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 - How necessary are high yield checking accounts?
2 - What is a way that I can use my investments to pay for veterinarian school, without paying capital gains tax?
3 - How should I invest for retirement after my 401k failed non-discrimination testing?
4 - Is it worth continuing to pay for short and long term disability insurance?
5 - Frugal or Cheap: skipping Coinstar and going straight to a register?
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During this episode we enjoyed a Kobzar 2022 by Big Spruce Brewing – a big thanks to our good buddy Andrew L for donating this one to the pod! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How to Money. I'm Joel and I am
Matt and today we're answering your listener questions.
Speaker 2 (00:24):
That's right, buddy, Happy Monday to everybody. We hope you
had a fantastic weekend. We've got some great listener money
questions to get to. For instance, we've got a listener
and he's wondering if high yield checking accounts, whether or
not they are necessary. We've got another listener who's looking
to pay for VET school while simultaneously avoiding capital gains.
(00:45):
How do those two have anything to do with each other.
We'll get to that question. You will soon know how.
And we're also going to talk about discriminatory four to
one K accounts. Joel, bet, you didn't know your retirement
cat was racist. I don't like discrimination, Matt On. So
actually doesn't have anything to do with race. It has
more to do with your level of income. But we'll
(01:06):
get to that and others during today's episode.
Speaker 1 (01:08):
All Right, I had a question that's been kind of
ruminating in my mind since I read an article about
this in the New York Times. Matt that there were
a lot of young people were interviewing this New York
Times article about the topic of social security. Many of
the people who were asked, Hey, how do you feel
about social Security? Would you stop contributing if you could,
and you could just bank that money instead.
Speaker 2 (01:27):
A couple of weeks ago, Yeah, I saw the headline.
I did not read it.
Speaker 1 (01:30):
I basically everyone said, yes, okay, yeah, I think you also.
Speaker 2 (01:32):
Know where I land on this, which is the more
responsibility that we can take as individuals as to our
future outcomes, right, Like the onus is on us, and
I think that that is the most efficient path forward.
It's going to be the least costly, it's going to
be so much more simple as opposed to this giant
system social security.
Speaker 1 (01:51):
I get why it exists, right, because there are a
lot of people who aren't going to save for themselves,
and this is a forced method of savings, and it's
essentially ensuring that that segment of people won't end up
in dire straits come those retirement years. But you're right,
I mean, and it's interesting. Nobody really can opt out
of Social Security except for some members of the clergy.
Some religious folks are able to say, yeah, ministers, because
(02:14):
we have a friend who opted. He heard that once
upon a time and said, sweet, I don't have to
lose a portion of my paycheck everything every two weeks
in the government sadly accept that.
Speaker 2 (02:23):
Well, then he wasn't investing in any other way. Yes,
and that is what.
Speaker 1 (02:26):
You have to do if he does that opt out
of Social Security. We had to scare them straight right
away and be like, dude, dude, if you're going to
opt out of Social Security, you've got to start. You
gotta be stocking those dollars away and do extra planning
for your own future.
Speaker 2 (02:37):
And all fairness, it was before we started the podcast,
So I feel like that he's like, I don't have
any street credit yet. That is something that we would
have talked to him about.
Speaker 1 (02:44):
Yeah, but I get why people would want to do that.
But I think the other the flip side of the
coin is, and it's worth mentioning this. There's a lot
of fear and uncertainty about the future of Social Security,
and rightly so in some ways, because our politicians have
been so negligent of the fact that the trust fund
is running out of money and that benefits are are
going to have to be cut at least a twenty
five percent haircut, right if nothing is done but the
(03:06):
truth is I twenty thirty five, put onto your hats.
I think everybody, especially for gen Z, I get maybe
some of that despair. But I just want to end
on a note of optimism. Like I do think social
security in some way, form or fashion will be there
for our generation and for the generation coming behind us.
But man, I just wish people would either do something
to fix it, and it'd be nice. Actually maybe if
we rely on social security less overall and we did
(03:28):
take more responsibility for our own retirement. I think with a
lack of pension access these days for people, we're all
going to have to be a little more thoughtful.
Speaker 2 (03:36):
We need to be.
Speaker 1 (03:36):
And that's why people tune into this podcast. I think,
how does they want to start thinking about how they
can prepare themselves depending on that.
Speaker 2 (03:43):
Yeah, they know the government's not going to do it.
I am not holding my breath to think that there
is going to be any reform to social security anytime soon.
Like nobody wants to touch it, Like nobody wants to
be talking about it. No, nobody wants to be the
bearer of bad news. And that's the part of why
we've got the show How to Money, because it puts
the ball in your court. It's up to you as
to how aggressively you want to stay for retirement. We
(04:04):
all know the longer you kick the can down the road,
the worst the problem gets. So like it'd be nice
if we I don't know, thought about it before things
really hit the fan. So, speaking of cans, I like
that Canada the beer. You've been doing this for a
long time. Haven't you long enough to do something like that?
I guess? But the beer that you and I are
going to enjoy during this episode is called cobs Are.
(04:27):
Where cobs Are? I'm not totally sure how you say it,
but this is a Ukrainian imperial stout by Big Spruce
Brewing that was donated to the show by our good
buddy Andrew. I'll say Andrew l he knows who.
Speaker 1 (04:40):
So yeah, he went on a trip to Canada, went
to some really fancy spots in Canada, and he brought
us back this beer and super excited. I wonder if
cobes are is that how uspl tzar in Ukrainian? Maybe
is that like a picture of a Ukrainian zar? I
don't know, I'm curious.
Speaker 3 (04:57):
I don't know.
Speaker 2 (04:58):
Well, on the side here there's there's a let's see,
it looks like it looks like there's a poem some
writings here, and it's titled codes are at the time.
So maybe it's just the name of this in particular excerpt.
I don't know. All right, Well, I like my refined beers.
Extra strong beers is what this is called. So it's
a good thing you and I are sharing.
Speaker 1 (05:15):
If this one's got a poem on it, it must be fancy.
Speaker 2 (05:17):
And it's certified organic by Canada, so sweet. All right,
let's got the Canadian there we go.
Speaker 1 (05:23):
Well, I'm excited to have this one, and we'll give
our thoughts in just a bit. But let's get to
listener questions. If you have a money question, we'd love
to hear from you. We'd love to take it on
the show. Got to howomoney dot com slash ask for
simple instructions or record your voice memo, email it over
to us. We'll take it hopefully next week. Matt, let's
get to a question specifically about checking accounts, trying to
make more money on the cash you got on hand.
Speaker 3 (05:46):
Hey, Matt and Joel, Mike, coming to you from Perry's Burg, Ohio.
Recently on the newsletter you mentioned checking your accounts and
ones that don't pay interest. Our current checking account is
one that does not pay interest. Should we look to
get something that does pay interest or not? Right now?
Anything extra in our checking account as.
Speaker 4 (06:07):
It comes in and bills are paid, I make sure
that it's going back out to things like Vanguard and
c for our savings. So I was wondering if needing
a checking account with interest or not is needed at
that point.
Speaker 2 (06:21):
Thanks all right, Joel. Well Mike here, he said exactly
where he lives, which of course means that you know,
I went looking up this town, Perrysburg. It's on the
outskirts of Toledo, Okay, right there near It's it's basically
on Lake Erie. Did you think of Canada? Speaking of Canada,
it's like right there, creep. He's basically a Canadian, a
personal not a personal finance somebody who's in investing, somebody
(06:44):
that we keep up with. He always talks about the
Great Lakes area up there being sort of a hedge
against global warming because as the earth warms up, everyone's
gonna want to go move from the south up to
the north. And he says the Great Lake Arias are
quite beautiful. I believe. I believe. I think Lake Erian
particularly is I think I've heard argued the most beautiful
great lake.
Speaker 1 (07:03):
I haven't spent enough time there. I've walked along was
it Lake Michigan in Milwaukee, Wisconsin. I was super impressed.
I would love to spend more time up in that area,
but just haven't made it up that far one of
these days.
Speaker 2 (07:14):
But Mike, this is a really solid question. So we
talked a bit about why you shouldn't do business with
one of the big banks last week. So let's focus
on checking accounts here for a second, Because if you
were to open up a checking account with one of
the biggest banks in the country, you wouldn't be earning
any interest, But that actually wouldn't be abnormal because checking
accounts don't typically come with meaningful interest rates attached. You would, however,
(07:37):
probably get hit with higher fees though, so some checking
accounts are created better than others, but it oftentimes doesn't
have much to do with the interest that you're earning
from that checking account.
Speaker 1 (07:48):
So it probably makes sense to mention the fact that
checking accounts overall, like here alluding to math, they're not
great on the interest rate. Front, so I don't know,
maybe exclusively using savings accounts.
Speaker 2 (07:58):
Would be better.
Speaker 1 (07:59):
Well, while the best online savings accounts are paying great
rates right now, at least when we're talking about the
last fifteen years of interest on savings and it's better
than it's been in a long time, they're not as
easy to get money out of, and so you can't
write checks or have a debit card essentially attached to
your savings account. And it's important to note that savings
accounts actually have some specific limitations. Most banks, for instance,
(08:22):
are not going to allow you to do more than
six withdrawals in a month and met that actually used
to be a limit that was imposed by the FED
on savings accounts specifically, so banks like literally were not
allowed thanks to FED dictate you couldn't make more than
six transfers out of your savings account. And I remember
they're trying to stabilize the M one.
Speaker 2 (08:41):
I don't know if that's true, made that up, but
I think that's why. Yeah, I had something to do
with it.
Speaker 1 (08:44):
And I remember getting something in the mail from my
bank at times saying listen, dude, you made more than
six withdraws from this account. If you keep doing this, like, oh,
slap on the wrist, we have to do something about it.
Speaker 2 (08:56):
And so I was like, okay, wait, don't make me
come back there, Joel.
Speaker 1 (08:59):
Right, I had to get more things to come out
of my checking account, and then I would start to
make single, larger sum transfers between that account. So that
went away actually a few years ago, I think in
twenty twenty. But a lot of banks still adhere to this,
and you might still get a slap on the wrist
or an email or a letter in the mail saying, hey,
you're over using, you're overdrawing from your sam usse account.
It's literally all about how many transactions you can perform
(09:19):
from that account in a given month. The truth is
most people need to have both types of accounts largely
because of that, and typically having them at the same
institution to make transferring money back and forth. Making it
easy makes it make it super.
Speaker 2 (09:32):
Easy, and it makes it instant right, Like, that's what's
so great about that is you don't have to wait
on that clearing the clearing house, you know, the multiple
business days. It's instantaneously there.
Speaker 1 (09:40):
We've talked on the show about how that's supposed to
be getting faster right there, but still can take three
days right to send money from one bank.
Speaker 2 (09:48):
To the other.
Speaker 1 (09:48):
It's not as fast as blockchain, right, No, so I
actually looked at it solves everything.
Speaker 2 (09:52):
Man. Mike Key specifically mentioned CIIT. Well actually didn't know this,
but CIIT they have zero limitations on the number of
transfers come out of your savings account. It's just pretty sweet. Ally,
so you mentioned a lot of banks are at at six.
I was curious because I've never bumped up against this,
but ally allows ten transfers out of your savings account.
So yeah, just as we're all trying to maximize the
(10:14):
amount of money that we're keeping in our savings, it's
good to know what those limits are if you have
those limits. But let's talk about these potential high yield
checking accounts, because there are some checking accounts out there
that will pay higher rates of interest, but those accounts
often come with additional fees in order to snag that
higher rate. Still, others will actually require that you use
(10:34):
your debit card a specific number.
Speaker 1 (10:36):
Of times in a given month. They're able to pay
you that higher rate of interest because of the swhite
fees that they're going to accrue. Thanks to you using
your debit card. If it's like saying, hey, let's use
your debit card twelve times in a month, and we'll
give you a four percent rate on your checking account.
If you don't though you miss it, you don't get that.
Speaker 2 (10:50):
You don't get that interesting, and they know. See, the
more often that you are using that card, you start thinking, well,
let me just use that card for everything, and then
all of a sudden that's your main account. We don't love, however,
debit cards. Just generally speaking, using a combination of a
credit card and then just stashing most of your money
in savings, I think that provides a better net result.
So that being said, we just don't see any need
(11:12):
for most folks out there to try and hunt down
one of these high yield checking accounts, especially when they're
just so hard to come by. You've got all these
different hoops. You gotta put on a performance every single month,
and that's not something I'm necessarily interested in doing.
