Simply Money

Episode Transcript

(00:06):
Tonight. Do you have that kernelof knowledge, that tidbit of truth that
maybe someone passed along to you atsome point that changed things for you When
it comes to money. We're talkingabout the most important financial advice that a
number of people said they have everreceived. You're listening to simply Money,
presented by all Worth Financial. Imean MEI Wagner, along with Steve Ruby,

(00:26):
you know Steve. For some ofus, it is the fact that,
you know, we grew up ina house and I did where people
were talking about money. I learnedfrom my parents' mistakes, which they discussed
openly, as well as there werecertain things that they passed along that have
been fantastic for me. And onthe flip side, I think most people,
though, grew up in houses wherepeople aren't talking about money, and

(00:47):
so you're either lucky enough to havesomeone put in your path along the way
or you'll learn it on your own. Yeah. I agree, And you
know, I'm kind of on theflip side there. I looked at the
adults in my life and I thoughtto myself, here's a motivation to succeeds,
so I don't end up like them. That was kind of what drove
me so you know today. Thissegment is about the best advice that people

(01:08):
say they've gotten throughout their lives,in no particular order. One person told
a story about don't they were toldnot to just pocket their rays. They
were explained to that you would wantto put half of your raise into your
four oh one K. This wasa guy that started out in the mid
eighties when he was in his thirties. His boss was the person that encouraged

(01:30):
him to do this, knowing thatthe company had a generous match. The
challenge for this guy when he was, you know, all the way back
in the eighties, when he wasin his thirties, is that he had
a new wife and a young child, and he thought about how difficult it
would be to do to put thatraise into his four oh one K.
But instead of experiencing what we wouldcall lifestyle creep and living off of that

(01:53):
increase, he kept some of itbut then put the rest into his four
oh one K. Was the bestadvice this gentleman had ever received financially.
A couple takeaways for me about thestory. First of all, kudos to
this boss right who just kept pushingbecause he personally felt like it was the
best thing for someone who works forhim. You know, I didn't know.

(02:14):
There's a line right there that youdon't want to cross. But also,
you know, when you care aboutsomeone, whether it's someone you work
with or a family member or afriend, and you've seen something work for
you, I love when people passthat on. And I also want to
point out too that the person whomade the decision, it was a sacrifice.
It was a major sacrifice the timeright, young kids wasn't making a

(02:36):
ton of money, yet they wereable to get through they made the sacrifice,
and on the other side of itso very grateful that they did it
that now they're giving that advice toother people. And I just I think
that so many money decisions that wehave to make at some point might require
a little bit of sacrifice, butmany, many times we will look back

(02:58):
at those sacrifices. If we sacrificedin favor of saving more, investing more,
thinking about our long term money goals, most of the time, then
you will look back and say soglad that my younger self did that.
My older self says a major thankyou, And I you know, sacrifice
is certainly a trend here. Alot of the more wealthy individuals that I

(03:20):
work with today. Have you madeover the years. But in a situation
where you're getting a raise, you'remaking more money. It's not that much
of a sacrifice to say I'm gonnaput half of this raise in my four
to one k moving forwards. It'sjust more of a discipline thing, I'm
sure. Yeah, it's a mindset. So I think that's a great piece

(03:40):
of advice. And you know,I certainly heed that when I get a
raise, I put more money intomy savings. Yeah, there's a forty
six year old who learned something fromhis dad thirty forty years ago and he's
still talking about it now, Andit could have just easily have been me,
because this is I think the bestadvice might Gary Wigner ever gave me.

(04:00):
And this was about credit cards.My dad said, it's a tool.
You can use it to charge things. You better have every penny of
what you're charging available in the bankwhen you're charging it, so that you
pay it off in full every month. I am now forty six, forty
seven years old, somewhere around there, trying to do the math. Oh

(04:20):
yeah, and I have never evercarried a balance on my credit card to
this day, every month I payit off in full. I have many
many friends who have not done that. I understand very well the stress of
it. I've seen financial plans absolutelyruined by credit card debt. But I'm
really really grateful for the fact thatI have always paid it off. That

