Ask HTM - Utilizing Roth Contributions in a Pinch, SAVE Plan for High Earners, & Buying a Home to Save Money #847 - How to Money

Episode Transcript
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Speaker 1 (00:00):
Welcome to Head of Money.

Speaker 2 (00:01):
I'm Joel and I am Matt.

Speaker 1 (00:03):
And today we're answering your listener questions.

Speaker 2 (00:24):
That's right, buddy. Happy Monday to everyone out there. We
hope you had a wonderful weekend. We've got list of
our questions to get to. This is again more we're
able to hear directly from listeners their specific financial quandaries
that they find themselves in. We've got a listener asking
about utilizing some rough contributions in a pinch. How to
go about doing that? Another listener is asking about the

(00:47):
save plan for student loans, but he's also a high earner,
so we'll discuss that. And another listener is asking about
purchasing a home in order to save money every single month.
Is that even possible? Is that something that you do?
It's something that she has heard folks talking about, so
we'll get to that one and more during this episode.

Speaker 1 (01:05):
Yeah, I don't know. It feels a different math these
days in twenty twenty four than it was in twenty eleven.

Speaker 2 (01:12):
Right, and maths, the math is broken, the matha math
Andjrol that's true. All right, We've got yeah, like you said,
a lot to get to on this one. But Matt,
before we get to that, I just wanted to quit
a bit. My dad sadly was My dad and mom
were driving in town the other day.

Speaker 1 (01:23):
They were rear ended. They're smashed by the truck in
the in the back end of their car and so
their car like shattered glass. They are okay, they were okay.
Fortunately they were okay on the way the doctor's appointment.
My mom was able to walk to her doctor's appointment.

Speaker 2 (01:36):
So what's crazy is you know how I learned about this?
My wife told me he didn't. He didn't tell me
about this.

Speaker 1 (01:42):
Yeah, so okay, our friendship still matters, it does.

Speaker 2 (01:46):
But that we talk about so many different things. I
think sometimes we forget. Yeah, but it's true. So they
got shared it with me though, and I was like, wait,
when did this happen? And she's like, no, that's why
he's driving a Jeep. Why is he driving a Jeep?

Speaker 1 (01:58):
Because it's a rental car.

Speaker 2 (01:59):
You can share that say that for some other parts.

Speaker 1 (02:01):
Will Their Toyota is being repaired, right, and so they're
that thing's being fixed up. But the thing I talked
to my dad about, and the thing that I think
most people forget is that when you're in an accident
like that. Well one, I mean, there's so many things
we could talk about about, what to do in the
aftermath of an accident, how to document things, how to
make sure that you are getting taken care of and
you're getting your car fixed in the way that it
needs to be, that you deserve.

Speaker 2 (02:22):
What you're supposed to say is immediately you just get
out of the vehicle and you just start saying, it's
my fault, it's my fault. Yeah, don't worry about it.

Speaker 1 (02:29):
Make sure you get it on video.

Speaker 2 (02:29):
So yeah, yeah, exactly, start recording me. Yeah, it's totally
my fault.

Speaker 1 (02:33):
Right, it's all good. Say, oh, no need to involve
any sort of the police here, any sort of documentation.
Yeah you don't want you know what. Just kidding obviously,
But yeah, there's a lot we can say on that.
But the one thing I feel like that almost nobody
knows about, or a lot of people have forgotten about.
And the thing I had to remind my data is
that something known as diminished value and the fact that
when your car is in an accident, the nicer, the

(02:54):
newer your car is, the more money you're gonna be
able to get from the offending insured person from that
insurance company, because not only are is the insurance company
responsible for fixing your car up and bringing you back
to the state that it was, but because of the
fact that car has now been in an accident, it
is worthless by that, just by that one metric.

Speaker 2 (03:15):
By the fact that it has been involved in IRAQ.

Speaker 1 (03:17):
That's right. So I was like looking up to figure
out for my dad, Okay, how much are you owed
from the insurance company, and there's like a there's a
calculator you can find online, there's things you can do
to kind of try to figure out. There's not a
lot out there, but there's there's a little bit at least,
And it was like, Okay, you probably deserve somewhere in
the eighteen hundred to twenty four hundred dollars range. Push
for something in this and if they try to say, oh,
we'll give you five hundred bucks, well that's clearly a

(03:38):
low ball value based on the calculations you can run.
And so it's just one of those things most people
don't think about that if you've been in a car
accident that wasn't your fault, that is a term you
need to know, you need to bring up with the
insurance company, with the agent who you're working with, so
that you can get paid for the fact that your
car is now worth less than it was before it's
I think Nebraska is the only state that maybe doesn't

(04:00):
have the minish value. In the other forty nine states,
you can ask for that and you are entitled to it.

Speaker 2 (04:04):
Yeah, that's one good reason to not live in Nebraska.
This is I'm kidding, one of the other good reasons. Kidding.
By the way, no hate all the Nebraska's out there
where they driving the Toyota.

Speaker 1 (04:14):
They were what, what's the other call? They both have toyos. Yeah, well,
yeah with a Highlander and a Prius.

Speaker 3 (04:19):
Oh I thought they used to have they used to
have a rat for yes, right, a toy I don't
think I knew that they Hey there's other Toyota's our
words that when it comes to the hybrid drive train,
I mean you're looking at gas mileage, you're looking at dependability.

Speaker 2 (04:33):
I kind of kicked myself that I don't have a
ci Na. Yeah, I've been on the ads. We've both
been on the Odyssey bandwagon now for quite a while.
But the ability to have yeah, hybrid man, I'm trying
to find a way to reduce our fuel costs. Yea,
even though we still only have one vehicle.

Speaker 1 (04:49):
Keep trying to tell you go for the EV dog,
but or a plug.

Speaker 2 (04:52):
In EV well. As prices continue to drop, Yes, that
will be something I consider, because folks are there. I
think a lot of folks are getting kind of scared
off by the idea of like, oh no, like you know,
the EV's aren't all what they're cracked up to be.
Because of that, prices are dropping, and I think there
could definitely be an opportunity there to snag some deals.
I mean there already have been massive deals, specifically with Tesla,
but then in the coming years more.

Speaker 4 (05:13):
Yeah.

Speaker 2 (05:13):
And have we talked about in China? How at their
like latest auto show or this is a few weeks ago,
I guess at this point, but they unveiled specifically is
it bid? Is the Chinese evary.

Speaker 1 (05:24):
Are kicking butt making great rides.

Speaker 2 (05:26):
Twelve to thirteen hundred miles on a single charge from an.

Speaker 1 (05:29):
EV But we're not going to see those here in
the States anytime soon.

Speaker 5 (05:32):
I know.

Speaker 2 (05:33):
But it's so messed up. Yeah, it just tells me
there's more to do with I don't know, it seems
like there's more politics involved as opposed to like doing
what's green and what's best for the earth and ultimately
what's going to make consumers the happiest of right, Oh
my gosh about you. Imagine if you had a twelve
hundred mile.

Speaker 1 (05:48):
Charge ev adoption would soar in this country if we
had inexpensive, longer range EV's. But it doesn't seem like
any politician right now wants to fight for that.