Speaker 1 (11:24):
Yeah, if you go to a site like doctor of
Credit dot com, which does a great job detailing like
the best paying CDs, the best paying save news accounts,
and checking accounts too, you're gonna find some checking accounts
where you're like, wow, I actually can't get paid a
reasonable rate of interest on my checking I haven't seen
this almost anywhere else. And and typically there are lots
of smaller banks and credit unions around the country. This
(11:45):
is how they attract business. But watch out for the
fine print if you do try to go with one
of those checking accounts that pays a reasonable rate of
interest where nobody else does. Because the fees are the hoops, Matt,
which is kind of what you're referring to, they can
easily outweigh the benefits. The best thing to do, I
would say, is kind of what I did when I
got slapped on the wrists using my savings account too much,
(12:05):
was we'll keep most of your money in savings and
move money over to your checking account as needed. And
if your bank has a limit on how many times
you're able to move money out of your savings account,
do a bigger chunk once or twice a month so
that it doesn't feel like you're constantly moving money back
and forth and the bank isn't like, dude, you're dipping
into your savings account wait too much. And again that's
going to depend on which bank you're doing business with,
(12:27):
and what rules they have in place. A lot of
banks aren't going to charge an overdraft fee, by the way,
if you take too much out of your checking as
long as you allow them to pull it out of
another linked account, which is typically your savings account with
the same institution. So that's something else to be aware of.
Is okay, if I'm with this kind of basic checking
account that doesn't really pay me anything, I can still
(12:48):
have most of my money stashed in a savings account
that's paying. You know, some are closer to five percent,
probably not five percent now, but some are closer to
that and have very little in my checking And guess
what if I do make a mistake, have a flub
and I overdraw my checking account, Well, at least our
favorite banks, Matt, they're not going to charge you a
fee for that, and maybe they'll just take the money
directly out of your savings account.
Speaker 2 (13:07):
And it's kind of like all clever, you a certain
amount of money that's right beyond the what you've gotten there,
that's right.
Speaker 1 (13:12):
It's kind of a no harm, no foul, whereas that
used to be like a massive booboo, and it still is.
Speaker 2 (13:17):
If you're with most of the big banks, Yeah, but
with Mike specifically, I mean it seems like he's on
top of it, and so I wouldn't sweat it because
we're talking about a relatively small amount of money there
within that checking account that's not earning that high rate
of interest. You are also investing some of those sons
with Vanguard. You mentioned that you're funneling other dollars towards
one of the high interest savings accounts that we recommend
being CIT. I think this is the best case scenario
(13:38):
by far. And if other listeners out there find that
they're keeping too much in their checking accounts, there's just
no need to try and find a great checking account,
which is akin to trying to find a needle in
a haystack. Just find one that's solid, that's got great perks,
no fees, and then just keep the vast majority of
your liquid savings in an actual savings account. And I'll
say as well, don't be tempted to oversave because from
(14:00):
personal experience, as you know, you've got a solid emergency
fund set up set aside. Let's say you are saving
some additional money that you're looking to keep liquid for
maybe a home renovation. The interest that you receive on
your savings it's nice, and when it comes in every
single month, it can be tempting, I think for some
people to see that and say, well, what's the point
of even investing? Like, I'm look how much money I'm
(14:21):
earning every single month, Because we see that more often,
it's something that we touch. We log into that account
more often I think than let's say our roth iras
or four to one k's. But even still you are
earning let's say half as much at least based on
historical returns on that money. So yeah, just putting a
little PSA out there as well. Don't be tempted to
oversave overpad that savings account where instead we want you
(14:42):
to have the proper amount of cash set aside in
that savings account, but you should be investing for your
long term goals. Yeah.
Speaker 1 (14:49):
I saw a stat Matt just this morning, and I
don't remember exactly what it was, with something along the
lines of like ten years ago, roughly eight percent of
overall assets we're in savings products and CDs, and now
it's like seventeen percent of overall assets has been is
in essentially savings esque products and that is something to
watch out for, and especially if you are a how
to Money listener who's in your wealth building phase of life,
(15:11):
if you're in if your gen Z millennial, if you've
got decades before you're planning to quit work, if you're
over saving, that's a real problem, and it has been
over the last couple of years in particular, but it
will continue to be a problem because you will under earn,
especially as rates go down. It doesn't mean that in
one given year your savings might not outperform the market,
but over the long haul, the market will easily if
(15:33):
historical averages remain outperform whatever you're gonna get in your
savings account, so easily. Savings is crucial. Got to have
the liquid cash on hand, but don't overdo it.
Speaker 2 (15:41):
That's right. We've got more to get to, including that
four one K non discrimination test question what that might
mean for your retirement accounts. We'll get to that more
right after this.
Speaker 1 (15:58):
All right, Matt, we're back. Let's say question now about
how to pay for higher education.
Speaker 5 (16:03):
Hi, Joel and Matt. This is Chris from the San
Francisco Bay Area, long time listener of How to Money,
and of course love your podcast. I have a question
about paying for our daughter's veterinary school. We are lucky
enough to be in a position to pay for her
four years of schooling and want to do this so
(16:24):
she starts her future career debt free. One quarter of
the cost will be covered by her five two nine,
which also help pay for her undergrad Our plan is
the other three quarters of the cost will come from
mutual funds under me and my wife's names. Those funds
are on Vanguard and Janis Henderson. By twenty two year
(16:46):
old daughter will have no income while she's in school.
Are there any tax advantage methods of selling these positions
or are we destined to pay the long term capital
gains tax? Also, I correct an understanding that capital gains
do not get added to normal income for purposes of
(17:06):
determining income tax brackets. Thank you love your show and
I tell everyone I can about you.
Speaker 2 (17:12):
Thanks well, Chris Well, thank you for spreading the word. Joel.
I personally don't tell anybody about the show because it
feels a bit self aggrandizing.
Speaker 3 (17:20):
Doesn't it.
Speaker 2 (17:20):
Do you walk around and say, hey, you got to
listen to Sandwich Board that says listen to my podcast.
We let other people toot our horn. I'm totally fine
with that, but I don't know. There's something about self promotion.
Speaker 1 (17:31):
When people ask me what I do, uh, I have
to be honest and say I'm a podcaster. But then
I quickly followed up with I promise that doesn't mean
I'm unemployed, because that's what it kind of sounds like,
because like everyone has a podcast.
Speaker 2 (17:41):
Now, yeah, it's like I'm an artist. Okay, well starting one, huh.
But Chris, thank you so much for spreading the word.
We really appreciate that. And I will say, it sounds
like you are an awesome parent. You are proactively saving
not just for yourself but for your daughter as well.
And the fact that you've got to extra money in
a brokerage account that you can use to ensure that
(18:03):
your daughter doesn't have any student debt after undergrad and
even after potentially getting a VET school education. This is incredible.
Speaker 1 (18:10):
I think this is just an awesome way to get
her started and her VET school eight cheap. Matt, I
don't think it is.
Speaker 2 (18:15):
I don't know much about it, but I will say
I think it's a really smart move though, because, like
you see more and more folks buying pets. I think
I saw a stat that said, pets is that what
you do? But you love a pet, Matt, Well, eventually
you have to buy them and then you love them,
or you can love them before you buy them. And
I guess that's the sure fire way to certainly be
part of with your money. But I saw that sixty
eight percent of gen zers are thinking or considering getting
(18:38):
a pet versus having kids, and cost has a lot
to do with it.
Speaker 1 (18:42):
We've talked about the rising costs of pet care, largely
because of a lot of consolidation in the industry too.
Speaker 2 (18:47):
And just the fact that folks are spending more money
on their pets. Because what happens if you are substituting
a dog or a kiddie or whatever pet for dude.
I was in home depot the other day and somebody
had the fluffiest rabbit in the little stroller. These are
the folks I'm talking about. But when you see that
pet as a family member, you don't spend a ton
of money on a pet, But would you spend a
(19:08):
lot of money for a family member. Absolutely, And so
I think this is why Chris, I'm pointing out Chris
that your daughter, I think is getting into a great
like I've got my own opinions about pets and kids.
This is aside from all of that, she is in
a field that where she's going to do really well.
Give me growth in that field.
Speaker 1 (19:24):
Yes, in the coming decades, as more and more folks
are looking to spend more money on their pets. Same
with mental sash professionals, family members. I'm glad my wife
is going into that industry.
Speaker 2 (19:32):
Yeah.
Speaker 1 (19:33):
No, I think you're right, Matt. And it makes me
think of what is it South Korea where they're actually
more pet strollers that get sold than strollers for kids.
Speaker 2 (19:42):
We haven't lost the lowest replacement rate in the entire world. Yeah,
in South Korea, I believe it. All right, Just one
minor word of caution, Chris. While this is truly an
admirable goal to pay for your daughter's schooling all the
way out, make sure you're doing this out of having excess,
right out of having an abundance of cash you've been
able to save up. We don't want you jeopardizing your
own financial future in order to ensure that she remains
(20:04):
student loan debt free. It sounds like that's where you're
coming from like, I don't think you're like, I don't
know if we can, but we're going to, even if
it means that we are living on next to nothing
for our retirement years. I don't think that's where you're
coming from. Those weren't the vibes I was picking up on, right.
Speaker 1 (20:19):
But the truth is a lot of folks, Matt, do
they over prioritize paying for their kids college to the
detriment of their own financial security, whether that's rolling back
roth Ira contributions or four one K contributions so they can,
you know, get the more money into that five twenty
nine plants so that their kids can graduate debt free.
But then they might be relying on their kids decades
down the road because they didn't do enough for themselves
(20:39):
early on. WE just don't want you to limit your choices,
even if you're doing this with noble intentions and you've
done so much for her already. I just don't think
you have to feel obligated sure to do this, And
I think it's great that you want to, but just
make sure you're not like, what is it the lead
pipe in the bicycle tire man and the spokes.
Speaker 2 (20:56):
I just don't I just want them to do that
to themselves totally. Yeah. And I would even say too,
if there is a way that you can get your
daughter to have some skin in the game, I think
I would try to find a way to do that
as well. Like every family has their own expectations as
to what their expectations are of the kids of parents,
all that kind of thing. Yeah, but I would hate
it if your daughter changed her mind a couple of
years in to vet school. He's like, now I'm going
(21:18):
to be a podcaster, and you're like, no, don't be
like Matt and Joe and so. I mean, for that
very reason is why I've at this point at least
stopped contributing to five twenty nine accounts for my kids
because I want to get some seed money in there.
I want to get the ball rolling. I want that
to begin to grow. But the ability for them to say, oh,
have a job in college to offset some of those costs,
(21:38):
where they have some of that buy in in a
way that you don't fully realize until you are doing
something maybe that you don't want to do, like working
a part time job. I think that is so important.
Speaker 1 (21:47):
We had a discussion about my daughter said or are you
going to buy my car for me? When I turned sixteen.
You're like, well, it's funny. Emily was like, oh, yeah,
we probably will, and I was like, oh no, we won't,
you know, And so we.
Speaker 2 (21:58):
Have to talk about that now. Now you got to go account.
Speaker 1 (22:00):
Yeah, but it's funny how we just have different expectations.
Speaker 2 (22:04):
And even within the h That's right.
Speaker 1 (22:07):
I bought my car and then I ended up talking
about it with my daughter later and I was like,
we'll probably help you out, but I want you to
also have some skin in the game.
Speaker 2 (22:13):
And I think there's fifty to fifty baby, I'll do
the match on the car. I mean, I've already we've
already had started these convers.
Speaker 1 (22:18):
Everybody, everybody has they come down to different different spaces
on that. But I do think that at least for me,
I appreciated that car more because I bought it with
money I earned working at a fast food joint.
Speaker 2 (22:28):
So totally agree. I'm with you man. All right, let's
talk about Chris's desire to avoid taxes because it came
in Islands. Yeah, okay, this is like what he's actually
asking about, not like all the other things that we've
spouted off so far, but there aren't really any other
ways of lessening the tax burn that you're going to
face when you sell these funds. Long term capital gains
taxes are just the reality that we all face as investors.
(22:49):
I think a sort of healthy way of thinking about
it is like as a success tax. It's a literal
tax but also a successful.
Speaker 1 (22:55):
Yes, and you want to see your investments gain in value.
But the good news is that the current rates are
pretty favorable, and so if you sell the proper amount,
you're only going to pay fifteen percent of the actual
gain that you experienced. However, if you sell too much
in a given year, you could see yourself pushed up
into that twenty percent capital gains bracket. So make sure
to pay attention to where the rate jumps, which for
(23:17):
let's assume that you are married and you are filing jointly. Well,
for you, it's when your taxable income goes above the
eighty three thousand threshold. There's a line of demarcation which
I don't know where Chris is, but considering that he's
saved in a mass so much that he's in one
fell swoop potentially ready to pay for a bet school
with he could be there.
Speaker 2 (23:37):
Yeah, they might pretty close. So not to mention, he's
in the Bay Area not a cheap place to live
as well, so he might. There's a good chance he's
a higher earner. That's like middle.