(04:41):
tidbit of advice that my dad gaveme was as I was heading off to
college my freshman year. Yeah,and keep in mind, we're not against
using credit cards. We're against yeah, we're against using them and carrying a
debt, yeah, because then you'repaying interests that you don't need to be
paying. So again, this advicehere is paid off in full or don't
buy it, and I think that'sterrific advice. You know. The next

(05:04):
thing that we're going to talk abouthere, it's from a former school teacher
been married for fifty years. Beforehe got married, he was told to
make an agreement with his spouse tonever spend money behind each other's backs.
We've had entire segments discussing this before, where there's financial infidelity and this is

(05:24):
something that you want to avoid atall costs. Doing so by having an
open line of communication, you're listeningto simply Money presented by all Worth Financial.
I mean you Wagner, along withSteve Ruby, as we talk about
some of the financial advice we've gotten, others have gotten right passing it along
to you. Maybe some of thiswill ring a bell. Maybe it's advice
that you've taken yourself. I likethe thought of this, right. It's

(05:47):
open communication and a marriage when itcomes to money. I do want to
get through your take. He's saying, every shirt bought, every toy purchase
for our kids through the years,it was always a discussion between the two
of us, and if it wasever something that one of us wanted and
the other one wasn't on board,it didn't get purchased. I don't know.
That's a little hard line in myopinion. I had to call my

(06:10):
husband every time I was buying something. You would be like enough of you
enough. Yeah. The way thatI approach this, you know, I
agree to an extent it's a yoursmine and ours strategy where we have ours
together, but my wife and Iwe do have separate bank accounts. It's
totally fine. My opinion here isthat this is a little bit hard line,

(06:31):
because really, to buy a shirtto buy you know, some recee's
peanut butter cups or something. Ithink that's a little bit too far.
Yeah, And I mean, ifthis is what works for them, that's
fantastic. And I think there's awhole spectrum of ways that you can be
when it comes to communicating about moneyand your marriage or your relationship. What

(06:53):
you have to decide is where onthe spectrum works best for you and your
spouse. And if one of youisn't sleeping at night because you don't know
about all the purchases, that's aconversation to be had. But I think
most of us we fall somewhere inthe middle major purchases. We probably want
to have that conversation and then justan open and ongoing dynamic there. But
yeah, I think it's whatever worksfor you. I like this next story

(07:15):
is about someone who says he maybewouldn't have gone to college, but was
lucky enough to have his in lawsin his life. I guess he was,
you know, graduating from high school, and they really encouraged him to
go on to college to learn andto get an education, a really strong
sort of personal finance education and explorekind of different opportunities. Now, he's
a financial planner himself and teaches ahigh school course in financial literacy. So

(07:39):
talk about taking what his in lawsdid for him and paying it forward.
I think that's a really cool thing. And you know, I would take
this another way too, because Ihave received advice from my in laws about
when you say family is more importantthan money, I think that means that
you need to make time for yourfamily no matter how busy you are working.
I will do everything in my tomake sure that I'm at every single

(08:01):
sporting event, dance competition, evenpractices to be there when my daughter,
who is eight years old, isat one of these events, and I'm
always there too. So it's aboutfinding a balance between family and money.
Yeah, anythink time well spent.You're never going to look back when she
gets older and she's out of thehouse and wish, gosh, I wish

(08:22):
I had been in more work meetingsrather than missing those practices or the dance
competitions. It's great perspective there.I think a common refrain when people talk
about just great advice that they've gottenwhen it comes to money is saving sooner
rather than later. Maybe we hearthe advice. Maybe we don't put the
very first paycheck, part of thefirst paycheck into the four one k.

(08:43):
But the earlier you start, man, the better off you're going to be.
Yeah, Compounding interest is where yourmoney makes money, and that money
makes more money. So the earlieryou get started, it's like a snowball
rolling down a hill. It doesn'tmatter if it's a tiny little snowball.
If the hill is super long,which represents your time frame between now in
retirement, you get started somewhere,and that gives your money an opportunity to

(09:05):
grow again. The folks that Iwork with that are most successful are the
ones that took that advice to heartand they started saving as early as they
possibly could. A great opportunity foryou is to maybe educate children or grandchildren
as they enter the workforce after highschool or after college. Start now.

