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 do I convince my in-laws that they’re wasting money by financing a car when they can pay cash?
2 - What kind of impact will saving in a 529 account have on my son’s ability to score financial aid?
3 - Should I choose a state provided pension or go with an Optional Retirement Plan (ORP)?
4 - Is there a way to run a cost benefit analysis on a home security system?
5 - Where should I turn for a solo 401k?
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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, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
You know, a buddy, it's Monday, which means it's everyone's favorite.
Speaker 3 (00:27):
Had a money episode of the week? Do you think
it's everyone's favorite? Actually, I don't know, you said it.
Speaker 1 (00:33):
Should we take a poll we should.
Speaker 2 (00:35):
On the on the newsletter and see which episode if
we If you only had to listen to one episode
for the rest of your life, which one would it.
Speaker 3 (00:42):
Be if you only got to not had to.
Speaker 2 (00:44):
Oh yeah, we wouldn't make you listen, of course. But
the problem with polls or surveys is that they're self selecting.
So I'm not I'm actually not a huge fan of
surveys and polls. But maybe maybe we'll do that all right,
But we do, in fact have listener questions to get to.
During this episode, buddy listener is wondering if, through some
sort of cost benefit analysis that she can run on
home security system. She wants to know if there is
an easy way to decide whether or not this is
(01:06):
something she should spend some money on. Another listener is
wondering if there are any advantages of financing a car.
Are there any pros or is it just cons when
it comes to paying interest on a vehicle? And another
listener is wondering about five twenty nine accounts and the
kind of impact that it could have on his kid's
financial aid. He's wanted to make sure he's setting his
(01:28):
kids up right for the future. We'll get to those
and more during today's episode.
Speaker 1 (01:32):
Sounds like a nice variety, Matt on today, nice a
nice spread. Yeah, okay, But before we get to listener questions,
A friend recently told me about going to a timeshare presentation. Matt,
you've done this in the past.
Speaker 3 (01:45):
I indeed, I've never.
Speaker 1 (01:48):
Done one of these because I don't trust myself.
Speaker 3 (01:50):
Here missing not on a good time, Joel.
Speaker 1 (01:51):
I'm the kind of guy who's like, wait, does Ie
get say that again?
Speaker 3 (01:56):
You would not?
Speaker 2 (01:57):
Are you really concerned that you might get swayed by
this new talking of whoever's up there presenting.
Speaker 1 (02:02):
I am maybe more malleable than you are, but I
don't know. I would not be as I would not
go by into a time.
Speaker 3 (02:08):
Share, that's for sure.
Speaker 2 (02:09):
I'm assuming he was going for whatever prize that they
were giving.
Speaker 3 (02:13):
At the end of this talk, Well, the.
Speaker 1 (02:14):
Big prize was a much discount of trip. So he
went to San Diego with a couple of his brothers,
kind of a reunion tour. And he told me he
paid one hundred and ninety nine bucks for three nights
and then included one hundred dollars resort credit. He's in
San Diego staying at this nice little spot with like
a pool, palm trees. Sounds pretty lovely.
Speaker 3 (02:33):
How long was the presentation?
Speaker 1 (02:34):
I think it was like two hours, okay, ye, which
is a long time to sit there.
Speaker 2 (02:38):
Yes, especially if you're like meeting up with the family
and it cuts I'm assuming it's eating into everybody's time,
I think, so, okay, yeah, this is almost like an
undercover frugal or cheap?
Speaker 3 (02:48):
Yeah? Sure, yea, what do you think?
Speaker 4 (02:49):
Yeah?
Speaker 3 (02:50):
That means like, I you're like a cheap move to
you or is this totally frugal? I don't know.
Speaker 1 (02:53):
I think I think so much depends on like where
you're at. Like I wouldn't want to do this even
if it meant saving a few hundred bucks on my vacation,
but I've also never done it, so a part of
me kind of wants to see what the what it's
actually feels like to sit in a timeshare pitch.
Speaker 2 (03:07):
But was able to sit there with like some Google
or Facebook meta glasses on and watch a movie.
Speaker 3 (03:14):
That would be awesome the whole time.
Speaker 1 (03:15):
Because then, I mean, that's the problem, is like not
wasting time in the same way.
Speaker 2 (03:18):
Yes, Like how do you want to It's less about
the money and more about well, I would just rather
spend my time doing something else, right, Like, I was
thinking about this.
Speaker 1 (03:26):
Actually, the only way you get the vacation. Let's say
you're like, listen, if I that's the only way we're
gonna get these three days in San Diego. So if
we go for a hundred bucks for suspend a eight hundred.
Speaker 2 (03:33):
But I know this friend and he's got some money,
like he's not completely broke. I guess like it would
make sense if you, let's say you just got laid
off from your job and you got six months to
just kind of loaf around figure out what you want
to do next. You're looking to cut expenses like crazy,
and you're like, why not do this as opposed to
you know, being gamefully employed and having enough money on
(03:55):
the side. Yeah, I was thinking about this because this
past weekend, Kate and I spent a lot of time
working in the yard, and I remember thinking, man, why
are we not paying somebody to do this backbreaking labor,
Like like I've got the pick axe out and I'm
like ripping up roots, destroying my back or trying not
to destroy my back. But at the end of the day,
like literally, I told I was telling chaos just like man,
(04:16):
like that was a ton of fun. The ability for
us to work side by side doing this thing together.
It was hard work, but we got to see the
result of our labor. And there's just all these other
sort of benefits that you gain from doing something like that. Yeah,
when normally, if you're just looking at it from just
a financial standpoint, you would say that's not worth it
at all.
Speaker 1 (04:33):
I could pay someone this in such amount an hour,
why wouldn't I pay so I could go do some
extra work and get paid. But there's all these other
intangible benefits that you receive from doing something like that
that I think are worth thinking through not just looking
at the financial menage. Y. No, I agree, And I
think I guess the case in which it would be
a really really cheap move and not a frugal move
is if you are prone to a sales pills and
(04:55):
you're like and you're like, look, I'm gonna say five
hundred bucks on this vacation, and I'm going to get
to go to San Diego for ninety nine bucks. And
then you did sign up for the time share, that
would be the worst of all scenarios.
Speaker 3 (05:04):
You just sign up for paying five hundred bucks.
Speaker 1 (05:06):
A year the rest of your life or even more right, yeah, well, yeah,
five hundred bucks a year. Not to mention probably the
ten or fifteen thousand dollars or whatever it costs actually
by the time share upfront two, So be careful time
shares out there, folks. All right, let's mention the beer
we're having on this episode, Matt. This is called Lizard King.
It's an IPA by Pipeworks Browing. We'll give our thoughts
(05:27):
on this one at the end of the episode.
Speaker 2 (05:28):
Not an ipa, a pale ale and phone. It's a payloaf,
which is very related to it's like an I life.
Speaker 3 (05:34):
Yeah, exactly, all.
Speaker 1 (05:35):
Right, And if, by the way, if you have a
question for us, a money question, we'd love to hear it.
And we are giving out pairs of how to money socks.
If we feature your question before the end of the year,
the lovely, the glorious, the most comfortable, how to money socks.
Just submit your money question, send it to us via
email recorded on the voice memo app of your phone.
If you want the full directions, just go to how
(05:57):
tomoney dot com slash ask. Let's get to a question
about buying a new car, but the listener who's asking
the question is actually asking on half of someone else.
Speaker 5 (06:08):
Hey, guys, this is Becky and Madison, Wisconsin. My in
laws right now need to buy a new car because
the engine died in theirs. They know exactly what they
want to buy. It's a used minivan. They know the
miles and what to spend, but they want to put
money down and then finance the rest. I tried to
talk to them about just paying cash because they have
(06:29):
the money set aside in a high yeled savings account.
I tried to explain that because they would be paying
a higher rate if they finance, it's dumb not to
just pay for it because they're earning five percent in
their savings. They did not understand this concept. Is there
a way that I could more simply explain this concept
to them? Any help? Would be appreciated. Thank you guys.
Speaker 2 (06:52):
So, Becky, have you considered that your in laws might
be lying to you because we don't get it? I
mean honest, Like I say that like half in jest,
but I think there's a chance that that could actually
be they care whe.
Speaker 3 (07:04):
I mean, maybe they're not being fully truthful.
Speaker 2 (07:06):
Like Becky's the one that listens to the personal finance
and maybe they're thinking they feel the pressure and she's like, hey,
you're not gonna you're not gonna finance that car. You're
gonna pay for that in cash, right, And they're.
Speaker 3 (07:14):
Like, oh, oh yeah, duh, of course we're gonna do that.
Speaker 2 (07:18):
I'm just saying maybe there's a slight chance that there's
a little bit of like self protection okay going on,
and maybe they have appeared to be in a better
financial position than they currently are. That could be true too,
you know, Yeah, I don't know. I'm just doing that
out there. That is a good point. I'm not saying
that they would do that to be deceitful on.
Speaker 1 (07:34):
Purpose, yeah, or like a malicious sort of but there's
like some shame if you if you feel like you
haven't handled finance as well and you're right, Matt. Maybe
maybe they don't have as much cash as Becky thinks
on hand, and so they're they're saying, no, we're gonna
go ahead and finance it anyway. Not because you're not
making a good point, Becky, not because you're not right,
and they don't understand that because they don't actually have
the money to buy the car and cash.
Speaker 3 (07:55):
Maybe we don't want to tell you the full truth. Yeah,
I guess.
Speaker 2 (07:57):
I mean I say that jokingly, but maybe that in
the back of your mind, because I think that could
help you to approach the conversation a little more delicately,
as opposed to like the Dave Ramsey way where he's
just like reving your face in it.
Speaker 3 (08:10):
Like, look what you've done? What do you think? And
this is so dumb? I know.
Speaker 1 (08:13):
It might tax the approach that some people take with
their dogs who are trying to train.
Speaker 3 (08:17):
Right exactly.
Speaker 2 (08:18):
It might allow you just to kind of like pull
back a little bit and approach this conversation.
Speaker 3 (08:23):
Yeah, just into a little more nuanced Yeah.
Speaker 1 (08:25):
So maybe they're trust like not lying, but just kind
of not being one hundred percent truth because they don't
want to.
Speaker 3 (08:31):
They don't want to confess there you go right.
Speaker 1 (08:34):
Also, by the way, Becky said they're going to buy
a minivan, which I love, and maybe that's yeah, Becky's
got kids or they've got grandkids that they're toting around.
Minivans still so underrated, and they don't even have to
go all Mark Zuckerberg and get the Porsche.
Speaker 3 (08:47):
You know, Minivans for.
Speaker 1 (08:49):
The custom Carrera or whatever it was, the regular, normal
ones that made by the major brands are plenty good
for us.
Speaker 3 (08:55):
We obviously are.
Speaker 2 (08:57):
Biased because not only Joel do you, You and I
have the exact same minivans, separated only by one year. Yep,
I realized go into We went to a friends this weekend,
our families with some other families, and there is another
Gray Honda Odyssey, so many in the driveway. And then
we got to thinking about it. We've got so many
friends with a generic family vehicle, the Gray Honda.
Speaker 1 (09:16):
Audience, just within a few years of each other. It's
such a great vehicle.
Speaker 2 (09:19):
We're all in the know, and we're trying to let
everyone else out there know that you need to be
in the know as well.
Speaker 1 (09:24):
Make minivans cool again.
Speaker 3 (09:25):
I'm for that.
Speaker 1 (09:26):
I'm doing my best trying to hear a minivan influencer,
and also just financial conversations with families. They can be awkward,
they can be fraught with peril. How they how they
go this past Thanksgiving?
Speaker 3 (09:38):
Right? Right? Exactly? Yeah, dive into these kind of topics.
Speaker 1 (09:41):
Probably right after the fun political discussion they start talking
about bank account balances. But truly, like so much of
the time, our our loved ones don't want to hear
our money advice. So how do you get something across?
Maybe when when you have an idea or you're willing
to have that discussion and they're less interested. And I
think the suggestion I have for Becky is to start
(10:03):
by being more curious, like ask questions. You know, why
is it that you feel comfortable taking on debt for
this new car. That's a good question to start with,
and you might be surprised at the answer, just being
curious and asking questions instead of telling them how you.
Speaker 3 (10:16):
Would do it. That's true.
Speaker 2 (10:17):
It's a better way to instead of just like shoving
invitation started, instead of shoving it down their throat. Yeah,
it might not be about like loving debt. It could
be more about having just meaningful savings on hand enough
to have some buffer to lean back on. We're not
saying that this is the most financially savvy way of
looking at it, but yeah, I think this is also understandable.
So yeah, instead of leaning in the like what are
you doing in direction, ask them like, why are they
(10:41):
keen to take on alone when they let's assume the
best here that they do actually have the cash on
hand to pay for the vehicle, Because then I think
that could you're peeling back layers of an onion, right, Yeah,
that could give you more insight as to what it
is that they're thinking and what it is that they're feeling.
Speaker 1 (10:56):
Exactly exactly and feeling matt because feelings drive a lot
of this, and sometimes those feelings aren't even wrong. You
can speak to them and you can maybe alleviate some
of those feelings during that discussion. But I think you're
right peeling back some of those those layers and hearing
some of those feelings will help you figure out well
how to continue to pursue that conversation. I think without
(11:16):
hearing their side, you are just kind of pushing your
own views. That's rarely the way to win an argument.
