):
all the content on your website. You could feed it
in there and it could spit out. Matt and Joel
answers right and left to people, And I don't know, man,
I'm just kind of trying to avoid that AI game
as much as possible. That was one of the first questions.
Speaker 4 (10:07):
So, man, we're really going off the rails here.
Speaker 3 (10:08):
But back when we were talking to somebody we had
that we had hired to do some work on the site,
and one of our questions was about AI. We're talking
about these large language models. Can we create our own chatbot,
train it on our episodes and essentially have answers in
our voice the way that we would.
Speaker 1 (10:25):
Talk about it.
Speaker 3 (10:26):
It's a unique proposition is but he's just like, we're
not quite there yet. Maybe we are now because that
wasn't again the rate at which things go. Yeah, it
might actually be a reality. But and I've got to say,
your desire here to avoid a financial advisor and instead
to work with a money coach specifically is brilliant. Most
folks they tend to think of advisors as the only
(10:47):
game in town when it comes to help with their money.
But the average advisor they don't do a whole lot
with household budgets and holding people accountable. So your desire
to find like a coach is totally It makes a
ton of sense. Advisors are going to be more interested
in helping you to invest, and then the vast majority
like they're not even gonna want to work with you
unless you've got like six figures of investable assets to
(11:09):
your name either.
Speaker 1 (11:11):
This is also why rebo advisors.
Speaker 3 (11:12):
They found a nice niche as well for them to
people who don't have a ton of money but they
are looking for some of that additional help, not unlike
an AI Chatbotjie.
Speaker 1 (11:20):
Kind of in between step there for a lot of
newbi investors totally.
Speaker 3 (11:24):
And plus you would likely pay way too much money
if you ended up going with a financial advisor as well,
So a budget coach I think that makes a whole
lot more sense.
Speaker 1 (11:34):
Yeah, The cheapest model we know of, essentially to get
a financial advisor on your team to help you out
basically is a minimum one hundred and fifty dollars per
hour long session, and that's through the website Hello Necktreen.
But even they it used to be flat fee hundred
and fifty. Now it's flat fee one fifty to three hundred,
and so the price to hire a financial advisor is
incredibly steep. We've had budget coaches Matt on the show before,
(11:56):
and you know, one of those folks or one of
those types of folks is likely the right choice for you.
An it's just it's such a great segment of the
finance base and it doesn't get enough love. Like nobody
talks about budget coaches or money coaches. These folks they offer.
They're often offering services because they've had a meaningful financial
awakening themselves. They've had to go through a debt payoff
(12:18):
journey that was a multi year long slog. They learned
a whole lot through trial and error in the DIY process,
and so they've also, on top of that, been through
the emotional roller coaster right that can be and often
is living to pay paycheck to paycheck. They know the
right questions to ask and that often allows them to
better speak to how to turn the ship around, right
(12:40):
to speak into your life about what's going on because
of what they've gone through themselves. And typically they get paid, yeah,
like an hourly rate, or they charge for a specific
number of sessions. I don't know, maybe like three hundred
and fifty bucks for four sessions something like that. But
I do think that budget coach. One it's going to
be cheaper, and two, it's going to be more highly
targeted to what you're going through. It's going to be
(13:02):
more relevant. A couple of specific folks we've had on
the show, or even ones that we haven't looked, that
we can recommend Erica Jung, she's been on the show,
Elena Fengal. She's also been on the show, and then
this couple who runs a podcast called The Price of
Avocado Toast. There are awesome folks and they're also financial
coaches on the side too.
Speaker 3 (13:18):
So that being said, and doesn't have a ton of money,
so I also want to point her towards free and
cheap resources from some different nonprofits. In particular, I'm thinking
of MMI, which is Money Management International, which by the way,
sounds super fancy and like wealth advisory, but they're not.
They're there to help folks deal with that and turn
their finances around. Also, National Foundation for Credit Counseling. These
(13:42):
are both excellent resources in order for you to gain credit,
to gain some budget counseling, you can get one on
one advice from a certified counselor there with those organizations,
and they'll typically help you to create a personalized plan
kind of like like if you're looking for a roadmap
for moving forward, if you know you find yourself kind
of spinning your tires a little bit, perhaps this is
(14:04):
going to allow you to gain some of that traction.
