Money Monday with Allworth's Brian James

Episode Transcript

Speaker 1 (00:00):
Folks.

Speaker 2 (00:01):
We are uncovering truth here Clay Travis and Buck Sexton
today at noon, which will result in live.

Speaker 1 (00:08):
Tears like fifty five KRC Talkstation.

Speaker 2 (00:14):
Ato six if afty five KRC E talkstation ain't very
Happy Monday to you, Brian Thomas about to be back
to work. Did enjoy my time off? Happy new Year
to all, and I'm so happy it's a new year
and we're still doing money Monday with Brian James from
Aulworth Financial. Welcome back, Brian, Happy new year to you.

Speaker 3 (00:30):
Happy new year, and happy first snow day of the year.
And all the kids and some workers out.

Speaker 2 (00:34):
It's a hell of a snow day too, isn't it,
Brian Lord Almond?

Speaker 1 (00:37):
This is a whopper. Have you seen this in a
very long time.

Speaker 2 (00:39):
That really long time. I know we've got a couple
of topics you provided and we're going to get to those.
And I don't think I'm throwing you much of a
curve ball, since you are a financial planner. But I
had a couple of things I just wanted to bring up,
and I was inspired by my own personal experience. I
get my credit score, you know, I know what it is,
and there was an article on the Wall Street Journal.

(01:01):
I believe it was from yesterday, one man's attempt to
get a perfect eight to fifty credit score, and rather
interesting article. And I not bragging or anything, but there
was a period of time where I did enjoy a
perfect credit score for a while, and lo and behold,
I launched the app to find my credit score and
it dropped down by like, I don't know, twelve points

(01:22):
or something. Nothing in my life had changed, nothing, All
my bills are paid, you know, I got all these
perfect everything's perfect, Everything's perfect. Then they suggestion on the
I don't know if his equifacts or whatever it was,
I don't have enough credit card accounts. In other words,
they want me to have more available credit in spite

(01:45):
of the fact that all my bills are paid and
I've got enough available credit to cover my family's basic
needs and probably another family down the streets basic needs.
What the hell is with credit scores? And why don't
they let people know? And they don't, as the article
points out, they keep all this quiet. It's they said,
the algorithms they assigned people are proprietary, so you don't

(02:05):
even know. And so the article goes over all these
different you know, you know the contortions this one guy
went through in an effort to get an eight to
fifty credit score, and it just it was out. It
was insane what he went through to try to do it,
and he ultimately was able to do it just by
maintaining a certain like teeny weeny percentage of some kind

(02:25):
of balance on his various credit cards. Does it really
matter once you get over and you're in that higher level?
Does it matter? Should have concern anybody? And do you
know anything about credit scores and how they come up
with them? Brian, I hate to put you on the spot,
but this kind of irks me.

Speaker 1 (02:41):
No, not at all.

Speaker 3 (02:42):
And I've got clients who bring up these questions as well.
Matter of fact, I have clients and there are frequent listeners.
They may hear me say this, who had the same
experience that you did and had that eight point fifty
for that one brief shining moment, printed it out, brought
it into me so we could celebrate, and then they
framed it, hung it on the wall. So I think
it shortly after that went went. But to answer your question,
these are great questions, but at the same time, once

(03:04):
you're over, really seven point fifty, You're not going to
get anything more special than you know, for being over
eight hundred or or you know, even up of that
eight to fifty range, there really aren't there. There isn't
a you know, a special green room for people with
super high credit scores, So it doesn't matter that much
once you're Once you're at that range, you can kind
of get what you need. But yeah, so question for

(03:25):
you though, did did they did you did they specify
that they thought you should have more actual credit card
accounts or do they think you should have more credit
available meaning higher limits and lower balances?

Speaker 2 (03:36):
Well, I didn't see anything but the limits. They gave
me a specific number. I think I have, I guess
ten specific accounts that they were able to identify within
this list of whatever is an approved account credit or otherwise,
and then I should have more like fifteen to twenty
or something. It's just I'm like this, this seems vast awkwards,

(03:57):
if you know what I mean.

