July 13, 2025 • 33 mins
More gas stations are charging extra if you pay with a credit card. Beware!
Ask HTM: What should you do if you overfund a Roth IRA!?
Americans believe that real estate and gold are the best investments in existence. But the numbers reveal that there's an even better way to invest.
Ask HTM: Rebecca wants to know if she should buy an extended warranty with her new car. It's expensive!
Ask HTM: What should you do if you overfund a Roth IRA!?
Americans believe that real estate and gold are the best investments in existence. But the numbers reveal that there's an even better way to invest.
Ask HTM: Rebecca wants to know if she should buy an extended warranty with her new car. It's expensive!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This is Matt Altmix and joelars Guard and you are
listening to kf I am six point forty how the
Money on demand on the iHeartRadio app.
Speaker 2 (00:10):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel Lar's Guard and Matt Altmix.
Speaker 3 (00:40):
I am sixty live everywhere on the iHeartRadio app. This
is how to Money.
Speaker 1 (00:45):
I'm your host, joelars Guard and I am the other host,
Matt Altmix. And if you have a money question, we'll
send it our way. All you have to do is
record your question on the voice memo app there on
your phone and send it over via email. You can
find the simple instructions at how to money dot com.
Forward slash ask. Now, it is time for the ludicrous
headline of the week. And you know what, I think
(01:05):
you are a little more enraged about this headline than
I am, because I don't know if I can officially
call it gallaging, But okay, I feel you feel a
little more in that direction.
Speaker 3 (01:15):
Well let's go ahead. Let's go ahead. So the headline
comes from Yahoo Finance and it reads I can make
it any number. I want. Gas stations are charging customers
a dollar more a gallon for using credit cards, and
I so I was frustrated by reading this the gas
stations are. I would be frustrated going to charge that
much if I rolled up to that gas station and
(01:36):
I was like, wait a second, gas is two eighty
five a gallon with three eighty five gallon if I
use my credit card. If I had rotten fruit in
the car, Matt, I would throw it at the at
the gas not the person, but at the gas station itself,
because that's assault. Brother, Yeah, I know, because that's messed up.
Speaker 1 (01:52):
That's it was a Billy Madison line for all the
oldies out there. Classic movie, classic movie. But then kipling
are along.
Speaker 3 (02:00):
This article documented the rise of gas stations charging outrageous
fees for credit card usage at the gas pump too.
Speaker 1 (02:07):
And we seems like it's becoming more of a widespread
It's not like just the Florida man or the Florida
man gas station owner.
Speaker 3 (02:14):
Right, which apparently this is largely happening in Florida. And
you and I we've documented this on the show. We
know that taking credit cards eats into the profit of
a small business or a gas station operator, which is
why many small businesses are saying there's a cash discount,
or there's a price you have to pay to use
a credit card, and it's why more gas stations are
charging ten cents a gallon, but a dollar a gallon.
(02:37):
That to me seemed pretty ludicrous. And so I think
this is just a heads up for you. If you're
the kind of person tap fill up, you don't even realize,
you're not even thinking about it, you're kind of thoughtlessly
filling up at whatever gas station you come across, just
know that they might be charging this significant amount extra
for using your gas, for using your credit card at
the pump. And I just I also kind of don't
(02:58):
see the financial incentive for gas station to charge this
much more, far beyond the cost that they incur for
taking credit cards. Because if I was a customer who
found out that I got, you know, kind of the hoodwinked,
paying more than I thought I was going to for
the gas I was putting in my car, I wouldn't
come back there.
Speaker 1 (03:16):
So I just seem like, yeah, really stupid. It does
seem like a stupid it's a short term. It seems
like it's a short term a short sided, near sighted
like cash grab. Yeah, and I would not even go
back to that gas station, I think, even after they
lowered the price, because it's like, wait a minute, wait,
was that an error? And maybe they're counting on folks
thinking that. But the fact that at least in this
in the one report that the guy's like, nah, I
(03:37):
can I can just make it whatever.
Speaker 3 (03:39):
It's like, yeah, you can run yourself out of business too,
and he might actually end up doing that.
Speaker 1 (03:43):
But the reason I don't think this is gouging, of course,
is because are there other options?
Speaker 3 (03:47):
Do you have the ability to leave?
Speaker 1 (03:48):
And man, there are a ton of gas stations all
over the place unless you happen to live somewhere or yeah,
it is your only gas station option. Right your town
is an intersection, like the radiator spring, there's like one
flashing red light.
Speaker 3 (04:00):
If that's the case, well maybe it's.
Speaker 1 (04:02):
Time for a town hall and there's there there should
be some social pressure, uh that station owner.
Speaker 3 (04:07):
So that's the difference.
Speaker 1 (04:08):
Between like two eighty five versus like three eighty five
a gallon or something like that. But like for instance,
the a ten cent per gallon difference is typically worth
it if you're using the right credit card of course,
Costco Visa. It gives you four percent cash back and
five percent with no fee at Costco, which is also
a very.
Speaker 3 (04:26):
Superior form of gas.
Speaker 1 (04:28):
Joel, speaking of gas, there's another gas station that I've
been to and I won't go back to because, like,
the check engine light.
Speaker 3 (04:33):
Came on after we filled up at this text.
Speaker 1 (04:37):
I don't know what you want to say it because
like you did, I'm sure it's a particular gastation owner
who maybe isn't doing a great job, or maybe it
was just a bad batch of gas. But I'm like,
I'm not going to risk my wonderfully old engine in
our our odyssey U going on the fritz.
Speaker 3 (04:52):
Yeah, I mean we've talked about this before too. But
there is a type of gas called top tier gas.
So you're not just saying here, baby, no, it seems
like it's better, but it really is. It's really formulated
better to keep your engine clean. And so yeah, they
sell the stuff at the AutoZone or whatever you can
dump in your dump in your engine to try to
clean your engine. Well, if you're filling up top tier
gas with regularity, your engine and components are going to
(05:15):
be cleaner. Maybe you don't need to even do that
at all. And by the way, it doesn't cost more
to get top tier gas, but they're just so certain
stations that provide it, So make sure you know where
you can get it.
Speaker 1 (05:24):
So as we're talking about competition, there's actually an interesting
white paper recently about competition at the gas pump and
how it spurs price reductions. Then maybe think of like
when an Audi moves into the neighborhood.
Speaker 3 (05:34):
Well, the prices up. The other grocery stores of course
are going to come down.
Speaker 1 (05:36):
Or maybe like when Southwest when they start operating out
of a certain airport, all the other airlines, they got
to get a bit more competitive, although maybe that's declined
album with the Southwest draws spirit the.
Speaker 3 (05:46):
Frontier when they jump in, like Delta's like, all right,
we gotta lower our prices for a little while at least, so.
Speaker 1 (05:51):
The price per gallon at existing gas stations gets reduced
immediately because now they gotta work harder to get you
to fill up there. The study said that the effects
are in mediate and persistent. Competition works man because prices
create important signals to shoppers. If gas stations try to
gouge you make sure to peace out. You can vote
with your dollars.
Speaker 3 (06:10):
Prices are signals, and we react accordingly when a price
goes up somewhere and make my little antennas pick up Matt.
Speaker 1 (06:17):
We might get honorary economic degrees from some college out
there who might be willing, probably for some if you
keep saying signals, Joel, some.
Speaker 3 (06:25):
Fly by Night University. Uh yeah, we'll see University of Phoenix.
We're getting our honorary degrees from there. I don't know.
Is that a good I don't know. If I'm not
trying to cast, if they've got great programs out there,
I don't know. Well, the price of home internet has
been on the rise. C net found that two thirds
of folks are paying more for Internet than they were
(06:45):
last year, and not just not just by a little bit.
I was kind of shocked to see this, by almost
two hundred dollars more over the course of a year.
And they also said that service has not improved with
the with their Wi Fi, which makes the cost increase
even more. For if I'm paying more because I'm getting
something superior, I might be willing to look past the
(07:06):
price increase, But if the service is degrading at the
same time, I mean, that makes me frustrated, but it
makes sense that this is happening because, first off, home
internet it's not a competitive industry in many locations around
the country. You're looking at a duopoly, which means your
options are paltry, like one of two places you can go. Yeah,
and then price competitiveness, it's not really a thing, and
(07:29):
it's still worth monitoring your bill for price increases and
calling your service provider to ask about a reduction, or
I've talked about this before, you're reaching out to them
on Twitter, because sometimes those are the people who are
most empowered to help you get a better price, as
opposed to call in the one eight hundred number other
options we've talked about this in the past two or
to choose slower speeds, or to stop renting equipment. Buying
(07:50):
your own equipment can reduce that monthly cost. Oh yeah,
but yeah, I think it's just important to note this.