And I'm not sure how much debt you specifically have,
but I think they can help you to create a
debt management plan to get rid of it more quickly,
but don't trust some of the for profit companies who
make these massive promises and end up under delivering. I
will also say a money coach is no substitute for
you learning some of this yourself, and so I'm talking
(14:26):
about a DIY education.
Speaker 4 (14:28):
It makes me think of someone who's interested in becoming.
Speaker 3 (14:30):
A real estate investor who opts to, let's say, hire
a property manager. Well, if that were to be you,
like you wouldn't even know the important questions to ask
in order to hire a good property manager because you've
never been.
Speaker 4 (14:42):
Exposed to this at all.
Speaker 3 (14:44):
And so I think listening to podcasts like this, reading
books this is still crucial. We've actually got a link
to some different resources up on the website to where
I don't know. I think that can help you to
get you your journey started. One other free resource too.
Don't underestimate the hour of community and friendship. I think
the ability to link up with somebody or to man.
(15:06):
This isn't something that we said in a long time,
but one of the goals for our show is for
money personal finances to not be taboo, and when it is,
people are afraid to talk about it, and when it's not,
it's something that you talk about, you engage with, you
challenge each other, you hold each other accountable, and it
allows you to see incredible progress, I think on a
very truncated timeline.
Speaker 4 (15:26):
So not to mention this is something we've talked about recently.
Speaker 3 (15:30):
But the fact that relationships are always key to long
lasting happiness, and so you're kind of like doing like
a two for one here by talking to your friends
about personal finances. It should be something we engage with
and ask each other questions about, as opposed to it
never coming up.
Speaker 1 (15:45):
I think there's also a lot of shame and for
a lot of people when it comes to their personal finances,
and the more we can kind of normalize talking about it,
the more we can kind of take some of that
shame away, bring out those mistakes into the light because
guess what everybody has made similar mistakes right sore is
it's not uncommon, and there's also nothing to feel ashamed about.
There's also a way forward, what it comes down to,
(16:07):
and to get this ship right back on the right path,
it's going to take changing some habits right, feeling some
pain along the way, as well. Right, you might need
to go on a bare bones budget, which we have
articles about on our website if you want to check
it out for a few months to gain some savings,
to gain some stability. And I think it's important to
mention that for most folks getting into a financial hole
(16:28):
where they're living paycheck to paycheck or where they're in
debt that they didn't see coming that they weren't planning
on taking on, well, it often took. It was little
things over the course of many many months, if not
many many years, and then once the light dawns on you, hey,
I'm ready to make a change. A lot of people think,
all right, how am I going to get out of
this in the next three months, And it's just it's
(16:48):
just not possible. Right, So you also have to have
a realistic time frame and expectations about how long it's
going to take to turn this thing around. All right,
We've got actually more to get to on today's show.
Speaker 6 (16:59):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (17:05):
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.
Speaker 3 (17:14):
So, Joe, something you and I were both really excited
about last week towards the end of the week was
the unveiling of that awesome EV or specifically an electric truck.
This is a twenty thousand dollars affordable EV and it's
not even the supposedly fantastic ones that BYD is creating
over there in China, which doesn't even really matter because
I doubt we're going to see any.
Speaker 4 (17:34):
Of those times.
Speaker 3 (17:36):
But a Jeff Bezos back startup called Slate Auto is
launching a bare bones electric truck that, if the current
electric vehicle instead of remain is supposedly going to cost
less than twenty thousand dollars. Incredible, and evidently they're going
to start delivering these things next year. And holy cow man,
(17:56):
I'm so excited. I don't think I've been excited for
the Tesla's are cool. Certainly when the ribbeans came out,
I was the gorgeous. Yeah, we're kind of drooling over them.
I'm just like, I don't know how I'm gonna Why
do all evs have to be luxury vehicles? And that's
the difference here because these things are incredibly cheap. The
reason being is because they are very minimalistic. They don't
(18:18):
have stereos, they don't have power windows, which was my
favorite feature, the fact that they don't have power at home.
