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1 - Is there a new homeowner rule of thumb for housing maintenance for that first year of ownership?
2 - Should I use ChatGPT in order to juice my savings returns?
3 - Does it make sense to pay off my mortgage with savings in a brokerage account?
4 - Do I include a pension lump sum when calculating my net worth?
5 - Churning gym membership free trials: frugal or cheap?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to had the Money. I'm Joel, I'm Matt. Today
we're answering your listener questions.
Speaker 2 (00:23):
Happy Monday, everybody. Hey, Happy April to you, Joel. April
is tomorrow.
Speaker 1 (00:28):
Isn't that crazy? How quickly did March just zip on by? Yeah?
Spring is here? And how quickly did winter zip by?
Speaker 2 (00:36):
This we're just like the old man on the front porch,
just like yelling at the clouds.
Speaker 1 (00:39):
Right now, slow down? It is true time. The older
you get, the more quickly it goes by. It's unreal.
I don't know why that is the case, since.
Speaker 2 (00:47):
We have a larger number of years to draw from,
so each individual year. When you're when you're two months old,
every day probably feels like an eternity. I don't know.
I remember being you know that young, But as you
get older, it's just a small slice and in our
overall lifetimes, Jill. But we are in fact going to
talk about personal finance and money. We're gonna answer listener
questions that We've got a listener who is budgeting or
(01:08):
hoping to budget for some housing splurges that they have
coming up for a this is on a new home purchase.
Another listener is using chat gpt to find the best
bank if it makes sense for him to do some
bank hopping.
Speaker 1 (01:20):
In order to get the best rates.
Speaker 2 (01:21):
And another listener is asking the whether it's cool or
acceptable to turn free gym trials. This is going to
be a frugal or cheap We'll get to that one
plus others during our episode today.
Speaker 1 (01:33):
Buddy.
Speaker 3 (01:34):
That makes me think for some reason about you. Remember
when we had an abundance of mattress companies that were
shipping mattresses directly to consumers, and they just had like
all these different brands. It's like, we have a thousand
dollars mattress that we'll send to you. There's still other
there's a couple, but there's far less than their worth.
Speaker 1 (01:49):
I think we're still waiting on you.
Speaker 2 (01:50):
Lisa and so got to get us that new clean
bed for one of the kids are in.
Speaker 3 (01:56):
Yeah, they had that like free thirty nights sleep or
some of them had even longer than that, ninety one
hundred day sleeps. And so I remember reading about people
who were like, I'm just going to never pay for
a mattress. I'm I'm essentially renting these mattresses for free.
That might have been uncouth, but we'll talk about.
Speaker 1 (02:10):
On a trial basis.
Speaker 3 (02:11):
Yeah, but Matt, before we get to the questions, let's
share a money win from a listener. Listener Andy sent
us an email and he basically said, Hey, guess what, guys,
Andy L. I'll say we have multiple Andy listeners.
Speaker 2 (02:24):
Well, how many Ady L's do we have? We actually
probably have multiple. Oh yeah, I'm sure you're out there.
Speaker 1 (02:28):
Guys, but this is all send us an email so
we like a little census.
Speaker 2 (02:34):
Yeah. Now, this is a longtime listener Andy, who's been
listening to the show from like way back in the day,
like literally from the beginning. He has sent us listener
money wins, He sent us questions, he even sent.
Speaker 3 (02:45):
Us beer that's from Utah. He's done that multiple time
back in the day. We appreciate you, Andy, So we
got to share this win. He paid off his mortgage
in just twelve and a half years time while maintaining
a thirty percent savings rate simultaneously.
Speaker 1 (03:00):
So unreal.
Speaker 3 (03:00):
You know, we get the question about paying off the
mortgage or not, and you know we're typically pointing people
in the direction of like, well, you know, saving and investing.
If you got that low mortgage rate. But what if
you're doing both, what if you're just hitting all the
above and you're like, no, no, no, I'm going to have
a massive savings trait and I'm gonna pay down that
mortgage quickly.
Speaker 1 (03:15):
That's Andy, he may it happen, then you must be
named Andy.
Speaker 2 (03:18):
And I want to point out the fact that he
didn't even mention what his mortgage interest rate was, and
I we didn't even ask because it doesn't matter because
we know that Andy is killing it. He is, I mean,
he's literally money gear number seven and he can do
whatever he wants with his money whatever, anything that's whatever,
that's legal.
Speaker 3 (03:35):
I mean, I guess one listening they don't. You don't
have to run your money decisions by us anyway. But yeah,
if you're Andy could but for him, you can do
whatever you want.
Speaker 2 (03:42):
Absolutely, and so like there are other reasons that you
do something like that, other psychological reasons. We have friends,
friends of the show, even folks out there who are
really smart when it comes to the different things that
they pursue.
Speaker 1 (03:54):
I would say, I would dare say that.
Speaker 2 (03:56):
They're smarter than nust Roll and they have chosen to
also pay off their homes. Guess from a psychological standpoint,
they want to know that no matter what, we've always
got this house, we've got a roof to be a
roof over our heads. That they don't pay your property
time can take back that is true.
Speaker 1 (04:09):
I guess what is?
Speaker 2 (04:11):
What is a city or county lean or short sale
or foreclosure?
Speaker 1 (04:17):
Look like that's good. Guess what's that? Pretty well?
Speaker 3 (04:19):
One of the things Andy mentioned, by the way, when
he reached out to us was that he took in
rolled coins with his kids to pay off the mortgage.
So he made it not just he didn't just pay
off the mortgage. And what he did was he made
it a family spectacle, which I think is really cool.
Kind of getting your kids in on the action. That's
just a great People ask us about teaching kids about money,
and that's just one of the include them in your
(04:40):
money decisions, include them in your money wins. Andy did
that on top of paying off his mortgage.
Speaker 2 (04:44):
So well, just think about the kind of impact that's
going to have on his kids. Like right now, they're
probably thinking, yeah, Dad, okay, you made a stand.
Speaker 1 (04:50):
For the picture.
Speaker 2 (04:52):
But like this kind of thing has an impact on kids,
and so like when they are getting older, and like
their friends are starting to use credit cards or something
like that, or let's just say, I don't know, student loans.
They might have friends who are taking on ridiculous amounts
of student loans, and maybe they're thinking, you know, maybe
we should be a little more cautious about this. Or
when it comes to let's say they're full grown adults
(05:13):
and they're looking to buy a new car or a
used car, and they're thinking, well, a lot of times
folks will just finance that thing. I guarantee his kids won't. Yeah,
I mean, I guess they could rebel and do the
financially unsavvy thing. But like, these kind of things have
an impression on you, I think further down the road,
because right now, I think they're probably thinking, Okay, this
is kind of lame whatever, But as they get older,
they're going to remember this, like these are identity forming
(05:35):
kind of events that are going to allow them to
think about debt in particular, I think, and just a
completely different lens. So I agree, I'm all for it.
Speaker 3 (05:43):
What we do is families matters, and kind of how
we include our kids in the financial decisions we make.
It can have a long lasting impact on them. All right,
let's introduce a beer that we're happening on this episode.
This one's called a Little Biggie on Chrome. It's a
coffee stout from the brewery that's spitting distance from where
we're sitting right now. The name of that brewery is
Contrast Brewing.
Speaker 1 (06:03):
We will heyk yes, give our thoughts on this beer.
Speaker 4 (06:06):
Thing to the episode.
Speaker 1 (06:06):
Everybody.
Speaker 2 (06:07):
I can't believe it's taken us this long to actually
have one of their beers on this show. We've been
there multiple times. We just haven't punked on the change
and purchased a couple of bottles, yea, a couple of
kinds of beers.
Speaker 3 (06:16):
At first they were like really just doing draft pors
and then now they finally have some stuff you can
buy on hand, so it took them a minute to
stock up. But yeah, looking forward to having this one today.
Speaker 1 (06:25):
Thank you. And by the way, if you.
Speaker 3 (06:26):
Have a money question we'd love to hear from you,
just go to how to money dot com slash ask
for the directions, or just record a voice memo on
your phone of the question that you've got, the money
question you've got and send it over to us via email.
How to Moneypod at gmail dot com is our email address. Matt,
let's take a question specifically about preparing for the incredible
(06:47):
costs of owning a home.
Speaker 4 (06:49):
Hey, Matt and Joel, This is Eric from Columbus, Ohio.
Wanted to ask a quick question as my wife and
I are set to close on a house in the
next few weeks. I know that the good rule thumb
for home maintenance each year is about one to two
percent of the purchase price, but wanted to ask you
(07:11):
if you had a different tip or trick for budgeting
for the first year of home ownership. We know it's
going to be pretty different because we're making some changes
to the kitchen, installing a radon reduction system, and those
are all pretty easy to budget for. But didn't know
if you had any tips, since you've both been homeowners
(07:33):
for a while about a different percentage budget for the
first year of home ownership. Thanks guys, oh.
Speaker 2 (07:41):
Eric mentioned a radon capture system or whatever. That's one
of the things that new home buyers are thinking. Wait
what this sounds completely made up. There's no way that
this thing is something I actually have.
Speaker 3 (07:53):
To eat so much about that because that's something I
don't know a lot about it.
Speaker 2 (07:55):
Actually I don't Okay, Well, like I know, if it's
a house that's on rock, something like a gas, right,
and sometimes if you are near a mountain or on rock,
this is a gas that comes up under your house perhaps, and.
Speaker 1 (08:08):
So you have to find I don't know, you have
to like vent it or something. Oh, okay, gotcha.
Speaker 3 (08:12):
Yeah, that's why I've kind of heard, like the basic
expl in different parts of the country, it's more or
less prevalent. Yeah, And I don't know how much it
costs to basically I don't think about.
Speaker 2 (08:21):
I don't think yeah, because it's like a whole whole system.
But Eric, bottom line, congrats on the new home, super
Stoke for you. And I love that you're asking this
question because so many folks they of course they budget
for the down payment, they budget for the closing costs,
they've been saving for years towards this goal, but then
they neglect to consider how much money they're going to
want to pour into that home in order to make
it feel like home, in order to make it their own.
(08:43):
And sometimes it can just be a few pieces of furniture,
maybe just a little a little bit of paint, and
some of these modifications can be easy, and there's ways
to achieve this, like a reasonably priced version of this
I'm thinking about if you're buying something used on Facebook Marketplace,
for instance, if you're like me, go.
Speaker 1 (09:00):
To the habitat restore, well, oh yeah.
Speaker 2 (09:02):
Man, you even have like the windows and stuff in there.
I just I just unloaded an electric stove. I think
I talked about how actually upgrading to gas was saving
us money because I meant that we didn't have to
get a new service to the house. And you know
what I said to myself, I don't want to fool around,
don't I don't want to have a part time job
this weekend, because the worst part about selling something on
(09:23):
Facebook is just constantly being on your phone and like
messaging folks and trying to like arrange for a time.