Most people, even if they realize they're wrong, they digging
their heels. They just get annoyed and they say, I'm
just gonna do it my way, and I'm going to
tune you out. I think the I know better approach
It can work potentially, but it can also lead to
hard feelings or worse, and it can cause the people
(11:36):
you love just to kind of tune you out on
this topic. So and I don't even not that that
you're taking this route, Becky, but just kind of our
two cents here. So ask questions to get them talking.
Try to empathize with their perspective, even if you don't
agree with the route they're taking. And you know, you
might be tipped off to elements of their financial past
that you weren't privy to, and you might that might
(11:58):
give you some insight about where they're coming from too,
could be something that happened years ago that you didn't
know existed in our financial past. And just saying I
don't know this actually makes me uncomfortable because of this
and this and this, and they might reveal a few
things that maybe make this decision make a little more
sense in your mind, even if it's not like the
most optimized financial decision out there.
Speaker 2 (12:16):
Sure, yeah, because like when you are looking at the numbers,
like you are one hundred percent in the right, Like
the average rate on a used vehicle is something like
twelve percent right now. And maybe they've got like the
absolute best credit. Maybe they can score like an eight
to nine percent loan from their local credit union and
that is better, but it's still not superior to paying
cash and interest rates on savings. They are getting worse
(12:39):
by the month, it seems. But when it comes to
car loans, we're with you. We are for sure out
of the era of ultra low interest rates.
Speaker 3 (12:46):
So I don't know.
Speaker 2 (12:47):
Yeah, maybe they haven't borrowed, Maybe they haven't taken out
a loan on a vehicle since like back in the
you know, the twenty teens. Maybe they aren't fully aware
of the fact that car interest rates have shot up.
Speaker 3 (12:59):
But I do think the.
Speaker 2 (13:00):
Questions you ask will hopefully provoke that curiosity. It's just
confusing because you said too that they're earning five percent
in their savings, which means that.
Speaker 3 (13:08):
Man, you're smart.
Speaker 2 (13:09):
Yes, like they are financially savvy, which is why I
feel like that are.
Speaker 3 (13:13):
They're not the Wells Fargo or Bank of America.
Speaker 2 (13:15):
If that were to be the case, I would maybe
put them more in the category of okay, they're not
just aware of all the facts.
Speaker 3 (13:20):
But I don't know.
Speaker 2 (13:21):
I think asking the questions makes the most sense because
I think they are aware of the facts. They seem
pretty financially savvy, and so figure out what it is
that's causing them to go back to taking out a loan.
Maybe just the fact that it's a giant chunk of money.
Maybe emotionally it's going to be difficult for them to
part themselves with that money, which case cheaper.
Speaker 3 (13:40):
Older, used many van might make sense. There you go,
But I don't know.
Speaker 1 (13:43):
Maybe they want something new or more reliable, nicer, I mean,
and if they have the money for it, then they
should be able to pursue that option too. But again, yeah,
paying cash would be a smarter move. I think at
the end of the day, Matt, this is the tough
thing about having conversations about money with people you love.
I think it's important and I think we need to
kind of work at having better discussions about money with
(14:06):
people we love. And this is a perfect opportunity to
kind of open those floodgates, if in a positive way,
If it's done correctly, but you also have to let
people do what they're going to do. There's only so
much you can do without overstepping your bounds. I'm glad
that you're having the discussion. I think it's worth continuing
the discussion and asking more questions. And we are all
about attempting to make money a regular topic of conversation
(14:27):
amongst friends and family. That is something we are big
proponents of. But it's not always easy, and you do
have to pick your battles, and you also have to
learn when to kind of lay down your sword and.
Speaker 3 (14:36):
Say battle over.
Speaker 1 (14:38):
You have a direction you're planning on going in, and
I'm not going to convince you otherwise. And honestly, this
relationship means more than you doing the thing I find
to be the most optimized, right, Like, I think this
should also be different, Matt, if we were talking about
different stakes. If Becky's in laws we're going to wire
one hundred thousand dollars to a scammer them in on Facebook,
I think you pull out all the stops, right. Yeah,
(15:00):
If they're driving to the Western Union or something like
that would be a serious, serious conversation.
Speaker 3 (15:05):
Yeah. Whereas the used van conversation. It's a little less serious.
Speaker 1 (15:07):
I would hop in my car and I would like
smack the money out of their hands.
Speaker 3 (15:11):
When I would physically stand in between them and the ATM.
Speaker 1 (15:13):
You would do whatever it takes. But the I think
the stakes are a little bit lower here, and so yeah,
if they're making a non optimized financing decision on a car,
I'd bring it up. I'd ask some questions, I'd offer
a little bit of advice, but I wouldn't lose sleep
over their choice either. At least they're still buying a
used van and not a new one Way to Go,
and they have a high yield sam Us account, so
(15:34):
they're not with one of the trashy big banks. They
have a level of money IQ, even if they're not
doing everything the way you would do it. I think
these are smart discussions to have, but also at some
point you kind of gotta leave it be.
Speaker 2 (15:47):
Yeah, And the fact that for them, like she said
that the engine died in their previous vehicle makes me
think that these are frugal.
Speaker 3 (15:53):
Yeah. I think this.
Speaker 2 (15:55):
Not a financial numbers game, and it's completely about emotions
and feelings. Potentially, like you said something else, in their
past some other hang up that is keeping them from
purchasing this.
Speaker 3 (16:05):
Vehicle with cash. Joe, We've got more to get to.
Speaker 2 (16:07):
We're gonna hear from a listener who has a couple
of great options that she's trying to decide between when
it comes to her retirement.
Speaker 3 (16:13):
We'll get to that and more right after this.
Speaker 1 (16:23):
All right, Matt, we'll back. Let's get to you a
question about saving for college. How can I actually have
some partial downsides?
Speaker 6 (16:31):
Hey man, Joel, This is Brendan from Carmel, Indiana. Carmel
is a suburb just north of Indianapolis. It's actually the
roundabout capital of the world. Outside of that not so
exciting fact, Carmel is actually a great place to raise
a family. It has excellent schools, reasonable cost of living.
I grew up here and then went to school and
worked in Chicago for a while. Recently moved back after
(16:53):
I met my wife and we had her son, who's
now almost six. Anyways, my question today is regarding five
to twenty nine accounts. My wife and I are saving
for retirement. However, it's important for me to also be
contributing to a five to twenty nine account for our son.
This is more on a personal level, as I've had
a substantial amount of student loan debt from both undergrad
and graduate school. My question is there a certain contribution
(17:15):
limit or value that we should be aware of that
can significantly affect his face at eligibility. I know our
total contributions can affect this, However, I'm not fully clear
to what extent this impacts his financial aid. Thank you
for taking my question and for all the great work
you guys do on the podcast. Let me know if
you ever end up in the Indie area. Carmel has
some great biking trails with excellent breweries along them.
Speaker 3 (17:38):
Cheers. Joel Brandon did all the hometown research for US
biking and breweries well. And roundabouts so cool? Is that
the roundabout capital of the world or the US? Did say?
I think you said us?
Speaker 1 (17:49):
But those are definitely I mean, it can't be the world, right,
because the US is so bad when it comes to
around us. We love traditional stop lights for some reason,
and roundabouts be so much better in so many places.
Speaker 2 (17:59):
Oh yeah, Oh, I totally agree, especially I don't know.
In my mind, I picture Indiana having a lot of space,
and don't roundabouts require more room than just like a
typical stop life. Yeah, because you have to.
Speaker 3 (18:10):
It seems like at least you've got to have extra
all that room for the circle. Yeah, But like I
don't know even.
Speaker 1 (18:15):
I like roundabouts though, when we went to Ireland together.
I mean, roundabouts are everywhere, and they just they make
it easier to get around, They keep the flow of
traffic going. They are less of an ice hore as
than stoplights. They just it makes sense in so many
areas though, I guess in major, major intersections you have
to have stop lights. But we would I guess so
(18:36):
we would do well to have more roundabouts.
Speaker 2 (18:37):
I will say, driving on the left hand side of
the road with a stick that you're not normally used
to while driving through a roundabout, that's a nerve wracking experience.
Speaker 3 (18:47):
Don't put you in the moment. No, Like I I
was able to focus on the road.
Speaker 1 (18:50):
You know, sometimes you drive and you're like, you get
to your destination and you feel like, how did I
get here?
Speaker 3 (18:56):
We've all felt like that.
Speaker 2 (18:57):
It doesn't happen when you're No, that doesn't happen. You're
on vacation with your other cheap friends. So this is you, Joel,
and you didn't splurge on the navigation system either true,
I can't even believe that we arrived like at the
proper place in what anybody would consider a reasonable amount
of time, but now we did branded I it sounds
(19:17):
like you are saving well for your own retirement, which
I'm glad to hear. You know that that is always
our first concern when folks are asking about socking away
some money within a five twenty nine plan for the kids,
and hopefully you'll be able to help your kids escape
your student loan debt fate that you've experienced there with
your It sounds like you've got undergrad as well as
well as grad school loans. But the other thing that
(19:39):
we want to highlight here is that we want folks
to open their own five twenty nine account via the
state run program because some folks they turned to a
financial advisor or they turn to a bank for this,
but that is typically not a great idea because the
fees can be significantly higher than were you to do
this yourself. So, for instance, for you you're there in Indiana,
(20:00):
if you just turn to the Indiana five twenty nine
direct Savings Plan, you can snag a state income tax
benefit and if you choose the lowest cost funds, you'll
be on the right path. You're going to avoid the
most egregious fees when it comes to the different investment options.
By the way, when it comes to investments, there are
aged based or there are US equity based funds that
(20:21):
you can invest in, depending on your goals, depending on
the risk tolerance that you're willing to take with those
investments for your kiddo.
Speaker 1 (20:27):
Yeah, and as far as the impact of the five
twenty nine account on financial aid, well, yes, there is
an impact, and it's a somewhat complicated formula. So having
saved up a decent chunk in the five to twenty
nine plan, it's not going to be detrimental for merit scholarships.
Speaker 3 (20:45):
Right.
Speaker 1 (20:45):
Let's say your kid is a soccer star in high
school and or a mathematical genius. Yes, it doesn't matter
how much money you make am athlete, I believe is
what they call it, matt But yeah, you might get
some sort of Your child might get a scholarship like that,
which is great and doesn't matter how much money you
have in your five to twenty nine account. Typically those
scholarships are not impacted right by how successful your child
(21:06):
is in that endeavor, but it will have a small
impact when it comes to qualifying for it need based aid.
And how much of an impact, well, really depends on
how much is in the account and what other types
of assets you own. But know that five to twenty
nine funds they impact the ratio far less than your
other assets, right, like real estate that you own, stocks
(21:28):
that you own, your brokerage account. Let's say we're talking
essentially about a five percent aid reduction for money that's
held in a five to twenty nine account versus a
twenty percent aid reduction on money in that bank or
brokeridge account. So you're going to experience, yes, a little
bit of discrimination on the needs based aid, but not
nearly as much as the money that you poured into
(21:51):
other lucrative assets.
Speaker 3 (21:52):
That's right.
Speaker 2 (21:52):
But there is a loophole that recently came about, and
I think we touched on this actually not too long ago,
but the US tax could, of course be the bastion
of complexity.
Speaker 3 (22:01):
It is without all the loopholes that you can fit
into your basket. Gotta love them.
Speaker 2 (22:06):
How much impact five twenty nine accounts actually have comes
down to who owns the account. And so we just
discussed what would happen if you are the account holder.
But what if it's your parents. What if it's grandma
or grandpa who opens the account, Well, then it would
have zero impact on need based aid.
Speaker 1 (22:25):
This sounds like money laundering, but it's it's legal, legal.
Speaker 3 (22:28):
Money laundering though.
Speaker 2 (22:29):
Yeah, so this is what's known as the grandparent loophole,
and so it's worth having a conversation with your folks
about opening a five to twenty nine account with your
child as the beneficiary, even if you are funding it right,
and so there's multiple parties that have to cooperate here.
Speaker 1 (22:43):
You essentially have to give the money to your grand
to your mom or dad, and the grandparent then opens
a five to twenty nine account with your child as
the beneficiary. And so yeah, you're kind of I guess,
gifting the money for the grandparents to stick in there.
Speaker 2 (22:55):
All of a sudden, it's become a family affair. Yeah, yeah,
but then the very legal family affair.
Speaker 5 (22:59):
Though.
Speaker 1 (23:00):
Then we're talking about the minimal reduction to needs based
aid based on the calculations that FAFSA makes, we're talking
about that going away completely. You're able to take the
five twenty nine penalty away. But man, I think it's
also worth pointing out here that this could be letting
the tail wag the dog right that five to twenty
(23:20):
nine money. It could impact how much free money your
kid has access to, but it's not going to have
as big of an impact, like I said, as other
assets and investments that you own. And you wouldn't want
to stop, like, for instance, growing your net worth just
to qualify for more free money from a college or
something like that, Right, that would be insane to be
like quitting your job to qualify for additional government benefits
(23:43):
or be like, listen, I'm gonna quit my day job
so I can get those sweet subsidies on the healthcare exchange.
