Episode Transcript
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Speaker 1 (00:06):
Tonight, we're getting into the difference between someone who focuses
on your investments and someone who focuses on your financial plan.
We are fixing those past financial regrets and some changes
in retirement savings rules that could affect you. You're listening
to simply when you presented by all Worth Financial Ammi
Wagner along with Steve sprovac in for Steve Ruby, I
(00:29):
think and I'm sure you would agree. And actually there's
all kinds of research out there about this, Steve, that
the financial services industry has a bit of a reputation.
Speaker 2 (00:37):
You know.
Speaker 1 (00:38):
Oh it's all you got your Bernie Madoffs out there,
your you know, myriad of versions of local Bernie Madoffs,
and people are like, oh, I don't know. You know,
I've been putting this. I've been saving this money for
so long. It's coming out of my paychecks. It's been
so hard. Who can I trust? And there is a
difference between the kinds of people who try to present
(01:00):
themselves I would say in a very similar way, but
actually end up being very different.
Speaker 3 (01:04):
Well, you know, the financial services industry only has itself
to blame any time any regulation proposals are made. Give
you an example, a couple of years ago, there was
a proposal to basically require all both commission and noncommission
advisors to become fiduciaries to work in the client's best interest.
Speaker 4 (01:25):
Sounds like a gimme.
Speaker 1 (01:28):
Yeah.
Speaker 3 (01:28):
There was a huge lobby, mainly from the big brokerage
firms out there saying no, no, we're not going to
put up with that, and it was It should have
been blasted all over the media that hey, why do
you have a problem with this? And yet it wasn't.
But you know that's the problem.
Speaker 1 (01:45):
Movie We talked about it here, but yeah, sure we do.
Speaker 4 (01:48):
Yeah.
Speaker 3 (01:48):
But it's like you can call yourself whatever you want
Beverly Hillbillies. Jethro was a sanitation engineer. He wasn't a
garbage man. I actually saw a business card years ago
from somebody who sold a financial product to the person
sitting in my office, and his soon to be former
advisor listed himself as a financial engineer.
Speaker 1 (02:10):
What does that mean engineer?
Speaker 4 (02:12):
Yeah, exactly.
Speaker 3 (02:14):
So you know, I get why people are confused, but
you really just have to ask a few questions and
you could very quickly figure out, Okay, is this guy
working in my best interest or his own?
Speaker 4 (02:29):
Best interest.
Speaker 1 (02:30):
Yeah, And I think also part of this becomes what's
your focus? Right when you're looking to partner with someone,
what are you hoping to get out of that relationship?
Because some people are focused only on investments, right, how
can work? Yeah? What can you put in my investments?
Speaker 3 (02:46):
In? Was?
Speaker 1 (02:47):
That performance is going to look like? How much can
you get me? You know, if it's not what they
think that's going to be, they'll jump around, they'll jump around,
they'll jump around. And I think there are people out
there that really sell themselves based on the investments. Here's
what we've got, Here's how much I think we can
get you. And if that's what you're looking for, great,
ask the right kinds of questions to find those kinds
(03:09):
of people. But hey, I really feel like, deep down
in my bones that for those of you who are
looking for a long term partnership, not only is it
about those investment return that's a piece of the puzzle,
but it's much bigger than that. You should have someone
who's focusing on your financial plan, which is a lot
more holistic view of your financial life.
Speaker 4 (03:32):
Yeah.
Speaker 3 (03:32):
I mean, we don't want to blame the investor for
when a relationship goes wrong. Performance is important. I mean,
that's why you're you're investing to grow your money. But
if performances you're number one, two, and three priorities. And
you sit down with an investment advisor, financial consultant, whatever
they happen to be calling themselves at that day, who says, yeah,
(03:54):
performance is why you're here. Performances why I'm here. Let
me explain our system and why we're better than everybody else.
That should be a big old red flag. You know,
if the advisor is putting performances number one, they're going
to hit a bad streak. You know, anytime somebody does
substantially better than someone else in our business over a
(04:17):
short period of time, it comes back to haunt them
because they're.
Speaker 4 (04:19):
Just in more volatile investments.
Speaker 3 (04:21):
And when the run is good, it can be great,
but everything turns around it at some point. And I've
always looked for trying to be as close to a
straight line on performance as possible. And that means we're
not gonna We're gonna underperform during the good years, but
maybe we'll do a little bit better.
Speaker 4 (04:38):
In the down years.
Speaker 3 (04:39):
And you know, what you want is less excitement in
your in your investments at least that's what I want,
and over time my clients would be the type of
people who are also looking for that. The ones that
were strictly about performance, they would fall by the wayside.
And that's why, over the years I tried to weed
them out before they started to work with me, because
(05:01):
it's not going to be a good, healthy relationship ten
or twenty.
Speaker 4 (05:05):
Years down the road.
Speaker 1 (05:06):
The conversation that I always have when someone comes and
talks to me is, yes, the investment piece is a
part of it, but it's about one fifth of it.
The retirement plan, which tells us a lot about what
we need our investments to do, how we need our
investments to perform. That's also part of it. A state
planning as part of it. Tax planning is part of it,
(05:27):
in making sure you've got the proper insurance. All five
of those pieces of this really have to work together well.
So you could be focused only on your investments and
think this is going to get me to and through retirement,
and I think you're dropping some major balls. I had
a woman in my office yesterday who said, explain to
me how this works. Her husband had passed away. She
was just overwhelmed by everything to do with our financial lives.
(05:51):
And she said, do I need a separate estate planning person,
a separate CPA, a separate I said, no, we can
actually help you with all of that here. Just the
look of Leef on her face that there was like
one point person that can help her with all these
things was huge. And I think there's a lot of
value in that. So I'm not saying, hey, you know
these investment advisors are these people that focus only on
(06:12):
your investments are bad. I think you have to go
into these meetings understanding what you need out of them.
You're listening to simply money presented by all Worth Financial
Imami Wagner along with Steve Sprovac in a very very
confusing industry that's trying to help you with your money.
There's just a lot of different kinds of people with
different titles, different jobs, and we're helping you kind of
(06:35):
sift through that to figure out what works best for you.
Speaker 3 (06:38):
Yeah, and I'm going to break it into two very
simple pieces here. If you're working with a fiduciary, somebody
who's working in your best interest, not necessarily their own,
or if you're not working with a fiduciary. If you
see these very important letters after the investment advisor, financial
consultants name working with a fiduciary by definition a certified
(07:03):
financial planner. Don't get me started out on how tough
that designation is to get, because I didn't get that
at the beginning of my career. I got that towards
the end of my career, and it was like going
back to get a master's degree in college, but I
got it. And a certified financial planner is going to
be a fiduciary, which it's not just.
Speaker 4 (07:23):
A feel good yet.
Speaker 3 (07:25):
This is a good guy, this is a good woman
who's going to work in my best Legally, they're required
to work in your best interest as a fiduciary. Same
with a chartered financial consultant. Very similar designation, Very tough
designation to get, and you're in good hands at least
from a fiduciary standpoint. If you're working with those types
(07:46):
of people any other designations that don't include those two,
You've got to ask some specific questions and don't feel
uncomfortable about asking, Hey, do you earn a commission on
this product?
Speaker 4 (07:57):
Are you a fiduciary?
Speaker 3 (07:59):
Point blancom it's okay, it's acceptable, and the person on
the other side of the table should be expecting those
questions from you.
Speaker 1 (08:06):
You know what makes me really angry though, I think
the word fiduciary now has become kind of a buzzword
in our industry, right, just to make things more confusing
for investors who are trying to find someone who they
can trust. Someone was in my office a couple of
weeks ago and we were talking about right fiduciary and
what that means, and she said, well, yeah, I my
former advisor was also a fiduciary, and here's the annuities
(08:30):
that I have. Yeah, And I thought, okay, this is
so confusing for the average person. But someone who is
selling you an annuity is actually working on a different standard.
The only thing that they have to prove is does
this make sense for you?
Speaker 2 (08:46):
Right?
Speaker 1 (08:46):
Is there a suitability? You know, that's all they have
to figure out. Right, Can we say, hey, this may
not be the best thing, but it works for them.
And they're very, very different ways that someone could work
with you. And it's so weird, I think, because if
you're going to a doctor or a lawyer or anyone
that you're paying to take care of you. Of course
(09:08):
they're going to tell you what's in your best interests, right,
So it seems crazy then to work with someone who
may not be telling you, oh, there's an eight percent
commission on this product. And so if you think you're
putting two hundred thousand dollars in it, we're actually going
to whack eight percent off the top. You're not going
to maybe notice it unless you're paying really close attention.
(09:29):
And that's how much is actually going into this annuity
from the beginning. Now, if that annuity is the right
fit for you, great, but I want to make sure
you have all the information before you make that decision.