That's slow creep up of your internet price. You may
be like, yeah, I'm paying seventy bucks a month for
an internet or something like that. That is probably more
than you should be paying. And there are a lot
of ways to reduce that bill. Just don't pay the
increased bill price because that's what came in the mail,
and not do a licka. Not to a licka about it,
(08:11):
because you really could save a couple hundred bucks a year. Yeah,
pretty easily with maybe a couple hours of your time.
Heck yeah, you are listening to how to Money KAF
I am six forty live everywhere on the iHeartRadio app.
Speaker 1 (08:23):
This is how to Money. I'm Joe Larscard and I
am Matt Altmix. If you are over on Facebook and
you want to join a group of like minded folks
who have money questions and insight, please go ahead and
join the how to Money Facebook group. All right, let's
hear from another listener. This is someone who has a
question about one of our absolute favorite retirement accounts.
Speaker 4 (08:43):
Hey, Matt and Joel. At the beginning of the year,
both my wife and I fully funded our wroth Ira. However,
over the course of the year, we've had significant capital
gains from our investments. I'm pretty sure this has pushed
us out of the limit to be able to contribute
to the roth Ira, assuming we're no longer eligible. How
do you all recommend we proceed prior to the end
of the year. Thanks guys, best friends out.
Speaker 3 (09:05):
Well. Matt Thomas lives in our neck of the woods.
He's also an honorary bestie, he said, best friends out. Yeah,
so you count, you count, We include you, We include you.
Thank you. And by the way, Matt, we think it's
typically a smart move to fully fund your wroth IRA
at the beginning of the year. This is something you
have emphasized a lot because we talk about the big fan.
We talked about dollar costs averaging regularly on the show,
(09:27):
which is essentially putting money in every time you get paid,
so you get paid every two weeks, you're sticking money
into that four one K if you've got that through
your employer. And if you have a roth ira, like
you're just letting it auto draft out of your account
every single month or every couple of weeks, so you
fully fund it by the end of the year. But
if you have the money to fully fund the wroth
(09:48):
IRA at the beginning of the year, which we know
not everybody does, but if you do, stick it in,
because one, it just kind of gets it out of
the way, like you've done the thing well, and then
you're actually going to be better off the majority of
the time too as an investor, because that's what the
data shows, right, what three out of four years the
market goes up something like that exactly, So you're more
(10:10):
likely to have a larger sum, larger balance at the
end of an investing lifetime, or you to have invested
at the beginning of every single year as opposed to
the end of very I know most folks off for
dollar cost averaging because they just don't have seven thousand
dollars in January first to toss it in.
Speaker 1 (10:26):
But you think it's a good goal to work towards, though,
I think that if that's something that over the course
of a few years, if that's something that you can
work towards, where you've got enough set aside that you
can every year, maybe you dump a little bit more
at the very beginning of the year. And in a
similar way, I think it does a similar behavioral trick
where I think what's great about dollar cost averaging is
(10:46):
that it just takes the guesswork out of when it
is that you want to buy into the market. You're
essentially doing the same thing though when you do the
a lumpsum investment at the beginning of every single year.
You're just like, well, that's just what I do come
January first, every single year. It's not something where we're
having a conversation about a bay like this is just
we are investors. This is what we do. We're gonna
be better for it.
Speaker 3 (11:06):
And it's basically dollar cost averaging on just a far
less frequent timeline. Because you're like, you're still doing the
same thing, Like you're not like, well maybe i'll wait
till like July and see if the market's up then
or something like that. You're still doing it like clockwork,
on the same you know, this same season, same date
hopefully every year.
Speaker 1 (11:20):
Yeah, and you're also not saying like, Okay, I'm only
gonna invest in even years or something, or you know,
I'm just gonna wait until them forty and I think
it's gonna be better then, Like you're not timing the
market at all in that way of course, But there
is that occasional situation that Thomas has found himself in
where you end up regretting it, and not because the
market goes down, but because you find yourself ineligible to
(11:43):
contribute to that wrath. It's a good thing on one hand, right,
because it means that you've made too much money, and
that is worth celebrating. In Thomas's case, it's great to
have maybe capital gains that he was not expecting.
Speaker 3 (11:56):
Some people like when they talk about capital gains, they
make it sound like it's like the worst thing ever, Like, dude,
I got this second, and I get it emotionally. My
tax bill the big picture, well, that means you made money.
Let'szoom out a little bit. You're doing well. We are
happy for you.
Speaker 1 (12:11):
But the current income limits are one hundred and fifty
thousand dollars for single folks to be able to contribute
to a roth, and it is two hundred and thirty
six thousand dollars if you are married filing jointly, so
Thomas or and.
Speaker 3 (12:23):
Others out there.
Speaker 1 (12:24):
If you're going to be close to that line, it
might be worth prioritizing some other tax advantage moves, like
contributing more to a traditional four to one K or
maybe even bashing your giving so that you still meet
the adjusted gross income requirements. Maybe typically you take the
standard deduction, but you're like, you know what, let's hold
off on giving. We'll give all of our money at
(12:46):
the beginning of next year and then essentially pre fund
you're giving at the end of that next year for
the following year. The way you're getting credit for all
of that charitable giving on one year, it allows you
to itemize and take more.
Speaker 3 (12:59):
Of a deduction. Make sense for a lot of people
where it's like standard deduction one year, don't take the
standard the next because you've just batched some of those
like tax oriented tax saving choices into one given year
and then you back off the next year, and that
can make you know a small dent in your ability
to save on taxes, but also in your ability to
then contribute to a ROTH.
Speaker 1 (13:19):
Yeah, exactly, and Ross truly are what are our favorite accounts,
in large part because of the flexibility and the options
that they give folks. That being said, man the ability
to contribute a little more to a traditional four win
K for instance, even if there isn't a match, Well, okay,
you are still investing, but then you are also bringing
down your adjusted gross income, which then in fact allows
you to be able to sock maybe fewer dollars towards your.
Speaker 3 (13:40):
WROTH, but at least you're eligible. Yes, right out of
the gate as well. Agreed so so okay, what do
you do though, if you've contributed to a WROTH and
you find out that your income was over and above
the limit for twenty twenty five, Well, there are a
few moves you can make. You're not going to face
any penalties if you actually just choose to withdraw your
your excess contratribution plus any income that it's earned by
(14:03):
the due date for your tax return. So you will
have to include the taxable earnings portion in your taxable income.
So like, let's say the money you stuck into the roth,
well it made money because it was invested in the market, Well,
that you will have to include in sort of your
figure out what the IRS form number is, Matt, But
there's a form you have to fill out to report
(14:23):
that on your taxes. But because of the way roth
irays are taxed, you can take your contribution out at
any time, Like you don't need to wait until you're
fifty nine and a half because you're paying the tax
up front. So because of that, you can just literally
plow back that contribution, no harm, no foul. Another option
is to recharacterize that contribution and move it into a
(14:45):
traditional IRA. And I do believe this is something that
you've done, right.
Speaker 1 (14:49):
Matt, I have, but that's also before the larger brokerages
out there, so like Fidelity and Vanguard before they were
offering this like a withdrawal of X contributions, that's what
they're calling it now. And so the recharacterization, I mean
even just the term right, it sounds like it was
something that was invented by a bunch of accountants or
the irs, where it's like, oh, you need to recharacterize
(15:11):
your contributions for sure, and there are.
Speaker 3 (15:13):
Times when you're gonna want to do that.
Speaker 1 (15:15):
But I truly think that this is a new thing
because this was not available when I did this a
number of years ago, when we had to recharacterize contributions.
But truly, the ability to go on to a brokerage
like Fidelity or Vanguard and initiate and excess contributions withdrawal, like,
I love it. It makes so much sense, and it's
oriented towards everyday retail investors as opposed to feeling like
(15:39):
you have to hire an accountant to make sure that
you're handling this thing correctly. And so I know that
there are certain situations where someone is going to want
to recharacterize. It's pretty easy as well. There are forms.
When I initiated that for us with Vanguard, it was
just an online form that you filled out. In particular,
is easy because I was characterizing those contributions, those dollars
(16:03):
from a roth IRA that's that was held there at
Vanguard to a traditional IRA that was also held there
at Vanguard. It's a little more complicated if you are
sending that to a different brokerage. There's a little more
handholding that needs to take place. But especially if you're
doing an in house recharacterization like that, it's pretty simple.