(09:26):
It doesn't matter how small it is. When you have time on your side,
the impact can be absolutely monumental onyour financial future and financial freedom eventually.
Yeah, I mean, here's theguy who says, oh my gosh,
my dad just nagged me right allthrough college. I didn't even have
a job yet, and he wastalking about when I started getting that paycheck
and he said, okay. Admittedlyit didn't take immediately. Those first several

(09:48):
paychecks did not go any part ofit to the four one k. But
by the time I was in mylate twenties, I saw it. It
clicked. I got it in.Every year, I started putting more and
more and more into that flour onek a higher percentage of my take home
until I got to the point whereI was maxing it out. And then
also when I got married, wemade sure that my wife and I did
the same thing. Now we're inour fifties and the opportunity to retire early

(10:13):
is available to us. There's sucha disconnect between who we are now and
making decisions that are really going tobenefit for our future selves. I understand
that, But if you could gainany perspective from these it is that you
can make decisions in your twenties,thirties forties about money that are going to

(10:33):
help you out push you so muchforward when it comes to money later in
life. Retirement is such an abstractthought when you're in your twenties, so
that can be difficult to heed theadvice. It just feels like nagging,
or maybe it feels like you arenagging the younger people in your life to
heed your advice, but it's justsuch an opportunity to really have financial freedom

(10:54):
later on in life. Here's theall Worth advice. As we talk about
this great money advice that we've gottenthat others have passed along, notice that
none of it is on how toget rich quick. The lessons involved discipline,
consistency, and always keeping an eyetowards the future. Coming up next,
do you have an emergency fund anda rainy day fund? Will tell

(11:15):
you the difference and if you needboth. Coming up, you're listening to
Simply Money presented by all Worth Financial. Here in fifty five KRC the talk
station. You're listening to Simply Moneypresented by all Worth Financial I mean Wagner
along with Stee Ruby. If youcan't catch our show every night, if
you have to miss something, youdon't have to miss a thing we talk

(11:37):
about, because we've got a dailypodcast where you just search Simply Money.
It's right there on the iHeart appor wherever you get your podcasts. Coming
up at six forty three, howto donate to charity while also making some
income and the process. This isthe win win you may have never heard
about. We'll talk about that comingup next. One of the things we
talk about as like the bedrock thefoundation of any kind of financial plan.

(12:01):
It's having an emergency fund, andthere's also something called a rainy day fund.
Let's get to the differences and whetherpeople need both. Emergency fund at
its foundation. That's that's you know, the equivalent of three to six months
of liquid cash parked on the sidelines, not invested to any capacity, not

(12:22):
in CDs, not in treasuries.We need that to be liquid in the
event that some kind of curveball isthrown at us in life and we need
that kit, that cash immediately.This is it's unfortunate because we want our
money to be working to some capacity, and cash that is completely liquid is

(12:43):
guaranteed to lose purchasing power over thelong term. But it is important to
have it there so that we don'thave to dip into retirement savings in the
event that we we need something.And that piece of that is a tough
pill to swallow for a lot ofpeople, especially when markets are doing work
right, when you're looking at howall the markets are doing and you're saying,
but wait, you're telling me Ineed to keep cash on the sidelines,

(13:05):
and it's not getting any of thesegames. I understand that. But
yeah, this money is there foranything that could happen. That's car breaking
down, an unexpected medical diagnosis withbills coming in. Whatever. It is.
A rainy day fund, however,that's money that's earmarked for something special.
So I think maybe the rainy daypart of it is a little misleading.

(13:26):
If say, you know you needto buy a car in a couple
of years, will you start savingmoney and there's an extra fund for that
that money when you go to buythe car, you've got whatever you need
for that down payment already ready.Maybe it's a wedding. We have a
producer, Jason. He and hiswife got engaged and knew they were going
to get married eighteen months later.They didn't need the money for eighteen months,

(13:48):
so they put the money into someCDs to go ahead and take advantage
of a little higher interest, andthen when they needed that money, it
was available to them. It's thisreally smart way to put money to work
for you if you know you're goingto need something in the next couple of
years. Yeah, So one wayto look at it is. The emergency
fund is for your short term unexpectedexpenses, whereas the rainy day fund it

(14:11):
you know, it's just a name. In my opinion, that's more along
the lines of for intermediate term expensesthat you know are on the horizon,
Like you said, our producer witha wedding pending, or putting money in
an account for a vacation or afuture car purchase. There's some rules that
I would typically attach to each though, because when we talk about setting an

