Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - What’s the best way to support a friend in the midst of a financial meltdown?
2 - Given the expensive repairs I’ve made on my car, should I sell it and upgrade?
3 - How do I afford long term care insurance if I retire early?
4 - My husband wants to open a new joint bank account at a big local brick and mortar – how do I convince him otherwise?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Had of Money. I'm Joel, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
That's right, buddy, We've got listener questions to get to.
This Monday. We've got a relational money question that I'm
actually really looking forward. It's not the best situation, but
I am looking forward to it because we don't talk
about relationship kind of stuff as opposed to like the
nuts and bolts, which is typically what we talk about
here on the show.
Speaker 1 (00:40):
All right, so let's talk about this. Should you marry
rich Matt? Should you marry for money? That's going to
be the question that we get to. That's what actually
Emily always tells me if you were to die, I
would only marry for money the next time around.
Speaker 2 (00:50):
Really, yeah, she's like one hundred percent. Serio.
Speaker 1 (00:52):
I don't think she means it, Okay, I mean she
says it a lot, so maybe she does. I think
it was just trying to say. What she means is
I love you. I could never love someone else like you.
So for just the bank accounts, see, that's how you
interpret it.
Speaker 2 (01:06):
But I feel like there are more layers to this
financial onion to appeal. But no we will get to
that relational mini question. We've got somebody else who's trying
to figure out when to ditch his car, when to
replace it. Another listener is looking for different ways or
I guess he's trying to figure out how to afford
long term care insurance, which isn't something we often talk
about on the show.
Speaker 1 (01:26):
So wants to know whether even needs it to Yeah, yeah.
Speaker 2 (01:28):
Yeah, So we've got a great show lined up for
y'all today.
Speaker 1 (01:30):
All right, let's do a frugal cheap we haven't done
one in a second. This one Matt someone the other
day My two thousand and five accurate SUV still running fine, nice,
and it's it's been a good car. I've had it
for a year and a half now. Bought it super
duper used for cheap. But when I bought it, there
was a crack in the passenger side of the windshield.
And I remember the first time Emily got into it
(01:52):
and she was like, what.
Speaker 2 (01:53):
Are you doing? Man? Like, why did you buy this thing?
I was like, because what kind of hoop do you?
Speaker 3 (01:58):
Right?
Speaker 2 (01:58):
Has parked in my driveway.
Speaker 1 (02:00):
Because I can see just find out on my side.
I don't care if you can see or not, and
so I could see how it'd be more distracting from
the passenger. The passenger that's way on the other side
of the car, who cares?
Speaker 2 (02:09):
Are you so?
Speaker 1 (02:10):
And then I had someone that that they say, when
are you going to replace your windshield?
Speaker 2 (02:14):
Man?
Speaker 1 (02:14):
I was like, this is a four thousand dollars car.
I'm not planning on putting in a four hundred dollars windshield.
Like it's not interested. I bought this knowing this. I
knew I could see out of it. Not willing to
pay ten percent of the overall cost of the vehicle
just to have a clear windshield. I know in some
states they actually either one they forced insurance to pay.
Speaker 2 (02:31):
For it or zero deductible states.
Speaker 1 (02:33):
Yeah, or they force you to do this because there
are safety checks every year from the state. But in
Georgia that's not the case. So I can keep rolling
with this Florida busted windshield, New York, Arizona. I think
those are all states that have the zero deductible. Essentially,
it's like cracked windshield, boom, you get a replace for free.
Speaker 2 (02:49):
Yeah.
Speaker 1 (02:49):
I think it was in Virginia. I remember my friend
lived there for a while and I think they had
those safety checks and so if there was a crack
or something, even just a nick, they might be like, hey,
you gotta fix that thing. And so okay, am I
frugal or cheap?
Speaker 2 (03:02):
Is it? Uh?
Speaker 3 (03:03):
Well?
Speaker 2 (03:03):
Has it gotten worse or the same? It's bad, It's
been bad. What's funny is I've written obviously I've ridden
in the vehicle. I can't really picture it. It's pretty
big crack, is it really? Oh yeah, it's that's so funny.
Speaker 1 (03:15):
It's going up and down like three quarters of the windshield.
Speaker 2 (03:17):
Okay, I would say if you didn't have the ability
to see through your windshield clearly, sure it's appos dumb
and dumber style looking out the side. Yes, like have
you obviously you've you've driven it in the rain?
Speaker 4 (03:29):
Right?
Speaker 2 (03:29):
Does the crack impact the ability of your wipers to
clear the windshield?
Speaker 3 (03:32):
No?
Speaker 2 (03:32):
Okay. I think if you, let's say you were a
realtor where you did business out of your vehicle, you know,
like if you had a sales like job or you
had clients in your car, of course that would be
cheap because that could hinder the potential sale.
Speaker 1 (03:44):
That would be a cheap move. I'm trying to impress
no one though.
Speaker 2 (03:47):
You are a podcaster, so the visuals don't really matter
so much, especially when it comes to our vehicle. So, dude,
I'm with you, one hundred percent frugal, Okay, keep the
crack windshield all right, and feel free.
Speaker 1 (03:58):
If you are out there listening and you're like, that's
so dump you should totally replace it, let me know why.
Feel free to emails how to moneypod at gmail dot com.
I always love hearing from you guys and hearing what
I bet in some people's minds.
Speaker 2 (04:08):
Matt, that is cheap.
Speaker 1 (04:09):
It's not frugal, but I knew it buying it. It's
got this crack, but to me, it's just it's basically
what do you call it?
Speaker 2 (04:15):
Cosmetic? That's it.
Speaker 1 (04:17):
Yeah, And so because of that, I was down to
buy it and to not replace that, and to hold
on to this thing as long as I can.
Speaker 2 (04:24):
I'm with you, okay, So I guess on a somewhat
related note, quick question, another frugal or cheap though, The
side mirrors on our van are twenty twelve hundred Odyssey.
It's made of plastic, and the plastic is like or
the paint. It's like a covering or something. It's coming off,
you know, you go through the high powered car washes,
and bottom line, it looks like it's it looks pretty ratty.
Do you think I should take the pressure washer and
(04:46):
just blast it off completely and like spray it with
some like black shiny spray paint to make it liquid
or should I not even worry about that? This is
similar because this, I would even say, is maybe even
more visible because when people see our van, they know
it's us because I don't know what it is. But
it's like the it's almost like a vinyl covering that's
getting that's that's peeling. Have you noticed it?
Speaker 3 (05:05):
No?
Speaker 2 (05:05):
I haven't, And honestly, clearly we are pointing out the
fact that we don't care at all about what our
vehicles look like. Yeah, I don't. I think that's true.
That'd be like a that would come in about our
bottle of spray paint or something.
Speaker 1 (05:16):
Yeah, exactly, that's so much cheaper, and that would come
down I think more less about oh what am I
projecting to other people as opposed to what do I
care about in the car that I'm driving?
Speaker 2 (05:23):
Yeah, it's about like trying to keep our ride looking fresh.
So like my dad.
Speaker 1 (05:27):
He scraped the side of our van when he was
driving it, like like last year, and I didn't even
bother getting it fixed that He was like, oh, no,
I'll pay for it. I'm not gonna make my dad
pay for that, Like come on, yeah, that to me,
that would be that'd be cheap, not frugal. So I'm like, no, Dad,
let's just leave it. That's the story about it. The
beauty of driving old cars is that I care less
about those cosmetic things and dents.
Speaker 2 (05:46):
But if you had pulled the trigger and you had
a one to two year old Rivian and he did
that in that case.
Speaker 1 (05:52):
That's part of the reason I don't want to one.
In some ways, I'm like, because I'll freak out more
about it, and I don't want to because I don't
want to care about cars. Yeah, all right, let's mention
the beer we're having on this episode, Matt. This one's
called Ube Macapuno Delight. It's by Brewyard Beer Company. This
one was given to us by our friend Joel, and
we'll give our thoughts on this one at the end.
Speaker 2 (06:10):
Of the episode.
Speaker 1 (06:11):
Great job on the pronunciation there. We'll also reveal what
ube means y o you had to look it up.
So we both looked it up because because I didn't
know either. Well, yeah, we'll talk about that later. But
all right, let's get to listener questions. If you have
a money question for us, we would love to take it.
We'd love to hear it. You can just go to
howtimoney dot com slash ask for simple directions on how
to record your voice memo and send it our way.
Speaker 2 (06:34):
But really that's all it is.
Speaker 1 (06:35):
It's recording a voice membo on your phone, emailing it
over to us, and hopefully we can take it next
week on the show. Matt, It's time now to get
to a money question that has a lot of relational
dynamics infused into it.
Speaker 3 (06:45):
Hey, y'all, this is Amanda from San Antonio. I have
a bit of a doozy for you. My best friend
in the whole world is in about twenty thousand dollars
of credit card debt with interest rates ranging from twenty
five to thirty percent as I understand it, and her
husband's car was just repossessed for the second time in
(07:08):
four years. She is a stable W two job. He
works a job that is unstable and unreliable and also
an hour and a half from their home, and now
he can no longer commute to it. They are living
outside of their means. I don't have all the details,
but from what I've gathered, they're going further into credit
(07:32):
card debt month by month, and now they have this,
you know, car repossession emergency. I've done all the things
I've you know, suggested he get a job that's walkable,
and they get an emergency fund under them, and everything
you guys would recommend, I think I've recommended to them.
So what I'm asking about is how to navigate this.
(07:53):
I want to be a good friend, and I have
the money to help, but I also want to hold
a boundary and I do not want to enable the
behavior that got them into this position. Man. That's That's
what I'm dealing with right now. I hope you guys
can help. I love the show.
Speaker 2 (08:11):
Thank you, guys, joel Man. This is tough to hear,
like you can literally hear it in her voice, just
how like this the situation that Amanda's friend is in
is how it pains her aially.
Speaker 1 (08:23):
I mean, it's tough to see your friends struggle, and
it's tough to see your friends kind of especially when
you know better, and it's tough to see them just
continually put themselves behind me.
Speaker 2 (08:32):
All like them. Yeah, as they continue to make some
of these decisions that you know, continue to dig them
into a deeper hole. It sounds like a lot of
things need to change for your friend though and her husband, Amanda, Like,
you know, they got the job issue, You've got the
I think if there is just like one Cary possession,
I mean, yeah, there's the car repo which has hit
me of things, the second one that's happened now. I
think if they if this was a situation where they
(08:54):
were kind of cruising along and everything, you know, maybe
what you would call typical or normal, but then all
of a sudden something came up out of nowhere. Like
I could totally see that being a situation where you
might step in from a financial standpoint, But because of
the fact that this seems to be ongoing behavior, I
think the way that you are thinking about this is
the complete right way of doing it, where you don't
(09:16):
want to enable the behavior that has gotten them into
this situation.
Speaker 1 (09:20):
I think it can feel like the empathetic thing to
do to step in and help make the fix, But
I think then you could end up putting yourself in harmsuoy,
you can put your relationship in harms. Way, it's you
have to be really careful.
Speaker 2 (09:32):
Amandon.
Speaker 1 (09:32):
You mentioned the term boundaries, and I think that's a
really good term to use. I think that's often necessary
when we're talking about relationships, Like you have to have
healthy boundaries so you can remain friends and be a
positive influence in the ways that you can, and then
realize the ways in which you maybe can't have an
impact and don't try on those levels.
Speaker 5 (09:50):
Yeah.
Speaker 1 (09:50):
So, like, for instance, match you mentioned, Hey, I've got
the money to help, but if you give your friends money,
that's money you don't have in your bank account anymore,
and you might not be enough to make any sort
of real meaningful tents in their situation depending on how
much you have. That is true, right, So, Yeah, over
twenty thousand dollars in yeah, in credit card credit card debts,
that's a lot of money. Yeah, I mean to get
(10:11):
that car Loan back in good graces all of the
things that need to happen. Amanda might not have enough
to actually fix all this stuff, and even if she did,
it might not be the best thing for her or
for them, And so I guess I would suggest that
the biggest thing, Amanda, you can offer is a sympathetic here,
some light guidance, preferably in a way that doesn't involve shaming,
which doesn't sound like is something you would do anyway.
(10:33):
Shame obviously it creates the opposite instinct, right, Like it
makes us want to stop sharing and hide our flaws.
And that can happen with your friend where she's like, now,
this isn't a safe place to talk to Amanda anymore,
because every time I talk to her, she makes me
feel bad about my choices, like, you don't want to
do that. It can perpetuate negative feelings, and it can
lead to more unwise behavior, which is what got them
(10:53):
here in the first place in so many ways. So
one way to avoid that dynamic, I think, is to
share some of your own mistakes with them. I think
that can make them feel more comfortable learning from you.
And when you do have advice, they're like, oh, Amanda's
been here, she's been through hard stuff too, so she's
a person worth listening to.
Speaker 2 (11:09):
That's true. Yeah, it sounds like you have shared with
them a lot of good advice, and so maybe that's
not the tact that you should take. So maybe switching
things up where you are not their main source of
financial information might be the way to go. But that
doesn't mean that you need to leave them high and dry.
Like what I would do in this case would be
to connect them with a helpful resource.
Speaker 1 (11:28):
Oh, I thought you were going to say, put had
a money podcast onto the background.
Speaker 2 (11:30):
Ford, that's also good. How do you think something that's
a whole other question. Do you think somebody hearing their
situation being described on a podcast would make them more
or less inclined to then want to turn things around?
I don't know that depends, Amanda is gonna be up
to you as to whether or not you share this
episode with them. But what I was gonna say, though,
is to get them hooked up with someone like NFCC,
(11:51):
the National Foundation for Credit Counseling or MMI Money Management International.
They're a professional who has seen plenty of folks in
a position just like your bestie there is going to
be able to take the reins and help them out significantly.
And even if you, Amanda, have been listening like for
the show, to the show for a really long time.
