Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight. Do you have that kernel of knowledge, that tidbit
of truth that maybe someone passed along to you at
some point that changed things for you When it comes
to money. We're talking about the most important financial advice
that a number of people said they have ever received. You're
listening to simply Money, presented by all Worth Financial. I
mean MEI Wagner, along with Steve Ruby, you know Steve.

(00:27):
For some of us, it is the fact that, you know,
we grew up in a house and I did where
people were talking about money. I learned from my parents' mistakes,
which they discussed openly, as well as there were certain
things that they passed along that have been fantastic for me.
And on the flip side, I think most people, though,
grew up in houses where people aren't talking about money,
and so you're either lucky enough to have someone put

(00:49):
in your path along the way or you'll learn it
on your own.

Speaker 2 (00:53):
Yeah.

Speaker 3 (00:53):
I agree, And you know, I'm kind of on the
flip side there. I looked at the adults in my
life and I thought to myself, here's a motivation to succeeds,
so I don't end up like them. That was kind
of what drove me so you know today. This segment
is about the best advice that people say they've gotten
throughout their lives, in no particular order. One person told

(01:14):
a story about don't they were told not to just
pocket their rays. They were explained to that you would
want to put half of your raise into your four
oh one K. This was a guy that started out
in the mid eighties when he was in his thirties.
His boss was the person that encouraged him to do this,
knowing that the company had a generous match. The challenge

(01:34):
for this guy when he was, you know, all the
way back in the eighties, when he was in his thirties,
is that he had a new wife and a young child,
and he thought about how difficult it would be to
do to put that raise into his four oh one K.
But instead of experiencing what we would call lifestyle creep
and living off of that increase, he kept some of

(01:56):
it but then put the rest into his four oh
one K. Was the best advice this gentleman had ever
received financially.

Speaker 1 (02:02):
A couple takeaways for me about the story. First of all,
kudos to this boss right who just kept pushing because
he personally felt like it was the best thing for
someone who works for him. You know, I didn't know.
There's a line right there that you don't want to cross.
But also, you know, when you care about someone, whether
it's someone you work with or a family member or
a friend, and you've seen something work for you, I

(02:25):
love when people pass that on. And I also want
to point out too that the person who made the decision,
it was a sacrifice. It was a major sacrifice the
time right, young kids wasn't making a ton of money,
yet they were able to get through they made the sacrifice,
and on the other side of it so very grateful
that they did it that now they're giving that advice

(02:47):
to other people. And I just I think that so
many money decisions that we have to make at some
point might require a little bit of sacrifice, but many,
many times we will look back at those sacrifices. If
we sacrificed in favor of saving more, investing more, thinking
about our long term money goals, most of the time,
then you will look back and say so glad that

(03:10):
my younger self did that. My older self says a
major thank you.

Speaker 3 (03:14):
And I you know, sacrifice is certainly a trend here.
A lot of the more wealthy individuals that I work
with today. Have you made over the years. But in
a situation where you're getting a raise, you're making more money.
It's not that much of a sacrifice to say I'm
gonna put half of this raise in my four to
one k moving forwards. It's just more of a discipline thing,

(03:37):
I'm sure. Yeah, it's a mindset. So I think that's
a great piece of advice. And you know, I certainly
heed that when I get a raise, I put more
money into my savings.

Speaker 1 (03:48):
Yeah, there's a forty six year old who learned something
from his dad thirty forty years ago and he's still
talking about it now, And it could have just easily
have been me, because this is I think the best
advice might Gary Wigner ever gave me. And this was
about credit cards. My dad said, it's a tool. You
can use it to charge things. You better have every

(04:08):
penny of what you're charging available in the bank when
you're charging it, so that you pay it off in
full every month. I am now forty six, forty seven
years old, somewhere around there, trying to do the math.
Oh yeah, and I have never ever carried a balance
on my credit card to this day, every month I
pay it off in full. I have many many friends

(04:30):
who have not done that. I understand very well the
stress of it. I've seen financial plans absolutely ruined by
credit card debt. But I'm really really grateful for the
fact that I have always paid it off. That tidbit
of advice that my dad gave me was as I
was heading off to college my freshman year.

Speaker 3 (04:47):
Yeah, and keep in mind, we're not against using credit cards.
We're against yeah, we're against using them and carrying a debt, yeah,
because then you're paying interests that you don't need to
be paying. So again, this advice here is paid off
in full or don't buy it, and I think that's
terrific advice.