Speaker 3 (09:28):
And the question is this still available? Well it makes
me want to punch myself in the face.
Speaker 2 (09:32):
And well, luckily there's also automatic responses, but even still
if it's I don't know all about to say, I
took some good pictures, did the video because they recommend that,
and I priced it competitively because I just wanted that
thing out of there. I didn't want to be constantly inundated,
and if you have time on your hand to be
able to shop around and to look for a deal
like that, you can find some excellent appliances out.
Speaker 1 (09:52):
There at a great price. You can know. So there's
Matt's old stove.
Speaker 2 (09:55):
Somebody what's her I forget her name, that came by
and got at her and her husband. But literally it
was less than one hour after I got back to
the first person that replied to me that that thing
was gone.
Speaker 1 (10:05):
I believe you called her Karen, which I thought was rude, Matt,
but it was her actual name, Joel.
Speaker 3 (10:08):
Okay, Yeah, I think you're right though, Like, it doesn't
have to cost an arm and a leg to make
those updates, but so much depends on what you're trying
to achieve, and the truth is those cost can spiral
out of control quickly, large largely because turning a house
into a home is very emotionally appealing, right yeah, but
it can also be financially draining. It can put a
(10:29):
strain on your money if you're not careful. And the
first year of home ownership it's often less about maintenance,
although there is going to be some of that. There's
like always that when you decide to own a home,
and for a lot of people, sounds like this is
the case for Eric, maybe it's more about cosmetic changes
that you want to make to the home too, And
I guess we just don't want you to spend more
(10:49):
than you planned and because that can derail other financial
goals that you have.
Speaker 1 (10:53):
I think it's.
Speaker 3 (10:54):
Really easy, Matt, for people to find themselves in a
dit A rose Robe kind of situation. This is something
we've talked about on in prior episodes, where as French
Philosopher his dressing gown, yes, and he got a new one, right,
a friend gave him a new gown, and then he
kind of lived a life of poverty and then he
(11:16):
gets this new dressing gown and then he basically says,
well now everything else around me looks shabby, and he
ruins himself financially in an attempt to update everything in
his life. And the truth is, man, hey you update
some paint, it's fairly inexpensive. Then you kind of the
dominoes drop. You find yourself ripping out and replacing countertops,
calling contractors, maybe about adding on a screen porch, And
(11:36):
I think, like just the next domino to drop, because Hey,
we updated this, and now this other thing kind of
just doesn't. It's not as visually appealing. Now we got
to drop more money on that. I think that's ultimately
what we want Eric to avoid here and everyone else
out there to avoid, which means instituting some guardrails, having
some kind of rules in place for how and when
(11:57):
you're willing to make updates totally.
Speaker 2 (11:59):
Of course, don't dismiss the maintenance costs even though it
is a it sounds like it's a newer home or
I don't know. Oftentimes, when someone is listing a property
like they have addressed, I guess a lot of the issues.
And so still, though that being said, set aside that
one percent, if you've got a system, like a major
system that is older, like let's say an h FACT
that's eighteen years old, that would be an instance where
(12:20):
I would lean towards the two percent.
Speaker 3 (12:21):
Can I tell you one of my friends, by the way,
just had an HVAC system go down. Guess how long
it lasted? Forty years? Well, they also don't make them
like they used to it.
Speaker 2 (12:30):
I know, is there a way to go back in
time and then get that like that saying forty years right,
that's super impressive.
Speaker 1 (12:37):
You're the luckiest human ever.
Speaker 2 (12:38):
But what Eric is getting to, though, is what you
we're addressing, Joel, which is the fact that how do
you account for some of these these splurges, some of
these elective upgrades that you want to make, and so
just start socking away money for these improvements that you
want to make for fun, and honestly, it's going to
be up to you as to how much you actually spend.
Like there might be a lot of folks who would
see you make some upgrades and them like, oh okay,
(13:00):
Like you mentioned the countertops roll and they're thinking, well,
those are perfectly fine, great, like build a grade grade
at countertops, but maybe nothing wrong with them, nothing wrong
with them, but maybe you hate them. And so for you,
it's going to be important in order to.
Speaker 1 (13:13):
Get them from personal experience.
Speaker 2 (13:14):
And this is something that something we did and I
think a lot of folks would have been like, I
can't believe you're doing that, but you, I'm like, you know.
Speaker 1 (13:19):
What, this is a priority for us.
Speaker 2 (13:21):
We do a ton of cooking at home, and somebody
else is going to think that that's a ridiculous move
for us, it was. It was kind of almost like
our craft beer equivalent. Of course, you can't have too
many craft beer equivalents. But as long as you're not
going into debts, and I think this is one of
the most important factors, as long as you are not
paying interest in order to afford these upgrades, and as
(13:41):
long as you are not neglecting your retirement account contributions
in order to pull this off. I think Eric might
be looking for like a percentage, like give me a
rule of thumb, guys, like how much should we be?
You know, like we need a guide, like some sort
of bumpers on the side of the bowling alley that
to help keep us in check. And I'm not quite
comfortable doing that because it depends on how much you
(14:02):
value making the place your own. If you love to
travel and you're just like, well, we just got a
house because it kind of made sense and we found
a good deal and my uncle's a realtor. It all
kind of came together that we're gonna buy a house.
But you don't really care about it, and instead you
want to continue to travel and prioritize other things. Well,
I would say you probably don't want to spend a
ton on some of these upgrades. But if you are
a homebody and in fact you work out of your home,
(14:25):
you've got a little home office. Oh maybe both of
you work out of your home. You also love hosting
friends over. Okay, I could see there's definitely a case
to be made here that this is going to be
a little bit more important.
Speaker 1 (14:34):
If that's the case.
Speaker 3 (14:35):
Yeah, and you you just said I'm a little hesitant
to give guardrails, but I feel like you did just
give a couple of good guardrails, which are like not
going into debt and not neglecting your financial future if
you're if you're.
Speaker 1 (14:43):
Left in the right bumper.
Speaker 3 (14:45):
Yeah, on the exactly, I think beyond that, like I
don't have other capin it, no more than five hundred
bucks a month.
Speaker 1 (14:50):
Like no, Like, yeah, we're not going to do a
dollar amount page amount.
Speaker 3 (14:54):
Yeah, on your income and your other financial goals. And
as long as you're able to not do those two
things that would actively harm your finances now and later,
then I think you could. You've got a lot of
free rein right, there's a lot of wiggle room here,
and that's that's what we're kind of getting here too,
is trade offs, which are the ultimate reality and personal
finance are really the ultimate reality in life. And you know,
(15:16):
new homeowners, they often dial back on other spending kind
of naturally as they enter this nesting phase, but they
do it with their eyes wide open. And so it
probably will mean saying no to the next big concert
when Beyonce brings her what is it Cowboy Carter tour
Matt through the country and say, I'm not going to
drop nine hundred bucks on those tickets because I instead
(15:38):
want to prioritize doing some house stuff or taking one
less vacation. Right, Is it worth it to get those
house projects done in less time to say no to
other things?
Speaker 1 (15:47):
Maybe? Maybe not.
Speaker 3 (15:48):
That depends on you. That's a personal decision. I would
start making a list of like the most important items
I want to address, the updates I want to make
at the house, and then I'd come up with a
ballpark figure of what each one of those would cost.
After that, Matt, I'd probably, like, I don't know, make
a priority list from one to them all. Yeah, I
can't do them all at the same time unless you're
(16:10):
a total baller. If so, Eric, congratulations, Yeah, yeah, if
you got that much money saved up after buying the home.
That's amazing. But then you know, list them in priority
and then create a timeline of when based on your
current income and your current current expenses and keeping everything
else essentially the same at least from a you know,
a retirement standpoint, maybe dial back on other spendings so
(16:30):
you can ramp up the timeline of getting those things done.
But you know, creating that timeline can help you understand
when you might reasonably be able to address each one
of those upgrades within the financial constraints that you have.
And so I think this could span a few years, right,
So maybe maybe that's a good thing to realize ahead
of time. Man, we want to do all these things,
(16:51):
but if we do one one of these things at quarter,
maybe then we're going to get there over the course
of three years. Get comfortable with the timeline, and I think
it will help mentally, and I'll also ensure that you're
gonna be able to pay cash as you save up
for each one of those upgrades.
Speaker 2 (17:04):
Yeah, you want to cashload that thing. And of course
the more you di I Wyatt, the less you're gonna
be forking out. So get in there, man, like you
some of that elbow grease get excited to do some
of these weekend projects together. It's a good way to
get to know your neighbors as well and be like, hey,
well you come over and now we got some beers
and pizza.
Speaker 1 (17:19):
Maybe you wanna Are you good with a roller or
maybe you're good with trim no? Okay?
Speaker 2 (17:22):
Pay like maybe just taping okay. But we ultimately want
you to avoid either taking on additional debt to make
these improvements or slashing your savings rate, specifically how much
you're able to invest for your retirement if you avoid
both of those routes, how much you opt to spend.
It really does come down to your personal priorities and
saying no to other fun ways that you could be
(17:44):
spending your money. But to you, it's gonna be worth it.
Just make these decisions with your eyes wide open.
Speaker 5 (17:48):
Yeah.
Speaker 3 (17:49):
Man, as one of our friends says, you're gonna afford anything,
but you can't afford everything. True, you gotta gotta make
those decisions with your eyes wide open. But Eric sounds
like you're on the right path. You're asking the right questions,
and we hope you're able to make those upgrades that
you want make that house exactly into what you want
it to be and hopefully, yeah, you do it smartly
so that those renovations pay off in terms of increased
(18:11):
value of that home as well. Matt, We've got more
to get to on this episode, including let's take a
question about using artificial intelligence to make smart money decisions.
We get to that and more right after this.
Speaker 2 (18:29):
All right, buddy, we are back from the break. Let's
now hear from a listener who is looking to use
chat GBT in order to find the best rates on
his savings.
Speaker 6 (18:40):
Hi, Joel, I'd love to get your thoughts on these
two high yield saving options open Bank at four point
seven percent or Genius at four point five percent any
recommendations just received forty K and I want to make
the best choice. Also, do you ever use AI to
find answers to your questions? And your research is so
which one?
Speaker 4 (18:57):
Chet GBT doesn't.
Speaker 6 (18:58):
Seem to really provide the most up to date or
actually truthful info. Enjoy the show.
Speaker 1 (19:04):
Thanks.
Speaker 2 (19:04):
Okay, so technically Rob didn't say he was using AI
to find the best savings account.
Speaker 1 (19:09):
But basically that's what he's asking. Yeah, yeah, we kind
of combined his two questions.