Speaker 1 (23:44):
Class there man exactly in the Bay Area. And you
asked Chris about selling your stocks, would that count has
earned income? The answer is no, like what you earned
from your job is taxed differently than what you've earned
from those investments. So then going back to your question,
I guess one more time, can you avoid some of
that tax? There's only one thing that crossed my mind, Matt,
one way in which there could be a tax avoidance
(24:07):
strategy here, which is donating some of the funds that
you own that have appreciated nicely. So instead of donating
cash like you might normally do in a given year
to your donor device fund or to nonprofits of your choice,
basically give the same amount from appreciated stock and then
write a check to your daughter school that twenty five
(24:29):
thousand dollars let's say it's twenty five thousand dollars for instance,
that you're going to do in a given year. Well,
that would avoid taxation, saving about thirty seven hundred bucks
in tax that you otherwise would have paid. I see
that as a potentially smooth move.
Speaker 2 (24:41):
So it's like a yeah, it's a workaround because guess
what money is fungible and so the ability for you
to pay directly and then oh, but we have these
other accounts over here and we'll donate from those. That's
a good way. Yeah, I like that. I think the
other thing that you could consider, Chris is tax loss harvesting.
So if you sell funds that have gone down in value,
that could help offset some of the games that you
realize when you do sell those mutual funds that have
(25:02):
done well, reducing your tax bill by potentially three thousand
dollars in a given year, and you can even roll
those losses into future years as well. You just want
to make sure that you're not intentionally pursuing crappy investments
in order to the tax loss service. Of course, that's uh,
that's the tail wagon the dogs, right. And last, but
not least, consider talking to a tax expert. You don't
(25:24):
want to needlessly pay tax that could have been could
have been avoided when you've got somebody who is able
to really spend a lot of time with you. They're
able to look at all of the particulars with you
and what you've got going on.
Speaker 1 (25:36):
Right, I think that can be a frugal or cheap
Matt And I know maybe like twenty five year old
Joel would have said, there's no way I'm paying six
hundred bucks for tax help from so I'm going to
figure this out on my own. I think when the
stakes get high enough, you could be talking about six
thousand or sixty thousand dollars in potential taxation that you
can't avoid if if you go through the right hoops
and if you know what you're doing, like simple strategies
(25:57):
like that daft thing I mentioned, that's something that's off
the radar of most people, and it's literally just kind
of a couple extra steps to save potentially a lot
of money in taxation. So yeah, I would Chris at
least consider hiring a tax expert since it sounds like
there's a lot of money on the line here and
a lot of potential tax that you could be faced with.
Speaker 2 (26:15):
And Chris didn't share how old he is, but I'm
pretty sure he's not twenty. This isn't twenty five year old, right, right,
But this is Chris on the other twenty five year.
Speaker 1 (26:22):
Olds don't have that much money to pay for somebody's at.
Speaker 2 (26:23):
School exactly, and he sounds like he has a twenty
five year old. Yea, Chris, we appreciate you listening to
the show, Joel. Let's hear from a listener who is
in the unique position of receiving a check from her
four oh one K in the mail at the end
of the year.
Speaker 6 (26:37):
Hey guys, this is Nina from Florida. First of all,
thank you so much for all the work you put
into the podcast. It has really helped me in my
personal finance education. Recently, you've had a couple four oh
one K questions and I'd like to add mine to
the mix. After finding you guys, I've made efforts to
max my wrath four oh one K, but for the
past couple of years I've actually gotten a check back
(26:59):
due to my company me failing the four oh one
K non discrimination test. I know that all employees are
auto enrolled, and so I'm assuming that many are opting out.
This year, I decided not to max out my four
oh one K, and instead I allocated funds to max
out my backdoor wroth and then also invest in a
taxable brokerage account. What would you do in this situation?
(27:19):
And is there any way to know in advance what
the true max actually is year to year? Thank you
so much?
Speaker 2 (27:25):
Oh, Matt, more four one k stuff going on here? Hey?
Four one k's that's the that's the path to millionaire
status for most Americans.
Speaker 1 (27:32):
I mean it certainly, it certainly can be, and I
think it maybe can be for Nina too, But there's
some shenanigans going on here that we have to get
to the bottom of.
Speaker 2 (27:40):
It sounds like.
Speaker 1 (27:41):
It, and we we've already we already have a retirement
account alphabet soup in this country. I think it just
is generally confusing to people, and it feels like you
have to listen to one hundred episodes of How to
Money before you really have a full grip on all
the different accounts and what their contribution limits are and
how those contribution limits actually change regularly. And then certain
plans have exceptions, and certain plans, Oh, if you make
(28:03):
over a certain threshold, wow, you can't contribute.
Speaker 2 (28:05):
To that anymore. And then the way you might.
Speaker 1 (28:08):
Actually be able to fund a backdoor wrath and contribute
more than the contribution limit, and so it can be
really frustrating, I think as a layperson to figure out
all the different details going on inside some of these
retirement accounts. And yet another funky rule that can mess
with your retirement goals is non discrimination testing. That's what
Meen is asking about this place.
Speaker 2 (28:28):
Yep, yep, yet another acronym to add to the mix.
Ndt's let's dig into it. There are a bunch of
tests that for wing K plans go through each year,
and these are required by the government, and there are
ways around these tests that typically involve the employer having
a base level match or contribution amount for all employees.
And so the basic goal is to ensure fairness. So
(28:49):
let's say, for instance, you are there's a situation where
the owners of the plan, the high income earners, the
high the highly compensated individuals or employees at your place
of war, they're using it to the max. But then
you've got other employees, uh, and they are neglecting it completely.
That would be a situation that would run a foul
of the I R S H. But this also stinks though,
(29:10):
because I mean you are paying a price, you're not
being able to contribute as much as you would like
because of the fact that your fellow employees aren't keen
on investing for their future. So it's something that we
haven't I don't know if we've ever talked about this
before on the show, but I don't. I also simultaneous rare. Typically, Yeah,
this is a little bit more of a nerdy sort
of conversation. But for a lot of small business owners
(29:32):
out there, I don't want them to also freak out
because typically this isn't something that comes under scrutiny unless
you are unless your business is audited, at which point
you are required to provide that testing to the I
R S. And Joel. I'm proud to say that a
hount of money aka poor not poor, has never been audited,
aren't you glad? I'm thankful. Well, even if we were audited,
(29:52):
we would also be in the.
Speaker 1 (29:53):
Clear because not on wood Right now, Max, just to
that never happens, because I feel like you're drinking us.
Speaker 2 (29:58):
No, there we go. Yeah, as our employeer, we match
equally for both you and I.
Speaker 1 (30:04):
Yeah, so I mean there's literally only two people here,
so it does become easier.
Speaker 2 (30:08):
We're good.
Speaker 1 (30:09):
Yeah, and there's reasoning behind this. I think the IRS
wants to make sure that that highly compensated in individuals
and the owners of the business aren't like getting massive
money into tax advantaged accounts while not really informing or
allowing other people to participate in the plan, making it
difficult and therefore making it kind of a tax windfall
(30:30):
for some and offering zero help on the retirement savings
front to other people who work for the business. And
so your employer has to make sure that the four
H one K plan is essentially useful for all employees
and not just a tax shelter for highly compensated employees.
And that's actually a little term that the IRS uses.
And so your employer actually failed the test and they
(30:51):
have to take the money back out and send it
to you in a check. Fortunately, you've been contributing to
the WROTH for on K. Great job on that front.
But folks who have this happen, if they've been contributing
to a traditional for one K, are actually going to
find themselves having to pay taxes that they owe because
of this too. So they're going to get an additional
form that says, hey, next year, when you pay taxes,
(31:12):
you're going to owe the irs extra money because of this,
and the only way you and other highly compensated employees,
and by the way, that's to find as someone who
makes one hundred and fifty thousand dollars or more. The
only way you guys can avoid this in the future
is by encouraging other workers to participate, which sounds kind
of weird because then you're going around, You're like, Sheila,
have you been contributing to your four one K? You
(31:33):
really should say for your.
Speaker 2 (31:35):
Future, Hey, let's all kick social Security do the CURRG right, Yeah,
And that's just an awkward conversation to have, But that
is one way, truly, if everyone had the money listeners, right,
money listeners, that's like normal fodder for conversation. You're right,
you're right.
Speaker 1 (31:47):
The only other way I think to truly avoid this
happening in the future is to enroll in a safe
Harbor for one K plan if your employer chooses to
essentially make some changes to the plan which makes it
more inherently fair.
Speaker 2 (32:00):
Nature exactly, which, again, though, that is up to the employer.
It's not like it's an option you can choose. It's
like roth versus traditional for owing K. This it's not
makes me think of we're just talking about our business
or whatever. It's like, we are formed as an LLC,
but we elect to be taxed as an S corporation.
This isn't some sort of election that you can check
a box for to opt into the safe.
Speaker 1 (32:20):
Heart, right, you'd have to twist some arms at the top.
Speaker 2 (32:22):
And so is there a way to know in advance?
Sadly know, Nina. I think one thing you could do
is just mention this to your superiors. Mention this to
HR and see if this is something that they're trying
to remedy. Because my guests is that the higher ups
they're at the company would also like to contribute more
to their tax advantage retirement accounts, and so they would
have a vested interest in either choosing that safe harbor
(32:44):
plan or just finding ways to help incentivize, help encourage
their employees there at the company to increase their contribution.
Speaker 1 (32:50):
And they probably don't want the best employees of the company,
who might be the most highly compensated employees. Matt to
be kind of frustrated that this perk that's being offered
that they can't take advantage to the max either, because
that makes them anti competitive.
Speaker 2 (33:02):
Exactly like Nina. Like, I mean, there's a chance that
Nina's thinking, all right, well, I get paid well, but
if there's another company right, same salary, but the benefits
are just completely off the chain, and guess what the
match is killer? Not only do I have unlimited days off,
but they also enforce it. There's all these other It's
just one of those things that a company wants to
not fall by the way.
Speaker 1 (33:19):
Side, right well, And I think too, there are ways
that the company can change things. Maybe they can offer
a better match. Maybe they can just communicate better about
the auto enrollment procedure, because Nina said, pretty sure, we
have an auto en roll, and I guess people are
ditching they're not doing it. Maybe it's literally as simple
as having some sort of better HR communication to employees
as the onboarding process is happening, so that more people
(33:41):
elect to stay remain invested inside the four oh one
K And if they're contributing a decent chunk of their
salary from the get go, maybe everyone can contribute exactly
how much they want to their retirement accounts. So what
should you do at the end of the day. I mean,
we think the route you're taking makes sense. Ideally you'd
be doing the backdoor roth. You'd axing out the WROTH
four O one K two but contributing less to your
(34:03):
WROTH four on K and more to your taxable brokerage account.
I think it's a reasonable choice matter. If it were me,
I think I would keep maxing out the WROTH for
one K in hopes that the plan doesn't fail the
non discrimination test in the future.
Speaker 2 (34:15):
Maybe they get their act together. Yeah for twenty twenty.
Speaker 1 (34:17):
Four, Yeah, and then any funds that were sent back,
I would funnel it into the brokerage account. Then, you know,
we still want you to get every dollar you can
into Wroth vehicles with the hopes that your company's plan
is going to figure this out and then allow for
those contributions to remain in place. It's a frustrating thing
to be like, oh, I've done the right thing and
then get money kicked back and you're.
Speaker 2 (34:36):
Like, because, well, there's what do I do now? And
there's a temptation maybe even at that point, to not
invest it, because then it's almost like this unexpected windfall
maybe end up blowing it. And the other super annoying
part of this two Nina, and I totally get this,
or this is how I'd be feeling about it, is
that I'm not investing at the beginning of the year
like I would naturally want to as because basically you're
a year behind and you're missing out on possible gains
(34:58):
that the market has experienced over that period of time
as well. So it's not like a deal breaker, it's
just really annoying. From an employer's stance. I think throughut
she's taking it's pretty solid. Yeah, she wants to keep
trying to max the wroth farol and K great and
if the kickback happens, put it in your taxable brokerage
account then. But it's just kind of one of those
idiosyncrasies of certain foural one K plans that she is
falling victim to and it's not fun. All right, matt
(35:20):
We got more to get to, including we're gonna talk
about a type of insurance it's highly underrated that almost
nobody thinks about. We'll talk about that and more right
after this. All right, man, we are back from the
break and it is now time for the Facebook Question
(35:40):
of the Week, which is from Matthew. He writes, I
have had short term and long term disability from my employer.
The short term disability is about thirty two dollars a month.
The long term disability is twelve dollars a month. Is
short and long term disability worth? It is one better
than the other. It's open enrollment time and my job,
so I'm just looking at my options. Jill. We are
(36:03):
in open enrollment season. That's true. It's time to think
about your health care plan. It's time to think about
which one makes the most sense. On November first is
the start date for open enrollment over on healthcare dot gov.
But there are other choices besides the big one healthcare
that need to be made during open enrollment as well.
Like Matthew's question about employer provided disability insurance, employers, they
(36:26):
often offer a little bit of life for a little
bit of disability coverage, just as a nice little perk,
but then they allow you to purchase more if you
so choose. Disability insurance specifically, long term disability is highly underrated,
and a big reason for that is because the stats
show that one in four people will become disabled during
(36:47):
their working life. We often talk about life insurance and
how that's something that you need to get in place.