Speaker 2 (05:04):
You know.

Speaker 3 (05:05):
The next thing that we're going to talk about here,
it's from a former school teacher been married for fifty years.
Before he got married, he was told to make an
agreement with his spouse to never spend money behind each
other's backs. We've had entire segments discussing this before, where
there's financial infidelity and this is something that you want

(05:26):
to avoid at all costs. Doing so by having an
open line of communication, you're listening.

Speaker 1 (05:32):
To simply Money presented by all Worth Financial. I mean
you Wagner, along with Steve Ruby, as we talk about
some of the financial advice we've gotten, others have gotten
right passing it along to you. Maybe some of this
will ring a bell. Maybe it's advice that you've taken yourself.
I like the thought of this, right. It's open communication
and a marriage when it comes to money. I do
want to get through your take. He's saying, every shirt bought,

(05:55):
every toy purchase for our kids through the years, it
was always a discussion between the two of us, and
if it was ever something that one of us wanted
and the other one wasn't on board, it didn't get purchased.
I don't know.

Speaker 2 (06:07):
That's a little hard line in my opinion.

Speaker 1 (06:09):
I had to call my husband every time I was
buying something. You would be like enough of you enough.

Speaker 2 (06:15):
Yeah.

Speaker 3 (06:16):
The way that I approach this, you know, I agree
to an extent it's a yours mine and ours strategy
where we have ours together, but my wife and I
we do have separate bank accounts. It's totally fine. My
opinion here is that this is a little bit hard line,
because really, to buy a shirt to buy you know,

(06:38):
some recee's peanut butter cups or something.

Speaker 2 (06:39):
I think that's a little bit too far.

Speaker 1 (06:41):
Yeah, And I mean, if this is what works for them,
that's fantastic. And I think there's a whole spectrum of
ways that you can be when it comes to communicating
about money and your marriage or your relationship. What you
have to decide is where on the spectrum works best
for you and your spouse. And if one of you
isn't sleeping at night because you don't know about all
the purchases, that's a conversation to be had. But I

(07:01):
think most of us we fall somewhere in the middle
major purchases. We probably want to have that conversation and
then just an open and ongoing dynamic there. But yeah,
I think it's whatever works for you. I like this
next story is about someone who says he maybe wouldn't
have gone to college, but was lucky enough to have
his in laws in his life. I guess he was,

(07:22):
you know, graduating from high school, and they really encouraged
him to go on to college to learn and to
get an education, a really strong sort of personal finance
education and explore kind of different opportunities. Now, he's a
financial planner himself and teaches a high school course in
financial literacy. So talk about taking what his in laws
did for him and paying it forward. I think that's

(07:44):
a really cool thing.

Speaker 3 (07:46):
And you know, I would take this another way too,
because I have received advice from my in laws about
when you say family is more important than money, I
think that means that you need to make time for
your family no matter how busy you are working. I
will do everything in my to make sure that I'm
at every single sporting event, dance competition, even practices to

(08:06):
be there when my daughter, who is eight years old,
is at one of these events, and I'm always there too.
So it's about finding a balance between family and.

Speaker 2 (08:15):
Money.

Speaker 1 (08:16):
Yeah, anythink time well spent. You're never going to look
back when she gets older and she's out of the
house and wish, gosh, I wish I had been in
more work meetings rather than missing those practices or the
dance competitions. It's great perspective there. I think a common
refrain when people talk about just great advice that they've
gotten when it comes to money is saving sooner rather

(08:37):
than later. Maybe we hear the advice. Maybe we don't
put the very first paycheck, part of the first paycheck
into the four one k. But the earlier you start, man,
the better off you're going to be.

Speaker 3 (08:47):
Yeah, Compounding interest is where your money makes money, and
that money makes more money. So the earlier you get started,
it's like a snowball rolling down a hill. It doesn't
matter if it's a tiny little snowball. If the hill
is super long, which represents your time frame between now
in retirement, you get started somewhere, and that gives your
money an opportunity to grow again. The folks that I

(09:08):
work with that are most successful are the ones that
took that advice to heart and they started saving as
early as they possibly could. A great opportunity for you
is to maybe educate children or grandchildren as they enter
the workforce after high school or after college. Start now.
It doesn't matter how small it is. When you have

(09:29):
time on your side, the impact can be absolutely monumental
on your financial future and financial freedom eventually.

