September 14, 2025 • 33 mins
Sports gambling is becoming a pervasive problem. Many young men are finding themselves addicted and in serious financial trouble.
Ask HTM: Anna wants to get her 529 contributions right, ensuring she gets the max state tax deduction she's eligible for.
Social Security is the most valuable asset that most Americans have. That's not good! We want HTM listeners to invest effectively enough that their retirement accounts are far more valuable.
Ask HTM: Insurance rates have risen quite a bit. What can be done about it!?
Ask HTM: Anna wants to get her 529 contributions right, ensuring she gets the max state tax deduction she's eligible for.
Social Security is the most valuable asset that most Americans have. That's not good! We want HTM listeners to invest effectively enough that their retirement accounts are far more valuable.
Ask HTM: Insurance rates have risen quite a bit. What can be done about it!?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
K if I Am six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
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 Aultmix.
Speaker 3 (00:58):
K IF I Am six forty everywhere on the iHeartRadio app.
Speaker 4 (01:02):
This is how to Money. I am Matt Altmix and
I'm Joe Larsgard.
Speaker 1 (01:05):
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 (01:14):
Is now time for the ludacrous headline of the week,
which comes from CNN this week, and headline reads the
hobby that's costing young men tens of thousands of dollars.
And this is not the new thing old hobby of pickleball, Joel.
We're not talking about the old school golf, which is
probably the second one. It's very expensive. I have friends
(01:37):
who go on like golf trips and I'm like, no thanks,
it's so expensive. Yeah, that's my backpacking hobby is like
not the cheapest, but it's way cheaper.
Speaker 4 (01:46):
It's so much more affotable. But golf.
Speaker 3 (01:48):
I have such a bad attitude about golf. I've gone
on rants before about used to work at a golf course.
I did that was younger, Matt old.
Speaker 4 (01:56):
Matt is not.
Speaker 3 (01:57):
I played a whole lot of golf when I was
a young kid, in part because of how accessible it
was to me at that point in time. Now we're
not talking about golf. We're talking about sports gambling, which
can that even be called a hobby? Like that's another
thing too, the fact that calling an addiction your addiction
of an addiction. So in this seeing an article, evidently,
if you watch a sporting event on TV, you're gonna
(02:19):
see an ad for gambling once every thirteen seconds, which
blew my mind. And it's actually it's not even an ad.
They're they're also including like logos for gambling apps for instance,
like whether it's on a jersey or you know, you're
sitting there watching the match, you're watching a hockey game
and you see like the boards, you know, like the ads,
they're even such a product placement along the sides of.
Speaker 4 (02:41):
The area everything.
Speaker 3 (02:42):
But it's just completely inundated our athletics, the sports that
we watch and evidently this is not I guess not
surprisingly largely a young male phenomena. A quarter of males
under the age of forty five have participated at all,
which again very surprising. I've never gambled on sports before.
Ten percent of men who are aged eighteen to thirty
(03:04):
think that they have a gambling problem. And man gambling
get young guys who are gambling on their favorite players
or their favorite teams. It has become fully normalized and
it's right throughout their fingertips. You know, this isn't something
that you need to go to Vegas to do. You
don't need a booky right, like that was the person
you would call up, I think in order to place
(03:24):
a sports.
Speaker 1 (03:25):
To feel CD And now it feels like bright and
clean and fun. And there's all the bells and whistles
on the apps and they're advertisements everywhere, and.
Speaker 3 (03:33):
So you're incentivized with free money to you know, I
know that's a part of it too. They're like, hey,
we'll give you this much money to even gamble with
once you initially download the app.
Speaker 1 (03:41):
And it's also pretty easy addiction to hide, right that
stick in your pocket? Well it went away, Yeah, exactly, well,
what are you talking about? Yeah, of course they're going
to highlight somebody who like was on the verge of
a mental breakdown because he lost over ten thousand dollars
like on.
Speaker 4 (03:57):
A seeing single hockey game.
Speaker 3 (04:00):
I don't think the different apps that I don't think
they're out there trying to ruin people's lives, you know,
like it makes sense they're trying to maximize their profits.
I think they would, but I think they would much
rather see all people, not just men, but like everybody.
What if everybody just bet like five or ten bucks
a month? That's totally reasonable, And I would say that
seems totally reasonable, right, Like, I don't think they're out
(04:21):
there trying to get individual people to lose tens of
thousands of dollars. But you got to know yourself. You
got to know if like what kind of slippery slope
you were on, and if you can't handle it. I mean,
you don't even need to dabble with five bucks, yeah,
because it might lead you to thinking you've got an
edge and you end up wagering much more money and
you end up losing a ton of it.
Speaker 1 (04:41):
They're also not giving that money back, right, you know,
if you gamble it away, So is that what they're after?
I don't know, Like I think there are incentives to
keep people glued to that app, so they are gambling
more and more, And yeah, it's a it's a real problem.
It's a real problem to be a society wide problem too.
Speaking of about as Matt, I don't think people are
(05:02):
using Google as much as I used to. I think
those the use of chat, GPT and other AI services
is on the uptick.
Speaker 4 (05:08):
And maybe I don't know.
Speaker 1 (05:09):
I'm curious to see how Google response to that. But
when you actually just look at the Google results that
show up at the top when you make a search,
they might not be as good as you think. You
typically assume that whatever Google is serving up first, once
you scroll past the ads at least, is going to
be the most effective solution to whatever query you've tossed it.
(05:32):
And there's this wallet hub survey that found that trusting
the top search results from Google can cost you can
cost you money. And it's not just those misleading ads,
but that is true too, Right, if you click on
those top ads, you might be going to the site
that paid Google the most, not to the site that's
going to give you the most help But it's also
the content creators who aren't offering the best advice who
(05:54):
are gaining the system, getting the top SEO placements, even
if their content isn't the most pactful or helpful. So,
for instance, some creators prioritize credit card rankings on their
sites based on their relationship with advertisers, right that the
relationship they have with the banks they list the credit
cards first that they get paid the most for, even
(06:17):
if they aren't the best solution for people making that search.
So this is I think I hope people intuitively understand
this that like, don't just trust the first Google result
you come across, but do research at multiple sites, run
the numbers, and Plus there's also individual realities here, Matt
that depending on how you spend well, this credit card
(06:37):
might be better for someone else who stumbled upon this site,
but it might not be the best card for you.
So know your individual situation and also know that whatever
hits you in the face first when you make a
Google search might not be the best thing for you
at that time.
Speaker 4 (06:51):
That's right, man.
Speaker 3 (06:52):
Let's discuss the cost of housing, because the general housing
market has gained more than twenty trillion dollars in value
or the past five years. This is quoting trillion, twenty
trillion dollars with the tea.
Speaker 4 (07:04):
That's right.
Speaker 3 (07:05):
I don't think that there's this as much of a surprise.
I think you know, we all saw if you owned
a home, your your home value like skyrocket, big number
in the beginning in twenty twenty. Yeah, that was a
it was a fifty seven percent gain in five years.
But those giant increases have largely subsided, and there's a
new housing market anomaly now, which is that new homes
(07:25):
are cheaper than existing ones. And this makes me think
of the car industry, because I certainly the home market
is different than the automobile market industry. That being said,
there are some similarities. And seeing new homes become cheaper
than the existing ones buy almost twenty thousand dollars on average,
this is super fascinating.
Speaker 4 (07:46):
Man. It comes down to supply and demand. Home builders.
Speaker 3 (07:50):
They've got supply coming to market when there's basically less
buyer interest generally speaking. But I think also maybe in
those newer homes which has led to rice cuts, so
existing homeowners like the older homes. Maybe the homes that
you might see and think Oh that's a house that's
got some character. Oh that's in a slightly more desirable
(08:10):
part of town.
Speaker 4 (08:10):
In nineteen twenties bungalow or a nineteen sixties ranch.
Speaker 3 (08:13):
Yeah, or it's just in a good location, like all
the good good spots are taken. You know, those homeowners
they've got less pressure to sell. They can often stay
put longer. And so if you are in the market
to buy a home, I think we would recommend to
consider buying a brand new one because you might get
a rate buy down. That's something that some of these
home buyers are doing in addition to a cheaper sales
(08:35):
price as well. So it's just a fascinating thing to
see that if you blindly said, oh, well, all housing
is the same, there are differences between old stock, you know,
like old housing, housing that's been on them, that's been
in existence for a while, and new builds essentially, and
I think there's opportunity for folks to perhaps to get
you a home that is a bit more affordable. You
(08:57):
certainly know the trade offs, and I think I think
it's probably safe to say as well that you're going
to seeless appreciation on those homes because they are more
affordable because they are maybe in a new development and
there's not as much infrastructure in that, you know, in.