But then you don't have any income coming in, and
that's a worse that's a bad idea. So if you're
a consistent investor and savior, and you have been over
multiple decades, you might find that need based aid is
that's offered to you is basically minimal or non existent anyway. Right,
(24:07):
But again, you don't want to throw a wrench in
your wealth building efforts in hopes of netting more college
financial aid money, saying you know what, I'm gonna not
contribute to these accounts or I'm going to invest in
things that are gonna lose me money so I can
keep my net worth low, keep that need based financial
aid ticking upward for my child. Like of course you
wouldn't do that, So, yeah, you don't want to be
(24:28):
shortsighted in this.
Speaker 2 (24:29):
You'd be winning a game that you don't want to win.
It's just like somebody being like, I'm the best tax
loss harvester. It's like, well, that's not something that you
necessarily want to have to do, but it's good that
you can't do it.
Speaker 3 (24:38):
Yeah, but the goals to see your investments go up.
Speaker 2 (24:41):
You don't want to be the number one person experiencing
losses and then tax harvesting. But yeah, it depends on
what it is that you want to optimize for and
what it is that you're trying to maximize. Because if
you're trying to maximize, like Jill said, the free dollars
that are coming from college, well yeah, set aside nothing
and be completely broke. But if you're trying to maxim
amount poverty, yeah, if you're trying to maximize, though, the
(25:01):
total amount of funding that can go towards your kids college,
then yes, you most definitely want to fund a five
to twenty nine account because overall, that is how you're
going to see the most benefit. And I would say,
like one other thing too to keep in mind is
that this is currently where the rules are, but the
rules always change. In particular when it comes to five
nine accounts, there seems to be more leeway when it
(25:24):
comes to different I don't like rules that are being
passed as opposed to retirement accounts. Those seem to be
a bit more locked in as opposed to how it
is they are qualifying the student Aid index, which is
like a brand new thing. I mean that is now
like the gold standard, the expected family contribution. There are
all these different terms and ways that they're calculating it.
Speaker 1 (25:42):
Well, the fasts have changed significantly right beginning of this year.
Speaker 2 (25:44):
So yeah, and so this is how it's been calculated now.
But I think there's a good chance that in ten
fifteen years from now it could be significantly different than
it is at the moment. And so I think that's
important to keep in mind that you don't want to
pin all of your hopes on how it's currently structured
and Therefore, it makes general sense to save and invest.
Speaker 1 (26:02):
For your future. We were experiencing that with student loan
details right now, right where you go. It's like it's
the facts are changing on the ground as we speak,
as something I'm sure we'll continue to talk about on
the show. So you have to kind of make the
best decision you can with the facts on the ground,
even though it feels like it's shifting sand underneath you.
Speaker 3 (26:20):
JLL.
Speaker 2 (26:20):
One other thing that's worth mentioning too, is that some
folks who are keen on creating generational wealth, they are
using five twenty nine plans now, not necessarily to pay
for college or if they're expecting their kids to go
to college, but help them to fund a roth ira
off in the future. Because of the recent changes to
the flexibility of five point nine accounts.
Speaker 3 (26:41):
It's made them a bit more attractive. It's made them something.
Speaker 2 (26:44):
It's like an item on the menu that used to
everyone used to always pass over, but then a new
chef came in and all of a sudden, it's like,
oh no, those are banging Sam pancakes.
Speaker 3 (26:52):
Now you totally need to check that thing out instead
of just guy, I don't know why I said that,
would you say, Sam pancakes? Yeah, why did anyone eat that?
I don't know.
Speaker 1 (27:00):
You can't elevate that.
Speaker 2 (27:01):
I would not personally order that, but I'm not gonna
yuck on someone else's young But that's another reason to
consider five nine accounts as well, Joel. Let's hear from
another listener who has a question about a potential pension
that she is considering signing up for.
Speaker 4 (27:15):
Hi, Matt and Joel. My name is Kristen and I'm
from Albany, New York. I've been listening to the pod
for a few years and your advice has been very helpful.
I recently got a job at a Sunni school and
I am learning how incredible the New York State benefits are.
I have to choose one of their two retirement plans
in my first thirty days of employment, and I will
(27:37):
not ever be able to change it thereafter. The first
plan is their ers or Employee Retirement System plan. It's
a pension plan, and the amount I receive will be
based on my age at retirement, final average salary calculation,
and years of service. I will need to work here
for at least five years to draw down on my pension. Someday.
(28:00):
The other plan is the OERP, or optional retirement program.
This is more like a typical four O one K
that I would have through Fidelity. My employer will contribute
eight percent of my gross biweekly earnings for the first
seven years I am here, but then their contribution will
increase to ten percent. I will only need to work
(28:23):
here for at least one year to keep any contributions
they make. Regardless of which retirement option I choose, I
will be required to make a four point five percent contribution.
I am leaning towards the four oh one K option
as I'm only twenty nine and I am unsure if
I will end up moving or changing jobs at some
(28:43):
point in my future, but I also know that pension
plans are a rare gem. I'd love to know your
thoughts and what retirement plan you think is best.
Speaker 1 (28:52):
Thanks Kristin, thank you for the question, and massive congrats
on the new job.
Speaker 6 (28:58):
Matt.
Speaker 1 (28:58):
It's always nice to have you benefits heading your way, the.
Speaker 2 (29:02):
Especially multiple options laid up before you. It's kind of like,
not only are I don't know, I like having options.
Speaker 1 (29:07):
It's like a chouse.
Speaker 3 (29:08):
You're on a venture book. Yes, exactly which were the
best when we were kids.
Speaker 1 (29:11):
You're like, I don't know, do I want to go
to page sixty eight and when Timmy stuck in a well,
I don't know whatever it is, but did.
Speaker 3 (29:16):
You ever go back and like you read them?
Speaker 1 (29:18):
I would always go back in what if I made
a different decision on this one? Though, sadly Kristen cannot
do that.
Speaker 3 (29:23):
She's like, I am locked in forever for the.
Speaker 1 (29:26):
Rest of my working existence at this place. So the
stakes are high, right, given the inability for her to
change her mind on this, So we will do our
best to offer some helpful advice. Yeah, And the truth is,
pensions can be great, but they're also rare.
Speaker 3 (29:39):
Well.
Speaker 2 (29:40):
I think that might be a part of why she's
thinking twice about the pension is that historically pensions from yesteryear,
it says, old school pensions that are incredibly valuable that
aren't being offered anymore.
Speaker 1 (29:51):
To talk to one of your grandparents about the pension
they have, and they will sing its praises and they'll
talk about how it was the most important part of
their retirement planning processes.
Speaker 2 (29:59):
Yeah, I mean literally, it's what retirements were completely built
around for them. Most likely and so because of that,
I see why that.
Speaker 3 (30:07):
Option would be tempting.
Speaker 2 (30:09):
And I would say, if you were intent in staying
there at that school or there within the state for
let's say a couple decades, well I think I might
be leaning in that direction, right, Like let's say, maybe
you come from a long line of school principles and
you're like, oh, yeah, this is going to be my school.
I'm going to be on a teach here for five
(30:29):
to ten years, and after that, I'm going to take
a lead teacher role. Beyond that, I'm going to be principal.
Maybe your folks own the bakery, the one coffee shop
there in the middle of the town, and so because
of that, you're like, I'm never going to leave this place.
Speaker 3 (30:41):
But that is not what you said.
Speaker 2 (30:42):
Like you are pretty young, and it sounds like you
want to have all the options open to you, and
so where you to go in the pension direction, that
would really just kind of hamper your ability to, like
Joel said, and just choose your own adventure.
Speaker 1 (30:55):
Yeah, you know that song, like doesn't anybody stay in
one place? An em Well, Kristen talks about.
Speaker 2 (31:03):
Who sings that? No, I don't know, but is this
a recent song or is this something else? It's the
HOODI and the Blowfish saying like twenty years ago, think
it was even before Hooty and the blowf Oh was
it really? Yeah? Digging real deep.
Speaker 1 (31:13):
But I should know I should know something, but I don't.
But that just came to my mind because Kristin seems
like the kind of person who might not be staying
in the same place. She's got this openness to moving
somewhere else, which is totally fine. It just has a
really important impact on the decision she makes here. And
so the ORP, the Optional Retirement Plan, I think probably
makes the most sense for her given the parameter she outlined.
(31:36):
So not only would she have to work there for
at least five years to have any pension coming to
at all, she'd have to likely work there for twenty
years or more to make the pension more effective than
the ORP. On her behalf. The biggest downside would be
if she opted to move on after like three or
four years, because she would have wasted some of those
(31:57):
prime years and a great match that was available to
her where she could have been investing and laying her
financial foundation. But she was like, I think I'm gonna
go with the pension and then ends up moving on
in fairly quick order. Well, that to me would be
the worst possible situation for her from a retirement planning perspective.
And then the ORP, the optional retirement plan, it has
(32:18):
a one year investing.
Speaker 3 (32:19):
Period, right, So maximum flexibility.
Speaker 1 (32:22):
Maximum flexibility, She's still going to get to retain stuff
if she was just there for three or four years.
Those employer contributions are quite generous and then only get
stepped up over time as well.
Speaker 3 (32:30):
Yes, so she said they start out at seven percent
and this graduates up to ten.
Speaker 2 (32:34):
Yeah, that's amazing, It was amazing. I think that's fantastic.
And I also don't like we're talking about the maximum
flexibility flexibility that you have, and I think there might
be some folks who would say, well, people don't need
all the flexibility in the world. But the fact is
we live in a world where we are able to
see all the different options that are laid out there
before us, right, And so when you think back to
like our parents' generation, or even like our grandparents generation,
(32:56):
I think oftentimes they stayed where they were because they
weren't necessarily aware of what all was out there. But
because of just the world we live in it, I
think that flexibility is it's a lot more valuable. It's
hard even to put a numerical value on that to
be able to choose how it is that you want
to live your life.
Speaker 1 (33:11):
And let's be honest, the numerical value could be in
a substantial pay raise by moving somewhere else. And you're like,
if you feel tempted to stay somewhere because the pension
and the financial value to accumulate from having a pension
years and decades down the road, well you might forego
doing work you enjoy more that pays a lot more.
Speaker 2 (33:30):
In the interim too, I will say one thing that
I like the least about the ORB, which is most
likely here a four toh one A, which is similar
to a four to one K, is that the investment
options can be more conservative.
Speaker 3 (33:43):
And for you, Christen, you are in the.
Speaker 2 (33:45):
Phase of your life where you have the ability and
even the necessity, I would say, of taking on more
risk in order to build wealth. Volatility like this is
just the price that we pay for these outsized gains,
and it's going to be easier to stomach the roller
coaster ride of the stock market when we are, let's say,
three four decades away from tapping our account, and so
the conservative nature of some of the investment options that
(34:07):
you would have there within the ORP might be the
only thing that would make me, I guess look into
the details a little bit more, and I don't see
what provider you would be with, see what options there
are at your disposal.
Speaker 1 (34:17):
You know, what sort of funds are you going to
be able to partake in? And what's the expensory show
there is there something equivalent to a total stock market
fund or a SPI fund, or an index fund, or
even like a target date retirement fund that doesn't have
outlandish fees associated with.
Speaker 2 (34:33):
As opposed to like a blended fifty to fifty fund,
which would Man, that would really bum me out, Yeah.
Speaker 1 (34:38):
Because you're just going to miss out on over the
course of multiple decades some of the gains that would
really help boost your efforts, right, your retirement savings efforts,
and what you might gain insecurity, by the way, by
taking the pension, should you jump through all the hoops
and stay there essentially your whole working life. I think
the biggest thing, Matt, you discard the flexibility, Like we've
talked about right. Pensions are called golden handcuffs for a reason,
(35:02):
and the longer you stay there, the more you feel
compelled to stay there because you're so far gone. Even
if let's say the working conditions are not great, you
don't love the role that you're in, the financial haircut
you would take by jumping ship would just be too significant.
If you don't love the job or you want to
do something else, you have to you feel like you
have to stay put that It's like it's more than
golden handcuffs. It's almost like a concrete block around your feet,
(35:25):
like you've stepped in it and you just can't move
anywhere else. And we really don't want that for you.
We want you to retain that flexibility when it comes
to earning or enjoying your career in something that you
love if the place that you're currently at does not
end up being a place that you see yourself long term.
So we would just say, based on kind of what
you said and the way we think about work in
today's environment, the ORP is likely your best bet. It's
(35:47):
incredibly generous, and doing that along with other investing on
the side, like a roth IRA, will ensure that you
keep your career options open, that you retain career flexibility,
and that you're still building significant wealth for your future.
Speaker 2 (35:59):
That's right, So, Chris and we hope that gets you
pointed in the right direction. And Joel, we've got more
to get you. We're gonna talk about fear and anxiety,
the money that we will often pay to alleviate those feelings.
We'll get to that and more right after this.
Speaker 1 (36:18):
All right, Matt, we're back. Now it's time for the
Facebook Question of the Week. This one comes from Jessica.
She says, is there a way to assess the cost
verse benefit of a home security system? Like based on
crime rates in your neighborhood? Is a security system just
a money taking scam? First a good investment to prevent
property loss or expensive home damage from a break in?
(36:39):
Is it all just a scam praying on fears when
the chances of break ins are extremely slam Or is
it actually worth it?
Speaker 3 (36:46):
Yeah?