Speaker 2 (05:56):
So yeah, what is it mile anxiety or rangings? Yeah,
that would completely disappe you go completely, Yeah, and we're
headed in that. Actually I have more than a thousand
miles in one day.

Speaker 1 (06:06):
Right, we're headed in that direction anyway. But sadly, we
could be there sooner and we can have those options
at our disposal. And I get some of the reasons
for productionism, but you also can't have it both ways.
You can't say that this is the future and we
have to all go in this direction and then say,
but we won't take the most low cost brand. We're
going to essentially prevent them, bar them from entering the market.
It's pretty messed up, yeap.

Speaker 2 (06:26):
Maybe what we need to do is like ramp up
our espionage, like maybe maybe we need to steal more.

Speaker 1 (06:31):
Point more trade secrets Matt. Matt doubles as an FBI informant,
So yeah, that's a side hustle.

Speaker 2 (06:37):
A little, the ways she makes some extra money.

Speaker 1 (06:39):
That's right, alright, midlistisch And the beer we're having on
this episode, it's called Duchess Red. It's a sour cherry
beer that we've had before, but never on this never
on the podcast. So yeah, one of your wife's favorite beers.
In fact, one of my favorite beers.

Speaker 2 (06:50):
I love it as well.

Speaker 1 (06:51):
All right, we'll give our thoughts at the end of
the episode, but Matt loves it, all right. So let's
get to listener questions. If you have a question, a
money question, go to how to money dot com slash ask.
Or if you just want to know that's deepest darket secrets,
you can record that question too and send it our
way they tell you, but you got to record it
and send it over that's the only way you get
the information. Just go to how to money dot com
slash ask for the simple instructions, but basically record a

(07:13):
voice memo sending it to us via email. Now let's
get to the first question for this episode. This one
is about student loan payoff.

Speaker 6 (07:19):
Hello, Matthew and Joel Sith. This is Shakatron from Benuda, California.
I'm calling in with a question about student loans. My
question is, at what point or what are the drawbacks
of the new SAVE program. I guess it's not super
new anymore, especially for high income earners. I am fortunate

(07:45):
enough to make three hundred thousand dollars a year, but unfortunately,
to get to that point, I had to take out
a lot of student loans, and I have roughly one
hundred and fifty thousand dollars in student loans right now
that I'm chipping away at. I have a six percent
interest on those graduate student loans. I currently am in

(08:07):
the pay program that PAYE program. Everyone in their mom
says that the new Save program online and that I
talk to is the best thing since sliced bread. But
when I read into the fine print, it seems like
there's no cap on the amount of payments that you'd

(08:29):
have every month versus my current plan, and so I
get a little bit confused with all of these different options.
Is it just a gimmick? And so I think in
my situation it might not be beneficial. And I think
I'm trying to push out my student loans as much

(08:50):
as possible and try and get some help from Uncle
Sam with different government programs for student loan forgiveness. But
any thoughts you guys have would be much appreciated. And
thank you for your show. It is very interesting and
has kept me on the right path financially, So thank.

Speaker 2 (09:13):
You for that.

Speaker 1 (09:14):
Oh, Matt, you hear that you have been like the
bumpers in the bowling lane for I was going to
do which.

Speaker 2 (09:20):
By the way, that's it's worth mentioning. Maybe Shakatron I'm guessing,
isn't his birth name given to him name? He's not
an evil robot. No, you kind of gravitated towards it
that my real name is joelseph it is. Yeah, I
wanted to jump on the exact same thing that you did,
which is the fact that he's I think what he
said was that he is on the right financial path, which, dude,

(09:42):
that is one hundred percent what it's about right there. Like,
you might be listening to the podcast and you might
not have much in common with Joel or I you
might workron, but the fact is, like, what we're trying
to do here with the show is just normalize these
conversations around personal finances and money and delaying that immediate
gratification and instead planning for your future. And the more

(10:03):
that we're able to present that as normal and the
more widely accepted. And it's not ever, I don't think
going to be widely accepted as this is the path forward,
not in this country. Not no, because we're constantly being
fed but oh no, it's owed to you, like you
need to live your life now, you don't need to
plan for the future. But the fact that Shakatron is

(10:24):
thinking about his future, I love that, and I mean
honestly like that is like hearing that part of his
comment there may be the happiest the fact that he's
just proactively thinking about it.

Speaker 1 (10:33):
It's going to take some willingness to be countercultural. And
it's also important to mention that that it doesn't happen overnight.
Progress is slow and steady, but like man turning that
rudder just a little bit, think about how quickly that's
going to pivot you in a new direction over the
coming weeks and months. That is the goal of the show.
Get you on the right financial path. Some of that, too,
is overarching advice, and some of it gets really specific too,

(10:54):
rit like talking about diminished value or now talking about
something like specific student on payment programs. Those are all
worth discussing, and they're all kind of part of what
it looks like to have a healthy financial life. And
so let's specifically get to Chakatron's question here. Matt he
by the way, he's got a big salary, which is huge.
I mean, that's gonna help you pivot and continue along
that healthy financial path much better than if your salary was, like,

(11:19):
got quite a bit lower. But a high salary, of
course doesn't mean that why choices aren't still necessary, right,
I think some people that's the problem. As you tick
up the income scale, you still see a lot of
people in those upper echelons living paycheck to paycheck. You
can make more progress, but you can also continue the
same bad habits that led you to poor financial decisions
when you were making half as much. Sure, and so yeah,

(11:40):
but we want Chocatron to pick the right payback plan
that gives him of the most bang for his buck,
because every dollar he doesn't have to put towards his
student loans is a dollar that he can say that
he can invest or that he can just spend in
other ways that are more fulfilling, that are more joyful.
And by the way, I think that that one hundred
and fifty thousand dollars of student loan debt, I don't
see it as an anvil weighing him down, but I

(12:01):
see it actually the reason he's able to command such
an income right that it's catapulted him into a higher
earning stratusphere. I know, of course, it's not fun to
owe that much, to have this a debt amount that's
this high, But that mindset shift, I think is an
important one to say, Hey, listen, this was the thing
that got me here. This isn't necessarily the thing holding

(12:21):
me back. It's propelling me. Although now I got to
figure out a way it's kind of eradicated so I
can run even faster.

Speaker 2 (12:26):
Yeah. I guess what we don't know is how long
he's been working since he graduated, because if you let's
just say he just graduated, Hey, this seems like a
perfectly a perfectly reasonable student loan amount. Rule of thumb
being to not borrow more than what you earn in
your first year after you graduate. But maybe it's been
like five years. I don't know, but either way, I
think there is he's he's climbed the ladder and he's

(12:48):
doing it.

Speaker 6 (12:49):
Yeah.

Speaker 2 (12:49):
I think there's a lot of progress that you can
make with an income that high. But you're asking about
a topic with some real nuance here, and for most
folks who aren't in your upper echelon earning stratosphere, Shakat,
I think we're gonna both try to save this day
as often as possible because it's so awesome. But for
other folks out there, usnormis the Safe Plan, it really

(13:10):
will be a massive help for them, which is why
you hear all those great headlines, you hear all that
that feverish support from almost everywhere.