Speaker 4 (09:09):
That suburb way out there.
Speaker 3 (09:10):
It's just like, oh yeah, homes are real cheap out there,
But do you want to live way out there? But
it comes down to what it is that you're you're looking,
that you are valuing, and what you're trying to add
to your life.
Speaker 1 (09:19):
Yeah, you're spot on, my friend. All right, Hey, we
got more money saving information to get to.
Speaker 5 (09:24):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (09:31):
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 now hear from a listener who is
looking to maximize that state deduction when it comes to
paying for education.
Speaker 6 (09:44):
Hi'm Matt and Joel. My name is Anna and I'm
from Saint Paul, Minnesota. I have a question about five
twenty nines. I have two young kids, a toddler and
a newborn. I have started five twenty nines for both
of them, and I'm making a small contribution each month
that we intend to either use for private high school
or to gift to them for college, depending on what
the future ends up looking like. Don't worry, our retirement
(10:07):
is well funded and our only debt is a sub
three percent mortgage. My question is regarding state plans for
five twenty nights. I have heard on the show before
that you can choose which states five twenty nine plan
you enroll in, regardless of where you live, and that
different plans have different benefits. I know that in Minnesota
we can take a tax deduction for five twenty nine contributions.
(10:28):
We have our iras at Schwab, and I saw that
they had five twenty nines as well, so I had
just opened my kids five twenty nins through them. I
don't remember having the option to choose a state. Did
Schwab just default to Minnesota's because it knows where I live?
Is Schwab's plans separate from our state plans? Can you
only claim the tax deduction if you're enrolled in the
state plan, or do contributions to any five twenty nine work?
Speaker 4 (10:51):
Thanks?
Speaker 1 (10:52):
Oh, Matt, I hear that kiddo sitting in her lap cooing,
So sir, yeah, I miss you know what I miss
the most? I think is their fingers grabbing onto your
one nextegger. I guess like the best feeling in the
world is a parent.
Speaker 4 (11:05):
Yeah, babies are the best they are. They are, although
I will.
Speaker 3 (11:08):
Say a little nostalgic feeling like maybe you should go
and undo any promited decisions you made.
Speaker 1 (11:13):
Any reading on making any changes moving forward. But I
can look back on those days with fondness. Yeah, and I'm.
Speaker 3 (11:19):
Just just pull out the phone and pull up some pictures, dude, honestly, Like,
that's one of my favorite things. Is it prompts me.
It shows me a picture from like this day but
seven years ago. Yeah, and when the kids are a
little Yeah, I love that. And then you's like cry
in a corner while you're again are sitting there. We'll
just like a picture for the next thirty minutes.
Speaker 4 (11:35):
Yeah, it's like that's where my day went. I get it.
Speaker 1 (11:38):
Well, I'm guessing that Anna's baby was saying thank you
for all the money that you're setting aside on their behalf.
Speaker 4 (11:43):
And like, I just.
Speaker 1 (11:44):
Want to say too, it's really hard to predict what
your life is gonna look like, and it's so nice
to have flexibility even if you're not sure when or
how you're gonna use the funds you're setting aside. I
don't want people to be nervous, Matt, so nervous about
having enough in retirement that they invest eighty five percent
of their income unless that's like truly what they're into.
I think sometimes that it's like anxiety that forces or
(12:06):
feeds into people's beliefs that they need to save and
invest more than they actually need to. It makes it
really hard to enjoy the year and now. And I
also don't want Onna to feel like it's her standard,
or the standard has to be that she pays.
Speaker 4 (12:17):
For all of her kids education. That's also up to you.
Speaker 1 (12:19):
Although she did mention private school, and in that case,
you're in high school, Yeah, your fourteen year old's probably
not going to be able to pony up power much
money fifteen twenty grand for their freshman year at the
private high schools. So that is something that really is
on your shoulders. And maybe I should just reveal a
personal factor in Matt. I never saw this coming in
our family. I never thought that any of my kids
(12:40):
would go to private school. And so, but for my
seventh grader this year, starting middle school was really really
hard to this giant middle school. And we decided a
month then that actually that pivot was going to make
sense for us. And I'm glad that I'd been setting
money aside in a five to twenty nine plan. I
wasn't play on using it for a private grade school education.
(13:05):
But that's what we're gonna use at least part of
it for.
Speaker 3 (13:07):
So that's one of the beauties of making some of
these smart moves previously, like you're thinking previous Joel, like
old Joel, yesterday Joel for having done something something like that,
because it gives you the options to they decide, hey,
maybe we can do a little pivot here and a
lot our dollars. Differently, by the way, the One Big
Beautiful Bill Act, there's some changes that took place, and
(13:28):
it now allows for up to twenty thousand dollars annually
in five twenty nine, withdraws for K twelve education starting
next year in twenty twenty six. So good news for
you and the other folks out there who might be.
Speaker 1 (13:40):
The cap was half that before. Yeah, And so if
you had a higher private school education bill, then you
just you could only use a portion of those five
twenty nine dollars you had to find the rest elsewhere.
Speaker 3 (13:51):
Yeah, you got to find another creative way to pay
that tuition. Man on a She kind of headed us
off at the pass as well, because she knows that
we're gonna point her to taking care of her own
retirement before funding the kids college before or in.
Speaker 4 (14:04):
This case, high school. You'll put on your own oxygen mask.
Speaker 3 (14:07):
First, and she says she's doing that, so no need
to linger there. But it depends on the state's specific
five nine plan as to whether or not you can
get the state the state income tax deduction. So whether
or not you contribute to the state's website directly or
whether you do it through Schwab through another provider, it
depends on the specifics of that plan. So, for instance,
(14:30):
in our state, our state says no, no, no, no, you
don't get the state tax been. You have to go
to the it's the sort of fake sounding website like
path to College with the number two in there for
your yeah, yeah, yeah, which always seems like websites of yours.
Speaker 4 (14:45):
Yeah, that's what it feels like.
Speaker 1 (14:47):
But other states, including Anna's, say you can. You can
put it in any plan you want, you just have
to still claim that deduction. Yeah, you just have to
file the form after the fact. And so, yeah, I
think it's important to mention that depending on your income,
you can say, right, in the state of Minnesota, almost
ten percent depending on again, depending on how much you
make on taxes for the three thousand dollars in contributions
(15:09):
each year that you can make and still qualify.
Speaker 4 (15:10):
Right.
Speaker 1 (15:11):
So Minnesota doesn't have the absolute lowest expense fees, but
they're pretty good, right, and largely because they use like
Tea and Vanguard Funds, which are both great companies. Starting
your own five twenty nine through the state's plan is easy,
right If you go to Minnesota's website as well, there's
a little bit more straightforward mat it's mnsaves dot org.
But what if you contribute through Schwab, Well, her state
(15:33):
allows her still to get the tax credit for doing so.
She just has to file the paperwork on the back end.
And so Minnesota is just one of those cool states
that let you claim that credit even if you contribute
to another plan. So you might say, well, yeah, the
fees are reasonable in Minnesota, but they're not like bargain
basement low Schwab's got lower fees or the Utah plan
has lower fees, so I'm going to go with that instead.
(15:55):
I don't want to be beholden the Minnesota's plan, and
you can have the best of both world to that case.
Speaker 3 (16:00):
Yeah, I will say it also in her case, she's
gonna be using those dollars slightly sooner than you otherwise would.
But for a lot of folks out there listening, they're saying, okay,
five twenty nine accounts, we're talking like almost twenty years
from now. Don't forget to actually invest those dollars. That's
one of the massive advantages. It's not just the deduction
in state income tax, but also the ability to for
(16:20):
this to grow without having to pay any taxes on
that growth. And obviously if it's a qualified expense, no
taxes there, it makes there's a big difference between that
money sitting there as cash as opposed to it compounding
for the next almost again, almost twenty years for her fairly.
Speaker 1 (16:38):
Young kids, so even high school is a ways away. True,
there's enough of a comfort level, I think to be
investing the majority of those dollars quite aggressively too.
Speaker 4 (16:47):
Yeah, maybe that's the other part.