Speaker 2 (36:47):
I think it's more the former, you know, Joel, Like
the fact that folks like the companies out there, are
praying on our desire to protect ourselves from the worst
of what could happen to well, and that's why in
a lot of the messaging, it's always your family, we're
keeping your family safe. If they use stuff like that,
because when they say in the commercials and it speaks
to exactly.
Speaker 3 (37:04):
What we want to do.
Speaker 1 (37:06):
But oftentimes they want to charge an armor.
Speaker 3 (37:08):
And a like fear inducing.
Speaker 2 (37:10):
Yeah, so I wouldn't call these companies out there scammers,
but they will often use their messaging to tap into
those different anxieties there and make for good reason, because
that's how they make the sales. And I think what
they are oftentimes really after or maybe this is the
older model, but those recurring monthly payments for monitoring, right,
because if you're paying let's say forty dollars a month, well,
that's five hundred dollars a year.
Speaker 3 (37:31):
Well and man, if you.
Speaker 2 (37:32):
Were able to avoid that, that's that would represent meaningful
savings on your part. But we're also talking about more
than just money. We're talking about how safe you feel.
And so I was happy to find some numbers and
so maybe you're able to kind of rest in the data.
And so I was very surprised to see that back
in the nineties, for every one hundred thousand homes, there
(37:55):
were one thousand, two hundred and fifty burglaries reported.
Speaker 3 (37:59):
Okay, sounds like a lot. It does.
Speaker 2 (38:01):
Guess what it is today, You want to guess eight
hundred and twenty. Dude, so much less than that two
hundred and fifty. So we went from one two hundred
fifty to just two hundred and fifty. It's a significant
accorded home book burglaries per one hundred thousand homes.
Speaker 3 (38:14):
That's amazing.
Speaker 2 (38:15):
I could not believe that stat Like, we have seen
crime at least, you know, in that regards drop precipitously
over the past twenty thirty years, especially, so there was
a plateaued like around like the twenty tens, but then
we saw a pretty significant drop then as well. Bottom line,
it's almost as if like home burglaries are just it's
(38:35):
not like relatable anymore. It's not it's not something that
happens as much.
Speaker 1 (38:37):
You couldn't make a Christmas movie about it anymore because
nobody does it right.
Speaker 3 (38:41):
People will be like, this doesn't make any sense. Oh,
when did home alone come out? Joel? That was the nineties?
Speaker 2 (38:46):
Correlation or causation, that's a good question that maybe they're
a bunch of bandits who are just like well, I
don't want that to happen to me.
Speaker 1 (38:53):
A bunch of smart kids over it starts throwing irons
at my face. Oh, that might be true.
Speaker 2 (38:59):
I was thinking initially of just sharing my own personal
interpretation of neighborhoods that we've lived in and how they've changed
over the years, and I thought, well, you can't just
take you can't take your own experience. But then seeing
nationwide data, I think, man, that's incredibly encouraging, and that
would make me feel better about let's say, skipping out
on say some monitored coverage.
Speaker 3 (39:18):
Yeah, personally, but I.
Speaker 1 (39:19):
Think it's also important to mention that technology has changed
quite a bit in the space, and it has reduced
the cost of that's home monitoring for alarms and actually
the installation of alarm systems as well. Competition is a
big part of that also, and it's made this just
less of a money pit where you talked about forty
(39:40):
bucks a month that I think that was what the
average person used to pay, and they also had to
sign a multi year contract, and they had to pay
for expensive installation of equipment, and so it did become
this like financially prohibitive investment. I'm looking at ADT, for instance.
I think they're still around, but they were the worst
culprit and I think they're trying to continue their business
model AOL charging people for email service. Right, it's one
(40:03):
of those things where it continues to exist, but only
the foolish will continue to go down that path, given
the proliferation of options that we have. Right, because you
can actually take DIY your equipment, right, you can take
it with you to the next home you move to,
you can avoid contracts completely. Plus, right, having a home
security system could get you a discount on homeowners insurance.
(40:24):
I think that is matt the precipitous drop in the
cost of it, plus the fact that you might get
a benefit from your homeowner's insurance company, Well, it could
make this This could make financial sense in addition to
alleviating some anxiety. So let's say you're paying ten to
fifteen bucks a month instead of forty, right, and you're
getting a five or ten dollars a month discount from
State Farm USA wherever you have your insurance. Well, the
(40:47):
money part of this equation is now closer to fifty
bucks a year than five hundred. And it's just all
about where you turn for service. Though, in order to
make those numbers work.
Speaker 2 (40:56):
And not just service, but just so you mentioned the equipment,
so check out ring Whise simply safe. I'm sure these
are all companies that you've heard of, and whys by
the way, is wyze uh huh. They've got some really
affordable cameras that we use and are big fans of.
But you're paying full price for the equipment upfront, or
not even full price wait for a sale, which isn't
really all that expensive to begin with in the grand
(41:17):
scheme of things, right, Maybe you're just paying like maybe
in the three digits for a few pieces of equipment,
But then the monthly monitoring costs can be had for
as little as three dollars a month, which is a
far cry from the thirty forty bucks a month old
school model. And just the fact that the cameras are
up right like and people.
Speaker 3 (41:36):
See that it's a deterrent in and of it. So
it's a deterrent.
Speaker 2 (41:39):
And I am much more a fan of things that
completely deter a burglary from happening, as opposed to being
able to watch somebody break into your house.
Speaker 3 (41:46):
Yeah.
Speaker 1 (41:47):
Well that's why I have a face a speaker in
the backyard that makes the sound of a Doberman picture,
So it just scares people off before they come.
Speaker 3 (41:53):
Mean literally, Like, what do you think about getting big dogs,
Joel for as a deterrent? I mean, I guess it's
one way to go. I don't like to get bit
by dogs, and so.
Speaker 1 (42:02):
I also like, don't don't like to take care of dogs, Matt,
so I'm gonna avoid that.
Speaker 2 (42:05):
You're more of a cat guy. Well, does that mean
you have what's that tax plasmo talx or whatever.
Speaker 3 (42:13):
I don't know, toxoplasmosis.
Speaker 2 (42:14):
Yeah, I don't know, but like it's something that happens
because of being in proximity to cats.
Speaker 1 (42:19):
I'm going to research that right after the right of
the seres. If I get rid of them, can I
get rid of it?
Speaker 3 (42:24):
I don't know. Okay, I'm gonna look into this, but
very much speaking out of out of my depth.
Speaker 1 (42:30):
Okay, Well, just on I think on the note last
note on the home security system, like like you were saying,
it's gotten so dang cheap. I think if it does
alleviate some anxiety and potentially saves you money, like, why
not consider it at least especially we're talking about three
five nine dollars a month from monitoring instead of like
forty or fifty. That just makes it like kind of
(42:50):
a drop in the bucket of your monthly budget, like
less than what Netflix charges. Right, But I think kind
of like when you're talking about Matt, there are other
ways to kind of prevent potential break ins. We would
just suggest not forgetting about the really cheap stuff that
offers real protection, like adding motion detector lights outside or
reinforcing the door jam with a longer strike plate and
(43:12):
deeper screws. It is typically when a break in does occur,
I mean, from what I've read Matt, it seems like
it's kicking down the front door, and those better strip
plates and screws can often prevent that from happening, Like
you give it two kicks and it doesn't go and
they move on to the next house exactly.
Speaker 2 (43:27):
Yeah, they're looking for the lowest hanging free which is
also why even Yeah, I don't know, I don't know
if people feel about sticking up stickers that say there's
an alarm system even if there's not, But it sounds
reasonable to me. It really doesn't make sense though that
we have seen a decline in home burglars, because as
I think through it, like what would somebody want to
steal from my house? Like I don't does somebody really
want all my old junk that I've got in my place?
(43:49):
As opposed to.
Speaker 3 (43:49):
It makes sense too.
Speaker 1 (43:50):
That before they'd steal a massive TV and it was
worth thousands of dollars, but all the stuff we have
in our homes now hundred bucks, so replaceable as opposed
and like there's no market for Like, it makes sense
that there has been an uptick in like retail theft
because oh yeah, you go to a.
Speaker 2 (44:05):
Pharmacy and snatch and grab a bunch of like bottles
of ibuprofen. Guess what, there's a market for brand new,
unopened bottles of ibuprofen. And people literally do solos on
eBay or even like Amazon stores. That's like they literally
traffic stolen goods, and you got to think like a
thief jowel in order to beat the thief, I guess.
(44:25):
But I'm just encouraged by the fact that we have
seen such a decline in home burglars because people, yeah,
they it's almost like too much of a hassle to
even be a thief stealing people's stuff.
Speaker 1 (44:35):
Sure, you know, Yeah, you gotta do it in bulk,
and you gotta target the right houses. I guess a
law the home alone guys. But all right, let's get
to another question, Matt. This one comes from Melissa. She says, Hi,
I'd like to open a solo four one K before
twenty twenty four ends. Vanguard no longer offers one. Do
you have any recommendations? What company would you go with?
Speaker 3 (44:55):
Nice?
Speaker 2 (44:55):
Okay, I love that she is jumping on the solo
for one K. It is our preferred retirement account for solopreneurs,
for sure. And the fact that you turn to Vanguard
first means that you care about low costs. That's freaking awesome.
But you're right, Vanguard actually no longer offers a solo
four one K. At the beginning of last year they
pieced out and now a Census is in charge of
(45:18):
those former Vanguard clients, and they are a decent choice.
But we would probably go in a different direction since
in your case, it sounds like you're starting from scratch,
and that's mostly because of just a twenty dollars anal
fee that they charge. So if you can avoid that
all together, why not.
Speaker 1 (45:34):
Yeah, it's not the worst thing in the world. But
it's also like, well, if you're going to open one up.
Speaker 3 (45:38):
And you haven't already, just go this direction instead.
Speaker 1 (45:40):
Of the Yeah, why to go with a player when
you can go with an a player By players, Matt,
let's just maybe you mentioned a few that we would
go with if we were her. I mean, we have
our solo four one ks with Fidelity. That's a ridiculously
great option. The only downside and I found this out
recently when I was trying to switch over from traditional
solo four one k contribution to four one k contributions. Well,
(46:03):
they're not available at Fidelity yet they basically promise. They
told me, Hey, no, we're gonna get it done in
twenty twenty five. We just can't tell you when. So
it's coming soon apparently. But the other option, if you
love low cost but want access to a Roth solo
for one k, Schwab is probably the best other provider
out there, the best other choice, and I believe they
(46:23):
have access to Wroth solo for one ks as we speak,
which is nice. They're similarly low cost to Fidelity. But
you really can't go wrong with either one of these players.
And if you're just looking mostly to contribute to a
traditional solo four one K Fidelity Rocks, and they are
a great pick. The costs are low, the fun choices
(46:45):
are significant, and the low cost fund choices, which is
what matters most to Matt and I are That's true,
really really good, right.
Speaker 2 (46:51):
And one of the massive benefits of opening a solo
four one K is that I don't think there's any
other retirement plan that allows you to sock away as
much as you can with a solo for one K
this year. Yeah, the maximum of sixty nine thousand dollars.
So if you are seriously looking to supercharge your retirement.
Speaker 3 (47:08):
That's how you do it. Joel.
Speaker 2 (47:09):
Let's get back to the beer that you and I
enjoyed during this episode, which was a Lizard King, not
an IPA, but a mosaic.
Speaker 3 (47:16):
Copped pale ale. This is my Pipeworks.
Speaker 2 (47:19):
Brewing Company and as expected, and they've got some crazy
fighting graphics here on the can you know, like they
have like the Ninja versus Unicorn.
Speaker 3 (47:26):
Yeah, you know, what do you think about this one?
Speaker 1 (47:28):
They've had the over the top labels since before they
were cool, and yeah, I'm gonna say this is not
my favorite. It's it's too floral, it's got lots of it,
almost tastes like potpourri. Really, yeah, that's what that's the
vibe I'm getting. And while maybe a light potpoury sense
in the half bathroom of a place that I'm visiting,
(47:48):
I don't mind it.
Speaker 3 (47:49):
I don't want it in my beer.
Speaker 2 (47:50):
Though, So nothing shaved pieces of wood that have been shaved, curled, dyed,
and smell like something completely different. Yeah, sitting there on
top of a candle, that's warming, and.
Speaker 1 (48:00):
I don't do pupper in my house, but I don't
mind it somewhere else. I just but when my beer
tastes like it, oh.
Speaker 3 (48:05):
It's just not my favorite. Do you think it's Is
it the Mosaic? Are you not a fan of Moasaic?
Speaker 1 (48:08):
Maybe maybe that's it?
Speaker 2 (48:09):
Yeah, personally I am a more of a fan of Citra.
Moasaic is more of like the old school kind of
ipa palel hop that I think a lot of the
breweries gravitated towards, like ten fifteen years ago, which is
what this tastes like.
Speaker 3 (48:22):
This is what this reminds me of.
Speaker 1 (48:23):
It when this beer has been around for quite some
time at this point so you're probably right. I think,
I think so. I think Wizard King is like one
of their og but they've had it for ten plus
years Flagship Palel.
Speaker 3 (48:32):
Yeah, so I'm with you.
Speaker 2 (48:33):
Though not my absolute favorite, it's still fun to enjoy
during our episode today.
Speaker 3 (48:37):
No doubt, any day you get to drink beer is
a good day. That's true. But that's going to be
it for this episode.
Speaker 2 (48:42):
You can find show notes up on the website at
howtomoney dot com and Buddy, let's just wrap it up
until next time.