(14:35):
amount goal in mind for an emergencyfund, we use it based on timeframe
three to six months. What doesthat really represent? It represents three months
of living expenses or six months ofliving expenses. Why the difference three months
is for a double income household,six months is for a single income household.
In the event that something happens tothe single income households income earner and

(15:00):
our ability to earn income, youneed to have a little bit more money
as a cushion to support you andyour family and all of your expenses so
that you don't have to tap intoretirement money or take on debt. You
know, And I think for thoseof you who are wondering, do I
need both of these, well,it depends the emergency fund. Steve and

(15:20):
I would both agree on this one. I don't want to speak for you,
but this is a non negotiable.You need this if you don't have
one now, this should be atop priority for this year that this is
something that you work toward having thosethree to six months of the critical expenses.
You're going to be so glad youhave this money because if you don't,
what we see people do time andtime again, you either put it

(15:41):
on a credit card, you pullmoney out of a four to one k,
and both of those things are thingsthat you're going to be dealing with
negatively with your money for a longtime to come. I think the Rainy
Day Fund is for people who arealmost a little next level with their money.
You're the thinkers, the planners,and I love these and I think

(16:03):
for those of you who have madeit to this level, if you are
able to look out a year ortwo and say we're not gonna you know,
we know this car isn't going tomake it three more years, so
we're going to go ahead and startsaving now. Or we want to help
one of our children, help thempay for a wedding and they've started dating
someone seriously, and we think it'sgoing to be a couple of yeers outright.

(16:26):
These are people who are saying,Okay, we're going to earmark some
funds towards this particular thing, giveit some time to grow, maybe put
it in a CD or somewhere whereit can make a little extra higher interest
on that money. But I likethe intentionality behind the rainy day fund.
I just don't know that a lotof people get to that level of financial
planning. Well, some of it'sbased around your own personal risk tolerance as

(16:49):
well, because arguably a rainy dayfund for something that's three years out,
you could put that into a longerterm investment vehicle vehicle like a taxable Okridge
account and invest those dollars with theexpectation that they may grow, but they're
still at risk depending on when youneed the money. The benefit right now
for those that are planning accordingly andhave their finger on the pulse of their

(17:14):
future current and future cash flow needs, you have that emergency fund that's your
baseline, that's non negotiable. Likeyou said, the rainy day fund and
a higher interest rate environment. It'san opportunity to put that money to work
at lower risk than putting it intosay a taxable brokerage account, because if
CDs are paying five five and ahalf percent, then that's an opportunity to
help those dollars keep up with inflation. And they are tied up to an

(17:40):
extent. But that's why you havethe emergency fund completely liquid and cash rainy
day fund. You can let itgrow a little bit if you know the
approximate time frame between when you're goingto need that money. Yeah, I
think if you are a great planner, and I think this is part of
the financial planning process. I thinkthat for many people, money can sound
and feel really overwhelming. And onceyou start to take control and you start

(18:02):
to see money as the tool thatit is, Okay, then all of
a sudden, I've got that emergencyfund. I mean there's a study after
study that shows that most Americans don'teven have four hundred dollars set aside for
an emergency that comes up. Right, So you've got that emergency fund.
Now you're thinking about what are other, more to your point, intermediate needs

(18:22):
that we might have. You know, if you can do both of those
things and by the way save fora retirement at the same time, Man,
you're in really good place. ButI would say what comes before that
rainy day fund is saving in thatfour one K. You got to put
enough in there to get the companymatch at least, you know, And
then I would say, if youcan automatically put a little more in every

(18:45):
year, a higher percentage of whatyou're bringing in, you're gonna be really
grateful you did that. I wouldcertainly have hierarchy above the rainy day fund,
just like you mentioned the emergency fundagain nonnegotiable. Hierarchy above the rainy
day fund would be making sure you'regetting free money from your employer, leveraging
a health savings account because that's atriple tax advantage vehicle. If you know

(19:06):
you're going to spend the money onmedical expenses, get the tax deduction,
maybe even paying down high interes straightdebt before you're beefing up the rainy day
fund, because arguably, depending onthe interest rate, an emergency could be
you know, that could be anemergency and you could actually use some of
your emergency fund for that. Soit's about being organized whether or not you're
going to have one or both rainyday fund and emergency fund. But I