Speaker 3 (19:13):
I'm also curious by the way Robert said he had
forty thousand dollars dropping his lap. I wonder how it
came about. Did he, like Jesse James Rob a bank.
It's harder to do these days, so I doubt it.
Speaker 2 (19:25):
Honestly, if he asked me, he sounds like he's in sales.
He's kind of like a guy on the move. Okay,
maybe I wouldn't.
Speaker 1 (19:30):
Be surprised if he got himself a nice little bonus
after last year.
Speaker 3 (19:32):
You're probably right, that's my thought. I not trying to
cast his versions on you, Rob. I'm sorry about that.
And before we get to your specific bank account question,
we should at least mention I think Matt that Rob,
he might want to invest a portion of this lump
sum that's fallen into his lap. That depends on his
goals how much money he currently has in liquid savings.
If he doesn't have much in liquid savings, right, he
(19:52):
might be a cash soon money gear he's in, yeah, exactly,
Or if he's buying a home soon or something like
that needs it for the down payment, opting for the
high yield. Taking these account is a fantastic choice. But
just know, we would say so much depends whether forty
thousand bucks is a lot to put in liquid savings,
especially if you already have a decent cash pile. So
just make sure you're not being too risk averse with
(20:13):
this money totally.
Speaker 2 (20:14):
And he also mentioned so he mentioned two accounts specifically,
both of which are offers from neo banks. These aren't
full fledged online banks, and man our.
Speaker 1 (20:26):
Bias is to steer folks towards.
Speaker 2 (20:28):
Legit banks because of the issues that have popped up
with neo banks over the years, including folks having a
hard time transferring their money out of them. You put
a transfer in a transfer request and it's supposed to
show up on You're like, okay, it's Monday. That money
is going to show up in my traditional bank on Thursday.
And then literally there are been complaints where folks are like,
(20:48):
on Thursday they get a notification that the transfer was declined.
You have to actually reach out to the non customer
service in order to get an explanation, and then all
of a sudden, you're kind of in this never ending
cycle of trying to reach out to somebody who is
actually not going to be able to.
Speaker 3 (21:01):
Support you, and then you end up pulling all your
hair out and then you've got other problems to deal
with because.
Speaker 1 (21:05):
It's just so darn frustrating.
Speaker 2 (21:06):
Yeah, So neo banks like that is the term that
has come to describe some of these newer tech like
fintech sort of startups that are backed by a bank.
There are a dime a dozen now many who are
offering a twist on traditional banking services in order to
appeal to younger folks, which is cool, but despite the
higher rates, there are real trade offs, including I will say,
to the ambiguity of the FDIC protection. So they claim
(21:30):
that they have this, Yeah, it's not quite like what
you would see with a traditional bank.
Speaker 3 (21:34):
You're right, man, And like the FDIC. They actually issued
a neo bank warning this past summer, right after we
saw what happened with YadA and some other similar fintech
banks last year. And we kind of liked the YadA
because of what they were trying to do create like
a lottery like environment there for people who saved, essentially
incentivizing people to save more money for the potential to
(21:56):
win really cool prizes. And I just remember when YadA
came online, I was like, that's a great idea, Like
you're getting people hopefully incentivized to do the right thing,
the best thing for their future. But it turns out
the neo banks and the banks that back them, they
don't always play well together, and they don't always play
well with the FDIC. So we've just been reluctant to
recommend that folks go in that direction, even if, like
(22:18):
you said, the rates on savings are higher. And that's
also because it's not like there's this massive disparity, right
that with the additional risk you take on, you're getting
some sort of insanely superior reward. Legit online banks like
CIT they pay upper echelon rates. They're paying rates that
are just as good, if not better than the vast
majority of these neobanks. So in my mind, having savings
(22:40):
with a bank like CIT doesn't come with any ambiguity.
They are that is, the bank that is backed by
the FDIC, and the banks that Rob mentioned are paying
what four point seven percent and four and a half
percent I believe on savings, but ciit is paying four
point three percent on its platinum savings account.
Speaker 1 (22:58):
Pretty solid.
Speaker 3 (22:58):
We're just talking about a difference of especially with his
sum of money eighty bucks or one hundred and sixty
bucks depending not very much in a year. By taking
on that additional risk, I would just stick with a
fully fledged online bank like CIIT. I don't think it's
worth the added risk of going with the neo bank
to try to eke out.
Speaker 1 (23:16):
That little bit extra totally.
Speaker 2 (23:17):
And then on top of that, these neo banks might
not last very long either. And so if you want
to avoid bank hopping, which is a total pain, you know,
if there's a way that you could use AI to
handle all of the actual bank transfer, like that sounds
like a good use case, because like that's like the
worst part is the legwork involved with setting up a
new bank. But instead pick an online bank that's been
(23:40):
around for a while, a bank who has consistently offered
really good rates sigil. You mentioned Ciit, but some other
great options are ally Capital One Discover. These are banks
literally that we all are patrons of ci They certainly
have the best rates out there out of the four
that we mentioned, but you might appreciate some of the
other per from some of these other big guys, like
(24:03):
free checks, free ATM access, things like that. And then
on top of that customer service dependability. These factor into
the where we say equation as well, not just the
ease of use, but just what kind of service am
I getting at the end of the day.
Speaker 1 (24:18):
Can I get a helpful human when I need that? Yeah,
I was mentioning too, Neil. Four humans get replaced by
a Yeah, these.
Speaker 2 (24:23):
Bankes possibly folding, But as the CFPB dissolves, it's I
think it's even more important to do business with banks
who have a good reputation on that front, their ability
to serve their customers. And I'm not typically someone who
likes to change their behavior based on politics and what
policy is going through the current administration, but I think
this is a real concern. The fact that there might
(24:44):
be some uncouth, some bad behavior, some sketchy behavior with
some different fintech pop ups. Is this is not guaranteed,
but I could see it being a potential of there
being more of those in the next four years versus
the last four years, which means that we need to
be even more on guard. We need to be even
more careful ourselves, especially when we see an offer that
(25:06):
looks like it's potentially too good to be true.
Speaker 3 (25:08):
Yeah, if there's not a cop on the beat, you're
saying yes. With fewer cops on the beat. When the
cats away, the mice will play. And so that might
be the case in the banking sector. So sticking with
banks that have a good reputation for customer service makes sense.
It's not negligible, it's not completely unimportant. I think it's
probably more important, like you're saying, Matt, and the banks
that we list out, the banks that we talk about consistently,
(25:29):
that factors into the reason we recommend those banks. And
so that's that's why the same four that we mentioned
and have been mentioning for years continue to remain the
same four we recommend and highlight today. And on the
topic of AI that the Rob broached, I don't know
about you, Matt. I don't know if you're using artificial
intelligence on the RAG. I'm not using artificial intelligence.
Speaker 2 (25:49):
We all kind of are like because it's so ubiquitous
in Google, like you get the little summary, and so
I mean personally, I just I think it's overblown.
Speaker 1 (25:57):
Yeah, Like, at least on a consumer end user point.
Speaker 3 (26:01):
Of view, I will say, talking to a friend who
runs a business, like the way he uses it and
infuses it into everything he does, it's impressive to see
how big of a help it's become for his business,
and he's just like I was like, dude, you need
to be like an AI influencer because you know how
all this stuff works. I'm an idiot, todten all the benefits. Yeah,
I'm an idiot on this stuff. Actually, in a recent
Hot of Money newsletter that we did document how people
can use AI to come up with certain specific financial
(26:25):
questions right, and how maybe AI might be able to
help in some ways. But you have to be careful
because Robbi even mentioned, hey, some of the information is inaccurate,
and yes, if you ask AI for investing advice, it
could be shoddy because where's it getting the information from?
What sources? Is it culling? You might find that the
advice is great for someone else that's not you. It
(26:47):
might be better for someone in a different financial situation.
But like, let's say you need help planning a meal
with the food you have on hand. AI can help, right,
can help you save money on that front? Do you
need help with your resume or asking for a raise?
Try asking AI those questions, same with like the basic
budgeting or payoff questions. Those could be helpful to But
I would just say tread lightly because yeah, AI comes
back with airon infos sometimes and even the recommendations that
(27:10):
it's making on savings accounts. Sure, those might be the
highest pain accounts out there, but does that mean that
they're the absolute best places for you to stash your cash?
Speaker 1 (27:19):
I don't think so. Yeah.
Speaker 2 (27:20):
I think it's sort of like the way we use
internet now, like back in the day, or let's just
say today, Like do you say, hey, did you use
the internet in order to find in order to book
the cheapest most affordable travel? No, Like you don't say that,
you say, like what site did you use? Or what
app did you use? In a similar way, I think
that's how AI is going to be infused into everything
that we use. I think everything that we use as
(27:41):
consumers is going to incrementally get better or even not
so incrementally, like maybe by leaps and bounds. But I
think just the like, the focus on AI just feels
completely overblown in my opinion, as opposed to and I'm
not like a you know, I'm not an expert on this,
but it seems like there's more groundbreaking innovations might be
able to be made in like the medical field.
Speaker 1 (28:02):
I've heard folks talk about that.
Speaker 2 (28:03):
Where they're able to like run these simulated trials and
like when typically this would take years and years, like
they're able to do this and even decades, they're able
to do it like in minutes. Like that seems incredibly
promising and exciting, but from like a just from a consumer,
and I don't know, maybe, like like you said, maybe
we haven't used it enough personally.
Speaker 3 (28:21):
So what you're saying is, Matt, you and I we're
still highly necessary. Right, oh Ai hasn't killed us off yet.
You'll need to stick around with how the money for sure?
All right, man, Let's get to another question. This one
is about paying off a mortgage.
Speaker 5 (28:35):
Hey, Joeln, Matt, This is Jose Gonzalez from Wilmington, California,
small neighborhood in southern California.
Speaker 4 (28:43):
I had a question.
Speaker 5 (28:43):
Regarding a mortgage loan on a rental property. My question
is should I pay it off or should I continue
to collect the rent and let itself pay off. I
currently have savings of three hundred and thirty seven thousand
in low cost ETFs and have been saving for quite
(29:04):
some time now, hoping to buy a home here in
southern California one day However, I don't like the idea
of the debt hanging over my head during this process.
I currently have about one hundred and ninety three leftover
in the mortgage, so i'd have enough to pay for
(29:25):
it and get rid of that debt. As you know,
holmes in so Cal are expensive, so that's why I
have such big chunk of change. I just signed a
twelve month lease and I am being very patient. So
I guess the idea of renting has had me thinking
of buying soon. Anyways, I love the show.
Speaker 4 (29:47):
Thanks for everything, guys.