Speaker 3 (48:48):
Best Friends Out and Best Friends Out bol
Welcome to How to Money. I'm Joel, I'm Matt, and
today we're answering your listener questions.
Speaker 2 (00:24):
You know, a buddy, it's Monday, which means it's everyone's favorite.
Speaker 3 (00:27):
Had a money episode of the week? Do you think
it's everyone's favorite? Actually, I don't know, you said it.
Speaker 1 (00:33):
Should we take a poll we should.
Speaker 2 (00:35):
On the on the newsletter and see which episode if
we If you only had to listen to one episode
for the rest of your life, which one would it.
Speaker 3 (00:42):
Be if you only got to not had to.
Speaker 2 (00:44):
Oh yeah, we wouldn't make you listen, of course. But
the problem with polls or surveys is that they're self selecting.
So I'm not I'm actually not a huge fan of
surveys and polls. But maybe maybe we'll do that all right,
But we do, in fact have listener questions to get to.
During this episode, buddy listener is wondering if, through some
sort of cost benefit analysis that she can run on
home security system. She wants to know if there is
an easy way to decide whether or not this is
(01:06):
something she should spend some money on. Another listener is
wondering if there are any advantages of financing a car.
Are there any pros or is it just cons when
it comes to paying interest on a vehicle? And another
listener is wondering about five twenty nine accounts and the
kind of impact that it could have on his kid's
financial aid. He's wanted to make sure he's setting his
(01:28):
kids up right for the future. We'll get to those
and more during today's episode.
Speaker 1 (01:32):
Sounds like a nice variety, Matt on today, nice a
nice spread. Yeah, okay, But before we get to listener questions,
A friend recently told me about going to a timeshare presentation. Matt,
you've done this in the past.
Speaker 3 (01:45):
I indeed, I've never.
Speaker 1 (01:48):
Done one of these because I don't trust myself.
Speaker 3 (01:50):
Here missing not on a good time, Joel.
Speaker 1 (01:51):
I'm the kind of guy who's like, wait, does Ie
get say that again?
Speaker 3 (01:56):
You would not?
Speaker 2 (01:57):
Are you really concerned that you might get swayed by
this new talking of whoever's up there presenting.
Speaker 1 (02:02):
I am maybe more malleable than you are, but I
don't know. I would not be as I would not
go by into a time.
Speaker 3 (02:08):
Share, that's for sure.
Speaker 2 (02:09):
I'm assuming he was going for whatever prize that they
were giving.
Speaker 3 (02:13):
At the end of this talk, Well, the.
Speaker 1 (02:14):
Big prize was a much discount of trip. So he
went to San Diego with a couple of his brothers,
kind of a reunion tour. And he told me he
paid one hundred and ninety nine bucks for three nights
and then included one hundred dollars resort credit. He's in
San Diego staying at this nice little spot with like
a pool, palm trees. Sounds pretty lovely.
Speaker 3 (02:33):
How long was the presentation?
Speaker 1 (02:34):
I think it was like two hours, okay, ye, which
is a long time to sit there.
Speaker 2 (02:38):
Yes, especially if you're like meeting up with the family
and it cuts I'm assuming it's eating into everybody's time,
I think, so, okay, yeah, this is almost like an
undercover frugal or cheap?
Speaker 3 (02:48):
Yeah? Sure, yea, what do you think?
Speaker 4 (02:49):
Yeah?
Speaker 3 (02:50):
That means like, I you're like a cheap move to
you or is this totally frugal? I don't know.
Speaker 1 (02:53):
I think I think so much depends on like where
you're at. Like I wouldn't want to do this even
if it meant saving a few hundred bucks on my vacation,
but I've also never done it, so a part of
me kind of wants to see what the what it's
actually feels like to sit in a timeshare pitch.
Speaker 2 (03:07):
But was able to sit there with like some Google
or Facebook meta glasses on and watch a movie.
Speaker 3 (03:14):
That would be awesome the whole time.
Speaker 1 (03:15):
Because then, I mean, that's the problem, is like not
wasting time in the same way.
Speaker 2 (03:18):
Yes, Like how do you want to It's less about
the money and more about well, I would just rather
spend my time doing something else, right, Like, I was
thinking about this.
Speaker 1 (03:26):
Actually, the only way you get the vacation. Let's say
you're like, listen, if I that's the only way we're
gonna get these three days in San Diego. So if
we go for a hundred bucks for suspend a eight hundred.
Speaker 2 (03:33):
But I know this friend and he's got some money,
like he's not completely broke. I guess like it would
make sense if you, let's say you just got laid
off from your job and you got six months to
just kind of loaf around figure out what you want
to do next. You're looking to cut expenses like crazy,
and you're like, why not do this as opposed to
you know, being gamefully employed and having enough money on
(03:55):
the side. Yeah, I was thinking about this because this
past weekend, Kate and I spent a lot of time
working in the yard, and I remember thinking, man, why
are we not paying somebody to do this backbreaking labor,
Like like I've got the pick axe out and I'm
like ripping up roots, destroying my back or trying not
to destroy my back. But at the end of the day,
like literally, I told I was telling chaos just like man,
(04:16):
like that was a ton of fun. The ability for
us to work side by side doing this thing together.
It was hard work, but we got to see the
result of our labor. And there's just all these other
sort of benefits that you gain from doing something like that. Yeah,
when normally, if you're just looking at it from just
a financial standpoint, you would say that's not worth it
at all.
Speaker 1 (04:33):
I could pay someone this in such amount an hour,
why wouldn't I pay so I could go do some
extra work and get paid. But there's all these other
intangible benefits that you receive from doing something like that
that I think are worth thinking through not just looking
at the financial menage. Y. No, I agree, And I
think I guess the case in which it would be
a really really cheap move and not a frugal move
is if you are prone to a sales pills and
(04:55):
you're like and you're like, look, I'm gonna say five
hundred bucks on this vacation, and I'm going to get
to go to San Diego for ninety nine bucks. And
then you did sign up for the time share, that
would be the worst of all scenarios.
Speaker 3 (05:04):
You just sign up for paying five hundred bucks.
Speaker 1 (05:06):
A year the rest of your life or even more right, yeah, well, yeah,
five hundred bucks a year. Not to mention probably the
ten or fifteen thousand dollars or whatever it costs actually
by the time share upfront two, So be careful time
shares out there, folks. All right, let's mention the beer
we're having on this episode, Matt. This is called Lizard King.
It's an IPA by Pipeworks Browing. We'll give our thoughts
(05:27):
on this one at the end of the episode.
Speaker 2 (05:28):
Not an ipa, a pale ale and phone. It's a payloaf,
which is very related to it's like an I life.
Speaker 3 (05:34):
Yeah, exactly, all.
Speaker 1 (05:35):
Right, And if, by the way, if you have a
question for us, a money question, we'd love to hear it.
And we are giving out pairs of how to money socks.
If we feature your question before the end of the year,
the lovely, the glorious, the most comfortable, how to money socks.
Just submit your money question, send it to us via
email recorded on the voice memo app of your phone.
If you want the full directions, just go to how
(05:57):
tomoney dot com slash ask. Let's get to a question
about buying a new car, but the listener who's asking
the question is actually asking on half of someone else.
Speaker 5 (06:08):
Hey, guys, this is Becky and Madison, Wisconsin. My in
laws right now need to buy a new car because
the engine died in theirs. They know exactly what they
want to buy. It's a used minivan. They know the
miles and what to spend, but they want to put
money down and then finance the rest. I tried to
talk to them about just paying cash because they have
(06:29):
the money set aside in a high yeled savings account.
I tried to explain that because they would be paying
a higher rate if they finance, it's dumb not to
just pay for it because they're earning five percent in
their savings. They did not understand this concept. Is there
a way that I could more simply explain this concept
to them? Any help? Would be appreciated. Thank you guys.
Speaker 2 (06:52):
So, Becky, have you considered that your in laws might
be lying to you because we don't get it? I
mean honest, Like I say that like half in jest,
but I think there's a chance that that could actually
be they care whe.
Speaker 3 (07:04):
I mean, maybe they're not being fully truthful.
Speaker 2 (07:06):
Like Becky's the one that listens to the personal finance
and maybe they're thinking they feel the pressure and she's like, hey,
you're not gonna you're not gonna finance that car. You're
gonna pay for that in cash, right, And they're.
Speaker 3 (07:14):
Like, oh, oh yeah, duh, of course we're gonna do that.
Speaker 2 (07:18):
I'm just saying maybe there's a slight chance that there's
a little bit of like self protection okay going on,
and maybe they have appeared to be in a better
financial position than they currently are. That could be true too,
you know, Yeah, I don't know. I'm just doing that
out there. That is a good point. I'm not saying
that they would do that to be deceitful on.
Speaker 1 (07:34):
Purpose, yeah, or like a malicious sort of but there's
like some shame if you if you feel like you
haven't handled finance as well and you're right, Matt. Maybe
maybe they don't have as much cash as Becky thinks
on hand, and so they're they're saying, no, we're gonna
go ahead and finance it anyway. Not because you're not
making a good point, Becky, not because you're not right,
and they don't understand that because they don't actually have
the money to buy the car and cash.
Speaker 3 (07:55):
Maybe we don't want to tell you the full truth. Yeah,
I guess.
Speaker 2 (07:57):
I mean I say that jokingly, but maybe that in
the back of your mind, because I think that could
help you to approach the conversation a little more delicately,
as opposed to like the Dave Ramsey way where he's
just like reving your face in it.
Speaker 3 (08:10):
Like, look what you've done? What do you think? And
this is so dumb? I know.
Speaker 1 (08:13):
It might tax the approach that some people take with
their dogs who are trying to train.
Speaker 3 (08:17):
Right exactly.
Speaker 2 (08:18):
It might allow you just to kind of like pull
back a little bit and approach this conversation.
Speaker 3 (08:23):
Yeah, just into a little more nuanced Yeah.
Speaker 1 (08:25):
So maybe they're trust like not lying, but just kind
of not being one hundred percent truth because they don't
want to.
Speaker 3 (08:31):
They don't want to confess there you go right.
Speaker 1 (08:34):
Also, by the way, Becky said they're going to buy
a minivan, which I love, and maybe that's yeah, Becky's
got kids or they've got grandkids that they're toting around.
Minivans still so underrated, and they don't even have to
go all Mark Zuckerberg and get the Porsche.
Speaker 3 (08:47):
You know, Minivans for.
Speaker 1 (08:49):
The custom Carrera or whatever it was, the regular, normal
ones that made by the major brands are plenty good
for us.
Speaker 3 (08:55):
We obviously are.
Speaker 2 (08:57):
Biased because not only Joel do you, You and I
have the exact same minivans, separated only by one year. Yep,
I realized go into We went to a friends this weekend,
our families with some other families, and there is another
Gray Honda Odyssey, so many in the driveway. And then
we got to thinking about it. We've got so many
friends with a generic family vehicle, the Gray Honda.
Speaker 1 (09:16):
Audience, just within a few years of each other. It's
such a great vehicle.
Speaker 2 (09:19):
We're all in the know, and we're trying to let
everyone else out there know that you need to be
in the know as well.
Speaker 1 (09:24):
Make minivans cool again.
Speaker 3 (09:25):
I'm for that.
Speaker 1 (09:26):
I'm doing my best trying to hear a minivan influencer,
and also just financial conversations with families. They can be awkward,
they can be fraught with peril. How they how they
go this past Thanksgiving?
Speaker 3 (09:38):
Right? Right? Exactly? Yeah, dive into these kind of topics.
Speaker 1 (09:41):
Probably right after the fun political discussion they start talking
about bank account balances. But truly, like so much of
the time, our our loved ones don't want to hear
our money advice. So how do you get something across?
Maybe when when you have an idea or you're willing
to have that discussion and they're less interested. And I
think the suggestion I have for Becky is to start
(10:03):
by being more curious, like ask questions. You know, why
is it that you feel comfortable taking on debt for
this new car. That's a good question to start with,
and you might be surprised at the answer, just being
curious and asking questions instead of telling them how you.
Speaker 3 (10:16):
Would do it. That's true.
Speaker 2 (10:17):
It's a better way to instead of just like shoving
invitation started, instead of shoving it down their throat. Yeah,
it might not be about like loving debt. It could
be more about having just meaningful savings on hand enough
to have some buffer to lean back on. We're not
saying that this is the most financially savvy way of
looking at it, but yeah, I think this is also understandable.
So yeah, instead of leaning in the like what are
you doing in direction, ask them like, why are they
(10:41):
keen to take on alone when they let's assume the
best here that they do actually have the cash on
hand to pay for the vehicle, Because then I think
that could you're peeling back layers of an onion, right, Yeah,
that could give you more insight as to what it
is that they're thinking and what it is that they're feeling.
Speaker 1 (10:56):
Exactly exactly and feeling matt because feelings drive a lot
of this, and sometimes those feelings aren't even wrong. You
can speak to them and you can maybe alleviate some
of those feelings during that discussion. But I think you're
right peeling back some of those those layers and hearing
some of those feelings will help you figure out well
how to continue to pursue that conversation. I think without
(11:16):
hearing their side, you are just kind of pushing your
own views. That's rarely the way to win an argument.