Speaker 1 (16:48):
You could choose an age based portfolio if you want
to set it and forget it, or you can choose
something like a S and five hundred fund, but then
you might want to revisit, like as you get closer
four or five years away, three three years away from
from needing to use some of those funds.
Speaker 4 (17:01):
Yeah, that's right.
Speaker 5 (17:03):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:10):
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, buddy, let's talk about
how much we as Americans value Social Security because there's
a new study from the Congressional Budget Office and they
have found that for the vast majority of Americans, it
(17:32):
is in fact their most valuable asset, which is this
is my Pokemon card collection. Yeah, this is some striking
and sad news. You know, It's evidently more valuable than
the retirement accounts. It's more valuable than the home equity
that they've been able to build up, especially with the
looming physical troubles that Social Security is facing. I think
(17:53):
to have the bulk of your retirement nest egg in
social Security, Like, that's a bit unsettled. The average social
security benefit is two thousand dollars a month, and without
that two thousand dollars, man, we would see a lot
more retiree devastation. I think it's another reason that I
don't see social security going away completely, but again, like
(18:15):
something is going to have to be done regardless.
Speaker 4 (18:17):
I was very shocked to.
Speaker 3 (18:19):
See that nine out of ten Americans have more essentially
in their social security and how much they're expecting to
draw from that that I was.
Speaker 1 (18:28):
Expecting basically because like, yeah, two thousand dollars a month
is what you're drawing from that, But the overall value
of a social security for the average American is something
like half a million dollars, right, That's what they can
expect to pull down from social security over the years,
and that's just.
Speaker 4 (18:44):
Way an exit.
Speaker 1 (18:45):
Most people don't have five hundred thousand dollars built up
in their four one kriras or that combination thereof they
don't have that much in home equity. So yeah, it
makes sense when you look at the numbers that something
like nine to ten people find that social security is
is the best thing that they have essentially to help
them fund their winnerment.
Speaker 4 (19:05):
I would not have expected that it was that much.
Speaker 3 (19:06):
I would have said, I would have expected that it
was pretty high, but that actually in ten maybe or well.
Speaker 4 (19:12):
Especially and we've talked about this on the show.
Speaker 3 (19:13):
I mean especially as auto en rolling in four to
one k's as that has become the norm. Iras have
been around for quite a long time, but I mean
in so a four to one k's right, like as
we switch from this pension system. But I guess it
just hasn't been It takes a long time for a
generation to kind of go through that and build up
the kind of net worth that you would need to
(19:33):
be able to live on, to be able to draw
two thousand dollars or more, yeah, when you are in
those retirement years.
Speaker 1 (19:38):
And I feel I guess maybe for that in between generation,
maybe it's like the gen exers, right, who didn't have
the pension, didn't have the investing knowledge or the easy
access to investing. It wasn't democratized right in the way
that it's that it's become for younger generations that you
look at the numbers of gen Zers who are just
like they're investing is kind of normalized and part of
(20:01):
their experience.
Speaker 4 (20:02):
It was like second nature there.
Speaker 3 (20:04):
Yeah, what is like digital natives like, they're right, they're
automatic four and K natives Like, it's almost like what
they've always known.
Speaker 1 (20:09):
Yeah, and so they've they've heard enough about it, they've
participated in the investing world enough, you know, some of
it dabbling in some weird stuff. But at least at
least they're doing the thing and they're they're putting money
away for their future that.
Speaker 4 (20:21):
You criticize them for their stonks.
Speaker 1 (20:24):
I mean, you know there is the strongs have paid
off dude, Yeah, but then some of the you know
fly by night she but you knew coins have not Yeah,
and the NFTs. But I think for us, what I
take away from this, the goal for that we have
for how to Money listeners is that your eventual monthly
social Security payments are helpful in your retirement, but that
you have more valuable assets to tap than your social security,
(20:47):
so that you find yourself in that ten percent of
folks where social security is not your most valuable asset.
And that is why we talk about index funds inside
of your four one ks and I raise all the time.
Speaker 3 (20:59):
This is all that we're going to continue to ring
from now until the end of.
Speaker 1 (21:03):
Time, increasing your contribution amount regularly, right, so that you
are well set up, well funded to have more options
even before you reach retirement, but especially once you reach
those decades that you're you're not like so dependent on
social security. You have other ways of funding your life, right.
And and we've talked about the Polish proliferation of ETF
(21:26):
options Matt recently, how there's just like so dang many
a lot of AI ETFs. Yeah, I mean dozens of them,
don't need them, but a lot of actively managed funds
are being are being added into that ETF space, and
even at brokerages like Vanguard, it's been surprising. Vanguard, the
king of passive passive investing products, has also included a
(21:48):
bunch of actively managed funds at lower costs and a
lot of other actively managed funds. But still like they've
got a ton. There's a ton of fun choices that
even a place like Vanguard. And while those funds, the
actively managed ones, might be getting the biggest marketing push,
they cost more and they tend to underperform. And so
morning Star recently found that only thirty three percent of
(22:08):
actively managed funds outperform their passive counterparts, the kind of
peer funds that look really similar but aren't actively managed.
And that's before you factor in the much higher fees.
Please do pay attention to that. That's why we talk
often about low cost you know, total stock market SMP
funds or target day funds like those are all great choices.
Speaker 3 (22:29):
Which I mean, how many all time new highs are
we going to hit with the SMP Yeah, in particular, man,
but which well I will maybe this year is a
little mini story which was driven in part because of
the fact that the jobs report we didn't I guess
we didn't talk about the jobs report. That's not typically
something we cover the jobs report, but the numbers got.
Speaker 4 (22:46):
Little wonky, sometimes went on.
Speaker 3 (22:48):
The numbers got revised from the preceding twelve months, and
it was like a million less jobs than initially reported,
which like almost certainly means a rate cut coming up
very soon.
Speaker 4 (23:03):
Yeah, for sure.
Speaker 5 (23:04):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (23:10):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 3 (23:16):
It is now time for the Facebook Question of the Week,
which is from Rebecca. She writes, our home and our
auto insurance policies are bundled. Home went up three hundred
bucks and auto went up one hundred and seventy dollars.
Is that standard right now? Or should I shop around?
Speaker 4 (23:30):
We've been with this company since twenty twenty.
Speaker 3 (23:32):
Three and got quotes slash year and they were still
the best price. I will immediately say it depends if
we're talking about a monthly payment of auto going up
one hundred and seventy dollars, yeah, versus versus annually, because
I would say annually that is a pretty big increase.
But I mean some folksmen are paying like fifteen hundred,
(23:53):
if not like two thousand dollars for their auto insurance easily,
and so I hear one hundred and seventy dollars increase,
and I'm just like, actually, that's not add at all
compared to what some folks are what some folks are seeing.
Speaker 1 (24:03):
But yeah, and we don't know what she was paying,
so we don't know what the percentage increase is exactly
what you're speaking to. It would be really helpful to know.
But I will say it doesn't sound ridiculous if that's
an annual price increase given kind of what we're seeing
in the marketplace right now.
Speaker 4 (24:16):
By the way, sounds like she's looking for some savings. Yeah. Yeah.
Speaker 1 (24:18):
And insurance increases have just man, they've outpaced inflation meaningful
in the past few post COVID years. I think really
since twenty one, inflation on insurance costs has been essentially
double the cost of everything else. So you're like, oh, man,
the cost of the grocery store has gone up, well,
guess what, not nearly as much as the cost of insurance,
as most of our listeners have found out. But that
(24:39):
also doesn't mean that you shouldn't shop around. I think
it actually it means that the stakes are higher. It
doesn't mean that you should resign yourself just to paying
more because price increases are inevitable. Just take that gut
punch and run with it. I think this means that
the disparity between rates and premiums is likely to be
even more pronounced than it has been, So you know,
(25:01):
different insurance insures raising premiums at different rates. I think
it just behooves you to be less loyal and to
shop around more if.
Speaker 3 (25:07):
You shop thoroughly, if you did a you know, a
pretty robust job, I would say it is okay to
just look maybe every other year, because it can be
a task, right Like, if you're doing this every single year,
might be overkilled. But also consider having someone just to
help you out on that front. And I'm going to
recommend an independent insurance agent. They can be a great call.
They are also so much easier than calling a bunch
(25:30):
of different one eight hundred numbers or getting online and
getting different quotes. On top of you getting spam to
death as you get your number out there and your
email some of those lead generator websites can be a mess. Yeah,
So for folks who can't remember the last time that
they shop, just knowing that a bunch of your dogs
here are at stake, and even just by going with
a single independent agent, head over to trust a choice
as well. That's a great single one stop shop online
(25:52):
that can.