Speaker 1 (09:36):
Yeah, I mean, here's the guy who says, oh my gosh,
my dad just nagged me right all through college. I
didn't even have a job yet, and he was talking
about when I started getting that paycheck and he said, okay.
Admittedly it didn't take immediately. Those first several paychecks did
not go any part of it to the four one k.
But by the time I was in my late twenties,
I saw it. It clicked. I got it in. Every year,

(09:57):
I started putting more and more and more into that
flour one k a higher percentage of my take home
until I got to the point where I was maxing
it out. And then also when I got married, we
made sure that my wife and I did the same thing.
Now we're in our fifties and the opportunity to retire
early is available to us. There's such a disconnect between

(10:19):
who we are now and making decisions that are really
going to benefit for our future selves. I understand that,
But if you could gain any perspective from these it
is that you can make decisions in your twenties, thirties
forties about money that are going to help you out
push you so much forward when it comes to money
later in life.

Speaker 3 (10:39):
Retirement is such an abstract thought when you're in your twenties,
so that can be difficult to heed the advice. It
just feels like nagging, or maybe it feels like you
are nagging the younger people in your life to heed
your advice, but it's just such an opportunity to really
have financial freedom later on in life.

Speaker 1 (10:55):
Here's the all Worth advice. As we talk about this
great money advice that we've gotten that others have passed along,
notice that none of it is on how to get
rich quick. The lessons involved discipline, consistency, and always keeping
an eye towards the future. Coming up next, do you
have an emergency fund and a rainy day fund? Will
tell you the difference and if you need both. Coming up,

(11:18):
you're listening to Simply Money presented by all Worth Financial.
Here in fifty five KRC the talk station. You're listening
to Simply Money presented by all Worth Financial I mean
Wagner along with Stee Ruby. If you can't catch our
show every night, if you have to miss something, you
don't have to miss a thing we talk about, because
we've got a daily podcast where you just search Simply Money.

(11:41):
It's right there on the iHeart app or wherever you
get your podcasts. Coming up at six forty three, how
to donate to charity while also making some income and
the process. This is the win win you may have
never heard about. We'll talk about that coming up next.
One of the things we talk about as like the
bedrock the foundation of any kind of financial plan. It's

(12:02):
having an emergency fund, and there's also something called a
rainy day fund. Let's get to the differences and whether
people need both.

Speaker 3 (12:11):
Emergency fund at its foundation. That's that's you know, the
equivalent of three to six months of liquid cash parked
on the sidelines, not invested to any capacity, not in CDs,
not in treasuries. We need that to be liquid in
the event that some kind of curveball is thrown at
us in life and we need that kit, that cash immediately.

(12:32):
This is it's unfortunate because we want our money to
be working to some capacity, and cash that is completely
liquid is guaranteed to lose purchasing power over the long term.
But it is important to have it there so that
we don't have to dip into retirement savings in the

(12:53):
event that we we need something.

Speaker 1 (12:55):
And that piece of that is a tough pill to
swallow for a lot of people, especially when markets are
doing work right, when you're looking at how all the
markets are doing and you're saying, but wait, you're telling
me I need to keep cash on the sidelines, and
it's not getting any of these games. I understand that.
But yeah, this money is there for anything that could happen.
That's car breaking down, an unexpected medical diagnosis with bills

(13:16):
coming in. Whatever. It is. A rainy day fund, however,
that's money that's earmarked for something special. So I think
maybe the rainy day part of it is a little misleading.
If say, you know you need to buy a car
in a couple of years, will you start saving money
and there's an extra fund for that that money when
you go to buy the car, you've got whatever you

(13:37):
need for that down payment already ready. Maybe it's a wedding.
We have a producer, Jason. He and his wife got
engaged and knew they were going to get married eighteen
months later. They didn't need the money for eighteen months,
so they put the money into some CDs to go
ahead and take advantage of a little higher interest, and
then when they needed that money, it was available to them.

(13:57):
It's this really smart way to put money to work
for you if you know you're going to need something
in the next couple of years.

Speaker 2 (14:04):
Yeah, So one way to look at it is.