I love those little roller things. I'm totally down to
my windows school dude. There's no big screen in the
center of the dash. It specifically called out manual AC
and heat controls like the old school buttons, just like
we are currently rocking in our old vans. Basically, the
(18:41):
car is a blank slate, so it's called slate Auto,
but it's you know, it's kind of like a blank slate. Yeah,
if you want to spice it up, you can. It's
got all these different accessories that you can add on.
You can even turn it into a five seater suv,
which I think it's like five grand to add those
I see.
Speaker 1 (18:57):
I think I saw that in one article about it
because I was I was concerned, or at least interested, Well,
how much is that.
Speaker 3 (19:02):
Going to TV medal is going to cost you? Thirty
five r Wait, how'd you go from twenty to thirty five? Yeah,
but apparently it's it's an extra five grand add on
we can get behind that twenty five thousand for a
five seater suv even just like a little truck, a
little like I can so see Kate and I having
one of these, just the putts around town. And just
given the amount of gardening that we do, to be
able to load mulch in the back of the truck bed,
to be able to.
Speaker 1 (19:22):
Put four by eight sheets of plywood back there. Man,
this is I love it. And it's a smaller truck.
When you look at the size, it's not as small
as a what do they call the Japanese are they
the K trucks?
Speaker 2 (19:33):
Yeah?
Speaker 4 (19:33):
Cars?
Speaker 1 (19:33):
It's not quite as small as that, which is good
for me. I might actually be fit in it as
someone who's.
Speaker 3 (19:38):
Six with six those are comically small, whereas this is
just like reasonably small, like nineteen eighties Toyota small, which
those are like the coolest trucks anyway, like the small
Toyota's from the eighties.
Speaker 1 (19:48):
This is huge groundbreaking. I think I'm so glad to
see someone launching a car finally at like the lower
end of the costs spectrump for people who and I
think there's probably more people than just us two money
nerds who are interested in this, Matt, I don't think so,
especially as car costs have been rocketing upwards and people
are like, yeah, I'd be down to do the ev thing,
but they're really expensive, and so yeah, I think this
(20:11):
is this is going to reach a lot of people.
You and I we both plunk down a fifty dollars
deposit to purchase one. It's refundable, not to go with it, right,
And you might be thinking, wait a second, Matt and Joel,
they're always talking smack about new cars. Who are these
guys who who really might buy this new truck when
it comes out. Well, this new car would be less
(20:31):
than half the price of the average new car, and
it would be cheaper than the average cost of a
used car.
Speaker 4 (20:39):
So I love it.
Speaker 1 (20:41):
Not that I would spend that much anyway typically, but
like the problem with new cars is that they keep
getting bigger, they keep getting fancy, Yes, power, everything becomes standard.
I just think that the market is crying out for
a bare bones creation process, and in what that does
essentially to the pricing of the automobiles, it allows them
to price them this competitively. Uh, And that no frill
(21:05):
segment of the population has been completely ignored in the
car buying population. So uh, I really think, Matt, that
this has a lot of legs to it. I'm curious
to see what one looks like in person. I'm curious
to see how this launch goes.
Speaker 4 (21:18):
It's like so cool, but I.
Speaker 1 (21:19):
Have a feeling a lot of how to money listeners
are like, yeah, I just kind of want something that's
going to get me around and be a little comfortable.
I don't mind if I have to stick my own
Bluetooth speaker and there to listen to my music because
guess what I'm.
Speaker 3 (21:30):
Doing that all that's my recommendation for you last year
where you're just like, oh, it's kind of annoying that
I had I listened to it from my phone.
Speaker 1 (21:36):
Doesn't get you a Bluetooth speaker.
Speaker 3 (21:37):
Yeah, And it's so cool that that's literally a part
of their like want to listen to music.
Speaker 1 (21:41):
From the ground up.
Speaker 4 (21:42):
Oh my gosh.