Speaker 3 (09:38):
Well, and I've got a question whether or not it
is the right decision or if there are sixteen thousand
reasons at an eight percent commission for that person to
sell that particular financial product to you. It's not unusual
for the advisor to wear two hats, a fiduciary hat
and a non fiduciary hat. And as an advisor, as
(10:00):
a client, how do you know which one they're wearing
when they're talking to you. I mean, that's why you
have to ask these questions. I think once you get
in the financial planning. You're starting to get into more holistic.
What do I need other than performance out of this
relationship so that I can live my life the way
I want to in retirement. And that's that's where you
(10:21):
get into a financial plan. And yeah, you can run
them yourselves. You can buy the software yourself, or you
can have somebody else do it for you. And there's
always room.
Speaker 4 (10:29):
For do it yourselfers.
Speaker 3 (10:30):
But you know, make sure that the software includes things
like inflation. Yeah, that's kind of important. Includes things like
is nursing home costs included in whether or not I
run out of money? Well, a good plan if it
doesn't include it in the basic plan will have a
module where you can plug that in.
Speaker 4 (10:48):
You know, these are things that I as a current
retiree who occasionally comes in.
Speaker 1 (10:53):
That to go on the air and someone you try
to retire, but we will let you, let making you
come back.
Speaker 3 (11:00):
You pulled me right back in, but but no, it's
these are things that Okay, I did my plan probably
half a dozen times in the last year of my
working life, and every year from this point on, I
will be updating it with my advisor and making sure.
Speaker 4 (11:16):
Okay, here's where I thought I was going to be.
Speaker 3 (11:18):
Am I ahead or behind there? And if I'm behind,
what do I need to fix it? If I'm ahead,
why did I get ahead? Should I expect it to
pull back? And am I still in good shape when
we recast the plan with current accurate figures over the
remainder of my expected life span? I mean, these are
things that once the answer is yes, which I sure
(11:40):
seck hope it is because it hasn't been a full
year yet. But you know what, once once we recast
the plan, I stopped thinking and worrying, and I'm a warrier.
These are things that allow me to live my life
much more comfortably in retirement.
Speaker 1 (11:54):
As I'm listening to I'm also thinking, Yeah, what you're
saying is a relationship. It's a long term relationship. If
it's not someone looking at your investments, asking you a
few questions, making a recommendation once and then forever disappearing
out of your life. This is a long term, ongoing relationship.
You know, it starts with making that plan, but plans change, right,
things change in our lives and kind of revisiting that
(12:15):
every year to make sure that you're still on course.
And of course, yeah, there's a lot that's involved with that.
Here's the all Worth advice, the big question to ask
whether you want to work with someone who serves your
best interests or theirs. Coming up next, and you want
to have a past financial regret, yep, I do. We're
gonna tell you how you can fix some of those.
You're listening to Simply Money presented by all Worth Financial
(12:35):
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 Sprovak. If you can't listen
to our show every night, you don't have to miss
a thing. We've got a daily podcast where you search
Simply Money on the iheartop or wherever you get your podcasts.
(12:57):
Coming up at six point forty three, A breakdown of
chain is in retirement savings rules, how they will affect you,
how you can take advantage of them. Okay, when it
comes to financial education, Steve, you know, one of the
questions that I always ask people is how many of
you grew up in a home where you talked openly
about money? I did, right, and I know that you you.
Speaker 4 (13:16):
Did did not?
Speaker 1 (13:17):
And so I guess maybe if you hadn't gone down
this path into this business, you might learn everything from Google.
Speaker 3 (13:25):
Yeah, except when I was a kid, there was no
Google even computers. So I go back to that generation
where Okay, in math class in high school, you're not
allowed to use your calculator because you may not have
one available when you need it.
Speaker 4 (13:38):
Yeah. How does that.
Speaker 1 (13:40):
Now it's in your pocket?
Speaker 3 (13:41):
Right?
Speaker 4 (13:42):
Yeah?
Speaker 3 (13:43):
Yeah, so so no, it's it's kind of interesting that
Google did a search of their own searches to see
what states were most involved in researching various investment products,
and it's kind of prized me, but didn't surprise me.
Number one New York. Only their number one search was
(14:05):
not stocks or bonds or investing, it was real estate,
which Google included in this research, So you know, ranking
states from top to bottom, Yeah, New York was at
the top. Basically all the northeastern US states were ranked
up top, with the exception of Arizona, which is where
I think a lot of these people moved to in retirement.
(14:26):
Ohio Okay, middle of the pack forty two, bottom of
the pack Kentucky forty seven. Only three states were less
interested in researching investments than Kentucky.
Speaker 4 (14:37):
I'm not sure what it tells us other things.
Speaker 1 (14:39):
Well, I'm going to tell you this as a Kentucky
and myself, it just means we already know the answers
and we don't ah google them obviously. You know what
I think too, though, Steve, if you dig a little
deeper into this research, what's really interesting is not who's
googling more necessarily, but what they are googling when it
comes to investing real estate. Right the most searched investments
(15:00):
stocks were next ETF's gold, cryptocurrency bonds, and mutual funds,
So you know that's what people are trying to learn
more about. I'm hoping for those of you who are
listening to show you already know this stuff. You're getting
it from reputable places like You're rather than Google. But hey,
I mean you got to learn. We got to learn somehow, right, all.
Speaker 3 (15:21):
Right, I want to talk about regrets, and since you
are my co host, I'm going to narrow it down
to financial regrets because we don't have hours and hours enough.
Speaker 1 (15:30):
You don't want to hear all my regrets, that's what
you're telling me. Fine, fine, no, but.
Speaker 3 (15:35):
You know financial regrets. You've got them, I've got them.
And the number one financial regret it was starting too late.
It wasn't debt, which kind of surprised me. Starting too late,
and I get that because I had a late start
in investing myself.
Speaker 1 (15:52):
Yeah, and that's one hundred percent my number one financial
regret too. I said this on the show many times.
You know, my dad really drilled into my head for
I left for college about credit card debt. So I've
always been really, really responsible about managing debt. I understand
many of you, you know, maxed out those first credit
cards and and learned that the hard way. That's I mean,
(16:13):
many many people have done that. I just dropped mine
off at college last week. I'm hoping she doesn't learn that.
Speaker 4 (16:19):
Specifically she's read your statements.
Speaker 1 (16:23):
Yeah, no kidding, no kidding. But I started later than
I should have. And you know, my first job out
of college, I was making sixteen thousand dollars. I could
hardly afford to eat, much less to invest any money.
But I got to tell you too, it just wasn't
necessarily on my radar. Retirement sounded like three lifetimes away.
And what was more important to me at that time was,
you know, getting through the week and having a good
(16:45):
time on the weekend. And I think as then I
started to make a little more and a little more.
Really wasn't until I was in my thirties and started
focusing on this financial part of my life and financial
education did I say, okay to prioritize this. But man,
if I had started in my twenties, which is what
you had your boys do, think about how far ahead
(17:06):
we'd be.
Speaker 3 (17:07):
I loved it when I when I was actively working,
when someone that I've dealt with for years would say.
Speaker 4 (17:13):
Hey, would you mind talking to my kid.
Speaker 3 (17:15):
He's getting out of college and he's gonna get his
first real job in the basics, yes please, because nobody
did that with me. Not sure would have gotten through
this thick skull anyway, but but yeah, the first thing
I tell kids coming out of college is, all right,
you're going to work for a company that most likely
has a four oh one K plan. Just put ten
percent into it and forget that money even exists. If
(17:37):
you do that, and both of my sons did, it's incredible.
Good how fast you build up money. If you put
away five hundred bucks a month over forty years, you
get started. Let's say a twenty five and plan on
retiring at sixty five. That five hundred bucks is over
a quarter million dollars at a six percent rate to return.
(17:57):
If you wait till you're forty, you've got to start
socking away most eight hundred and fifty bucks, almost seventy
percent more money to get to the same quarter million.
I mean, getting started earlier is so much more important
than how much you put away.
Speaker 4 (18:11):
It's nice.
Speaker 1 (18:11):
Well, I think when you have a past financial regret,
it's like, how do I put that in the past
and move forward in a really healthy way. It's figuring
out a budget and you and I neither one of
us I've ever joined color coded spreadsheets, you know, but
we have kind of the fifty to thirty twenty rule,
and we're making sure that a part of what we're
bringing in every month is going towards savings. It's going
to our financial future, toward retirement. You know, you did that.
(18:34):
You started a little later, and then you took advantage
of ketchup contributions in order to get you there.
Speaker 3 (18:40):
And ketchup contributions are generally kicking in at age fifty,
depending on the plan you're talking about. But they let
you put more money away than you were able to
before fifty, like an irais and four oh one case,
and especially in four oh one case, you can really
load up once you hit fifty if you were a
little bit late of a late bloomer on investing, it's
(19:00):
a good tool.
Speaker 1 (19:01):
Any what. I also want to make this point too
about those that are coming up on retirement. These don't
necessarily have to be your mistakes that you learned from.
Ask a friend, ask someone who you know when you
trust to, is five or ten years ahead of you.