Speaker 3 (03:59):
Yes, and the algorithm that algorithm, like all algorithms, changes
all the time because they're after whatever it is that
they're after. But at the same time that the really
the important things, you know, if you wanted that last
marginal few points.

Speaker 2 (04:11):
To get you to the eight fifty.

Speaker 1 (04:12):
Then yeah, that's probably what you would need.

Speaker 3 (04:14):
And that algorithm that you're asking to tell you to
give you advice on what else do I need is
really reaching to the bottom of the barrel for the ideas.

Speaker 1 (04:22):
And that last bit is the number of accounts.

Speaker 2 (04:24):
It sounds like, yeah, apparently, so it just seems just
so so stupid. If you don't need the additional credit,
then why would you want it available? So I don't
know anyhow, And along those lines, I just want to
bring this up because in case people aren't aware in
terms of credit, my wife just got I don't know,

(04:45):
a col statement or something. We don't even shop there anymore,
but it was an announcement that their interest rate is
now north of thirty percent. Thirty and it was one
of several cards, you know, it was some other small
retail that we don't ever use. But I mean your
thirty percent interest rate, Brian, that's insane.

Speaker 3 (05:08):
This is insane, and it tells you exactly who they're
shooting for. They are truly, truly hoping that you will
forget about it. Because remember the way a credit card works,
it has a grace period too. So as soon as
you swipe that card and you rack up a month's
worth of expenses, you're gonna get your statement and then
you've got usually twenty five maybe twenty eight days. It
can waiver around there somewhere, but that's how much time

(05:29):
you've got to get that paid off. What they're after,
they're after the small percentage of people who are gonna
forget to make that payment and pay that statement off.
Most people do. Most people get their rewards and run away.
And I know you and I both play that game. Yeah,
but there are a handful of people out there who
will not make that payment, and they'll go, I'll get
it next year. And if you annualize the interest that
you're paying on those accounts, you are simply paying an

(05:52):
enormous amount of money for the privilege to owe a
bank money.

Speaker 1 (05:55):
Yeah.

Speaker 2 (05:56):
Well, and again I only bring it up in case
people are not paying a ten because apparently, I guess
they can adjust these interest rates in any damn well
time they please, or maybe they have to do at
the beginning of the calendar year. I don't know what
the rules are that apply to these credit card company
are credit cards, but man't pay close attention, because I mean,
let's face it, if you could find a credit card
that only charges twenty percent versus one that charges thirty,

(06:18):
you know which one you should be using if you're not,
if you're going to carry a balance. But it's still
it's like the word usery comes to mind.

Speaker 3 (06:25):
Yeah, and and well i'd also add based on that
thought process, And I know you don't really think this way,
but if you're really looking at the interest rate, if
you're comparing the interest rate across credit cards, then you're
probably using credit cards incorrectly. If you've got a situation
where you've got a balance on one of them, then
you need to be looking for a balance transfer opportunity.
Sometimes those are zero percent for twelve to eighteen months
something like that. But if you've got a significant balance,

(06:48):
I would say that twenty percent is truly no better
than thirty percent.

Speaker 1 (06:51):
It's all way too high.

Speaker 2 (06:52):
It is way too high.

Speaker 1 (06:53):
All right, Well, let's.

Speaker 2 (06:56):
I'm tempted to take an early break, Joe. Can we
take an early break because we can go to the
two topics afterwards, or you want to just dive into
part of the first one, or how do you want
to work it? Okay, Brian, We're gonna take an early break,
a couple minutes early because I don't want to start
either one of the topics we have remaining, because I'm
afraid we'll not have enough time in the segment to
do it. So let's pause it. We'll bring Brian James
back to talk a super sized limit for four to

(07:17):
one k's and Trump's proposed tariffs could cost some US
companies those two subjects next. It's eight thirteen right now,
fifty five K see the talk station. I'll be right
back fifty five the talk station. Jud just said it's bad.
Don't get on the roads. You can avoid it. Brian James.

Speaker 1 (07:37):
Money.

Speaker 2 (07:37):
Money is Brian James from Allworth Mancher. We're talking well finances,
and I want to do the second one first. This
I am more confused having read the new four to
oh one K rules after the USA Today article I
just finished reading than I was when I started reading.