Speaker 2 (29:49):
Okay, so when he said he's got savings of three
hundred and thirty seven thousand dollars, I was like.
Speaker 1 (29:55):
What hose?
Speaker 2 (29:57):
But then he quickly follow that up with that they're
in low cost ETFs. He's got that money invested. He's
calling it his savings, but he has invested those dollars.
That looks a lot different. But there is a lot
to discuss with your question, Jose. So let's start off
by discussing mortgage payoff, because we've been pretty consistent advocates
for not paying off your mortgage if you have a
(30:20):
locked in low rate. I think he mentioned that he
purchased this one back in twenty nineteen, So yeah, he's
locked in hopefully at thirty years for a really nice
low rate, and inflation and higher savings rates are only
making that low cost debt look better by the day.
And there's also lots.
Speaker 1 (30:37):
Of value to be had by by having more liquidity
as well.
Speaker 4 (30:40):
Well.
Speaker 1 (30:40):
I think we'll address all these things I just touched
on here.
Speaker 3 (30:43):
Yeah, yeah, no, I agree, And yeah, the only exception
to that answer of not paying off the mortgage is
typically if that money was going to blow a hole
in your pocket otherwise, But that doesn't sound like it's
the case for Jose, and I guess like there are
certain other reasons you might want to pay off your mortgage. Really,
if it's it's a personal preference, so as well, it's
just not our personal preference, and so we highlight that
(31:05):
because it's our show. But it also sounds like you're
in the wealth building phase of your life, Jose. If
you were in your sixties, right and you wanted more
financial certainty as you entered your retirement years, the discussion
would also be different. We might push you a little
more towards mortgage payoff just because of where you're at
in the grand scheme of things, but you've likely got
so many years ahead of you to make savvy financial
(31:25):
moves to grow your net worth, including buying that primary home.
And so if you pay off this mortgage, you might
find your ability to grow your net worth it's actually
hurt by prioritizing debt payoff.
Speaker 1 (31:37):
Yeah, that's right.
Speaker 2 (31:38):
And if you decide to pay off at debt, it
would increase your cash flow. That's that's certainly nice perk.
But if let's say another investment deal came along, something
that you were made privy to, well you might not
have the capital to jump on it. Imagine. So sounds
like so his first property ever purchase was an investment
property he's been renting.
Speaker 1 (31:56):
Imagine if you come.
Speaker 2 (31:57):
Across like the perfect house hack, let's say across just
this sweet duplex or triplex or a quadplex, and your
you know, the dollar signs are in your eyes, not
only because you see the potential, but also because it
costs you a whole lot of money.
Speaker 1 (32:10):
Oh but too bad. You used all the money.
Speaker 2 (32:12):
That you had in order to pay down that previous mortgage,
and now you don't have enough on hand for a
competitive down payment or even something above and beyond in
order to make you look like a more attractive buyer
to the potential seller. These are all things that you
want to want to keep in mind. That's the liquidity
aspect that I touched on earlier. But another downside of
paying off this debt would be paying tax. And it
(32:35):
sounds like the money that you'd be using is in
a taxable brokerage account, and it's highly likely that you
would have to pay capital gains tax in order to
access that money to pay more to the mortgage company.
This is a situation where trying to diminish your debt
where it could lead to an unnecessary tax bill and
likely just I mean a fairly substantial tax bill as
(32:56):
well as he's trying to get his hands on those
funds in an attempt to alleviate this debt.
Speaker 1 (33:02):
That isn't all that.
Speaker 3 (33:03):
Terrible, Yeah, yeah, And again we don't know the exact
mortgage interest rate. We're assuming that, how you have a
mortgage rate that starts with a three, right, And if
that's the case, then that's our advice for people Matt
who took out a mortgage within the last year and
their mortgage rates upper six is low sevens, Like there's
different advices story.
Speaker 1 (33:23):
Yeah, that's not what I'm hearing though, No, And I think.
Speaker 3 (33:25):
Part of what makes real estate also a compelling investment
is the ability to use leverage Wisely, if you had
to save up and fork over one hundred percent cash
to buy a rental property, the investment just wouldn't be
nearly as attractive and almost nobody would partake. It would
take forever to save up, and your profit potential would
be greatly diminished. And on the flip side, many real
(33:47):
estate investors have taken on too much leverage and they've
hurt their finances because of it. Right, They got out
over their skis and their debt load is just it's
too heavy of a burden for them. So there is
it's important to highlight both risk and reward when using leverage.
But Jose, that's not you, right, Like paying off the
mortgage would mean you're going the de leveraging route. Uh,
(34:08):
And I just don't think you need to do that
given where things stand with your finances and how smart
you've been in building up wealth. It's it's not like
your your asset poor. It's not like your your light
on cash uh, and the only way to have some
liquidity is to sell this place. You You've made a
bunch of other smart moves, So, yeah, de leveraging. There
(34:29):
are pros and cons to going that route. I just
don't think you're maybe at the place in your financial
journey where it makes sense to deleverage.
Speaker 1 (34:37):
Yeah, I would want to hold on to that low
cost step for now. Yeah.
Speaker 2 (34:40):
Well, especially because I didn't hear him say anything about
retirement accounts. It would be different if he also came
in and said and said, hey, guys, I've got this.
You know, my net worth is at this level. I've
been maxing out my four one K my roth iray
for this many years, for a couple of decades. Even
that would be a different story. I would have a
different answer. But I didn't hear him saying anything about that.
(35:02):
He sounds financially savvy, like I've got a feeling that
he's he sounds debt averse, like he doesn't want to
have debt on him. But I don't hear him saying
he's risk averse. So I don't hear him not investing
those dollars. I mean, well, he is investing those dollars.
He mentioned the low cost ETF so I think he
has plenty of money socked aside. I assume he's maxing
out his retirement accounts. But Jose, if you're not absolutely
(35:25):
do that first. Those are table stakes and instead of
having to jump through these hoops of buying a property
that may or may not go up in value, that
where you can or can't find a tenant who's willing
to sign for twelve months for shoot, a tenant who
might be a nightmare tenant.
Speaker 1 (35:41):
Like these are all prerequisites to get.
Speaker 2 (35:43):
You to the point to where you might see an
average or slightly higher than average return on your money.
But you don't have to do any of those things,
zero prerequisites in order to experience that kind of return
by just simply investing in the market.
Speaker 3 (35:55):
Yeah, I think when it comes down to it, don't
pay off the debt is what we would suggest. But
also so don't spend that money, leave it investing for
the time being. And you might want to even slow
down your investing for now in order to enlarge your
cash cushion if that home purchase is a high priority. Right,
I'm not sure how much you have in liquid savings, right,
that's not invested. But that's the bucket I think you
want to prioritize for the next house purchase, so that
(36:18):
I don't know, maybe you could avoid selling some of
those positions at some point.
Speaker 1 (36:21):
At a potentially an opportune time.
Speaker 3 (36:23):
Right, Yeah, the more cash you have on hand, the
more likely you will be able to keep those investments
in place. And obviously, Matt, everybody knows this. Home prices
in southern California can be incredibly expensive. Buying instead of
renting there is going to cost you quite a bit
more on a monthly basis, especially these days. So factor
that in. You'll also get to participate, yes, in the
(36:44):
upside of appreciation in that market. But buying it's ultimately
a personal choice. I just want Jose to know it's
not a necessity for wealth building. He said, he just
signed a new lease, and if owning that home is
not a massive priority, he might be able to build
more wealth over by continuing to rent if he's so inclined,
and the just investing more in the market and in
(37:07):
other potential endeavors.
Speaker 2 (37:08):
That's right, man, all right, we got more to get
to Actually, we're gonna hear from a listener who is
considering a pension lump some something he didn't realize was
even possible up until recently. We'll get to that and
more right after this.
Speaker 1 (37:28):
All right, Matt, we're back.
Speaker 3 (37:29):
Let's keep taking listener questions. Now we get to the
Facebook question of the week. This one comes from Zain.
He said, I almost wish I didn't learn this, but
I found out recently that there is an option to
cash out my pension. Non attractive option, but it does
bring up a question. Is there any reason to include
that value when I'm listing personal assets such as for
a loan application or when calculating net worth?
Speaker 1 (37:53):
Oh, time to cash out?
Speaker 2 (37:54):
Well, this is something I feel like you can speak
to this a little bit when it comes to you've
got some personal experience when it comes.
Speaker 3 (38:00):
To very recent personal pension. Yeah, yeah, yeah, So, I
mean I think it's interesting. Zane basically said, it's not
an attractive option, but it might be an attractive option.
It's worth at least thinking through the pros and the
cons and running the numbers. And so I did that
recently because I got sent a letter from my former
employer about my pension and they basically said, hey, you
(38:22):
can take this lump sum, or here's what you would
get paid when you turn sixty five on a monthly,
ongoing monthly basis. And because I had the option of
rolling that into a traditional ira or into a roth
ira and then paying a little bit of that paying
the tax, I decided the best thing for me was
to roll it into a roth, get more money into
the roth, pay the tax now, and then hopefully watch
(38:43):
that money grow to become substantially more than would it
otherwise would have become had I just waited for that
pension payment to start right twenty five years down the line.
But I think, Matt, a lot of people who opt
for a pension lump sum, maybe there's a lot of
hoops you have to jump through, and you have to
do it the right way, and you have to make
sure you get it into the right account, and you
(39:05):
have to know what is possible from a tax perspective
when you take that lump sum. If you don't do
it properly, you could be creating more of a financial
headache for yourself, more of a liability, yeah than a benefit.
Speaker 1 (39:17):
Yeah yeah, I think.
Speaker 2 (39:19):
I mean one of the reasons you do this is because, yes,
it could perform better in your capable hands, and so
actually run the numbers see what it could do.
Speaker 1 (39:27):
A reasonable goal would be that.
Speaker 2 (39:28):
Your lump sum if you, let's say, invested in a
total stock market or an SP five hundred fund earning
average returns, whether or not it would lead to more
income in retirement. I think that's a good goal that
for you to have for that money. Granted, this is
a return that's not guaranteed, which is unlike your pension,
and so I would want to think through the pros
and cons there. Like these are the two schools of
(39:50):
thought that I'd be bouncing back and forth between.
Speaker 1 (39:53):
Schwab.
Speaker 2 (39:53):
They actually have a pretty awesome calculator that will link
to you in the show notes for this episode that
will help you to get an idea the rate of
return that you would need to get investing on your
own in order to make cashing out worth it.
Speaker 3 (40:05):
Yeah, and then you asked the question, should use your
pension in your net worth calculations? I think you can.