Speaker 3 (14:06):
The emergency fund is for your short term unexpected expenses,
whereas the rainy day fund it you know, it's just
a name. In my opinion, that's more along the lines
of for intermediate term expenses that you know are on
the horizon, Like you said, our producer with a wedding pending,
or putting money in an account for a vacation or

(14:26):
a future car purchase. There's some rules that I would
typically attach to each though, because when we talk about
setting an amount goal in mind for an emergency fund,
we use it based on timeframe three to six months.
What does that really represent? It represents three months of
living expenses or six months of living expenses. Why the

(14:47):
difference three months is for a double income household, six
months is for a single income household. In the event
that something happens to the single income households income earner
and our ability to earn income, you need to have
a little bit more money as a cushion to support
you and your family and all of your expenses so

(15:08):
that you don't have to tap into retirement money or
take on debt.

Speaker 1 (15:13):
You know, And I think for those of you who
are wondering, do I need both of these, well, it
depends the emergency fund. Steve and I would both agree
on this one. I don't want to speak for you,
but this is a non negotiable. You need this if
you don't have one now, this should be a top
priority for this year that this is something that you
work toward having those three to six months of the

(15:34):
critical expenses. You're going to be so glad you have
this money because if you don't, what we see people
do time and time again, you either put it on
a credit card, you pull money out of a four
to one k, and both of those things are things
that you're going to be dealing with negatively with your
money for a long time to come. I think the
Rainy Day Fund is for people who are almost a

(15:56):
little next level with their money. You're the thinkers, the planners,
and I love these and I think for those of
you who have made it to this level, if you
are able to look out a year or two and
say we're not gonna you know, we know this car
isn't going to make it three more years, so we're
going to go ahead and start saving now. Or we

(16:17):
want to help one of our children, help them pay
for a wedding and they've started dating someone seriously, and
we think it's going to be a couple of yeers outright.
These are people who are saying, Okay, we're going to
earmark some funds towards this particular thing, give it some
time to grow, maybe put it in a CD or
somewhere where it can make a little extra higher interest
on that money. But I like the intentionality behind the

(16:40):
rainy day fund. I just don't know that a lot
of people get to that level of financial planning.

Speaker 3 (16:47):
Well, some of it's based around your own personal risk
tolerance as well, because arguably a rainy day fund for
something that's three years out, you could put that into
a longer term investment vehicle vehicle like a taxable Okridge
account and invest those dollars with the expectation that they
may grow, but they're still at risk depending on when
you need the money. The benefit right now for those

(17:10):
that are planning accordingly and have their finger on the
pulse of their future current and future cash flow needs,
you have that emergency fund that's your baseline, that's non negotiable.
Like you said, the rainy day fund and a higher
interest rate environment. It's an opportunity to put that money
to work at lower risk than putting it into say
a taxable brokerage account, because if CDs are paying five

(17:32):
five and a half percent, then that's an opportunity to
help those dollars keep up with inflation. And they are
tied up to an extent. But that's why you have
the emergency fund completely liquid and cash rainy day fund.
You can let it grow a little bit if you
know the approximate time frame between when you're going to
need that money.

Speaker 1 (17:50):
Yeah, I think if you are a great planner, and
I think this is part of the financial planning process.
I think that for many people, money can sound and
feel really overwhelming. And once you start to take control
and you start to see money as the tool that
it is, Okay, then all of a sudden, I've got
that emergency fund. I mean there's a study after study
that shows that most Americans don't even have four hundred

(18:13):
dollars set aside for an emergency that comes up. Right,
So you've got that emergency fund. Now you're thinking about
what are other, more to your point, intermediate needs that
we might have. You know, if you can do both
of those things and by the way save for a
retirement at the same time, Man, you're in really good place.
But I would say what comes before that rainy day

(18:35):
fund is saving in that four one K. You got
to put enough in there to get the company match
at least, you know, And then I would say, if
you can automatically put a little more in every year,
a higher percentage of what you're bringing in, you're gonna
be really grateful you did that.

Speaker 3 (18:49):
I would certainly have hierarchy above the rainy day fund,
just like you mentioned the emergency fund again nonnegotiable. Hierarchy
above the rainy day fund would be making sure you're
getting free money from your employer, leveraging a health savings
account because that's a triple tax advantage vehicle. If you
know you're going to spend the money on medical expenses,
get the tax deduction, maybe even paying down high interes

(19:11):
straight debt before you're beefing up the rainy day fund,
because arguably, depending on the interest rate, an emergency could
be you know, that could be an emergency and you
could actually use some of your emergency fund for that.
So it's about being organized whether or not you're going
to have one or both rainy day fund and emergency fund.
But I would say the emergency fund would be top

(19:32):
of the line important for any financial plan.