But because one hundred percent of people die maat that
is true. But the likelihood of you being disabled and
not being able to earn an income to be able
to provide for your family or your loved ones, that's
a real possibility. So for you, Matthew, it's great that
your employer is offering this, but we do want you
(37:08):
to think twice before you click to buy.
Speaker 1 (37:11):
Yeah, First, you might have enough coverage, right if your
employer offers a little bit of each type, short term
and long term disability for free, that combined with savings
you built up, like hey, you might not need anything
beyond those two things. And then second, you might actually
find more flexible and more affordable coverage by shopping on
the open market. Makes me think, matt when I was
(37:32):
working for a W two wage with a traditional employer
and they offered a small amount of employer provided life
insurance during open enrollment, and I can opt for more,
but I never opted to buy more because it was
actually more costly than me going out and shopping for
my own policy on the open market. So that's typically
(37:53):
true unless you have let's say, meaningful pre existing conditions,
and maybe you're unensurable, then maybe getting your coverage through
your employer is the only our best way for you,
but the long term disability. It's only going to cost
Matthew twelve dollars a month, he said, Man, you can
shop the open market, but you're probably not gonna beat that.
Speaker 2 (38:11):
So it sounds like a pretty good deal.
Speaker 1 (38:13):
Right, You probably want to option that, and you know,
if you're looking to shop more or get more interns
on the open market, go to a site like policy genius.
Depending on your income and the policy you choose, it's
likely get to cost between like one hundred and five
hundred dollars a month. That's a lot more than twelve.
And so this sounds like it's a good deal. But
here's the potential downside of this. You likely won't be
(38:33):
able to take this policy with you if you leave
this job. So yeah, if you do decide to leave,
if you find greener pastures somewhere else, you're gonna have
to pony up for your own policy at that point.
So just recognize that that it's going to be great
while you're currently employed with this company, but if at
some point that stops being the case, you might have
to fork over a bunch of money to get your own.
Speaker 2 (38:54):
Totally, and just make sure to look at the fine
print as well, because different policies are going to have
different caps, they're going to have different reales requirements. You
want to look at something like the benefit period as well,
which is how long. Let's say we're talking about long
term long term disability insurance. There's a big difference in
the cost of the plan if the benefit is only
two years versus if it is going to pay benefits
(39:14):
for your entire life. Yeah. So obviously though, that one's
going to be more expensive, right.
Speaker 1 (39:18):
Oh, it's the same thing of whole life versus term life, right,
And there's a reason that term life is so much
cheaper because it's not covering.
Speaker 2 (39:23):
You're looking at a set amount of time, Yeah.
Speaker 1 (39:26):
Until you're ninety five. It's usually covering you for twenty
or thirty years from the time you're forty to sixties.
Speaker 2 (39:31):
Yeah. Elimination period is another term to keep in mind
as well. That's the period of time that has to
elapse before the benefits kick in. Essentially, that's the period
of time that you are out there on your own.
Of course, the longer you wait, the less your monthly
premiums are going to be, but having the right kinds
of insurance is crucial. So I think this is great
that you are considering this, Matthew, where you're looking to
protect the financial life that you've built for yourself, but
(39:53):
it can also become prohibitively expensive to ensure yourself to
the max on every single front. So if you're looking,
if you're just going down the and lists and you
just at like check check, I'm gonna got all the insurances,
I'm gonna get that. I'm going to get that as well.
Speaker 1 (40:05):
But now I can't pay my mortgage. Map you're not
going to have, yeah, a whole lot left at the
at the end of the month. Long term disability, it's
it's a more important product in our opinion, and that's
because a simple, robust emergency fund can often be sufficient
enough and that can carry you through the period of
time that a short term disability event would create in
your life in a similar way that that elimination period
(40:28):
or the waiting period before the insurance kicks in for
the long term disability. In that same in the same way,
you want your emergency fund to be able to basically
bridge you through those rough waters. That's exactly right. And
I think that that's why we just value short term
disability coverage so much less is because that is something
we think is more self insurable, and maybe you need
(40:50):
it for a year until you've been able to ramp
up your emergency fund to the point where you can
self insure.
Speaker 2 (40:55):
Yeah, I could see that'd be in a decent situation. Yeah,
but decent scenario to find yourself in. That's when you
pay the money to the duck and as you are
building up you're right, but.
Speaker 1 (41:04):
At some point you're able to avoid paying for that
insurance altogether because you've got the cash on hand to
cover yourself in case the worst scenario or a bad
scenario where to happen to you. I think smart how
to money listeners should be able to cover a short
term event because they have built up the cash savings
to whether a bunch of different financial storms, whether that's
job loss or whether that is some sort of disability
(41:24):
that takes you out of work for a few months.
But you know, think through the potentially catastrophic consequences of
a long term disability, Matt, if you like, run some
worst case scenarios that can be really frightening and hopefully,
of course, Matthew, you stay healthy. You feel like you've
wasted those premiums years down the road, but especially you know,
given the price your employer is charging for that coverage,
I think it makes a whole lot of sense to
(41:44):
snag the long term disability coverage specifically, and then maybe
at least consider and do some shopping what it would
look like to get your own policy on the open
market too, just in case, or especially if you're not
planning on staying employed at your current place of work
for too much life.
Speaker 2 (42:00):
Alright, got time for one more. This is an email
from k she wrote us Joel. She said, I went
to the grocery store at a non busy time of day,
took the coins that were gathering dust in our home.
I had a sandwich bag full of small coins and
I used them to pay for my groceries. Instead of
going to coinstar, I took them to the self served
check out and I paid with thirty seven dollars worth
of pennies, nickels, and dimes. I wish I had a
(42:22):
slow clap sound effect. Rights. What's impressive is the fact
that she didn't say quarters, so that's actually she said,
small sandwich bag or I don't know, just a sandwich
bag full, that's all. I don't know. It takes a
lot of pennies, nickels and dimes, so make thirty seven
dollars worth. But she said, sure, you turn that into
a barbell and get your workout. Seriously, she said, no,
twelve point nine percent coinstar fee and no transaction fee.
(42:44):
It didn't take that long, and the cashier said that
it wasn't that unusual for people to do this. I
look carefully to ensure that there were always open checkout
stations and it didn't take long. Frugal or cheap? Joel,
what you think? I think? You know what I think, Matt.
I like it. Frugal, I like it. How could this
not be frugal? I love it.
Speaker 1 (43:00):
The cooinsts our fees are insane, yeah, like truly uh
and and part of the reason it.
Speaker 2 (43:04):
Make it easy.
Speaker 1 (43:05):
This is frugal, not cheap, like I think. I might
have a slightly different take if Kay had said and
there were people lined up behind me and they were
so angry, they were seething, and then my tires got.
Speaker 2 (43:15):
Slapped because they were so angry that it took was
being considerate. She was looking around her, you know, went
during a time of day that where it wasn't busy. Right,
I'm all for it.
Speaker 1 (43:22):
You didn't hold up the line for thirty minutes and
then you got rid of that change you turn into
something constructive and we didn't pay a massive fee to
do it.
Speaker 2 (43:29):
No, have we talked about this that I did this,
Like was this maybe earlier this year or or I
think we did talk about it. Our change jar was
filling up and I went to a local Kroger, thinking that, oh,
this is gonna be so easy. I can just like
just dump them in the little cup and they'll kind
of tint, you know, like go down into the slot. No,
that's not how the self checkout thing is there. You
just stick them in individually. Yes, it was a literal
tiny little slot and so man, that really turned me
(43:52):
off from the entire and it kept getting jammed. That
was the whole other thing. I had to like pull
out my keys. Some people were seething behind you when
you did it. Uh, it wasn't it Also wasn't that
that crowded oine Tomato Stown at your head. All that
being said, I have since learned that coinstar oftentimes if
you receive your payment from your change in the form
of a gift card, a lot of times there aren't
(44:13):
transaction fees. And this is I only learned about this recently.
I looked into it, and specifically Amazon is one of
the one of the gift cards that you can get,
which in our household that's basically as good as cash.
Speaker 1 (44:24):
Yeah, So I was done the impression and maybe I'm wrong,
and maybe it's different at different coinstar machines that there
is like a reduced fee if you get an Amazon
gift card, but then there are other stores that you
can get a gift card for and then there is
no fee if you do that. So I think it's
like Home Depot and Nike and some of those companies.
But if you I think I thought it was zero
percent maybe with Amazon. If it is for anybody who
(44:44):
likes to use Amazon, which is like everybody I know, Yeah,
then then you're talking with You spend a decent amount
of money.
Speaker 2 (44:50):
Pretty simple decision with Amazon. And if this is incorrect,
we'll issue a correction in the show notes for this UBPENCD.
Speaker 1 (44:55):
If time is money, Matt, then you don't have to
waste your time plunking every coin individual I know, no
the ability to to dump the whole thing in there.
We need to keep enough around to be able to
teach the kids about money, and Kate, she pays the kids.
The bugs are all kind of dying now because it's
getting colder, but there are certain bugs that were on
her flowers and stuff, and she would pay them ten
cents every time they would kill one.
Speaker 2 (45:15):
Of those bugs. I gotta have some dimes on hand.
Speaker 1 (45:17):
Yeah, so I can't dump all those into the coin star.
But Kate, yeah to k not Kate, kry Kay, you're
doing a great job.
Speaker 2 (45:24):
You should not.
Speaker 1 (45:26):
That's not cheap, it's frugal. We've getting rid of those
coins getting your groceries. At the same time, nobody got
mad at you in the process, so I think you
did a fine job there. Made a good choice. All right, Matt,
Let's get back to the beer we had on this episode.
This was is called a kobzar. It's a Ukrainian imperial stout.
Sure not cobs are I don't know.
Speaker 2 (45:43):
I don't know.
Speaker 1 (45:44):
I didn't really look up the presentation, but I did
look up because I mentioned in the beginning I didn't
know what this means what that word meant, And apparently
it's like a traveling minstrel who plays some sort of
stringed instrument in Ukraine back in the day, like the
Bob Dylan of a couple.
Speaker 2 (45:57):
Hundred years ago, so early Bob Villanob Dylan, so that
that poem or whatever it maybe their lyrics there on
the side, it could be, but it's got someone's name,
tear Us Chavenshko. I don't know, I'm not saying your
pronunciation is terrible. Sorry, it's all my Ukrainian friends out there.
But I did like this beer, super dark, some awesome
(46:18):
roasty notes going on here. It was brewed with coffee
beans as well, so there's like some nice bitter notes
coming off of some of those coffee beans. Do you
get any cinnamon in this one? Oh? I think I
could see why you would say that.
Speaker 1 (46:29):
I got like a touch of cinnamon, and I also
got some of the whiskey barrel on there too.
Speaker 2 (46:33):
Yeah, yeah, yeah, there's so yeah.
Speaker 1 (46:36):
We're we're not necessarily in the heart of stout season yet,
but this is like, I don't know, kicking off potential
stout season for us. And this one was a fantastic
representation of an imperial stout, so I loved it.
Speaker 2 (46:49):
It's a it was aged in Glenora whiskey barrels, which
I don't know what Glenora is, but man, I just
love oak. Kate. So she's been trying to find a
new cologne for me, and because she doesn't like the
I bought this little tiny little thing of some oil
that I wear occasionally, and she got some samles for me.
But they all smell like traditional, like dude in the
mall cologne. Yeah. But what I told her that I
(47:11):
love are the the smells that smell Oaki, like literally,
and I was having a hard time explaining to her,
like feed her yeah, And I was just like, you
remember when I was like splitting all those rounds of
that white oak that the neighbor took down, and I
was literally like sniffing every chunk of wood that I'll split,
Like that smell. There's something about that yeah, oakiness that
I love so much, not only that I enjoy drinking,
(47:32):
but sometimes I like smelling like it too.
Speaker 1 (47:33):
I guess I don't wear coloone. And my buddy was
talking to me about that the other day and I
was like, one, I don't want to spend seventy dollars
a bottle. I'm sure you can get cheaper stuff, but
oftentimes the cheap stuff smells really cheap.
Speaker 2 (47:43):
But I just I don't think.
Speaker 1 (47:44):
I don't like smelling myself, so I like to I
like to be neutral in my scentse and so I wear.
I use a dove soap. I think that has a
nice little See, you're not neutral.
Speaker 2 (47:52):
It's faint. It's faint. I just want my faint to
be but I can't smell it. I want it to
be of the white oak genres. Let me know if
you find something kind of manly and inexpensive. Thank you.
Oh yeah, I said thank you because I envisioned listeners
reaching out with their suggestions. If you have my mind,
it doesn't stop.
Speaker 1 (48:08):
Cheap, manly colowned suggestions will take them.
Speaker 2 (48:10):
That smells like white oak. Yeah, I'm all for it.