Let's say like since episode one, you might have a
(12:12):
whole lot of knowledge, but I think trying to be
their their budget counselor that could actually do lasting damage
to your relationship. And considering you said that this is
like your best friend, this is something that I think
I would want to risk. So instead, just help them
to find someone else who can fill that role, and
then you can just be more of like a supporter type, right,
Like you can encourage your friend, you can be there
(12:33):
for them. Who can you know, chime in with some
money wisdom from time to time, But your ability to
be like the sole provider of the information, Like like
if you are at the center of this whole plan,
I personally I feel like it things can get really
messy really quickly.
Speaker 1 (12:47):
Yeah, there's some saying, man, I've heard that be the
wall that holds them up, not the roof over their head, right,
And maybe that's Hey, I'm going to be one of
the support pillars in their lives, but I can't be
the whole thing to them. I think you're right, Like,
there are great organizations out there doing good work, and
there are awesome people who work there, and it's not
going to call them an arm and a leg if
you go to one of these not for profit places
that you mentioned, and with all of the issues you've described, man,
(13:10):
it's kind of a litany of things going on. This
situation could get worse before it gets better, and there's
a chance that bankruptcy might be necessary. But the folks
at these nonprofit organizations can help determine that by digging
into their numbers and looking at the specifics, and they
should not only be able to help with budgeting, but
also in creating basically a triage list of which money
moves they need to make and in what order. They're
(13:31):
also going to have access to working with some of
the companies, some of the credit card companies in particular
that they on their own or you helping them won't
have access too, So I think that's an important thing
to mention also. And then once they have their marching
orders from one of these non nonprofit debt counseling centers,
your encouragement, your insights are going to come in handy
because they're going to be making progress, they're going to
(13:51):
be bouncing things off of you. They're probably going to
have lots of questions, and it's going to be really
nice to have someone they trust deeply, who knows their
stuff on the money front, who they can bounce those
questions off of.
Speaker 2 (14:01):
Yeah, and I mean remember too that turning this around,
I think is going to take a long time. It's
taken them a long time to get into the mess
that they are currently finding themselves in, and so I
think it's going to take a while for them to
get out as well. You are a good friend, you
can continue to be one there who is helping them,
But just know that you aren't going to be again
like at the center of their universe as they're turning
their financial lives around. That doesn't mean you don't check
(14:23):
in with them, certainly do that talk about it. You know, Joe,
you mentioned a shame there earlier that can easily take over,
meaning that your friend might even just go silent for
a while. And a good friend knows that that can
be a tendency, and so reach out see if she's
willing to or wanting to talk about that. And by
the way, if you actually if you do feel compelled
to financially help in order to help your friend to
(14:45):
accelerate their progress as they are making changes, as you've seen,
you know, positive movements in the right direction. Essentially, I
would avoid loaning the money instead see it purely as
a gift, something that they don't have to return, just
again because of the relation dynamics and how messy things
could get. But I think if I were in your situation, though,
I would find different ways to be present as a friend,
(15:07):
to demonstrate that you are willing to give in a
way but specifically that invests in your friendship together. And
so practically speaking, what that means is like if y'all
go out to get some Mexican food or something like that,
like picking up the tab, or like if you're gonna
go grab coffee, paying for it, because it shows that, Hey,
it's not that I'm not willing to put forth some
of my financial resources towards us. It's just that this
(15:30):
particular problem seems like it's something that that y'all keep
finding yourselves in. And so I think what that demonstrates, though,
is that you are there for your friend no matter what,
in this case, for richer or for poor. Yeah, it's
not like you you didn't take any vals. It's not
like y'all got married or anything. But like, that's what
a good friend is is someone who sticks with you
through this hard phase in life, which also begs the question, Joel,
(15:54):
do you think do you think it ever would get
to a point to where Amanda shouldn't maintain the friendship
with her friends, Like, because what I hear in her voice,
like kind of going back to the beginning we're talking
about how exasperated she sounds, is that like almost it
almost seems like she's at the end of her row.
That's a good question. I guess I'm pointing to Amanda's
mental health.
Speaker 1 (16:12):
I think you don't abandon your friends when they're when
when they're in a hard situation. Yeah, I think that's
what that's that's my gut reaction and totally I guess
if your friends are like, we love the lifestyle we're living,
that's jeopardizing everything we've worked for. I don't know that
that might be a different conversation than that's sure, but
I think if they're trying, and they and they actually
want to get better, yeah, you continue being there for them.
Speaker 2 (16:31):
Yeah, stick it out. That's yeah, as long as they
are respecting boundaries, right, Like if you are saying, hey,
I'm not willing, I'm not able to help you for
the for X SO and so reasons, and if they
keep coming back to you, like not demanding money, but
but asking, I feel like that would warrant a bigger
conversation where it's just like, look, you need to know
what kind of impact this is having on me from
a mental health standpoint. But it doesn't necessarily sound like that.
(16:53):
That's where you are, at least not yet, Amanda. And
it's a bummer to find yourself in a situation like this,
But hopefully we've given you some fodder, giving you some
good thoughts as you are trying to be a good friend.
But Joe, We've got more to get to, including that
question about long term care, our thoughts on that and
more right after this.
Speaker 1 (17:16):
All right, Matt, we got more money saving information to
get to on this episode. Let's get to a question
about cars, Wendy upgrade and how do you do it?
Speaker 4 (17:24):
Well, Hey, Matt and Joel, my name is Jay and
I am calling from Marietta, Georgia. I have a couple
of car related questions for you guys. I currently own
a used Hyundai Accent that I purchased back in twenty eighteen.
Since I've owned this car, I have experienced a variety
of small to major mechanical and other issues with this
car that have ended up costing me a lot of
(17:46):
money to maintain. The conventional wisdom that I inherited from
my parents is that when you own a car, you
should drive it basically into the ground. But since this
car has cost me so much money, at this point,
I am ready to look at selling it and purchasing
a different car. A quick search on CarMax and Carvana
(18:08):
gave me a trade in offer that looked like it
was a lot lower than my car might actually be worth.
So my question is, do you have any advice on
finding a private party that I might be able to
sell my car to. I've looked at other places like
an auto trader, but if you guys have any other
advice in that area, I would greatly appreciate it. Additionally,
(18:31):
my plan right now is to try and hold onto
this car and hope that I don't have any more
major issues until around the end of the year, as
that looks like it might be a better time to
look at purchasing a newer car, since dealerships typically offer
a lot of discounts or rebates during the holidays. In
terms of purchasing a new car. I was also wondering
if you have any advice on financing and purchasing a
(18:56):
newer car. Would it be better to go through finance
from a car dealership or a used car dealership like
CarMax or Carvana, or would it be better to seek
out an auto loan from a credit union or other
financial institution. I appreciate any advice you can offer. I
really enjoy listening to the podcast.
Speaker 2 (19:16):
Thank you so much, Right, Joel, do you feel like
Jay cheated a little bit? He has like three different questions,
so many questions at once. It's a complex situation when
you're like, do I keep it? If I'm selling it? Sure?
How do I go about it? What I'm buy the
new car?
Speaker 1 (19:30):
I mean, there's of course it's because it's really one
big decision that's a big expense and wrapped up to
a bunch of different ones. It's sorry that you've had
so many problems with this car, by the way, Jay,
that's that is the worst, Matt. It's a bummer to have.
Perpetual car problems can be really frustrating. And I think
the general rule of thumb that Jay's parents taught him
is a pretty good one, right, that the longer you
hold on to the car, on average, the more freedom
(19:51):
you're going to have to save and invest intentionally, the
more margin you're going to have in your life, because hey,
guess what it means not having a car payment for
potentially a long period of time. And we think that
the longer you can go in life without having a
car payment, or if you can essentially make that commitment
to not having a car payment ever, that's like a
financial cheat code. That is game Genie for your money.
(20:12):
Because for Matt, for the average American, they're spending so
much money on their car every month. To not have
any of that, it just gives you a lot more
wiggle room into making other decisions. But as mechanical issues proliferate, right,
we get that you want to drive something more reliable,
and I think when to ditch a used car is
kind of this perpetually difficult question. I think the truth
(20:33):
is money is only one part of the equation. Makes
you think Matt, I was talking to a friend recently.
He's got this Toyota Siena that's like twenty twelve or something.
It's in good condition, and he's like, should I get
rid of it before the issues start. I'm like, dude,
if you do, I'm buying it from you because that's
a great car. But that's how people tend to think
of cars. They want to beat it to sell it
before the issues begin. But oftentimes I think we need
(20:56):
to get more comfortable with realizing that repairs are a
part of life. Is or age, Yes, exactly.
Speaker 2 (21:02):
And that's that's kind of where I want to go
is because I'm reading between the lines a little bit
and I want Jay to be honest with himself because
he said that there have been a lot of expenses
and it's been maybe inordinately expensive, but.
Speaker 1 (21:13):
I want to know how much and over what period
of time?
Speaker 2 (21:15):
Yeah, and like what's the mileage on the vehicle, because
if we're talking, you know, is it because you've recently
rolled over one hundred thousand miles? Well, that's when there
are a lot of more expensive sort of maintenance and
repairs that need to be done. Break system, Yeah, to
a vehicle like that. And it's not like that this
is an expensive vehicle to maintain. Like we're not talking
about like a land Rover or something like that, some
foreign or European car. I should say this is a Hyundai,
(21:38):
a Hundai Accent. Those aren't expensive cars to maintain necessarily,
and they get pretty good gas mileage, and they're also
not flashy or sexy. So Jay, I guess I want
you to be honest with yourself, and I hope that
you're not using some of these repairs as any excuse
to be like, you know what, maybe it's time for
me to go ahead and make the upgrade. I'm kind
of not so keen on the old used Hyundai Accent
(22:01):
anymore because he said he bought it. He bought it
used several years ago, so it's an older vehicle. I
get that. I understand when you're at the car shop
and you get hit with like a five hundred dollars repair,
you start doing the math, You start calculating in your
head and you start thinking, dude, I could have a
brand new, sweet new ride for that much money. But
and you start to justify it.
Speaker 1 (22:20):
If I sign up for seventy two months of payment.
Speaker 2 (22:22):
Yeah, basically to do this for the rest of my life.
So again, I'm assuming a lot here. Reading between the lines,
I hear a used Hyundai Accent that you've purchased in
twenty eighteen, and I think that sounds like sounds like
you're just hitting your stride when it comes to that
vehicle and some and you've made some of these repairs.
Maybe that means this is something now that's good for
another fifty to seventy five to one hundred thousand miles,
(22:42):
Like maybe you're about to like this is going to
put you on the path to being able to drive
that thing for another one hundred thousand miles to where
you're at two hundred thousand miles and the entire time
you don't have a car payment.
Speaker 1 (22:51):
So yeah, I think base what you're saying is even
if you're paying two thousand dollars a year in like
maintenance and repair costs for that car, that would be
far less than the payments you would even buying like
a gently used newer car. To you like that would
be a cheaper route to take. So make sure. If
this car is a lemon, that's one thing. But if
this car, if this is just traditional maintenance that most
cars of this age need, I would just realize that
(23:14):
that's part of the game.
Speaker 2 (23:15):
Jay's probably like, man, of course, this is when the
guys have recently talked about crack windshields and pain coming
off their side mirrors. Yeah, Jay, you should know what
kind of answers we're gonna give when it comes to
potentially upgrading and getting a new.
Speaker 1 (23:26):
Car, right, Yeah, well, and okay, so if you are
going to upgrade, let's say this car is having more
significant issues, right, that these are perpetual there, they're bad, And.
Speaker 2 (23:34):
Let's say that we actually believe you. Jay.
Speaker 1 (23:37):
We're not calling here your truthfulness in to question here,
but we are just saying, like, think again. But sure,
Let's say you're gonna buy another car. You mentioned buying
from a dealership. That could be a solid route to take.
But it sounds like you've got some time here, right,
You're not in a massive rush to ditch this car.
It's not like it's currently in the shop and it's
got like a transmission issue and so you don't have
any way to get around. If you've got the patience
(23:57):
to do some digging, you might be able to score
a better car at a nicer price. If you're buying,
I would say directly from an individual, that is, it's
becoming harder and harder sadly to do that. More people
are matt selling their cars to middle men like Carbon
and Carmacks are buying from those companies too. They're not
bad companies necessarily, and in fact, some of their warranties
are nice. I appreciate that. But they've become the go
(24:20):
to for sellers and buyers alike, meaning that there's less
buyer to seller face to face transactions happening. But this
also means that those people aren't going to get as
much money for their ride. So where should you look?
I would say, look at auto Trader, right, but filter
down to private sales only. There's literally button at the
bottom left you can click and you can say, don't
show me anything from dealers, just show me from private
(24:42):
individuals who are listing their automobile for sale. Facebook Marketplace
is another one, but Matt even that's gotten a little
scammy at times, or not even scammy, but just overrun
with auto brokers who are buying from the auctions and
then selling them on there. I personally prefer to find
a private individual who's selling a car that I'm interested in.
I think that's the way to get the best car
for the for the best price, and then they've got
the records to show that they've had it. Yeah, for
(25:03):
how however long that they've maintained it. I think, no
matter what though, you always get that car checked out
by a mechanic you trust, whether it's from a dealership
or whether it's from an individual.
Speaker 2 (25:12):
Yeah. And because of the fact that Carvon and Carmacks
have made it so easy, I think fewer and fewer
folks than ever are actually selling their vehicles via a
private sale. They're basically trading in every single time. And dude,
I have always felt like it's worth the extra thousands
of dollars that you can net buy dii wining that sale.
It's not a joyous experience. It's not the most fun
that you've ever had in your entire life, but the
(25:33):
financial stakes are high when it comes to these larger
ticket items. I think it's worth it.
Speaker 1 (25:37):
You don't love when me and people are random parking
lots letting them to test rive your car.