Speaker 1 (07:53):
It.

Speaker 2 (07:55):
Is the average human being supposed to understand how much
money they can contribute to a four to one K
given all the different breakdowns and subcategories and categories we
have here in terms of you know, annual four oh
one K savings and catch up contributions. I mean, this
is baffling, but the number I'm reading here, can someone
in any of these age groups that apply save up

(08:15):
to thirty four thousand, seven hundred and fifty dollars for
retirement next year in a four oh one K, then
well that would be this year. The answer is yes, yes,
apparently right. So honestly, this is all all the confusion, Brian,
is job security for me? If the Irs ever made
things simple, or if Congress ever, you know, kind of
tried to work a little harder to make things put

(08:37):
things in English, then I don't.

Speaker 1 (08:38):
Have a job.

Speaker 3 (08:39):
So let's go over where we were so we can
talk about what the changes are. Twenty twenty four, if
you had a four oh one K, then you were.
Everybody under the sun who had a four to oh
one K could put in twenty three thousand dollars. Whether
that's wroth or traditional four oh one K didn't matter.
It didn't matter what your age is. The limit for
everybody was twenty three thousand. If you were over fifty.
We've had something called the catchup that's been around for

(09:00):
a long time. That was an additional seventy five hundred.
So in twenty twenty four, somebody fifty plus could put
away thirty thousand, five hundred dollars new for this year
is a super ketchup contribution.

Speaker 1 (09:11):
Another flavor for everybody to remember.

Speaker 3 (09:14):
If you are age sixty to sixty three, instead of
seventy five hundred, you get to put in the thirty
four thousand and seven to fifty. So now you're at
the twenty three for everybody twenty three and a half.
That is actually the standard limit went up by five
hundred bucks to twenty three thousand, five hundred. Those over
sixty but under sixty three or under sixty four rather

(09:36):
are allowed an additional eleven two point fifty. That's a
total of thirty four to seven fifty. If you're sixty
four or turning sixty four this year, you don't get it.
So this is the other confusing part. What old ketchup
job security again, Brian, job security for me? Right, let's
talk about what's important here.

Speaker 1 (09:54):
So what I.

Speaker 2 (09:58):
Mean, the older you get, the more life it is
you should be able to get it. I mean usually
your highest income earning years are older. So why would
someone who's sixty five and still gainful employed and not
be able to chuck board a four oh one. K.
If that's what they want to do, you.

Speaker 3 (10:13):
Would have to ask your friendly neighborhood actuary as to
why this was a good idea. So what you've just
pointed out is the Ketchup contribution applies two different times
in your life. Currently, it applies from ages fifty to
fifty nine, and then from sixty to sixty three you
have the super Ketchup. And then currently, from when you
become sixty four and older, you go back to the
old Ketchup super Ketchup. Does that understand? Does that help

(10:34):
you understand that?

Speaker 2 (10:35):
I mean, I do have an understanding of it. It
just doesn't make any sense when you practically talk about
it in real life. You know, terms like wait a second,
how come it's you know, up to sixty four and
that shuts off after age sixty four. Someone explained that
to me, and I know you're not going to be
capable of or in a position to do that, but

(10:56):
super Ketchup. That sounds like the thing you buy at Costco,
the giant size, as opposed to the regular.

Speaker 1 (11:01):
The generic version of the Ketchup. Yep.

Speaker 2 (11:03):
Well, and the other thing is now this will apply
to me, since I am fifty nine. I turned sixty
in September. I still qualify for this age sixty through
sixty three super ketchup because I turned sixty in the
calendar year.

Speaker 1 (11:20):
That is correct. But you will you will be sixty
by twelve thirty one.

Speaker 3 (11:23):
Therefore this is a super ketchup year, not the regular
ketchup for you, the good kind.

Speaker 2 (11:31):
Okay. And I know there's a WROTH provision in here too,
but roths are only available to people within certain income levels.

Speaker 1 (11:39):
Correct, that's correct. Yeah, so that's kind of correct. Here's
another fun thing too.