Speaker 1 (13:17):
He specifically asked for it was a gimmick, and the
answer is it's not a gum not for a lot.

Speaker 2 (13:21):
Of people exactly. Yeah, the average student loan netter is
going to be able to see their payment reduced significantly
because of the Safe Plan. That's ton of folks are
gonna pay zero dollars a month thanks to the like
specifically the more generous poverty line deduction. But for you shaka.
The safe plan is almost assuredly going to be a
bad idea.

Speaker 1 (13:40):
Yeah, And it's no wonder that you're confused because the
details can be hard to figure out.

Speaker 2 (13:44):
Yeah, exactly, it's it's it's worth noting too. That is
he said he's an engineer. I means he's pretty smart. Right,
he's commanding a pretty high salary. Yes, it's still really confusing, still.

Speaker 1 (13:52):
Confusing, and they're I think part of it's because there's
these four letter acronyms. You're like, save, pay, repay, and
you're like, I don't know, it's hard to parse the details,
and you maybe read the it feels like reading a
foreign language, almost, as you're perusing the specifics of each one,
and you're like, so, how do I know which one
of these is going to be best for me? Then?
And we The save plan is an income driven repayment plan, right,

(14:13):
which means the higher income, the more you pay each month.
So if you make sixty thousand dollars, as you were
alluding to, let's say you made sixty thousand dollars and
you have four kids, your payment might go from hundreds
of dollars a month to zero dollars a Yeah, and
there's going to be a lot of people, depending on
their income and how their family size, they might find
themselves in that position. But if you are in Shaka
territory and you're making hundreds of thousand dollars of dollars

(14:34):
a year and you don't have like a dozen children
to like qualify as a larger family size, which I
didn't hear Shaka mention anything about having kids. If he's
single and has an income that high, the Save plan
is actually going to be more harmful than helpful. Right,
So sticking with the pay plan that you're currently on
is almost inevitably going to be the best financial decision
to spite. Despite the laudatory things that you've heard about

(14:57):
the Save plan, it just doesn't fit for your situation
for year.

Speaker 2 (15:00):
You not a good plan for it. Yeah. The crux
of the matter is that payment cap that you mentioned,
Because if you sign up for Save and your income
continues to increase, well, that payment can go up too.
And here's the thing, the sky is the limit to
how high it can go. Yeah, there is no cap
that is not true for your pay plan. So you
don't want to base your decision solely on what you're
earning now, but you also want to think about what

(15:21):
it is that you might be earning in the near future.

Speaker 1 (15:24):
The other thing I think worth mentioning is that the
pay plan comes with a shorter timeline for forgiveness for
graduate student loans, which is, I believe what Chaka said
he had right, So twenty years versus twenty five years
with a save plan, and that might seem like forever
a way anyway, but with the size of your balance,
you just might find that to be another compelling reason

(15:44):
to choose pay oversave. Also, I wouldn't let that be
a deciding factor because ultimately, especially given your income, we'd
love to see you pay off that balance before you
reach that endpoint. Anyway, Forgiveness is cool, but given yeah,
how much money you're able to bring in the size
of that balance, I think you should be able to
get rid of those loans in years rather than decades.
But that is at least one more fact or one

(16:07):
more checkbox, and like maybe much just stick with pay
because if it does take me longer, I'm that much
closer to having at least part of my student loan
debt forgiven.

Speaker 2 (16:16):
Yeah. For him, like we have to sort of interpret
the question for the listener out there, because they're hearing
one hundred and fifty K and they're thinking, oh my gosh,
that's a substantial amount of money. But for those folks,
it might only be earning you know, like sixty or
seventy K, where yes, you do probably want to extend
the payments as long as possible and not for that forgiveness.

Speaker 1 (16:31):
In that case, it feels like a grizzly bear sitting
on your chest, whereas yeah, in the case of Shaka,
it's like a baby cub, Yeah, trying to grab onto
your back.

Speaker 2 (16:39):
It's like swatten away a fly.

Speaker 1 (16:40):
Yeah, all those costs hurt even though you're a baby.
It's yeah, it's still uncomfortable.

Speaker 2 (16:44):
But there's But I think what you're saying is true
because like so Shaka he was like chipping away at
his student loans, and I think that's okay. It's a
big balance. You know, it can be hard to maybe
like mentally wrap your mind around that. We get it.
You don't I want to put other financial goals on
the back burner at the same time, right, Like, for instance,
you don't want to avoid investing in order to pay

(17:06):
it off immediately. In order to pay it off more quickly.

Speaker 1 (17:09):
I think a lot of years that you might be
avoiding your roth irka if you made that choice.

Speaker 2 (17:13):
I just think it's a good idea to try to
be doing both at the same time, eliminating that debt
but also building up a nest egg for your future.
And then plus those contributions will actually reduce your AGI,
which reduces your required monthly payment. But the longer you
can live a lean existence, the more quickly you're going
to be able to eradicate that debt. And again, we

(17:34):
know this is a massive sum, but your income, it's
pretty large, and it might not be worth drawing out
those payments for multiple decades, for instance, to have just
perhaps small amount forgiven by the time you reach that,
you know, twenty years down the road, I think you
might just be better off funneling money toward the debt
to get rid of it sooner rather than later. And
there's different calculators you can check out, like the student

(17:56):
Loans the student Loans simulator that is up at studentaid
dot gov. I've heard folks talk about that, but simultaneously
it seems like it has limited information that it will consider. So,
for instance, how long you've been paying on that, and
so given the fact that you've got more, there's the
stakes are higher here. Given the large amount of student
loans that you have, it might be worth checking in

(18:19):
with student loan planner. We actually have a review up
on the website that will link to you in the
show notes for this episode. But that might be a
great resource for you, just to have somebody essentially kind
of guiding you, walking you.

Speaker 1 (18:30):
Through this, like a financial planner for your student loans,
like yeah, and as someone who's an experts specifically at
choosing the right payment plan and knowing the right pathwork.

Speaker 2 (18:36):
Yeah, and especially given the fact that the rules have changed,
and we often talk about this. It used to be
where the only time we would say, hey, you should
probably consider hiring a professional is with a tax professional
because the fact that the rules change so frequently, and
some small mistakes on the friend and could cost you
a large amount of money. But that's it's a similar
pattern now that we're seeing when it comes to student

(18:58):
loan repayments, as the rules of change and as there
are different requirements. Yeah, so that might be worth your time.

Speaker 1 (19:03):
Yeah, we'll link to that review in the show notes
in case, you do want to say, listen, I've got
a lot of money here that I need to pay off,
and making the wrong choice could cost me a lot
more than hiring the professional to help me choose the
slam dunk best thing for me. You're in the kind
of position chockout where that can make a lot of sense.
But best of luck as you pay off those loans,
we hope you're not holding on to them for too long. Matt.
We've got more to get through on this episode, including

(19:24):
we'll talk about cashing out a retirement account to pay
off a nefarious debt. We'll talk about that and more
right after this.