Speaker 2 (25:41):
No, you come to me first, all, but go ahead,
get a quote from both Carvana and CarMax. If you
went see how it stacks up to what KBB says
that your car is worth, and if the gap is significant,
we'll go ahead and list it on Auto Trader. Get
it up there on Facebook. See what sort of response
that you might get. Because if it's minimal, well then
just hit the easy button. But again, if there's a
lot of folks clamoring for that vehicle, because it turns
(26:03):
out maybe you made all the expensive repairs and this
is a very attractive vehicle. Now I'm going back to
the whole thing about him keeping his access. I suppose
to selling it. But if you see a lot of
interest in your vehicle, then that could either a make
you reconsider selling it or B means that it's going
to be an even better financial decision to sell it privately.
Speaker 1 (26:21):
Yeah, and I think, Matt, there's actually more nuanced to
this question than ever before.
Speaker 2 (26:24):
Too.
Speaker 1 (26:24):
If you're thinking about buying a used electric vehicle, for instance,
because of the way the tax credit works, you would
want to buy that car from a dealer, because you
don't get the credit if you buy from an individual.
If I buy a Nissan Leaf from my neighbor, Matt,
I'm not getting a four thousand dollars tax credit. But
if I buy it from the dealership, And this depends
on where you follow in the income tax bracket, but
you are going to get a tax credit of four
(26:46):
thousand dollars for buying that vehicle. So make sure you
know that too, and you might actually save money, by
the way on tax by training in your car in
certain states. And Jay mentioned he lives in our fair
state of Georgia. This we're in one of those states
where if you're planning on buying from that same dealership,
it's worth finding out what they would pay for your
beat up Hundai because by training that in, maybe you
(27:07):
don't get as much money, but you will save money
on the sales tax portion, I think, which bridges that
gap at least a little bit. And I think one
last thing I want to say here, Matt is don't
forget to look at the reliability ratings on the new
car you're looking at purchasing from a site like Consumer Reports,
because we want you in a car that rates highly
so you can keep this next one you buy for many,
many many years to come.
Speaker 2 (27:27):
That'd be the goal.
Speaker 1 (27:28):
I think if you just kind of, oh, I like
the way that one looks, I get why people do that.
But if you look at the reliability ratings, find that
nice overlap of a car that rates highly from Consumer
Reports and then also looks good to you sure.
Speaker 2 (27:40):
And then you asked about financing. Definitely get a quote,
maybe two or three from local credit unions. Every stat
points to the fact that you're going to get a
lower rate from a credit union versus financing via the
dealership or financing with like one of the bigger banks.
But that being said, and we basically have to say
this every single time, but we are fans, big fans
(28:01):
of buying cars in cash. I also know that this
is easier said than done. But because of the fact
that it does not sound like you are in a
rush to unload that vehicle, I think it sounds like,
at least that this is more maybe a lifestyle sort
of decision as opposed to I need a reliable vehicle
to be able to get to work. And I think
(28:22):
another part of this too is the inconvenience of having
to take it into the shop. Like you have a
string of repairs and you start getting on a first
name basis with a mechanic. That's not a good feeling.
It's a noise, like, Hey, you want to go out
for beers? After this? You're like, I mean, you seem cool.
I'm here way too much. Man, I'm sorry. I was
hoping not to have that relationship with you though, But like,
nobody likes the inconvenience of having to take their vehicle in,
(28:43):
But I think that's that also just gets blown out
of proportion much more than it actually inconveniences or prevents
us from doing the things that we want to be
able to do, and typically basically because of uber and
left the ability. Like I don't want to have to
drop twenty or thirty bucks because I got to take
the van up to get the get a break job done.
But you know what, twenty or thirty dollars is nothing
when in comparison to a monthly payment where I to
(29:05):
finance a vehicle. So again I'm kind of going back
to the jay me wanting you to not use this
as an excuse to get a new vehicle if that's
the case. But if it's not the case and you
do need a vehicle and now you're considering financing, just
realize that financing and paying interest on a depreciating asset
that is not a winning formula to getting ahead.
Speaker 1 (29:23):
With your fight, which means you want to prioritize taking
on as short of a loan as possible. Maybe that's
two year loan or a three year loan at Max.
But if you're buying a used car taking out a
forty eight or sixty month loan, it's just it's really
bad news bears. So we would say buy a cheaper
car if you can find reliable cars that aren't thirty grand,
despite you know, I think popular assumptions. So make sure, yeah,
(29:45):
you're getting that loan, likely from a credit union.
Speaker 2 (29:46):
You're going to get the.
Speaker 1 (29:47):
Best rates and keep that loan term as short as
possible because that's going to be in the best interest
of your overall holistic financial situation. All right, let's get
to another question. This one's from a listener who wants
to quit his job.
Speaker 5 (30:00):
I joll them, Matt. My name is Kip and I
live out in the western suburb of Atlanta. I really
appreciate the show that you guys do, and the one
approach to advice that you guys provide is just really
encouraging and I enjoyed. I'm forty six and my wife
is forty seven, and personally I'm ready to bag work
and retire. Over the years, we've been able to get
(30:21):
all expenses down to about five K a month, and
we have enough for the four percent rule. And so
what I thought was that we'd go sit down which
was built as a produciary financial planner, just to give
the final blessing to pull the trigger on this. And
you know, and then the interview that we had with him,
all he really wanted to do was U pitch us
(30:42):
a bunch of our annuities and that kind of thing.
But you know, it's one thing he didn't mention that
got me to think in it is long term care.
Just looking at some of the costs, you know that
the long term chara can you know, if you need
to go nursing can end up being you know, ten
km month, you know, ten k for me CA for
my wife. So you see how that that could really
(31:03):
skywrocket your expenses. But you know, I started trying to
find some some various insurance plans and for long term care,
and you know, they all had some really define benefits
and in some cases, you know, you could pay the
insurance for years and they just keep raising the prices
and ultimately end up with nothing but a bunch of
money spent. So I started thinking, you know, I'd really
(31:28):
feel horrible if you know, I quit work at forty
six and you know ended up broke, you know, fifteen
years down the road. So what I'm wondering guys, if
you guys have had any ideas on how to deal
with the whole long term care issue or you know,
do you you just got to get six million bugs
saved up so that you know you can have enough
(31:48):
money on four percent rule. Thanks you, I I appreciate
any of us will be helpful.
Speaker 2 (31:53):
Kip, thank you so much for your question. And Joe,
the first thing and I think we should address here
is the fact that he is ready to.
Speaker 1 (32:00):
Retire, but he's only forty six years old, which is basically,
I'm done with that job. I'm tired of that jump
quote unquote. I think he said he's ready to bag it.
I think he's just love it. He's tired of being
a working stiff. And I get that sometimes the nine
to five can grind on it.
Speaker 2 (32:15):
I get it, I get it. But that being said,
so maybe the first thing worth talking through is it
might be helpful to think through what your life might
end up looking like were you to do something else.
Let's say you've been working over fifty hours a week
like the typical American. If that's the case, I get
the fatigue, I get the exhaustion, and the fact that
(32:35):
you've got so much money saved up that's incredible. So
if you have the capacity to retire, you are financially ready.
But from a retirement lifestyle perspective, as well as the
financial concerns, I think it's important to at least consider
maybe finding more enjoyable work, maybe find some different ways
to keep the paycheck flowing a little bit, but maybe
just reducing your overall workload, even if that also means
(32:58):
a reduced income, because you can always dial back even
more over time if you're like, no, guys, I really
want to be done with work altogether. Going from you know,
we've talked about retirement not necessarily being an on off
switch DOL, but like a dimmer switch, and I think
finding a way to gradually phase out of work could
lead to more positive outcomes in multiple areas of life,
not only financial, but that lifestyle. So you get used
(33:20):
to the idea of not having to, like you said,
go in and slog at the wherever it is that
you're working from nine to five at a minimum every single.
Speaker 1 (33:28):
Day, not to mention a commute all the whole nine yards,
and I get especially if you've been in the same
industry for twenty plus years and you're like, I'm just
done with this, man, I'm burnt out. I think that
happens to a lot of people, and not many people
have kIPS ability because they don't have the savings that
he's amass to be able to make this choice. But
I do want to say, like, yeah, you are only
forty six, and so maybe it's some sort of part
(33:48):
time work, or maybe it's working for yourself, maybe it's
doing something ultra part time, or maybe just pivoting to
another career that doesn't pay as much but where you
have more freedom over your lifestyle. Those could be worthwhile
considerations because I think typically Matt, we talk about it
as a dimmer switch. Most people think of it as
an on off switch. That's the traditional views. And so
it's like retirement. I guess my choice is either to
(34:09):
keep working here and doing something I hate, or to
stop and retire fully. That's not those aren't your only choices.
Speaker 2 (34:15):
Where you're kicking it on the front porch, right, that's
a lot of a lot of decades of hanging out
on the front porch. If that's if that's the case.
Speaker 1 (34:21):
Yeah, and he listened to the South like us, so
he's gonna be drinking sweet tea on the porch like
I would be, which is great. But you talked to Kip.
You you've taken this, this brilliant route of reducing your
expenses and of increasing your investments. That's the classic recipe
that leads to more choice for you. Our next pushback, though,
I guess, would be on the subject of annuities. You
mentioned talking to the financial planner. Jeez, yeah, be very
(34:43):
careful talking to that person any longer I would want
to get a second opinion from somebody else, I would
consider talking to somebody at Domain Money or Nectarine. Those
are cheaper ways to talk to a financial planner. And
while annuities, yes, they can offer a more predictable stream
of cash flow and more peace of mind, and potentially
they can be quite expensive. And so the way those
(35:05):
most annuities get sold, they're typically done through fear based tactics,
and often the fear is you're going to run out
of money in retirement, so you need this predictable source
of income, and you've done such a good job saving
and investing that you really might be able to stop
working before you turn fifty, which is awesome, but we
don't think you need to buy an annuity to turn
that into a reality.
Speaker 2 (35:24):
That's right. Yeah, he's doing a lot of his math
based on the four percent rule, which basically states that
if you've saved up twenty five times your annual expenses
and so this is the inverse of the four percent rule,
that for you to do that, you should feel comfortable
making this decision. But you've also got to make sure
that we're not just talking about your current expenses, but
that we are talking about your expenses way off there
(35:44):
into the future, and.
Speaker 1 (35:45):
Why there's long term things considerations coming to exactly in
the play.
Speaker 2 (35:50):
Yeah, and well and also too, like considering what you
want your retirement years to look like. I guess I'm
pointing to a lifestyle inflation. And again, we don't want
to push you to work like a dog until you
seventy years old, but we do want to make sure
that you're not bowing out too soon and that you
can handle a potential you know, a potential downturn in
the market from a mental and a portfolio perspective, and
that you are taking into account some of the future
(36:12):
lifestyle choices that you and your wife might have in
store for yourself.
Speaker 1 (36:16):
Would you still be meeting the four percent rule if
the stock market were to drop fifteen or twenty percent.
That's a that's a good question to ask, and Matt,
I think let's talk about long term care specifically, which
is basically the need for support as you age, right,
especially if you have like a chronic illness or disability,
and even if Kip, if you're in fantastic shape, you
don't know what things are going to be like thirty
years down the road. You might need some sort of
(36:37):
long term care at some point, and it can be
crazy expensive. It's gotten so much more costly over the
past ten or fifteen years as well. Insurance companies basically
they didn't price some of these policies appropriately, Matt. And
it's amazing to see some of the premium increases that
people have gotten stuck with. And what ultimately ends up
happening for so many of those folks is that they
(36:57):
bought this long term care policy assuming that premiums would
increase you moderately at most, and then what happens is
they get stuck with a thirty forty fifty percent premium
hike and they have to ditch their long term care insurance.
So it basically feels like and it actually kind of
is money that was tossed aside, completely wasted. Yeah, it
feels like you threw it into a fire. The other thing, too,
(37:19):
is stats from insurance companies show that something like seventy
percent of folks are going to need at least some
form of long term care insurance in their life, and
they always give this stat mat that the costs can
exceed one hundred thousand dollars per year, which certainly makes
it opens my eyes, but those facts can be a
bit misleading too. And plus, your insurance company could go
out of business in that time where your claim could
be denied, or again, like I said, those premiums could skyrocket,
(37:42):
making it unaffordable long term care insurance. The market for
it sucks. Yeah, there is potentially a need for greater
spending in some of those later years. I'm not sold
on the fact that long term care insurance is the
proper product though for most people. And the truth is,
middle class folks often find themselves in the most uncomfortable
positions because they've saved decently well and Folks who haven't
(38:05):
saved much at all can often depend on medicaid, and
folks who have saved tons of money can self ensure.
But if you're in that messy middle, that can be
a really tough spot to find yourself.
Speaker 2 (38:14):
Totally. Yeah, that messy middle, it seems like that that's
where Kip is finding himself. I would say, if you
can comfortably afford the premiums on a solid long term
care policy, that might be the best course of action.
But it's also worth highlighting here too that you're only
forty six years old, and so that's actually way too
young to pull the trigger on getting a long term
care policy in place. Typically a lot of experts say
(38:35):
to look around the age of sixty and so if
you were to go ahead and get one of those
in place, now, that's what fifteen years of potentially paying
premiums on something that you don't need to be paying
premiums on. And at that age, you would still likely
qualify with the medical underwriting to still qualify for affordable
products without having to pay these annual premiums from now
(38:56):
until then, which is most likely going to be when
you wouldn't need that policy in place and Something else
worth pointing out here too, is that it sounded like
this was not something that was on Kip's radar until
he met with the financial advisor who was trying to
sell him on the annuities, which is great because it
didn't the sales pitch didn't work on the annuities, but
it has gotten him thinking about this. But they're always
(39:18):
going to run through the worst possible scenarios where they're
looking at the largest amount possible to end up paying
for long term care. They're looking and they're also forecasting
years and even decades of this long term care because
if you're thinking, oh, yeah, we're talking about one hundred
thousand dollars each, but when you look at the numbers,
I think the average stay in a long term care
facility is only something like three point seven years. And
(39:40):
so I'm not saying that that's not a whole lot
of money, But that being said that it's also not
a guarantee that you're going to find yourself in that
sort of position. So at the very least, I'm glad
that this is something that you are thinking about in
the here now and for you to make informed decisions,
but it's definitely not something that you need to look
at getting in place right now.