If you could go back and redo anything about that
transition to retirement or the time leading up to it,
what would you do right? What are your regrets? Listen,
(19:22):
learn from those who've gone before you so that you
don't repeat their mistakes in retirement. But I think, yeah,
you know what, there are ways to recover from these things.
The key is putting these regrets and these mistakes in
the past and moving forward in a healthy way. Here's
the all Worth advice. If you have a financial of
a qualified financial advisor, ask them what regrets will I
have if I don't have this financial plan and work
(19:43):
with you on it and stick with it. Coming up
next an inspirational story how a local man got himself
out of a mountain of debt and the lesson he
has for you. You're listening to Simply Money, presented by
all Worth Financial here in fifty five krs the talk
station too Simply Money, because I'm all Worth Financial, I
mean me Wagner along with Steve Ruby. We can throw
(20:05):
statistics at you, and we can tell you all kinds
of stories about people who have gotten themselves out of
debt and it can just seem like, well, that worked
for them, but it's not going to work for me. Well,
tonight we are sharing a personal story for those of
you who think you can't make it happen. Our good
friend Brit Scarse. We've known Britt for years. He's our
credit expert here on the show. He gives amazing advice,
(20:28):
as he has been for years about things that you
need to know and understand about your credit. But this
is a guy who knows where he's coming from when
he tells you these things, because well, Brit, to be frank,
you made some mistakes a long time ago.
Speaker 2 (20:44):
I sure did you know? I had great parents and
great teachers, you know, growing up? But you know, I
really never had anyone really teach me about money. And
I think a lot of us can say that that
we really didn't have anyone that truly just kind of,
you know, walked us through budgeting and how money works
(21:06):
and how credit works, and you know, you know, how
to budget and things of that nature. So basically, when
I got out of school, I pretty much the financial world,
and you know, the pool of the culture, you know,
to be a spend thrift and kind of just get
whatever you want, do whatever feels good. You know, that
(21:26):
kind of culture pool just kind of sucks you in
if you've had no one really teach you, you know,
kind of the proper way to manage money and budget.
Speaker 1 (21:36):
So and for you, it started with the truck. Right
there was a car that you always wanted, you could
buy that, and then it went from there.
Speaker 2 (21:45):
Yeah, I went to hang out with my buddy one
day and he had a new car. And of course,
you know, if you're a young guy in your early
twenties and your buddy gets a new.
Speaker 1 (21:53):
Car, well do you want too?
Speaker 2 (21:56):
Well, yeah, so I went and found a way to
get myself an auto and and got myself a truck,
and and you know, got myself a car loan. Well
that got my That got me some credit. And you know,
once you establish some credit, it's amazing what the credit
bureaus will do. They're so friendly and they're so nice.
(22:16):
They start to sell they start to sell your name, uh,
in your contact information to all kinds of other people
that want to sell you more debt. Once you have
some debt and so you'll.
Speaker 1 (22:28):
Get it kind of and they have this credit card
and that credit card. Would you do sign up for
all of them?
Speaker 2 (22:34):
Well? Yeah, I mean they would send me, you know,
an offer in the mail and said that you know,
if you get this, if you apply for this visa card,
there's three thousand dollars out there. Well I didn't believe them,
so I signed up for it. They gave it to me.
And guess what I just started. You know, I had
to get accessories from my truck and you know, and
and of course from every little emergency. It's so easy
(22:54):
to just kind of put it on a credit card, right. Uh.
You know, I like to like in the uh, the
ability of you know, to get into debt kind of
like the story that they always tell about cooking frogs.
You know, if you take a live frog and try
to put it into a boiling water pot of water.
You know it'll jump out immediately because they could tell
it's going to be killed right well, you know if
(23:15):
but if you put it in cold water and you know,
put it on the stove and slowly turn the heat
up before it knows that it's cooked, and that's exactly
I know that's gross, but that is exactly how it
is with us with debt. You know, the easy monthly
payments are very easy until you have so many of
them that they're not easy anymore. And that's what happened
(23:35):
with me, is you know, I started accumulating more and
more cards started to uh, you know, the monthly payments
were easy until they weren't. And if you're ever lonely
and feel that no one cares, just miss a few
payments on your credit card or your.
Speaker 1 (23:51):
Car, and all of a sudden, everybody's reaching out, right,
So if you could, thinking back, talk about your low
point when you decided this is out of control, paint
that picture for us.
Speaker 2 (24:07):
Well when I truly you know what ended up happening.
You know, I bought a truck, as you said, and
then my I went to hang out with my friend
again one day and he had traded his other car
in for one of those Burretta gtz's back in the
early nineteen nineties, and I thought that was so cool.
So of course I had to go trade that in,
you know, for for a one for myself. And of
(24:28):
course it came with a you know, huge car payment,
and it was just a stupid move, you know, but
it was it was impulsive. And you know, I think
when when you know, when the REPO guy came to
get that car because I had, you know, had some
interruptions in my income and couldn't afford the month of
payments anymore. Well, that was pretty much my signal that
you know, hey, you're you're busted, you know, you.
Speaker 1 (24:48):
You really you no longer have a car.
Speaker 2 (24:51):
Yeah, you don't have a car, and uh, you know,
you got all these people you know wanting to uh
wanted to know when the next payment's coming or when
you're going to to pay them in full. So that
was that was the lowest point, you know, And when
you have to go from driving you know, a new car,
you know as a young guy, to you know, a
beater car with a dent in the door, that eventually
(25:12):
the reverse went out of and I couldn't even afford
to fix it, so I just kept driving it forward
and everywhere.
Speaker 4 (25:17):
Oh my gosh, how was that broke?
Speaker 1 (25:22):
So clearly a huge swing, right, you went from all
these nice new things to then a beater. And I
think there's there's an obvious mind shift that has to
happen in between there. And I think for so many
people it's just like it feels like the ditch is
too deep. I've just dug myself in too much here.
There's no way I can possibly get out of it.
(25:44):
Sounds like though you were pretty deep in your car
had been repossessed, Then how do you get out?
Speaker 2 (25:51):
Yeah, well, you know, you end up reassessing your life,
you know, and you know, you either decide to stay
down and just be in complete financial ruin forever, or
you you know, you decide to you know, take some
action and start learning about money and start figuring out how,
you know, to increase your income and find ways to uh,
(26:11):
you know, just figure out ways to kind of get
your head above water. And you know, you've got to
kind of build the four walls around yourself, you know, food, shelter,
basic transportation, and clothing. You know, and you've got to
just do your best to kind of ignore all the negative.
And you know, you're not a bad person because you
have debt and because you messed up. And you also
(26:33):
need to understand that this is temporary. This isn't forever.
This you're not ruined forever because you make mistakes and maybe,
you know, maybe you have a lot of debt, maybe
you have a lot of issues. But you know, what
you can do is you can reassess everything you can.
You can list everything that you owe, and you know,
start making agreements with your creditors, start to settle accounts,
(26:55):
start to you know, find ways to make more money.
You know, sometimes we get kind of down and we like,
oh my gosh, and you know, it's it's harder to
be creative. But you know, that's when you have to
stop adding new debt and you have to start doing
your best to create as much income as you can.
And you just have to you know, they say, how
do you how do you need an elephant? You know,
(27:16):
one bite at a time, right, So you just simply
have to start somewhere. You know, the debt snowball is
referenced a lot. That's what I utilized and you just simply,
you know, pay your smallest debts first, settle them up.
A lot of them will accept fifty cents on the dollar,
you know, if you call them up and talk nicely
to them and say, hey, I don't have all this,
(27:37):
but I can, I can pay you this much. Well,
you settle for that about and you know, you do
it one at a time, and then once you clear
your debt. At that point, you know, I didn't start
worrying about my uh. You know a lot of people
have this fear about their credit score. You know, they're like,
oh my gosh, this is you know, my credit score
is so important. I got to get my credit score up.
I got to get a credit score up. Well, you
(27:57):
don't need to be worried about your credit score while
you're you know, knee deep in the debt, trying to
get yourself cleared of the debt an open heart yes,
like have an open art surgery and saying okay, I
want to run a marathon you know the day after,
I mean, you can't really do that. You have to
kind of, you know, first heal the problem, get the
debt cleared, and then you can re establish.
Speaker 1 (28:19):
Which is how long did it take you. How long
did it take you to get out of the debt
to turn things around?
Speaker 2 (28:26):
It took about two years. And you know, once I
was able to kind of get things cleared, then at
that point I was able to what I ended up
having to eventually find a way to finance another car. Actually,
obviously I was much more reasonable with with the with
the car option, and I had to pay an interest
(28:49):
rate on that car. Loan on the car that I
got had to pay twenty five percent interest, So you know,
I had, you know, and I know what kind of
humiliation you know goes with you know, having to go
and try to you know, rent an apartment when you
have bad credit, buy a car when you have bad credit,
or just in general fun function in the financial world
(29:10):
with bad credit. It's it's very humiliating, and a lot
of people treat you very, you know, very in a
very humiliating way. A lot of them are not nice.
And I know there's not supposed to be discrimination and
that sort of thing, but if you've ever been in
that situation, you know what I've talked about people.