Speaker 1 (48:13):
All right, let's going to do it for this episode.
We'll put links to some of the stuff we mentioned
up in the show notes on our website at how
toomoney dot com. So, Matt, until next time, Best Friends
Alutum best Friends Out
Welcome to How to Money. I'm Joel and I am
Matt and today we're answering your listener questions.
Speaker 2 (00:24):
That's right, buddy, Happy Monday to everybody. We hope you
had a fantastic weekend. We've got some great listener money
questions to get to. For instance, we've got a listener
and he's wondering if high yield checking accounts, whether or
not they are necessary. We've got another listener who's looking
to pay for VET school while simultaneously avoiding capital gains.
(00:45):
How do those two have anything to do with each other.
We'll get to that question. You will soon know how.
And we're also going to talk about discriminatory four to
one K accounts. Joel, bet, you didn't know your retirement
cat was racist. I don't like discrimination, Matt On. So
actually doesn't have anything to do with race. It has
more to do with your level of income. But we'll
(01:06):
get to that and others during today's episode.
Speaker 1 (01:08):
All Right, I had a question that's been kind of
ruminating in my mind since I read an article about
this in the New York Times. Matt that there were
a lot of young people were interviewing this New York
Times article about the topic of social security. Many of
the people who were asked, Hey, how do you feel
about social Security? Would you stop contributing if you could,
and you could just bank that money instead.
Speaker 2 (01:27):
A couple of weeks ago, Yeah, I saw the headline.
I did not read it.
Speaker 1 (01:30):
I basically everyone said, yes, okay, yeah, I think you also.
Speaker 2 (01:32):
Know where I land on this, which is the more
responsibility that we can take as individuals as to our
future outcomes, right, Like the onus is on us, and
I think that that is the most efficient path forward.
It's going to be the least costly, it's going to
be so much more simple as opposed to this giant
system social security.
Speaker 1 (01:51):
I get why it exists, right, because there are a
lot of people who aren't going to save for themselves,
and this is a forced method of savings, and it's
essentially ensuring that that segment of people won't end up
in dire straits come those retirement years. But you're right,
I mean, and it's interesting. Nobody really can opt out
of Social Security except for some members of the clergy.
Some religious folks are able to say, yeah, ministers, because
(02:14):
we have a friend who opted. He heard that once
upon a time and said, sweet, I don't have to
lose a portion of my paycheck everything every two weeks
in the government sadly accept that.
Speaker 2 (02:23):
Well, then he wasn't investing in any other way. Yes,
and that is what.
Speaker 1 (02:26):
You have to do if he does that opt out
of Social Security. We had to scare them straight right
away and be like, dude, dude, if you're going to
opt out of Social Security, you've got to start. You
gotta be stocking those dollars away and do extra planning
for your own future.
Speaker 2 (02:37):
And all fairness, it was before we started the podcast,
So I feel like that he's like, I don't have
any street credit yet. That is something that we would
have talked to him about.
Speaker 1 (02:44):
Yeah, but I get why people would want to do that.
But I think the other the flip side of the
coin is, and it's worth mentioning this. There's a lot
of fear and uncertainty about the future of Social Security,
and rightly so in some ways, because our politicians have
been so negligent of the fact that the trust fund
is running out of money and that benefits are are
going to have to be cut at least a twenty
five percent haircut, right if nothing is done but the
(03:06):
truth is I twenty thirty five, put onto your hats.
I think everybody, especially for gen Z, I get maybe
some of that despair. But I just want to end
on a note of optimism. Like I do think social
security in some way, form or fashion will be there
for our generation and for the generation coming behind us.
But man, I just wish people would either do something
to fix it, and it'd be nice. Actually maybe if
we rely on social security less overall and we did
(03:28):
take more responsibility for our own retirement. I think with a
lack of pension access these days for people, we're all
going to have to be a little more thoughtful.
Speaker 2 (03:36):
We need to be.
Speaker 1 (03:36):
And that's why people tune into this podcast. I think,
how does they want to start thinking about how they
can prepare themselves depending on that.
Speaker 2 (03:43):
Yeah, they know the government's not going to do it.
I am not holding my breath to think that there
is going to be any reform to social security anytime soon.
Like nobody wants to touch it, Like nobody wants to
be talking about it. No, nobody wants to be the
bearer of bad news. And that's the part of why
we've got the show How to Money, because it puts
the ball in your court. It's up to you as
to how aggressively you want to stay for retirement. We
(04:04):
all know the longer you kick the can down the road,
the worst the problem gets. So like it'd be nice
if we I don't know, thought about it before things
really hit the fan. So, speaking of cans, I like
that Canada the beer. You've been doing this for a
long time. Haven't you long enough to do something like that?
I guess? But the beer that you and I are
going to enjoy during this episode is called cobs Are.
(04:27):
Where cobs Are? I'm not totally sure how you say it,
but this is a Ukrainian imperial stout by Big Spruce
Brewing that was donated to the show by our good
buddy Andrew. I'll say Andrew l he knows who.
Speaker 1 (04:40):
So yeah, he went on a trip to Canada, went
to some really fancy spots in Canada, and he brought
us back this beer and super excited. I wonder if
cobes are is that how uspl tzar in Ukrainian? Maybe
is that like a picture of a Ukrainian zar? I
don't know, I'm curious.
Speaker 3 (04:57):
I don't know.
Speaker 2 (04:58):
Well, on the side here there's there's a let's see,
it looks like it looks like there's a poem some
writings here, and it's titled codes are at the time.
So maybe it's just the name of this in particular excerpt.
I don't know. All right, Well, I like my refined beers.
Extra strong beers is what this is called. So it's
a good thing you and I are sharing.
Speaker 1 (05:15):
If this one's got a poem on it, it must be fancy.
Speaker 2 (05:17):
And it's certified organic by Canada, so sweet. All right,
let's got the Canadian there we go.
Speaker 1 (05:23):
Well, I'm excited to have this one, and we'll give
our thoughts in just a bit. But let's get to
listener questions. If you have a money question, we'd love
to hear from you. We'd love to take it on
the show. Got to howomoney dot com slash ask for
simple instructions or record your voice memo, email it over
to us. We'll take it hopefully next week. Matt, let's
get to a question specifically about checking accounts, trying to
make more money on the cash you got on hand.
Speaker 3 (05:46):
Hey, Matt and Joel, Mike, coming to you from Perry's Burg, Ohio.
Recently on the newsletter you mentioned checking your accounts and
ones that don't pay interest. Our current checking account is
one that does not pay interest. Should we look to
get something that does pay interest or not? Right now?
Anything extra in our checking account as.
Speaker 4 (06:07):
It comes in and bills are paid, I make sure
that it's going back out to things like Vanguard and
c for our savings. So I was wondering if needing
a checking account with interest or not is needed at
that point.
Speaker 2 (06:21):
Thanks all right, Joel. Well Mike here, he said exactly
where he lives, which of course means that you know,
I went looking up this town, Perrysburg. It's on the
outskirts of Toledo, Okay, right there near It's it's basically
on Lake Erie. Did you think of Canada? Speaking of Canada,
it's like right there, creep. He's basically a Canadian, a
personal not a personal finance somebody who's in investing, somebody
(06:44):
that we keep up with. He always talks about the
Great Lakes area up there being sort of a hedge
against global warming because as the earth warms up, everyone's
gonna want to go move from the south up to
the north. And he says the Great Lake Arias are
quite beautiful. I believe. I believe. I think Lake Erian
particularly is I think I've heard argued the most beautiful
great lake.
Speaker 1 (07:03):
I haven't spent enough time there. I've walked along was
it Lake Michigan in Milwaukee, Wisconsin. I was super impressed.
I would love to spend more time up in that area,
but just haven't made it up that far one of
these days.
Speaker 2 (07:14):
But Mike, this is a really solid question. So we
talked a bit about why you shouldn't do business with
one of the big banks last week. So let's focus
on checking accounts here for a second, Because if you
were to open up a checking account with one of
the biggest banks in the country, you wouldn't be earning
any interest, But that actually wouldn't be abnormal because checking
accounts don't typically come with meaningful interest rates attached. You would, however,
(07:37):
probably get hit with higher fees though, so some checking
accounts are created better than others, but it oftentimes doesn't
have much to do with the interest that you're earning
from that checking account.
Speaker 1 (07:48):
So it probably makes sense to mention the fact that
checking accounts overall, like here alluding to math, they're not
great on the interest rate. Front, so I don't know,
maybe exclusively using savings accounts.
Speaker 2 (07:58):
Would be better.
Speaker 1 (07:59):
Well, while the best online savings accounts are paying great
rates right now, at least when we're talking about the
last fifteen years of interest on savings and it's better
than it's been in a long time, they're not as
easy to get money out of, and so you can't
write checks or have a debit card essentially attached to
your savings account. And it's important to note that savings
accounts actually have some specific limitations. Most banks, for instance,
(08:22):
are not going to allow you to do more than
six withdrawals in a month and met that actually used
to be a limit that was imposed by the FED
on savings accounts specifically, so banks like literally were not
allowed thanks to FED dictate you couldn't make more than
six transfers out of your savings account. And I remember
they're trying to stabilize the M one.
Speaker 2 (08:41):
I don't know if that's true, made that up, but
I think that's why. Yeah, I had something to do
with it.
Speaker 1 (08:44):
And I remember getting something in the mail from my
bank at times saying listen, dude, you made more than
six withdraws from this account. If you keep doing this, like, oh,
slap on the wrist, we have to do something about it.
Speaker 2 (08:56):
And so I was like, okay, wait, don't make me
come back there, Joel.
Speaker 1 (08:59):
Right, I had to get more things to come out
of my checking account, and then I would start to
make single, larger sum transfers between that account. So that
went away actually a few years ago, I think in
twenty twenty. But a lot of banks still adhere to this,
and you might still get a slap on the wrist
or an email or a letter in the mail saying, hey,
you're over using, you're overdrawing from your sam usse account.
It's literally all about how many transactions you can perform
(09:19):
from that account in a given month. The truth is
most people need to have both types of accounts largely
because of that, and typically having them at the same
institution to make transferring money back and forth. Making it
easy makes it make it super.
Speaker 2 (09:32):
Easy, and it makes it instant right, Like, that's what's
so great about that is you don't have to wait
on that clearing the clearing house, you know, the multiple
business days. It's instantaneously there.
Speaker 1 (09:40):
We've talked on the show about how that's supposed to
be getting faster right there, but still can take three
days right to send money from one bank.
Speaker 2 (09:48):
To the other.
Speaker 1 (09:48):
It's not as fast as blockchain, right, No, so I
actually looked at it solves everything.
Speaker 2 (09:52):
Man. Mike Key specifically mentioned CIIT. Well actually didn't know this,
but CIIT they have zero limitations on the number of
transfers come out of your savings account. It's just pretty sweet. Ally,
so you mentioned a lot of banks are at at six.
I was curious because I've never bumped up against this,
but ally allows ten transfers out of your savings account.
So yeah, just as we're all trying to maximize the
(10:14):
amount of money that we're keeping in our savings, it's
good to know what those limits are if you have
those limits. But let's talk about these potential high yield
checking accounts, because there are some checking accounts out there
that will pay higher rates of interest, but those accounts
often come with additional fees in order to snag that
higher rate. Still, others will actually require that you use
(10:34):
your debit card a specific number.
Speaker 1 (10:36):
Of times in a given month. They're able to pay
you that higher rate of interest because of the swhite
fees that they're going to accrue. Thanks to you using
your debit card. If it's like saying, hey, let's use
your debit card twelve times in a month, and we'll
give you a four percent rate on your checking account.
If you don't though you miss it, you don't get that.
Speaker 2 (10:50):
You don't get that interesting, and they know. See, the
more often that you are using that card, you start thinking, well,
let me just use that card for everything, and then
all of a sudden that's your main account. We don't love, however,
debit cards. Just generally speaking, using a combination of a
credit card and then just stashing most of your money
in savings, I think that provides a better net result.
So that being said, we just don't see any need
(11:12):
for most folks out there to try and hunt down
one of these high yield checking accounts, especially when they're
just so hard to come by. You've got all these
different hoops. You gotta put on a performance every single month,
and that's not something I'm necessarily interested in doing.