(19:30):
would say the emergency fund would betop of the line important for any financial
plan. Absolutely, here's the allWorth advice. If you have a specific
purpose for where all those dollars go, you are next level when it comes
to financial planning. Congrats to you. Coming up next, how to deal
with debt once and for all.You're listening to Simply Money, presented by
all Worth Financial here in fifty fiveKRC the talk station. It's listening too,

(20:00):
Simply Money, percent by all WorthFinancial. I'm Amy Wagner. If
twenty twenty four is the year foryou when you say Okay, once and
for all, I'm going to getout of debt? Where do you even
begin? Well, tonight our creditexpert Brit Scares is joining us here on
the show with where do you evenget started? And you know, but
I love that you're talking to usabout this because it's not something that you're

(20:22):
telling us from some you know,scholastic view. You've done this, you've
lived it, you've been in debtyourself, you've pulled yourself out, you've
gotten to a really great point.So you're not like on some high horse
you're telling people what to do thatyou've never had to do yourself. That's
that's right, Amy, I've livedthis, and you know, first off,
know that you know, at alot of times people feel like this

(20:42):
is just like, oh, I'mruined forever. I have so much debt,
I'll never be able to recover.And I want you to know there
is hope now. You know,you can't just hope that it goes away
and not do anything. You know, if you find yourself dig digging yourself
into a hole that you want toget out out of, the first step
is to put the shovel down.Yeah, you got to stop adding new

(21:04):
debt and uh, you know,make a mental you know, just put
a put put a stake in theground that says, Okay, I'm gonna
be I'm gonna get serious about this, because what a lot of times what
happens is, you know, itis so easy to get a debt.
I mean, credit cards you're easyto use. It's it's it's easy to
just set up payments automatically, tojust go to your credit cards. Obviously

(21:26):
when you swipe your credit card,it doesn't feel like you're spending money.
Uh. They've even done some studiesthat say that, uh, you know,
you you spend like a like tento twelve percent more by using a
credit card versus cash, you know, and and that using cash actually registers

(21:48):
is pain in your brain. Yeah, yeah, you know, it's it's
a psychological thing, right, asmuch as it's like an entire shift in
how you think, as well asyour actions following the way that you're thinking
exactly. So you know, firststop debting number two, you know,
get a handle on your your yourspend, you know, you know,
I don't know if anyone's done I'vedone this before, but I don't know

(22:11):
if you've done this. Amy.Have you ever just written down every single
thing you spend money on every month? Yes, I mean every I'm talking
ten cents for the bubblegum machine,I'm talking this and everything. And then
and then you take a look atit and you're like, wow, I
do I really need Disney, theDisney Channel, Netflix, Hulu and Prime.
Right. Well, my husband crazy, I actually do this on on

(22:34):
a pretty regular basis, just justto kind of track things. It's maddening
to him. But I also thinklike you kind of got to do it
is at least a starting point tosay, okay, And to your point,
I think, britt, like,if you knew you were spending two
hundred and fifty dollars a month onsubscriptions, would you change something about that?

(22:56):
Right? Probably? Yes, yeah, yeah, And so you take
that inventory and then at that pointdevise a plan. You know, obviously
you can make some cuts. Thereare opportunities to get maybe a side hustle
to bring in some extra income,or work a little overtime if that's possible
on your job. And then youknow, develop a spending plan and an

(23:18):
actual, you know, strategy foreliminating debt, whether it be you hear
a lot of different types of strategiesfor paying down credit card debt, like
the debt snowball or the avalanche method. You know, the avalanche method is
to pay off your highest interest ratesfirst and pay minimum payments on everything else.
You know, or you can dothe debt snowball, which is pay

(23:38):
minimums on everything. List your debtsfrom smallest to largest, and pay extra
on your smallest debt and make asmany of those go away as fast as
possible because you get those mental wins. And you know, sometimes we also
have to, you know, makesome decisions that you know what, I
know, our family loves to takethese certain vacations. We certain we like

(24:00):
to do these certain things. Well, maybe for you know, one year,
depending on how much debt you haveand that sort of thing. You
know, maybe for one year wedo a staycation and we use the you
know, the five, six,seven, ten thousand dollars or whatever that
would have gone toward you know,some you know, extravag extravagant vacation.
You know, it goes to payingdown debt, and then next year we