Speaker 1 (29:28):
Right right who feels like I can't it's too much,
you know, Britt, Thank you for sharing your story and
being so vulnerable to say this is how it felt,
this is what happened to me. And also it took
me two years, but I did turn it around. And
I think the key here is for anyone to understand
you can also turn it around. Brit Scares, our credit expert.
(29:49):
You're listening to Simply Money present of my all Worth
Financial here in fifty five KRC the coxation. You're listening
to Simply Money presented by all Worth Financial. I mean
me Wagner along with Steve Sprovac. Do you have a
financial question you'd like a little help with. 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
(30:11):
your question. It's coming straight to us and straight ahead.
For those of you who have enough money to truly
kind of yolo, you only live once, how you can
really do that with your money? I think for some
of us this is going to be eye opening, but
we'll get to that in a few minutes. You know,
I think for do it yourselfers, I've met many through
the years who I mean just really have it nailed down,
(30:32):
buttoned up all the things. But one of the kind
of pains of doing it yourself is you're going to
have to be on top of all the legislation. Right,
things change in Washington that can affect our retirement. So
tonight we have some reminders of some of those things.
Or maybe you've just never caught these before.
Speaker 3 (30:49):
Yeah, and a lot of these changes, and they're good.
Changes are in ROTH I, RAIS and WROTH. For one case,
if you're not sure the rule, check with your accountant.
I just want to get that.
Speaker 4 (31:00):
Out of the way.
Speaker 3 (31:01):
But if you say to yourself, wait, that doesn't make
a lot of sense, it's probably the rule because the government.
Speaker 4 (31:05):
Set it up that way. Hey, you know.
Speaker 3 (31:07):
But once you realize what the incentive is between behind
the government making these changes, it starts to add up,
because the government wants.
Speaker 4 (31:16):
To get your tax dollars today, not down the road.
Speaker 3 (31:20):
When you put money in a traditional four oh one
K or a traditional IRA, this is pre tax money.
You're deducting the amount it's like you never earned it
that you're putting into the plan, and then when you
retire and start drawing that money out, you pay tax
on it. At that point you defer your taxes in
a ROTH, whether it's a four to oh one k
or a roth ira. In a wroth four oh one k,
(31:43):
it's after tax money. You pay tax on it because
you earn the money, but when it comes out down
the road, it's a freebie unless the law changes, which
I will never rule out. But that's the way it's
set up. And that's kind of nice. Is now that
wroth four oh one k are the same as roth
irays in that you don't have to do required minimum
(32:06):
distributions and you can make after tax contributions and pull
the money out whenever you want to down the road,
and under current law, not pay any tax on the
distributions if it's been in there five years and you're
over fifty nine and a half.
Speaker 1 (32:20):
Well, And I remember the first time it dawned on
me that the rules were different right for the wroth
rogae and the roth ira as far as require minium distributions.
I'm like, this makes zero sense. This makes zero sense.
You've already paid taxes on it, then how can Uncle
Sam tell you you've got to take rm ds on it.
I like this change, This is a good change for everyone.
(32:41):
This is an interesting one too. This is a four
toh one k catchup contribution. So for those of you
who are high earners, and this is at the level
of you make one hundred and forty five thousand dollars
or more, those ketchup contributions go into wroth accounts, not
traditional accounts. So you pay the taxes on those ketchup
contributions now rather than later.
Speaker 3 (33:01):
Here again, it's a government being short sighted. We want
to tax that money now, and we'll give you a
breakdown the.
Speaker 4 (33:07):
Road when somebody else is in office. But that's the
way it is.
Speaker 3 (33:10):
So, Yeah, if you're going to load up like a
lot of people do and do that catch up provision
and put more money away after you turn fifty than
you had previously been allowed to, guess what it has
to now go into your roth four to oh one K.
To me, that's not a negative that it has to
go in there. Some people may look at it that
way because they don't get the tax break today, but
(33:31):
you know what, someday down the road, and I'm in
this boat now, also, you're going to want to buy
a new car or spend money on a substantial vacation
or something like that, and you're going to say, yeah,
I'm going to get killed in taxes by taking this
out of my traditional IRA or traditional four oh one k.
Speaker 4 (33:47):
If you take it out of the ROTH, it's a freebee.
Speaker 3 (33:49):
Again as long as it's been there five years and
you're over fifty nine and a half. But free money
coming out of a retirement account is a lot better
than tax money.
Speaker 1 (33:58):
Here's something that's a mess, so much confusion out of
it when it comes to the irs, right, inherited iras.
We've just been all over the place with this. Usually
it's easier, right if you're the spouse, there's less rules
around that. Well, if you happen to be an older
spouse and your younger spouse, say ten years younger, ends
(34:18):
up predeceasing you, and then you inherit that IRA, you
don't have to take rmds on it. You essentially assume
the age of that person when they died when you
take over that account on that particular account, and then
you don't assume the RMD age until they would have
gotten to that exact age. You know, all of this
is just as clear as mud.
Speaker 3 (34:38):
Yeah, yeah, But here's where if I'm driving in my
car listening to the radio saying this is really important,
I got to pay attention. You just lost me because
these are complicated rules.
Speaker 4 (34:48):
Because the government set them up that way.
Speaker 3 (34:51):
So yeah, if your spouse unfortunately passed away, just check
with your account and run a Google search and say,
here are our ages. They're using a different set of tables.
Is what it boils down to. It's to your advantage.
You can take out less money as a requirement. You
may need more anyway, but if you're just trying to
keep the distributions at the absolute lowest amount, well to
(35:13):
stay within the law and not get penalized. It's going
to be a lesser amount with a new change, so
that's a good thing. But if you want to know
the exact amount, call a custodian, explain to them what
the situation is that eight hundred number on your statement,
and somebody there I'll be able to tell you what
your required minimum distribution is.
Speaker 1 (35:29):
Here's the all Worth advice. Listen, this is complicated. We
recommend finding a fiduciary advisor to help you navigate through this,
or a CPA so you don't spend your days trying
to figure this stuff out on your own. Washington never
makes sense and things change apparently sometimes on a dime.
Coming up next a segment dedicated to those of you
who have done well and are awesome savers but maybe
(35:51):
a little scared to spend. We'll tell you how to
have a little fun with that. You're listening to Simply Money,
presented by all Worth Financial here on fifty five KRC,
the talk station. You're listening to Simply Money if somebody
all Worth Financial, I mean you Wagner along with Steve Sprovac.
Every once in a while you run up into against
someone who has just done a really good job, right.
(36:13):
They've made good money, they have saved well, they have
prioritized retirement, and they get to retirement and it's just
like they can't even spend it well.
Speaker 3 (36:22):
I've always said it's really tough, as especially as an advisor,
to turn a saver into a spender. If you've got
great savings habits, you're not going to go out and
start blowing money just because you're retired now you're worried
about running out of money, and you may even be
more frugal. But I'll tell you what, as a recent retiree,
spend the money, especially when it's on personal relationships, because
(36:45):
when life got busy, you raised your kids, send them
to college, got busy in your career, you tend to
lose touch with some of the people that were important
to you earlier in life. And one of the nicest
things I've been able to do is just, you know,
just bring those people back in and allow myself to
be part of their lives.
Speaker 4 (37:04):
And sometimes that takes money. That's okay, that's what.
Speaker 3 (37:07):
Money is a tool for doing what you want to
do in life.
Speaker 4 (37:10):
That's it.
Speaker 1 (37:11):
I think of a woman who I was recently talking to.
We were trying to figure out what her expenses are
on a monthly basis, and she said, you know what,
Every Friday, my two kids and my six grandkids, like,
we all get together for dinner. And she says, sometimes
I cook, sometimes I don't feel like cooking, and I
just want to take them out and I treat. And
she said that gives me more joy than just about
anything I can do with my money, you know. And
(37:33):
so if you're having trouble spending money, sometimes it's just
spending it on yourself, and you might get more joy
out of either spending it on your loved ones or
maybe a charity. Maybe you just donate generously and that's
how you spend a little bit of money, but you
get to see maybe the fruits of that while you're
still here.
Speaker 4 (37:53):
You know, if you've been a good saver, you probably budget.
Speaker 3 (37:56):
And if you budget, it's okay to set aside ten
percent for charity, for family relationships, for old friendships that
you want to rekindle, It's okay to spend that money
because that's important. A couple of years ago, we've got
two sons that are grown, both married and grandkids, and
one lives in Phoenix.
Speaker 4 (38:14):
The oh that lives in Michigan.
Speaker 3 (38:15):
We said, we're going to spend some money and we're
going to get all of us together because I don't
take anything for granted anymore. On my health, their health,
everybody's health. Accidents happen, life gets in the way, and
I'm going to go ahead and spring for a family
get together. There's a lot of money, but you know what,
everybody still talks about that two years later.
Speaker 1 (38:33):
Yeah, sometimes money, when you spend on experiences, can be
worth It's absolutely price question priceless. Yeah, thanks for listening.