Speaker 4 (25:53):
Save you a bunch as well.
Speaker 1 (25:53):
Yeah, the independent agent is a clutch thing if you
want it looks like someone else to do the work
for you. It's what they get paid to do. They
get paid by the insurance companies, not by you, and
so it doesn't cost you extra money and someone else
is going to do that shopping on your behalf, which
and really kind of help you figure out what your
coverage should be too. They might be more they're in
all likelihood more informed about the insurance coverage that would
(26:16):
make sense for you and your family than you are.
Speaker 4 (26:18):
And even if you have, by.
Speaker 1 (26:19):
The way, the lowest rate with your current insurance company,
you might be able to save even more. I just
I think, especially in this day and age, I wouldn't
want to leave any stone unturned when it comes to
save me money on insurance. These prices have increased so much.
If you can self insure to a greater degree, if
you can raise your deductibles, do that. If you can
take a defensive driver course. I took one online. My
parents just took one online to save money on their
(26:42):
car insurance costs. And you can pay like twenty five bucks.
Take the course, get the certificate, and then you might
be able to save three four hundred bucks a year
because now you look like a safe driver. Ask your
agent or your customer service representative to run through a
list of all the potential discounts you might be eligible for.
Maybe there's like an alumni discount because of where you
went to school. Maybe if you pay in full or
(27:03):
six months at a time. Yeah, I got that same
funal discount. Yeah, it's like list it can make sense,
and auto pay or if you served in the military,
like ask about all of those things because that could
lead to savings on your insurance. I just kind of like,
you know, the magician Matt pulling the ribbon out of
their sleeve or whatever.
Speaker 4 (27:21):
That never ends. You got another discount. That's like me
for discounts, Like.
Speaker 1 (27:25):
When I'm talking to the insurance agent and they're like, gosh, dude,
I think we've run through them all, and I'm like,
are you sure?
Speaker 4 (27:29):
Are you sure we have?
Speaker 1 (27:30):
And this is controversial, but you might even want to
consider letting them track your driving to save more. Some
people think that's an invasion of their privacy. For me,
I was willing to do it and it saved me.
Speaker 4 (27:40):
Would you rather have an invasion of your privacy or
an invasion of your wallet? Yeah, exactly, that's true.
Speaker 3 (27:44):
I'd rather have the invasion of my privacy for a
measured amount of time.
Speaker 2 (27:48):
Yep.
Speaker 3 (27:49):
And then you delete that oup. Yeah, that's right, you're
gonna go, let's do another one real quick. This is
from Jordan. He writes, one of my financial goals has
been to contribute to each of my nieces, nephews and
children's five twenty nine each birthday and Christmas. The plan
has been to present them this lump sum, and he
said it's about one hundred dollars a year, so it's
not a huge amount. As the child graduates or turns eighteen,
to decide what they want to do with that money.
(28:11):
The first child of the bunch turns eighteen roughly when
school ends for the twenty twenty five twenty six school year.
I'd like to present her with various options and the
pros and cons of each, so she can make an
informed choice.
Speaker 4 (28:22):
The way I see it, there are the following choices.
Speaker 3 (28:24):
One do nothing, leave it into five twenty nine if
or when she chooses to use it for school funding.
At this point, I doubt she will choose additional schooling,
so any benefit to leave it as the five twenty
nine if she doesn't want to do additional schooling. Two
cash it out to use for personal expenses, maybe towards
a car. I believe if she picks this option, there's
a ten percent penalty of the growth, not the principle.
Speaker 4 (28:47):
Is it still correct?
Speaker 3 (28:47):
And three another option roll it into a roth ira
seems like a good option for compounded growth, although it's
very delayed gratification anything I missing, Joel, What do you
think George should be thinking through here?
Speaker 4 (29:02):
Well?
Speaker 1 (29:02):
First, I just want to say, one hundred bucks a year,
that's a meaningful gift for somebody's future. And it's those
kiddos might not be old enough to appreciate it now,
but they will someday that someone was helping think about
their financial future putting dollars down to invest on their behalf.
And I love too that it's not just the money,
but he wants to help his niece make a wise
(29:23):
decision with the money. And maybe this sounds sneaky, Matt,
but here's what I would do. I would not cover
option to it all. I would not tell her that
she can use the funds for a car. I would say, hey,
these funds are either for higher education or you can
roll it into a roth ira, which is this awesome
investment vehicle that you can use to build wealth for
your future. It's a perfect time to teach her what
(29:43):
that is, how it works. I just don't think I
talk about cashing it out for other uses, because why
tempt her in that way.
Speaker 3 (29:50):
Well, yeah, he said he specifically, So this money is
already in a five twenty nine, So that's the catch.
If it was me, I would be very willing to
quote unquote liqu like liquidate that money if it wasn't
in the five twenty nine.
Speaker 4 (30:02):
Because of the fact that with the taxes and penalties.
Speaker 3 (30:05):
Yeah, that's the part that I kind of hate that
because I almost so my answer would be different if
he was talking about nieces and nephews specifically versus kids,
because when it comes to kids, like it's your job
as a parent to be saving for the It's up
to you to decide how much you are looking to
teach them, but it's more of your responsibility to help
(30:26):
to prepare them for the future. Versus if you're saving
for nieces and nephews, this is just it's not your
job to make them eat to broccoli and to make
them like brush your teeth and go to bed on time,
you know, Like like I in that case, I would
want to be more of like the fun uncle and
be like it's your money, like I've been setting this
aside for you, you can do what you want with it,
because then you're kind of investing in like the relationship
(30:46):
and the ability for you to continue to speak.
Speaker 4 (30:48):
Into their lives maybe a little bit more.
Speaker 3 (30:51):
Not that you're trying to like buy their love or anything,
but it's the job of the parent to be the
one to deliver the hard news of like, you gotta
do this, you got to start preparing for your future.
Speaker 4 (31:02):
And I'm very much less.
Speaker 3 (31:04):
Interested in them rolling it into a roth ira, because
I mean, it's not even my it's not even my
job as a parent to help my kids start to
save for their retirement.
Speaker 4 (31:12):
That's their job, right. If anything, I'm like, yeah, we'll.
Speaker 3 (31:14):
Talk about saving for college in a five twenty nine,
but I'm not looking to intentionally start setting aside money
for your retirement. But with him as an uncle, he's
like even more removed from the situation, and so I
would find I think this might even cause me to
consider ways to save to set money aside for them
in a more fun, sort of enriching way, as opposed
(31:37):
to just if you want to contribute to the five
twenty nine, that's great reach out to the parents. I'm sure,
they've got parents that are that are doing that for them,
but I would be looking for ways to have a
more relatable financial impact in their lives, like helping them
to fund something. Yeah, if it's likely not to be
used for higher education, we'll skip the five point nut
account and find another avenue, another account to save it in,
(32:00):
or help them build a save mus account, whatever that
might be. But I think you're right, Like, if, especially
as the uncle, you might want to avoid that altogether.
But what's done is done. The money was putting the back.
What's done is done, and that's why I'm like, I'm
with you.
Speaker 4 (32:12):
I wouldn't.
Speaker 3 (32:13):
I wouldn't be considering liquid liquidating and just getting hit
that penalty.
Speaker 1 (32:16):
It just makes me think, like, if I'm trying to
help my kids, and again, you're right, I think the
obligation of an uncle or aunt is different. But if
I'm trying to help my kids understand saving and investing,
and I'm like, hey, you've got this money, you can
spend it, but there's these other things you can do
with it too, I probably don't want to tempt them
by taking them to like the candy store five days
a week and being like, yeah, you probably should save
this money, but you can spend it here if you want, right, Like,
(32:37):
that's it's gonna be hard to teach that lesson if
I'm putting that temptation in front of them constantly or consistently.
And so I guess I just want Jordan to think
of that as he's giving her this advice.
Speaker 4 (32:48):
Like, hey, you can't.
Speaker 1 (32:49):
The great thing as an uncle is like this can
be a teaching moment for you to with your niece
where like, yeah, it's not your responsibility, but you still
have that influence in that ability, and you've put the
money down to kind of help and make a wise decision.
So maybe it's a perfect opportunity to be like, hey,
guess what this was money that I was saving free education?