Speaker 1 (40:00):
I think Kip's got plenty of time to plan for
that and to put himself into that self insurance camp
right where if he not. Like, we want you to
work for the next thirty years, Kip, but I think
you can plan for potentially a few hundred thousand dollars
worth of potential long term care needs at some point
in your future decades down the road. But that might
mean delaying your retirement date by a couple of years
(40:21):
so that you can continue to fund some of those
accounts and that you can have more of a cushion
to fall back on the long term care insurance market.
Speaker 2 (40:28):
Yeah.
Speaker 1 (40:28):
Like, I think you're right, Matt. I think it's probably
too early to be looking there anyway. But the truth
is a lot of those policies that are expensive, they
can be volatile. The premium need, the premium amounts can change,
and self funding is a better approach to take if
you can pull it off.
Speaker 2 (40:42):
And it's also.
Speaker 1 (40:43):
Important to note, Matt that there are other ways. Let's
say I don't know if Kip is a renter or
a homeowner, but if you own your home free and clear,
well there's a lot of equity built up in that home,
and so lots of times people choose to do something
like a reverse mortgage instead of having a long term
care policy. Those can be expensive, those aren't the best
product either, but that might be a better choice for
a lot of people than a long term care policy too,
(41:03):
especially when a lot of those long term care policies
get ditched before it gets time to use them. So
I think that might be at least a more flexible approach.
Speaker 2 (41:12):
Yeah, and another consideration too, and this wasn't at all
something that get brought up in his question, but I
think look into family because, like I think one of
the reasons people don't like reverse mortgages is because they
start to think, well, then I don't have anything to
give to my kids, right, they're thinking about generational wealth.
But if you have kids, I think it's worth having
a conversation with them and considering a multi generational household.
(41:33):
It's something that's very common in other countries, but it's
just not a part of our society. It's not a
part of our culture here in the US. But I
think it's like it's the best of both worlds because
you've got aging parents where they're at the point in
time where they might need some of that help and
it would be more affordable for them for the assets
that they have to be able to offset the costs
(41:53):
associated with an adult child who's then helping to take
care of them. And then they also have additional time
with their kids or even the grandkids. You've got built
in community, Like it's just a win win. And if
that's not a conversation, and again may not be a
part of Kip's situation, but for everyone else out there,
I think this is a real consideration. I want this
just to be more of a talking point, something that
(42:14):
comes up, something that's considered, because it's totally on our
radar as something that might be off in our future.
We just live in a world, in a country specifically
that glorifies and holds up independence and sort of in
that independent sort of lifestyle as opposed to being more
reliant in community with each other, which I think can
be more beautiful and healthier on multiple fronts, not only
(42:35):
in relational ways, but also financially as.
Speaker 1 (42:37):
Well, especially that familiar level. And I think this is
just keeps asking a great question at a great time
for him, because he still has so many options in
front of him. He's still working, still earning an income.
He could choose to prolong that retirement age by just
a little bit. There's so many different choices he can
make on the way to be prepared for these possible
future large expenses coming down the pike. I wouldn't you know,
(42:58):
put blinders on and assume that you're not going to
encounter any sort of health headwinds. You know that as
you get further along into your retirement years. But now
is the right time to start planning for those things
and to start saving ahead so that you're ready to
tackle those things and so you don't feel kind of
hoodwinked into buying some sort of expensive policy that doesn't
make sense for you and your family.
Speaker 2 (43:19):
That's right, man, But everyone out there stick with us
because we've got more personal finance content to get to
just right after this break. All right, we're back.
Speaker 1 (43:35):
It is, of course time now for the Facebook question
of the week. Comes from the how to Money Facebook group,
which you should join if you're not a member of
This question comes from Catherine. She says, Hey, Matt and
Joel love your podcast. Thank you for everything you do
and everything you've taught me. I'm newly married and my
husband and I are opening a joint bank account at
the end of this year. We discussed Bank of America,
being that it's conveniently located near where we live. But
(43:57):
I just listened to your Friday Flight episode. Please tell
me the cons of banking with a big bank so
that I can explain it to my new husband. Why
do you favor online banks such as Discover? My husband
loves the idea of being able to go to his
bank and pull out cash at any given time, so
that's his reasoning the bank with Bank of America. Let
us know what you guys think. First, we got to
say congrats on getting married. Oh yeah, yeah, congrats to
(44:20):
you too.
Speaker 2 (44:20):
And let's go ahead and just address that specific question,
which is that most of the online banks reimburse ATM fees,
so you can pretty much get cash. You don't have
to go to the actual actual bank branch in order
to get your hands on some cash.
Speaker 1 (44:31):
They're part of some sort of ATM network, and they're
like at the local drug store. Instead of the bank
that's on the street corner, it's at the drug store
thread around the corner. So in fact, Target, like I
think Capital One has all their banks have They've got
ATMs at every target around the country.
Speaker 2 (44:45):
So it's actually more convenient for your husband to get
his hands on cash. I think most likely were he
to go with some of the online banks.
Speaker 1 (44:52):
That we loved, and you need cash these days, not
much the ability some people.
Speaker 2 (44:56):
I don't know. I don't want to make it assumptions
about Catherine's husband.
Speaker 1 (44:59):
I pay with the that they put in my wrist map,
which you don't actually, although I see that a whole
Foods you can pay like Amazon customers can pay with
a chip in their body.
Speaker 2 (45:06):
While someone's they're buying pizza. Though a little freaky it
was out of order or whatever. Did you see that? Yeah,
the cath Let's highlight some of the main issues. First
of all, bad customer service. Uh. This makes me think
about Wells Fargo and all that they have done to
their customers, some of the awful ways that they've treated
folks over the past decade. We would rather see you
(45:27):
do business with companies who don't actively hate you. The
culture at some of these gargangum banks is just so
toxic that we would just we would honestly rather see
how money listeners completely avoid them, and maybe you're thinking, well, yeah,
customer service, like what kind of customer service do you
actually have when it comes to some of these online banks.
You know what, maybe it's not any better than were
you to reach out to a bigger bank digitally online,
(45:48):
but the fact that they haven't participated in underhanded schemes
to be able to open accounts as branches are trying
to reach certain quotas. There's just there's a history of
untrustworthy behavior that we've seen some of the bigger branches
that were not fans of I think.
Speaker 1 (46:03):
And actually a lot of the banks that you and
I talk about, Matt, it's actively less bad and it's
it's proactively better too. I think it's easier to get
a human on the phone to talk about a problem
you have. Yeah, there's no bank branch you can walk into,
but the one hundred numbers are typically better with the
online bank. So if you need or you care about
customer service with your bank, I think that is a
selling point. The truth ist too, the products from the
(46:25):
big banks often suck too. Like think about savings accounts,
for instance, the big banks don't come close to paying
you a reasonable return on your savings. I think Wells Fargo, Matt,
who you just aptly mentioned, they're paying point one five
percent on their savings account. That's awful. Chase is paying
point zero one percent, which is even worse. And then
at Bank of America, which is the bank that's right
(46:47):
around the corner from Catherine, point zero three percent is
standard the gold tier.
Speaker 2 (46:51):
Oh you want to know what that is, Matt, point
zero four percent.
Speaker 1 (46:54):
Oh, and then oh you want to go platinum dog
point zero five percent. It's you can't make this up.
It's these like incremental increases that mean essentially nothing, whereas
like competitive banks are paying you know, four and a
quarter four and a half percent. Say, but you missed
out on Platinum Honors, which is point zero six percent. Yeah,
you found you missed the upper tier, which maybe you're thinking, Catherin,
(47:17):
you're hearing to say these numbers, and you're like, yeah,
but like he doesn't that doesn't mean all that much.
All right, listen up, because if you run the numbers,
the average two person household in America has seventy five
thousand in annual expenses. So cut that in half, you're
looking at thirty seven thousand dollars. That's what you should
roughly have in your emergency fund if you've got six
months worth of living expenses set aside. Now, if you
(47:39):
go with a bank like cit who I believe at
this point is paying four point seven percent, it's definitely
over four percent. That's good, not point zero four like
literally four plus percent. You're talking about earning seventeen hundred
dollars on the money that you've got just sitting there
parked in your emergency fund versus guess what it is
you'll at point zero six percent, guessing it's about ninety
(48:01):
two cents.
Speaker 2 (48:03):
It's not that lot. Okay, twenty two bucksky, but still
over seventeen hundred dollars versus twenty two dollars. That there's
a big difference there. Just in a credit mathmath, it's
revealing of what you think of of the large I
have so little regard for those big banks and matt
So you're talking about rates of return, but then talk
about the fees too. So a lot of these these
(48:23):
checking accounts or savings accounts again worse with some of
the big banks, they might that one hundred and seventy
dollars or whatever you might have earned can be completely
wiped away thanks to the monthly service fees they are
going to charge you. So, I mean the big banks,
they keep threatening to bring on new fees even while
the banks we love are taking fees away, they're eliminating them. Yeah,
the rates on the product, like on the loan products
(48:44):
as well, are going to be much worse. And so
I just I literally searched the first credit union that
popped up in the mind here locally, and it's over
half a percent better than what it is that Bank
of America's got, and that's for a just a thirty
year mortgage with twenty percent down.
Speaker 1 (48:58):
It's amazing. The big banks are actually banking on name
recognition and brick and mortars near you, yep, to retain
your loyalty. And we would say that's not good enough,
Like there's so many reasons to choose the online banks
and credit unions instead. People remain, though, Matt, because inertia
bias it's hard for humans to overcome. I'm hoping here
that we've convinced Catherine and that she can convince her husband,
(49:19):
because the best banks these days are online banks like
Discover ally cit We mentioned them all the time. Low cost.
Broker's firms like Fidelity and Schwab actually have good banking
products too. Betterment has a good one as well. They
pay really good rates on your savings. Customer service is superior.
They're still big enough to have solid fee free ATM networks.
I mean, you get all the modern amenities without the
(49:40):
horrible downsides.
Speaker 2 (49:41):
That's right. So just point that out. And for me
it's I mean the savings rate that they're paying, like
if you are willing to pay over but you're basically
paying over fifteen hundred dollars for the convenience every single
year to be able to pop into your local branch.
Speaker 1 (49:53):
Not worth it, Not worth it, You're right. I think
of that as a gargantuan fee that the big banks
are charging. And to have that comedian brick and mortar location,
it ain't worth it. You don't want to fund that
building for them.
Speaker 2 (50:03):
But all right, let's get to the beer that you
and I enjoyed.
Speaker 5 (50:06):
Joel.
Speaker 2 (50:06):
This was the Ube Macapuno Delight. It's an Ube chocolate
coconut porter donated to the show by our buddy Joel,
and this is brewed by Brewyard Beer Company. What were
your thoughts?
Speaker 1 (50:18):
Well, I had to look up ube. Ube is apparently
purple yam. Yeah, I didn't even realize that it's like
a so yams were harmed in the making of this beer.
Speaker 2 (50:27):
It's from the Philippines, so ube is like it's evidently
it's got like sweet potata like vibes. But it's often
used in making desserts, which makes sense because the can
is purple. It looks like a cake, like a layered
cake of sorts. But uh, yeah, what were your thoughts?
I thought this was good.
Speaker 1 (50:42):
Yeah, it had like coconut, vanilla, and chocolate be vibes
kind of all combined together in a porter package, which
is kind of a lighter version of a stout in
so many ways, And I enjoyed it. It was it
was a little a little sweet for my taste, like
not my favorite thing, but I thought it was solid.
Speaker 2 (50:58):
Was it sweet or were you convinced that sweet based
on the icing that the design ont of this can
that's dripping down, so it makes you think that, oh,
this has got it. There's maybe a little more vanilla
than I would totally typically go for. Yeah, the vanilla
and the coconut kind of joined forces and both come
across stronger than I think they would have otherwise. Yeah,
but it's also like I guess maybe the roasty sort
(51:19):
of flavors, but do you remember clove. Well, I'll just
leave it at that. Clothes like you know, like a
like a Christmas ham, Like, yeah, you set the clothes
in there. You know what kind of spices that you're
talking about With clothes? It almost says that kind of
flavor profile going on. But it makes me think of
I don't know, it also makes me think of the holiday.
So I actually kind of like it. As the temperatures
are starting to cool down a little bit and we're
getting into maybe some of these beers that have a
(51:39):
little more backbone.
Speaker 1 (51:40):
The Porter is a great drink for October. Like you
don't want to drink a Porter in August, but once October.
Speaker 2 (51:46):
And then maybe you're not even ready for the barrel
aged out yet. Yeah, in October either, like between you
want to say that for December for January.
Speaker 1 (51:52):
I had a good october Fest the other day and
I was like, oh man, I'm not Usually Octoberfest isn't
the thing I yearned for, but in this time of year,
it just it's the right drink.
Speaker 2 (52:00):
It fits the mood nice. All right, Well, that's gonna
be it for this episode. Listeners can find our show
notes up on the website at howtomoney dot com. Oh,
I meant to say too. We're talking about, uh, it
was Catherine, her husband. Why he uses cash all the time.
Why don't you just use a credit card? You're also
giving up so many benefits by not using a credit card,
like even a basic credit card. And you can hop
over to the site at howdomony dot com forward slash
(52:22):
credit card tool and you can literally sort it by
I want a card that's free, so zero annual fee,
and I just want to earn simple cash back, and
it'll pop up several options there for you, as long as,
of course, you don't rack up a bunch of debt,
which is maybe that's why Catherine's husband is completely avoiding
cards all Maybe and he likes dealing in cash or
maybe yeah, he just.
Speaker 1 (52:41):
Used to doing it and he hasn't changed his ways.