Most people, even if they realize they're wrong, they digging
their heels. They just get annoyed and they say, I'm
just gonna do it my way, and I'm going to
tune you out. I think the I know better approach
It can work potentially, but it can also lead to
hard feelings or worse, and it can cause the people
(11:36):
you love just to kind of tune you out on
this topic. So and I don't even not that that
you're taking this route, Becky, but just kind of our
two cents here. So ask questions to get them talking.
Try to empathize with their perspective, even if you don't
agree with the route they're taking. And you know, you
might be tipped off to elements of their financial past
that you weren't privy to, and you might that might
(11:58):
give you some insight about where they're coming from too,
could be something that happened years ago that you didn't
know existed in our financial past. And just saying I
don't know this actually makes me uncomfortable because of this
and this and this, and they might reveal a few
things that maybe make this decision make a little more
sense in your mind, even if it's not like the
most optimized financial decision out there.
Speaker 2 (12:16):
Sure, yeah, because like when you are looking at the numbers,
like you are one hundred percent in the right, Like
the average rate on a used vehicle is something like
twelve percent right now. And maybe they've got like the
absolute best credit. Maybe they can score like an eight
to nine percent loan from their local credit union and
that is better, but it's still not superior to paying
cash and interest rates on savings. They are getting worse
(12:39):
by the month, it seems. But when it comes to
car loans, we're with you. We are for sure out
of the era of ultra low interest rates.
Speaker 3 (12:46):
So I don't know.
Speaker 2 (12:47):
Yeah, maybe they haven't borrowed, Maybe they haven't taken out
a loan on a vehicle since like back in the
you know, the twenty teens. Maybe they aren't fully aware
of the fact that car interest rates have shot up.
Speaker 3 (12:59):
But I do think the.
Speaker 2 (13:00):
Questions you ask will hopefully provoke that curiosity. It's just
confusing because you said too that they're earning five percent
in their savings, which means that.
Speaker 3 (13:08):
Man, you're smart.
Speaker 2 (13:09):
Yes, like they are financially savvy, which is why I
feel like that are.
Speaker 3 (13:13):
They're not the Wells Fargo or Bank of America.
Speaker 2 (13:15):
If that were to be the case, I would maybe
put them more in the category of okay, they're not
just aware of all the facts.
Speaker 3 (13:20):
But I don't know.
Speaker 2 (13:21):
I think asking the questions makes the most sense because
I think they are aware of the facts. They seem
pretty financially savvy, and so figure out what it is
that's causing them to go back to taking out a loan.
Maybe just the fact that it's a giant chunk of money.
Maybe emotionally it's going to be difficult for them to
part themselves with that money, which case cheaper.
Speaker 3 (13:40):
Older, used many van might make sense. There you go,
But I don't know.
Speaker 1 (13:43):
Maybe they want something new or more reliable, nicer, I mean,
and if they have the money for it, then they
should be able to pursue that option too. But again, yeah,
paying cash would be a smarter move. I think at
the end of the day, Matt, this is the tough
thing about having conversations about money with people you love.
I think it's important and I think we need to
kind of work at having better discussions about money with
(14:06):
people we love. And this is a perfect opportunity to
kind of open those floodgates, if in a positive way,
If it's done correctly, but you also have to let
people do what they're going to do. There's only so
much you can do without overstepping your bounds. I'm glad
that you're having the discussion. I think it's worth continuing
the discussion and asking more questions. And we are all
about attempting to make money a regular topic of conversation
(14:27):
amongst friends and family. That is something we are big
proponents of. But it's not always easy, and you do
have to pick your battles, and you also have to
learn when to kind of lay down your sword and.
Speaker 3 (14:36):
Say battle over.
Speaker 1 (14:38):
You have a direction you're planning on going in, and
I'm not going to convince you otherwise. And honestly, this
relationship means more than you doing the thing I find
to be the most optimized, right, Like, I think this
should also be different, Matt, if we were talking about
different stakes. If Becky's in laws we're going to wire
one hundred thousand dollars to a scammer them in on Facebook,
I think you pull out all the stops, right. Yeah,
(15:00):
If they're driving to the Western Union or something like
that would be a serious, serious conversation.
Speaker 3 (15:05):
Yeah. Whereas the used van conversation. It's a little less serious.
Speaker 1 (15:07):
I would hop in my car and I would like
smack the money out of their hands.
Speaker 3 (15:11):
When I would physically stand in between them and the ATM.
Speaker 1 (15:13):
You would do whatever it takes. But the I think
the stakes are a little bit lower here, and so yeah,
if they're making a non optimized financing decision on a car,
I'd bring it up. I'd ask some questions, I'd offer
a little bit of advice, but I wouldn't lose sleep
over their choice either. At least they're still buying a
used van and not a new one Way to Go,
and they have a high yield sam Us account, so
(15:34):
they're not with one of the trashy big banks. They
have a level of money IQ, even if they're not
doing everything the way you would do it. I think
these are smart discussions to have, but also at some
point you kind of gotta leave it be.
Speaker 2 (15:47):
Yeah, And the fact that for them, like she said
that the engine died in their previous vehicle makes me
think that these are frugal.
Speaker 3 (15:53):
Yeah. I think this.
Speaker 2 (15:55):
Not a financial numbers game, and it's completely about emotions
and feelings. Potentially, like you said something else, in their
past some other hang up that is keeping them from
purchasing this.
Speaker 3 (16:05):
Vehicle with cash. Joe, We've got more to get to.
Speaker 2 (16:07):
We're gonna hear from a listener who has a couple
of great options that she's trying to decide between when
it comes to her retirement.
Speaker 3 (16:13):
We'll get to that and more right after this.
Speaker 1 (16:23):
All right, Matt, we'll back. Let's get to you a
question about saving for college. How can I actually have
some partial downsides?
Speaker 6 (16:31):
Hey man, Joel, This is Brendan from Carmel, Indiana. Carmel
is a suburb just north of Indianapolis. It's actually the
roundabout capital of the world. Outside of that not so
exciting fact, Carmel is actually a great place to raise
a family. It has excellent schools, reasonable cost of living.
I grew up here and then went to school and
worked in Chicago for a while. Recently moved back after
(16:53):
I met my wife and we had her son, who's
now almost six. Anyways, my question today is regarding five
to twenty nine accounts. My wife and I are saving
for retirement. However, it's important for me to also be
contributing to a five to twenty nine account for our son.
This is more on a personal level, as I've had
a substantial amount of student loan debt from both undergrad
and graduate school. My question is there a certain contribution
(17:15):
limit or value that we should be aware of that
can significantly affect his face at eligibility. I know our
total contributions can affect this, However, I'm not fully clear
to what extent this impacts his financial aid. Thank you
for taking my question and for all the great work
you guys do on the podcast. Let me know if
you ever end up in the Indie area. Carmel has
some great biking trails with excellent breweries along them.
Speaker 3 (17:38):
Cheers. Joel Brandon did all the hometown research for US
biking and breweries well. And roundabouts so cool? Is that
the roundabout capital of the world or the US? Did say?
I think you said us?
Speaker 1 (17:49):
But those are definitely I mean, it can't be the world, right,
because the US is so bad when it comes to
around us. We love traditional stop lights for some reason,
and roundabouts be so much better in so many places.
Speaker 2 (17:59):
Oh yeah, Oh, I totally agree, especially I don't know.
In my mind, I picture Indiana having a lot of space,
and don't roundabouts require more room than just like a
typical stop life. Yeah, because you have to.
Speaker 3 (18:10):
It seems like at least you've got to have extra
all that room for the circle. Yeah, But like I
don't know even.
Speaker 1 (18:15):
I like roundabouts though, when we went to Ireland together.
I mean, roundabouts are everywhere, and they just they make
it easier to get around, They keep the flow of
traffic going. They are less of an ice hore as
than stoplights. They just it makes sense in so many
areas though, I guess in major, major intersections you have
to have stop lights. But we would I guess so
(18:36):
we would do well to have more roundabouts.
Speaker 2 (18:37):
I will say, driving on the left hand side of
the road with a stick that you're not normally used
to while driving through a roundabout, that's a nerve wracking experience.
Speaker 3 (18:47):
Don't put you in the moment. No, Like I I
was able to focus on the road.
Speaker 1 (18:50):
You know, sometimes you drive and you're like, you get
to your destination and you feel like, how did I
get here?
Speaker 3 (18:56):
We've all felt like that.
Speaker 2 (18:57):
It doesn't happen when you're No, that doesn't happen. You're
on vacation with your other cheap friends. So this is you, Joel,
and you didn't splurge on the navigation system either true,
I can't even believe that we arrived like at the
proper place in what anybody would consider a reasonable amount
of time, but now we did branded I it sounds
(19:17):
like you are saving well for your own retirement, which
I'm glad to hear. You know that that is always
our first concern when folks are asking about socking away
some money within a five twenty nine plan for the kids,
and hopefully you'll be able to help your kids escape
your student loan debt fate that you've experienced there with
your It sounds like you've got undergrad as well as
well as grad school loans. But the other thing that
(19:39):
we want to highlight here is that we want folks
to open their own five twenty nine account via the
state run program because some folks they turned to a
financial advisor or they turn to a bank for this,
but that is typically not a great idea because the
fees can be significantly higher than were you to do
this yourself. So, for instance, for you you're there in Indiana,
(20:00):
if you just turn to the Indiana five twenty nine
direct Savings Plan, you can snag a state income tax
benefit and if you choose the lowest cost funds, you'll
be on the right path. You're going to avoid the
most egregious fees when it comes to the different investment options.
By the way, when it comes to investments, there are
aged based or there are US equity based funds that
(20:21):
you can invest in, depending on your goals, depending on
the risk tolerance that you're willing to take with those
investments for your kiddo.
Speaker 1 (20:27):
Yeah, and as far as the impact of the five
twenty nine account on financial aid, well, yes, there is
an impact, and it's a somewhat complicated formula. So having
saved up a decent chunk in the five to twenty
nine plan, it's not going to be detrimental for merit scholarships.
Speaker 3 (20:45):
Right.
Speaker 1 (20:45):
Let's say your kid is a soccer star in high
school and or a mathematical genius. Yes, it doesn't matter
how much money you make am athlete, I believe is
what they call it, matt But yeah, you might get
some sort of Your child might get a scholarship like that,
which is great and doesn't matter how much money you
have in your five to twenty nine account. Typically those
scholarships are not impacted right by how successful your child
(21:06):
is in that endeavor, but it will have a small
impact when it comes to qualifying for it need based aid.
And how much of an impact, well, really depends on
how much is in the account and what other types
of assets you own. But know that five to twenty
nine funds they impact the ratio far less than your
other assets, right, like real estate that you own, stocks
(21:28):
that you own, your brokerage account. Let's say we're talking
essentially about a five percent aid reduction for money that's
held in a five to twenty nine account versus a
twenty percent aid reduction on money in that bank or
brokeridge account. So you're going to experience, yes, a little
bit of discrimination on the needs based aid, but not
nearly as much as the money that you poured into
(21:51):
other lucrative assets.
Speaker 3 (21:52):
That's right.
Speaker 2 (21:52):
But there is a loophole that recently came about, and
I think we touched on this actually not too long ago,
but the US tax could, of course be the bastion
of complexity.
Speaker 3 (22:01):
It is without all the loopholes that you can fit
into your basket. Gotta love them.
Speaker 2 (22:06):
How much impact five twenty nine accounts actually have comes
down to who owns the account. And so we just
discussed what would happen if you are the account holder.
But what if it's your parents. What if it's grandma
or grandpa who opens the account, Well, then it would
have zero impact on need based aid.
Speaker 1 (22:25):
This sounds like money laundering, but it's it's legal, legal.
Speaker 3 (22:28):
Money laundering though.
Speaker 2 (22:29):
Yeah, so this is what's known as the grandparent loophole,
and so it's worth having a conversation with your folks
about opening a five to twenty nine account with your
child as the beneficiary, even if you are funding it right,
and so there's multiple parties that have to cooperate here.
Speaker 1 (22:43):
You essentially have to give the money to your grand
to your mom or dad, and the grandparent then opens
a five to twenty nine account with your child as
the beneficiary. And so yeah, you're kind of I guess,
gifting the money for the grandparents to stick in there.
Speaker 2 (22:55):
All of a sudden, it's become a family affair. Yeah, yeah,
but then the very legal family affair.
Speaker 5 (22:59):
Though.
Speaker 1 (23:00):
Then we're talking about the minimal reduction to needs based
aid based on the calculations that FAFSA makes, we're talking
about that going away completely. You're able to take the
five twenty nine penalty away. But man, I think it's
also worth pointing out here that this could be letting
the tail wag the dog right that five to twenty
(23:20):
nine money. It could impact how much free money your
kid has access to, but it's not going to have
as big of an impact, like I said, as other
assets and investments that you own. And you wouldn't want
to stop, like, for instance, growing your net worth just
to qualify for more free money from a college or
something like that, Right, that would be insane to be
like quitting your job to qualify for additional government benefits
(23:43):
or be like, listen, I'm gonna quit my day job
so I can get those sweet subsidies on the healthcare exchange.