I never did, but mine was also small, like right,
it wasn't some epic amounts. Others might want to, depending
on how much their pension is worth. I think the
best way to do that is to figure out what
your likely annual pension amount will be and then to
multiply it by twenty five. I think that's roughly what
(40:28):
it's going to be from a net worth perspective for
you down the road. You should certainly factor it in
for retirement planning. But there are also downsides I think
to including your pension in your net worth right because
you might overestimate your assets, you might underprepare in other ways.
Speaker 2 (40:42):
That's what worries me. Yeah, is thinking of baking on
this thing, and yah, maybe it doesn't pan out the
way well, And just how I think about net worth,
it has to do with how much money I have now,
Like I'm less interested in my future net worth because
like that may or may not happen depending on what
the market's going to do, And.
Speaker 1 (40:56):
So counting them chickens for the hast yes exactly.
Speaker 2 (40:59):
And so if I were were going personally, if I
was going to consider a pension, like I would consider
the lump some cash out for my net worth calculations
in the here and now. But and even then I
would only assume the most conservative of projections when it
comes to you know, what that number might be?
Speaker 3 (41:15):
Well, because the truth is unlike money you've saved up
in retirement accounts. Now, the pension is not liquid, right,
It's gonna pay out monthly as stated once you reach
retirement age, and if your employer has financial issues, your
pension amount could be reduced. So you might be counting
a chicken that doesn't hatch. And so yeah, that's also
something to keep in mind if your employer is struggling,
(41:36):
know that that's a possibility. And that's just I think
another reason that to at least consider taking the lump
sum pension amount if it's offered to you. Matt, you
use the term capable hands. I like that, like if
you if you feel like you are capable of using
that money effectively and investing it for your own future,
you'll likely perform better and do better than the pension
would on your behalf.
Speaker 2 (41:57):
Yeah, and the other thing he mentioned too is that
should he this out like when like, for instance, with
a loan application, I I don't see the advantage of
doing that either, because, like, if anything, what that might
do is cause a lender to think that you are
more credit worthy because of the fact that maybe you've
got additional assets on the books. And I think there
might be a slight temptation to borrow more than you
(42:20):
should because like bottom line, I think a good rule
of thumb is to borrow less than whatever than what
any lender is say that you are, that you're good for,
and so by having more debt, you know more on paper.
It's like, oh, actually, you know, let's just say it's
for a home or something like that. Actually, you were
going to be approved for a six hundred and fifty thousand
dollars loan. I was going to bump that thing up
(42:40):
to eight hundred because we see that you've no, no.
Speaker 1 (42:42):
See I don't like yeah, yeah, I don't. I don't
like that, although I would.
Speaker 2 (42:46):
I think this is just a there's a small chance
that this would happen because typically they're looking at your income.
They don't really look at like what you're asked like, yeah,
they should be looking at your assets.
Speaker 1 (42:54):
Usually debt to income ratio.
Speaker 2 (42:55):
Yeah, that's exactly, like you wanna you want to credit
limit increase on your credit cards? What are they asking about?
They're asking about your income. Actually, they ask about your
if you own a home too, and what your primary
mortgage is oftentimes, but they should be considering your assets,
because I feel like that's more indicative of your capacity
to sacrifice, to defer, pleasure, to invest in, to sock
(43:15):
away money. But instead they just care about what you're
going to earn that year. They're using a more basic metric.
They're just looking at the near short term. Yeah, but
even if they do take that into account, I think
it can only have the potential to get you in trouble.
Speaker 1 (43:28):
Agreed.
Speaker 3 (43:29):
All right, man, Let's get to another question. This one
comes from TJ in the how to Money Facebook group.
He said, frugal are cheap churning Jim free trial memberships
with no intention of signing up. I like the community
aspect of working out in a class with other people,
but I also work for a nonprofit where I don't
take home much money, so I'm good with just running
jump roping and doing workout routines from dareb dot com,
(43:50):
which I've not heard of before. I've heard of them
in my bedroom. Well, of course you have. So is
that frugal cheap from TJ? It completely comes down to
how he goes about doing this.
Speaker 2 (44:01):
Okay, you know, like you know what it makes immediately
makes me think of It makes me think of the
free samples at costco, the taste tests, and if you
walk up to that nice person there manning that little booth,
that little table, the little card table.
Speaker 1 (44:12):
There with a little air fryer or what or whatever.
Speaker 2 (44:15):
It is that they're doing, and if you like look
them down the eyes and you're like, I'm not going
to buy any of this, but let me have a taste,
that's like a total jerk thing to do. You might
be thinking that, but you can't say it out loud, right.
And the reason I think it's okay to think that
is because it is up to them to convince you otherwise.
Like if there are free samples, if there's a free
taste test or something like that, it means that that
(44:37):
manufacturer or that business owner, whoever it is, they believe
enough in their product to convince you otherwise when you
have made up your mind that this is not something
that you're going to partake in, but they're willing to
give you.
Speaker 1 (44:48):
A little taste of it for free.
Speaker 2 (44:50):
Knowing that, well, in this case of the gym, knowing that, man,
our members are so awesome, you're gonna want to come back.
Our coaching is so top notch that you're not to
be able to live without it. Whatever it is that
they think they're gonna be able to attract you in
with is up to them to sway you. And so
you might think that there's no way I'm not gonna
join the stupid it's so expensive, or I do this
(45:11):
stuff at home for free, but you can't say that
out loud, and it's up to them to convince you otherwise.
Speaker 1 (45:15):
See that's what I think.
Speaker 3 (45:16):
That's exactly where I was gonna be ready to answer,
because I think that's the whole reason people off for
free trials is because they think you're gonna love the
thing enough that you're gonna stick with it. And so
you might say, I'm gonna sign up for the Netflix
seven day free trial, but I'm not giving them my money,
and then you might get hooked on I don't know,
it's good game or something like that, whatever they're showing.
I don't have Netflix these days. I've had Netflix in
(45:37):
a long time, say whatever it is. And I think
that's true. Like TJ has to be ready to one
either cancel the free trial in time before he gets
charged if he's not interested in sticking around. That would
be I think cheap. If he wasn't. But on top
of that, be ready to fall in love with the
thing that you're checking out because it might happen.
Speaker 1 (45:55):
Because it might happen.
Speaker 3 (45:56):
Yeah, and it might be worth the money, even though
right now you don't think it is. I remember signing
up for a Discover bank account map because there for
like a three hundred dollars bonus, and I was like, oh,
this is really easy like that, the hoops are not
that significant. I just have to like have the account
open for sixty days with a certain amount of money
in it.
Speaker 1 (46:11):
It was like all they want is my first name.
That's right.
Speaker 3 (46:14):
It was so easy, and I was like, three hundred bucks,
this is great. It's way easier than like some of
the the big physical banks want, like I don't know,
you have to go into the branch. It's so annoying.
And then I ended up saying, well, this is a
great interface. Yeah, this is a good bank. And I've
been with Discover from many years since. So what I
thought was playing the system that was gonna be temporary.
I got played, but not in a bad way, because
(46:35):
it's it's a great product, but.
Speaker 1 (46:36):
That costing you anything, right, But it might end up
costing TJ.
Speaker 2 (46:39):
Right, And that's the thing I think, like, I like
what you said about being prepared to potentially pay, and
you might think, well, guys, because he mentioned that he
works for a nonprofit, and he's like, hey, I can't
afford that, but you might love it so much. You
might get creative with your expenses. You might do some
budget rearranging because now all of a sudden, this is
such a high priority for you. You you found your people.
It kind of reminds me. You remember, at some point
(47:01):
we talked about I think it was on a Friday flight,
about a girl who hasn't paid for eating out, hasn't
paid a restaurant bill in like two years, and it's
because she goes on dates for free. They're not free
dates that well, I mean, I guess technically they are,
but she goes on dates and they pay for dinner.
And I think it was a frugler cheap then, because
it kind of feels deceptive, right, But I remember, even
(47:22):
at that point in time, I remember thinking the same thing.
It's like you might be thinking or saying to yourself
that there's no way I'm going to be into this dude.
But in fact, after meeting him. Oh, he's got a
great since a humor. You get to know him, and
then all of a sudden, I guess what happened with
my wife? And all of a sudden you get tricked. Yeah,
and you've been married for fifteen years.
Speaker 5 (47:41):
Right.
Speaker 2 (47:41):
See, that's that's what these gyms are banking on TJ.
And So I don't think it's it's cheap at all.
I think it's a frugal move. But you know, like
Joel said, be prepared to start to start paying a
monthly fee in order to access their services, no doubt.
By the way, so you mentioned Darby dot com, I've
been I still been using my push jerk dot com,
(48:03):
which is free programming. Did it this morning? Freaking love
it push jerk. It could be a workout app. It
could be I don't know, a strike back app of
people you don't like.
Speaker 1 (48:11):
I'm not a solid.
Speaker 5 (48:11):
OK.
Speaker 3 (48:12):
It was good, all right, Just the name of it's funny,
all right, Matt, let's mention. Let's let's we're double questions. Now,
let's get back to the beer that we had on
this episode. This one's called a Little Biggie on Chrome.
It's a coffee stout and Yeah, we're your thoughts on
this one.
Speaker 2 (48:24):
I feel like we're going along in the episode, so
I'm gonna make it short and sweet, dude, solid roasted
coffee flavors. I thought it was gonna be. I thought
it was a roast, a barrel aged, but there's no
way that.
Speaker 1 (48:33):
This is barrel age. There's like zero of those woody notes.
But really good.
Speaker 2 (48:37):
It even had like a creaminess to it. I was
picturing it was coffee with a little bit of a
little bit of milk right there. Yeah, there was definitely
some milk vibes going on. Definitely some lactose in the
making of this beer. This one is a little thinner
and almost like had more porter vibes than stout vibes
going on for me. But yeah, solid beer from the
brewer right down the street, which we are trying to support,
(48:57):
Like Mad wanted to stick around because when you you
have a good brewery in your neighborhood, it is your
pride and joy as everyone.
Speaker 1 (49:03):
But that's going to be it for this episode.
Speaker 2 (49:05):
Find her show notes up on the website at Howtomoney
dot com. We will see you back here on Wednesday.
We're going to have an awesome conversation about taxes, because
you know that's on everyone's mind right now, Joel, but
with an influencer on taxes indeed, but she likes influencer
who really knows her stuff. That's right, So look forward
to that and until next time, best friends Out, Best
(49:27):
Friends Out,
Welcome to had the Money. I'm Joel, I'm Matt. Today
we're answering your listener questions.
Speaker 2 (00:23):
Happy Monday, everybody. Hey, Happy April to you, Joel. April
is tomorrow.
Speaker 1 (00:28):
Isn't that crazy? How quickly did March just zip on by? Yeah?
Spring is here? And how quickly did winter zip by?
Speaker 2 (00:36):
This we're just like the old man on the front porch,
just like yelling at the clouds.