Speaker 1 (19:36):
Absolutely, here's the all Worth advice. If you have a
specific purpose for where all those dollars go, you are
next level when it comes to financial planning. Congrats to you.
Coming up next, how to deal with debt once and
for all. You're listening to Simply Money, presented by all
Worth Financial here in fifty five KRC the talk station.

(20:00):
It's listening too, Simply Money, percent by all Worth Financial.
I'm Amy Wagner. If twenty twenty four is the year
for you when you say Okay, once and for all,
I'm going to get out of debt? Where do you
even begin? Well, tonight our credit expert Brit Scares is
joining us here on the show with where do you
even get started? And you know, but I love that
you're talking to us about this because it's not something

(20:21):
that you're telling us from some you know, scholastic view.
You've done this, you've lived it, you've been in debt yourself,
you've pulled yourself out, you've gotten to a really great point.
So you're not like on some high horse you're telling
people what to do that you've never had to do yourself.

Speaker 4 (20:35):
That's that's right, Amy, I've lived this, and you know,
first off, know that you know, at a lot of
times people feel like this is just like, oh, I'm
ruined forever. I have so much debt, I'll never be
able to recover. And I want you to know there
is hope now. You know, you can't just hope that
it goes away and not do anything. You know, if
you find yourself dig digging yourself into a hole that

(20:59):
you want to get out out of, the first step
is to put the shovel down. Yeah, you got to
stop adding new debt and uh, you know, make a
mental you know, just put a put put a stake
in the ground that says, Okay, I'm gonna be I'm
gonna get serious about this, because what a lot of
times what happens is, you know, it is so easy
to get a debt. I mean, credit cards you're easy

(21:21):
to use. It's it's it's easy to just set up
payments automatically, to just go to your credit cards. Obviously
when you swipe your credit card, it doesn't feel like
you're spending money.

Speaker 1 (21:33):
Uh.

Speaker 4 (21:33):
They've even done some studies that say that, uh, you know,
you you spend like a like ten to twelve percent
more by using a credit card versus cash, you know,
and and that using cash actually registers is pain in
your brain.

Speaker 1 (21:49):
Yeah, yeah, you know, it's it's a psychological thing, right,
as much as it's like an entire shift in how
you think, as well as your actions following the way
that you're thinking exactly.

Speaker 4 (22:00):
So you know, first stop debting number two, you know,
get a handle on your your your spend, you know,
you know, I don't know if anyone's done I've done
this before, but I don't know if you've done this. Amy.
Have you ever just written down every single thing you
spend money on every month? Yes, I mean every I'm
talking ten cents for the bubblegum machine, I'm talking this
and everything. And then and then you take a look

(22:22):
at it and you're like, wow, I do I really
need Disney, the Disney Channel, Netflix, Hulu and Prime.

Speaker 1 (22:30):
Right. Well, my husband crazy, I actually do this on
on a pretty regular basis, just just to kind of
track things. It's maddening to him. But I also think
like you kind of got to do it is at
least a starting point to say, okay, And to your point,
I think, britt, like, if you knew you were spending

(22:51):
two hundred and fifty dollars a month on subscriptions, would
you change something about that? Right? Probably?

Speaker 4 (22:57):
Yes, yeah, yeah, And so you take that inventory and
then at that point devise a plan. You know, obviously
you can make some cuts. There are opportunities to get
maybe a side hustle to bring in some extra income,
or work a little overtime if that's possible on your job.
And then you know, develop a spending plan and an actual,

(23:20):
you know, strategy for eliminating debt, whether it be you
hear a lot of different types of strategies for paying
down credit card debt, like the debt snowball or the
avalanche method. You know, the avalanche method is to pay
off your highest interest rates first and pay minimum payments
on everything else. You know, or you can do the
debt snowball, which is pay minimums on everything. List your

(23:41):
debts from smallest to largest, and pay extra on your
smallest debt and make as many of those go away
as fast as possible because you get those mental wins.
And you know, sometimes we also have to, you know,
make some decisions that you know what, I know, our
family loves to take these certain vacations. We certain we

(24:01):
like to do these certain things. Well, maybe for you know,
one year, depending on how much debt you have and
that sort of thing. You know, maybe for one year
we do a staycation and we use the you know,
the five, six, seven, ten thousand dollars or whatever that
would have gone toward you know, some you know, extravag
extravagant vacation. You know, it goes to paying down debt,
and then next year we can pay cash. You know,

(24:24):
once we have no debt, we can actually stay for
that vacation and pay cash for it.