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five krs. The talk station
Tonight, we're getting into the difference between someone who focuses
on your investments and someone who focuses on your financial plan.
We are fixing those past financial regrets and some changes
in retirement savings rules that could affect you. You're listening
to simply when you presented by all Worth Financial Ammi
Wagner along with Steve sprovac in for Steve Ruby, I
(00:29):
think and I'm sure you would agree. And actually there's
all kinds of research out there about this, Steve, that
the financial services industry has a bit of a reputation.
Speaker 2 (00:37):
You know.
Speaker 1 (00:38):
Oh it's all you got your Bernie Madoffs out there,
your you know, myriad of versions of local Bernie Madoffs,
and people are like, oh, I don't know. You know,
I've been putting this. I've been saving this money for
so long. It's coming out of my paychecks. It's been
so hard. Who can I trust? And there is a
difference between the kinds of people who try to present
(01:00):
themselves I would say in a very similar way, but
actually end up being very different.
Speaker 3 (01:04):
Well, you know, the financial services industry only has itself
to blame any time any regulation proposals are made. Give
you an example, a couple of years ago, there was
a proposal to basically require all both commission and noncommission
advisors to become fiduciaries to work in the client's best interest.
Speaker 4 (01:25):
Sounds like a gimme.
Speaker 1 (01:28):
Yeah.
Speaker 3 (01:28):
There was a huge lobby, mainly from the big brokerage
firms out there saying no, no, we're not going to
put up with that, and it was It should have
been blasted all over the media that hey, why do
you have a problem with this? And yet it wasn't.
But you know that's the problem.
Speaker 1 (01:45):
Movie We talked about it here, but yeah, sure we do.
Speaker 4 (01:48):
Yeah.
Speaker 3 (01:48):
But it's like you can call yourself whatever you want
Beverly Hillbillies. Jethro was a sanitation engineer. He wasn't a
garbage man. I actually saw a business card years ago
from somebody who sold a financial product to the person
sitting in my office, and his soon to be former
advisor listed himself as a financial engineer.
Speaker 1 (02:10):
What does that mean engineer?
Speaker 4 (02:12):
Yeah, exactly.
Speaker 3 (02:14):
So you know, I get why people are confused, but
you really just have to ask a few questions and
you could very quickly figure out, Okay, is this guy
working in my best interest or his own?
Speaker 4 (02:29):
Best interest.
Speaker 1 (02:30):
Yeah, And I think also part of this becomes what's
your focus? Right when you're looking to partner with someone,
what are you hoping to get out of that relationship?
Because some people are focused only on investments, right, how
can work? Yeah? What can you put in my investments?
Speaker 3 (02:46):
In? Was?
Speaker 1 (02:47):
That performance is going to look like? How much can
you get me? You know, if it's not what they
think that's going to be, they'll jump around, they'll jump around,
they'll jump around. And I think there are people out
there that really sell themselves based on the investments. Here's
what we've got, Here's how much I think we can
get you. And if that's what you're looking for, great,
ask the right kinds of questions to find those kinds
(03:09):
of people. But hey, I really feel like, deep down
in my bones that for those of you who are
looking for a long term partnership, not only is it
about those investment return that's a piece of the puzzle,
but it's much bigger than that. You should have someone
who's focusing on your financial plan, which is a lot
more holistic view of your financial life.
Speaker 4 (03:32):
Yeah.
Speaker 3 (03:32):
I mean, we don't want to blame the investor for
when a relationship goes wrong. Performance is important. I mean,
that's why you're you're investing to grow your money. But
if performances you're number one, two, and three priorities. And
you sit down with an investment advisor, financial consultant, whatever
they happen to be calling themselves at that day, who says, yeah,
(03:54):
performance is why you're here. Performances why I'm here. Let
me explain our system and why we're better than everybody else.
That should be a big old red flag. You know,
if the advisor is putting performances number one, they're going
to hit a bad streak. You know, anytime somebody does
substantially better than someone else in our business over a
(04:17):
short period of time, it comes back to haunt them
because they're.
Speaker 4 (04:19):
Just in more volatile investments.
Speaker 3 (04:21):
And when the run is good, it can be great,
but everything turns around it at some point. And I've
always looked for trying to be as close to a
straight line on performance as possible. And that means we're
not gonna We're gonna underperform during the good years, but
maybe we'll do a little bit better.
Speaker 4 (04:38):
In the down years.
Speaker 3 (04:39):
And you know, what you want is less excitement in
your in your investments at least that's what I want,
and over time my clients would be the type of
people who are also looking for that. The ones that
were strictly about performance, they would fall by the wayside.
And that's why, over the years I tried to weed
them out before they started to work with me, because
(05:01):
it's not going to be a good, healthy relationship ten
or twenty.
Speaker 4 (05:05):
Years down the road.
Speaker 1 (05:06):
The conversation that I always have when someone comes and
talks to me is, yes, the investment piece is a
part of it, but it's about one fifth of it.
The retirement plan, which tells us a lot about what
we need our investments to do, how we need our
investments to perform. That's also part of it. A state
planning as part of it. Tax planning is part of it,
(05:27):
in making sure you've got the proper insurance. All five
of those pieces of this really have to work together well.
So you could be focused only on your investments and
think this is going to get me to and through retirement,
and I think you're dropping some major balls. I had
a woman in my office yesterday who said, explain to
me how this works. Her husband had passed away. She
was just overwhelmed by everything to do with our financial lives.
(05:51):
And she said, do I need a separate estate planning person,
a separate CPA, a separate I said, no, we can
actually help you with all of that here. Just the
look of Leef on her face that there was like
one point person that can help her with all these
things was huge. And I think there's a lot of
value in that. So I'm not saying, hey, you know
these investment advisors are these people that focus only on
(06:12):
your investments are bad. I think you have to go
into these meetings understanding what you need out of them.
You're listening to simply money presented by all Worth Financial
Imami Wagner along with Steve Sprovac in a very very
confusing industry that's trying to help you with your money.
There's just a lot of different kinds of people with
different titles, different jobs, and we're helping you kind of
(06:35):
sift through that to figure out what works best for you.
Speaker 3 (06:38):
Yeah, and I'm going to break it into two very
simple pieces here. If you're working with a fiduciary, somebody
who's working in your best interest, not necessarily their own,
or if you're not working with a fiduciary. If you
see these very important letters after the investment advisor, financial
consultants name working with a fiduciary by definition a certified
(07:03):
financial planner. Don't get me started out on how tough
that designation is to get, because I didn't get that
at the beginning of my career. I got that towards
the end of my career, and it was like going
back to get a master's degree in college, but I
got it. And a certified financial planner is going to
be a fiduciary, which it's not just.
Speaker 4 (07:23):
A feel good yet.
Speaker 3 (07:25):
This is a good guy, this is a good woman
who's going to work in my best Legally, they're required
to work in your best interest as a fiduciary. Same
with a chartered financial consultant. Very similar designation, Very tough
designation to get, and you're in good hands at least
from a fiduciary standpoint. If you're working with those types
(07:46):
of people any other designations that don't include those two,
You've got to ask some specific questions and don't feel
uncomfortable about asking, Hey, do you earn a commission on
this product?
Speaker 4 (07:57):
Are you a fiduciary?
Speaker 3 (07:59):
Point blancom it's okay, it's acceptable, and the person on
the other side of the table should be expecting those
questions from you.
Speaker 1 (08:06):
You know what makes me really angry though, I think
the word fiduciary now has become kind of a buzzword
in our industry, right, just to make things more confusing
for investors who are trying to find someone who they
can trust. Someone was in my office a couple of
weeks ago and we were talking about right fiduciary and
what that means, and she said, well, yeah, I my
former advisor was also a fiduciary, and here's the annuities
(08:30):
that I have. Yeah, And I thought, okay, this is
so confusing for the average person. But someone who is
selling you an annuity is actually working on a different standard.
The only thing that they have to prove is does
this make sense for you?
Speaker 2 (08:46):
Right?
Speaker 1 (08:46):
Is there a suitability? You know, that's all they have
to figure out. Right, Can we say, hey, this may
not be the best thing, but it works for them.
And they're very, very different ways that someone could work
with you. And it's so weird, I think, because if
you're going to a doctor or a lawyer or anyone
that you're paying to take care of you. Of course
(09:08):
they're going to tell you what's in your best interests, right,
So it seems crazy then to work with someone who
may not be telling you, oh, there's an eight percent
commission on this product. And so if you think you're
putting two hundred thousand dollars in it, we're actually going
to whack eight percent off the top. You're not going
to maybe notice it unless you're paying really close attention.
(09:29):
And that's how much is actually going into this annuity
from the beginning. Now, if that annuity is the right
fit for you, great, but I want to make sure
you have all the information before you make that decision.
Speaker 3 (09:38):
Well, and I've got a question whether or not it
is the right decision or if there are sixteen thousand
reasons at an eight percent commission for that person to
sell that particular financial product to you. It's not unusual
for the advisor to wear two hats, a fiduciary hat
and a non fiduciary hat. And as an advisor, as
(10:00):
a client, how do you know which one they're wearing
when they're talking to you. I mean, that's why you
have to ask these questions. I think once you get
in the financial planning. You're starting to get into more holistic.