Speaker 1 (00:39):
Right now, slow down? It is true time. The older
you get, the more quickly it goes by. It's unreal.
I don't know why that is the case, since.
Speaker 2 (00:47):
We have a larger number of years to draw from,
so each individual year. When you're when you're two months old,
every day probably feels like an eternity. I don't know.
I remember being you know that young, But as you
get older, it's just a small slice and in our
overall lifetimes, Jill. But we are in fact going to
talk about personal finance and money. We're gonna answer listener
questions that We've got a listener who is budgeting or
(01:08):
hoping to budget for some housing splurges that they have
coming up for a this is on a new home purchase.
Another listener is using chat gpt to find the best
bank if it makes sense for him to do some
bank hopping.
Speaker 1 (01:20):
In order to get the best rates.
Speaker 2 (01:21):
And another listener is asking the whether it's cool or
acceptable to turn free gym trials. This is going to
be a frugal or cheap We'll get to that one
plus others during our episode today.
Speaker 1 (01:33):
Buddy.
Speaker 3 (01:34):
That makes me think for some reason about you. Remember
when we had an abundance of mattress companies that were
shipping mattresses directly to consumers, and they just had like
all these different brands. It's like, we have a thousand
dollars mattress that we'll send to you. There's still other
there's a couple, but there's far less than their worth.
Speaker 1 (01:49):
I think we're still waiting on you.
Speaker 2 (01:50):
Lisa and so got to get us that new clean
bed for one of the kids are in.
Speaker 3 (01:56):
Yeah, they had that like free thirty nights sleep or
some of them had even longer than that, ninety one
hundred day sleeps. And so I remember reading about people
who were like, I'm just going to never pay for
a mattress. I'm I'm essentially renting these mattresses for free.
That might have been uncouth, but we'll talk about.
Speaker 1 (02:10):
On a trial basis.
Speaker 3 (02:11):
Yeah, but Matt, before we get to the questions, let's
share a money win from a listener. Listener Andy sent
us an email and he basically said, Hey, guess what, guys,
Andy L. I'll say we have multiple Andy listeners.
Speaker 2 (02:24):
Well, how many Ady L's do we have? We actually
probably have multiple. Oh yeah, I'm sure you're out there.
Speaker 1 (02:28):
Guys, but this is all send us an email so
we like a little census.
Speaker 2 (02:34):
Yeah. Now, this is a longtime listener Andy, who's been
listening to the show from like way back in the day,
like literally from the beginning. He has sent us listener
money wins, He sent us questions, he even sent.
Speaker 3 (02:45):
Us beer that's from Utah. He's done that multiple time
back in the day. We appreciate you, Andy, So we
got to share this win. He paid off his mortgage
in just twelve and a half years time while maintaining
a thirty percent savings rate simultaneously.
Speaker 1 (03:00):
So unreal.
Speaker 3 (03:00):
You know, we get the question about paying off the
mortgage or not, and you know we're typically pointing people
in the direction of like, well, you know, saving and investing.
If you got that low mortgage rate. But what if
you're doing both, what if you're just hitting all the
above and you're like, no, no, no, I'm going to have
a massive savings trait and I'm gonna pay down that
mortgage quickly.
Speaker 1 (03:15):
That's Andy, he may it happen, then you must be
named Andy.
Speaker 2 (03:18):
And I want to point out the fact that he
didn't even mention what his mortgage interest rate was, and
I we didn't even ask because it doesn't matter because
we know that Andy is killing it. He is, I mean,
he's literally money gear number seven and he can do
whatever he wants with his money whatever, anything that's whatever,
that's legal.
Speaker 3 (03:35):
I mean, I guess one listening they don't. You don't
have to run your money decisions by us anyway. But yeah,
if you're Andy could but for him, you can do
whatever you want.
Speaker 2 (03:42):
Absolutely, and so like there are other reasons that you
do something like that, other psychological reasons. We have friends,
friends of the show, even folks out there who are
really smart when it comes to the different things that
they pursue.
Speaker 1 (03:54):
I would say, I would dare say that.
Speaker 2 (03:56):
They're smarter than nust Roll and they have chosen to
also pay off their homes. Guess from a psychological standpoint,
they want to know that no matter what, we've always
got this house, we've got a roof to be a
roof over our heads. That they don't pay your property
time can take back that is true.
Speaker 1 (04:09):
I guess what is?
Speaker 2 (04:11):
What is a city or county lean or short sale
or foreclosure?
Speaker 1 (04:17):
Look like that's good. Guess what's that? Pretty well?
Speaker 3 (04:19):
One of the things Andy mentioned, by the way, when
he reached out to us was that he took in
rolled coins with his kids to pay off the mortgage.
So he made it not just he didn't just pay
off the mortgage. And what he did was he made
it a family spectacle, which I think is really cool.
Kind of getting your kids in on the action. That's
just a great People ask us about teaching kids about money,
and that's just one of the include them in your
(04:40):
money decisions, include them in your money wins. Andy did
that on top of paying off his mortgage.
Speaker 2 (04:44):
So well, just think about the kind of impact that's
going to have on his kids. Like right now, they're
probably thinking, yeah, Dad, okay, you made a stand.
Speaker 1 (04:50):
For the picture.
Speaker 2 (04:52):
But like this kind of thing has an impact on kids,
and so like when they are getting older, and like
their friends are starting to use credit cards or something
like that, or let's just say, I don't know, student loans.
They might have friends who are taking on ridiculous amounts
of student loans, and maybe they're thinking, you know, maybe
we should be a little more cautious about this. Or
when it comes to let's say they're full grown adults
(05:13):
and they're looking to buy a new car or a
used car, and they're thinking, well, a lot of times
folks will just finance that thing. I guarantee his kids won't. Yeah,
I mean, I guess they could rebel and do the
financially unsavvy thing. But like, these kind of things have
an impression on you, I think further down the road,
because right now, I think they're probably thinking, Okay, this
is kind of lame whatever, But as they get older,
they're going to remember this, like these are identity forming
(05:35):
kind of events that are going to allow them to
think about debt in particular, I think, and just a
completely different lens. So I agree, I'm all for it.
Speaker 3 (05:43):
What we do is families matters, and kind of how
we include our kids in the financial decisions we make.
It can have a long lasting impact on them. All right,
let's introduce a beer that we're happening on this episode.
This one's called a Little Biggie on Chrome. It's a
coffee stout from the brewery that's spitting distance from where
we're sitting right now. The name of that brewery is
Contrast Brewing.
Speaker 1 (06:03):
We will heyk yes, give our thoughts on this beer.
Speaker 4 (06:06):
Thing to the episode.
Speaker 1 (06:06):
Everybody.
Speaker 2 (06:07):
I can't believe it's taken us this long to actually
have one of their beers on this show. We've been
there multiple times. We just haven't punked on the change
and purchased a couple of bottles, yea, a couple of
kinds of beers.
Speaker 3 (06:16):
At first they were like really just doing draft pors
and then now they finally have some stuff you can
buy on hand, so it took them a minute to
stock up. But yeah, looking forward to having this one today.
Speaker 1 (06:25):
Thank you. And by the way, if you.
Speaker 3 (06:26):
Have a money question we'd love to hear from you,
just go to how to money dot com slash ask
for the directions, or just record a voice memo on
your phone of the question that you've got, the money
question you've got and send it over to us via email.
How to Moneypod at gmail dot com is our email address. Matt,
let's take a question specifically about preparing for the incredible
(06:47):
costs of owning a home.
Speaker 4 (06:49):
Hey, Matt and Joel, This is Eric from Columbus, Ohio.
Wanted to ask a quick question as my wife and
I are set to close on a house in the
next few weeks. I know that the good rule thumb
for home maintenance each year is about one to two
percent of the purchase price, but wanted to ask you
(07:11):
if you had a different tip or trick for budgeting
for the first year of home ownership. We know it's
going to be pretty different because we're making some changes
to the kitchen, installing a radon reduction system, and those
are all pretty easy to budget for. But didn't know
if you had any tips, since you've both been homeowners
(07:33):
for a while about a different percentage budget for the
first year of home ownership. Thanks guys, oh.
Speaker 2 (07:41):
Eric mentioned a radon capture system or whatever. That's one
of the things that new home buyers are thinking. Wait
what this sounds completely made up. There's no way that
this thing is something I actually have.
Speaker 3 (07:53):
To eat so much about that because that's something I
don't know a lot about it.
Speaker 2 (07:55):
Actually I don't Okay, Well, like I know, if it's
a house that's on rock, something like a gas, right,
and sometimes if you are near a mountain or on rock,
this is a gas that comes up under your house perhaps, and.
Speaker 1 (08:08):
So you have to find I don't know, you have
to like vent it or something. Oh, okay, gotcha.
Speaker 3 (08:12):
Yeah, that's why I've kind of heard, like the basic
expl in different parts of the country, it's more or
less prevalent. Yeah, And I don't know how much it
costs to basically I don't think about.
Speaker 2 (08:21):
I don't think yeah, because it's like a whole whole system.
But Eric, bottom line, congrats on the new home, super
Stoke for you. And I love that you're asking this
question because so many folks they of course they budget
for the down payment, they budget for the closing costs,
they've been saving for years towards this goal, but then
they neglect to consider how much money they're going to
want to pour into that home in order to make
it feel like home, in order to make it their own.
(08:43):
And sometimes it can just be a few pieces of furniture,
maybe just a little a little bit of paint, and
some of these modifications can be easy, and there's ways
to achieve this, like a reasonably priced version of this
I'm thinking about if you're buying something used on Facebook Marketplace,
for instance, if you're like me, go.
Speaker 1 (09:00):
To the habitat restore, well, oh yeah.
Speaker 2 (09:02):
Man, you even have like the windows and stuff in there.
I just I just unloaded an electric stove. I think
I talked about how actually upgrading to gas was saving
us money because I meant that we didn't have to
get a new service to the house. And you know
what I said to myself, I don't want to fool around,
don't I don't want to have a part time job
this weekend, because the worst part about selling something on
(09:23):
Facebook is just constantly being on your phone and like
messaging folks and trying to like arrange for a time.
Speaker 3 (09:28):
And the question is this still available? Well it makes
me want to punch myself in the face.
Speaker 2 (09:32):
And well, luckily there's also automatic responses, but even still
if it's I don't know all about to say, I
took some good pictures, did the video because they recommend that,
and I priced it competitively because I just wanted that
thing out of there. I didn't want to be constantly inundated,
and if you have time on your hand to be
able to shop around and to look for a deal
like that, you can find some excellent appliances out.
Speaker 1 (09:52):
There at a great price. You can know. So there's
Matt's old stove.
Speaker 2 (09:55):
Somebody what's her I forget her name, that came by
and got at her and her husband. But literally it
was less than one hour after I got back to
the first person that replied to me that that thing
was gone.