Speaker 3 (21:42):
Of course, like there are just simpler, more bare bones
ways to accomplish the things that we thought required all
the technology or all the factory settings to be just
the defaults. I mean, we've talked about this recently too,
Just how like when did kitchens get so nice? Yeah,
and we've I don't want to change the conversation and
switch to homes, but like think about homes from the
(22:03):
eighties and the seventies and the sixties, even versus kitchens.
Speaker 4 (22:06):
Now maybe we consider.
Speaker 1 (22:08):
Normal is it's so long luxury fifteen twenty years ago.
Speaker 3 (22:12):
That's great if you can afford it, But man, I
want to see more fews out there sometimes.
Speaker 1 (22:16):
Sure it's like I'd rather find my money on other things.
Speaker 3 (22:18):
So yeah, yeah, I love it, and I hope that
we are not the only ones that are going to
get excited about this. I really want to see this
little company out of Troy, Michigan takeoff.
Speaker 1 (22:27):
You too.
Speaker 3 (22:27):
This is Troy because that's what it said on the
credit card statement. Not really, it always like says like
the name of the company and specifically where they are.
Speaker 1 (22:34):
Yeah, yeah, trum. I was like thrilled to put fifty
bucks down on this list and yeah, my riv and
R two. It might be I got a.
Speaker 3 (22:41):
Whole lot less attractive, less attract I'm gonna ahead and
pull that deposit back.
Speaker 1 (22:44):
Yeah, we'll see.
Speaker 6 (22:45):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty don't forget.
Speaker 3 (22:52):
To sign up for the how to Money newsletter over
at how tomoney dot com slash newsletter.
Speaker 1 (22:56):
All right, let's take this question from listener Phil Matt.
He has a question about saving for his down payment,
and he highlights an account you and I don't talk about,
maybe as much as he'd like him at Joel.
Speaker 7 (23:07):
I'm in the process of saving for a down payment
for a house, and I've been advised to put some
of my money into a money market account. I don't
hear you guys talk a lot about these, and I
was curious if it's something you don't recommend, or if
you do recommend, and why or why not. I have
looked online for some information, but haven't found a lot
of information about money markets. The account that I was
(23:28):
recommended was pcoxx and it's average about a five and
a half percent return this last year, and the year
before was about six and a half percent, and I
assume with the interest rates going down, it'll lower a
little bit this year. That being said, I have a
high interest checking account with Lake Michigan Credit Union and
(23:48):
it offers three percent apy but only up to fifteen K.
So since I'm over that in saving for a down
payment on my house. I'm looking for a single place
to put all my money. I did look it up
with Dave Ramsey and he suggests a CD over a
money market account, but didn't really explain why other than
he said the rates were better. However, I don't see
(24:10):
that the rates are better in CDs right now. Just
for reference sake, I'm planning to purchase a house in
twelve to eighteen months, so I'm looking to have this
money available and liquid easily. And from what I understand,
money market accounts you can get the money back relatively
quickly when you need it.
Speaker 1 (24:29):
Thanks for your help, I appreciate everything, Phil.
Speaker 4 (24:33):
Joel's actually going to make a donation.
Speaker 3 (24:34):
If you could just put together a gofund me for
hum down payment, YE going to pitch.
Speaker 1 (24:40):
In about thirty two cents. That's what I can spare.
Speaker 4 (24:43):
Right by the way, did Phil did he actually say
his name?
Speaker 3 (24:45):
I don't know if he said his name, but we
know his name because he sent us the email, of course.
Speaker 4 (24:48):
But Phil, good question.
Speaker 3 (24:49):
There are a lot of different places where you can
save your down payment these days. You can save your
money over in Joel's account and he'll that's right.
Speaker 1 (24:58):
No, the interest rates much worse than what Phil's.
Speaker 3 (25:00):
Debscribe CDs, money markets savings. These are all different accounts.
Each one of these exists for different reasons, so we'll
do our best to explain which one might make the
most sense for you.
Speaker 1 (25:10):
Yeah, they sure have a lot of similarities, I will say,
but they have distinctive qualities that Phil's kind of looking at.
Parse the details, So Matt, let's parse the details. Let's
start off by talking about CDs, and I think they're
out for Phil, right, I think he knows that too.