(24:22):
can pay cash. You know,once we have no debt, we can
actually stay for that vacation and paycash for it. So how you're talking
about motions that we have to make, you know, but you're talking about
like, you know, passing upvacations and things like that. I think
for a lot of people it's like, oh, but that's something we look
forward to every year. Well youunderstand, but it's like kind of what
are the lesser of two evils rightnow? Not going on that vacation and

(24:45):
finally getting yourself out of debt orstaying in that hole and continuing to dig
that hole right deeper and deeper.It's going to take some a little bit
of sacrifice, maybe a lot ofsacrifice in order to get out of there
exactly, and you know it's temporary. That's Here's here's the thing that whenever
I'm coaching someone, know that thisyou don't have to live like a you

(25:10):
know, you know, like onthis type budget where you can't do anything.
You know, this isn't like forthe rest of your life. This
is this is a strategy and agame plan for six months, twelve months,
you know, twenty four months,depending on what your debt situation is.
In many cases, people really oncethey get focused, they are amazed
at how efficient they can become atmaking that debt go away. It probably

(25:34):
changes, though, how you lookat spending long term, maybe for the
rest of your life. Right,all of the things that felt necessary before,
once you cut them out and yourealize I'm actually fine without these things.
I think it probably just changes yourwhole outlook on how you spend it.
Does you know? I know whenI first you know, started digging

(25:55):
out of my own situation, youknow, thirty years ago, I you
know, I ended up. Youknow, it was tough because I would
I would actually start on the rightpath and be really disciplined for a little
bit, and I would fall offthe wagon and I would like make a
mistake or you know, it's likea diet. This is well it is
or you know, usually it's somerepair happens, you know, oh my

(26:15):
gosh, I have to spend twelvehundred bucks, you know, on this,
you know, whatever car repair orwhatever. So, you know,
the other step, after you getyour you know, spending playing kind of
in place and you kind of getan inventory, you need to start an
emergency fund. And you know,start that even if it's small, even

(26:37):
if it's only a thousand or twothousand dollars, get an emergency fund in
play so that you don't have togo into debt if there is some sort
of you know, live thing happening, you know, a car breaks down,
or you end up with a medicalbill or something of that nature.
You know, those are you know, those emergency funds can really be you
know, very helpful in keeping youfrom adding to the debt. And then

(27:00):
of course, once your debt's paidoff, you want to get that emergency
fund up to six months worth ofliving expenses and you know, from there
you can worry about you know,ramping up things like retirement savings and that
sort of thing. And I know, initially starting out that seems tough.
But when you're doing that inventory andas you make cuts, and as you
try to get a little extra income, you know, perhaps you could even

(27:22):
have a garage sale, sell stuffon eBay, what whatever, get yourself
that emergency fund, and and that'llreally put you in at least a little
bit of more peace of mind thatyou know, Okay, if something does
happen, I don't have to addmore to my debt. And I actually
got to the point personally that onceI started attacking one particular debt we have

(27:44):
you know we have nowadays, wehave a lot more you know, electronic
means to do this, you know, I would I would make multiple payments,
you know, other thing debts likeoh I got some more money,
I'm going to send a little moreof that, and I would just get
obsessed with making the debt go awayand success in it. Right, that's
right. And you know, andI think once you really kind of get

(28:06):
into that mode, that mindset,you know, you'll be amazed at what
you can accomplish. Great advice isalways from our credit expert with scares you're
listening to Simply Money presented by allWorth Financial. Here in fifty five KRC
the talk station. You're listening toSimply Money presented by all Worth Financial.