Speaker 2 (19:39):
Right man, we are back from the break, and like
you mentioned, we will talk about tapping some ROTH contributions.
But let's now hear from a listener who's looking to
take a more active role when it comes to his
retirement portfolio.

Speaker 5 (19:53):
Hi, Matt and Joel, this is Addie. I am a
thirty nine year old engineer living in in Southeast Michigan.
I have recently hired a financial advising firm to manage
my funds and finances. After working with them for four months,
I believe I have time and skills needed for planning

(20:16):
the finances by myself. However, regarding managing my investment, there
are two things that I am unable to do by myself.
They are one tax loss harvesting and two sector investing.
My question to you both is, are tax loss harvesting

(20:38):
and sector investing as effective as these financial advising firms
claimed to be. Hoping to hear your answers sometime soon.
Thank you, and I appreciate what you both are doing
in terms of educating people like me. Thank you, Matt.

Speaker 1 (21:00):
This is a perfect timing for this question, considering we
were just talking about when to hire a financial pro
or not, and I feel like there's probably more weeds
we can dive into in answer to ADDIE's question here,
so Ati, thank you for your question, and I love
that you're ready to manage your own investments. I will
say we have like mixed feelings on financial advisors and
when it makes sense for people to bring one on

(21:22):
into their financial lives, they make very little sense for
people in the beginning of their wealth building endeavor.

Speaker 2 (21:28):
Right.

Speaker 1 (21:28):
I think we took a question not too long ago, Matt,
from someone in his early twenties didn't have much save
doesn't have much invested yet, and he's trying to figure out,
you know, what it looks like to have a relationship
with a financial advisor. We're saying it's too soon, you're
not ready. You need to keep funneling money towards your
future and less towards a pro to help you out. Right.
But the further along you get, or the more complex

(21:49):
your finances get, the more you might want to employ
employ the help of a pro.

Speaker 4 (21:52):
Right.

Speaker 1 (21:53):
But if you're going to do that, it's crucial to
do it wisely because you want to make sure you
hire a fee only fiduciary. And you know, we prefer
that you do business with an advisor who charges a
flat hourly or a one time fee, because the ongoing costs,
the one percent ongoing fees could really eat intose compounding returns.
It seems on the very front end, it seems like
one percent. That sounds reasonable, and I'm gonna paying a

(22:16):
little bit dribs and drabs every single year. But man,
I don't want to have to pay like three thousand
dollars to have someone help me come up with a
financial plan. That's so much money. But when you do
the math, the way that one percent fee eats into
your returns. You'd be much better off paying three thousand
dollars one time for a financial plan for a long,
multi visit session with a financial planner. Our brains, it's

(22:38):
just hard for our brains to think that that's the case,
that that one time expensive fee would be smarter. But
for most people it's much smarter.

Speaker 2 (22:45):
Yeah, especially for a lot of listeners who might be
entering into some of those higher earning years of their careers.
And what I also love about what Addie is saying
is that he feels like having an advisor for just
a period of time, that it has given him the
tools to go alone, because like, it's just awesome that
he's been able to learn, Because I think going through
the planning experience, it can provide a ton of helpful insights.

(23:07):
Right The information that they make you gather and confront,
the goals that they help you to outline, the questions
that they can ask are illuminating, and I think all
of those things combined can make the task of creating
a financial plan a little less daunting. Certainly you can
do that all on your own, sure, but an advisor
can just prod you in different ways that maybe you
otherwise wouldn't. It makes me think of like hiring a

(23:28):
personal trainer for a period of time where you're like, oh, wow,
I didn't realize I was capable of that, or oh wow,
I did not think to try to do this instead
of that because maybe you were stuck in your ways.

Speaker 1 (23:37):
Or say, oh, can you read a couple of self
help books and work through your own mental health issues? Sure,
but like it's the help of a licensed therapist who's
gone through years of training can get to help you
get to the root of some things and help you
think about things in a way you never had before.
And then maybe down the line, off you've done some therapy,
like you can abandon it or at least like do
it less often.

Speaker 2 (23:55):
Professionals are going to have a deeper level of knowledge
on many fronts, which means you know, they're just going
to bring things to the service that you may not
have thought about.

Speaker 1 (24:02):
That's right. So I do think that is one of
the plus checks in the plus column for hiring an advisor.
But let's get to those two specific questions that you ask.
Yes about tax loss harvesting, so we'll start there. Tax
loss harvesting is great. It can be a way to
reduce taxes without really changing the makeup of your portfolio
very much. But it's not helpful when we're talking about

(24:24):
tax advantaged accounts. When you buy and sell inside of those,
there is no taxable events, so you don't need tax
loss harvesting. The only way that it makes sense or
that it can be helpful is if you've got funds,
significant funds, and a taxable brokerage account. So if that's
the case, there are opportunities basically every single year to
reduce your tax burds. Burden buy tax loss harvesting, which

(24:45):
means selling a fund at a loss and buying a
very similar fund afterward, which save yourself money at tax time.
But like I said, it doesn't really affect your portfolio
in any meaningful way. By harvesting a loss, you're able
to offset taxes on both gains and in And so, yeah,
do you need your financial planner, your fancy paints financial
planner to help you do this? Is it worth the

(25:06):
fee or the percentage you're giving to them for this?
I would say probably not. Robo advisors like Betterment can
help you do it for far less than that, And
they say on Betterment site that four and five users
cover their Betterment fee with the savings from tax loss
harvesting alone. So I think if you do have a
substantial taxable broker's account and you like tax loss harvesting,

(25:27):
you like saving potentially a few thousand dollars being able
to make that claim on your taxes. If that's one
of the main selling points of your advisor, there are
cheaper ways to get that done.

Speaker 2 (25:35):
Sure, And I will say, of course Betterment has a
vested interest in saying on their site that hey, eighty
percent of folks other fee covered, So you know, take
that with a grain of salt. But the fact is,
tax loss harvesting is a legitimate thing, and this is
a more affordable way to achieve that rather than maybe
paying one percent.

Speaker 1 (25:54):
It's something you DIY too, Like you can sell and
find the perfect times during the year, but it's easier
when an algorithm does it for you. Yeah, it's possible
to screw it up, do I wy ing it too? Sure,
So you just have to realize that there are potential pitfalls.

Speaker 2 (26:07):
It literally is can be as simple as I know.
We talked about this during the on the show, but
I guess it was right after the pandemic, like as
things were taken that I just switched a lot. I
ended up selling a bunch of VU and instead bought VTI,
which from a portfolio standpoint for me, was pretty much
the minimal exact same thing. Yeah, but it was different
enough in the eyes of the irs that hey, I

(26:29):
was able to harvest some losses there.

Speaker 1 (26:32):
And the cool thing is you can push You can't
you can only claim a small amount in any given year,
but if you have a lot of loss in one
specific year, you can continue to claim that in smaller,
small increments moving.