But then you don't have any income coming in, and
that's a worse that's a bad idea. So if you're
a consistent investor and savior, and you have been over
multiple decades, you might find that need based aid is
that's offered to you is basically minimal or non existent anyway. Right,
(24:07):
But again, you don't want to throw a wrench in
your wealth building efforts in hopes of netting more college
financial aid money, saying you know what, I'm gonna not
contribute to these accounts or I'm going to invest in
things that are gonna lose me money so I can
keep my net worth low, keep that need based financial
aid ticking upward for my child. Like of course you
wouldn't do that, So, yeah, you don't want to be
(24:28):
shortsighted in this.
Speaker 2 (24:29):
You'd be winning a game that you don't want to win.
It's just like somebody being like, I'm the best tax
loss harvester. It's like, well, that's not something that you
necessarily want to have to do, but it's good that
you can't do it.
Speaker 3 (24:38):
Yeah, but the goals to see your investments go up.
Speaker 2 (24:41):
You don't want to be the number one person experiencing
losses and then tax harvesting. But yeah, it depends on
what it is that you want to optimize for and
what it is that you're trying to maximize. Because if
you're trying to maximize, like Jill said, the free dollars
that are coming from college, well yeah, set aside nothing
and be completely broke. But if you're trying to maxim
amount poverty, yeah, if you're trying to maximize, though, the
(25:01):
total amount of funding that can go towards your kids college,
then yes, you most definitely want to fund a five
to twenty nine account because overall, that is how you're
going to see the most benefit. And I would say,
like one other thing too to keep in mind is
that this is currently where the rules are, but the
rules always change. In particular when it comes to five
nine accounts, there seems to be more leeway when it
(25:24):
comes to different I don't like rules that are being
passed as opposed to retirement accounts. Those seem to be
a bit more locked in as opposed to how it
is they are qualifying the student Aid index, which is
like a brand new thing. I mean that is now
like the gold standard, the expected family contribution. There are
all these different terms and ways that they're calculating it.
Speaker 1 (25:42):
Well, the fasts have changed significantly right beginning of this year.
Speaker 2 (25:44):
So yeah, and so this is how it's been calculated now.
But I think there's a good chance that in ten
fifteen years from now it could be significantly different than
it is at the moment. And so I think that's
important to keep in mind that you don't want to
pin all of your hopes on how it's currently structured
and Therefore, it makes general sense to save and invest.
Speaker 1 (26:02):
For your future. We were experiencing that with student loan
details right now, right where you go. It's like it's
the facts are changing on the ground as we speak,
as something I'm sure we'll continue to talk about on
the show. So you have to kind of make the
best decision you can with the facts on the ground,
even though it feels like it's shifting sand underneath you.
Speaker 3 (26:20):
JLL.
Speaker 2 (26:20):
One other thing that's worth mentioning too, is that some
folks who are keen on creating generational wealth, they are
using five twenty nine plans now, not necessarily to pay
for college or if they're expecting their kids to go
to college, but help them to fund a roth ira
off in the future. Because of the recent changes to
the flexibility of five point nine accounts.
Speaker 3 (26:41):
It's made them a bit more attractive. It's made them something.
Speaker 2 (26:44):
It's like an item on the menu that used to
everyone used to always pass over, but then a new
chef came in and all of a sudden, it's like,
oh no, those are banging Sam pancakes.
Speaker 3 (26:52):
Now you totally need to check that thing out instead
of just guy, I don't know why I said that,
would you say, Sam pancakes? Yeah, why did anyone eat that?
I don't know.
Speaker 1 (27:00):
You can't elevate that.
Speaker 2 (27:01):
I would not personally order that, but I'm not gonna
yuck on someone else's young But that's another reason to
consider five nine accounts as well, Joel. Let's hear from
another listener who has a question about a potential pension
that she is considering signing up for.
Speaker 4 (27:15):
Hi, Matt and Joel. My name is Kristen and I'm
from Albany, New York. I've been listening to the pod
for a few years and your advice has been very helpful.
I recently got a job at a Sunni school and
I am learning how incredible the New York State benefits are.
I have to choose one of their two retirement plans
in my first thirty days of employment, and I will
(27:37):
not ever be able to change it thereafter. The first
plan is their ers or Employee Retirement System plan. It's
a pension plan, and the amount I receive will be
based on my age at retirement, final average salary calculation,
and years of service. I will need to work here
for at least five years to draw down on my pension. Someday.
(28:00):
The other plan is the OERP, or optional retirement program.
This is more like a typical four O one K
that I would have through Fidelity. My employer will contribute
eight percent of my gross biweekly earnings for the first
seven years I am here, but then their contribution will
increase to ten percent. I will only need to work
(28:23):
here for at least one year to keep any contributions
they make. Regardless of which retirement option I choose, I
will be required to make a four point five percent contribution.
I am leaning towards the four oh one K option
as I'm only twenty nine and I am unsure if
I will end up moving or changing jobs at some
(28:43):
point in my future, but I also know that pension
plans are a rare gem. I'd love to know your
thoughts and what retirement plan you think is best.
Speaker 1 (28:52):
Thanks Kristin, thank you for the question, and massive congrats
on the new job.
Speaker 6 (28:58):
Matt.
Speaker 1 (28:58):
It's always nice to have you benefits heading your way, the.
Speaker 2 (29:02):
Especially multiple options laid up before you. It's kind of like,
not only are I don't know, I like having options.
Speaker 1 (29:07):
It's like a chouse.
Speaker 3 (29:08):
You're on a venture book. Yes, exactly which were the
best when we were kids.
Speaker 1 (29:11):
You're like, I don't know, do I want to go
to page sixty eight and when Timmy stuck in a well,
I don't know whatever it is, but did.
Speaker 3 (29:16):
You ever go back and like you read them?
Speaker 1 (29:18):
I would always go back in what if I made
a different decision on this one? Though, sadly Kristen cannot
do that.
Speaker 3 (29:23):
She's like, I am locked in forever for the.
Speaker 1 (29:26):
Rest of my working existence at this place. So the
stakes are high, right, given the inability for her to
change her mind on this, So we will do our
best to offer some helpful advice. Yeah, And the truth is,
pensions can be great, but they're also rare.
Speaker 3 (29:39):
Well.
Speaker 2 (29:40):
I think that might be a part of why she's
thinking twice about the pension is that historically pensions from yesteryear,
it says, old school pensions that are incredibly valuable that
aren't being offered anymore.
Speaker 1 (29:51):
To talk to one of your grandparents about the pension
they have, and they will sing its praises and they'll
talk about how it was the most important part of
their retirement planning processes.
Speaker 2 (29:59):
Yeah, I mean literally, it's what retirements were completely built
around for them. Most likely and so because of that,
I see why that.
Speaker 3 (30:07):
Option would be tempting.
Speaker 2 (30:09):
And I would say, if you were intent in staying
there at that school or there within the state for
let's say a couple decades, well I think I might
be leaning in that direction, right, Like let's say, maybe
you come from a long line of school principles and
you're like, oh, yeah, this is going to be my school.
I'm going to be on a teach here for five
(30:29):
to ten years, and after that, I'm going to take
a lead teacher role. Beyond that, I'm going to be principal.
Maybe your folks own the bakery, the one coffee shop
there in the middle of the town, and so because
of that, you're like, I'm never going to leave this place.
Speaker 3 (30:41):
But that is not what you said.
Speaker 2 (30:42):
Like you are pretty young, and it sounds like you
want to have all the options open to you, and
so where you to go in the pension direction, that
would really just kind of hamper your ability to, like
Joel said, and just choose your own adventure.
Speaker 1 (30:55):
Yeah, you know that song, like doesn't anybody stay in
one place? An em Well, Kristen talks about.
Speaker 2 (31:03):
Who sings that? No, I don't know, but is this
a recent song or is this something else? It's the
HOODI and the Blowfish saying like twenty years ago, think
it was even before Hooty and the blowf Oh was
it really? Yeah? Digging real deep.
Speaker 1 (31:13):
But I should know I should know something, but I don't.
But that just came to my mind because Kristin seems
like the kind of person who might not be staying
in the same place. She's got this openness to moving
somewhere else, which is totally fine. It just has a
really important impact on the decision she makes here. And
so the ORP, the Optional Retirement Plan, I think probably
makes the most sense for her given the parameter she outlined.
(31:36):
So not only would she have to work there for
at least five years to have any pension coming to
at all, she'd have to likely work there for twenty
years or more to make the pension more effective than
the ORP. On her behalf. The biggest downside would be
if she opted to move on after like three or
four years, because she would have wasted some of those
(31:57):
prime years and a great match that was available to
her where she could have been investing and laying her
financial foundation. But she was like, I think I'm gonna
go with the pension and then ends up moving on
in fairly quick order. Well, that to me would be
the worst possible situation for her from a retirement planning perspective.
And then the ORP, the optional retirement plan, it has
(32:18):
a one year investing.
Speaker 3 (32:19):
Period, right, So maximum flexibility.
Speaker 1 (32:22):
Maximum flexibility, She's still going to get to retain stuff
if she was just there for three or four years.
Those employer contributions are quite generous and then only get
stepped up over time as well.
Speaker 3 (32:30):
Yes, so she said they start out at seven percent
and this graduates up to ten.
Speaker 2 (32:34):
Yeah, that's amazing, It was amazing. I think that's fantastic.
And I also don't like we're talking about the maximum
flexibility flexibility that you have, and I think there might
be some folks who would say, well, people don't need
all the flexibility in the world. But the fact is
we live in a world where we are able to
see all the different options that are laid out there
before us, right, And so when you think back to
like our parents' generation, or even like our grandparents generation,
(32:56):
I think oftentimes they stayed where they were because they
weren't necessarily aware of what all was out there. But
because of just the world we live in it, I
think that flexibility is it's a lot more valuable. It's
hard even to put a numerical value on that to
be able to choose how it is that you want
to live your life.
Speaker 1 (33:11):
And let's be honest, the numerical value could be in
a substantial pay raise by moving somewhere else. And you're like,
if you feel tempted to stay somewhere because the pension
and the financial value to accumulate from having a pension
years and decades down the road, well you might forego
doing work you enjoy more that pays a lot more.
Speaker 2 (33:30):
In the interim too, I will say one thing that
I like the least about the ORB, which is most
likely here a four toh one A, which is similar
to a four to one K, is that the investment
options can be more conservative.
Speaker 3 (33:43):
And for you, Christen, you are in the.
Speaker 2 (33:45):
Phase of your life where you have the ability and
even the necessity, I would say, of taking on more
risk in order to build wealth. Volatility like this is
just the price that we pay for these outsized gains,
and it's going to be easier to stomach the roller
coaster ride of the stock market when we are, let's say,
three four decades away from tapping our account, and so
the conservative nature of some of the investment options that
(34:07):
you would have there within the ORP might be the
only thing that would make me, I guess look into
the details a little bit more, and I don't see
what provider you would be with, see what options there
are at your disposal.
Speaker 1 (34:17):
You know, what sort of funds are you going to
be able to partake in? And what's the expensory show
there is there something equivalent to a total stock market
fund or a SPI fund, or an index fund, or
even like a target date retirement fund that doesn't have
outlandish fees associated with.
Speaker 2 (34:33):
As opposed to like a blended fifty to fifty fund,
which would Man, that would really bum me out, Yeah.
Speaker 1 (34:38):
Because you're just going to miss out on over the
course of multiple decades some of the gains that would
really help boost your efforts, right, your retirement savings efforts,
and what you might gain insecurity, by the way, by
taking the pension, should you jump through all the hoops
and stay there essentially your whole working life. I think
the biggest thing, Matt, you discard the flexibility, Like we've
talked about right. Pensions are called golden handcuffs for a reason,
(35:02):
and the longer you stay there, the more you feel
compelled to stay there because you're so far gone. Even
if let's say the working conditions are not great, you
don't love the role that you're in, the financial haircut
you would take by jumping ship would just be too significant.
If you don't love the job or you want to
do something else, you have to you feel like you
have to stay put that It's like it's more than
golden handcuffs. It's almost like a concrete block around your feet,
(35:25):
like you've stepped in it and you just can't move
anywhere else. And we really don't want that for you.
We want you to retain that flexibility when it comes
to earning or enjoying your career in something that you
love if the place that you're currently at does not
end up being a place that you see yourself long term.
So we would just say, based on kind of what
you said and the way we think about work in
today's environment, the ORP is likely your best bet. It's
(35:47):
incredibly generous, and doing that along with other investing on
the side, like a roth IRA, will ensure that you
keep your career options open, that you retain career flexibility,
and that you're still building significant wealth for your future.
Speaker 2 (35:59):
That's right, So, Chris and we hope that gets you
pointed in the right direction. And Joel, we've got more
to get you. We're gonna talk about fear and anxiety,
the money that we will often pay to alleviate those feelings.
We'll get to that and more right after this.
Speaker 1 (36:18):
All right, Matt, we're back. Now it's time for the
Facebook Question of the Week. This one comes from Jessica.
She says, is there a way to assess the cost
verse benefit of a home security system? Like based on
crime rates in your neighborhood? Is a security system just
a money taking scam? First a good investment to prevent
property loss or expensive home damage from a break in?
(36:39):
Is it all just a scam praying on fears when
the chances of break ins are extremely slam Or is
it actually worth it?
Speaker 3 (36:46):
Yeah?
Speaker 2 (36:47):
I think it's more the former, you know, Joel, Like
the fact that folks like the companies out there, are
praying on our desire to protect ourselves from the worst
of what could happen to well, and that's why in
a lot of the messaging, it's always your family, we're
keeping your family safe. If they use stuff like that,
because when they say in the commercials and it speaks
to exactly.