Speaker 1 (11:24):
Yeah, if you go to a site like doctor of
Credit dot com, which does a great job detailing like
the best paying CDs, the best paying save news accounts,
and checking accounts too, you're gonna find some checking accounts
where you're like, wow, I actually can't get paid a
reasonable rate of interest on my checking I haven't seen
this almost anywhere else. And and typically there are lots
of smaller banks and credit unions around the country. This
(11:45):
is how they attract business. But watch out for the
fine print if you do try to go with one
of those checking accounts that pays a reasonable rate of
interest where nobody else does. Because the fees are the hoops, Matt,
which is kind of what you're referring to, they can
easily outweigh the benefits. The best thing to do, I
would say, is kind of what I did when I
got slapped on the wrists using my savings account too much,
(12:05):
was we'll keep most of your money in savings and
move money over to your checking account as needed. And
if your bank has a limit on how many times
you're able to move money out of your savings account,
do a bigger chunk once or twice a month so
that it doesn't feel like you're constantly moving money back
and forth and the bank isn't like, dude, you're dipping
into your savings account wait too much. And again that's
going to depend on which bank you're doing business with,
(12:27):
and what rules they have in place. A lot of
banks aren't going to charge an overdraft fee, by the way,
if you take too much out of your checking as
long as you allow them to pull it out of
another linked account, which is typically your savings account with
the same institution. So that's something else to be aware of.
Is okay, if I'm with this kind of basic checking
account that doesn't really pay me anything, I can still
(12:48):
have most of my money stashed in a savings account
that's paying. You know, some are closer to five percent,
probably not five percent now, but some are closer to
that and have very little in my checking And guess
what if I do make a mistake, have a flub
and I overdraw my checking account, Well, at least our
favorite banks, Matt, they're not going to charge you a
fee for that, and maybe they'll just take the money
directly out of your savings account.
Speaker 2 (13:07):
And it's kind of like all clever, you a certain
amount of money that's right beyond the what you've gotten there,
that's right.
Speaker 1 (13:12):
It's kind of a no harm, no foul, whereas that
used to be like a massive booboo, and it still is.
Speaker 2 (13:17):
If you're with most of the big banks, Yeah, but
with Mike specifically, I mean it seems like he's on
top of it, and so I wouldn't sweat it because
we're talking about a relatively small amount of money there
within that checking account that's not earning that high rate
of interest. You are also investing some of those sons
with Vanguard. You mentioned that you're funneling other dollars towards
one of the high interest savings accounts that we recommend
being CIT. I think this is the best case scenario
(13:38):
by far. And if other listeners out there find that
they're keeping too much in their checking accounts, there's just
no need to try and find a great checking account,
which is akin to trying to find a needle in
a haystack. Just find one that's solid, that's got great perks,
no fees, and then just keep the vast majority of
your liquid savings in an actual savings account. And I'll
say as well, don't be tempted to oversave because from
(14:00):
personal experience, as you know, you've got a solid emergency
fund set up set aside. Let's say you are saving
some additional money that you're looking to keep liquid for
maybe a home renovation. The interest that you receive on
your savings it's nice, and when it comes in every
single month, it can be tempting, I think for some
people to see that and say, well, what's the point
of even investing? Like, I'm look how much money I'm
(14:21):
earning every single month, Because we see that more often,
it's something that we touch. We log into that account
more often I think than let's say our roth iras
or four to one k's. But even still you are
earning let's say half as much at least based on
historical returns on that money. So yeah, just putting a
little PSA out there as well. Don't be tempted to
oversave overpad that savings account where instead we want you
(14:42):
to have the proper amount of cash set aside in
that savings account, but you should be investing for your
long term goals. Yeah.
Speaker 1 (14:49):
I saw a stat Matt just this morning, and I
don't remember exactly what it was, with something along the
lines of like ten years ago, roughly eight percent of
overall assets we're in savings products and CDs, and now
it's like seventeen percent of overall assets has been is
in essentially savings esque products and that is something to
watch out for, and especially if you are a how
to Money listener who's in your wealth building phase of life,
(15:11):
if you're in if your gen Z millennial, if you've
got decades before you're planning to quit work, if you're
over saving, that's a real problem, and it has been
over the last couple of years in particular, but it
will continue to be a problem because you will under earn,
especially as rates go down. It doesn't mean that in
one given year your savings might not outperform the market,
but over the long haul, the market will easily if
(15:33):
historical averages remain outperform whatever you're gonna get in your
savings account, so easily. Savings is crucial. Got to have
the liquid cash on hand, but don't overdo it.
Speaker 2 (15:41):
That's right. We've got more to get to, including that
four one K non discrimination test question what that might
mean for your retirement accounts. We'll get to that more
right after this.
Speaker 1 (15:58):
All right, Matt, we're back. Let's say question now about
how to pay for higher education.
Speaker 5 (16:03):
Hi, Joel and Matt. This is Chris from the San
Francisco Bay Area, long time listener of How to Money,
and of course love your podcast. I have a question
about paying for our daughter's veterinary school. We are lucky
enough to be in a position to pay for her
four years of schooling and want to do this so
(16:24):
she starts her future career debt free. One quarter of
the cost will be covered by her five two nine,
which also help pay for her undergrad Our plan is
the other three quarters of the cost will come from
mutual funds under me and my wife's names. Those funds
are on Vanguard and Janis Henderson. By twenty two year
(16:46):
old daughter will have no income while she's in school.
Are there any tax advantage methods of selling these positions
or are we destined to pay the long term capital
gains tax? Also, I correct an understanding that capital gains
do not get added to normal income for purposes of
(17:06):
determining income tax brackets. Thank you love your show and
I tell everyone I can about you.
Speaker 2 (17:12):
Thanks well, Chris Well, thank you for spreading the word. Joel.
I personally don't tell anybody about the show because it
feels a bit self aggrandizing.
Speaker 3 (17:20):
Doesn't it.
Speaker 2 (17:20):
Do you walk around and say, hey, you got to
listen to Sandwich Board that says listen to my podcast.
We let other people toot our horn. I'm totally fine
with that, but I don't know. There's something about self promotion.
Speaker 1 (17:31):
When people ask me what I do, uh, I have
to be honest and say I'm a podcaster. But then
I quickly followed up with I promise that doesn't mean
I'm unemployed, because that's what it kind of sounds like,
because like everyone has a podcast.
Speaker 2 (17:41):
Now, yeah, it's like I'm an artist. Okay, well starting one, huh.
But Chris, thank you so much for spreading the word.
We really appreciate that. And I will say, it sounds
like you are an awesome parent. You are proactively saving
not just for yourself but for your daughter as well.
And the fact that you've got to extra money in
a brokerage account that you can use to ensure that
(18:03):
your daughter doesn't have any student debt after undergrad and
even after potentially getting a VET school education. This is incredible.
Speaker 1 (18:10):
I think this is just an awesome way to get
her started and her VET school eight cheap. Matt, I
don't think it is.
Speaker 2 (18:15):
I don't know much about it, but I will say
I think it's a really smart move though, because, like
you see more and more folks buying pets. I think
I saw a stat that said, pets is that what
you do? But you love a pet, Matt, Well, eventually
you have to buy them and then you love them,
or you can love them before you buy them. And
I guess that's the sure fire way to certainly be
part of with your money. But I saw that sixty
eight percent of gen zers are thinking or considering getting
(18:38):
a pet versus having kids, and cost has a lot
to do with it.
Speaker 1 (18:42):
We've talked about the rising costs of pet care, largely
because of a lot of consolidation in the industry too.
Speaker 2 (18:47):
And just the fact that folks are spending more money
on their pets. Because what happens if you are substituting
a dog or a kiddie or whatever pet for dude.
I was in home depot the other day and somebody
had the fluffiest rabbit in the little stroller. These are
the folks I'm talking about. But when you see that
pet as a family member, you don't spend a ton
of money on a pet, But would you spend a
(19:08):
lot of money for a family member. Absolutely, And so
I think this is why Chris, I'm pointing out Chris
that your daughter, I think is getting into a great
like I've got my own opinions about pets and kids.
This is aside from all of that, she is in
a field that where she's going to do really well.
Give me growth in that field.
Speaker 1 (19:24):
Yes, in the coming decades, as more and more folks
are looking to spend more money on their pets. Same
with mental sash professionals, family members. I'm glad my wife
is going into that industry.
Speaker 2 (19:32):
Yeah.
Speaker 1 (19:33):
No, I think you're right, Matt. And it makes me
think of what is it South Korea where they're actually
more pet strollers that get sold than strollers for kids.
Speaker 2 (19:42):
We haven't lost the lowest replacement rate in the entire world. Yeah,
in South Korea, I believe it. All right, Just one
minor word of caution, Chris. While this is truly an
admirable goal to pay for your daughter's schooling all the
way out, make sure you're doing this out of having excess,
right out of having an abundance of cash you've been
able to save up. We don't want you jeopardizing your
own financial future in order to ensure that she remains
(20:04):
student loan debt free. It sounds like that's where you're
coming from like, I don't think you're like, I don't
know if we can, but we're going to, even if
it means that we are living on next to nothing
for our retirement years. I don't think that's where you're
coming from. Those weren't the vibes I was picking up on, right.
Speaker 1 (20:19):
But the truth is a lot of folks, Matt, do
they over prioritize paying for their kids college to the
detriment of their own financial security, whether that's rolling back
roth Ira contributions or four one K contributions so they can,
you know, get the more money into that five twenty
nine plants so that their kids can graduate debt free.
But then they might be relying on their kids decades
down the road because they didn't do enough for themselves
(20:39):
early on. WE just don't want you to limit your choices,
even if you're doing this with noble intentions and you've
done so much for her already. I just don't think
you have to feel obligated sure to do this, And
I think it's great that you want to, but just
make sure you're not like, what is it the lead
pipe in the bicycle tire man and the spokes.
Speaker 2 (20:56):
I just don't I just want them to do that
to themselves totally. Yeah. And I would even say too,
if there is a way that you can get your
daughter to have some skin in the game, I think
I would try to find a way to do that
as well. Like every family has their own expectations as
to what their expectations are of the kids of parents,
all that kind of thing. Yeah, but I would hate
it if your daughter changed her mind a couple of
years in to vet school. He's like, now I'm going
(21:18):
to be a podcaster, and you're like, no, don't be
like Matt and Joe and so. I mean, for that
very reason is why I've at this point at least
stopped contributing to five twenty nine accounts for my kids
because I want to get some seed money in there.
I want to get the ball rolling. I want that
to begin to grow. But the ability for them to say, oh,
have a job in college to offset some of those costs,
(21:38):
where they have some of that buy in in a
way that you don't fully realize until you are doing
something maybe that you don't want to do, like working
a part time job. I think that is so important.
Speaker 1 (21:47):
We had a discussion about my daughter said or are you
going to buy my car for me? When I turned sixteen.
You're like, well, it's funny. Emily was like, oh, yeah,
we probably will, and I was like, oh no, we won't,
you know, And so we.
Speaker 2 (21:58):
Have to talk about that now. Now you got to go account.
Speaker 1 (22:00):
Yeah, but it's funny how we just have different expectations.
Speaker 2 (22:04):
And even within the h That's right.
Speaker 1 (22:07):
I bought my car and then I ended up talking
about it with my daughter later and I was like,
we'll probably help you out, but I want you to
also have some skin in the game.
Speaker 2 (22:13):
And I think there's fifty to fifty baby, I'll do
the match on the car. I mean, I've already we've
already had started these convers.
Speaker 1 (22:18):
Everybody, everybody has they come down to different different spaces
on that. But I do think that at least for me,
I appreciated that car more because I bought it with
money I earned working at a fast food joint.
Speaker 2 (22:28):
So totally agree. I'm with you man. All right, let's
talk about Chris's desire to avoid taxes because it came
in Islands. Yeah, okay, this is like what he's actually
asking about, not like all the other things that we've
spouted off so far, but there aren't really any other
ways of lessening the tax burn that you're going to
face when you sell these funds. Long term capital gains
taxes are just the reality that we all face as investors.
(22:49):
I think a sort of healthy way of thinking about
it is like as a success tax. It's a literal
tax but also a successful.
Speaker 1 (22:55):
Yes, and you want to see your investments gain in value.
But the good news is that the current rates are
pretty favorable, and so if you sell the proper amount,
you're only going to pay fifteen percent of the actual
gain that you experienced. However, if you sell too much
in a given year, you could see yourself pushed up
into that twenty percent capital gains bracket. So make sure
to pay attention to where the rate jumps, which for
(23:17):
let's assume that you are married and you are filing jointly. Well,
for you, it's when your taxable income goes above the
eighty three thousand threshold. There's a line of demarcation which
I don't know where Chris is, but considering that he's
saved in a mass so much that he's in one
fell swoop potentially ready to pay for a bet school
with he could be there.
Speaker 2 (23:37):
Yeah, they might pretty close. So not to mention, he's
in the Bay Area not a cheap place to live
as well, so he might. There's a good chance he's
a higher earner. That's like middle.
Speaker 1 (23:44):
Class there man exactly in the Bay Area. And you
asked Chris about selling your stocks, would that count has
earned income? The answer is no, like what you earned
from your job is taxed differently than what you've earned
from those investments. So then going back to your question,
I guess one more time, can you avoid some of
that tax? There's only one thing that crossed my mind, Matt,
one way in which there could be a tax avoidance
(24:07):
strategy here, which is donating some of the funds that
you own that have appreciated nicely. So instead of donating
cash like you might normally do in a given year
to your donor device fund or to nonprofits of your choice,
basically give the same amount from appreciated stock and then
write a check to your daughter school that twenty five
(24:29):
thousand dollars let's say it's twenty five thousand dollars for instance,
that you're going to do in a given year. Well,
that would avoid taxation, saving about thirty seven hundred bucks
in tax that you otherwise would have paid. I see
that as a potentially smooth move.