And if he handles credit cards, well that would be
a better form of payment. So yeah, all right, that's
gonna do it for this one, Matt. Until next time,
Best Friends Out, Best Friends Out.
Speaker 3 (53:02):
The hun spe
Welcome to Had of Money. I'm Joel, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
That's right, buddy, We've got listener questions to get to.
This Monday. We've got a relational money question that I'm
actually really looking forward. It's not the best situation, but
I am looking forward to it because we don't talk
about relationship kind of stuff as opposed to like the
nuts and bolts, which is typically what we talk about
here on the show.
Speaker 1 (00:40):
All right, so let's talk about this. Should you marry
rich Matt? Should you marry for money? That's going to
be the question that we get to. That's what actually
Emily always tells me if you were to die, I
would only marry for money the next time around.
Speaker 2 (00:50):
Really, yeah, she's like one hundred percent. Serio.
Speaker 1 (00:52):
I don't think she means it, Okay, I mean she
says it a lot, so maybe she does. I think
it was just trying to say. What she means is
I love you. I could never love someone else like you.
So for just the bank accounts, see, that's how you
interpret it.
Speaker 2 (01:06):
But I feel like there are more layers to this
financial onion to appeal. But no we will get to
that relational mini question. We've got somebody else who's trying
to figure out when to ditch his car, when to
replace it. Another listener is looking for different ways or
I guess he's trying to figure out how to afford
long term care insurance, which isn't something we often talk
about on the show.
Speaker 1 (01:26):
So wants to know whether even needs it to Yeah, yeah.
Speaker 2 (01:28):
Yeah, So we've got a great show lined up for
y'all today.
Speaker 1 (01:30):
All right, let's do a frugal cheap we haven't done
one in a second. This one Matt someone the other
day My two thousand and five accurate SUV still running fine, nice,
and it's it's been a good car. I've had it
for a year and a half now. Bought it super
duper used for cheap. But when I bought it, there
was a crack in the passenger side of the windshield.
And I remember the first time Emily got into it
(01:52):
and she was like, what.
Speaker 2 (01:53):
Are you doing? Man? Like, why did you buy this thing?
I was like, because what kind of hoop do you?
Speaker 3 (01:58):
Right?
Speaker 2 (01:58):
Has parked in my driveway.
Speaker 1 (02:00):
Because I can see just find out on my side.
I don't care if you can see or not, and
so I could see how it'd be more distracting from
the passenger. The passenger that's way on the other side
of the car, who cares?
Speaker 2 (02:09):
Are you so?
Speaker 1 (02:10):
And then I had someone that that they say, when
are you going to replace your windshield?
Speaker 2 (02:14):
Man?
Speaker 1 (02:14):
I was like, this is a four thousand dollars car.
I'm not planning on putting in a four hundred dollars windshield.
Like it's not interested. I bought this knowing this. I
knew I could see out of it. Not willing to
pay ten percent of the overall cost of the vehicle
just to have a clear windshield. I know in some
states they actually either one they forced insurance to pay.
Speaker 2 (02:31):
For it or zero deductible states.
Speaker 1 (02:33):
Yeah, or they force you to do this because there
are safety checks every year from the state. But in
Georgia that's not the case. So I can keep rolling
with this Florida busted windshield, New York, Arizona. I think
those are all states that have the zero deductible. Essentially,
it's like cracked windshield, boom, you get a replace for free.
Speaker 2 (02:49):
Yeah.
Speaker 1 (02:49):
I think it was in Virginia. I remember my friend
lived there for a while and I think they had
those safety checks and so if there was a crack
or something, even just a nick, they might be like, hey,
you gotta fix that thing. And so okay, am I
frugal or cheap?
Speaker 2 (03:02):
Is it? Uh?
Speaker 3 (03:03):
Well?
Speaker 2 (03:03):
Has it gotten worse or the same? It's bad, It's
been bad. What's funny is I've written obviously I've ridden
in the vehicle. I can't really picture it. It's pretty
big crack, is it really? Oh yeah, it's that's so funny.
Speaker 1 (03:15):
It's going up and down like three quarters of the windshield.
Speaker 2 (03:17):
Okay, I would say if you didn't have the ability
to see through your windshield clearly, sure it's appos dumb
and dumber style looking out the side. Yes, like have
you obviously you've you've driven it in the rain?
Speaker 4 (03:29):
Right?
Speaker 2 (03:29):
Does the crack impact the ability of your wipers to
clear the windshield?
Speaker 3 (03:32):
No?
Speaker 2 (03:32):
Okay. I think if you, let's say you were a
realtor where you did business out of your vehicle, you know,
like if you had a sales like job or you
had clients in your car, of course that would be
cheap because that could hinder the potential sale.
Speaker 1 (03:44):
That would be a cheap move. I'm trying to impress
no one though.
Speaker 2 (03:47):
You are a podcaster, so the visuals don't really matter
so much, especially when it comes to our vehicle. So, dude,
I'm with you, one hundred percent frugal, Okay, keep the
crack windshield all right, and feel free.
Speaker 1 (03:58):
If you are out there listening and you're like, that's
so dump you should totally replace it, let me know why.
Feel free to emails how to moneypod at gmail dot com.
I always love hearing from you guys and hearing what
I bet in some people's minds.
Speaker 2 (04:08):
Matt, that is cheap.
Speaker 1 (04:09):
It's not frugal, but I knew it buying it. It's
got this crack, but to me, it's just it's basically
what do you call it?
Speaker 2 (04:15):
Cosmetic? That's it.
Speaker 1 (04:17):
Yeah, And so because of that, I was down to
buy it and to not replace that, and to hold
on to this thing as long as I can.
Speaker 2 (04:24):
I'm with you, okay, So I guess on a somewhat
related note, quick question, another frugal or cheap though, The
side mirrors on our van are twenty twelve hundred Odyssey.
It's made of plastic, and the plastic is like or
the paint. It's like a covering or something. It's coming off,
you know, you go through the high powered car washes,
and bottom line, it looks like it's it looks pretty ratty.
Do you think I should take the pressure washer and
(04:46):
just blast it off completely and like spray it with
some like black shiny spray paint to make it liquid
or should I not even worry about that? This is
similar because this, I would even say, is maybe even
more visible because when people see our van, they know
it's us because I don't know what it is. But
it's like the it's almost like a vinyl covering that's
getting that's that's peeling. Have you noticed it?
Speaker 3 (05:05):
No?
Speaker 2 (05:05):
I haven't, And honestly, clearly we are pointing out the
fact that we don't care at all about what our
vehicles look like. Yeah, I don't. I think that's true.
That'd be like a that would come in about our
bottle of spray paint or something.
Speaker 1 (05:16):
Yeah, exactly, that's so much cheaper, and that would come
down I think more less about oh what am I
projecting to other people as opposed to what do I
care about in the car that I'm driving?
Speaker 2 (05:23):
Yeah, it's about like trying to keep our ride looking fresh.
So like my dad.
Speaker 1 (05:27):
He scraped the side of our van when he was
driving it, like like last year, and I didn't even
bother getting it fixed that He was like, oh, no,
I'll pay for it. I'm not gonna make my dad
pay for that, Like come on, yeah, that to me,
that would be that'd be cheap, not frugal. So I'm like, no, Dad,
let's just leave it. That's the story about it. The
beauty of driving old cars is that I care less
about those cosmetic things and dents.
Speaker 2 (05:46):
But if you had pulled the trigger and you had
a one to two year old Rivian and he did
that in that case.
Speaker 1 (05:52):
That's part of the reason I don't want to one.
In some ways, I'm like, because I'll freak out more
about it, and I don't want to because I don't
want to care about cars. Yeah, all right, let's mention
the beer we're having on this episode, Matt. This one's
called Ube Macapuno Delight. It's by Brewyard Beer Company. This
one was given to us by our friend Joel, and
we'll give our thoughts on this one at the end.
Speaker 2 (06:10):
Of the episode.
Speaker 1 (06:11):
Great job on the pronunciation there. We'll also reveal what
ube means y o you had to look it up.
So we both looked it up because because I didn't
know either. Well, yeah, we'll talk about that later. But
all right, let's get to listener questions. If you have
a money question for us, we would love to take it.
We'd love to hear it. You can just go to
howtimoney dot com slash ask for simple directions on how
to record your voice memo and send it our way.
Speaker 2 (06:34):
But really that's all it is.
Speaker 1 (06:35):
It's recording a voice membo on your phone, emailing it
over to us, and hopefully we can take it next
week on the show. Matt, It's time now to get
to a money question that has a lot of relational
dynamics infused into it.
Speaker 3 (06:45):
Hey, y'all, this is Amanda from San Antonio. I have
a bit of a doozy for you. My best friend
in the whole world is in about twenty thousand dollars
of credit card debt with interest rates ranging from twenty
five to thirty percent as I understand it, and her
husband's car was just repossessed for the second time in
(07:08):
four years. She is a stable W two job. He
works a job that is unstable and unreliable and also
an hour and a half from their home, and now
he can no longer commute to it. They are living
outside of their means. I don't have all the details,
but from what I've gathered, they're going further into credit
(07:32):
card debt month by month, and now they have this,
you know, car repossession emergency. I've done all the things
I've you know, suggested he get a job that's walkable,
and they get an emergency fund under them, and everything
you guys would recommend, I think I've recommended to them.
So what I'm asking about is how to navigate this.
(07:53):
I want to be a good friend, and I have
the money to help, but I also want to hold
a boundary and I do not want to enable the
behavior that got them into this position. Man. That's That's
what I'm dealing with right now. I hope you guys
can help. I love the show.
Speaker 2 (08:11):
Thank you, guys, joel Man. This is tough to hear,
like you can literally hear it in her voice, just
how like this the situation that Amanda's friend is in
is how it pains her aially.
Speaker 1 (08:23):
I mean, it's tough to see your friends struggle, and
it's tough to see your friends kind of especially when
you know better, and it's tough to see them just
continually put themselves behind me.
Speaker 2 (08:32):
All like them. Yeah, as they continue to make some
of these decisions that you know, continue to dig them
into a deeper hole. It sounds like a lot of
things need to change for your friend though and her husband, Amanda, Like,
you know, they got the job issue, You've got the
I think if there is just like one Cary possession,
I mean, yeah, there's the car repo which has hit
me of things, the second one that's happened now. I
think if they if this was a situation where they
(08:54):
were kind of cruising along and everything, you know, maybe
what you would call typical or normal, but then all
of a sudden something came up out of nowhere. Like
I could totally see that being a situation where you
might step in from a financial standpoint, But because of
the fact that this seems to be ongoing behavior, I
think the way that you are thinking about this is
the complete right way of doing it, where you don't
(09:16):
want to enable the behavior that has gotten them into
this situation.
Speaker 1 (09:20):
I think it can feel like the empathetic thing to
do to step in and help make the fix, But
I think then you could end up putting yourself in harmsuoy,
you can put your relationship in harms. Way, it's you
have to be really careful.
Speaker 2 (09:32):
Amandon.
Speaker 1 (09:32):
You mentioned the term boundaries, and I think that's a
really good term to use. I think that's often necessary
when we're talking about relationships, Like you have to have
healthy boundaries so you can remain friends and be a
positive influence in the ways that you can, and then
realize the ways in which you maybe can't have an
impact and don't try on those levels.
Speaker 5 (09:50):
Yeah.
Speaker 1 (09:50):
So, like, for instance, match you mentioned, Hey, I've got
the money to help, but if you give your friends money,
that's money you don't have in your bank account anymore,
and you might not be enough to make any sort
of real meaningful tents in their situation depending on how
much you have. That is true, right, So, Yeah, over
twenty thousand dollars in yeah, in credit card credit card debts,
that's a lot of money. Yeah, I mean to get
(10:11):
that car Loan back in good graces all of the
things that need to happen. Amanda might not have enough
to actually fix all this stuff, and even if she did,
it might not be the best thing for her or
for them, And so I guess I would suggest that
the biggest thing, Amanda, you can offer is a sympathetic here,
some light guidance, preferably in a way that doesn't involve shaming,
which doesn't sound like is something you would do anyway.
(10:33):
Shame obviously it creates the opposite instinct, right, Like it
makes us want to stop sharing and hide our flaws.
And that can happen with your friend where she's like, now,
this isn't a safe place to talk to Amanda anymore,
because every time I talk to her, she makes me
feel bad about my choices, like, you don't want to
do that. It can perpetuate negative feelings, and it can
lead to more unwise behavior, which is what got them
(10:53):
here in the first place in so many ways. So
one way to avoid that dynamic, I think, is to
share some of your own mistakes with them. I think
that can make them feel more comfortable learning from you.
And when you do have advice, they're like, oh, Amanda's
been here, she's been through hard stuff too, so she's
a person worth listening to.
Speaker 2 (11:09):
That's true. Yeah, it sounds like you have shared with
them a lot of good advice, and so maybe that's
not the tact that you should take. So maybe switching
things up where you are not their main source of
financial information might be the way to go. But that
doesn't mean that you need to leave them high and dry.
Like what I would do in this case would be
to connect them with a helpful resource.
Speaker 1 (11:28):
Oh, I thought you were going to say, put had
a money podcast onto the background.
Speaker 2 (11:30):
Ford, that's also good. How do you think something that's
a whole other question. Do you think somebody hearing their
situation being described on a podcast would make them more
or less inclined to then want to turn things around?
I don't know that depends, Amanda is gonna be up
to you as to whether or not you share this
episode with them. But what I was gonna say, though,
is to get them hooked up with someone like NFCC,
(11:51):
the National Foundation for Credit Counseling or MMI Money Management International.
They're a professional who has seen plenty of folks in
a position just like your bestie there is going to
be able to take the reins and help them out significantly.
And even if you, Amanda, have been listening like for
the show, to the show for a really long time.