Speaker 3 (11:44):
So, yes, there is an income limitation on ROTH contributions,
and that's in the range for the perry, depending on
how you know, whether you're married, whether you're single, so forth.
It's in the range of say two hundred thousand dollars
something like that. But the fun thing there is that
you can do what's called a backdoor WROTH conversion because
there are no income limitations on converting traditional or pre

(12:07):
tax assets from a pretax IRA to a WROTH. So
the trick there is you make a non deductible traditional
IRA contribution. This is not new, This is an old thing,
been around for a while make a non deductible traditional
IRA contribution and then immediately convert that, and then you
wind up with the exact same result. So if you may,
if you're married, you make over two hundred one thousand dollars,

(12:28):
then you are not able to make a roth IRA contribution. However,
you can make a pre tax non deductible contribution and
then convert that and get the exact same outcome. And
what's really crazy about this, Brian, this was this started
off as a loophole, but eventually the IRS said, yeah,
you know what, you guys, this is fine, go ahead
and keep doing it. So rather than just removing the
income limitation on a WROTH contribution, they've simply said that

(12:51):
if you file a couple more pieces of paper on
your IRA, you can get the same end result.

Speaker 2 (12:56):
God, that is so insane. And you know you call
it a loophole. If it's written that way, I don't
consider the loophole. I mean I consider that the intended
consequence of any legislation that comes down the pike, because
they wrote it that way the extent they didn't consider
something one way or another. It's not you know, it's
not illegal or anything, but it's just something that's built

(13:19):
into the tax provisions or in this particular case, ira
A provisions.

Speaker 3 (13:24):
Ryan just anyway, why on Monday morning it is all
of this out for the listening public.

Speaker 2 (13:33):
It is well, talk to your financial planner. To the
extent you don't have one, I recommend getting one. Anyhow,
Trump's proposed tariffs. I have heard and read so much
about Trump's proposed tariffs. I mean, he every other day
he comes out with another tariff he's proposing. I think,
you know it. It seems to be getting some traction

(13:53):
in terms of global affairs. I know the Mexico's president
now plans on working with the Trump administration in terms
of taking back some of the illegal immigrants he wants
to send over, certainly in part because of threats of tariffs.
And I see Trudeau's getting ready to resign in Canada,
and one of the concerns they have in Canada is

(14:14):
tariffs on Canadian goods. But this transcends that, and we're
talking Chinese goods primarily. China is obviously a difficult competitor globally.
They don't have any OSHA rules, they have slave labor,
they don't have minimum wage, so it's a lot more
difficult to compete with the Chinese companies, So at least conceptually,
I understand wanting to perhaps tariff Chinese products, which we've

(14:37):
all gotten used to because they are so inexpensive compared
to anything that we make here. What's your take on this,
because some people are all in favor of this for
some of the reasons I mentioned, and some people think
it's going to ruin the economy. Do you have any
personal thoughts on this or anything.

Speaker 3 (14:53):
Well, I mean, in terms of the impact here, it's
really kind of the same discussion as when I'm doing
a financial plan for somebody. What are your priorities, right,
what's the most important thing to you? And what I
mean by that is if you are someone who says,
you know what, the United States has just got to
get more competitive because twenty thirty years from now we're
not going to be able to be at the same
level that we currently are, then you might say that

(15:13):
it's worth laying tariffs against especially China, for the reasons
you just mentioned. It's a lot easier for China to
produce goods more cheaply than it is here because of
all the rules we have. However, if you're somebody who says,
you know what, inflation is the thing, that's the thing
we've got to focus on, then you're not going to
be in favor of these things because there's no way
to have our cake and eat it too. We can't

(15:34):
reduce we can't attack China with tariffs without having any
kind of inflationary impact, and heaven knows, we've seen plenty
of it in the last few years. So it really
just depends on what you feel is the most important,
what's the best for your situation. If you are a
small business owner who imports goods, who imports natural resources
and things from China that you need, you're probably not
real excited about these tariffs. Right.

Speaker 1 (15:55):
On the other hand, you.

Speaker 3 (15:56):
Know, you might be if you're a company that competes
directly with China, then you might feel a little bit differently.