Speaker 1 (10:05):
I believe you called her Karen, which I thought was rude, Matt,
but it was her actual name, Joel.
Speaker 3 (10:08):
Okay, Yeah, I think you're right though, Like, it doesn't
have to cost an arm and a leg to make
those updates, but so much depends on what you're trying
to achieve, and the truth is those cost can spiral
out of control quickly, large largely because turning a house
into a home is very emotionally appealing, right yeah, but
it can also be financially draining. It can put a
(10:29):
strain on your money if you're not careful. And the
first year of home ownership it's often less about maintenance,
although there is going to be some of that. There's
like always that when you decide to own a home,
and for a lot of people, sounds like this is
the case for Eric, maybe it's more about cosmetic changes
that you want to make to the home too, And
I guess we just don't want you to spend more
(10:49):
than you planned and because that can derail other financial
goals that you have.
Speaker 1 (10:53):
I think it's.
Speaker 3 (10:54):
Really easy, Matt, for people to find themselves in a
dit A rose Robe kind of situation. This is something
we've talked about on in prior episodes, where as French
Philosopher his dressing gown, yes, and he got a new one, right,
a friend gave him a new gown, and then he
kind of lived a life of poverty and then he
(11:16):
gets this new dressing gown and then he basically says,
well now everything else around me looks shabby, and he
ruins himself financially in an attempt to update everything in
his life. And the truth is, man, hey you update
some paint, it's fairly inexpensive. Then you kind of the
dominoes drop. You find yourself ripping out and replacing countertops,
calling contractors, maybe about adding on a screen porch, And
(11:36):
I think, like just the next domino to drop, because Hey,
we updated this, and now this other thing kind of
just doesn't. It's not as visually appealing. Now we got
to drop more money on that. I think that's ultimately
what we want Eric to avoid here and everyone else
out there to avoid, which means instituting some guardrails, having
some kind of rules in place for how and when
(11:57):
you're willing to make updates totally.
Speaker 2 (11:59):
Of course, don't dismiss the maintenance costs even though it
is a it sounds like it's a newer home or
I don't know. Oftentimes, when someone is listing a property
like they have addressed, I guess a lot of the issues.
And so still, though that being said, set aside that
one percent, if you've got a system, like a major
system that is older, like let's say an h FACT
that's eighteen years old, that would be an instance where
(12:20):
I would lean towards the two percent.
Speaker 3 (12:21):
Can I tell you one of my friends, by the way,
just had an HVAC system go down. Guess how long
it lasted? Forty years? Well, they also don't make them
like they used to it.
Speaker 2 (12:30):
I know, is there a way to go back in
time and then get that like that saying forty years right,
that's super impressive.
Speaker 1 (12:37):
You're the luckiest human ever.
Speaker 2 (12:38):
But what Eric is getting to, though, is what you
we're addressing, Joel, which is the fact that how do
you account for some of these these splurges, some of
these elective upgrades that you want to make, and so
just start socking away money for these improvements that you
want to make for fun, and honestly, it's going to
be up to you as to how much you actually spend.
Like there might be a lot of folks who would
see you make some upgrades and them like, oh okay,
(13:00):
Like you mentioned the countertops roll and they're thinking, well,
those are perfectly fine, great, like build a grade grade
at countertops, but maybe nothing wrong with them, nothing wrong
with them, but maybe you hate them. And so for you,
it's going to be important in order to.
Speaker 1 (13:13):
Get them from personal experience.
Speaker 2 (13:14):
And this is something that something we did and I
think a lot of folks would have been like, I
can't believe you're doing that, but you, I'm like, you know.
Speaker 1 (13:19):
What, this is a priority for us.
Speaker 2 (13:21):
We do a ton of cooking at home, and somebody
else is going to think that that's a ridiculous move
for us, it was. It was kind of almost like
our craft beer equivalent. Of course, you can't have too
many craft beer equivalents. But as long as you're not
going into debts, and I think this is one of
the most important factors, as long as you are not
paying interest in order to afford these upgrades, and as
(13:41):
long as you are not neglecting your retirement account contributions
in order to pull this off. I think Eric might
be looking for like a percentage, like give me a
rule of thumb, guys, like how much should we be?
You know, like we need a guide, like some sort
of bumpers on the side of the bowling alley that
to help keep us in check. And I'm not quite
comfortable doing that because it depends on how much you
(14:02):
value making the place your own. If you love to
travel and you're just like, well, we just got a
house because it kind of made sense and we found
a good deal and my uncle's a realtor. It all
kind of came together that we're gonna buy a house.
But you don't really care about it, and instead you
want to continue to travel and prioritize other things. Well,
I would say you probably don't want to spend a
ton on some of these upgrades. But if you are
a homebody and in fact you work out of your home,
(14:25):
you've got a little home office. Oh maybe both of
you work out of your home. You also love hosting
friends over. Okay, I could see there's definitely a case
to be made here that this is going to be
a little bit more important.
Speaker 1 (14:34):
If that's the case.
Speaker 3 (14:35):
Yeah, and you you just said I'm a little hesitant
to give guardrails, but I feel like you did just
give a couple of good guardrails, which are like not
going into debt and not neglecting your financial future if
you're if you're.
Speaker 1 (14:43):
Left in the right bumper.
Speaker 3 (14:45):
Yeah, on the exactly, I think beyond that, like I
don't have other capin it, no more than five hundred
bucks a month.
Speaker 1 (14:50):
Like no, Like, yeah, we're not going to do a
dollar amount page amount.
Speaker 3 (14:54):
Yeah, on your income and your other financial goals. And
as long as you're able to not do those two
things that would actively harm your finances now and later,
then I think you could. You've got a lot of
free rein right, there's a lot of wiggle room here,
and that's that's what we're kind of getting here too,
is trade offs, which are the ultimate reality and personal
finance are really the ultimate reality in life. And you know,
(15:16):
new homeowners, they often dial back on other spending kind
of naturally as they enter this nesting phase, but they
do it with their eyes wide open. And so it
probably will mean saying no to the next big concert
when Beyonce brings her what is it Cowboy Carter tour
Matt through the country and say, I'm not going to
drop nine hundred bucks on those tickets because I instead
(15:38):
want to prioritize doing some house stuff or taking one
less vacation. Right, Is it worth it to get those
house projects done in less time to say no to
other things?
Speaker 1 (15:47):
Maybe? Maybe not.
Speaker 3 (15:48):
That depends on you. That's a personal decision. I would
start making a list of like the most important items
I want to address, the updates I want to make
at the house, and then I'd come up with a
ballpark figure of what each one of those would cost.
After that, Matt, I'd probably, like, I don't know, make
a priority list from one to them all. Yeah, I
can't do them all at the same time unless you're
(16:10):
a total baller. If so, Eric, congratulations, Yeah, yeah, if
you got that much money saved up after buying the home.
That's amazing. But then you know, list them in priority
and then create a timeline of when based on your
current income and your current current expenses and keeping everything
else essentially the same at least from a you know,
a retirement standpoint, maybe dial back on other spendings so
(16:30):
you can ramp up the timeline of getting those things done.
But you know, creating that timeline can help you understand
when you might reasonably be able to address each one
of those upgrades within the financial constraints that you have.
And so I think this could span a few years, right,
So maybe maybe that's a good thing to realize ahead
of time. Man, we want to do all these things,
(16:51):
but if we do one one of these things at quarter,
maybe then we're going to get there over the course
of three years. Get comfortable with the timeline, and I think
it will help mentally, and I'll also ensure that you're
gonna be able to pay cash as you save up
for each one of those upgrades.
Speaker 2 (17:04):
Yeah, you want to cashload that thing. And of course
the more you di I Wyatt, the less you're gonna
be forking out. So get in there, man, like you
some of that elbow grease get excited to do some
of these weekend projects together. It's a good way to
get to know your neighbors as well and be like, hey,
well you come over and now we got some beers
and pizza.
Speaker 1 (17:19):
Maybe you wanna Are you good with a roller or
maybe you're good with trim no? Okay?
Speaker 2 (17:22):
Pay like maybe just taping okay. But we ultimately want
you to avoid either taking on additional debt to make
these improvements or slashing your savings rate, specifically how much
you're able to invest for your retirement if you avoid
both of those routes, how much you opt to spend.
It really does come down to your personal priorities and
saying no to other fun ways that you could be
(17:44):
spending your money. But to you, it's gonna be worth it.
Just make these decisions with your eyes wide open.
Speaker 5 (17:48):
Yeah.
Speaker 3 (17:49):
Man, as one of our friends says, you're gonna afford anything,
but you can't afford everything. True, you gotta gotta make
those decisions with your eyes wide open. But Eric sounds
like you're on the right path. You're asking the right questions,
and we hope you're able to make those upgrades that
you want make that house exactly into what you want
it to be and hopefully, yeah, you do it smartly
so that those renovations pay off in terms of increased
(18:11):
value of that home as well. Matt, We've got more
to get to on this episode, including let's take a
question about using artificial intelligence to make smart money decisions.
We get to that and more right after this.
Speaker 2 (18:29):
All right, buddy, we are back from the break. Let's
now hear from a listener who is looking to use
chat GBT in order to find the best rates on
his savings.
Speaker 6 (18:40):
Hi, Joel, I'd love to get your thoughts on these
two high yield saving options open Bank at four point
seven percent or Genius at four point five percent any
recommendations just received forty K and I want to make
the best choice. Also, do you ever use AI to
find answers to your questions? And your research is so
which one?
Speaker 4 (18:57):
Chet GBT doesn't.
Speaker 6 (18:58):
Seem to really provide the most up to date or
actually truthful info. Enjoy the show.
Speaker 1 (19:04):
Thanks.
Speaker 2 (19:04):
Okay, so technically Rob didn't say he was using AI
to find the best savings account.
Speaker 1 (19:09):
But basically that's what he's asking. Yeah, yeah, we kind
of combined his two questions.
Speaker 3 (19:13):
I'm also curious by the way Robert said he had
forty thousand dollars dropping his lap. I wonder how it
came about. Did he, like Jesse James Rob a bank.
It's harder to do these days, so I doubt it.
Speaker 2 (19:25):
Honestly, if he asked me, he sounds like he's in sales.
He's kind of like a guy on the move. Okay,
maybe I wouldn't.
Speaker 1 (19:30):
Be surprised if he got himself a nice little bonus
after last year.
Speaker 3 (19:32):
You're probably right, that's my thought. I not trying to
cast his versions on you, Rob. I'm sorry about that.
And before we get to your specific bank account question,
we should at least mention I think Matt that Rob,
he might want to invest a portion of this lump
sum that's fallen into his lap. That depends on his
goals how much money he currently has in liquid savings.