Doesn't look like you're going to school. Guess what you
can turn it into and guess what this can be
(33:10):
over time and talk about compounding returns and talk about
how that can make a different difference in their ability
to build wealth. And maybe this kick starts making contributions
on the regular for your niece, not just resting on
her laurels because you started saving for her.
Speaker 3 (33:22):
Totally agree, buddy, 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.
Speaker 1 (33:30):
You've been listening to How To Money with Joel Larsgard.
You can always hear us live on KFI AM six
forty twelve pm to two pm on Sunday, and anytime
on demand on the iHeartRadio app
K if I Am six forty. You're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
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 Aultmix.
Speaker 3 (00:58):
K IF I Am six forty everywhere on the iHeartRadio app.
Speaker 4 (01:02):
This is how to Money. I am Matt Altmix and
I'm Joe Larsgard.
Speaker 1 (01:05):
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 (01:14):
Is now time for the ludacrous headline of the week,
which comes from CNN this week, and headline reads the
hobby that's costing young men tens of thousands of dollars.
And this is not the new thing old hobby of pickleball, Joel.
We're not talking about the old school golf, which is
probably the second one. It's very expensive. I have friends
(01:37):
who go on like golf trips and I'm like, no thanks,
it's so expensive. Yeah, that's my backpacking hobby is like
not the cheapest, but it's way cheaper.
Speaker 4 (01:46):
It's so much more affotable. But golf.
Speaker 3 (01:48):
I have such a bad attitude about golf. I've gone
on rants before about used to work at a golf course.
I did that was younger, Matt old.
Speaker 4 (01:56):
Matt is not.
Speaker 3 (01:57):
I played a whole lot of golf when I was
a young kid, in part because of how accessible it
was to me at that point in time. Now we're
not talking about golf. We're talking about sports gambling, which
can that even be called a hobby? Like that's another
thing too, the fact that calling an addiction your addiction
of an addiction. So in this seeing an article, evidently,
if you watch a sporting event on TV, you're gonna
(02:19):
see an ad for gambling once every thirteen seconds, which
blew my mind. And it's actually it's not even an ad.
They're they're also including like logos for gambling apps for instance,
like whether it's on a jersey or you know, you're
sitting there watching the match, you're watching a hockey game
and you see like the boards, you know, like the ads,
they're even such a product placement along the sides of.
Speaker 4 (02:41):
The area everything.
Speaker 3 (02:42):
But it's just completely inundated our athletics, the sports that
we watch and evidently this is not I guess not
surprisingly largely a young male phenomena. A quarter of males
under the age of forty five have participated at all,
which again very surprising. I've never gambled on sports before.
Ten percent of men who are aged eighteen to thirty
(03:04):
think that they have a gambling problem. And man gambling
get young guys who are gambling on their favorite players
or their favorite teams. It has become fully normalized and
it's right throughout their fingertips. You know, this isn't something
that you need to go to Vegas to do. You
don't need a booky right, like that was the person
you would call up, I think in order to place
(03:24):
a sports.
Speaker 1 (03:25):
To feel CD And now it feels like bright and
clean and fun. And there's all the bells and whistles
on the apps and they're advertisements everywhere, and.
Speaker 3 (03:33):
So you're incentivized with free money to you know, I
know that's a part of it too. They're like, hey,
we'll give you this much money to even gamble with
once you initially download the app.
Speaker 1 (03:41):
And it's also pretty easy addiction to hide, right that
stick in your pocket? Well it went away, Yeah, exactly, well,
what are you talking about? Yeah, of course they're going
to highlight somebody who like was on the verge of
a mental breakdown because he lost over ten thousand dollars
like on.
Speaker 4 (03:57):
A seeing single hockey game.
Speaker 3 (04:00):
I don't think the different apps that I don't think
they're out there trying to ruin people's lives, you know,
like it makes sense they're trying to maximize their profits.
I think they would, but I think they would much
rather see all people, not just men, but like everybody.
What if everybody just bet like five or ten bucks
a month? That's totally reasonable, And I would say that
seems totally reasonable, right, Like, I don't think they're out
(04:21):
there trying to get individual people to lose tens of
thousands of dollars. But you got to know yourself. You
got to know if like what kind of slippery slope
you were on, and if you can't handle it. I mean,
you don't even need to dabble with five bucks, yeah,
because it might lead you to thinking you've got an
edge and you end up wagering much more money and
you end up losing a ton of it.
Speaker 1 (04:41):
They're also not giving that money back, right, you know,
if you gamble it away, So is that what they're after?
I don't know, Like I think there are incentives to
keep people glued to that app, so they are gambling
more and more, And yeah, it's a it's a real problem.
It's a real problem to be a society wide problem too.
Speaking of about as Matt, I don't think people are
(05:02):
using Google as much as I used to. I think
those the use of chat, GPT and other AI services
is on the uptick.
Speaker 4 (05:08):
And maybe I don't know.
Speaker 1 (05:09):
I'm curious to see how Google response to that. But
when you actually just look at the Google results that
show up at the top when you make a search,
they might not be as good as you think. You
typically assume that whatever Google is serving up first, once
you scroll past the ads at least, is going to
be the most effective solution to whatever query you've tossed it.
(05:32):
And there's this wallet hub survey that found that trusting
the top search results from Google can cost you can
cost you money. And it's not just those misleading ads,
but that is true too, Right, if you click on
those top ads, you might be going to the site
that paid Google the most, not to the site that's
going to give you the most help But it's also
the content creators who aren't offering the best advice who
(05:54):
are gaining the system, getting the top SEO placements, even
if their content isn't the most pactful or helpful. So,
for instance, some creators prioritize credit card rankings on their
sites based on their relationship with advertisers, right that the
relationship they have with the banks they list the credit
cards first that they get paid the most for, even
(06:17):
if they aren't the best solution for people making that search.
So this is I think I hope people intuitively understand
this that like, don't just trust the first Google result
you come across, but do research at multiple sites, run
the numbers, and Plus there's also individual realities here, Matt
that depending on how you spend well, this credit card
(06:37):
might be better for someone else who stumbled upon this site,
but it might not be the best card for you.
So know your individual situation and also know that whatever
hits you in the face first when you make a
Google search might not be the best thing for you
at that time.
Speaker 4 (06:51):
That's right, man.
Speaker 3 (06:52):
Let's discuss the cost of housing, because the general housing
market has gained more than twenty trillion dollars in value
or the past five years. This is quoting trillion, twenty
trillion dollars with the tea.
Speaker 4 (07:04):
That's right.
Speaker 3 (07:05):
I don't think that there's this as much of a surprise.
I think you know, we all saw if you owned
a home, your your home value like skyrocket, big number
in the beginning in twenty twenty. Yeah, that was a
it was a fifty seven percent gain in five years.
But those giant increases have largely subsided, and there's a
new housing market anomaly now, which is that new homes
(07:25):
are cheaper than existing ones. And this makes me think
of the car industry, because I certainly the home market
is different than the automobile market industry. That being said,
there are some similarities. And seeing new homes become cheaper
than the existing ones buy almost twenty thousand dollars on average,
this is super fascinating.
Speaker 4 (07:46):
Man. It comes down to supply and demand. Home builders.
Speaker 3 (07:50):
They've got supply coming to market when there's basically less
buyer interest generally speaking. But I think also maybe in
those newer homes which has led to rice cuts, so
existing homeowners like the older homes. Maybe the homes that
you might see and think Oh that's a house that's
got some character. Oh that's in a slightly more desirable
(08:10):
part of town.
Speaker 4 (08:10):
In nineteen twenties bungalow or a nineteen sixties ranch.
Speaker 3 (08:13):
Yeah, or it's just in a good location, like all
the good good spots are taken. You know, those homeowners
they've got less pressure to sell. They can often stay
put longer. And so if you are in the market
to buy a home, I think we would recommend to
consider buying a brand new one because you might get
a rate buy down. That's something that some of these
home buyers are doing in addition to a cheaper sales
(08:35):
price as well. So it's just a fascinating thing to
see that if you blindly said, oh, well, all housing
is the same, there are differences between old stock, you know,
like old housing, housing that's been on them, that's been
in existence for a while, and new builds essentially, and
I think there's opportunity for folks to perhaps to get
you a home that is a bit more affordable. You
(08:57):
certainly know the trade offs, and I think I think
it's probably safe to say as well that you're going
to seeless appreciation on those homes because they are more
affordable because they are maybe in a new development and
there's not as much infrastructure in that, you know, in.
Speaker 4 (09:09):
That suburb way out there.