Speaker 3 (37:04):
What we want to do.
Speaker 1 (37:06):
But oftentimes they want to charge an armor.
Speaker 3 (37:08):
And a like fear inducing.
Speaker 2 (37:10):
Yeah, so I wouldn't call these companies out there scammers,
but they will often use their messaging to tap into
those different anxieties there and make for good reason, because
that's how they make the sales. And I think what
they are oftentimes really after or maybe this is the
older model, but those recurring monthly payments for monitoring, right,
because if you're paying let's say forty dollars a month, well,
that's five hundred dollars a year.
Speaker 3 (37:31):
Well and man, if you.
Speaker 2 (37:32):
Were able to avoid that, that's that would represent meaningful
savings on your part. But we're also talking about more
than just money. We're talking about how safe you feel.
And so I was happy to find some numbers and
so maybe you're able to kind of rest in the data.
And so I was very surprised to see that back
in the nineties, for every one hundred thousand homes, there
(37:55):
were one thousand, two hundred and fifty burglaries reported.
Speaker 3 (37:59):
Okay, sounds like a lot. It does.
Speaker 2 (38:01):
Guess what it is today, You want to guess eight
hundred and twenty. Dude, so much less than that two
hundred and fifty. So we went from one two hundred
fifty to just two hundred and fifty. It's a significant
accorded home book burglaries per one hundred thousand homes.
Speaker 3 (38:14):
That's amazing.
Speaker 2 (38:15):
I could not believe that stat Like, we have seen
crime at least, you know, in that regards drop precipitously
over the past twenty thirty years, especially, so there was
a plateaued like around like the twenty tens, but then
we saw a pretty significant drop then as well. Bottom line,
it's almost as if like home burglaries are just it's
(38:35):
not like relatable anymore. It's not it's not something that
happens as much.
Speaker 1 (38:37):
You couldn't make a Christmas movie about it anymore because
nobody does it right.
Speaker 3 (38:41):
People will be like, this doesn't make any sense. Oh,
when did home alone come out? Joel? That was the nineties?
Speaker 2 (38:46):
Correlation or causation, that's a good question that maybe they're
a bunch of bandits who are just like well, I
don't want that to happen to me.
Speaker 1 (38:53):
A bunch of smart kids over it starts throwing irons
at my face. Oh, that might be true.
Speaker 2 (38:59):
I was thinking initially of just sharing my own personal
interpretation of neighborhoods that we've lived in and how they've changed
over the years, and I thought, well, you can't just
take you can't take your own experience. But then seeing
nationwide data, I think, man, that's incredibly encouraging, and that
would make me feel better about let's say, skipping out
on say some monitored coverage.
Speaker 3 (39:18):
Yeah, personally, but I.
Speaker 1 (39:19):
Think it's also important to mention that technology has changed
quite a bit in the space, and it has reduced
the cost of that's home monitoring for alarms and actually
the installation of alarm systems as well. Competition is a
big part of that also, and it's made this just
less of a money pit where you talked about forty
(39:40):
bucks a month that I think that was what the
average person used to pay, and they also had to
sign a multi year contract, and they had to pay
for expensive installation of equipment, and so it did become
this like financially prohibitive investment. I'm looking at ADT, for instance.
I think they're still around, but they were the worst
culprit and I think they're trying to continue their business
model AOL charging people for email service. Right, it's one
(40:03):
of those things where it continues to exist, but only
the foolish will continue to go down that path, given
the proliferation of options that we have. Right, because you
can actually take DIY your equipment, right, you can take
it with you to the next home you move to,
you can avoid contracts completely. Plus, right, having a home
security system could get you a discount on homeowners insurance.
(40:24):
I think that is matt the precipitous drop in the
cost of it, plus the fact that you might get
a benefit from your homeowner's insurance company, Well, it could
make this This could make financial sense in addition to
alleviating some anxiety. So let's say you're paying ten to
fifteen bucks a month instead of forty, right, and you're
getting a five or ten dollars a month discount from
State Farm USA wherever you have your insurance. Well, the
(40:47):
money part of this equation is now closer to fifty
bucks a year than five hundred. And it's just all
about where you turn for service. Though, in order to
make those numbers work.
Speaker 2 (40:56):
And not just service, but just so you mentioned the equipment,
so check out ring Whise simply safe. I'm sure these
are all companies that you've heard of, and whys by
the way, is wyze uh huh. They've got some really
affordable cameras that we use and are big fans of.
But you're paying full price for the equipment upfront, or
not even full price wait for a sale, which isn't
really all that expensive to begin with in the grand
(41:17):
scheme of things, right, Maybe you're just paying like maybe
in the three digits for a few pieces of equipment,
But then the monthly monitoring costs can be had for
as little as three dollars a month, which is a
far cry from the thirty forty bucks a month old
school model. And just the fact that the cameras are
up right like and people.
Speaker 3 (41:36):
See that it's a deterrent in and of it. So
it's a deterrent.
Speaker 2 (41:39):
And I am much more a fan of things that
completely deter a burglary from happening, as opposed to being
able to watch somebody break into your house.
Speaker 3 (41:46):
Yeah.
Speaker 1 (41:47):
Well that's why I have a face a speaker in
the backyard that makes the sound of a Doberman picture,
So it just scares people off before they come.
Speaker 3 (41:53):
Mean literally, Like, what do you think about getting big dogs,
Joel for as a deterrent? I mean, I guess it's
one way to go. I don't like to get bit
by dogs, and so.
Speaker 1 (42:02):
I also like, don't don't like to take care of dogs, Matt,
so I'm gonna avoid that.
Speaker 2 (42:05):
You're more of a cat guy. Well, does that mean
you have what's that tax plasmo talx or whatever.
Speaker 3 (42:13):
I don't know, toxoplasmosis.
Speaker 2 (42:14):
Yeah, I don't know, but like it's something that happens
because of being in proximity to cats.
Speaker 1 (42:19):
I'm going to research that right after the right of
the seres. If I get rid of them, can I
get rid of it?
Speaker 3 (42:24):
I don't know. Okay, I'm gonna look into this, but
very much speaking out of out of my depth.
Speaker 1 (42:30):
Okay, Well, just on I think on the note last
note on the home security system, like like you were saying,
it's gotten so dang cheap. I think if it does
alleviate some anxiety and potentially saves you money, like, why
not consider it at least especially we're talking about three
five nine dollars a month from monitoring instead of like
forty or fifty. That just makes it like kind of
(42:50):
a drop in the bucket of your monthly budget, like
less than what Netflix charges. Right, But I think kind
of like when you're talking about Matt, there are other
ways to kind of prevent potential break ins. We would
just suggest not forgetting about the really cheap stuff that
offers real protection, like adding motion detector lights outside or
reinforcing the door jam with a longer strike plate and
(43:12):
deeper screws. It is typically when a break in does occur,
I mean, from what I've read Matt, it seems like
it's kicking down the front door, and those better strip
plates and screws can often prevent that from happening, Like
you give it two kicks and it doesn't go and
they move on to the next house exactly.
Speaker 2 (43:27):
Yeah, they're looking for the lowest hanging free which is
also why even Yeah, I don't know, I don't know
if people feel about sticking up stickers that say there's
an alarm system even if there's not, But it sounds
reasonable to me. It really doesn't make sense though that
we have seen a decline in home burglars, because as
I think through it, like what would somebody want to
steal from my house? Like I don't does somebody really
want all my old junk that I've got in my place?
(43:49):
As opposed to.
Speaker 3 (43:49):
It makes sense too.
Speaker 1 (43:50):
That before they'd steal a massive TV and it was
worth thousands of dollars, but all the stuff we have
in our homes now hundred bucks, so replaceable as opposed
and like there's no market for Like, it makes sense
that there has been an uptick in like retail theft
because oh yeah, you go to a.
Speaker 2 (44:05):
Pharmacy and snatch and grab a bunch of like bottles
of ibuprofen. Guess what, there's a market for brand new,
unopened bottles of ibuprofen. And people literally do solos on
eBay or even like Amazon stores. That's like they literally
traffic stolen goods, and you got to think like a
thief jowel in order to beat the thief, I guess.
(44:25):
But I'm just encouraged by the fact that we have
seen such a decline in home burglars because people, yeah,
they it's almost like too much of a hassle to
even be a thief stealing people's stuff.
Speaker 1 (44:35):
Sure, you know, Yeah, you gotta do it in bulk,
and you gotta target the right houses. I guess a
law the home alone guys. But all right, let's get
to another question, Matt. This one comes from Melissa. She says, Hi,
I'd like to open a solo four one K before
twenty twenty four ends. Vanguard no longer offers one. Do
you have any recommendations? What company would you go with?
Speaker 3 (44:55):
Nice?
Speaker 2 (44:55):
Okay, I love that she is jumping on the solo
for one K. It is our preferred retirement account for solopreneurs,
for sure. And the fact that you turn to Vanguard
first means that you care about low costs. That's freaking awesome.
But you're right, Vanguard actually no longer offers a solo
four one K. At the beginning of last year they
pieced out and now a Census is in charge of
(45:18):
those former Vanguard clients, and they are a decent choice.
But we would probably go in a different direction since
in your case, it sounds like you're starting from scratch,
and that's mostly because of just a twenty dollars anal
fee that they charge. So if you can avoid that
all together, why not.
Speaker 1 (45:34):
Yeah, it's not the worst thing in the world. But
it's also like, well, if you're going to open one up.
Speaker 3 (45:38):
And you haven't already, just go this direction instead.
Speaker 1 (45:40):
Of the Yeah, why to go with a player when
you can go with an a player By players, Matt,
let's just maybe you mentioned a few that we would
go with if we were her. I mean, we have
our solo four one ks with Fidelity. That's a ridiculously
great option. The only downside and I found this out
recently when I was trying to switch over from traditional
solo four one k contribution to four one k contributions. Well,
(46:03):
they're not available at Fidelity yet they basically promise. They
told me, Hey, no, we're gonna get it done in
twenty twenty five. We just can't tell you when. So
it's coming soon apparently. But the other option, if you
love low cost but want access to a Roth solo
for one k, Schwab is probably the best other provider
out there, the best other choice, and I believe they
(46:23):
have access to Wroth solo for one ks as we speak,
which is nice. They're similarly low cost to Fidelity. But
you really can't go wrong with either one of these players.
And if you're just looking mostly to contribute to a
traditional solo four one K Fidelity Rocks, and they are
a great pick. The costs are low, the fun choices
(46:45):
are significant, and the low cost fund choices, which is
what matters most to Matt and I are That's true,
really really good, right.
Speaker 2 (46:51):
And one of the massive benefits of opening a solo
four one K is that I don't think there's any
other retirement plan that allows you to sock away as
much as you can with a solo for one K
this year. Yeah, the maximum of sixty nine thousand dollars.
So if you are seriously looking to supercharge your retirement.
Speaker 3 (47:08):
That's how you do it. Joel.
Speaker 2 (47:09):
Let's get back to the beer that you and I
enjoyed during this episode, which was a Lizard King, not
an IPA, but a mosaic.
Speaker 3 (47:16):
Copped pale ale. This is my Pipeworks.
Speaker 2 (47:19):
Brewing Company and as expected, and they've got some crazy
fighting graphics here on the can you know, like they
have like the Ninja versus Unicorn.
Speaker 3 (47:26):
Yeah, you know, what do you think about this one?
Speaker 1 (47:28):
They've had the over the top labels since before they
were cool, and yeah, I'm gonna say this is not
my favorite. It's it's too floral, it's got lots of it,
almost tastes like potpourri. Really, yeah, that's what that's the
vibe I'm getting. And while maybe a light potpoury sense
in the half bathroom of a place that I'm visiting,
(47:48):
I don't mind it.
Speaker 3 (47:49):
I don't want it in my beer.
Speaker 2 (47:50):
Though, So nothing shaved pieces of wood that have been shaved, curled, dyed,
and smell like something completely different. Yeah, sitting there on
top of a candle, that's warming, and.
Speaker 1 (48:00):
I don't do pupper in my house, but I don't
mind it somewhere else. I just but when my beer
tastes like it, oh.
Speaker 3 (48:05):
It's just not my favorite. Do you think it's Is
it the Mosaic? Are you not a fan of Moasaic?
Speaker 1 (48:08):
Maybe maybe that's it?
Speaker 2 (48:09):
Yeah, personally I am a more of a fan of Citra.
Moasaic is more of like the old school kind of
ipa palel hop that I think a lot of the
breweries gravitated towards, like ten fifteen years ago, which is
what this tastes like.
Speaker 3 (48:22):
This is what this reminds me of.
Speaker 1 (48:23):
It when this beer has been around for quite some
time at this point so you're probably right. I think,
I think so. I think Wizard King is like one
of their og but they've had it for ten plus
years Flagship Palel.
Speaker 3 (48:32):
Yeah, so I'm with you.
Speaker 2 (48:33):
Though not my absolute favorite, it's still fun to enjoy
during our episode today.
Speaker 3 (48:37):
No doubt, any day you get to drink beer is
a good day. That's true. But that's going to be
it for this episode.
Speaker 2 (48:42):
You can find show notes up on the website at
howtomoney dot com and Buddy, let's just wrap it up
until next time.
Speaker 3 (48:48):
Best Friends Out and Best Friends Out bol
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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