Speaker 2 (26:42):
Forward, roll it forward, and definitely you probably got tax
losses for the next couple decades. Yeah, So we wanted
to mention Betterment because I think that could be the
perfect happy medium place to have your taxable brokerage account
because you're gonna certainly save a lot more than what
you're paying to a traditional financial advisor. But of course
you're going to get the upside of that tax lost
harvesting alongside also some other compelling reasons to use Betterment.

(27:05):
They've got some great tools over there as well. Like
one of the tools is, like, if you're thinking about
selling a certain number of shares of an ETF or
a stock. They'll just tell you, hey, this is what
you're going to owe in tax. That can come in
really handy if this is something that you're looking to
use less. As you know, some folks see their brokerage
account more as an additional retirement account. Some folks see

(27:26):
it as like, hey, I want to invest in this
within this vehicle for three to five years and then
I'm going to pull the trigger and then I'm going
to spend that money on something that I want to
enjoy at that point in life. But like a boat, yeah,
I mean particularly yeah, but that is a perfectly fine
reason I think to invest money. So yes, to invest
some money for certain number of years. But then Addie

(27:48):
asked about sector specific investing, and that's certainly something that
you can make a priority. But so much of it
is going to depend on your specific goals. It is
going to depend on your risk tolerance as well. It
depends on how complicated you want to make your investments.
Because you could invest in some precious metals, you can
dabble in reads a little bit, real estate investment trusts,

(28:09):
you could focus on the tech sector. All this is
up to you.

Speaker 1 (28:12):
But we just go all in on Nvidia.

Speaker 2 (28:14):
You could do that if you wanted to. I would
rather you do all of that than consume. Right, Like,
if on one hand you're looking at just spending that
money in frivolous ways, that doesn't bring you much joy,
But on the other hand, you're thinking about investing in
a more aggressive way that might be a little riskier. Okay, Well,
between the two those, I'd rather see you investing, even
if it's not something that for the vast majority of

(28:35):
folks I think you should be doing. Because it's not
necessary to build up a nice nest egg for retirement
by investing in these ways. You can just stick with
the simple SMP or the total stock market indexes out there.

Speaker 1 (28:46):
And some people might accuse us of over simplifying things,
matt and in regards to investments. They might have a point.
It's something I've thought about for sure over the years. Right,
are we making it just too simplistic on the investing front?
Do you need kind of to to broaden your horizons
to make sure you have your money spread out in
an even more diversified manner than what we recommend with

(29:07):
kind of the simple investing approach. And I think ultimately,
for a lot of our listeners, our goal is for
them to do the thing right and to get money
into those accounts, to start growing that money for their future,
and it's less about perfect and I think sometimes that
attempt at perfect it is the enemy of something that's
not even just good.

Speaker 2 (29:24):
That's great, sure, yeah, but I mean, honestly, like that's
where I see the fancier, more sophisticated ways of investing
as being what keeps people from investing in the SMP.
And not because the SMP is sub is inferior, but truly,
I mean, like over the past decade plus, the S
and P five hundred has outperformed even betterments this sub betterment.
They actually updated their core portfolio earlier this year to

(29:47):
weight heavier towards US equities because it has seen subpower
performance when you're comparing it to the S and P
of five hundred and So does that mean that the
that the US stock market is going to continue to
out the rest of the world.

Speaker 1 (30:02):
I don't know, but probably not if history has anything
to teach us about, Like we could see we see
times of international ow performance versus US DOX two innother decades.
So it's It's hard to predict, but the one thing
I can predict is that the more complicated you make something,
the more people are gonna like say this is not
for me.

Speaker 2 (30:19):
Yeap, They're gonna throw in the towel altogether.

Speaker 1 (30:21):
Yep. And so yes, addie, if you choose to do
that and you want to complicate things a little more
and you want diversity, more diversification through some sector specific funds,
more power to you. It's just not something that we
think is a necessity, and so we'd actually encourage you
to go back and listen to episode seven thirty four
with Paul Merriman. His take is that having some small

(30:41):
cap value exposure over the long haul hasn't in recent years,
but over the long haul will result in outsized gains.
But he is also about keeping it simple, so he's
like one added step of complexity without without really overdoing it.
I think he advocates a simple too fund approach, and
I guess we think that for most investors dollar cost
averaging to one or two funds is ideal. It just

(31:02):
makes it more likely that you're going to do the thing.
It doesn't complicate things too much. I would say, another
episode worth listening to is the one we did with
Brian Ferraldi back in seven ninety four. He loves investing
in single stocks, but he doesn't recommend it for everyone.
In fact, for most people he thinks it's not a
good strategy. We're fans of whatever approach though that allows
you to stay the course and keep building wealth. And
if some of that is investing in individual stocks, but

(31:25):
while you're doing the basic, simple thing with the majority
of things. Just because you're interested more power, that's great
and enjoy. But I just think for most folks that's
not where their head's at. Their head is like, how
do I build wealth in a simple, repeatable fashion, And
that's kind of what we harp on and that's where
we put the majority of our emphasis.

Speaker 2 (31:43):
That's right, Addie, So we hope that gets you pointed
in the right direction. Joel us here from our next
listener who is in a tight spot and so he's
looking to tap some retirement funds.

Speaker 4 (31:52):
Hi, Matt and Joel, This is Terry from Jacksonville, Florida.
Been listening to you guys for a long time. Love
the podcast, Love everything that you do to spread financial
and information. Got an interesting roth Ira question for you
so I was considering cashing out an old Roth IRA
account to clear some small debt from a credit card,

(32:13):
And when I was doing so, I was trying to
figure out how much my original contributions to the Roth
account were versus what my gains were and what I
would be responsible for paying taxes on since it doesn't
qualify for any of the early withdrawals. The account was
from a previous employer from two thousand and eight. In
two thousand and nine, I do not still have those
tax accounts, and the account itself has changed hands from

(32:36):
a number of financial institutions, from Scott Trade to tdmor
Trade now to Charles Schwab, and they have no record
of telling me that either. My question is what's my
course of action here if I decided to go this route,
and if not, is this something that I need to
be doing with my current Roth account to keep track
of this for the future if I ever need to
tap into that for a critical time and critical time

(32:59):
and financial need. My wife has a similar account hasn't
worked in about ten years in an account, and that
account has been sitting there growing and we.

Speaker 2 (33:05):
Just don't know how much.

Speaker 4 (33:06):
The honest the starting point was versus versus what it
is now again, appreciate you taking my question. Hope you guys,
Hope you guys can figure this one out with me.

Speaker 2 (33:16):
Thanks nice. So, Joel, it's worth mentioning right out of
the gate that Terry, he said wroth Ira, but he's
also mentioning the fact that this is an employer sponsored account.
So in his email he actually referred to it as
a Roth four one K on one hand of the
now at other points he called it a roth Ira.
So I'm assuming because of the employer part, he's talking
about a roth for one cat.

Speaker 1 (33:35):
That's what I'm getting. Yeah, that's what I'm gathering too,
So that's how we'll address this.

Speaker 2 (33:37):
We're just clarifying the language because there are two different.