Speaker 1 (24:28):
So how you're talking about motions that we have to make,
you know, but you're talking about like, you know, passing
up vacations and things like that. I think for a
lot of people it's like, oh, but that's something we
look forward to every year. Well you understand, but it's
like kind of what are the lesser of two evils
right now? Not going on that vacation and finally getting
yourself out of debt or staying in that hole and

(24:49):
continuing to dig that hole right deeper and deeper. It's
going to take some a little bit of sacrifice, maybe
a lot of sacrifice in order to get out of there.

Speaker 4 (24:59):
Exactly, and you know it's temporary. That's Here's here's the
thing that whenever I'm coaching someone, know that this you
don't have to live like a you know, you know,
like on this type budget where you can't do anything.
You know, this isn't like for the rest of your life.
This is this is a strategy and a game plan

(25:19):
for six months, twelve months, you know, twenty four months,
depending on what your debt situation is. In many cases,
people really once they get focused, they are amazed at
how efficient they can become at making that debt go away.

Speaker 1 (25:34):
It probably changes, though, how you look at spending long term,
maybe for the rest of your life. Right, all of
the things that felt necessary before, once you cut them
out and you realize I'm actually fine without these things.
I think it probably just changes your whole outlook on
how you spend.

Speaker 4 (25:51):
It.

Speaker 2 (25:51):
Does you know?

Speaker 4 (25:52):
I know when I first you know, started digging out
of my own situation, you know, thirty years ago, I
you know, I ended up. You know, it was tough
because I would I would actually start on the right
path and be really disciplined for a little bit, and
I would fall off the wagon and I would like
make a mistake or you.

Speaker 1 (26:10):
Know, it's like a diet.

Speaker 4 (26:11):
This is well it is or you know, usually it's
some repair happens, you know, oh my gosh, I have
to spend twelve hundred bucks, you know, on this, you know,
whatever car repair or whatever. So, you know, the other step,
after you get your you know, spending playing kind of
in place and you kind of get an inventory, you

(26:31):
need to start an emergency fund. And you know, start
that even if it's small, even if it's only a
thousand or two thousand dollars, get an emergency fund in
play so that you don't have to go into debt
if there is some sort of you know, live thing happening,
you know, a car breaks down, or you end up
with a medical bill or something of that nature. You know,

(26:53):
those are you know, those emergency funds can really be
you know, very helpful in keeping you from adding to
the debt. And then of course, once your debt's paid off,
you want to get that emergency fund up to six
months worth of living expenses and you know, from there
you can worry about you know, ramping up things like
retirement savings and that sort of thing. And I know,

(27:14):
initially starting out that seems tough. But when you're doing
that inventory and as you make cuts, and as you
try to get a little extra income, you know, perhaps
you could even have a garage sale, sell stuff on eBay,
what whatever, get yourself that emergency fund, and and that'll
really put you in at least a little bit of
more peace of mind that you know, Okay, if something

(27:34):
does happen, I don't have to add more to my debt.
And I actually got to the point personally that once
I started attacking one particular debt we have you know
we have nowadays, we have a lot more you know,
electronic means to do this, you know, I would I
would make multiple payments, you know, other thing debts like
oh I got some more money, I'm going to send

(27:55):
a little more of that, and I would just get
obsessed with making the debt go away and success in it. Right,
that's right. And you know, and I think once you
really kind of get into that mode, that mindset, you know,
you'll be amazed at what you can accomplish.

Speaker 1 (28:11):
Great advice is always from our credit expert with scares
you're listening to Simply Money presented by all Worth Financial.

Speaker 5 (28:17):
Here in fifty five KRC the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
you Wagner along with Steve Ruby. If you've got a
financial question.

Speaker 1 (28:30):
Maybe it's keeping you up midnight, you and your spouse
aren't on the same page. We can help you figure
it out. There's a red button you can click on
while you're listening to the show. It's right there on
the iHeart app. Record your question. It's coming straight to
us and straight ahead. We've got the pros and cons
of using auto pay. One of the things I love.
One of the things I love about kind of the

(28:51):
Greater Cincinnati area is this is just an area I
think where people are more charitable minded than anywhere else.
I've lived in different cities and states, you know, and
as you know my background being in the news, I've
covered some of the just worst tragedies that are that
are out there. And I always love, when you know,
living here and growing up here, just seeing how people

(29:13):
respond when there is a need. And so if you
are someone who is charitably inclined, we're going to give
you some options that maybe you've never heard about before
that are kind of win wins from a tax standpoint.