But again, this withdrawal of excess contributions option makes this
(16:26):
even easier.
Speaker 3 (16:27):
Yeah, so we got more money saving information.
Speaker 1 (16:29):
To get to KFI AM six forty. You're listening to
how to Money on demand on the iHeartRadio app KFI
AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (16:43):
This is how to Money. I am Matt Altmis 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. Let's talk about investing
and as we know Americans, you know when it comes
to investing and being informed about the best ways to invest.
Maybe they're not as informed as you and I would love.
(17:03):
That's part of the reason the show exists. But there's
this new report from Gallup and it finds that's similar
to last year, people assume that real estate and gold
are the top notch, absolute best investments that you could
be for taking in and so it's a sticky myth.
That's right, sticky myth because it perpetuates people continue to
think this. You and I we talked about gold a
(17:23):
little bit last week, so we won't, like, you know,
brate that topic and keep going at it. And it
hasn't been a bad investment recently. We documented that over
the past twenty years it's actually it's actually been an
awesome investment. But it doesn't hold a candle to investing
in stocks over many decades. And you and I were
real estate investors, but we would still I think, hesitate
to tell folks that real estate is the best long
(17:44):
term investment. There's a lot of just nuance and specifics
that come into play there. If it can be if
you buy at the right time and you know what
you're doing right or if you bought a property that
was pretty inexpensive and you use leverage to buy it,
and you've seen what returns have done over the past
fifteen years. Wonder the recency bias inside of you would
say real estate crushes stocks no matter what, even though
(18:05):
stocks have done well too. Yeah, but just to assume
that gold and real estate are better than investing in
the stock market, I don't think the numbers over an
extended period of time bear that out.
Speaker 1 (18:16):
I was sad to see that only sixteen percent of
folks who were surveying thought that the stocks were the
best long term investment. And it's worth mentioning that it
is just so much easier to invest in the market
right like it can be worth working hard. It's maybe
it's worth you spending some time on the weekend putting
in some sweat equity, putting in some elbow grease in
order to increase your returns as you are forcing equity
(18:37):
into that property. But many folks are gonna find it
hard to make the numbers work investing in real estate
specifically right now. Plus is just hard to save up
enough liquid cash to get you in the game. And
there's also the part time job aspect of it. And
you do have to do all that like this, yeah exactly.
Like I'm not trying to shatter your landlord dreams if
you've got them, but just simply dollar cost averaging into
the market is still the best way for the vast
(18:58):
majority of folks, despite what it is that they think.
I think a lot of individuals lash onto the different anecdote.
They lash onto the outliers. They've heard stories of, Oh,
he made all this money in real estate, and.
Speaker 3 (19:08):
It feels more approachable too than like I built a
business around AI and I sold it for billions or something.
It seems like something that they can do.
Speaker 1 (19:15):
But even still, like the average American, they've got a
nine to five, yeah, like, and then after that, you've
got a family who you want to see, or you've
got friends, you've got interest, you've got other hobbies. And
I think there are some things in life that are
hard to do and it's worth putting in. Like you
wrote yourth on, that's going to take a whole lot
of work. It's not an easy thing to do. You
want the start thing to do, It's gonna take a
(19:38):
whole lot of grit to make this thing happen. And
unfortunately I think people they take that principle and they
apply it to their investments when truly, when it comes
to building wealth.
Speaker 3 (19:47):
It pays to be like it pays to be able to.
Speaker 1 (19:49):
Literally dollar cost average into the market, paying low fees
and just doing that over the course of decades, like
you are going to be able to retire comfortably and
with a whole lot of wealth by doing that. It
doesn't have to be hard.
Speaker 3 (20:01):
Without going as hard as you can, right, which typically
when we're talking about real estate buying physical properties, Yeah,
it could certainly work out to your advantage and you
could be wealthier because of it, but there are so
many factors at play just to knee jerk assume that
real estate is the best investment. I think that's what
kind of irks me about this study, that people just
(20:21):
continue to assume that real estate and gold are better
than stocks. And it's like that doesn't bear out in
the numbers, and it doesn't bear out for a lot
of people's personal experience. And yes, there are some people
who massively crush at real estate, but yeah, it takes
and we talk to some of those people, and you
and I are real estate investors ourselves, But just be
careful before thinking that real estate is the golden ticket
(20:41):
to building wealth, because stocks can certainly be that for
you too, and they can be a much easier way
to get there. Another tried and true way to get
wealthy in the US is to build a business. And
the journal had an awesome profile of small to medium
sized business owners across the country this week, and they
called the folks who built those businesses the stealthy wealthy.
(21:02):
And the people that they highlighted here make their living
manufacturing flooring or having an auto dealership, or they distribute beverages,
stuff like that, Like these kind of run of the
mill businesses you don't think about. And I think the
gist of the article is that it doesn't have to
be sexy to make money, right. Makes me think of
(21:23):
when you interview kids these days, Matt, Like, so many
of them say they want to be influencers, Like that's
what they want to grow up to be. It's the
hot career. Wouldn't it be nice to be mister beasts right,
to follow in his footsteps? And it's kind of like
when you would have interviewed kids my age and me
in particular, probably all I want to be Michael Jordan, Like,
that's how cool would it be to play basketball every
day and earn a living and earn millions of dollars?
(21:43):
But I think it's important to highlight, to not neglect,
the boring ways of being able to make a living
and in fact how successful those people can be. And
in fact, boomers are selling their boring businesses these days.
You can buy their business as they're ready to retire. True,
they might let it fold otherwise. I mean, this is
this is the kind of thing where could a boring
(22:05):
business be your path to success potentially? And I love
reading that article just how Yeah, I just think those
things get neglected so often because they're not snazzy, they're
not fancy. Uh, But I mean that's what you're going
for with your life, and if you want to if
you want to build wealth without and you don't want
to be famous, this could be a great way to go.
Speaker 1 (22:24):
Yeah, Honestly, like going back to investing in the stock market,
it's a similar thing.
Speaker 3 (22:28):
Like take the boring path. Yeah, it also comes with
a whole lot less drama as well. All Right, We've
got more to get to on today's show. KFI AM
six forty Live Everywhere on the iHeartRadio app. This is
how to Money.
Speaker 1 (22:41):
I am one of your hosts, Joel Larsgard, and I
am that all mixed by the way. You can always
find more money saving information over at howtomoney dot com.
Speaker 3 (22:50):
It's time now for the Facebook question of the Week.
This one comes from Becca. She says, got a car
warranty question here. We just bought a VW Volkswagen ID
four with thirteen thousand miles. It's an electric vehicle. They
pushed a warranty on us that we have thirty days
to back out on. It's sixty one hundred dollars and
it includes most drive train issues, tire alignments and rotation,
(23:12):
as well as scheduled maintenance. The car comes with a
no cost one hundred thousand mile battery warranty. I did
not want to spend that much on a warranty. Was
wondering about trying to find a different warranty or just
kind of saving that money as a buffer.
Speaker 1 (23:25):
The old car warranty is what Beca's dealing with here, Joel,
and she said that they pushed it on me. You
are not alone because warranties are such a big money
maker for car dealerships.
Speaker 3 (23:37):
It's no wonder that they made the heart sell on you.
Many people have been pushed over, bowled over by those salespeople.
Speaker 1 (23:43):
And you know why I think that a lot of
folks accept it is because of the fact that oftentimes
we finance our cars and so when you take if
you know, if someone's just like, hey, pay up six
thousand dollars for this thing, you're thinking, I got a
sorry cash, I'm not going to be able to afford
that a B. I don't know if it's worth it.
But when you roll it into a payment like that,
it makes it a much more pleasant pill to.
Speaker 3 (24:03):
Swallow at that point, Like it'll be an extra forty
two dollars a month, but it's also going to be
peace of mind, don't you exactly, And don't you know
the piece of mind that that's going to give you.
It's going to protect you and your car against anything
that could come its way. Yeah.
Speaker 1 (24:14):
Typically we are not fans of extended warranties, especially like
on technology on electronics, like tech gadgets. Instead, take care
of your stuff self ensured, and you're gonna come out ahead.
Like the vast majority of the time if you bought
one of those, every single time you made a purchase
like even of on like appliances, you're going to be
spending all of your money all electronics. But car warranties
(24:38):
are a little bit different, but still they can provide
that piece of mind, but they are rarely worth the
money that they actually cost you.