Let's say like since episode one, you might have a
(12:12):
whole lot of knowledge, but I think trying to be
their their budget counselor that could actually do lasting damage
to your relationship. And considering you said that this is
like your best friend, this is something that I think
I would want to risk. So instead, just help them
to find someone else who can fill that role, and
then you can just be more of like a supporter type, right,
Like you can encourage your friend, you can be there
(12:33):
for them. Who can you know, chime in with some
money wisdom from time to time, But your ability to
be like the sole provider of the information, Like like
if you are at the center of this whole plan,
I personally I feel like it things can get really
messy really quickly.
Speaker 1 (12:47):
Yeah, there's some saying, man, I've heard that be the
wall that holds them up, not the roof over their head, right,
And maybe that's Hey, I'm going to be one of
the support pillars in their lives, but I can't be
the whole thing to them. I think you're right, Like,
there are great organizations out there doing good work, and
there are awesome people who work there, and it's not
going to call them an arm and a leg if
you go to one of these not for profit places
that you mentioned, and with all of the issues you've described, man,
(13:10):
it's kind of a litany of things going on. This
situation could get worse before it gets better, and there's
a chance that bankruptcy might be necessary. But the folks
at these nonprofit organizations can help determine that by digging
into their numbers and looking at the specifics, and they
should not only be able to help with budgeting, but
also in creating basically a triage list of which money
moves they need to make and in what order. They're
(13:31):
also going to have access to working with some of
the companies, some of the credit card companies in particular
that they on their own or you helping them won't
have access too, So I think that's an important thing
to mention also. And then once they have their marching
orders from one of these non nonprofit debt counseling centers,
your encouragement, your insights are going to come in handy
because they're going to be making progress, they're going to
(13:51):
be bouncing things off of you. They're probably going to
have lots of questions, and it's going to be really
nice to have someone they trust deeply, who knows their
stuff on the money front, who they can bounce those
questions off of.
Speaker 2 (14:01):
Yeah, and I mean remember too that turning this around,
I think is going to take a long time. It's
taken them a long time to get into the mess
that they are currently finding themselves in, and so I
think it's going to take a while for them to
get out as well. You are a good friend, you
can continue to be one there who is helping them,
But just know that you aren't going to be again
like at the center of their universe as they're turning
their financial lives around. That doesn't mean you don't check
(14:23):
in with them, certainly do that talk about it. You know, Joe,
you mentioned a shame there earlier that can easily take over,
meaning that your friend might even just go silent for
a while. And a good friend knows that that can
be a tendency, and so reach out see if she's
willing to or wanting to talk about that. And by
the way, if you actually if you do feel compelled
to financially help in order to help your friend to
(14:45):
accelerate their progress as they are making changes, as you've seen,
you know, positive movements in the right direction. Essentially, I
would avoid loaning the money instead see it purely as
a gift, something that they don't have to return, just
again because of the relation dynamics and how messy things
could get. But I think if I were in your situation, though,
I would find different ways to be present as a friend,
(15:07):
to demonstrate that you are willing to give in a
way but specifically that invests in your friendship together. And
so practically speaking, what that means is like if y'all
go out to get some Mexican food or something like that,
like picking up the tab, or like if you're gonna
go grab coffee, paying for it, because it shows that, Hey,
it's not that I'm not willing to put forth some
of my financial resources towards us. It's just that this
(15:30):
particular problem seems like it's something that that y'all keep
finding yourselves in. And so I think what that demonstrates, though,
is that you are there for your friend no matter what,
in this case, for richer or for poor. Yeah, it's
not like you you didn't take any vals. It's not
like y'all got married or anything. But like, that's what
a good friend is is someone who sticks with you
through this hard phase in life, which also begs the question, Joel,
(15:54):
do you think do you think it ever would get
to a point to where Amanda shouldn't maintain the friendship
with her friends, Like, because what I hear in her voice,
like kind of going back to the beginning we're talking
about how exasperated she sounds, is that like almost it
almost seems like she's at the end of her row.
That's a good question. I guess I'm pointing to Amanda's
mental health.
Speaker 1 (16:12):
I think you don't abandon your friends when they're when
when they're in a hard situation. Yeah, I think that's
what that's that's my gut reaction and totally I guess
if your friends are like, we love the lifestyle we're living,
that's jeopardizing everything we've worked for. I don't know that
that might be a different conversation than that's sure, but
I think if they're trying, and they and they actually
want to get better, yeah, you continue being there for them.
Speaker 2 (16:31):
Yeah, stick it out. That's yeah, as long as they
are respecting boundaries, right, Like if you are saying, hey,
I'm not willing, I'm not able to help you for
the for X SO and so reasons, and if they
keep coming back to you, like not demanding money, but
but asking, I feel like that would warrant a bigger
conversation where it's just like, look, you need to know
what kind of impact this is having on me from
a mental health standpoint. But it doesn't necessarily sound like that.
(16:53):
That's where you are, at least not yet, Amanda. And
it's a bummer to find yourself in a situation like this,
But hopefully we've given you some fodder, giving you some
good thoughts as you are trying to be a good friend.
But Joe, We've got more to get to, including that
question about long term care, our thoughts on that and
more right after this.
Speaker 1 (17:16):
All right, Matt, we got more money saving information to
get to on this episode. Let's get to a question
about cars, Wendy upgrade and how do you do it?
Speaker 4 (17:24):
Well, Hey, Matt and Joel, my name is Jay and
I am calling from Marietta, Georgia. I have a couple
of car related questions for you guys. I currently own
a used Hyundai Accent that I purchased back in twenty eighteen.
Since I've owned this car, I have experienced a variety
of small to major mechanical and other issues with this
car that have ended up costing me a lot of
(17:46):
money to maintain. The conventional wisdom that I inherited from
my parents is that when you own a car, you
should drive it basically into the ground. But since this
car has cost me so much money, at this point,
I am ready to look at selling it and purchasing
a different car. A quick search on CarMax and Carvana
(18:08):
gave me a trade in offer that looked like it
was a lot lower than my car might actually be worth.
So my question is, do you have any advice on
finding a private party that I might be able to
sell my car to. I've looked at other places like
an auto trader, but if you guys have any other
advice in that area, I would greatly appreciate it. Additionally,
(18:31):
my plan right now is to try and hold onto
this car and hope that I don't have any more
major issues until around the end of the year, as
that looks like it might be a better time to
look at purchasing a newer car, since dealerships typically offer
a lot of discounts or rebates during the holidays. In
terms of purchasing a new car. I was also wondering
if you have any advice on financing and purchasing a
(18:56):
newer car. Would it be better to go through finance
from a car dealership or a used car dealership like
CarMax or Carvana, or would it be better to seek
out an auto loan from a credit union or other
financial institution. I appreciate any advice you can offer. I
really enjoy listening to the podcast.
Speaker 2 (19:16):
Thank you so much, Right, Joel, do you feel like
Jay cheated a little bit? He has like three different questions,
so many questions at once. It's a complex situation when
you're like, do I keep it? If I'm selling it? Sure?
How do I go about it? What I'm buy the
new car?
Speaker 1 (19:30):
I mean, there's of course it's because it's really one
big decision that's a big expense and wrapped up to
a bunch of different ones. It's sorry that you've had
so many problems with this car, by the way, Jay,
that's that is the worst, Matt. It's a bummer to have.
Perpetual car problems can be really frustrating. And I think
the general rule of thumb that Jay's parents taught him
is a pretty good one, right, that the longer you
hold on to the car, on average, the more freedom
(19:51):
you're going to have to save and invest intentionally, the
more margin you're going to have in your life, because hey,
guess what it means not having a car payment for
potentially a long period of time. And we think that
the longer you can go in life without having a
car payment, or if you can essentially make that commitment
to not having a car payment ever, that's like a
financial cheat code. That is game Genie for your money.
(20:12):
Because for Matt, for the average American, they're spending so
much money on their car every month. To not have
any of that, it just gives you a lot more
wiggle room into making other decisions. But as mechanical issues proliferate, right,
we get that you want to drive something more reliable,
and I think when to ditch a used car is
kind of this perpetually difficult question. I think the truth
(20:33):
is money is only one part of the equation. Makes
you think Matt, I was talking to a friend recently.
He's got this Toyota Siena that's like twenty twelve or something.
It's in good condition, and he's like, should I get
rid of it before the issues start. I'm like, dude,
if you do, I'm buying it from you because that's
a great car. But that's how people tend to think
of cars. They want to beat it to sell it
before the issues begin. But oftentimes I think we need
(20:56):
to get more comfortable with realizing that repairs are a
part of life. Is or age, Yes, exactly.
Speaker 2 (21:02):
And that's that's kind of where I want to go
is because I'm reading between the lines a little bit
and I want Jay to be honest with himself because
he said that there have been a lot of expenses
and it's been maybe inordinately expensive, but.
Speaker 1 (21:13):
I want to know how much and over what period
of time?
Speaker 2 (21:15):
Yeah, and like what's the mileage on the vehicle, because
if we're talking, you know, is it because you've recently
rolled over one hundred thousand miles? Well, that's when there
are a lot of more expensive sort of maintenance and
repairs that need to be done. Break system, Yeah, to
a vehicle like that. And it's not like that this
is an expensive vehicle to maintain. Like we're not talking
about like a land Rover or something like that, some
foreign or European car. I should say this is a Hyundai,
(21:38):
a Hundai Accent. Those aren't expensive cars to maintain necessarily,
and they get pretty good gas mileage, and they're also
not flashy or sexy. So Jay, I guess I want
you to be honest with yourself, and I hope that
you're not using some of these repairs as any excuse
to be like, you know what, maybe it's time for
me to go ahead and make the upgrade. I'm kind
of not so keen on the old used Hyundai Accent
(22:01):
anymore because he said he bought it. He bought it
used several years ago, so it's an older vehicle. I
get that. I understand when you're at the car shop
and you get hit with like a five hundred dollars repair,
you start doing the math, You start calculating in your
head and you start thinking, dude, I could have a
brand new, sweet new ride for that much money. But
and you start to justify it.
Speaker 1 (22:20):
If I sign up for seventy two months of payment.
Speaker 2 (22:22):
Yeah, basically to do this for the rest of my life.
So again, I'm assuming a lot here. Reading between the lines,
I hear a used Hyundai Accent that you've purchased in
twenty eighteen, and I think that sounds like sounds like
you're just hitting your stride when it comes to that
vehicle and some and you've made some of these repairs.
Maybe that means this is something now that's good for
another fifty to seventy five to one hundred thousand miles,
(22:42):
Like maybe you're about to like this is going to
put you on the path to being able to drive
that thing for another one hundred thousand miles to where
you're at two hundred thousand miles and the entire time
you don't have a car payment.
Speaker 1 (22:51):
So yeah, I think base what you're saying is even
if you're paying two thousand dollars a year in like
maintenance and repair costs for that car, that would be
far less than the payments you would even buying like
a gently used newer car. To you like that would
be a cheaper route to take. So make sure. If
this car is a lemon, that's one thing. But if
this car, if this is just traditional maintenance that most
cars of this age need, I would just realize that
(23:14):
that's part of the game.
Speaker 2 (23:15):
Jay's probably like, man, of course, this is when the
guys have recently talked about crack windshields and pain coming
off their side mirrors. Yeah, Jay, you should know what
kind of answers we're gonna give when it comes to
potentially upgrading and getting a new.
Speaker 1 (23:26):
Car, right, Yeah, well, and okay, so if you are
going to upgrade, let's say this car is having more
significant issues, right, that these are perpetual there, they're bad, And.
Speaker 2 (23:34):
Let's say that we actually believe you. Jay.
Speaker 1 (23:37):
We're not calling here your truthfulness in to question here,
but we are just saying, like, think again. But sure,
Let's say you're gonna buy another car. You mentioned buying
from a dealership. That could be a solid route to take.
But it sounds like you've got some time here, right,
You're not in a massive rush to ditch this car.
It's not like it's currently in the shop and it's
got like a transmission issue and so you don't have
any way to get around. If you've got the patience
(23:57):
to do some digging, you might be able to score
a better car at a nicer price. If you're buying,
I would say directly from an individual, that is, it's
becoming harder and harder sadly to do that. More people
are matt selling their cars to middle men like Carbon
and Carmacks are buying from those companies too. They're not
bad companies necessarily, and in fact, some of their warranties
are nice. I appreciate that. But they've become the go
(24:20):
to for sellers and buyers alike, meaning that there's less
buyer to seller face to face transactions happening. But this
also means that those people aren't going to get as
much money for their ride. So where should you look?
I would say, look at auto Trader, right, but filter
down to private sales only. There's literally button at the
bottom left you can click and you can say, don't
show me anything from dealers, just show me from private
(24:42):
individuals who are listing their automobile for sale. Facebook Marketplace
is another one, but Matt even that's gotten a little
scammy at times, or not even scammy, but just overrun
with auto brokers who are buying from the auctions and
then selling them on there. I personally prefer to find
a private individual who's selling a car that I'm interested in.
I think that's the way to get the best car
for the for the best price, and then they've got
the records to show that they've had it. Yeah, for
(25:03):
how however long that they've maintained it. I think, no
matter what though, you always get that car checked out
by a mechanic you trust, whether it's from a dealership
or whether it's from an individual.
Speaker 2 (25:12):
Yeah. And because of the fact that Carvon and Carmacks
have made it so easy, I think fewer and fewer
folks than ever are actually selling their vehicles via a
private sale. They're basically trading in every single time. And dude,
I have always felt like it's worth the extra thousands
of dollars that you can net buy dii wining that sale.
It's not a joyous experience. It's not the most fun
that you've ever had in your entire life, but the
(25:33):
financial stakes are high when it comes to these larger
ticket items. I think it's worth it.
Speaker 1 (25:37):
You don't love when me and people are random parking
lots letting them to test rive your car.