What do I need other than performance out of this
relationship so that I can live my life the way
I want to in retirement. And that's that's where you
(10:21):
get into a financial plan. And yeah, you can run
them yourselves. You can buy the software yourself, or you
can have somebody else do it for you. And there's
always room.
Speaker 4 (10:29):
For do it yourselfers.
Speaker 3 (10:30):
But you know, make sure that the software includes things
like inflation. Yeah, that's kind of important. Includes things like
is nursing home costs included in whether or not I
run out of money? Well, a good plan if it
doesn't include it in the basic plan will have a
module where you can plug that in.
Speaker 4 (10:48):
You know, these are things that I as a current
retiree who occasionally comes in.
Speaker 1 (10:53):
That to go on the air and someone you try
to retire, but we will let you, let making you
come back.
Speaker 3 (11:00):
You pulled me right back in, but but no, it's
these are things that Okay, I did my plan probably
half a dozen times in the last year of my
working life, and every year from this point on, I
will be updating it with my advisor and making sure.
Speaker 4 (11:16):
Okay, here's where I thought I was going to be.
Speaker 3 (11:18):
Am I ahead or behind there? And if I'm behind,
what do I need to fix it? If I'm ahead,
why did I get ahead? Should I expect it to
pull back? And am I still in good shape when
we recast the plan with current accurate figures over the
remainder of my expected life span? I mean, these are
things that once the answer is yes, which I sure
(11:40):
seck hope it is because it hasn't been a full
year yet. But you know what, once once we recast
the plan, I stopped thinking and worrying, and I'm a warrier.
These are things that allow me to live my life
much more comfortably in retirement.
Speaker 1 (11:54):
As I'm listening to I'm also thinking, Yeah, what you're
saying is a relationship. It's a long term relationship. If
it's not someone looking at your investments, asking you a
few questions, making a recommendation once and then forever disappearing
out of your life. This is a long term, ongoing relationship.
You know, it starts with making that plan, but plans change, right,
things change in our lives and kind of revisiting that
(12:15):
every year to make sure that you're still on course.
And of course, yeah, there's a lot that's involved with that.
Here's the all Worth advice, the big question to ask
whether you want to work with someone who serves your
best interests or theirs. Coming up next, and you want
to have a past financial regret, yep, I do. We're
gonna tell you how you can fix some of those.
You're listening to Simply Money presented by all Worth Financial
(12:35):
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 Sprovak. If you can't listen
to our show every night, you don't have to miss
a thing. We've got a daily podcast where you search
Simply Money on the iheartop or wherever you get your podcasts.
(12:57):
Coming up at six point forty three, A breakdown of
chain is in retirement savings rules, how they will affect you,
how you can take advantage of them. Okay, when it
comes to financial education, Steve, you know, one of the
questions that I always ask people is how many of
you grew up in a home where you talked openly
about money? I did, right, and I know that you you.
Speaker 4 (13:16):
Did did not?
Speaker 1 (13:17):
And so I guess maybe if you hadn't gone down
this path into this business, you might learn everything from Google.
Speaker 3 (13:25):
Yeah, except when I was a kid, there was no
Google even computers. So I go back to that generation
where Okay, in math class in high school, you're not
allowed to use your calculator because you may not have
one available when you need it.
Speaker 4 (13:38):
Yeah. How does that.
Speaker 1 (13:40):
Now it's in your pocket?
Speaker 3 (13:41):
Right?
Speaker 4 (13:42):
Yeah?
Speaker 3 (13:43):
Yeah, so so no, it's it's kind of interesting that
Google did a search of their own searches to see
what states were most involved in researching various investment products,
and it's kind of prized me, but didn't surprise me.
Number one New York. Only their number one search was
(14:05):
not stocks or bonds or investing, it was real estate,
which Google included in this research, So you know, ranking
states from top to bottom, Yeah, New York was at
the top. Basically all the northeastern US states were ranked
up top, with the exception of Arizona, which is where
I think a lot of these people moved to in retirement.
(14:26):
Ohio Okay, middle of the pack forty two, bottom of
the pack Kentucky forty seven. Only three states were less
interested in researching investments than Kentucky.
Speaker 4 (14:37):
I'm not sure what it tells us other things.
Speaker 1 (14:39):
Well, I'm going to tell you this as a Kentucky
and myself, it just means we already know the answers
and we don't ah google them obviously. You know what
I think too, though, Steve, if you dig a little
deeper into this research, what's really interesting is not who's
googling more necessarily, but what they are googling when it
comes to investing real estate. Right the most searched investments
(15:00):
stocks were next ETF's gold, cryptocurrency bonds, and mutual funds,
So you know that's what people are trying to learn
more about. I'm hoping for those of you who are
listening to show you already know this stuff. You're getting
it from reputable places like You're rather than Google. But hey,
I mean you got to learn. We got to learn somehow, right, all.
Speaker 3 (15:21):
Right, I want to talk about regrets, and since you
are my co host, I'm going to narrow it down
to financial regrets because we don't have hours and hours enough.
Speaker 1 (15:30):
You don't want to hear all my regrets, that's what
you're telling me. Fine, fine, no, but.
Speaker 3 (15:35):
You know financial regrets. You've got them, I've got them.
And the number one financial regret it was starting too late.
It wasn't debt, which kind of surprised me. Starting too late,
and I get that because I had a late start
in investing myself.
Speaker 1 (15:52):
Yeah, and that's one hundred percent my number one financial
regret too. I said this on the show many times.
You know, my dad really drilled into my head for
I left for college about credit card debt. So I've
always been really, really responsible about managing debt. I understand
many of you, you know, maxed out those first credit
cards and and learned that the hard way. That's I mean,
(16:13):
many many people have done that. I just dropped mine
off at college last week. I'm hoping she doesn't learn that.
Speaker 4 (16:19):
Specifically she's read your statements.
Speaker 1 (16:23):
Yeah, no kidding, no kidding. But I started later than
I should have. And you know, my first job out
of college, I was making sixteen thousand dollars. I could
hardly afford to eat, much less to invest any money.
But I got to tell you too, it just wasn't
necessarily on my radar. Retirement sounded like three lifetimes away.
And what was more important to me at that time was,
you know, getting through the week and having a good
(16:45):
time on the weekend. And I think as then I
started to make a little more and a little more.
Really wasn't until I was in my thirties and started
focusing on this financial part of my life and financial
education did I say, okay to prioritize this. But man,
if I had started in my twenties, which is what
you had your boys do, think about how far ahead
(17:06):
we'd be.
Speaker 3 (17:07):
I loved it when I when I was actively working,
when someone that I've dealt with for years would say.
Speaker 4 (17:13):
Hey, would you mind talking to my kid.
Speaker 3 (17:15):
He's getting out of college and he's gonna get his
first real job in the basics, yes please, because nobody
did that with me. Not sure would have gotten through
this thick skull anyway, but but yeah, the first thing
I tell kids coming out of college is, all right,
you're going to work for a company that most likely
has a four oh one K plan. Just put ten
percent into it and forget that money even exists. If
(17:37):
you do that, and both of my sons did, it's incredible.
Good how fast you build up money. If you put
away five hundred bucks a month over forty years, you
get started. Let's say a twenty five and plan on
retiring at sixty five. That five hundred bucks is over
a quarter million dollars at a six percent rate to return.
(17:57):
If you wait till you're forty, you've got to start
socking away most eight hundred and fifty bucks, almost seventy
percent more money to get to the same quarter million.
I mean, getting started earlier is so much more important
than how much you put away.
Speaker 4 (18:11):
It's nice.
Speaker 1 (18:11):
Well, I think when you have a past financial regret,
it's like, how do I put that in the past
and move forward in a really healthy way. It's figuring
out a budget and you and I neither one of
us I've ever joined color coded spreadsheets, you know, but
we have kind of the fifty to thirty twenty rule,
and we're making sure that a part of what we're
bringing in every month is going towards savings. It's going
to our financial future, toward retirement. You know, you did that.
(18:34):
You started a little later, and then you took advantage
of ketchup contributions in order to get you there.
Speaker 3 (18:40):
And ketchup contributions are generally kicking in at age fifty,
depending on the plan you're talking about. But they let
you put more money away than you were able to
before fifty, like an irais and four oh one case,
and especially in four oh one case, you can really
load up once you hit fifty if you were a
little bit late of a late bloomer on investing, it's
(19:00):
a good tool.
Speaker 1 (19:01):
Any what. I also want to make this point too
about those that are coming up on retirement. These don't
necessarily have to be your mistakes that you learned from.
Ask a friend, ask someone who you know when you
trust to, is five or ten years ahead of you.
If you could go back and redo anything about that
transition to retirement or the time leading up to it,
what would you do right? What are your regrets? Listen,
(19:22):
learn from those who've gone before you so that you
don't repeat their mistakes in retirement. But I think, yeah,
you know what, there are ways to recover from these things.