Speaker 3 (24:45):
And it sounds like the basic warranty that comes with
the car provides a heck of a lot of peace
of mind in and of itself, because that what is
the number one potential problem with an electric vehicle. It's
that the battery craps out ahead of time. And when
you have she's at thirte teen thousand miles, when you
have eighty seven thousand miles in front of you, that
where the battery is covered, that's a long time, and
(25:07):
that in and of a self shuld provide a lot
of peace of mind. Sixty one hundred bucks is so
much money. And if you already have kind of that
warranty that gives you that much coverage, I mean that
could be many, many, many years of coverage on that battery.
To me, that's the biggest thing I would feel taken
care of by that. And it sounds like, yeah, you're
(25:28):
extended warranty includes some extras, but I would also say
this scheduled maintenance on an electric vehicle is minimal, and
so I think the initial manufacturer's warranty should be ample.
It should dissuaded your concerns, and you just really don't
need to add this extended service contract. Also think about
what fine print and exclusions it might come with, Like
(25:49):
you'd be wise to know what's covered first. There is
a small chance that you come out ahead by buying
this thing, but the gamble just doesn't pay off for
most folks, and so if you opt. Also, one last
thing on this extended warranty that I want to mention
is if you do opt to go for it, make
sure it is from Volkswagen directly, because third third party
(26:10):
warranties are the worst possible kind. The company might not
be there when you need it. There's typically more fine print.
They're just a lot of third party warranties that aren't
direct from the manufacturer that I think are worth a
pittance to almost nothing, and so I would be completely
unwilling to pay for that, that's for sure. Do you
say warranty or warranty because I swore I was hearing
(26:34):
you say both interchange warranty like.
Speaker 1 (26:36):
Guarantee, when I'm like, I don't think I've ever said
warranty like warranty. I always say warranty, thirty year warranty, yeah,
drive trade warranty, Yes, say it differently, But towards the
end of say tomato, I say to me, I sound
like I don't know. Aside from self ensuring, I think
a better thing to do is just simply buy a
vehicle that rates high and reliability.
Speaker 3 (26:57):
I have a looked at.
Speaker 1 (26:58):
Your specific car, So I'm not being critical here. We're
talking to the public at large here, because if we're
playing the odds hoping that our repair bills are going
to come in lower than the price of the extended warranty,
we'll buying a car making model that consistently rates well
from different sites like consumer reports.
Speaker 3 (27:14):
That would be wise.
Speaker 1 (27:15):
An extended warranty is rarely an awesome idea, but it
just makes more sense. If you buy a car that's
prone to experiencing the problems when it comes to some
of the different mechanicals in that land Rover.
Speaker 3 (27:27):
You might want to consider the extended warranty. What about
the Jaguar, right, Yeah, just a little more. I would
I would think about it for a second longer.
Speaker 1 (27:33):
Okay, So to that, to the defense of that, there's
a survey of Consumer Reports readers that finds so after
a decade, they find that the vast majority of Honda, Toyota,
and Subaru extended warranty buyers would never ever buy one again.
Speaker 3 (27:49):
They ended up paying a lot of money didn't have
to use it. And I think that.
Speaker 1 (27:52):
That's just it's not anecdotal, it's a survey, but it
just points to the fact that.
Speaker 3 (27:58):
It's not necessary when you purchased the rate, which is interesting,
like you might hear that at first pass and say, oh,
then why Hanta, Toyota and Subar who's selling these things
that people don't like? Well because it makes the money, Well,
because it makes the money. But also interestingly enough, like
when you opt for cars that are more reliable historically,
it just means that the people were most displeased because
(28:18):
they didn't need to use it. But the ideal would
be to buy a car that's not going to need
and you can never fully one hundred percent assure yourself
that even a new car isn't going to have problems
that you're going to need to pay for especially if
it happens just outside that warranty period. And like, Man,
I should have got the extended warranty. Matt and Joel,
we're so wrong. At one hundred and two thousand miles
(28:40):
the battery crapped out on this feed up and man,
they're idiots. And the truth is those kind of anecdotal
stories happen too. But if we're playing the odds here,
keeping that sixty one hundred dollars in your bank account
and relying on the warranty that already comes with the
vehicle should provide plenty of peace of mind and plenty
of financial ammunition in your bank account to pay for
(29:01):
something that might or might not happen in this car
in the future. That's true. Okay, let's take a quick
email from Ryan.
Speaker 1 (29:06):
I've been looking to switch after tax brokerages from Schwab
to Fidelity or Vanguard. As Schwab pays big bank interest
rates on uninvested cash like zero point five percent. You
can go higher, but it'll take three days to invest it,
while Fidelity and Vanguard pay small bank rates five percent
last I checked, and no time waiting. So I was
(29:27):
wondering what the best way to do that would be
should I slowly sell and Schwab and buy in the other,
or would it be possible to do a trustee to
trustee swap similar to pre tax retirement accounts, which I thinks.
Speaker 3 (29:37):
A good question. I would be frustrated if I was
with a brokerage firm and like those sweep accounts where
your cash is kept before you make investments, if that
was earning next to nothing, I would be like, what gives?
Because there are other brokerage firms that don't treat their
customers like that, and Schwap is a great, low cost
(29:57):
brokerage firm. So I was like, wait a second, is
this for real? To Schwap pay nothing to cash customers? Well,
I would just encourage Ryan to check your money market
funds again. Check what Schwab is offering. There are likely
multiple money market funds that they offer. You might be
in an inferior one because it looks like the one
I checked out is returning more than four percent right now,
(30:19):
which is pretty close to what other money market funds
are offering at some of our other favorite white I
think he.
Speaker 1 (30:25):
Saw that, but what he wrote was that it'll take
three days to invest it, So I think maybe he's
seen those. But the big question then then if that's
the case, then the big question is what's the rub
with the three days?
Speaker 3 (30:36):
Why does it take three Yeah? Well, I mean it
shouldn't take that long.
Speaker 1 (30:39):
Well, I mean it takes time for transactions to go through.
And maybe I don't know what he's talking about transferring
the money and then placing the purchase order.
Speaker 3 (30:45):
And then just the fact that it's in the ether
for yeah.
Speaker 1 (30:48):
Yeah, So I don't know, like it's maybe it's more
of a principled sort of decision that's driving him to
want to change brokerages. But that being said, if it was,
I mean, I personal wouldn't let the three days rub
me the wrong way.
Speaker 3 (31:01):
Yeah, But maybe he also away a question differently. I
guess I think I heard him saying that, hey, money
that's sitting there ready to be invested, I can't earn
any meaningful return on it while I'm waiting to invest.
And if that's the case, then I would just say
look to swv x X, which is their savings equivalent
money market fund. That might be the only move you
(31:22):
need to make. But if if you're if Matt's right here,
then I think this might be an issue that you
encounter at other brokerages too, not your SWAB. But it's
not take some time, probably not lazy. It's just to
move money around. Yeah, those money moves don't happen instantly.
It's like a Venmo transfer from your Venmo account into
your bank account that typically takes a couple of days
(31:43):
unless you hit the instant thing where you have to
pay extra, right, which you don't want to do.
Speaker 1 (31:47):
You also, I mean, even if you did, let's say
you did want to switch over, maybe there's other reasons,
Like I wouldn't say that this is the only reason
to switch switch brokerages. Fidelity is great. So let's say
you wanted to do that. But if you were to
sell your assets there in a brokerage account and then
buy them again at another brokerage, that would also trigger
tax consequences, and that's something that you certainly want to avoid.
(32:08):
Don't pay these capital gains when you don't need to.
Uh So, if you decided that you're gonna be better
off at Vanguard, you just do what's known as an
act transfer.
Speaker 3 (32:18):
You call the new.
Speaker 1 (32:20):
Brokerage firm you want to start doing business with, and
they should help you to be able to do this. Essentially,
you're just changing custodians of the funds that you already own.
Speaker 3 (32:27):
It's like slapping a new label on them.
Speaker 1 (32:29):
Essentially, you're not selling and then rebuying, which is how
you're gonna If you were you to do that, you're
gonna be paying a ton of money. Well, it just
depends on how much, like how much you got you're selling,
but you are most definitely going to be paying capital
gains tax.
Speaker 3 (32:40):
That would be an inefficient way to do it.
Speaker 1 (32:42):
No bueno, and that is going to do it for today.