(28:26):
I mean you Wagner along with SteveRuby. If you've got a financial question,
maybe it's keeping you up midnight,you and your spouse aren't on the
same page. We can help youfigure it out. There's a red button
you can click on while you're listeningto the show. It's right there on
the iHeart app. Record your question. It's coming straight to us and straight
ahead. We've got the pros andcons of using auto pay. One of

(28:48):
the things I love. One ofthe things I love about kind of the
Greater Cincinnati area is this is justan area I think where people are more
charitable minded than anywhere else. I'velived in different cities and states, you
know, and as you know mybackground being in the news, I've covered
some of the just worst tragedies thatare that are out there. And I
always love, when you know,living here and growing up here, just

(29:11):
seeing how people respond when there isa need. And so if you are
someone who is charitably inclined, we'regoing to give you some options that maybe
you've never heard about before that arekind of win wins from a tax standpoint.
Yeah, I know a lot offolks in this area. Certainly when
I work with with people here,there's a lot of strategies that we deploy

(29:34):
that's part of kind of a taxplanning maneuver when it comes to financial planning,
and one that we're going to shinesome light on today is called a
charitable gift annuity, which is it'sbasically a contract between you and it's got
to be a qualified nonprofit where youdonate cash, some kind of assets,
even securities. In return, you'rereceiving a partial tax deduction and a fixed

(29:57):
income stream for the rest of yourli life and potentially the rest of your
spouse's life now when when both aregone. In that situation, the remaining
annuity actually stays with the charity.Now, one of the major things you
have to think about, you know, for most of us, when you
think about a charity, there isa particular something that is near and dear

(30:17):
to your heart. You got tocheck first and see if this is a
charity that offers a charitable gift annuity. Because I would say these are these
are newer you know, not everycharity is going to have these available,
So first of all, start bydoing your research. But yeah, if
it's something that a charity that youreally care about and they offer one of
these, yeah, you're getting afixed stream of income that money that you've

(30:41):
given them. Then is some ofit are part of it? Right?
All of it can be invested forthem, And then yeah, they invest
that money, they determine where itgoes. You get that stream of income,
it's it's you know, it's nolonger yours. And then once you're
gone or you and your spouse aregone, if there is any remaining money,
remaining money, they get to hearit. And so I like this.

(31:02):
I think it makes a lot ofsense. I mean, I guess
one caveat this is not for everyone. You know, everyone isn't looking for,
you know, fixed streams of incomein retirement that are also tied to
charities. But hey, if thisworks for you, it's a really great
option. Well, people are lookingfor tax deductions, that's something that never

(31:22):
goes away in my experience. Andif you itemize your taxes instead of it's
important instead of taking the standard deduction, which is very high right now.
But if you itemize your taxes,you're eligible for a partial tax deduction in
the calendar year that you gave thegift that qualifies as this annuity stream moving
forwards, and that deduction it's basedon the estimated amount that will eventually go

(31:47):
to charity after all of the annuitypayments are made. So it's it's something
that you need to sit down andtalk to a CPA about before you're pulling
the trigger on this type of strategy. I mean, just a lot of
nuances to this. Right, youcan use an IRA to fund it,
but there's it's a one time thing. You're seventy and a half or older,
you can give up to fifty thousanddollars to fund a gift annuity from

(32:09):
your IRA. That's an option,you know. And I think the key
here is to understand if you were, if you were getting to the point
you maybe you're already retired, beena lifetime saver, You've made some great
money decisions. Your legacy for youis beyond just the next generation. Knowing
that you have options when it comesto charities, whether it's something like this

(32:31):
that pays out over your lifetime,you know, or other options that you
have. I think the key islooking at all of them and determining what's
the best fit for you and yourfamily. Yeah, and you had mentioned
gifting to the charitable gift annuity froman IRA in this situation as long as
you're seventy and a half years old. What that actually is is a qualified

(32:53):
charitable distribution. So you're not actuallygetting a deduction for that donation, but
it ounce towards your r MD forthe year, and you don't have to
pay taxes on that RMD. Soit's an interesting strategy where you can do
the qualified charitable distribution to a charitablegift annuity, but you can also do

(33:15):
that without using a charitable gift annuity. I have a lot of folks in
this area that that when they whenit comes time to process their distribution,
there's there's a simple enough process.Or you can just give your RMD directly
to a charity of your choosing withoutthis this charitable gift annuity. It doesn't
create an income stream, but itsaves you tax dollars when you're taking that

(33:36):
distribution because you don't know taxes onit when you do it that way.
Another option I think that we shouldthrow out in the midst of this conversation
is a donor advice fund. Thisis where you know you want to start
putting aside money for a charity.Maybe you don't know what charity it is
yet, so you're going to goahead and start putting money into a fun
and then maybe in a few yearsyou and you're maybe you're waiting for your