The key is putting these regrets and these mistakes in
the past and moving forward in a healthy way. Here's
the all Worth advice. If you have a financial of
a qualified financial advisor, ask them what regrets will I
have if I don't have this financial plan and work
(19:43):
with you on it and stick with it. Coming up
next an inspirational story how a local man got himself
out of a mountain of debt and the lesson he
has for you. You're listening to Simply Money, presented by
all Worth Financial here in fifty five krs the talk
station too Simply Money, because I'm all Worth Financial, I
mean me Wagner along with Steve Ruby. We can throw
(20:05):
statistics at you, and we can tell you all kinds
of stories about people who have gotten themselves out of
debt and it can just seem like, well, that worked
for them, but it's not going to work for me. Well,
tonight we are sharing a personal story for those of
you who think you can't make it happen. Our good
friend Brit Scarse. We've known Britt for years. He's our
credit expert here on the show. He gives amazing advice,
(20:28):
as he has been for years about things that you
need to know and understand about your credit. But this
is a guy who knows where he's coming from when
he tells you these things, because well, Brit, to be frank,
you made some mistakes a long time ago.
Speaker 2 (20:44):
I sure did you know? I had great parents and
great teachers, you know, growing up? But you know, I
really never had anyone really teach me about money. And
I think a lot of us can say that that
we really didn't have anyone that truly just kind of,
you know, walked us through budgeting and how money works
(21:06):
and how credit works, and you know, you know, how
to budget and things of that nature. So basically, when
I got out of school, I pretty much the financial world,
and you know, the pool of the culture, you know,
to be a spend thrift and kind of just get
whatever you want, do whatever feels good. You know, that
(21:26):
kind of culture pool just kind of sucks you in
if you've had no one really teach you, you know,
kind of the proper way to manage money and budget.
Speaker 1 (21:36):
So and for you, it started with the truck. Right
there was a car that you always wanted, you could
buy that, and then it went from there.
Speaker 2 (21:45):
Yeah, I went to hang out with my buddy one
day and he had a new car. And of course,
you know, if you're a young guy in your early
twenties and your buddy gets a new.
Speaker 1 (21:53):
Car, well do you want too?
Speaker 2 (21:56):
Well, yeah, so I went and found a way to
get myself an auto and and got myself a truck,
and and you know, got myself a car loan. Well
that got my That got me some credit. And you know,
once you establish some credit, it's amazing what the credit
bureaus will do. They're so friendly and they're so nice.
(22:16):
They start to sell they start to sell your name, uh,
in your contact information to all kinds of other people
that want to sell you more debt. Once you have
some debt and so you'll.
Speaker 1 (22:28):
Get it kind of and they have this credit card
and that credit card. Would you do sign up for
all of them?
Speaker 2 (22:34):
Well? Yeah, I mean they would send me, you know,
an offer in the mail and said that you know,
if you get this, if you apply for this visa card,
there's three thousand dollars out there. Well I didn't believe them,
so I signed up for it. They gave it to me.
And guess what I just started. You know, I had
to get accessories from my truck and you know, and
and of course from every little emergency. It's so easy
(22:54):
to just kind of put it on a credit card, right. Uh.
You know, I like to like in the uh, the
ability of you know, to get into debt kind of
like the story that they always tell about cooking frogs.
You know, if you take a live frog and try
to put it into a boiling water pot of water.
You know it'll jump out immediately because they could tell
it's going to be killed right well, you know if
(23:15):
but if you put it in cold water and you know,
put it on the stove and slowly turn the heat
up before it knows that it's cooked, and that's exactly
I know that's gross, but that is exactly how it
is with us with debt. You know, the easy monthly
payments are very easy until you have so many of
them that they're not easy anymore. And that's what happened
(23:35):
with me, is you know, I started accumulating more and
more cards started to uh, you know, the monthly payments
were easy until they weren't. And if you're ever lonely
and feel that no one cares, just miss a few
payments on your credit card or your.
Speaker 1 (23:51):
Car, and all of a sudden, everybody's reaching out, right,
So if you could, thinking back, talk about your low
point when you decided this is out of control, paint
that picture for us.
Speaker 2 (24:07):
Well when I truly you know what ended up happening.
You know, I bought a truck, as you said, and
then my I went to hang out with my friend
again one day and he had traded his other car
in for one of those Burretta gtz's back in the
early nineteen nineties, and I thought that was so cool.
So of course I had to go trade that in,
you know, for for a one for myself. And of
(24:28):
course it came with a you know, huge car payment,
and it was just a stupid move, you know, but
it was it was impulsive. And you know, I think
when when you know, when the REPO guy came to
get that car because I had, you know, had some
interruptions in my income and couldn't afford the month of
payments anymore. Well, that was pretty much my signal that
you know, hey, you're you're busted, you know, you.
Speaker 1 (24:48):
You really you no longer have a car.
Speaker 2 (24:51):
Yeah, you don't have a car, and uh, you know,
you got all these people you know wanting to uh
wanted to know when the next payment's coming or when
you're going to to pay them in full. So that
was that was the lowest point, you know, And when
you have to go from driving you know, a new car,
you know as a young guy, to you know, a
beater car with a dent in the door, that eventually
(25:12):
the reverse went out of and I couldn't even afford
to fix it, so I just kept driving it forward
and everywhere.
Speaker 4 (25:17):
Oh my gosh, how was that broke?
Speaker 1 (25:22):
So clearly a huge swing, right, you went from all
these nice new things to then a beater. And I
think there's there's an obvious mind shift that has to
happen in between there. And I think for so many
people it's just like it feels like the ditch is
too deep. I've just dug myself in too much here.
There's no way I can possibly get out of it.
(25:44):
Sounds like though you were pretty deep in your car
had been repossessed, Then how do you get out?
Speaker 2 (25:51):
Yeah, well, you know, you end up reassessing your life,
you know, and you know, you either decide to stay
down and just be in complete financial ruin forever, or
you you know, you decide to you know, take some
action and start learning about money and start figuring out how,
you know, to increase your income and find ways to uh,
(26:11):
you know, just figure out ways to kind of get
your head above water. And you know, you've got to
kind of build the four walls around yourself, you know, food, shelter,
basic transportation, and clothing. You know, and you've got to
just do your best to kind of ignore all the negative.
And you know, you're not a bad person because you
have debt and because you messed up. And you also
(26:33):
need to understand that this is temporary. This isn't forever.
This you're not ruined forever because you make mistakes and maybe,
you know, maybe you have a lot of debt, maybe
you have a lot of issues. But you know, what
you can do is you can reassess everything you can.
You can list everything that you owe, and you know,
start making agreements with your creditors, start to settle accounts,
(26:55):
start to you know, find ways to make more money.
You know, sometimes we get kind of down and we like,
oh my gosh, and you know, it's it's harder to
be creative. But you know, that's when you have to
stop adding new debt and you have to start doing
your best to create as much income as you can.
And you just have to you know, they say, how
do you how do you need an elephant? You know,
(27:16):
one bite at a time, right, So you just simply
have to start somewhere. You know, the debt snowball is
referenced a lot. That's what I utilized and you just simply,
you know, pay your smallest debts first, settle them up.
A lot of them will accept fifty cents on the dollar,
you know, if you call them up and talk nicely
to them and say, hey, I don't have all this,
(27:37):
but I can, I can pay you this much. Well,
you settle for that about and you know, you do
it one at a time, and then once you clear
your debt. At that point, you know, I didn't start
worrying about my uh. You know a lot of people
have this fear about their credit score. You know, they're like,
oh my gosh, this is you know, my credit score
is so important. I got to get my credit score up.
I got to get a credit score up. Well, you
(27:57):
don't need to be worried about your credit score while
you're you know, knee deep in the debt, trying to
get yourself cleared of the debt an open heart yes,
like have an open art surgery and saying okay, I
want to run a marathon you know the day after,
I mean, you can't really do that. You have to
kind of, you know, first heal the problem, get the
debt cleared, and then you can re establish.
Speaker 1 (28:19):
Which is how long did it take you. How long
did it take you to get out of the debt
to turn things around?
Speaker 2 (28:26):
It took about two years. And you know, once I
was able to kind of get things cleared, then at
that point I was able to what I ended up
having to eventually find a way to finance another car. Actually,
obviously I was much more reasonable with with the with
the car option, and I had to pay an interest
(28:49):
rate on that car. Loan on the car that I
got had to pay twenty five percent interest, So you know,
I had, you know, and I know what kind of
humiliation you know goes with you know, having to go
and try to you know, rent an apartment when you
have bad credit, buy a car when you have bad credit,
or just in general fun function in the financial world
(29:10):
with bad credit. It's it's very humiliating, and a lot
of people treat you very, you know, very in a
very humiliating way. A lot of them are not nice.
And I know there's not supposed to be discrimination and
that sort of thing, but if you've ever been in
that situation, you know what I've talked about people.