Speaker 1 (33:39):
Accounts, right, and they both have brought them the name
in that again, is where simplicity would be awesome in
the retirement account space. But there are a lot of
different accounts with different letters and numbers attached to them,
which can be just mind boggling for people who don't
spend a lot of their time, whether it's their job
or just their free time, thinking through these things. So Terry,
we will address this as though it's a WROTH four

(33:59):
one K, and we'll actually kind of allude to the
roth IRA in this too. But it does sound like
you've been jostled around to different brokerage firms that can
make a record keeping difficult. So what we would suggest
is to reach out to the HR department of your
old employer to see if they have records of your
accounts and your contribution amounts. That's at least one stone
worth turning over. And if you have an old account statement,

(34:19):
you might be able to reach out to the old
investment firm itself, although for you in particular, it seems
that both of those are now defunct. They've been purchased,
the original company has been wiped off the face of
the planet, so those records probably don't exist anymore. Those
are two potential ways to dig up the document you're
looking for, but honestly, it might.

Speaker 2 (34:38):
Be a waste of your time in your essence, Yeah, yeah, no, exactly,
that's right, because we don't want you to cash out
your ROTH for one K funds the money that you've
got stashed away there to pay off what you refer
to as small credit card debt. That would be bad news.
Bears and that's for many reasons that are worth discussing here.
Because Joel, like you alluded to roth Ira contributions, they

(35:01):
can be taken out tax and penalty free, but Roth
four win k contributions don't receive the same treatment, which
means taking money out of that account, even if it
were below your contribution threshold, that's going to result in taxes.
It's gonna result in penalties, making it a in our opinion,
a massive financial mistake not to mention that you'd be
robbing future Terry of a much bigger, tax free nest

(35:25):
egg if you were to pull those dollars out now
as opposed to leaving them invested in the market.

Speaker 1 (35:29):
Yeah, think about yourself, Terry, but yourself twenty years down
the line and you pull that money out Old Terry
right exactly, and young Terry super satisfied because you don't
have that debt lingering anymore. But future Terry is like
bawling because he realizes that there's not just like, I
don't know, you didn't say exactly how much you're planning
on pulling out, but maybe it's not just fifteen thousand

(35:51):
or ten thousand dollars less, it's the compounding returns of
that money than now future Terry doesn't have at his disposal.
So that is I think one of the biggest reasons
to not even consider going this route. Right, you need
to wait until you're fifty nine and a half to
withdraw money in that wroth for one K to be
tax and penalty free. And I'm not sure how small

(36:12):
this credit card debt is, but we'd much rather see
you living on a bare bones budget for something like
nine to twelve months so you can eradicate it in
a short order, leaving every single dollar that you're thinking
about taking out intact in your wroth for one K.
Because it has this double impact, right, it keeps those
dollars working for you, dramatically impacting your future net worth,
but it also helps you feel the pain of the

(36:33):
credit card debt that you've accrued. And it's not that
we're massacis. It's not that we want need it to
yeah exactly. We're not trying to like make you hate
your life, But tapping a retirement account it just feels
like the easy way out, which is why so many
people take it.

Speaker 4 (36:46):
Matt.

Speaker 1 (36:47):
When you see the statistics about people that touch their
retirement accounts early. It's sad, it's awful. And what happens
to as an American the average American leaves our job. Well,
they decide, oh, you know, there's like ten thousand bucks,
eight thousand bucks, my four one k might as well
just like crack the piggybank open. And the truth is
they do that, and because it's the easy way out,

(37:07):
they find themselves back in debt again, not too far
down the road, with a much lighter retirement account to boot.
And so our advice is to make a plan to
cut spending YEP, to funnel more money towards that debt
in the here and now so you can pay it
off quickly instead. But don't do anything with the wraw
four one k, leave that thing being Yeah.

Speaker 2 (37:25):
Leave your retirement nest eck alone. And I think a
part of your plan could be to consider a balance
transfer credit card. And this is especially true if the
interest that you're paying on your credit card balance is
just incredibly frustrating and slowing you down.

Speaker 1 (37:41):
I just be honest. With rising interest rates and rising
credit card interest rates, it probably is.

Speaker 2 (37:45):
Really, I'm sure. Yeah, even if you have righted your
ways and you're not spending recklessly on that it could
just really slow things down as those rates have ticked up.
And so I think choosing a card with a long
enough zero percent interest rate where you feel confident that
you'll be able to pay it off in full within
that window could be the way to go. You're gonna
pay a transfer fee of three to four percent, but

(38:05):
it's worth not having. I think you know any interest
or crew for let's say fifteen, eighteen, even twenty one months,
if you have a plan. And I do kind of
feel like we're getting outside the bounds of your original question, Terry,
but we wanted to mention this because like alarm bells
are going off in our heads when we hear folks
talk about tapping the retirement accounts early for something that

(38:26):
feels temporary like it. It feels like a huge deal
to you right now, But we just feel that there
are better ways to proceed. There are different changes that
you can make and you're spending, there are different ways
you can impact your earning potential to focus on eliminating
this altogether without experiencing the permanent impacts of having withdrawn
some of your retirement funds.

Speaker 1 (38:43):
So that's whey who you listen to in the personal
finance based Matters MAC because there are some people who
would who think the debt is the worst thing since
lif spread and whatever it takes to pay that off
in the shortest amount of time is the most prudent
thing to do. And again, we always take like shades
of gray happy medium, and that is not always true,
because you can do a lot of harm to yourself

(39:04):
preventing future wealth building activities. Even with something as egregious
as credit card debt, there are better ways to handle it.
And again, I think feeling the behavioral implications of what
it took to get in that credit card debt, marching
yourself slowly and steadily out of that is going to
make you feel different at the end of the day,
having achieved debt payoff by buckling down instead of tapping

(39:26):
the retirement account instead to get there sooner. And last, banaloigues,
I just want to mention that you're terry, that you're
a Schwab, and that's good. They're one of the biggest
low cost players in the game. That means record keeping
should become less of an issue moving forward. It can't
hurt to print out annual contribution statements for your own
personal records just in case. So if you stick those
in a file folder or something in a cabinet in

(39:49):
your house, then I think that can help you for
future record keeping purposes.

Speaker 2 (39:53):
Cool. Well, you mentioned the forms. Done makes me think
of so one thing. So Terry, let's just say, just
in case, you were talking about Rothie IRA contributions. When
you make contributions to an IRA, the brokerage that you're
with has to issue you Form fifty four to ninety eight.
And that is a way that actually I personally have
needed to go back to previous brokerages to get some

(40:14):
of those forms because I was like, wait a minute, yeah,
you can tap contributions if you were in a pinch.
And this was a situation where Kate and I found
ourselves in years ago where we're like, oh man, income's
looking pretty low this year. We've got some financial goals
that we're looking to hit. Maybe let's just consider this
is just something we were considering. And I had to
reach back out to E Trade because my first roth

(40:35):
IRA was with E Trade and they sent me the
forms and so it takes a little bit more legwork,
but that's when you can reach out to the brokerage
directly in order to keep up with that on your own.
And I will say, prior to that, I had never
kept up with my contributions, my retirement contributions with my IRA,
and I never had a four one K before that
at that point anyway, And of course Joel, you're not

(40:56):
surprised to hear that. That's when I started my investment
Bounce's contribute. I had a sheet that I added to
to my excel file. Yeah, sounds like you, because I
just want to be able to keep up with that
on my AM.