Thank you for listening. We appreciate your time and attention.
We'll see you back here next week. And you are
listening to how to Money on k if I AM
six forty You've been listening to how to Money with
Joel Larscard and Matt All Mixed and you can always
hear us live on k if I AM six forty
twelve to two pm on Sunday and anytime on the
(33:02):
iHeartRadio app
This is Matt Altmix and joelars Guard and you are
listening to kf I am six point forty how the
Money on demand on the iHeartRadio app.
Speaker 2 (00:10):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel Lar's Guard and Matt Altmix.
Speaker 3 (00:40):
I am sixty live everywhere on the iHeartRadio app. This
is how to Money.
Speaker 1 (00:45):
I'm your host, joelars Guard and I am the other host,
Matt Altmix. And if you have a money question, we'll
send it our way. All you have to do is
record your question on the voice memo app there on
your phone and send it over via email. You can
find the simple instructions at how to money dot com.
Forward slash ask. Now, it is time for the ludicrous
headline of the week. And you know what, I think
(01:05):
you are a little more enraged about this headline than
I am, because I don't know if I can officially
call it gallaging, But okay, I feel you feel a
little more in that direction.
Speaker 3 (01:15):
Well let's go ahead. Let's go ahead. So the headline
comes from Yahoo Finance and it reads I can make
it any number. I want. Gas stations are charging customers
a dollar more a gallon for using credit cards, and
I so I was frustrated by reading this the gas
stations are. I would be frustrated going to charge that
much if I rolled up to that gas station and
(01:36):
I was like, wait a second, gas is two eighty
five a gallon with three eighty five gallon if I
use my credit card. If I had rotten fruit in
the car, Matt, I would throw it at the at
the gas not the person, but at the gas station itself,
because that's assault. Brother, Yeah, I know, because that's messed up.
Speaker 1 (01:52):
That's it was a Billy Madison line for all the
oldies out there. Classic movie, classic movie. But then kipling
are along.
Speaker 3 (02:00):
This article documented the rise of gas stations charging outrageous
fees for credit card usage at the gas pump too.
Speaker 1 (02:07):
And we seems like it's becoming more of a widespread
It's not like just the Florida man or the Florida
man gas station owner.
Speaker 3 (02:14):
Right, which apparently this is largely happening in Florida. And
you and I we've documented this on the show. We
know that taking credit cards eats into the profit of
a small business or a gas station operator, which is
why many small businesses are saying there's a cash discount,
or there's a price you have to pay to use
a credit card, and it's why more gas stations are
charging ten cents a gallon, but a dollar a gallon.
(02:37):
That to me seemed pretty ludicrous. And so I think
this is just a heads up for you. If you're
the kind of person tap fill up, you don't even realize,
you're not even thinking about it, you're kind of thoughtlessly
filling up at whatever gas station you come across, just
know that they might be charging this significant amount extra
for using your gas, for using your credit card at
the pump. And I just I also kind of don't
(02:58):
see the financial incentive for gas station to charge this
much more, far beyond the cost that they incur for
taking credit cards. Because if I was a customer who
found out that I got, you know, kind of the hoodwinked,
paying more than I thought I was going to for
the gas I was putting in my car, I wouldn't
come back there.
Speaker 1 (03:16):
So I just seem like, yeah, really stupid. It does
seem like a stupid it's a short term. It seems
like it's a short term a short sided, near sighted
like cash grab. Yeah, and I would not even go
back to that gas station, I think, even after they
lowered the price, because it's like, wait a minute, wait,
was that an error? And maybe they're counting on folks
thinking that. But the fact that at least in this
in the one report that the guy's like, nah, I
(03:37):
can I can just make it whatever.
Speaker 3 (03:39):
It's like, yeah, you can run yourself out of business too,
and he might actually end up doing that.
Speaker 1 (03:43):
But the reason I don't think this is gouging, of course,
is because are there other options?
Speaker 3 (03:47):
Do you have the ability to leave?
Speaker 1 (03:48):
And man, there are a ton of gas stations all
over the place unless you happen to live somewhere or yeah,
it is your only gas station option. Right your town
is an intersection, like the radiator spring, there's like one
flashing red light.
Speaker 3 (04:00):
If that's the case, well maybe it's.
Speaker 1 (04:02):
Time for a town hall and there's there there should
be some social pressure, uh that station owner.
Speaker 3 (04:07):
So that's the difference.
Speaker 1 (04:08):
Between like two eighty five versus like three eighty five
a gallon or something like that. But like for instance,
the a ten cent per gallon difference is typically worth
it if you're using the right credit card of course,
Costco Visa. It gives you four percent cash back and
five percent with no fee at Costco, which is also
a very.
Speaker 3 (04:26):
Superior form of gas.
Speaker 1 (04:28):
Joel, speaking of gas, there's another gas station that I've
been to and I won't go back to because, like,
the check engine light.
Speaker 3 (04:33):
Came on after we filled up at this text.
Speaker 1 (04:37):
I don't know what you want to say it because
like you did, I'm sure it's a particular gastation owner
who maybe isn't doing a great job, or maybe it
was just a bad batch of gas. But I'm like,
I'm not going to risk my wonderfully old engine in
our our odyssey U going on the fritz.
Speaker 3 (04:52):
Yeah, I mean we've talked about this before too. But
there is a type of gas called top tier gas.
So you're not just saying here, baby, no, it seems
like it's better, but it really is. It's really formulated
better to keep your engine clean. And so yeah, they
sell the stuff at the AutoZone or whatever you can
dump in your dump in your engine to try to
clean your engine. Well, if you're filling up top tier
gas with regularity, your engine and components are going to
(05:15):
be cleaner. Maybe you don't need to even do that
at all. And by the way, it doesn't cost more
to get top tier gas, but they're just so certain
stations that provide it, So make sure you know where
you can get it.
Speaker 1 (05:24):
So as we're talking about competition, there's actually an interesting
white paper recently about competition at the gas pump and
how it spurs price reductions. Then maybe think of like
when an Audi moves into the neighborhood.
Speaker 3 (05:34):
Well, the prices up. The other grocery stores of course
are going to come down.
Speaker 1 (05:36):
Or maybe like when Southwest when they start operating out
of a certain airport, all the other airlines, they got
to get a bit more competitive, although maybe that's declined
album with the Southwest draws spirit the.
Speaker 3 (05:46):
Frontier when they jump in, like Delta's like, all right,
we gotta lower our prices for a little while at least, so.
Speaker 1 (05:51):
The price per gallon at existing gas stations gets reduced
immediately because now they gotta work harder to get you
to fill up there. The study said that the effects
are in mediate and persistent. Competition works man because prices
create important signals to shoppers. If gas stations try to
gouge you make sure to peace out. You can vote
with your dollars.
Speaker 3 (06:10):
Prices are signals, and we react accordingly when a price
goes up somewhere and make my little antennas pick up Matt.
Speaker 1 (06:17):
We might get honorary economic degrees from some college out
there who might be willing, probably for some if you
keep saying signals, Joel, some.
Speaker 3 (06:25):
Fly by Night University. Uh yeah, we'll see University of Phoenix.
We're getting our honorary degrees from there. I don't know.
Is that a good I don't know. If I'm not
trying to cast, if they've got great programs out there,
I don't know. Well, the price of home internet has
been on the rise. C net found that two thirds
of folks are paying more for Internet than they were
(06:45):
last year, and not just not just by a little bit.
I was kind of shocked to see this, by almost
two hundred dollars more over the course of a year.
And they also said that service has not improved with
the with their Wi Fi, which makes the cost increase
even more. For if I'm paying more because I'm getting
something superior, I might be willing to look past the
(07:06):
price increase, But if the service is degrading at the
same time, I mean, that makes me frustrated, but it
makes sense that this is happening because, first off, home
internet it's not a competitive industry in many locations around
the country. You're looking at a duopoly, which means your
options are paltry, like one of two places you can go. Yeah,
and then price competitiveness, it's not really a thing, and
(07:29):
it's still worth monitoring your bill for price increases and
calling your service provider to ask about a reduction, or
I've talked about this before, you're reaching out to them
on Twitter, because sometimes those are the people who are
most empowered to help you get a better price, as
opposed to call in the one eight hundred number other
options we've talked about this in the past two or
to choose slower speeds, or to stop renting equipment. Buying
(07:50):
your own equipment can reduce that monthly cost. Oh yeah,
but yeah, I think it's just important to note this.