(33:57):
kids to get older, or youstill have a family meeting and say,
Okay, this is how much wehave saved. It's been invested during this
time, it's been growing. Whatdo we want to do with this money?
And I've known a couple of familieswho have done this, and it's
so cool for everyone to get tohave a voice and where that money goes
and what the charity is. Andso I think there's lots of great options

(34:19):
with that as well. Here's yourall worth advice. If you are charitably
inclined, discussing your options with aqualified financial pro can help you figure out
what makes the most sense and maybeyou can even save yourself some money.
And the tax realm and the processcoming up next when auto pay makes sense
and maybe when it doesn't. You'relistening to simply money presented by all Worth
Financial. Here in fifty five KRC. The talk station you're listening to Simply

(34:47):
Money, presented by all Worth Financial. I'm Amy Wagner along with Steve Ruby.
Steve, do you ought to payyour bills? I do when I
can. It's particularly I mean useT mobile and they set up you know,
they sent me a message that said, hey, if you set up
autopay, then you get ten orfifteen dollars a month decrease on your bill.

(35:09):
And I was like, all right, well let's do it. The
money is there. I pay withmy credit card, which I pay off
at the end of the month anyways, so yeah, let's get that discount.
And I think that's a great pointthat you're making. There's a lot
of organizations companies that offer discounts toauto pay because they know they're going to
get paid right when autopay is setup. They're not going to have to

(35:30):
track you down for late bills,misspayments and things like that. So if
you are someone who believes in autopay, I think it is a very
valid and fair question to be askingthat company. Is there any kind of
incentive for me to go ahead andsign up for auto pay? So my
husband had always auto paid everything.Everything is on autopay. I had always

(35:52):
paid every bill every month, whichwas so insane to him. But the
one thing I will say is itis insane. I get it. I
get it from a convenience factor,but I don't like anyone trying to get
anything by me, and so Ido like to look at my bills.
You know. It was like whenI used to pay the cable bill and
every year it would just automatically bumpup. I wanted to know that,

(36:15):
and so, but I think thatthere's certain bills that you know, there's
not going to be wiggle room.It is what it is. And I
also think if you're going to autopay, please spot check those bills.
You know. I'm not saying everymonth you have to go over it with
a fine tooth comb, but maybequarterly you actually take a look at them
to make sure that there's no heirs, that you're not paying for things that
you're not actually getting, because thatcould happen and you could go a couple

(36:37):
of years paying for something I neverknow about it. I look at it
monthly. So while I'm using autobillpay, I do a quick scrub at
the you know, every statement,and I kind of look through a line
item because it's easy to lose trackyou're spending when there's there's so many services
out there that charge monthly subscription feesthat like little changes every so often,

(36:58):
Hey, congratulations, we're increasing yourfee by three dollars a month, and
you know, giving you more accessto different TV shows for example, whatever
it might be. There's added expensesthat if you don't have your finger on
the pulse of you know, howmoney is going out, then you can
quickly lose track of spending. Sowhile I do use autopay where I can,
especially because it unlocks benefits, Iwould be an advocate for being a

(37:22):
little more diligent. I also likeauto pay from the standpoint of helping your
credit score, right. I mean, one of the number one contributors to
lower credit scores is people just missingbills, not paying bills on time.
And for some people it's because they'reyou know, don't have the money,
but for many I think it's youmiss a bill. I mean, there's

(37:42):
a lot of stuff coming in,You've got emails coming in and mail and
all the things. It can beeasy to miss something along the way and
so auto paying is one way thatyou know, okay, bills paid on
time check and that should over timeif someone is trying to bring up a
credit score, that goes a longway when it comes to that. Yeah,
And something to keep an eye onhere is you can potentially miss out

(38:04):
on different savings opportunities when you haveauto bill pay set up, because over
time there may be different pricing tiersthat a service provider whatever that may be
offers for newer customers or clients.So I do a review of that every
probably two or three years, andI look at what I'm paying, and
I make some phone calls to seeif there's a way to pay less.

(38:28):
If you don't have your finger onthe pulse of the cash flow out then
and you're not organized, then maybeautobill pay is something that you shouldn't explore.
Thanks for listening. You've been listeningto Simply Money presented me all Worth
Financial here in fifty five krs.The talk station