Speaker 1 (41:07):
And I think it's worth mentioning really quickly. If Terry
was talking about a roth Ira, well, the great thing,
the cool thing about roth IRA's when we talk about this,
is that you can tap those contributions tax and penalty free,
so you could go back get that forum realized. Wait
a second, over the last six years, I have contributed
twelve thousand dollars, let's say, and I could pull all
that out right now, pay off the credit card debt,

(41:27):
no harm, no foul, right because I didn't have to
pay any taxes or penalties. Matt and Joel will love
that plan. If it's a roth Ira, you can do that.

Speaker 2 (41:34):
That is more flexibility there.

Speaker 1 (41:36):
That is a touchier subjective if we're talking about a
roth ira, because you're right, you don't pay taxes and penalties,
but you're talking about money that's in a tax advantaged
account that you've already paid tax on the growth of
which you'll never pay tax on again in the future.
I still like the idea. I think of buckling down
if you can pay it off in short order and
leaving the money in the roth ira doing even though

(41:56):
you could tap it without like the excessive penalties.

Speaker 2 (41:59):
Yeah, the the principal soul stands that we would want
you to try to do everything else possible in order
to find a way to eliminate that debt without touching
those retirement savings.

Speaker 1 (42:08):
All right, Matt, We've got more to get to, including
what's better renting or buying. Oh, it's a touchy subject,
but we'll talk about that right after this.

Speaker 2 (42:23):
We are back from the break and it is now
time for the Facebook Question of the Week. Joel. This
is from an anonymous poster, and the question is our
mortgage payments typically cheaper than rent. I sometimes hear of
people who only made a small down payment on their home,
say five percent who say they're now paying less than
what they'd pay for rent. However, in my area, I

(42:44):
can't rent a three bedroom, single family home for around
two thousand dollars a month. A similar home in my
area would go for about three hundred and seventy thousand,
and this would end up being around twenty seven hundred
dollars a month at the moment with PMI, taxes, taxes,
and insurance after putting down a percent down payment if
I continue renting, I am the type to invest the
difference in mutual funds and keep that down payment in

(43:06):
a high yield savings account where it would make about
eighteen hundred dollars a year. I'd love to buy a
home if it would save me money. And I notice
people saying that sometimes, but I don't know if they
mean they bought back when interest rates were nothing, or
they mean you can actually go out now and find
this sort of situation. I like how this poster said
back when interest rates were nothing, because that's truly what

(43:27):
it feels like. I'm sure for a lot of folks
who are who are looking to purchase a home today.

Speaker 1 (43:31):
Sure, yeah, timing is not on your side. It feels
like there has been a massive shift. And if you
bought your home five plus years ago, you're thanking your
lucky stars. And if you are like weighted, you punted
just for a little while, you're probably feeling the eight
inside that you didn't pounce earlier. And really, real estate
is incredibly dependent on timing, right if you bought, If

(43:53):
you bought a house in the nine to thirteen timeframe
and you're still living in it, you're locked in low
mortgage rate combined within inexpensive sales price. It would mean
that you're paying far less than anyone who's renting something
similar around the corner if they just signed the lease
last month. Right, But if you bought in twenty twenty three,
your mortgage amount is likely higher than what someone around

(44:14):
the corner is paying. So, for example, Matt, I have
had a rental property that I recently sold that the
only rental property have ever sold because it was a
primary and I was trying to avoid tax blah blah
blah blah blah. But the amount I was renting that
property out for was far cheaper than what the equivalent
mortgage is going to be for the people who just
bought the home, So they would have been better off

(44:37):
renting the property at least from a monthly expense standpoint.
And that is just still get the same house, right,
And that's not the ownership, of course, that's true, and
that's just the gap between rent and mortgage. That doesn't
take into account all the other factors too. So it's
significantly more expensive on a monthly basis to buy that
home than it was to rent it.

Speaker 2 (44:55):
Yeah, and truly rates do, I mean rates and home
values are the big driver of why it's so much
more difficult today. And I think a reason why this
poster has maybe heard folks saying this is the fact
that here's a stat for you. Over eighty percent of
mortgage holders today have a rate at five percent or lower.
And so yes, folks who are buying new homes today

(45:16):
are looking at seven plus percent, but the vast majority
of folks have rates that are locked in at far
lower levels. And to take a step back into like
the macro economy a little bit, this is this is
one of the reasons why inflation has been so sticky
because of the fact that the biggest line item that
we experienced every single month in our budgets is what
it's housing. And when you raise interest rates, guess what

(45:39):
happens to your mortgage. Nothing. When you're locked in at
a thirty year mortgage, that is not an expense that
you see go up as opposed to other countries where
mortgage is reset. That is why, for instance, that's at
least one of the reasons that we're likely only going
to see one interest rate cut this year as opposed
to what was like it was the end of last
year that they're like, oh, there's gonna be three cuts

(46:00):
the next year. That's when the markets are off. Yeah,
that's just one of the reasons why inflation has been
a little sticky. But enough about that. I wanted to
also mention that so much comes down to where it
is that you live, because real estate is incredibly local.
Like it makes me think I've out in California, for instance,
Like you would not only be hard pressed to buy

(46:20):
a home, but you'd also be committing a lot more
money every single month housing costs. Your mortgage could easily
be double the rent for the same or at least
a very similar home. But let's say you live in
a market like Memphis, Tennessee, or you live in Alabama,
you live in Birmingham or Cleveland out in the Midwest,
you still might find that buying a home actually makes

(46:40):
more financial sense. So so much of this comes down
to where it is that you live within the United States.

Speaker 1 (46:44):
Right, So you're asking me broad question that, but this
is such a highly specific market where it's like, well,
where do you live? Because that is going to be
a massive indicator on whether or not you're going to
be able to save money by buying versus renting. And
like we've talked about before on the show, Matt Apps
in so many locations around the country, between how expensive
it is to rent relatively inexpensive in comparison and buy

(47:08):
incredibly expensive in so many markets has never been wider
in a whole bunch of places. So at least on
the surface, when you're talking about a macro level, it's
going to be cheaper to rent than it is to
buy in most places. And so yeah, payments are also,
by the way, dependent on how much you put down,
As this question ask or mentioned, the more money you
save to put down on that home, the lower your
monthly payment is going to be. And I mentioned the

(47:29):
additional cost of home ownership those a balloon also in
recent years thanks to inflation, taxes, insurance, maintenance, costs of
prison significantly, all the costs, all the costs, and so
we're factoring in sometimes. I mean, people look at the
mortgage payment versus the rent, but there's so much more
you have to take into consideration. Home Ownership can be
a great goal, and it can be a potentially solid
financial move, but it's just not a slam dunk in

(47:51):
the way ownership advocates make it sound. That's particularly true
in our economic climate, Matt. And that is particularly true
as well for listeners like this who say I would
be investing the difference, I would be holding onto that money,
I would not be consuming it. Yeah, lots of times
when you're renting, you're taking the cheaper rent amount, and
a lot of renters are spending the access. But if
you're going to bank the access, I think it puts

(48:13):
an even bigger check mark in the box of continuing
to rent, save up more money so that you have
a larger nest to get your disposal for that purchase
when you're finally ready.