That's slow creep up of your internet price. You may
be like, yeah, I'm paying seventy bucks a month for
an internet or something like that. That is probably more
than you should be paying. And there are a lot
of ways to reduce that bill. Just don't pay the
increased bill price because that's what came in the mail,
and not do a licka. Not to a licka about it,
(08:11):
because you really could save a couple hundred bucks a year. Yeah,
pretty easily with maybe a couple hours of your time.
Heck yeah, you are listening to how to Money KAF
I am six forty live everywhere on the iHeartRadio app.
Speaker 1 (08:23):
This is how to Money. I'm Joe Larscard and I
am Matt Altmix. If you are over on Facebook and
you want to join a group of like minded folks
who have money questions and insight, please go ahead and
join the how to Money Facebook group. All right, let's
hear from another listener. This is someone who has a
question about one of our absolute favorite retirement accounts.
Speaker 4 (08:43):
Hey, Matt and Joel. At the beginning of the year,
both my wife and I fully funded our wroth Ira. However,
over the course of the year, we've had significant capital
gains from our investments. I'm pretty sure this has pushed
us out of the limit to be able to contribute
to the roth Ira, assuming we're no longer eligible. How
do you all recommend we proceed prior to the end
of the year. Thanks guys, best friends out.
Speaker 3 (09:05):
Well. Matt Thomas lives in our neck of the woods.
He's also an honorary bestie, he said, best friends out. Yeah,
so you count, you count, We include you, We include you.
Thank you. And by the way, Matt, we think it's
typically a smart move to fully fund your wroth IRA
at the beginning of the year. This is something you
have emphasized a lot because we talk about the big fan.
We talked about dollar costs averaging regularly on the show,
(09:27):
which is essentially putting money in every time you get paid,
so you get paid every two weeks, you're sticking money
into that four one K if you've got that through
your employer. And if you have a roth ira, like
you're just letting it auto draft out of your account
every single month or every couple of weeks, so you
fully fund it by the end of the year. But
if you have the money to fully fund the wroth
(09:48):
IRA at the beginning of the year, which we know
not everybody does, but if you do, stick it in,
because one, it just kind of gets it out of
the way, like you've done the thing well, and then
you're actually going to be better off the majority of
the time too as an investor, because that's what the
data shows, right, what three out of four years the
market goes up something like that exactly, So you're more
(10:10):
likely to have a larger sum, larger balance at the
end of an investing lifetime, or you to have invested
at the beginning of every single year as opposed to
the end of very I know most folks off for
dollar cost averaging because they just don't have seven thousand
dollars in January first to toss it in.
Speaker 1 (10:26):
But you think it's a good goal to work towards, though,
I think that if that's something that over the course
of a few years, if that's something that you can
work towards, where you've got enough set aside that you
can every year, maybe you dump a little bit more
at the very beginning of the year. And in a
similar way, I think it does a similar behavioral trick
where I think what's great about dollar cost averaging is
(10:46):
that it just takes the guesswork out of when it
is that you want to buy into the market. You're
essentially doing the same thing though when you do the
a lumpsum investment at the beginning of every single year.
You're just like, well, that's just what I do come
January first, every single year. It's not something where we're
having a conversation about a bay like this is just
we are investors. This is what we do. We're gonna
be better for it.
Speaker 3 (11:06):
And it's basically dollar cost averaging on just a far
less frequent timeline. Because you're like, you're still doing the
same thing, Like you're not like, well maybe i'll wait
till like July and see if the market's up then
or something like that. You're still doing it like clockwork,
on the same you know, this same season, same date
hopefully every year.
Speaker 1 (11:20):
Yeah, and you're also not saying like, Okay, I'm only
gonna invest in even years or something, or you know,
I'm just gonna wait until them forty and I think
it's gonna be better then, Like you're not timing the
market at all in that way of course, But there
is that occasional situation that Thomas has found himself in
where you end up regretting it, and not because the
market goes down, but because you find yourself ineligible to
(11:43):
contribute to that wrath. It's a good thing on one hand, right,
because it means that you've made too much money, and
that is worth celebrating. In Thomas's case, it's great to
have maybe capital gains that he was not expecting.
Speaker 3 (11:56):
Some people like when they talk about capital gains, they
make it sound like it's like the worst thing ever, Like, dude,
I got this second, and I get it emotionally. My
tax bill the big picture, well, that means you made money.
Let'szoom out a little bit. You're doing well. We are
happy for you.
Speaker 1 (12:11):
But the current income limits are one hundred and fifty
thousand dollars for single folks to be able to contribute
to a roth, and it is two hundred and thirty
six thousand dollars if you are married filing jointly, so
Thomas or and.
Speaker 3 (12:23):
Others out there.
Speaker 1 (12:24):
If you're going to be close to that line, it
might be worth prioritizing some other tax advantage moves, like
contributing more to a traditional four to one K or
maybe even bashing your giving so that you still meet
the adjusted gross income requirements. Maybe typically you take the
standard deduction, but you're like, you know what, let's hold
off on giving. We'll give all of our money at
(12:46):
the beginning of next year and then essentially pre fund
you're giving at the end of that next year for
the following year. The way you're getting credit for all
of that charitable giving on one year, it allows you
to itemize and take more.
Speaker 3 (12:59):
Of a deduction. Make sense for a lot of people
where it's like standard deduction one year, don't take the
standard the next because you've just batched some of those
like tax oriented tax saving choices into one given year
and then you back off the next year, and that
can make you know a small dent in your ability
to save on taxes, but also in your ability to
then contribute to a ROTH.
Speaker 1 (13:19):
Yeah, exactly, and Ross truly are what are our favorite accounts,
in large part because of the flexibility and the options
that they give folks. That being said, man the ability
to contribute a little more to a traditional four win
K for instance, even if there isn't a match, Well, okay,
you are still investing, but then you are also bringing
down your adjusted gross income, which then in fact allows
you to be able to sock maybe fewer dollars towards your.
Speaker 3 (13:40):
WROTH, but at least you're eligible. Yes, right out of
the gate as well. Agreed so so okay, what do
you do though, if you've contributed to a WROTH and
you find out that your income was over and above
the limit for twenty twenty five, Well, there are a
few moves you can make. You're not going to face
any penalties if you actually just choose to withdraw your
your excess contratribution plus any income that it's earned by
(14:03):
the due date for your tax return. So you will
have to include the taxable earnings portion in your taxable income.
So like, let's say the money you stuck into the roth,
well it made money because it was invested in the market, Well,
that you will have to include in sort of your
figure out what the IRS form number is, Matt, But
there's a form you have to fill out to report
(14:23):
that on your taxes. But because of the way roth
irays are taxed, you can take your contribution out at
any time, Like you don't need to wait until you're
fifty nine and a half because you're paying the tax
up front. So because of that, you can just literally
plow back that contribution, no harm, no foul. Another option
is to recharacterize that contribution and move it into a
(14:45):
traditional IRA. And I do believe this is something that
you've done, right.
Speaker 1 (14:49):
Matt, I have, but that's also before the larger brokerages
out there, so like Fidelity and Vanguard before they were
offering this like a withdrawal of X contributions, that's what
they're calling it now. And so the recharacterization, I mean
even just the term right, it sounds like it was
something that was invented by a bunch of accountants or
the irs, where it's like, oh, you need to recharacterize
(15:11):
your contributions for sure, and there are.
Speaker 3 (15:13):
Times when you're gonna want to do that.
Speaker 1 (15:15):
But I truly think that this is a new thing
because this was not available when I did this a
number of years ago, when we had to recharacterize contributions.
But truly, the ability to go on to a brokerage
like Fidelity or Vanguard and initiate and excess contributions withdrawal, like,
I love it. It makes so much sense, and it's
oriented towards everyday retail investors as opposed to feeling like
(15:39):
you have to hire an accountant to make sure that
you're handling this thing correctly. And so I know that
there are certain situations where someone is going to want
to recharacterize. It's pretty easy as well. There are forms.
When I initiated that for us with Vanguard, it was
just an online form that you filled out. In particular,
is easy because I was characterizing those contributions, those dollars
(16:03):
from a roth IRA that's that was held there at
Vanguard to a traditional IRA that was also held there
at Vanguard. It's a little more complicated if you are
sending that to a different brokerage. There's a little more
handholding that needs to take place. But especially if you're
doing an in house recharacterization like that, it's pretty simple.
But again, this withdrawal of excess contributions option makes this
(16:26):
even easier.
Speaker 3 (16:27):
Yeah, so we got more money saving information.