But because he said he needs liquid cash for the
home purchase, that's really not in the too far distant future.
(25:33):
You could, I guess, feel op for a short term CD,
since you said you need the money and like, let's
say twelve to eighteen months, But hey, what if you
put it in a twelve month CD. You found the
perfect home in eleven months and you're like, man, I
need to that down payment, Like, now, what's just not
worth the loss of the interest you would take by
breaking that CD would typically you forfeit the last three
(25:54):
months of interest, which would mean hey, basically, any other
savings vehicle you picked would have been better than this
I think it's just a non starter, Like I wouldn't
even consider it. There are Matt, you know this well
because you're an ALLY customer. There are no penalty CDs
from Ally, which I believe you put your money in
at one point, but you pay right for that more
flexible product by agreeing to a lower starting interest rate.
(26:17):
There's something. I don't think it's quite half a point,
but there's a there's a decent gap between signing up
for a CD that doesn't have a no penalty writer
on it, essentially through Ally, and so yeah, you're just
going to get paid less on your money, and it
just doesn't make sense for what you're trying to accomplish here.
Although CDs might still make sense for other people right,
especially if they need downside protection against the possibility of
(26:41):
following interest rates for their cash. That's when a CD
makes sense, but only if like, hey, you can lock
it up. You know you're not going to need to
touch it before him, And that's just not the case
that fills in.
Speaker 4 (26:50):
Yeah, he wants to be ready.
Speaker 3 (26:51):
To pounce and we're gonna not recommend CDs because Dave
Ramsey sounded like he recommended that to fill so we're
going to immediately just say the opposite of it.
Speaker 4 (27:00):
Whatever Day says. Now, that doesn't surprise me.
Speaker 1 (27:03):
Did Dave tell you save for retirement?
Speaker 4 (27:05):
Don't do it? Phil? You better? You better not.
Speaker 3 (27:07):
It makes sense that Dave or someone you know over
that was a part of his crew mentioned that because
just I feel like, generally speaking, they're a little bit
more risk averse, at least when it comes to debt
taking on. Well, yeah, I guess we're not talking about
debt here. We're talking about savings. But there are a
lot of things that we do agree with when it
comes to Dave and some of his principles. But there's
some things that we don't agree with, like credit cards, namely,
(27:28):
but I'd pay.
Speaker 1 (27:30):
Your mortgage right there. Yeah, I get the.
Speaker 3 (27:32):
Desire wanting to cross check some of these different recommendations.
But when it comes to high yield savings accounts versus
money market funds, I'm gonna.
Speaker 4 (27:41):
Say that we're probably a bit more partial.
Speaker 3 (27:42):
To highield savings, but you truly you can't go wrong
either way here because they're very similar account types. One
is offered by brokerages, that being money market funds, and
the others is going to be banks.
Speaker 4 (27:54):
The high old savings account.
Speaker 3 (27:55):
Of course, Vanguard's v m f x X is actually
a fantastic choice on the money market front. You do
have to have an account at Vanguard, but the holdings
of that fund are in very stable assets like cash,
government securities as well. Fidelity they've got a cash management account.
That's that's pretty good.
Speaker 4 (28:16):
Uh. And one perk of that that specs.
Speaker 3 (28:19):
Yeah, not spankspas spax uh Huh. A perk of that
versus a high old savings account is you can use
a debit card and you can write checks directly from that,
which you typically can't do from a highyield savings account.
Speaker 2 (28:32):
Ah.
Speaker 3 (28:33):
That being said, it is not too difficult to transfer
money over from the high old savings directly to a
checking account, assuming you also have a checking account with
that particular institution and they offer free checks. But the
returns they're close to or sometimes oftentimes I guess at
least lately, they've exceeded some of the highest returns on
high yields savings accounts as well. So if you are
(28:54):
a Vanguard or if you are a Fidelity customer, this
is a I would say, a very reasonable place to stash.
Speaker 4 (29:00):
Or cash that you're gonna need for a down payment.
Speaker 1 (29:03):
Yeah, So I think money market funds definitely a recent option,
and there's a reason I think more and more people
have gravitated towards having doing essentially all of their money
business with a low cost brokerage firm because it's like, hey,
I'm gonna invest there, I'm to have my cash management account.