Speaker 2 (48:23):
You got to be a little bit more disciplined, right,
because you don't have that forced method of savings that
homeowners are faced with where you have to make your
mortgage payment if you want to stay in that house.
But one other thing I want to mention too is
that home ownership isn't just about the basic numbers. Because
if you are in a good finished position, yeah, you
got a solid down payment saved up, Sure, that's great.
But homeownership also needs to suit your lifestyle goals because like,

(48:47):
you can't just only look at the numbers. And it
makes me think about like making a big life decision
purely based on the numbers, Like it makes me think
about going to medical school and you're thinking, oh, I'm
gonna be a doctor. That way I can make a
ton of money. Okay, there's a whole lot of other
questions that you need to ask, like are you even
interested in being a doctor at the side of blood?
Do are you smart enough to be a doctor? Can

(49:08):
you handle twelve years of higher education? Basically in order
to get to that point?

Speaker 1 (49:14):
Would be a note to all those questions.

Speaker 2 (49:15):
Do you want to be on call? You no, like,
depending on the type of medicine that you're getting into.
And so there's just so much more to purchasing a
home than all, right, do the numbers. Mike sense and
I certainly understand this is how to money, and we're
looking to optimize from a financial standpoint, but we just
like to zoom out a little bit and look at
the whole picture, not only the whole financial picture, like

(49:37):
what are the additional maintenance costs, what does that look like,
but also what it looks like from a lifestyle standpoint.
If you want to be able to move, if you
like exploring new places, you know, if you like to
travel it done. These are all things that kind of
point in the direction of renting to where you don't
have to maintain the home so that you can travel,
so that you can hop from city to city as
opposed to being tied down to a specific location, because
that's what that's what it's going to take to ensure

(49:59):
that you make a smart financial move, not moving, you know,
less than five years from now, if you're looking to
purchase a home in twenty twenty four.

Speaker 1 (50:05):
One last thing I want to say, and potentially semi
Devil's advocate of our position, is that rent is likely
to increase over time while your mortgage is going to
roughly stay the same. We've talked about the fact that
your mortgage can essentially act as a bulwark against inflation
for your finances, and so there is no easy, one
size fits answer to this question. But that is one

(50:25):
more thing to factor in to say, Okay, if I
take out this mortgage, yes, it's going to cost me
more now, But ten years down the line, what's rent
going to be in my town, in the place I
want to live. And if I'm planning on staying in
this place, even though my mortgage is initially more expensive,
it might not be a decade down the road, and
that is at least something worth considering. So hopefully this
gives you enough food for thought to make a smart

(50:46):
decision when it comes to your own housing choice. But
there's certainly a lot of inputs that you have to consider.
This is It's just a complex question, it is, man,
all right.

Speaker 2 (50:56):
Let's get to the beer that you and I enjoyed
during this episode. This is the dutchess red And do
they always say does it always say sweet cherry sour?

Speaker 4 (51:04):
On?

Speaker 6 (51:05):
There?

Speaker 2 (51:05):
This isn't like a special duchess, is it? This is
like the standard duchess? I think so, I just have
never had it in a can before, which I love
because normally when you buy so back in the day,
And when I say it back in the day, I'm like,
I don't know. Five years ago when you got Duchess,
you had to buy it in like a seven to
fifty bottle, or like at a minimum, like one of
those medium sized three or like five hundred millvater bottle

(51:26):
sometimes too, which can be a lot for a sweeter
beer like this, right.

Speaker 1 (51:30):
Especially for a beer with as much flavor.

Speaker 2 (51:32):
Yeah, I was waiting on you to take up the
I hate sweet beers point.

Speaker 1 (51:37):
Well, I will say I do like this beer. I
love cherry beers. But yes, this beer is a little
sweet for my liking.

Speaker 2 (51:43):
I still like it.

Speaker 1 (51:44):
I still enjoy it, but it's not as tart or
funky as I want a cherry sour to be. I
like those other flavors infused in there, and some of
like the funky vibes that so many of the Belgian
breweries are able to produce. Yeah, this beer doesn't have
much of that going on. It is more just straight
up sweet cherry.

Speaker 2 (52:01):
Yeah.

Speaker 1 (52:01):
That being said, I still like it.

Speaker 2 (52:02):
It's still really good, much less funky. But yeah, the
first thing is, I mean, you got that cherry sweetness.
It's like this dark, sweet cherry with just like the
tiniest little bit of pucker, which then kind of segues
into the oakiness that you pick up on the barrels
that they aged this beer in. But yeah, I've never
seen it's never had this beer in this format in
a can. And I truly think this is gonna I'm

(52:24):
gonna go out to wherever I can. I'm I'm assuming
you got this at the local bottle shop. Yeah, But
to be able to have this in the fridge as
like a dessert beer, like Kate and I would one
split one of these like once a week. It's like
a dessert in a glass. You know what I'm saying. Yeah,
Oh yeah, I like so good, nice cherry cordial, but
in beer form. Yeah, it's like a you into cherries
or ports? Have you ever? Have you gotten those in

(52:46):
your in your wine club? No? Have we talked about
that on the show.

Speaker 1 (52:49):
Emily got me a wine club subscription for was it
my birthday, I guess or yeah, earlier this year. Yeah,
and that's been fun trying some new stuff.

Speaker 2 (52:58):
But have you gotten any dessert wines?

Speaker 1 (52:59):
So she knows I'm cheap, so correctly signature wines or
I normally go to. I feel like as.

Speaker 2 (53:03):
Soon as the subscription is that, baby, well, I'm not
sure we're gonna renew it.

Speaker 1 (53:06):
Thanks, it's really kind, but it's been.

Speaker 2 (53:08):
Fun, it's been real.

Speaker 1 (53:10):
I prefer Costco Wine blog as instead of like the
other rating systems, are.

Speaker 2 (53:13):
Really good wines that you can you can by Costco.
That's what I'm saying. But I know it's a good
one and glad we got to enjoy it today. It's good.

Speaker 1 (53:19):
All right, that's gonna do it. For this episode. We'll
put links in the show notes to some of the
resources that we mentioned today. And if you haven't been
to the website recently, go check it out. Lots of
new information being published all the time at how to
money dot com to help you with your finances, to
help you continue on in your journey, and if you
just want to bite sized information every week, sign up
for the newsletter over at how to money dot com
slash newsletter.

Speaker 2 (53:40):
That's right, that's gonna be it, buddy, Until next time.
Best Friends Out, Best Friends Out.

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Ask HTM - Utilizing Roth Contributions in a Pinch, SAVE Plan for High Earners, & Buying a Home to Save Money #847

Episode Transcript

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Joel Larsgaard

Matthew Altmix

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