Speaker 1 (16:29):
To get to KFI AM six forty. You're listening to
how to Money on demand on the iHeartRadio app KFI
AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (16:43):
This is how to Money. I am Matt Altmis 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. Let's talk about investing
and as we know Americans, you know when it comes
to investing and being informed about the best ways to invest.
Maybe they're not as informed as you and I would love.
(17:03):
That's part of the reason the show exists. But there's
this new report from Gallup and it finds that's similar
to last year, people assume that real estate and gold
are the top notch, absolute best investments that you could
be for taking in and so it's a sticky myth.
That's right, sticky myth because it perpetuates people continue to
think this. You and I we talked about gold a
(17:23):
little bit last week, so we won't, like, you know,
brate that topic and keep going at it. And it
hasn't been a bad investment recently. We documented that over
the past twenty years it's actually it's actually been an
awesome investment. But it doesn't hold a candle to investing
in stocks over many decades. And you and I were
real estate investors, but we would still I think, hesitate
to tell folks that real estate is the best long
(17:44):
term investment. There's a lot of just nuance and specifics
that come into play there. If it can be if
you buy at the right time and you know what
you're doing right or if you bought a property that
was pretty inexpensive and you use leverage to buy it,
and you've seen what returns have done over the past
fifteen years. Wonder the recency bias inside of you would
say real estate crushes stocks no matter what, even though
(18:05):
stocks have done well too. Yeah, but just to assume
that gold and real estate are better than investing in
the stock market, I don't think the numbers over an
extended period of time bear that out.
Speaker 1 (18:16):
I was sad to see that only sixteen percent of
folks who were surveying thought that the stocks were the
best long term investment. And it's worth mentioning that it
is just so much easier to invest in the market
right like it can be worth working hard. It's maybe
it's worth you spending some time on the weekend putting
in some sweat equity, putting in some elbow grease in
order to increase your returns as you are forcing equity
(18:37):
into that property. But many folks are gonna find it
hard to make the numbers work investing in real estate
specifically right now. Plus is just hard to save up
enough liquid cash to get you in the game. And
there's also the part time job aspect of it. And
you do have to do all that like this, yeah exactly.
Like I'm not trying to shatter your landlord dreams if
you've got them, but just simply dollar cost averaging into
the market is still the best way for the vast
(18:58):
majority of folks, despite what it is that they think.
I think a lot of individuals lash onto the different anecdote.
They lash onto the outliers. They've heard stories of, Oh,
he made all this money in real estate, and.
Speaker 3 (19:08):
It feels more approachable too than like I built a
business around AI and I sold it for billions or something.
It seems like something that they can do.
Speaker 1 (19:15):
But even still, like the average American, they've got a
nine to five, yeah, like, and then after that, you've
got a family who you want to see, or you've
got friends, you've got interest, you've got other hobbies. And
I think there are some things in life that are
hard to do and it's worth putting in. Like you
wrote yourth on, that's going to take a whole lot
of work. It's not an easy thing to do. You
want the start thing to do, It's gonna take a
(19:38):
whole lot of grit to make this thing happen. And
unfortunately I think people they take that principle and they
apply it to their investments when truly, when it comes
to building wealth.
Speaker 3 (19:47):
It pays to be like it pays to be able to.
Speaker 1 (19:49):
Literally dollar cost average into the market, paying low fees
and just doing that over the course of decades, like
you are going to be able to retire comfortably and
with a whole lot of wealth by doing that. It
doesn't have to be hard.
Speaker 3 (20:01):
Without going as hard as you can, right, which typically
when we're talking about real estate buying physical properties, Yeah,
it could certainly work out to your advantage and you
could be wealthier because of it, but there are so
many factors at play just to knee jerk assume that
real estate is the best investment. I think that's what
kind of irks me about this study, that people just
(20:21):
continue to assume that real estate and gold are better
than stocks. And it's like that doesn't bear out in
the numbers, and it doesn't bear out for a lot
of people's personal experience. And yes, there are some people
who massively crush at real estate, but yeah, it takes
and we talk to some of those people, and you
and I are real estate investors ourselves, But just be
careful before thinking that real estate is the golden ticket
(20:41):
to building wealth, because stocks can certainly be that for
you too, and they can be a much easier way
to get there. Another tried and true way to get
wealthy in the US is to build a business. And
the journal had an awesome profile of small to medium
sized business owners across the country this week, and they
called the folks who built those businesses the stealthy wealthy.
(21:02):
And the people that they highlighted here make their living
manufacturing flooring or having an auto dealership, or they distribute beverages,
stuff like that, Like these kind of run of the
mill businesses you don't think about. And I think the
gist of the article is that it doesn't have to
be sexy to make money, right. Makes me think of
(21:23):
when you interview kids these days, Matt, Like, so many
of them say they want to be influencers, Like that's
what they want to grow up to be. It's the
hot career. Wouldn't it be nice to be mister beasts right,
to follow in his footsteps? And it's kind of like
when you would have interviewed kids my age and me
in particular, probably all I want to be Michael Jordan, Like,
that's how cool would it be to play basketball every
day and earn a living and earn millions of dollars?
(21:43):
But I think it's important to highlight, to not neglect,
the boring ways of being able to make a living
and in fact how successful those people can be. And
in fact, boomers are selling their boring businesses these days.
You can buy their business as they're ready to retire. True,
they might let it fold otherwise. I mean, this is
this is the kind of thing where could a boring
(22:05):
business be your path to success potentially? And I love
reading that article just how Yeah, I just think those
things get neglected so often because they're not snazzy, they're
not fancy. Uh, But I mean that's what you're going
for with your life, and if you want to if
you want to build wealth without and you don't want
to be famous, this could be a great way to go.
Speaker 1 (22:24):
Yeah, Honestly, like going back to investing in the stock market,
it's a similar thing.
Speaker 3 (22:28):
Like take the boring path. Yeah, it also comes with
a whole lot less drama as well. All Right, We've
got more to get to on today's show. KFI AM
six forty Live Everywhere on the iHeartRadio app. This is
how to Money.
Speaker 1 (22:41):
I am one of your hosts, Joel Larsgard, and I
am that all mixed by the way. You can always
find more money saving information over at howtomoney dot com.
Speaker 3 (22:50):
It's time now for the Facebook question of the Week.
This one comes from Becca. She says, got a car
warranty question here. We just bought a VW Volkswagen ID
four with thirteen thousand miles. It's an electric vehicle. They
pushed a warranty on us that we have thirty days
to back out on. It's sixty one hundred dollars and
it includes most drive train issues, tire alignments and rotation,
(23:12):
as well as scheduled maintenance. The car comes with a
no cost one hundred thousand mile battery warranty. I did
not want to spend that much on a warranty. Was
wondering about trying to find a different warranty or just
kind of saving that money as a buffer.
Speaker 1 (23:25):
The old car warranty is what Beca's dealing with here, Joel,
and she said that they pushed it on me. You
are not alone because warranties are such a big money
maker for car dealerships.
Speaker 3 (23:37):
It's no wonder that they made the heart sell on you.
Many people have been pushed over, bowled over by those salespeople.
Speaker 1 (23:43):
And you know why I think that a lot of
folks accept it is because of the fact that oftentimes
we finance our cars and so when you take if
you know, if someone's just like, hey, pay up six
thousand dollars for this thing, you're thinking, I got a
sorry cash, I'm not going to be able to afford
that a B. I don't know if it's worth it.
But when you roll it into a payment like that,
it makes it a much more pleasant pill to.
Speaker 3 (24:03):
Swallow at that point, Like it'll be an extra forty
two dollars a month, but it's also going to be
peace of mind, don't you exactly, And don't you know
the piece of mind that that's going to give you.
It's going to protect you and your car against anything
that could come its way. Yeah.
Speaker 1 (24:14):
Typically we are not fans of extended warranties, especially like
on technology on electronics, like tech gadgets. Instead, take care
of your stuff self ensured, and you're gonna come out ahead.
Like the vast majority of the time if you bought
one of those, every single time you made a purchase
like even of on like appliances, you're going to be
spending all of your money all electronics. But car warranties
(24:38):
are a little bit different, but still they can provide
that piece of mind, but they are rarely worth the
money that they actually cost you.