Speaker 3 (09:10):
It's just like, oh yeah, homes are real cheap out there,
But do you want to live way out there? But
it comes down to what it is that you're you're looking,
that you are valuing, and what you're trying to add
to your life.
Speaker 1 (09:19):
Yeah, you're spot on, my friend. All right, Hey, we
got more money saving information to get to.
Speaker 5 (09:24):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (09:31):
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 now hear from a listener who is
looking to maximize that state deduction when it comes to
paying for education.
Speaker 6 (09:44):
Hi'm Matt and Joel. My name is Anna and I'm
from Saint Paul, Minnesota. I have a question about five
twenty nines. I have two young kids, a toddler and
a newborn. I have started five twenty nines for both
of them, and I'm making a small contribution each month
that we intend to either use for private high school
or to gift to them for college, depending on what
the future ends up looking like. Don't worry, our retirement
(10:07):
is well funded and our only debt is a sub
three percent mortgage. My question is regarding state plans for
five twenty nights. I have heard on the show before
that you can choose which states five twenty nine plan
you enroll in, regardless of where you live, and that
different plans have different benefits. I know that in Minnesota
we can take a tax deduction for five twenty nine contributions.
(10:28):
We have our iras at Schwab, and I saw that
they had five twenty nines as well, so I had
just opened my kids five twenty nins through them. I
don't remember having the option to choose a state. Did
Schwab just default to Minnesota's because it knows where I live?
Is Schwab's plans separate from our state plans? Can you
only claim the tax deduction if you're enrolled in the
state plan, or do contributions to any five twenty nine work?
Speaker 4 (10:51):
Thanks?
Speaker 1 (10:52):
Oh, Matt, I hear that kiddo sitting in her lap cooing,
So sir, yeah, I miss you know what I miss
the most? I think is their fingers grabbing onto your
one nextegger. I guess like the best feeling in the
world is a parent.
Speaker 4 (11:05):
Yeah, babies are the best they are. They are, although
I will.
Speaker 3 (11:08):
Say a little nostalgic feeling like maybe you should go
and undo any promited decisions you made.
Speaker 1 (11:13):
Any reading on making any changes moving forward. But I
can look back on those days with fondness. Yeah, and I'm.
Speaker 3 (11:19):
Just just pull out the phone and pull up some pictures, dude, honestly, Like,
that's one of my favorite things. Is it prompts me.
It shows me a picture from like this day but
seven years ago. Yeah, and when the kids are a
little Yeah, I love that. And then you's like cry
in a corner while you're again are sitting there. We'll
just like a picture for the next thirty minutes.
Speaker 4 (11:35):
Yeah, it's like that's where my day went. I get it.
Speaker 1 (11:38):
Well, I'm guessing that Anna's baby was saying thank you
for all the money that you're setting aside on their behalf.
Speaker 4 (11:43):
And like, I just.
Speaker 1 (11:44):
Want to say too, it's really hard to predict what
your life is gonna look like, and it's so nice
to have flexibility even if you're not sure when or
how you're gonna use the funds you're setting aside. I
don't want people to be nervous, Matt, so nervous about
having enough in retirement that they invest eighty five percent
of their income unless that's like truly what they're into.
I think sometimes that it's like anxiety that forces or
(12:06):
feeds into people's beliefs that they need to save and
invest more than they actually need to. It makes it
really hard to enjoy the year and now. And I
also don't want Onna to feel like it's her standard,
or the standard has to be that she pays.
Speaker 4 (12:17):
For all of her kids education. That's also up to you.
Speaker 1 (12:19):
Although she did mention private school, and in that case,
you're in high school, Yeah, your fourteen year old's probably
not going to be able to pony up power much
money fifteen twenty grand for their freshman year at the
private high schools. So that is something that really is
on your shoulders. And maybe I should just reveal a
personal factor in Matt. I never saw this coming in
our family. I never thought that any of my kids
(12:40):
would go to private school. And so, but for my
seventh grader this year, starting middle school was really really
hard to this giant middle school. And we decided a
month then that actually that pivot was going to make
sense for us. And I'm glad that I'd been setting
money aside in a five to twenty nine plan. I
wasn't play on using it for a private grade school education.
(13:05):
But that's what we're gonna use at least part of
it for.
Speaker 3 (13:07):
So that's one of the beauties of making some of
these smart moves previously, like you're thinking previous Joel, like
old Joel, yesterday Joel for having done something something like that,
because it gives you the options to they decide, hey,
maybe we can do a little pivot here and a
lot our dollars. Differently, by the way, the One Big
Beautiful Bill Act, there's some changes that took place, and
(13:28):
it now allows for up to twenty thousand dollars annually
in five twenty nine, withdraws for K twelve education starting
next year in twenty twenty six. So good news for
you and the other folks out there who might be.
Speaker 1 (13:40):
The cap was half that before. Yeah, And so if
you had a higher private school education bill, then you
just you could only use a portion of those five
twenty nine dollars you had to find the rest elsewhere.
Speaker 3 (13:51):
Yeah, you got to find another creative way to pay
that tuition. Man on a She kind of headed us
off at the pass as well, because she knows that
we're gonna point her to taking care of her own
retirement before funding the kids college before or in.
Speaker 4 (14:04):
This case, high school. You'll put on your own oxygen mask.
Speaker 3 (14:07):
First, and she says she's doing that, so no need
to linger there. But it depends on the state's specific
five nine plan as to whether or not you can
get the state the state income tax deduction. So whether
or not you contribute to the state's website directly or
whether you do it through Schwab through another provider, it
depends on the specifics of that plan. So, for instance,
(14:30):
in our state, our state says no, no, no, no, you
don't get the state tax been. You have to go
to the it's the sort of fake sounding website like
path to College with the number two in there for
your yeah, yeah, yeah, which always seems like websites of yours.
Speaker 4 (14:45):
Yeah, that's what it feels like.
Speaker 1 (14:47):
But other states, including Anna's, say you can. You can
put it in any plan you want, you just have
to still claim that deduction. Yeah, you just have to
file the form after the fact. And so, yeah, I
think it's important to mention that depending on your income,
you can say, right, in the state of Minnesota, almost
ten percent depending on again, depending on how much you
make on taxes for the three thousand dollars in contributions
(15:09):
each year that you can make and still qualify.
Speaker 4 (15:10):
Right.
Speaker 1 (15:11):
So Minnesota doesn't have the absolute lowest expense fees, but
they're pretty good, right, and largely because they use like
Tea and Vanguard Funds, which are both great companies. Starting
your own five twenty nine through the state's plan is easy,
right If you go to Minnesota's website as well, there's
a little bit more straightforward mat it's mnsaves dot org.
But what if you contribute through Schwab, Well, her state
(15:33):
allows her still to get the tax credit for doing so.
She just has to file the paperwork on the back end.
And so Minnesota is just one of those cool states
that let you claim that credit even if you contribute
to another plan. So you might say, well, yeah, the
fees are reasonable in Minnesota, but they're not like bargain
basement low Schwab's got lower fees or the Utah plan
has lower fees, so I'm going to go with that instead.
(15:55):
I don't want to be beholden the Minnesota's plan, and
you can have the best of both world to that case.
Speaker 3 (16:00):
Yeah, I will say it also in her case, she's
gonna be using those dollars slightly sooner than you otherwise would.
But for a lot of folks out there listening, they're saying, okay,
five twenty nine accounts, we're talking like almost twenty years
from now. Don't forget to actually invest those dollars. That's
one of the massive advantages. It's not just the deduction
in state income tax, but also the ability to for
(16:20):
this to grow without having to pay any taxes on
that growth. And obviously if it's a qualified expense, no
taxes there, it makes there's a big difference between that
money sitting there as cash as opposed to it compounding
for the next almost again, almost twenty years for her fairly.
Speaker 1 (16:38):
Young kids, so even high school is a ways away. True,
there's enough of a comfort level, I think to be
investing the majority of those dollars quite aggressively too.
Speaker 4 (16:47):
Yeah, maybe that's the other part.
Speaker 1 (16:48):
You could choose an age based portfolio if you want
to set it and forget it, or you can choose
something like a S and five hundred fund, but then
you might want to revisit, like as you get closer
four or five years away, three three years away from
from needing to use some of those funds.
Speaker 4 (17:01):
Yeah, that's right.