Speaker 3 (29:28):
Yeah, I know a lot of folks in this area.
Certainly when I work with with people here, there's a
lot of strategies that we deploy that's part of kind
of a tax planning maneuver when it comes to financial planning,
and one that we're going to shine some light on
today is called a charitable gift annuity, which is it's
basically a contract between you and it's got to be
a qualified nonprofit where you donate cash, some kind of assets,

(29:52):
even securities. In return, you're receiving a partial tax deduction
and a fixed income stream for the rest of your
li life and potentially the rest of your spouse's life
now when when both are gone. In that situation, the
remaining annuity actually stays with the charity.

Speaker 1 (30:09):
Now, one of the major things you have to think about,
you know, for most of us, when you think about
a charity, there is a particular something that is near
and dear to your heart. You got to check first
and see if this is a charity that offers a
charitable gift annuity. Because I would say these are these
are newer you know, not every charity is going to
have these available, So first of all, start by doing

(30:31):
your research. But yeah, if it's something that a charity
that you really care about and they offer one of these, yeah,
you're getting a fixed stream of income that money that
you've given them. Then is some of it are part
of it?

Speaker 4 (30:43):
Right?

Speaker 1 (30:44):
All of it can be invested for them, And then yeah,
they invest that money, they determine where it goes. You
get that stream of income, it's it's you know, it's
no longer yours. And then once you're gone or you
and your spouse are gone, if there is any remaining money,
remaining money, they get to hear it. And so I
like this. I think it makes a lot of sense.

(31:04):
I mean, I guess one caveat this is not for everyone.
You know, everyone isn't looking for, you know, fixed streams
of income in retirement that are also tied to charities.
But hey, if this works for you, it's a really
great option.

Speaker 3 (31:20):
Well, people are looking for tax deductions, that's something that
never goes away in my experience. And if you itemize
your taxes instead of it's important instead of taking the
standard deduction, which is very high right now. But if
you itemize your taxes, you're eligible for a partial tax
deduction in the calendar year that you gave the gift
that qualifies as this annuity stream moving forwards, and that

(31:43):
deduction it's based on the estimated amount that will eventually
go to charity after all of the annuity payments are made.
So it's it's something that you need to sit down
and talk to a CPA about before you're pulling the
trigger on this type of strategy.

Speaker 1 (31:56):
I mean, just a lot of nuances to this. Right,
you can use an IRA to fund it, but there's
it's a one time thing. You're seventy and a half
or older, you can give up to fifty thousand dollars
to fund a gift annuity from your IRA. That's an option,
you know. And I think the key here is to
understand if you were, if you were getting to the

(32:17):
point you maybe you're already retired, been a lifetime saver,
You've made some great money decisions. Your legacy for you
is beyond just the next generation. Knowing that you have
options when it comes to charities, whether it's something like
this that pays out over your lifetime, you know, or
other options that you have. I think the key is

(32:38):
looking at all of them and determining what's the best
fit for you and your family.

Speaker 3 (32:42):
Yeah, and you had mentioned gifting to the charitable gift
annuity from an IRA in this situation as long as
you're seventy and a half years old. What that actually
is is a qualified charitable distribution. So you're not actually
getting a deduction for that donation, but it ounce towards
your r MD for the year, and you don't have

(33:03):
to pay taxes on that RMD. So it's an interesting
strategy where you can do the qualified charitable distribution to
a charitable gift annuity, but you can also do that
without using a charitable gift annuity.

Speaker 2 (33:18):
I have a lot of folks.

Speaker 3 (33:19):
In this area that that when they when it comes
time to process their distribution, there's there's a simple enough process.
Or you can just give your RMD directly to a
charity of your choosing without this this charitable gift annuity.
It doesn't create an income stream, but it saves you
tax dollars when you're taking that distribution because you don't
know taxes on it when you do.

Speaker 1 (33:39):
It that way. Another option I think that we should
throw out in the midst of this conversation is a
donor advice fund. This is where you know you want
to start putting aside money for a charity. Maybe you
don't know what charity it is yet, so you're going
to go ahead and start putting money into a fun
and then maybe in a few years you and you're
maybe you're waiting for your kids to get older, or

(33:59):
you still have a family meeting and say, Okay, this
is how much we have saved. It's been invested during
this time, it's been growing. What do we want to
do with this money? And I've known a couple of
families who have done this, and it's so cool for
everyone to get to have a voice and where that
money goes and what the charity is. And so I
think there's lots of great options with that as well.