Speaker 2 (16:02):
Yeah, I just the whole idea. It's an artificial tinkering
with the market. But it's brought about because we have well,
I guess, pretty healthy trade relations with China. For example,
We've gotten used to it. I mean I always just
kind of wonder, I mean, had we treated China the
way we treated the Soviet Union, We wouldn't be having
this discussion because we wouldn't be trading with them, period.

(16:23):
End of story. Yeah, I read this article this morning,
our National security advisor telling us that China could basically
just flip the switch and shut down our entire electric
grid given how much it's infected our our infrastructure with
software and things like that. That is an enemy of ours.
So if we just quit trading with them, period. And
I understand the the practical effect of just shutting off

(16:44):
that light swhich is impossibility. But I mean, we have
to contend with them on some way, but we've just
gotten I think fat and happy on cheap Chinese made stuff.

Speaker 3 (16:56):
I think you're exactly right, and I use the term
on these airwaves pretty frequently that we're the United States
a profit margin. The one thing for how, whether we've
actively decided this or just passively by not objecting to it,
the one thing we will not touch is the ability
of our publicly traded companies to make money because that's
how we all get richer. I'm not saying that's good, bad,
or indifferent. I'm just saying that's the decision that we've made.

(17:18):
That's why it was not hard at all. To cut
off Russia because they were never a huge trading partner,
and Russia never made the moves that China has to
become a major player on the kind of overall world
economic stage. They don't make plastic garbage that they can
sell for nothing and undercut everybody else. China does. So therefore,
you know, look at the things you're buying on Amazon.
If you're looking for a phone charger, how many of

(17:39):
those you think you're actually made in the United States.
The ones that are made the United States are probably
four or five times more expensive, probably maybe a little
better quality. That's a different topic. But if you're simply
going for cheap, cheap, cheap, that's China. That's what they've
been doing for one hundred years when they figured out
that that's a way to get under the skin of
the United States, and we're addicted to it. You know,
if you've been bringing in cheap product and cheap components

(18:01):
for whatever it is that you build, and it's going
to be real hard to give that up.

Speaker 2 (18:05):
Well, it certainly is. And I'm just wondering, are these
tariffs going to apply to all the like for example,
rare earth minerals that are brought into this country through
China to build electric vehicles, or to wherever that happened.
The electric vehicles have to be built, we don't have
our own because our own environmental laws won't allow us
to extract them, even though it's right there in front
of our faces. So I don't know, I'm just confused

(18:27):
by the whole thing. But the geopolitical the realities of
the world have changed dramatically since Nixon normalized trade relations
with China. They weren't a sworn enemy back then. They were,
you know, a second world at best country, And clearly
they've moved ahead in advanced significantly and seek to compete
with America on a globe on you know, directly on
a global scale, and pretty successful at doing it because

(18:50):
they don't have any regulations.

Speaker 1 (18:51):
Hmm yeah, go figure.

Speaker 3 (18:53):
So if you think about it, it's almost a kind
of a perfect capitalist story.

Speaker 1 (18:58):
They found a.

Speaker 3 (18:58):
Need that that is out there and people were willing
to throw money at it. Happens to be here in
this country, which where where our goal is profit margin.

Speaker 1 (19:07):
That's our number one goal.

Speaker 3 (19:08):
So if they're the cheapest offering of whatever resources we need,
it's going to be real hard to go against that
number one goal and say that you know we're going
to sacrifice these other things.

Speaker 2 (19:17):
Well, we always care about morality and how people are
treated and you know, suffering, and of course the Chinese
people suffer mightily for lack of a lot of the
regulatory struct infrastructure we have here. So maybe there's a
moral argument that can be made for us paying more
for Chinese products. Don't know, Brian James, always a distinct
pleasure to have you on the program on Mondays. I

(19:37):
appreciate this segment. I'll look forward to next Monday for
another edition of Money Monday. And be careful out there,
my friend.

Speaker 1 (19:43):
Happy New Year and who day anyway.

Speaker 2 (19:46):
Right, that's the first time that came up this morning.
Thanks Brian, eight twenty eight. Right now, if you have
care se de talk stations, stick around. We've got care
se Cares coming up Todd Sledge and since Ata is
going to go over some topics with us at eight forty,
I'll be right back fifty five k RC dot com.
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