Speaker 5 (17:03):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (17:10):
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, buddy, let's talk about
how much we as Americans value Social Security because there's
a new study from the Congressional Budget Office and they
have found that for the vast majority of Americans, it
(17:32):
is in fact their most valuable asset, which is this
is my Pokemon card collection. Yeah, this is some striking
and sad news. You know, It's evidently more valuable than
the retirement accounts. It's more valuable than the home equity
that they've been able to build up, especially with the
looming physical troubles that Social Security is facing. I think
(17:53):
to have the bulk of your retirement nest egg in
social Security, Like, that's a bit unsettled. The average social
security benefit is two thousand dollars a month, and without
that two thousand dollars, man, we would see a lot
more retiree devastation. I think it's another reason that I
don't see social security going away completely, but again, like
(18:15):
something is going to have to be done regardless.
Speaker 4 (18:17):
I was very shocked to.
Speaker 3 (18:19):
See that nine out of ten Americans have more essentially
in their social security and how much they're expecting to
draw from that that I was.
Speaker 1 (18:28):
Expecting basically because like, yeah, two thousand dollars a month
is what you're drawing from that, But the overall value
of a social security for the average American is something
like half a million dollars, right, That's what they can
expect to pull down from social security over the years,
and that's just.
Speaker 4 (18:44):
Way an exit.
Speaker 1 (18:45):
Most people don't have five hundred thousand dollars built up
in their four one kriras or that combination thereof they
don't have that much in home equity. So yeah, it
makes sense when you look at the numbers that something
like nine to ten people find that social security is
is the best thing that they have essentially to help
them fund their winnerment.
Speaker 4 (19:05):
I would not have expected that it was that much.
Speaker 3 (19:06):
I would have said, I would have expected that it
was pretty high, but that actually in ten maybe or well.
Speaker 4 (19:12):
Especially and we've talked about this on the show.
Speaker 3 (19:13):
I mean especially as auto en rolling in four to
one k's as that has become the norm. Iras have
been around for quite a long time, but I mean
in so a four to one k's right, like as
we switch from this pension system. But I guess it
just hasn't been It takes a long time for a
generation to kind of go through that and build up
the kind of net worth that you would need to
(19:33):
be able to live on, to be able to draw
two thousand dollars or more, yeah, when you are in
those retirement years.
Speaker 1 (19:38):
And I feel I guess maybe for that in between generation,
maybe it's like the gen exers, right, who didn't have
the pension, didn't have the investing knowledge or the easy
access to investing. It wasn't democratized right in the way
that it's that it's become for younger generations that you
look at the numbers of gen Zers who are just
like they're investing is kind of normalized and part of
(20:01):
their experience.
Speaker 4 (20:02):
It was like second nature there.
Speaker 3 (20:04):
Yeah, what is like digital natives like, they're right, they're
automatic four and K natives Like, it's almost like what
they've always known.
Speaker 1 (20:09):
Yeah, and so they've they've heard enough about it, they've
participated in the investing world enough, you know, some of
it dabbling in some weird stuff. But at least at
least they're doing the thing and they're they're putting money
away for their future that.
Speaker 4 (20:21):
You criticize them for their stonks.
Speaker 1 (20:24):
I mean, you know there is the strongs have paid
off dude, Yeah, but then some of the you know
fly by night she but you knew coins have not Yeah,
and the NFTs. But I think for us, what I
take away from this, the goal for that we have
for how to Money listeners is that your eventual monthly
social Security payments are helpful in your retirement, but that
you have more valuable assets to tap than your social security,
(20:47):
so that you find yourself in that ten percent of
folks where social security is not your most valuable asset.
And that is why we talk about index funds inside
of your four one ks and I raise all the time.
Speaker 3 (20:59):
This is all that we're going to continue to ring
from now until the end of.
Speaker 1 (21:03):
Time, increasing your contribution amount regularly, right, so that you
are well set up, well funded to have more options
even before you reach retirement, but especially once you reach
those decades that you're you're not like so dependent on
social security. You have other ways of funding your life, right.
And and we've talked about the Polish proliferation of ETF
(21:26):
options Matt recently, how there's just like so dang many
a lot of AI ETFs. Yeah, I mean dozens of them,
don't need them, but a lot of actively managed funds
are being are being added into that ETF space, and
even at brokerages like Vanguard, it's been surprising. Vanguard, the
king of passive passive investing products, has also included a
(21:48):
bunch of actively managed funds at lower costs and a
lot of other actively managed funds. But still like they've
got a ton. There's a ton of fun choices that
even a place like Vanguard. And while those funds, the
actively managed ones, might be getting the biggest marketing push,
they cost more and they tend to underperform. And so
morning Star recently found that only thirty three percent of
(22:08):
actively managed funds outperform their passive counterparts, the kind of
peer funds that look really similar but aren't actively managed.
And that's before you factor in the much higher fees.
Please do pay attention to that. That's why we talk
often about low cost you know, total stock market SMP
funds or target day funds like those are all great choices.
Speaker 3 (22:29):
Which I mean, how many all time new highs are
we going to hit with the SMP Yeah, in particular, man,
but which well I will maybe this year is a
little mini story which was driven in part because of
the fact that the jobs report we didn't I guess
we didn't talk about the jobs report. That's not typically
something we cover the jobs report, but the numbers got.
Speaker 4 (22:46):
Little wonky, sometimes went on.
Speaker 3 (22:48):
The numbers got revised from the preceding twelve months, and
it was like a million less jobs than initially reported,
which like almost certainly means a rate cut coming up
very soon.
Speaker 4 (23:03):
Yeah, for sure.
Speaker 5 (23:04):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (23:10):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter.
Speaker 3 (23:16):
It is now time for the Facebook Question of the Week,
which is from Rebecca. She writes, our home and our
auto insurance policies are bundled. Home went up three hundred
bucks and auto went up one hundred and seventy dollars.
Is that standard right now? Or should I shop around?
Speaker 4 (23:30):
We've been with this company since twenty twenty.
Speaker 3 (23:32):
Three and got quotes slash year and they were still
the best price. I will immediately say it depends if
we're talking about a monthly payment of auto going up
one hundred and seventy dollars, yeah, versus versus annually, because
I would say annually that is a pretty big increase.
But I mean some folksmen are paying like fifteen hundred,
(23:53):
if not like two thousand dollars for their auto insurance easily,
and so I hear one hundred and seventy dollars increase,
and I'm just like, actually, that's not add at all
compared to what some folks are what some folks are seeing.
Speaker 1 (24:03):
But yeah, and we don't know what she was paying,
so we don't know what the percentage increase is exactly
what you're speaking to. It would be really helpful to know.
But I will say it doesn't sound ridiculous if that's
an annual price increase given kind of what we're seeing
in the marketplace right now.
Speaker 4 (24:16):
By the way, sounds like she's looking for some savings. Yeah. Yeah.
Speaker 1 (24:18):
And insurance increases have just man, they've outpaced inflation meaningful
in the past few post COVID years. I think really
since twenty one, inflation on insurance costs has been essentially
double the cost of everything else. So you're like, oh, man,
the cost of the grocery store has gone up, well,
guess what, not nearly as much as the cost of insurance,
as most of our listeners have found out. But that
(24:39):
also doesn't mean that you shouldn't shop around. I think
it actually it means that the stakes are higher. It
doesn't mean that you should resign yourself just to paying
more because price increases are inevitable. Just take that gut
punch and run with it. I think this means that
the disparity between rates and premiums is likely to be
even more pronounced than it has been, So you know,
(25:01):
different insurance insures raising premiums at different rates. I think
it just behooves you to be less loyal and to
shop around more if.
Speaker 3 (25:07):
You shop thoroughly, if you did a you know, a
pretty robust job, I would say it is okay to
just look maybe every other year, because it can be
a task, right Like, if you're doing this every single year,
might be overkilled. But also consider having someone just to
help you out on that front. And I'm going to
recommend an independent insurance agent. They can be a great call.
They are also so much easier than calling a bunch
(25:30):
of different one eight hundred numbers or getting online and
getting different quotes. On top of you getting spam to
death as you get your number out there and your
email some of those lead generator websites can be a mess. Yeah,
So for folks who can't remember the last time that
they shop, just knowing that a bunch of your dogs
here are at stake, and even just by going with
a single independent agent, head over to trust a choice
as well. That's a great single one stop shop online
(25:52):
that can.
Speaker 4 (25:53):
Save you a bunch as well.