Speaker 2 (24:41):
So it's like a yeah, it's a workaround because guess
what money is fungible and so the ability for you
to pay directly and then oh, but we have these
other accounts over here and we'll donate from those. That's
a good way. Yeah, I like that. I think the
other thing that you could consider, Chris is tax loss harvesting.
So if you sell funds that have gone down in value,
that could help offset some of the games that you
realize when you do sell those mutual funds that have
(25:02):
done well, reducing your tax bill by potentially three thousand
dollars in a given year, and you can even roll
those losses into future years as well. You just want
to make sure that you're not intentionally pursuing crappy investments
in order to the tax loss service. Of course, that's uh,
that's the tail wagon the dogs, right. And last, but
not least, consider talking to a tax expert. You don't
(25:24):
want to needlessly pay tax that could have been could
have been avoided when you've got somebody who is able
to really spend a lot of time with you. They're
able to look at all of the particulars with you
and what you've got going on.
Speaker 1 (25:36):
Right, I think that can be a frugal or cheap
Matt And I know maybe like twenty five year old
Joel would have said, there's no way I'm paying six
hundred bucks for tax help from so I'm going to
figure this out on my own. I think when the
stakes get high enough, you could be talking about six
thousand or sixty thousand dollars in potential taxation that you
can't avoid if if you go through the right hoops
and if you know what you're doing, like simple strategies
(25:57):
like that daft thing I mentioned, that's something that's off
the radar of most people, and it's literally just kind
of a couple extra steps to save potentially a lot
of money in taxation. So yeah, I would Chris at
least consider hiring a tax expert since it sounds like
there's a lot of money on the line here and
a lot of potential tax that you could be faced with.
Speaker 2 (26:15):
And Chris didn't share how old he is, but I'm
pretty sure he's not twenty. This isn't twenty five year old, right, right,
But this is Chris on the other twenty five year.
Speaker 1 (26:22):
Olds don't have that much money to pay for somebody's at.
Speaker 2 (26:23):
School exactly, and he sounds like he has a twenty
five year old. Yea, Chris, we appreciate you listening to
the show, Joel. Let's hear from a listener who is
in the unique position of receiving a check from her
four oh one K in the mail at the end
of the year.
Speaker 6 (26:37):
Hey guys, this is Nina from Florida. First of all,
thank you so much for all the work you put
into the podcast. It has really helped me in my
personal finance education. Recently, you've had a couple four oh
one K questions and I'd like to add mine to
the mix. After finding you guys, I've made efforts to
max my wrath four oh one K, but for the
past couple of years I've actually gotten a check back
(26:59):
due to my company me failing the four oh one
K non discrimination test. I know that all employees are
auto enrolled, and so I'm assuming that many are opting out.
This year, I decided not to max out my four
oh one K, and instead I allocated funds to max
out my backdoor wroth and then also invest in a
taxable brokerage account. What would you do in this situation?
(27:19):
And is there any way to know in advance what
the true max actually is year to year? Thank you
so much?
Speaker 2 (27:25):
Oh, Matt, more four one k stuff going on here? Hey?
Four one k's that's the that's the path to millionaire
status for most Americans.
Speaker 1 (27:32):
I mean it certainly, it certainly can be, and I
think it maybe can be for Nina too, But there's
some shenanigans going on here that we have to get
to the bottom of.
Speaker 2 (27:40):
It sounds like.
Speaker 1 (27:41):
It, and we we've already we already have a retirement
account alphabet soup in this country. I think it just
is generally confusing to people, and it feels like you
have to listen to one hundred episodes of How to
Money before you really have a full grip on all
the different accounts and what their contribution limits are and
how those contribution limits actually change regularly. And then certain
plans have exceptions, and certain plans, Oh, if you make
(28:03):
over a certain threshold, wow, you can't contribute.
Speaker 2 (28:05):
To that anymore. And then the way you might.
Speaker 1 (28:08):
Actually be able to fund a backdoor wrath and contribute
more than the contribution limit, and so it can be
really frustrating, I think as a layperson to figure out
all the different details going on inside some of these
retirement accounts. And yet another funky rule that can mess
with your retirement goals is non discrimination testing. That's what
Meen is asking about this place.
Speaker 2 (28:28):
Yep, yep, yet another acronym to add to the mix.
Ndt's let's dig into it. There are a bunch of
tests that for wing K plans go through each year,
and these are required by the government, and there are
ways around these tests that typically involve the employer having
a base level match or contribution amount for all employees.
And so the basic goal is to ensure fairness. So
(28:49):
let's say, for instance, you are there's a situation where
the owners of the plan, the high income earners, the
high the highly compensated individuals or employees at your place
of war, they're using it to the max. But then
you've got other employees, uh, and they are neglecting it completely.
That would be a situation that would run a foul
of the I R S H. But this also stinks though,
(29:10):
because I mean you are paying a price, you're not
being able to contribute as much as you would like
because of the fact that your fellow employees aren't keen
on investing for their future. So it's something that we
haven't I don't know if we've ever talked about this
before on the show, but I don't. I also simultaneous rare. Typically, Yeah,
this is a little bit more of a nerdy sort
of conversation. But for a lot of small business owners
(29:32):
out there, I don't want them to also freak out
because typically this isn't something that comes under scrutiny unless
you are unless your business is audited, at which point
you are required to provide that testing to the I
R S. And Joel. I'm proud to say that a
hount of money aka poor not poor, has never been audited,
aren't you glad? I'm thankful. Well, even if we were audited,
(29:52):
we would also be in the.
Speaker 1 (29:53):
Clear because not on wood Right now, Max, just to
that never happens, because I feel like you're drinking us.
Speaker 2 (29:58):
No, there we go. Yeah, as our employeer, we match
equally for both you and I.
Speaker 1 (30:04):
Yeah, so I mean there's literally only two people here,
so it does become easier.
Speaker 2 (30:08):
We're good.
Speaker 1 (30:09):
Yeah, and there's reasoning behind this. I think the IRS
wants to make sure that that highly compensated in individuals
and the owners of the business aren't like getting massive
money into tax advantaged accounts while not really informing or
allowing other people to participate in the plan, making it
difficult and therefore making it kind of a tax windfall
(30:30):
for some and offering zero help on the retirement savings
front to other people who work for the business. And
so your employer has to make sure that the four
H one K plan is essentially useful for all employees
and not just a tax shelter for highly compensated employees.
And that's actually a little term that the IRS uses.
And so your employer actually failed the test and they
(30:51):
have to take the money back out and send it
to you in a check. Fortunately, you've been contributing to
the WROTH for on K. Great job on that front.
But folks who have this happen, if they've been contributing
to a traditional for one K, are actually going to
find themselves having to pay taxes that they owe because
of this too. So they're going to get an additional
form that says, hey, next year, when you pay taxes,
(31:12):
you're going to owe the irs extra money because of this,
and the only way you and other highly compensated employees,
and by the way, that's to find as someone who
makes one hundred and fifty thousand dollars or more. The
only way you guys can avoid this in the future
is by encouraging other workers to participate, which sounds kind
of weird because then you're going around, You're like, Sheila,
have you been contributing to your four one K? You
(31:33):
really should say for your.
Speaker 2 (31:35):
Future, Hey, let's all kick social Security do the CURRG right, Yeah,
And that's just an awkward conversation to have, But that
is one way, truly, if everyone had the money listeners, right,
money listeners, that's like normal fodder for conversation. You're right,
you're right.
Speaker 1 (31:47):
The only other way I think to truly avoid this
happening in the future is to enroll in a safe
Harbor for one K plan if your employer chooses to
essentially make some changes to the plan which makes it
more inherently fair.
Speaker 2 (32:00):
Nature exactly, which, again, though, that is up to the employer.
It's not like it's an option you can choose. It's
like roth versus traditional for owing K. This it's not
makes me think of we're just talking about our business
or whatever. It's like, we are formed as an LLC,
but we elect to be taxed as an S corporation.
This isn't some sort of election that you can check
a box for to opt into the safe.
Speaker 1 (32:20):
Heart, right, you'd have to twist some arms at the top.
Speaker 2 (32:22):
And so is there a way to know in advance?
Sadly know, Nina. I think one thing you could do
is just mention this to your superiors. Mention this to
HR and see if this is something that they're trying
to remedy. Because my guests is that the higher ups
they're at the company would also like to contribute more
to their tax advantage retirement accounts, and so they would
have a vested interest in either choosing that safe harbor
(32:44):
plan or just finding ways to help incentivize, help encourage
their employees there at the company to increase their contribution.
Speaker 1 (32:50):
And they probably don't want the best employees of the company,
who might be the most highly compensated employees. Matt to
be kind of frustrated that this perk that's being offered
that they can't take advantage to the max either, because
that makes them anti competitive.
Speaker 2 (33:02):
Exactly like Nina. Like, I mean, there's a chance that
Nina's thinking, all right, well, I get paid well, but
if there's another company right, same salary, but the benefits
are just completely off the chain, and guess what the
match is killer? Not only do I have unlimited days off,
but they also enforce it. There's all these other It's
just one of those things that a company wants to
not fall by the way.
Speaker 1 (33:19):
Side, right well, And I think too, there are ways
that the company can change things. Maybe they can offer
a better match. Maybe they can just communicate better about
the auto enrollment procedure, because Nina said, pretty sure, we
have an auto en roll, and I guess people are
ditching they're not doing it. Maybe it's literally as simple
as having some sort of better HR communication to employees
as the onboarding process is happening, so that more people
(33:41):
elect to stay remain invested inside the four oh one
K And if they're contributing a decent chunk of their
salary from the get go, maybe everyone can contribute exactly
how much they want to their retirement accounts. So what
should you do at the end of the day. I mean,
we think the route you're taking makes sense. Ideally you'd
be doing the backdoor roth. You'd axing out the WROTH
four O one K two but contributing less to your
(34:03):
WROTH four on K and more to your taxable brokerage account.
I think it's a reasonable choice matter. If it were me,
I think I would keep maxing out the WROTH for
one K in hopes that the plan doesn't fail the
non discrimination test in the future.
Speaker 2 (34:15):
Maybe they get their act together. Yeah for twenty twenty.
Speaker 1 (34:17):
Four, Yeah, and then any funds that were sent back,
I would funnel it into the brokerage account. Then, you know,
we still want you to get every dollar you can
into Wroth vehicles with the hopes that your company's plan
is going to figure this out and then allow for
those contributions to remain in place. It's a frustrating thing
to be like, oh, I've done the right thing and
then get money kicked back and you're.
Speaker 2 (34:36):
Like, because, well, there's what do I do now? And
there's a temptation maybe even at that point, to not
invest it, because then it's almost like this unexpected windfall
maybe end up blowing it. And the other super annoying
part of this two Nina, and I totally get this,
or this is how I'd be feeling about it, is
that I'm not investing at the beginning of the year
like I would naturally want to as because basically you're
a year behind and you're missing out on possible gains
(34:58):
that the market has experienced over that period of time
as well. So it's not like a deal breaker, it's
just really annoying. From an employer's stance. I think throughut
she's taking it's pretty solid. Yeah, she wants to keep
trying to max the wroth farol and K great and
if the kickback happens, put it in your taxable brokerage
account then. But it's just kind of one of those
idiosyncrasies of certain foural one K plans that she is
falling victim to and it's not fun. All right, matt
(35:20):
We got more to get to, including we're gonna talk
about a type of insurance it's highly underrated that almost
nobody thinks about. We'll talk about that and more right
after this. All right, man, we are back from the
break and it is now time for the Facebook Question
(35:40):
of the Week, which is from Matthew. He writes, I
have had short term and long term disability from my employer.
The short term disability is about thirty two dollars a month.
The long term disability is twelve dollars a month. Is
short and long term disability worth? It is one better
than the other. It's open enrollment time and my job,
so I'm just looking at my options. Jill. We are
(36:03):
in open enrollment season. That's true. It's time to think
about your health care plan. It's time to think about
which one makes the most sense. On November first is
the start date for open enrollment over on healthcare dot gov.
But there are other choices besides the big one healthcare
that need to be made during open enrollment as well.
Like Matthew's question about employer provided disability insurance, employers, they
(36:26):
often offer a little bit of life for a little
bit of disability coverage, just as a nice little perk,
but then they allow you to purchase more if you
so choose. Disability insurance specifically, long term disability is highly underrated,
and a big reason for that is because the stats
show that one in four people will become disabled during
(36:47):
their working life. We often talk about life insurance and
how that's something that you need to get in place.