Speaker 3 (24:45):
And it sounds like the basic warranty that comes with
the car provides a heck of a lot of peace
of mind in and of itself, because that what is
the number one potential problem with an electric vehicle. It's
that the battery craps out ahead of time. And when
you have she's at thirte teen thousand miles, when you
have eighty seven thousand miles in front of you, that
where the battery is covered, that's a long time, and
(25:07):
that in and of a self shuld provide a lot
of peace of mind. Sixty one hundred bucks is so
much money. And if you already have kind of that
warranty that gives you that much coverage, I mean that
could be many, many, many years of coverage on that battery.
To me, that's the biggest thing I would feel taken
care of by that. And it sounds like, yeah, you're
(25:28):
extended warranty includes some extras, but I would also say
this scheduled maintenance on an electric vehicle is minimal, and
so I think the initial manufacturer's warranty should be ample.
It should dissuaded your concerns, and you just really don't
need to add this extended service contract. Also think about
what fine print and exclusions it might come with, Like
(25:49):
you'd be wise to know what's covered first. There is
a small chance that you come out ahead by buying
this thing, but the gamble just doesn't pay off for
most folks, and so if you opt. Also, one last
thing on this extended warranty that I want to mention
is if you do opt to go for it, make
sure it is from Volkswagen directly, because third third party
(26:10):
warranties are the worst possible kind. The company might not
be there when you need it. There's typically more fine print.
They're just a lot of third party warranties that aren't
direct from the manufacturer that I think are worth a
pittance to almost nothing, and so I would be completely
unwilling to pay for that, that's for sure. Do you
say warranty or warranty because I swore I was hearing
(26:34):
you say both interchange warranty like.
Speaker 1 (26:36):
Guarantee, when I'm like, I don't think I've ever said
warranty like warranty. I always say warranty, thirty year warranty, yeah,
drive trade warranty, Yes, say it differently, But towards the
end of say tomato, I say to me, I sound
like I don't know. Aside from self ensuring, I think
a better thing to do is just simply buy a
vehicle that rates high and reliability.
Speaker 3 (26:57):
I have a looked at.
Speaker 1 (26:58):
Your specific car, So I'm not being critical here. We're
talking to the public at large here, because if we're
playing the odds hoping that our repair bills are going
to come in lower than the price of the extended warranty,
we'll buying a car making model that consistently rates well
from different sites like consumer reports.
Speaker 3 (27:14):
That would be wise.
Speaker 1 (27:15):
An extended warranty is rarely an awesome idea, but it
just makes more sense. If you buy a car that's
prone to experiencing the problems when it comes to some
of the different mechanicals in that land Rover.
Speaker 3 (27:27):
You might want to consider the extended warranty. What about
the Jaguar, right, Yeah, just a little more. I would
I would think about it for a second longer.
Speaker 1 (27:33):
Okay, So to that, to the defense of that, there's
a survey of Consumer Reports readers that finds so after
a decade, they find that the vast majority of Honda, Toyota,
and Subaru extended warranty buyers would never ever buy one again.
Speaker 3 (27:49):
They ended up paying a lot of money didn't have
to use it. And I think that.
Speaker 1 (27:52):
That's just it's not anecdotal, it's a survey, but it
just points to the fact that.
Speaker 3 (27:58):
It's not necessary when you purchased the rate, which is interesting,
like you might hear that at first pass and say, oh,
then why Hanta, Toyota and Subar who's selling these things
that people don't like? Well because it makes the money, Well,
because it makes the money. But also interestingly enough, like
when you opt for cars that are more reliable historically,
it just means that the people were most displeased because
(28:18):
they didn't need to use it. But the ideal would
be to buy a car that's not going to need
and you can never fully one hundred percent assure yourself
that even a new car isn't going to have problems
that you're going to need to pay for especially if
it happens just outside that warranty period. And like, Man,
I should have got the extended warranty. Matt and Joel,
we're so wrong. At one hundred and two thousand miles
(28:40):
the battery crapped out on this feed up and man,
they're idiots. And the truth is those kind of anecdotal
stories happen too. But if we're playing the odds here,
keeping that sixty one hundred dollars in your bank account
and relying on the warranty that already comes with the
vehicle should provide plenty of peace of mind and plenty
of financial ammunition in your bank account to pay for
(29:01):
something that might or might not happen in this car
in the future. That's true. Okay, let's take a quick
email from Ryan.
Speaker 1 (29:06):
I've been looking to switch after tax brokerages from Schwab
to Fidelity or Vanguard. As Schwab pays big bank interest
rates on uninvested cash like zero point five percent. You
can go higher, but it'll take three days to invest it,
while Fidelity and Vanguard pay small bank rates five percent
last I checked, and no time waiting. So I was
(29:27):
wondering what the best way to do that would be
should I slowly sell and Schwab and buy in the other,
or would it be possible to do a trustee to
trustee swap similar to pre tax retirement accounts, which I thinks.
Speaker 3 (29:37):
A good question. I would be frustrated if I was
with a brokerage firm and like those sweep accounts where
your cash is kept before you make investments, if that
was earning next to nothing, I would be like, what gives?
Because there are other brokerage firms that don't treat their
customers like that, and Schwap is a great, low cost
(29:57):
brokerage firm. So I was like, wait a second, is
this for real? To Schwap pay nothing to cash customers? Well,
I would just encourage Ryan to check your money market
funds again. Check what Schwab is offering. There are likely
multiple money market funds that they offer. You might be
in an inferior one because it looks like the one
I checked out is returning more than four percent right now,
(30:19):
which is pretty close to what other money market funds
are offering at some of our other favorite white I
think he.
Speaker 1 (30:25):
Saw that, but what he wrote was that it'll take
three days to invest it, So I think maybe he's
seen those. But the big question then then if that's
the case, then the big question is what's the rub
with the three days?
Speaker 3 (30:36):
Why does it take three Yeah? Well, I mean it
shouldn't take that long.
Speaker 1 (30:39):
Well, I mean it takes time for transactions to go through.
And maybe I don't know what he's talking about transferring
the money and then placing the purchase order.
Speaker 3 (30:45):
And then just the fact that it's in the ether
for yeah.
Speaker 1 (30:48):
Yeah, So I don't know, like it's maybe it's more
of a principled sort of decision that's driving him to
want to change brokerages. But that being said, if it was,
I mean, I personal wouldn't let the three days rub
me the wrong way.
Speaker 3 (31:01):
Yeah, But maybe he also away a question differently. I
guess I think I heard him saying that, hey, money
that's sitting there ready to be invested, I can't earn
any meaningful return on it while I'm waiting to invest.
And if that's the case, then I would just say
look to swv x X, which is their savings equivalent
money market fund. That might be the only move you
(31:22):
need to make. But if if you're if Matt's right here,
then I think this might be an issue that you
encounter at other brokerages too, not your SWAB. But it's
not take some time, probably not lazy. It's just to
move money around. Yeah, those money moves don't happen instantly.
It's like a Venmo transfer from your Venmo account into
your bank account that typically takes a couple of days
(31:43):
unless you hit the instant thing where you have to
pay extra, right, which you don't want to do.
Speaker 1 (31:47):
You also, I mean, even if you did, let's say
you did want to switch over, maybe there's other reasons,
Like I wouldn't say that this is the only reason
to switch switch brokerages. Fidelity is great. So let's say
you wanted to do that. But if you were to
sell your assets there in a brokerage account and then
buy them again at another brokerage, that would also trigger
tax consequences, and that's something that you certainly want to avoid.
(32:08):
Don't pay these capital gains when you don't need to.
Uh So, if you decided that you're gonna be better
off at Vanguard, you just do what's known as an
act transfer.
Speaker 3 (32:18):
You call the new.
Speaker 1 (32:20):
Brokerage firm you want to start doing business with, and
they should help you to be able to do this. Essentially,
you're just changing custodians of the funds that you already own.
Speaker 3 (32:27):
It's like slapping a new label on them.
Speaker 1 (32:29):
Essentially, you're not selling and then rebuying, which is how
you're gonna If you were you to do that, you're
gonna be paying a ton of money. Well, it just
depends on how much, like how much you got you're selling,
but you are most definitely going to be paying capital
gains tax.
Speaker 3 (32:40):
That would be an inefficient way to do it.
Speaker 1 (32:42):
No bueno, and that is going to do it for today.
Thank you for listening. We appreciate your time and attention.
We'll see you back here next week. And you are
listening to how to Money on k if I AM
six forty You've been listening to how to Money with
Joel Larscard and Matt All Mixed and you can always
hear us live on k if I AM six forty
twelve to two pm on Sunday and anytime on the
(33:02):
iHeartRadio app
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