I'm just going to have it literally all under one roof.
And the perks of some of those cash management accounts
(29:25):
at the brokenge firms, So I've gotten really good right
when it comes to like no fees, free atm with rawls.
I think Schwab kind of started at Fidelity has a
great option now too. So more and more people are
saying that's that works for me, and they're just saying
I don't think I need a bank at all. I
also just want to say I think banks do a
really good Some banks do a really good job on
the front, obviously not the big banks. So we love CI.
(29:46):
We talked about CIT regularly when you've got lots of money,
like an down payment fund, because they've been paying top
notch returns that are at or above some of these
money market fund rates. If we're talking about like small
time savings, like, hey, I've got fifteen hundred bucks to save,
should I move banks? Well, the stakes are lowered there,
right if you don't have a lot of money on hand.
But if you've got a lot of cash because you're
saving for to buy a house, then every half a
(30:09):
point or something like that matters quite a bit when
it comes to your overall amount of returns, how much
money your money is making. There's just no reason to
not be with an online bank that offers highly competitive rates.
Phil mentioned that he has a three percent checking account
with strict limits. What fifteen k, Matt, you can't earn
above that? Probably over fifteen k you're making point zero
(30:30):
one percent or something like that. Well, now it's the
perfect time to move. Get out of that. Credit unions
are great for borrowing, they're not great for savers. And
so there are just great highled savings accounts out there
for you, Phil that are going to you know, you're
going to get a good bit more on your money
with zero caps, so you're going to make the full
four plus percent on all the money that you have
(30:52):
right in that account. We don't want folks jumping around
all the time to score slightly higher interest rate. But
moving your funds and your business to a bank that
consistently pays customers incredibly well, I think. I think it's
a no brainer.
Speaker 3 (31:04):
Yeah, specifically because it's something that you want to do regardless.
It's not like you're only doing it for this down payment.
This is just good general personal finance hygiene essentially. Also,
Betterment's got a pretty solid cash management account too. I
think right now you can snag an extra half a
percent as a new customer for three months for a
total of four and a half percent right now.
Speaker 4 (31:23):
So that's pretty cool.
Speaker 1 (31:24):
That's ye, like about the best I know of it.
Speaker 3 (31:26):
Yeah, of course I want to point out here with
your timeline, Phil, do not invest any of these dollars,
and which might bring up a small note when it
comes to the semantics here, because there is a technical
difference between a money market deposit account versus a money
market fund and the one that you specifically called out.
(31:46):
Technically it is an investment, but it's an investment that
is very very unlikely to ever.
Speaker 4 (31:53):
Go down in value.
Speaker 3 (31:55):
So a deposit account is actually FDIC ensured, whereas the
fund is technically an investment and technically that means you
could see that go down, but effectively it's not gonna
go down.
Speaker 4 (32:04):
Yeah, so I wouldn't I.
Speaker 3 (32:05):
Wouldn't worry too much about that because the Fed they're
gonna come swooping in. They're gonna save the day, which
is what happened. I think the last time was that
like two thousand and nine. So yeah, there's the Great
Recession when that was the case, happened to what one
or two of those accounts, And yeah, it was a
big deal then, but it's not something you have to
effectively worry about now, even though technically I'm saying not
to invest, but you are investing just a small note
(32:28):
something to be aware of.
Speaker 1 (32:29):
And that's another just parsing of the details between hygal
same THEWS accounts and some of these money market funds.
And you also notice that these different brokerage firms have
multiple different versions of cash management accounts or money market
funds and they're all created a little differently, so know
what you're getting into. That's why I think for most people, Matt,
the simplicity of a Hio SAMES account with one of
our favorite online banks that consistently pays high rate.
Speaker 4 (32:51):
It's tough to beat.
Speaker 1 (32:51):
Yeah, it's tough to be but I'm glad these other
options exist, and I do think the cash management accounts
at some of these low cost brokerage firms have only
gotten better and better and better they become a more
compelling product in recenters. Nice 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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