But because one hundred percent of people die maat that
is true. But the likelihood of you being disabled and
not being able to earn an income to be able
to provide for your family or your loved ones, that's
a real possibility. So for you, Matthew, it's great that
your employer is offering this, but we do want you
(37:08):
to think twice before you click to buy.
Speaker 1 (37:11):
Yeah, First, you might have enough coverage, right if your
employer offers a little bit of each type, short term
and long term disability for free, that combined with savings
you built up, like hey, you might not need anything
beyond those two things. And then second, you might actually
find more flexible and more affordable coverage by shopping on
the open market. Makes me think, matt when I was
(37:32):
working for a W two wage with a traditional employer
and they offered a small amount of employer provided life
insurance during open enrollment, and I can opt for more,
but I never opted to buy more because it was
actually more costly than me going out and shopping for
my own policy on the open market. So that's typically
(37:53):
true unless you have let's say, meaningful pre existing conditions,
and maybe you're unensurable, then maybe getting your coverage through
your employer is the only our best way for you,
but the long term disability. It's only going to cost
Matthew twelve dollars a month, he said, Man, you can
shop the open market, but you're probably not gonna beat that.
Speaker 2 (38:11):
So it sounds like a pretty good deal.
Speaker 1 (38:13):
Right, You probably want to option that, and you know,
if you're looking to shop more or get more interns
on the open market, go to a site like policy genius.
Depending on your income and the policy you choose, it's
likely get to cost between like one hundred and five
hundred dollars a month. That's a lot more than twelve.
And so this sounds like it's a good deal. But
here's the potential downside of this. You likely won't be
(38:33):
able to take this policy with you if you leave
this job. So yeah, if you do decide to leave,
if you find greener pastures somewhere else, you're gonna have
to pony up for your own policy at that point.
So just recognize that that it's going to be great
while you're currently employed with this company, but if at
some point that stops being the case, you might have
to fork over a bunch of money to get your own.
Speaker 2 (38:54):
Totally, and just make sure to look at the fine
print as well, because different policies are going to have
different caps, they're going to have different reales requirements. You
want to look at something like the benefit period as well,
which is how long. Let's say we're talking about long
term long term disability insurance. There's a big difference in
the cost of the plan if the benefit is only
two years versus if it is going to pay benefits
(39:14):
for your entire life. Yeah. So obviously though, that one's
going to be more expensive, right.
Speaker 1 (39:18):
Oh, it's the same thing of whole life versus term life, right,
And there's a reason that term life is so much
cheaper because it's not covering.
Speaker 2 (39:23):
You're looking at a set amount of time, Yeah.
Speaker 1 (39:26):
Until you're ninety five. It's usually covering you for twenty
or thirty years from the time you're forty to sixties.
Speaker 2 (39:31):
Yeah. Elimination period is another term to keep in mind
as well. That's the period of time that has to
elapse before the benefits kick in. Essentially, that's the period
of time that you are out there on your own.
Of course, the longer you wait, the less your monthly
premiums are going to be, but having the right kinds
of insurance is crucial. So I think this is great
that you are considering this, Matthew, where you're looking to
protect the financial life that you've built for yourself, but
(39:53):
it can also become prohibitively expensive to ensure yourself to
the max on every single front. So if you're looking,
if you're just going down the and lists and you
just at like check check, I'm gonna got all the insurances,
I'm gonna get that. I'm going to get that as well.
Speaker 1 (40:05):
But now I can't pay my mortgage. Map you're not
going to have, yeah, a whole lot left at the
at the end of the month. Long term disability, it's
it's a more important product in our opinion, and that's
because a simple, robust emergency fund can often be sufficient
enough and that can carry you through the period of
time that a short term disability event would create in
your life in a similar way that that elimination period
(40:28):
or the waiting period before the insurance kicks in for
the long term disability. In that same in the same way,
you want your emergency fund to be able to basically
bridge you through those rough waters. That's exactly right. And
I think that that's why we just value short term
disability coverage so much less is because that is something
we think is more self insurable, and maybe you need
(40:50):
it for a year until you've been able to ramp
up your emergency fund to the point where you can
self insure.
Speaker 2 (40:55):
Yeah, I could see that'd be in a decent situation. Yeah,
but decent scenario to find yourself in. That's when you
pay the money to the duck and as you are
building up you're right, but.
Speaker 1 (41:04):
At some point you're able to avoid paying for that
insurance altogether because you've got the cash on hand to
cover yourself in case the worst scenario or a bad
scenario where to happen to you. I think smart how
to money listeners should be able to cover a short
term event because they have built up the cash savings
to whether a bunch of different financial storms, whether that's
job loss or whether that is some sort of disability
(41:24):
that takes you out of work for a few months.
But you know, think through the potentially catastrophic consequences of
a long term disability, Matt, if you like, run some
worst case scenarios that can be really frightening and hopefully,
of course, Matthew, you stay healthy. You feel like you've
wasted those premiums years down the road, but especially you know,
given the price your employer is charging for that coverage,
I think it makes a whole lot of sense to
(41:44):
snag the long term disability coverage specifically, and then maybe
at least consider and do some shopping what it would
look like to get your own policy on the open
market too, just in case, or especially if you're not
planning on staying employed at your current place of work
for too much life.
Speaker 2 (42:00):
Alright, got time for one more. This is an email
from k she wrote us Joel. She said, I went
to the grocery store at a non busy time of day,
took the coins that were gathering dust in our home.
I had a sandwich bag full of small coins and
I used them to pay for my groceries. Instead of
going to coinstar, I took them to the self served
check out and I paid with thirty seven dollars worth
of pennies, nickels, and dimes. I wish I had a
(42:22):
slow clap sound effect. Rights. What's impressive is the fact
that she didn't say quarters, so that's actually she said,
small sandwich bag or I don't know, just a sandwich
bag full, that's all. I don't know. It takes a
lot of pennies, nickels and dimes, so make thirty seven
dollars worth. But she said, sure, you turn that into
a barbell and get your workout. Seriously, she said, no,
twelve point nine percent coinstar fee and no transaction fee.
(42:44):
It didn't take that long, and the cashier said that
it wasn't that unusual for people to do this. I
look carefully to ensure that there were always open checkout
stations and it didn't take long. Frugal or cheap? Joel,
what you think? I think? You know what I think, Matt.
I like it. Frugal, I like it. How could this
not be frugal? I love it.
Speaker 1 (43:00):
The cooinsts our fees are insane, yeah, like truly uh
and and part of the reason it.
Speaker 2 (43:04):
Make it easy.
Speaker 1 (43:05):
This is frugal, not cheap, like I think. I might
have a slightly different take if Kay had said and
there were people lined up behind me and they were
so angry, they were seething, and then my tires got.
Speaker 2 (43:15):
Slapped because they were so angry that it took was
being considerate. She was looking around her, you know, went
during a time of day that where it wasn't busy. Right,
I'm all for it.
Speaker 1 (43:22):
You didn't hold up the line for thirty minutes and
then you got rid of that change you turn into
something constructive and we didn't pay a massive fee to
do it.
Speaker 2 (43:29):
No, have we talked about this that I did this,
Like was this maybe earlier this year or or I
think we did talk about it. Our change jar was
filling up and I went to a local Kroger, thinking that, oh,
this is gonna be so easy. I can just like
just dump them in the little cup and they'll kind
of tint, you know, like go down into the slot. No,
that's not how the self checkout thing is there. You
just stick them in individually. Yes, it was a literal
tiny little slot and so man, that really turned me
(43:52):
off from the entire and it kept getting jammed. That
was the whole other thing. I had to like pull
out my keys. Some people were seething behind you when
you did it. Uh, it wasn't it Also wasn't that
that crowded oine Tomato Stown at your head. All that
being said, I have since learned that coinstar oftentimes if
you receive your payment from your change in the form
of a gift card, a lot of times there aren't
(44:13):
transaction fees. And this is I only learned about this recently.
I looked into it, and specifically Amazon is one of
the one of the gift cards that you can get,
which in our household that's basically as good as cash.
Speaker 1 (44:24):
Yeah, So I was done the impression and maybe I'm wrong,
and maybe it's different at different coinstar machines that there
is like a reduced fee if you get an Amazon
gift card, but then there are other stores that you
can get a gift card for and then there is
no fee if you do that. So I think it's
like Home Depot and Nike and some of those companies.
But if you I think I thought it was zero
percent maybe with Amazon. If it is for anybody who
(44:44):
likes to use Amazon, which is like everybody I know, Yeah,
then then you're talking with You spend a decent amount
of money.
Speaker 2 (44:50):
Pretty simple decision with Amazon. And if this is incorrect,
we'll issue a correction in the show notes for this UBPENCD.
Speaker 1 (44:55):
If time is money, Matt, then you don't have to
waste your time plunking every coin individual I know, no
the ability to to dump the whole thing in there.
We need to keep enough around to be able to
teach the kids about money, and Kate, she pays the kids.
The bugs are all kind of dying now because it's
getting colder, but there are certain bugs that were on
her flowers and stuff, and she would pay them ten
cents every time they would kill one.
Speaker 2 (45:15):
Of those bugs. I gotta have some dimes on hand.
Speaker 1 (45:17):
Yeah, so I can't dump all those into the coin star.
But Kate, yeah to k not Kate, kry Kay, you're
doing a great job.
Speaker 2 (45:24):
You should not.
Speaker 1 (45:26):
That's not cheap, it's frugal. We've getting rid of those
coins getting your groceries. At the same time, nobody got
mad at you in the process, so I think you
did a fine job there. Made a good choice. All right, Matt,
Let's get back to the beer we had on this episode.
This was is called a kobzar. It's a Ukrainian imperial stout.
Sure not cobs are I don't know.
Speaker 2 (45:43):
I don't know.
Speaker 1 (45:44):
I didn't really look up the presentation, but I did
look up because I mentioned in the beginning I didn't
know what this means what that word meant, And apparently
it's like a traveling minstrel who plays some sort of
stringed instrument in Ukraine back in the day, like the
Bob Dylan of a couple.
Speaker 2 (45:57):
Hundred years ago, so early Bob Villanob Dylan, so that
that poem or whatever it maybe their lyrics there on
the side, it could be, but it's got someone's name,
tear Us Chavenshko. I don't know, I'm not saying your
pronunciation is terrible. Sorry, it's all my Ukrainian friends out there.
But I did like this beer, super dark, some awesome
(46:18):
roasty notes going on here. It was brewed with coffee
beans as well, so there's like some nice bitter notes
coming off of some of those coffee beans. Do you
get any cinnamon in this one? Oh? I think I
could see why you would say that.
Speaker 1 (46:29):
I got like a touch of cinnamon, and I also
got some of the whiskey barrel on there too.
Speaker 2 (46:33):
Yeah, yeah, yeah, there's so yeah.
Speaker 1 (46:36):
We're we're not necessarily in the heart of stout season yet,
but this is like, I don't know, kicking off potential
stout season for us. And this one was a fantastic
representation of an imperial stout, so I loved it.
Speaker 2 (46:49):
It's a it was aged in Glenora whiskey barrels, which
I don't know what Glenora is, but man, I just
love oak. Kate. So she's been trying to find a
new cologne for me, and because she doesn't like the
I bought this little tiny little thing of some oil
that I wear occasionally, and she got some samles for me.
But they all smell like traditional, like dude in the
mall cologne. Yeah. But what I told her that I
(47:11):
love are the the smells that smell Oaki, like literally,
and I was having a hard time explaining to her,
like feed her yeah, And I was just like, you
remember when I was like splitting all those rounds of
that white oak that the neighbor took down, and I
was literally like sniffing every chunk of wood that I'll split,
Like that smell. There's something about that yeah, oakiness that
I love so much, not only that I enjoy drinking,
(47:32):
but sometimes I like smelling like it too.
Speaker 1 (47:33):
I guess I don't wear coloone. And my buddy was
talking to me about that the other day and I
was like, one, I don't want to spend seventy dollars
a bottle. I'm sure you can get cheaper stuff, but
oftentimes the cheap stuff smells really cheap.
Speaker 2 (47:43):
But I just I don't think.
Speaker 1 (47:44):
I don't like smelling myself, so I like to I
like to be neutral in my scentse and so I wear.
I use a dove soap. I think that has a
nice little See, you're not neutral.
Speaker 2 (47:52):
It's faint. It's faint. I just want my faint to
be but I can't smell it. I want it to
be of the white oak genres. Let me know if
you find something kind of manly and inexpensive. Thank you.
Oh yeah, I said thank you because I envisioned listeners
reaching out with their suggestions. If you have my mind,
it doesn't stop.
Speaker 1 (48:08):
Cheap, manly colowned suggestions will take them.
Speaker 2 (48:10):
That smells like white oak. Yeah, I'm all for it.
Speaker 1 (48:13):
All right, let's going to do it for this episode.
We'll put links to some of the stuff we mentioned
up in the show notes on our website at how
toomoney dot com. So, Matt, until next time, Best Friends
Alutum best Friends Out
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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