Speaker 2 (25:41):
No, you come to me first, all, but go ahead,
get a quote from both Carvana and CarMax. If you
went see how it stacks up to what KBB says
that your car is worth, and if the gap is significant,
we'll go ahead and list it on Auto Trader. Get
it up there on Facebook. See what sort of response
that you might get. Because if it's minimal, well then
just hit the easy button. But again, if there's a
lot of folks clamoring for that vehicle, because it turns
(26:03):
out maybe you made all the expensive repairs and this
is a very attractive vehicle. Now I'm going back to
the whole thing about him keeping his access. I suppose
to selling it. But if you see a lot of
interest in your vehicle, then that could either a make
you reconsider selling it or B means that it's going
to be an even better financial decision to sell it privately.
Speaker 1 (26:21):
Yeah, and I think, Matt, there's actually more nuanced to
this question than ever before.
Speaker 2 (26:24):
Too.
Speaker 1 (26:24):
If you're thinking about buying a used electric vehicle, for instance,
because of the way the tax credit works, you would
want to buy that car from a dealer, because you
don't get the credit if you buy from an individual.
If I buy a Nissan Leaf from my neighbor, Matt,
I'm not getting a four thousand dollars tax credit. But
if I buy it from the dealership, And this depends
on where you follow in the income tax bracket, but
you are going to get a tax credit of four
(26:46):
thousand dollars for buying that vehicle. So make sure you
know that too, and you might actually save money, by
the way on tax by training in your car in
certain states. And Jay mentioned he lives in our fair
state of Georgia. This we're in one of those states
where if you're planning on buying from that same dealership,
it's worth finding out what they would pay for your
beat up Hundai because by training that in, maybe you
(27:07):
don't get as much money, but you will save money
on the sales tax portion, I think, which bridges that
gap at least a little bit. And I think one
last thing I want to say here, Matt is don't
forget to look at the reliability ratings on the new
car you're looking at purchasing from a site like Consumer Reports,
because we want you in a car that rates highly
so you can keep this next one you buy for many,
many many years to come.
Speaker 2 (27:27):
That'd be the goal.
Speaker 1 (27:28):
I think if you just kind of, oh, I like
the way that one looks, I get why people do that.
But if you look at the reliability ratings, find that
nice overlap of a car that rates highly from Consumer
Reports and then also looks good to you sure.
Speaker 2 (27:40):
And then you asked about financing. Definitely get a quote,
maybe two or three from local credit unions. Every stat
points to the fact that you're going to get a
lower rate from a credit union versus financing via the
dealership or financing with like one of the bigger banks.
But that being said, and we basically have to say
this every single time, but we are fans, big fans
(28:01):
of buying cars in cash. I also know that this
is easier said than done. But because of the fact
that it does not sound like you are in a
rush to unload that vehicle, I think it sounds like,
at least that this is more maybe a lifestyle sort
of decision as opposed to I need a reliable vehicle
to be able to get to work. And I think
(28:22):
another part of this too is the inconvenience of having
to take it into the shop. Like you have a
string of repairs and you start getting on a first
name basis with a mechanic. That's not a good feeling.
It's a noise, like, Hey, you want to go out
for beers? After this? You're like, I mean, you seem cool.
I'm here way too much. Man, I'm sorry. I was
hoping not to have that relationship with you though, But like,
nobody likes the inconvenience of having to take their vehicle in,
(28:43):
But I think that's that also just gets blown out
of proportion much more than it actually inconveniences or prevents
us from doing the things that we want to be
able to do, and typically basically because of uber and
left the ability. Like I don't want to have to
drop twenty or thirty bucks because I got to take
the van up to get the get a break job done.
But you know what, twenty or thirty dollars is nothing
when in comparison to a monthly payment where I to
(29:05):
finance a vehicle. So again I'm kind of going back
to the jay me wanting you to not use this
as an excuse to get a new vehicle if that's
the case. But if it's not the case and you
do need a vehicle and now you're considering financing, just
realize that financing and paying interest on a depreciating asset
that is not a winning formula to getting ahead.
Speaker 1 (29:23):
With your fight, which means you want to prioritize taking
on as short of a loan as possible. Maybe that's
two year loan or a three year loan at Max.
But if you're buying a used car taking out a
forty eight or sixty month loan, it's just it's really
bad news bears. So we would say buy a cheaper
car if you can find reliable cars that aren't thirty grand,
despite you know, I think popular assumptions. So make sure, yeah,
(29:45):
you're getting that loan, likely from a credit union.
Speaker 2 (29:46):
You're going to get the.
Speaker 1 (29:47):
Best rates and keep that loan term as short as
possible because that's going to be in the best interest
of your overall holistic financial situation. All right, let's get
to another question. This one's from a listener who wants
to quit his job.
Speaker 5 (30:00):
I joll them, Matt. My name is Kip and I
live out in the western suburb of Atlanta. I really
appreciate the show that you guys do, and the one
approach to advice that you guys provide is just really
encouraging and I enjoyed. I'm forty six and my wife
is forty seven, and personally I'm ready to bag work
and retire. Over the years, we've been able to get
(30:21):
all expenses down to about five K a month, and
we have enough for the four percent rule. And so
what I thought was that we'd go sit down which
was built as a produciary financial planner, just to give
the final blessing to pull the trigger on this. And
you know, and then the interview that we had with him,
all he really wanted to do was U pitch us
(30:42):
a bunch of our annuities and that kind of thing.
But you know, it's one thing he didn't mention that
got me to think in it is long term care.
Just looking at some of the costs, you know that
the long term chara can you know, if you need
to go nursing can end up being you know, ten
km month, you know, ten k for me CA for
my wife. So you see how that that could really
(31:03):
skywrocket your expenses. But you know, I started trying to
find some some various insurance plans and for long term care,
and you know, they all had some really define benefits
and in some cases, you know, you could pay the
insurance for years and they just keep raising the prices
and ultimately end up with nothing but a bunch of
money spent. So I started thinking, you know, I'd really
(31:28):
feel horrible if you know, I quit work at forty
six and you know ended up broke, you know, fifteen
years down the road. So what I'm wondering guys, if
you guys have had any ideas on how to deal
with the whole long term care issue or you know,
do you you just got to get six million bugs
saved up so that you know you can have enough
(31:48):
money on four percent rule. Thanks you, I I appreciate
any of us will be helpful.
Speaker 2 (31:53):
Kip, thank you so much for your question. And Joe,
the first thing and I think we should address here
is the fact that he is ready to.
Speaker 1 (32:00):
Retire, but he's only forty six years old, which is basically,
I'm done with that job. I'm tired of that jump
quote unquote. I think he said he's ready to bag it.
I think he's just love it. He's tired of being
a working stiff. And I get that sometimes the nine
to five can grind on it.
Speaker 2 (32:15):
I get it, I get it. But that being said,
so maybe the first thing worth talking through is it
might be helpful to think through what your life might
end up looking like were you to do something else.
Let's say you've been working over fifty hours a week
like the typical American. If that's the case, I get
the fatigue, I get the exhaustion, and the fact that
(32:35):
you've got so much money saved up that's incredible. So
if you have the capacity to retire, you are financially ready.
But from a retirement lifestyle perspective, as well as the
financial concerns, I think it's important to at least consider
maybe finding more enjoyable work, maybe find some different ways
to keep the paycheck flowing a little bit, but maybe
just reducing your overall workload, even if that also means
(32:58):
a reduced income, because you can always dial back even
more over time if you're like, no, guys, I really
want to be done with work altogether. Going from you know,
we've talked about retirement not necessarily being an on off
switch DOL, but like a dimmer switch, and I think
finding a way to gradually phase out of work could
lead to more positive outcomes in multiple areas of life,
not only financial, but that lifestyle. So you get used
(33:20):
to the idea of not having to, like you said,
go in and slog at the wherever it is that
you're working from nine to five at a minimum every single.
Speaker 1 (33:28):
Day, not to mention a commute all the whole nine yards,
and I get especially if you've been in the same
industry for twenty plus years and you're like, I'm just
done with this, man, I'm burnt out. I think that
happens to a lot of people, and not many people
have kIPS ability because they don't have the savings that
he's amass to be able to make this choice. But
I do want to say, like, yeah, you are only
forty six, and so maybe it's some sort of part
(33:48):
time work, or maybe it's working for yourself, maybe it's
doing something ultra part time, or maybe just pivoting to
another career that doesn't pay as much but where you
have more freedom over your lifestyle. Those could be worthwhile
considerations because I think typically Matt, we talk about it
as a dimmer switch. Most people think of it as
an on off switch. That's the traditional views. And so
it's like retirement. I guess my choice is either to
(34:09):
keep working here and doing something I hate, or to
stop and retire fully. That's not those aren't your only choices.
Speaker 2 (34:15):
Where you're kicking it on the front porch, right, that's
a lot of a lot of decades of hanging out
on the front porch. If that's if that's the case.
Speaker 1 (34:21):
Yeah, and he listened to the South like us, so
he's gonna be drinking sweet tea on the porch like
I would be, which is great. But you talked to Kip.
You you've taken this, this brilliant route of reducing your
expenses and of increasing your investments. That's the classic recipe
that leads to more choice for you. Our next pushback, though,
I guess, would be on the subject of annuities. You
mentioned talking to the financial planner. Jeez, yeah, be very
(34:43):
careful talking to that person any longer I would want
to get a second opinion from somebody else, I would
consider talking to somebody at Domain Money or Nectarine. Those
are cheaper ways to talk to a financial planner. And
while annuities, yes, they can offer a more predictable stream
of cash flow and more peace of mind, and potentially
they can be quite expensive. And so the way those
(35:05):
most annuities get sold, they're typically done through fear based tactics,
and often the fear is you're going to run out
of money in retirement, so you need this predictable source
of income, and you've done such a good job saving
and investing that you really might be able to stop
working before you turn fifty, which is awesome, but we
don't think you need to buy an annuity to turn
that into a reality.
Speaker 2 (35:24):
That's right. Yeah, he's doing a lot of his math
based on the four percent rule, which basically states that
if you've saved up twenty five times your annual expenses
and so this is the inverse of the four percent rule,
that for you to do that, you should feel comfortable
making this decision. But you've also got to make sure
that we're not just talking about your current expenses, but
that we are talking about your expenses way off there
(35:44):
into the future, and.
Speaker 1 (35:45):
Why there's long term things considerations coming to exactly in
the play.
Speaker 2 (35:50):
Yeah, and well and also too, like considering what you
want your retirement years to look like. I guess I'm
pointing to a lifestyle inflation. And again, we don't want
to push you to work like a dog until you
seventy years old, but we do want to make sure
that you're not bowing out too soon and that you
can handle a potential you know, a potential downturn in
the market from a mental and a portfolio perspective, and
that you are taking into account some of the future
(36:12):
lifestyle choices that you and your wife might have in
store for yourself.
Speaker 1 (36:16):
Would you still be meeting the four percent rule if
the stock market were to drop fifteen or twenty percent.
That's a that's a good question to ask, and Matt,
I think let's talk about long term care specifically, which
is basically the need for support as you age, right,
especially if you have like a chronic illness or disability,
and even if Kip, if you're in fantastic shape, you
don't know what things are going to be like thirty
years down the road. You might need some sort of
(36:37):
long term care at some point, and it can be
crazy expensive. It's gotten so much more costly over the
past ten or fifteen years as well. Insurance companies basically
they didn't price some of these policies appropriately, Matt. And
it's amazing to see some of the premium increases that
people have gotten stuck with. And what ultimately ends up
happening for so many of those folks is that they
(36:57):
bought this long term care policy assuming that premiums would
increase you moderately at most, and then what happens is
they get stuck with a thirty forty fifty percent premium
hike and they have to ditch their long term care insurance.
So it basically feels like and it actually kind of
is money that was tossed aside, completely wasted. Yeah, it
feels like you threw it into a fire. The other thing, too,
(37:19):
is stats from insurance companies show that something like seventy
percent of folks are going to need at least some
form of long term care insurance in their life, and
they always give this stat mat that the costs can
exceed one hundred thousand dollars per year, which certainly makes
it opens my eyes, but those facts can be a
bit misleading too. And plus, your insurance company could go
out of business in that time where your claim could
be denied, or again, like I said, those premiums could skyrocket,
(37:42):
making it unaffordable long term care insurance. The market for
it sucks. Yeah, there is potentially a need for greater
spending in some of those later years. I'm not sold
on the fact that long term care insurance is the
proper product though for most people. And the truth is,
middle class folks often find themselves in the most uncomfortable
positions because they've saved decently well and Folks who haven't
(38:05):
saved much at all can often depend on medicaid, and
folks who have saved tons of money can self ensure.
But if you're in that messy middle, that can be
a really tough spot to find yourself.
Speaker 2 (38:14):
Totally. Yeah, that messy middle, it seems like that that's
where Kip is finding himself. I would say, if you
can comfortably afford the premiums on a solid long term
care policy, that might be the best course of action.
But it's also worth highlighting here too that you're only
forty six years old, and so that's actually way too
young to pull the trigger on getting a long term
care policy in place. Typically a lot of experts say
(38:35):
to look around the age of sixty and so if
you were to go ahead and get one of those
in place, now, that's what fifteen years of potentially paying
premiums on something that you don't need to be paying
premiums on. And at that age, you would still likely
qualify with the medical underwriting to still qualify for affordable
products without having to pay these annual premiums from now
(38:56):
until then, which is most likely going to be when
you wouldn't need that policy in place and Something else
worth pointing out here too, is that it sounded like
this was not something that was on Kip's radar until
he met with the financial advisor who was trying to
sell him on the annuities, which is great because it
didn't the sales pitch didn't work on the annuities, but
it has gotten him thinking about this. But they're always
(39:18):
going to run through the worst possible scenarios where they're
looking at the largest amount possible to end up paying
for long term care. They're looking and they're also forecasting
years and even decades of this long term care because
if you're thinking, oh, yeah, we're talking about one hundred
thousand dollars each, but when you look at the numbers,
I think the average stay in a long term care
facility is only something like three point seven years. And
(39:40):
so I'm not saying that that's not a whole lot
of money, But that being said that it's also not
a guarantee that you're going to find yourself in that
sort of position. So at the very least, I'm glad
that this is something that you are thinking about in
the here now and for you to make informed decisions,
but it's definitely not something that you need to look
at getting in place right now.