Speaker 1 (25:53):
Yeah, the independent agent is a clutch thing if you
want it looks like someone else to do the work
for you. It's what they get paid to do. They
get paid by the insurance companies, not by you, and
so it doesn't cost you extra money and someone else
is going to do that shopping on your behalf, which
and really kind of help you figure out what your
coverage should be too. They might be more they're in
all likelihood more informed about the insurance coverage that would
(26:16):
make sense for you and your family than you are.
Speaker 4 (26:18):
And even if you have, by.
Speaker 1 (26:19):
The way, the lowest rate with your current insurance company,
you might be able to save even more. I just
I think, especially in this day and age, I wouldn't
want to leave any stone unturned when it comes to
save me money on insurance. These prices have increased so much.
If you can self insure to a greater degree, if
you can raise your deductibles, do that. If you can
take a defensive driver course. I took one online. My
parents just took one online to save money on their
(26:42):
car insurance costs. And you can pay like twenty five bucks.
Take the course, get the certificate, and then you might
be able to save three four hundred bucks a year
because now you look like a safe driver. Ask your
agent or your customer service representative to run through a
list of all the potential discounts you might be eligible for.
Maybe there's like an alumni discount because of where you
went to school. Maybe if you pay in full or
(27:03):
six months at a time. Yeah, I got that same
funal discount. Yeah, it's like list it can make sense,
and auto pay or if you served in the military,
like ask about all of those things because that could
lead to savings on your insurance. I just kind of like,
you know, the magician Matt pulling the ribbon out of
their sleeve or whatever.
Speaker 4 (27:21):
That never ends. You got another discount. That's like me
for discounts, Like.
Speaker 1 (27:25):
When I'm talking to the insurance agent and they're like, gosh, dude,
I think we've run through them all, and I'm like,
are you sure?
Speaker 4 (27:29):
Are you sure we have?
Speaker 1 (27:30):
And this is controversial, but you might even want to
consider letting them track your driving to save more. Some
people think that's an invasion of their privacy. For me,
I was willing to do it and it saved me.
Speaker 4 (27:40):
Would you rather have an invasion of your privacy or
an invasion of your wallet? Yeah, exactly, that's true.
Speaker 3 (27:44):
I'd rather have the invasion of my privacy for a
measured amount of time.
Speaker 2 (27:48):
Yep.
Speaker 3 (27:49):
And then you delete that oup. Yeah, that's right, you're
gonna go, let's do another one real quick. This is
from Jordan. He writes, one of my financial goals has
been to contribute to each of my nieces, nephews and
children's five twenty nine each birthday and Christmas. The plan
has been to present them this lump sum, and he
said it's about one hundred dollars a year, so it's
not a huge amount. As the child graduates or turns eighteen,
to decide what they want to do with that money.
(28:11):
The first child of the bunch turns eighteen roughly when
school ends for the twenty twenty five twenty six school year.
I'd like to present her with various options and the
pros and cons of each, so she can make an
informed choice.
Speaker 4 (28:22):
The way I see it, there are the following choices.
Speaker 3 (28:24):
One do nothing, leave it into five twenty nine if
or when she chooses to use it for school funding.
At this point, I doubt she will choose additional schooling,
so any benefit to leave it as the five twenty
nine if she doesn't want to do additional schooling. Two
cash it out to use for personal expenses, maybe towards
a car. I believe if she picks this option, there's
a ten percent penalty of the growth, not the principle.
Speaker 4 (28:47):
Is it still correct?
Speaker 3 (28:47):
And three another option roll it into a roth ira
seems like a good option for compounded growth, although it's
very delayed gratification anything I missing, Joel, What do you
think George should be thinking through here?
Speaker 4 (29:02):
Well?
Speaker 1 (29:02):
First, I just want to say, one hundred bucks a year,
that's a meaningful gift for somebody's future. And it's those
kiddos might not be old enough to appreciate it now,
but they will someday that someone was helping think about
their financial future putting dollars down to invest on their behalf.
And I love too that it's not just the money,
but he wants to help his niece make a wise
(29:23):
decision with the money. And maybe this sounds sneaky, Matt,
but here's what I would do. I would not cover
option to it all. I would not tell her that
she can use the funds for a car. I would say, hey,
these funds are either for higher education or you can
roll it into a roth ira, which is this awesome
investment vehicle that you can use to build wealth for
your future. It's a perfect time to teach her what
(29:43):
that is, how it works. I just don't think I
talk about cashing it out for other uses, because why
tempt her in that way.
Speaker 3 (29:50):
Well, yeah, he said he specifically, So this money is
already in a five twenty nine, So that's the catch.
If it was me, I would be very willing to
quote unquote liqu like liquidate that money if it wasn't
in the five twenty nine.
Speaker 4 (30:02):
Because of the fact that with the taxes and penalties.
Speaker 3 (30:05):
Yeah, that's the part that I kind of hate that
because I almost so my answer would be different if
he was talking about nieces and nephews specifically versus kids,
because when it comes to kids, like it's your job
as a parent to be saving for the It's up
to you to decide how much you are looking to
teach them, but it's more of your responsibility to help
(30:26):
to prepare them for the future. Versus if you're saving
for nieces and nephews, this is just it's not your
job to make them eat to broccoli and to make
them like brush your teeth and go to bed on time,
you know, Like like I in that case, I would
want to be more of like the fun uncle and
be like it's your money, like I've been setting this
aside for you, you can do what you want with it,
because then you're kind of investing in like the relationship
(30:46):
and the ability for you to continue to speak.
Speaker 4 (30:48):
Into their lives maybe a little bit more.
Speaker 3 (30:51):
Not that you're trying to like buy their love or anything,
but it's the job of the parent to be the
one to deliver the hard news of like, you gotta
do this, you got to start preparing for your future.
Speaker 4 (31:02):
And I'm very much less.
Speaker 3 (31:04):
Interested in them rolling it into a roth ira, because
I mean, it's not even my it's not even my
job as a parent to help my kids start to
save for their retirement.
Speaker 4 (31:12):
That's their job, right. If anything, I'm like, yeah, we'll.
Speaker 3 (31:14):
Talk about saving for college in a five twenty nine,
but I'm not looking to intentionally start setting aside money
for your retirement. But with him as an uncle, he's
like even more removed from the situation, and so I
would find I think this might even cause me to
consider ways to save to set money aside for them
in a more fun, sort of enriching way, as opposed
(31:37):
to just if you want to contribute to the five
twenty nine, that's great reach out to the parents. I'm sure,
they've got parents that are that are doing that for them,
but I would be looking for ways to have a
more relatable financial impact in their lives, like helping them
to fund something. Yeah, if it's likely not to be
used for higher education, we'll skip the five point nut
account and find another avenue, another account to save it in,
(32:00):
or help them build a save mus account, whatever that
might be. But I think you're right, Like, if, especially
as the uncle, you might want to avoid that altogether.
But what's done is done. The money was putting the back.
What's done is done, and that's why I'm like, I'm
with you.
Speaker 4 (32:12):
I wouldn't.
Speaker 3 (32:13):
I wouldn't be considering liquid liquidating and just getting hit
that penalty.
Speaker 1 (32:16):
It just makes me think, like, if I'm trying to
help my kids, and again, you're right, I think the
obligation of an uncle or aunt is different. But if
I'm trying to help my kids understand saving and investing,
and I'm like, hey, you've got this money, you can
spend it, but there's these other things you can do
with it too, I probably don't want to tempt them
by taking them to like the candy store five days
a week and being like, yeah, you probably should save
this money, but you can spend it here if you want, right, Like,
(32:37):
that's it's gonna be hard to teach that lesson if
I'm putting that temptation in front of them constantly or consistently.
And so I guess I just want Jordan to think
of that as he's giving her this advice.
Speaker 4 (32:48):
Like, hey, you can't.
Speaker 1 (32:49):
The great thing as an uncle is like this can
be a teaching moment for you to with your niece
where like, yeah, it's not your responsibility, but you still
have that influence in that ability, and you've put the
money down to kind of help and make a wise decision.
So maybe it's a perfect opportunity to be like, hey,
guess what this was money that I was saving free education?
Doesn't look like you're going to school. Guess what you
can turn it into and guess what this can be
(33:10):
over time and talk about compounding returns and talk about
how that can make a different difference in their ability
to build wealth. And maybe this kick starts making contributions
on the regular for your niece, not just resting on
her laurels because you started saving for her.
Speaker 3 (33:22):
Totally agree, buddy, 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.
Speaker 1 (33:30):
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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