(34:20):
Here's your all worth advice. If you are charitably inclined,
discussing your options with a qualified financial pro can help
you figure out what makes the most sense and maybe
you can even save yourself some money. And the tax
realm and the process coming up next when auto pay
makes sense and maybe when it doesn't. You're listening to
simply money presented by all Worth Financial. Here in fifty

(34:41):
five KRC. The talk station you're listening to Simply Money,
presented by all Worth Financial. I'm Amy Wagner along with
Steve Ruby. Steve, do you ought to pay your bills?

Speaker 2 (34:55):
I do when I can.

Speaker 3 (34:57):
It's particularly I mean use T mobile and they set
up you know, they sent me a message that said, hey,
if you set up autopay, then you get ten or
fifteen dollars a month decrease on your bill. And I
was like, all right, well let's do it. The money
is there. I pay with my credit card, which I
pay off at the end of the month anyways, so yeah,

(35:18):
let's get that discount.

Speaker 1 (35:20):
And I think that's a great point that you're making.
There's a lot of organizations companies that offer discounts to
auto pay because they know they're going to get paid
right when autopay is set up. They're not going to
have to track you down for late bills, misspayments and
things like that. So if you are someone who believes
in auto pay, I think it is a very valid
and fair question to be asking that company. Is there

(35:41):
any kind of incentive for me to go ahead and
sign up for auto pay? So my husband had always
auto paid everything. Everything is on autopay. I had always
paid every bill every month, which was so insane to him.
But the one thing I will say is it is insane.
I get it. I get it from a convenience factor,

(36:03):
but I don't like anyone trying to get anything by me,
and so I do like to look at my bills.

Speaker 4 (36:09):
You know.

Speaker 1 (36:09):
It was like when I used to pay the cable
bill and every year it would just automatically bump up.
I wanted to know that, and so, but I think
that there's certain bills that you know, there's not going
to be wiggle room. It is what it is. And
I also think if you're going to auto pay, please
spot check those bills. You know. I'm not saying every
month you have to go over it with a fine
tooth comb, but maybe quarterly you actually take a look

(36:31):
at them to make sure that there's no heirs, that
you're not paying for things that you're not actually getting,
because that could happen and you could go a couple
of years paying for something I never know about it.

Speaker 2 (36:40):
I look at it monthly.

Speaker 3 (36:41):
So while I'm using autobill pay, I do a quick
scrub at the you know, every statement, and I kind
of look through a line item because it's easy to
lose track you're spending when there's there's so many services
out there that charge monthly subscription fees that like little
changes every so often, Hey, congratulations, we're increasing your fee
by three dollars a month, and you know, giving you

(37:04):
more access to different TV shows for example, whatever it
might be. There's added expenses that if you don't have
your finger on the pulse of you know, how money
is going out, then you can quickly lose track of spending.
So while I do use autopay where I can, especially
because it unlocks benefits, I would be an advocate for
being a little more diligent.

Speaker 1 (37:25):
I also like auto pay from the standpoint of helping
your credit score, right. I mean, one of the number
one contributors to lower credit scores is people just missing bills,
not paying bills on time. And for some people it's
because they're you know, don't have the money, but for
many I think it's you miss a bill. I mean,
there's a lot of stuff coming in, You've got emails
coming in and mail and all the things. It can

(37:47):
be easy to miss something along the way and so
auto paying is one way that you know, okay, bills
paid on time check and that should over time if
someone is trying to bring up a credit score, that
goes a long way when it comes to that.

Speaker 3 (38:01):
Yeah, And something to keep an eye on here is
you can potentially miss out on different savings opportunities when
you have auto bill pay set up, because over time
there may be different pricing tiers that a service provider
whatever that may be offers for newer customers or clients.
So I do a review of that every probably two

(38:21):
or three years, and I look at what I'm paying,
and I make some phone calls to see if there's
a way to pay less. If you don't have your
finger on the pulse of the cash flow out then
and you're not organized, then maybe autobill pay is something
that you shouldn't explore.

Speaker 1 (38:39):
Thanks for listening. You've been listening to Simply Money presented
me all Worth Financial here in fifty five krs. The
talk station