Speaker 1 (40:00):
I think Kip's got plenty of time to plan for
that and to put himself into that self insurance camp
right where if he not. Like, we want you to
work for the next thirty years, Kip, but I think
you can plan for potentially a few hundred thousand dollars
worth of potential long term care needs at some point
in your future decades down the road. But that might
mean delaying your retirement date by a couple of years
(40:21):
so that you can continue to fund some of those
accounts and that you can have more of a cushion
to fall back on the long term care insurance market.
Speaker 2 (40:28):
Yeah.
Speaker 1 (40:28):
Like, I think you're right, Matt. I think it's probably
too early to be looking there anyway. But the truth
is a lot of those policies that are expensive, they
can be volatile. The premium need, the premium amounts can change,
and self funding is a better approach to take if
you can pull it off.
Speaker 2 (40:42):
And it's also.
Speaker 1 (40:43):
Important to note, Matt that there are other ways. Let's
say I don't know if Kip is a renter or
a homeowner, but if you own your home free and clear,
well there's a lot of equity built up in that home,
and so lots of times people choose to do something
like a reverse mortgage instead of having a long term
care policy. Those can be expensive, those aren't the best
product either, but that might be a better choice for
a lot of people than a long term care policy too,
(41:03):
especially when a lot of those long term care policies
get ditched before it gets time to use them. So
I think that might be at least a more flexible approach.
Speaker 2 (41:12):
Yeah, and another consideration too, and this wasn't at all
something that get brought up in his question, but I
think look into family because, like I think one of
the reasons people don't like reverse mortgages is because they
start to think, well, then I don't have anything to
give to my kids, right, they're thinking about generational wealth.
But if you have kids, I think it's worth having
a conversation with them and considering a multi generational household.
(41:33):
It's something that's very common in other countries, but it's
just not a part of our society. It's not a
part of our culture here in the US. But I
think it's like it's the best of both worlds because
you've got aging parents where they're at the point in
time where they might need some of that help and
it would be more affordable for them for the assets
that they have to be able to offset the costs
(41:53):
associated with an adult child who's then helping to take
care of them. And then they also have additional time
with their kids or even the grandkids. You've got built
in community, Like it's just a win win. And if
that's not a conversation, and again may not be a
part of Kip's situation, but for everyone else out there,
I think this is a real consideration. I want this
just to be more of a talking point, something that
(42:14):
comes up, something that's considered, because it's totally on our
radar as something that might be off in our future.
We just live in a world, in a country specifically
that glorifies and holds up independence and sort of in
that independent sort of lifestyle as opposed to being more
reliant in community with each other, which I think can
be more beautiful and healthier on multiple fronts, not only
(42:35):
in relational ways, but also financially as.
Speaker 1 (42:37):
Well, especially that familiar level. And I think this is
just keeps asking a great question at a great time
for him, because he still has so many options in
front of him. He's still working, still earning an income.
He could choose to prolong that retirement age by just
a little bit. There's so many different choices he can
make on the way to be prepared for these possible
future large expenses coming down the pike. I wouldn't you know,
(42:58):
put blinders on and assume that you're not going to
encounter any sort of health headwinds. You know that as
you get further along into your retirement years. But now
is the right time to start planning for those things
and to start saving ahead so that you're ready to
tackle those things and so you don't feel kind of
hoodwinked into buying some sort of expensive policy that doesn't
make sense for you and your family.
Speaker 2 (43:19):
That's right, man, But everyone out there stick with us
because we've got more personal finance content to get to
just right after this break. All right, we're back.
Speaker 1 (43:35):
It is, of course time now for the Facebook question
of the week. Comes from the how to Money Facebook group,
which you should join if you're not a member of
This question comes from Catherine. She says, Hey, Matt and
Joel love your podcast. Thank you for everything you do
and everything you've taught me. I'm newly married and my
husband and I are opening a joint bank account at
the end of this year. We discussed Bank of America,
being that it's conveniently located near where we live. But
(43:57):
I just listened to your Friday Flight episode. Please tell
me the cons of banking with a big bank so
that I can explain it to my new husband. Why
do you favor online banks such as Discover? My husband
loves the idea of being able to go to his
bank and pull out cash at any given time, so
that's his reasoning the bank with Bank of America. Let
us know what you guys think. First, we got to
say congrats on getting married. Oh yeah, yeah, congrats to
(44:20):
you too.
Speaker 2 (44:20):
And let's go ahead and just address that specific question,
which is that most of the online banks reimburse ATM fees,
so you can pretty much get cash. You don't have
to go to the actual actual bank branch in order
to get your hands on some cash.
Speaker 1 (44:31):
They're part of some sort of ATM network, and they're
like at the local drug store. Instead of the bank
that's on the street corner, it's at the drug store
thread around the corner. So in fact, Target, like I
think Capital One has all their banks have They've got
ATMs at every target around the country.
Speaker 2 (44:45):
So it's actually more convenient for your husband to get
his hands on cash. I think most likely were he
to go with some of the online banks.
Speaker 1 (44:52):
That we loved, and you need cash these days, not
much the ability some people.
Speaker 2 (44:56):
I don't know. I don't want to make it assumptions
about Catherine's husband.
Speaker 1 (44:59):
I pay with the that they put in my wrist map,
which you don't actually, although I see that a whole
Foods you can pay like Amazon customers can pay with
a chip in their body.
Speaker 2 (45:06):
While someone's they're buying pizza. Though a little freaky it
was out of order or whatever. Did you see that? Yeah,
the cath Let's highlight some of the main issues. First
of all, bad customer service. Uh. This makes me think
about Wells Fargo and all that they have done to
their customers, some of the awful ways that they've treated
folks over the past decade. We would rather see you
(45:27):
do business with companies who don't actively hate you. The
culture at some of these gargangum banks is just so
toxic that we would just we would honestly rather see
how money listeners completely avoid them, and maybe you're thinking, well, yeah,
customer service, like what kind of customer service do you
actually have when it comes to some of these online banks.
You know what, maybe it's not any better than were
you to reach out to a bigger bank digitally online,
(45:48):
but the fact that they haven't participated in underhanded schemes
to be able to open accounts as branches are trying
to reach certain quotas. There's just there's a history of
untrustworthy behavior that we've seen some of the bigger branches
that were not fans of I think.
Speaker 1 (46:03):
And actually a lot of the banks that you and
I talk about, Matt, it's actively less bad and it's
it's proactively better too. I think it's easier to get
a human on the phone to talk about a problem
you have. Yeah, there's no bank branch you can walk into,
but the one hundred numbers are typically better with the
online bank. So if you need or you care about
customer service with your bank, I think that is a
selling point. The truth ist too, the products from the
(46:25):
big banks often suck too. Like think about savings accounts,
for instance, the big banks don't come close to paying
you a reasonable return on your savings. I think Wells Fargo, Matt,
who you just aptly mentioned, they're paying point one five
percent on their savings account. That's awful. Chase is paying
point zero one percent, which is even worse. And then
at Bank of America, which is the bank that's right
(46:47):
around the corner from Catherine, point zero three percent is
standard the gold tier.
Speaker 2 (46:51):
Oh you want to know what that is, Matt, point
zero four percent.
Speaker 1 (46:54):
Oh, and then oh you want to go platinum dog
point zero five percent. It's you can't make this up.
It's these like incremental increases that mean essentially nothing, whereas
like competitive banks are paying you know, four and a
quarter four and a half percent. Say, but you missed
out on Platinum Honors, which is point zero six percent. Yeah,
you found you missed the upper tier, which maybe you're thinking, Catherin,
(47:17):
you're hearing to say these numbers, and you're like, yeah,
but like he doesn't that doesn't mean all that much.
All right, listen up, because if you run the numbers,
the average two person household in America has seventy five
thousand in annual expenses. So cut that in half, you're
looking at thirty seven thousand dollars. That's what you should
roughly have in your emergency fund if you've got six
months worth of living expenses set aside. Now, if you
(47:39):
go with a bank like cit who I believe at
this point is paying four point seven percent, it's definitely
over four percent. That's good, not point zero four like
literally four plus percent. You're talking about earning seventeen hundred
dollars on the money that you've got just sitting there
parked in your emergency fund versus guess what it is
you'll at point zero six percent, guessing it's about ninety
(48:01):
two cents.
Speaker 2 (48:03):
It's not that lot. Okay, twenty two bucksky, but still
over seventeen hundred dollars versus twenty two dollars. That there's
a big difference there. Just in a credit mathmath, it's
revealing of what you think of of the large I
have so little regard for those big banks and matt
So you're talking about rates of return, but then talk
about the fees too. So a lot of these these
(48:23):
checking accounts or savings accounts again worse with some of
the big banks, they might that one hundred and seventy
dollars or whatever you might have earned can be completely
wiped away thanks to the monthly service fees they are
going to charge you. So, I mean the big banks,
they keep threatening to bring on new fees even while
the banks we love are taking fees away, they're eliminating them. Yeah,
the rates on the product, like on the loan products
(48:44):
as well, are going to be much worse. And so
I just I literally searched the first credit union that
popped up in the mind here locally, and it's over
half a percent better than what it is that Bank
of America's got, and that's for a just a thirty
year mortgage with twenty percent down.
Speaker 1 (48:58):
It's amazing. The big banks are actually banking on name
recognition and brick and mortars near you, yep, to retain
your loyalty. And we would say that's not good enough,
Like there's so many reasons to choose the online banks
and credit unions instead. People remain, though, Matt, because inertia
bias it's hard for humans to overcome. I'm hoping here
that we've convinced Catherine and that she can convince her husband,
(49:19):
because the best banks these days are online banks like
Discover ally cit We mentioned them all the time. Low cost.
Broker's firms like Fidelity and Schwab actually have good banking
products too. Betterment has a good one as well. They
pay really good rates on your savings. Customer service is superior.
They're still big enough to have solid fee free ATM networks.
I mean, you get all the modern amenities without the
(49:40):
horrible downsides.
Speaker 2 (49:41):
That's right. So just point that out. And for me
it's I mean the savings rate that they're paying, like
if you are willing to pay over but you're basically
paying over fifteen hundred dollars for the convenience every single
year to be able to pop into your local branch.
Speaker 1 (49:53):
Not worth it, Not worth it, You're right. I think
of that as a gargantuan fee that the big banks
are charging. And to have that comedian brick and mortar location,
it ain't worth it. You don't want to fund that
building for them.
Speaker 2 (50:03):
But all right, let's get to the beer that you
and I enjoyed.
Speaker 5 (50:06):
Joel.
Speaker 2 (50:06):
This was the Ube Macapuno Delight. It's an Ube chocolate
coconut porter donated to the show by our buddy Joel,
and this is brewed by Brewyard Beer Company. What were
your thoughts?
Speaker 1 (50:18):
Well, I had to look up ube. Ube is apparently
purple yam. Yeah, I didn't even realize that it's like
a so yams were harmed in the making of this beer.
Speaker 2 (50:27):
It's from the Philippines, so ube is like it's evidently
it's got like sweet potata like vibes. But it's often
used in making desserts, which makes sense because the can
is purple. It looks like a cake, like a layered
cake of sorts. But uh, yeah, what were your thoughts?
I thought this was good.
Speaker 1 (50:42):
Yeah, it had like coconut, vanilla, and chocolate be vibes
kind of all combined together in a porter package, which
is kind of a lighter version of a stout in
so many ways, And I enjoyed it. It was it
was a little a little sweet for my taste, like
not my favorite thing, but I thought it was solid.
Speaker 2 (50:58):
Was it sweet or were you convinced that sweet based
on the icing that the design ont of this can
that's dripping down, so it makes you think that, oh,
this has got it. There's maybe a little more vanilla
than I would totally typically go for. Yeah, the vanilla
and the coconut kind of joined forces and both come
across stronger than I think they would have otherwise. Yeah,
but it's also like I guess maybe the roasty sort
(51:19):
of flavors, but do you remember clove. Well, I'll just
leave it at that. Clothes like you know, like a
like a Christmas ham, Like, yeah, you set the clothes
in there. You know what kind of spices that you're
talking about With clothes? It almost says that kind of
flavor profile going on. But it makes me think of
I don't know, it also makes me think of the holiday.
So I actually kind of like it. As the temperatures
are starting to cool down a little bit and we're
getting into maybe some of these beers that have a
(51:39):
little more backbone.
Speaker 1 (51:40):
The Porter is a great drink for October. Like you
don't want to drink a Porter in August, but once October.
Speaker 2 (51:46):
And then maybe you're not even ready for the barrel
aged out yet. Yeah, in October either, like between you
want to say that for December for January.
Speaker 1 (51:52):
I had a good october Fest the other day and
I was like, oh man, I'm not Usually Octoberfest isn't
the thing I yearned for, but in this time of year,
it just it's the right drink.
Speaker 2 (52:00):
It fits the mood nice. All right, Well, that's gonna
be it for this episode. Listeners can find our show
notes up on the website at howtomoney dot com. Oh,
I meant to say too. We're talking about, uh, it
was Catherine, her husband. Why he uses cash all the time.
Why don't you just use a credit card? You're also
giving up so many benefits by not using a credit card,
like even a basic credit card. And you can hop
over to the site at howdomony dot com forward slash
(52:22):
credit card tool and you can literally sort it by
I want a card that's free, so zero annual fee,
and I just want to earn simple cash back, and
it'll pop up several options there for you, as long as,
of course, you don't rack up a bunch of debt,
which is maybe that's why Catherine's husband is completely avoiding
cards all Maybe and he likes dealing in cash or
maybe yeah, he just.
Speaker 1 (52:41):
Used to doing it and he hasn't changed his ways.
And if he handles credit cards, well that would be
a better form of payment. So yeah, all right, that's
gonna do it for this one, Matt. Until next time,
Best Friends Out, Best Friends Out.
Speaker 3 (53:02):
The hun spe
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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