Speaker 1 (29:28):
Right right who feels like I can't it's too much,
you know, Britt, Thank you for sharing your story and
being so vulnerable to say this is how it felt,
this is what happened to me. And also it took
me two years, but I did turn it around. And
I think the key here is for anyone to understand
you can also turn it around. Brit Scares, our credit expert.
(29:49):
You're listening to Simply Money present of my all Worth
Financial here in fifty five KRC the coxation. You're listening
to Simply Money presented by all Worth Financial. I mean
me Wagner along with Steve Sprovac. Do you have a
financial question you'd like a little help with. 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
(30:11):
your question. It's coming straight to us and straight ahead.
For those of you who have enough money to truly
kind of yolo, you only live once, how you can
really do that with your money? I think for some
of us this is going to be eye opening, but
we'll get to that in a few minutes. You know,
I think for do it yourselfers, I've met many through
the years who I mean just really have it nailed down,
(30:32):
buttoned up all the things. But one of the kind
of pains of doing it yourself is you're going to
have to be on top of all the legislation. Right,
things change in Washington that can affect our retirement. So
tonight we have some reminders of some of those things.
Or maybe you've just never caught these before.
Speaker 3 (30:49):
Yeah, and a lot of these changes, and they're good.
Changes are in ROTH I, RAIS and WROTH. For one case,
if you're not sure the rule, check with your accountant.
I just want to get that.
Speaker 4 (31:00):
Out of the way.
Speaker 3 (31:01):
But if you say to yourself, wait, that doesn't make
a lot of sense, it's probably the rule because the government.
Speaker 4 (31:05):
Set it up that way. Hey, you know.
Speaker 3 (31:07):
But once you realize what the incentive is between behind
the government making these changes, it starts to add up,
because the government wants.
Speaker 4 (31:16):
To get your tax dollars today, not down the road.
Speaker 3 (31:20):
When you put money in a traditional four oh one
K or a traditional IRA, this is pre tax money.
You're deducting the amount it's like you never earned it
that you're putting into the plan, and then when you
retire and start drawing that money out, you pay tax
on it. At that point you defer your taxes in
a ROTH, whether it's a four to oh one k
or a roth ira. In a wroth four oh one k,
(31:43):
it's after tax money. You pay tax on it because
you earn the money, but when it comes out down
the road, it's a freebie unless the law changes, which
I will never rule out. But that's the way it's
set up. And that's kind of nice. Is now that
wroth four oh one k are the same as roth
irays in that you don't have to do required minimum
(32:06):
distributions and you can make after tax contributions and pull
the money out whenever you want to down the road,
and under current law, not pay any tax on the
distributions if it's been in there five years and you're
over fifty nine and a half.
Speaker 1 (32:20):
Well, And I remember the first time it dawned on
me that the rules were different right for the wroth
rogae and the roth ira as far as require minium distributions.
I'm like, this makes zero sense. This makes zero sense.
You've already paid taxes on it, then how can Uncle
Sam tell you you've got to take rm ds on it.
I like this change, This is a good change for everyone.
(32:41):
This is an interesting one too. This is a four
toh one k catchup contribution. So for those of you
who are high earners, and this is at the level
of you make one hundred and forty five thousand dollars
or more, those ketchup contributions go into wroth accounts, not
traditional accounts. So you pay the taxes on those ketchup
contributions now rather than later.
Speaker 3 (33:01):
Here again, it's a government being short sighted. We want
to tax that money now, and we'll give you a
breakdown the.
Speaker 4 (33:07):
Road when somebody else is in office. But that's the
way it is.
Speaker 3 (33:10):
So, Yeah, if you're going to load up like a
lot of people do and do that catch up provision
and put more money away after you turn fifty than
you had previously been allowed to, guess what it has
to now go into your roth four to oh one K.
To me, that's not a negative that it has to
go in there. Some people may look at it that
way because they don't get the tax break today, but
(33:31):
you know what, someday down the road, and I'm in
this boat now, also, you're going to want to buy
a new car or spend money on a substantial vacation
or something like that, and you're going to say, yeah,
I'm going to get killed in taxes by taking this
out of my traditional IRA or traditional four oh one k.
Speaker 4 (33:47):
If you take it out of the ROTH, it's a freebee.
Speaker 3 (33:49):
Again as long as it's been there five years and
you're over fifty nine and a half. But free money
coming out of a retirement account is a lot better
than tax money.
Speaker 1 (33:58):
Here's something that's a mess, so much confusion out of
it when it comes to the irs, right, inherited iras.
We've just been all over the place with this. Usually
it's easier, right if you're the spouse, there's less rules
around that. Well, if you happen to be an older
spouse and your younger spouse, say ten years younger, ends
(34:18):
up predeceasing you, and then you inherit that IRA, you
don't have to take rmds on it. You essentially assume
the age of that person when they died when you
take over that account on that particular account, and then
you don't assume the RMD age until they would have
gotten to that exact age. You know, all of this
is just as clear as mud.
Speaker 3 (34:38):
Yeah, yeah, But here's where if I'm driving in my
car listening to the radio saying this is really important,
I got to pay attention. You just lost me because
these are complicated rules.
Speaker 4 (34:48):
Because the government set them up that way.
Speaker 3 (34:51):
So yeah, if your spouse unfortunately passed away, just check
with your account and run a Google search and say,
here are our ages. They're using a different set of tables.
Is what it boils down to. It's to your advantage.
You can take out less money as a requirement. You
may need more anyway, but if you're just trying to
keep the distributions at the absolute lowest amount, well to
(35:13):
stay within the law and not get penalized. It's going
to be a lesser amount with a new change, so
that's a good thing. But if you want to know
the exact amount, call a custodian, explain to them what
the situation is that eight hundred number on your statement,
and somebody there I'll be able to tell you what
your required minimum distribution is.
Speaker 1 (35:29):
Here's the all Worth advice. Listen, this is complicated. We
recommend finding a fiduciary advisor to help you navigate through this,
or a CPA so you don't spend your days trying
to figure this stuff out on your own. Washington never
makes sense and things change apparently sometimes on a dime.
Coming up next a segment dedicated to those of you
who have done well and are awesome savers but maybe
(35:51):
a little scared to spend. We'll tell you how to
have a little fun with that. You're listening to Simply Money,
presented by all Worth Financial here on fifty five KRC,
the talk station. You're listening to Simply Money if somebody
all Worth Financial, I mean you Wagner along with Steve Sprovac.
Every once in a while you run up into against
someone who has just done a really good job, right.
(36:13):
They've made good money, they have saved well, they have
prioritized retirement, and they get to retirement and it's just
like they can't even spend it well.
Speaker 3 (36:22):
I've always said it's really tough, as especially as an advisor,
to turn a saver into a spender. If you've got
great savings habits, you're not going to go out and
start blowing money just because you're retired now you're worried
about running out of money, and you may even be
more frugal. But I'll tell you what, as a recent retiree,
spend the money, especially when it's on personal relationships, because
(36:45):
when life got busy, you raised your kids, send them
to college, got busy in your career, you tend to
lose touch with some of the people that were important
to you earlier in life. And one of the nicest
things I've been able to do is just, you know,
just bring those people back in and allow myself to
be part of their lives.
Speaker 4 (37:04):
And sometimes that takes money. That's okay, that's what.
Speaker 3 (37:07):
Money is a tool for doing what you want to
do in life.
Speaker 4 (37:10):
That's it.
Speaker 1 (37:11):
I think of a woman who I was recently talking to.
We were trying to figure out what her expenses are
on a monthly basis, and she said, you know what,
Every Friday, my two kids and my six grandkids, like,
we all get together for dinner. And she says, sometimes
I cook, sometimes I don't feel like cooking, and I
just want to take them out and I treat. And
she said that gives me more joy than just about
anything I can do with my money, you know. And
(37:33):
so if you're having trouble spending money, sometimes it's just
spending it on yourself, and you might get more joy
out of either spending it on your loved ones or
maybe a charity. Maybe you just donate generously and that's
how you spend a little bit of money, but you
get to see maybe the fruits of that while you're
still here.
Speaker 4 (37:53):
You know, if you've been a good saver, you probably budget.
Speaker 3 (37:56):
And if you budget, it's okay to set aside ten
percent for charity, for family relationships, for old friendships that
you want to rekindle, It's okay to spend that money
because that's important. A couple of years ago, we've got
two sons that are grown, both married and grandkids, and
one lives in Phoenix.
Speaker 4 (38:14):
The oh that lives in Michigan.
Speaker 3 (38:15):
We said, we're going to spend some money and we're
going to get all of us together because I don't
take anything for granted anymore. On my health, their health,
everybody's health. Accidents happen, life gets in the way, and
I'm going to go ahead and spring for a family
get together. There's a lot of money, but you know what,
everybody still talks about that two years later.
Speaker 1 (38:33):
Yeah, sometimes money, when you spend on experiences, can be
worth It's absolutely price question priceless. Yeah, thanks for listening.
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five krs. The talk station
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