If he doesn't have much in liquid savings, right, he
(19:52):
might be a cash soon money gear he's in, yeah, exactly,
Or if he's buying a home soon or something like
that needs it for the down payment, opting for the
high yield. Taking these account is a fantastic choice. But
just know, we would say so much depends whether forty
thousand bucks is a lot to put in liquid savings,
especially if you already have a decent cash pile. So
just make sure you're not being too risk averse with
(20:13):
this money totally.
Speaker 2 (20:14):
And he also mentioned so he mentioned two accounts specifically,
both of which are offers from neo banks. These aren't
full fledged online banks, and man our.
Speaker 1 (20:26):
Bias is to steer folks towards.
Speaker 2 (20:28):
Legit banks because of the issues that have popped up
with neo banks over the years, including folks having a
hard time transferring their money out of them. You put
a transfer in a transfer request and it's supposed to
show up on You're like, okay, it's Monday. That money
is going to show up in my traditional bank on Thursday.
And then literally there are been complaints where folks are like,
(20:48):
on Thursday they get a notification that the transfer was declined.
You have to actually reach out to the non customer
service in order to get an explanation, and then all
of a sudden, you're kind of in this never ending
cycle of trying to reach out to somebody who is
actually not going to be able to.
Speaker 3 (21:01):
Support you, and then you end up pulling all your
hair out and then you've got other problems to deal
with because.
Speaker 1 (21:05):
It's just so darn frustrating.
Speaker 2 (21:06):
Yeah, So neo banks like that is the term that
has come to describe some of these newer tech like
fintech sort of startups that are backed by a bank.
There are a dime a dozen now many who are
offering a twist on traditional banking services in order to
appeal to younger folks, which is cool, but despite the
higher rates, there are real trade offs, including I will say,
to the ambiguity of the FDIC protection. So they claim
(21:30):
that they have this, Yeah, it's not quite like what
you would see with a traditional bank.
Speaker 3 (21:34):
You're right, man, And like the FDIC. They actually issued
a neo bank warning this past summer, right after we
saw what happened with YadA and some other similar fintech
banks last year. And we kind of liked the YadA
because of what they were trying to do create like
a lottery like environment there for people who saved, essentially
incentivizing people to save more money for the potential to
(21:56):
win really cool prizes. And I just remember when YadA
came online, I was like, that's a great idea, Like
you're getting people hopefully incentivized to do the right thing,
the best thing for their future. But it turns out
the neo banks and the banks that back them, they
don't always play well together, and they don't always play
well with the FDIC. So we've just been reluctant to
recommend that folks go in that direction, even if, like
(22:18):
you said, the rates on savings are higher. And that's
also because it's not like there's this massive disparity, right
that with the additional risk you take on, you're getting
some sort of insanely superior reward. Legit online banks like
CIT they pay upper echelon rates. They're paying rates that
are just as good, if not better than the vast
majority of these neobanks. So in my mind, having savings
(22:40):
with a bank like CIT doesn't come with any ambiguity.
They are that is, the bank that is backed by
the FDIC, and the banks that Rob mentioned are paying
what four point seven percent and four and a half
percent I believe on savings, but ciit is paying four
point three percent on its platinum savings account.
Speaker 1 (22:58):
Pretty solid.
Speaker 3 (22:58):
We're just talking about a difference of especially with his
sum of money eighty bucks or one hundred and sixty
bucks depending not very much in a year. By taking
on that additional risk, I would just stick with a
fully fledged online bank like CIIT. I don't think it's
worth the added risk of going with the neo bank
to try to eke out.
Speaker 1 (23:16):
That little bit extra totally.
Speaker 2 (23:17):
And then on top of that, these neo banks might
not last very long either. And so if you want
to avoid bank hopping, which is a total pain, you know,
if there's a way that you could use AI to
handle all of the actual bank transfer, like that sounds
like a good use case, because like that's like the
worst part is the legwork involved with setting up a
new bank. But instead pick an online bank that's been
(23:40):
around for a while, a bank who has consistently offered
really good rates sigil. You mentioned Ciit, but some other
great options are ally Capital One Discover. These are banks
literally that we all are patrons of ci They certainly
have the best rates out there out of the four
that we mentioned, but you might appreciate some of the
other per from some of these other big guys, like
(24:03):
free checks, free ATM access, things like that. And then
on top of that customer service dependability. These factor into
the where we say equation as well, not just the
ease of use, but just what kind of service am
I getting at the end of the day.
Speaker 1 (24:18):
Can I get a helpful human when I need that? Yeah,
I was mentioning too, Neil. Four humans get replaced by
a Yeah, these.
Speaker 2 (24:23):
Bankes possibly folding, But as the CFPB dissolves, it's I
think it's even more important to do business with banks
who have a good reputation on that front, their ability
to serve their customers. And I'm not typically someone who
likes to change their behavior based on politics and what
policy is going through the current administration, but I think
this is a real concern. The fact that there might
(24:44):
be some uncouth, some bad behavior, some sketchy behavior with
some different fintech pop ups. Is this is not guaranteed,
but I could see it being a potential of there
being more of those in the next four years versus
the last four years, which means that we need to
be even more on guard. We need to be even
more careful ourselves, especially when we see an offer that
(25:06):
looks like it's potentially too good to be true.
Speaker 3 (25:08):
Yeah, if there's not a cop on the beat, you're
saying yes. With fewer cops on the beat. When the
cats away, the mice will play. And so that might
be the case in the banking sector. So sticking with
banks that have a good reputation for customer service makes sense.
It's not negligible, it's not completely unimportant. I think it's
probably more important, like you're saying, Matt, and the banks
that we list out, the banks that we talk about consistently,
(25:29):
that factors into the reason we recommend those banks. And
so that's that's why the same four that we mentioned
and have been mentioning for years continue to remain the
same four we recommend and highlight today. And on the
topic of AI that the Rob broached, I don't know
about you, Matt. I don't know if you're using artificial
intelligence on the RAG. I'm not using artificial intelligence.
Speaker 2 (25:49):
We all kind of are like because it's so ubiquitous
in Google, like you get the little summary, and so
I mean personally, I just I think it's overblown.
Speaker 1 (25:57):
Yeah, Like, at least on a consumer end user point.
Speaker 3 (26:01):
Of view, I will say, talking to a friend who
runs a business, like the way he uses it and
infuses it into everything he does, it's impressive to see
how big of a help it's become for his business,
and he's just like I was like, dude, you need
to be like an AI influencer because you know how
all this stuff works. I'm an idiot, todten all the benefits. Yeah,
I'm an idiot on this stuff. Actually, in a recent
Hot of Money newsletter that we did document how people
can use AI to come up with certain specific financial
(26:25):
questions right, and how maybe AI might be able to
help in some ways. But you have to be careful
because Robbi even mentioned, hey, some of the information is inaccurate,
and yes, if you ask AI for investing advice, it
could be shoddy because where's it getting the information from?
What sources? Is it culling? You might find that the
advice is great for someone else that's not you. It
(26:47):
might be better for someone in a different financial situation.
But like, let's say you need help planning a meal
with the food you have on hand. AI can help, right,
can help you save money on that front? Do you
need help with your resume or asking for a raise?
Try asking AI those questions, same with like the basic
budgeting or payoff questions. Those could be helpful to But
I would just say tread lightly because yeah, AI comes
back with airon infos sometimes and even the recommendations that
(27:10):
it's making on savings accounts. Sure, those might be the
highest pain accounts out there, but does that mean that
they're the absolute best places for you to stash your cash?
Speaker 1 (27:19):
I don't think so. Yeah.
Speaker 2 (27:20):
I think it's sort of like the way we use
internet now, like back in the day, or let's just
say today, Like do you say, hey, did you use
the internet in order to find in order to book
the cheapest most affordable travel? No, Like you don't say that,
you say, like what site did you use? Or what
app did you use? In a similar way, I think
that's how AI is going to be infused into everything
that we use. I think everything that we use as
(27:41):
consumers is going to incrementally get better or even not
so incrementally, like maybe by leaps and bounds. But I
think just the like, the focus on AI just feels
completely overblown in my opinion, as opposed to and I'm
not like a you know, I'm not an expert on this,
but it seems like there's more groundbreaking innovations might be
able to be made in like the medical field.
Speaker 1 (28:02):
I've heard folks talk about that.
Speaker 2 (28:03):
Where they're able to like run these simulated trials and
like when typically this would take years and years, like
they're able to do this and even decades, they're able
to do it like in minutes. Like that seems incredibly
promising and exciting, but from like a just from a consumer,
and I don't know, maybe, like like you said, maybe
we haven't used it enough personally.
Speaker 3 (28:21):
So what you're saying is, Matt, you and I we're
still highly necessary. Right, oh Ai hasn't killed us off yet.
You'll need to stick around with how the money for sure?
All right, man, Let's get to another question. This one
is about paying off a mortgage.
Speaker 5 (28:35):
Hey, Joeln, Matt, This is Jose Gonzalez from Wilmington, California,
small neighborhood in southern California.
Speaker 4 (28:43):
I had a question.
Speaker 5 (28:43):
Regarding a mortgage loan on a rental property. My question
is should I pay it off or should I continue
to collect the rent and let itself pay off. I
currently have savings of three hundred and thirty seven thousand
in low cost ETFs and have been saving for quite
(29:04):
some time now, hoping to buy a home here in
southern California one day However, I don't like the idea
of the debt hanging over my head during this process.
I currently have about one hundred and ninety three leftover
in the mortgage, so i'd have enough to pay for
(29:25):
it and get rid of that debt. As you know,
holmes in so Cal are expensive, so that's why I
have such big chunk of change. I just signed a
twelve month lease and I am being very patient. So
I guess the idea of renting has had me thinking
of buying soon. Anyways, I love the show.
Speaker 4 (29:47):
Thanks for everything, guys.
Speaker 2 (29:49):
Okay, so when he said he's got savings of three
hundred and thirty seven thousand dollars, I was like.
Speaker 1 (29:55):
What hose?
Speaker 2 (29:57):
But then he quickly follow that up with that they're
in low cost ETFs. He's got that money invested. He's
calling it his savings, but he has invested those dollars.
That looks a lot different. But there is a lot
to discuss with your question, Jose. So let's start off
by discussing mortgage payoff, because we've been pretty consistent advocates
for not paying off your mortgage if you have a
(30:20):
locked in low rate. I think he mentioned that he
purchased this one back in twenty nineteen, So yeah, he's
locked in hopefully at thirty years for a really nice
low rate, and inflation and higher savings rates are only
making that low cost debt look better by the day.
And there's also lots.
Speaker 1 (30:37):
Of value to be had by by having more liquidity
as well.
Speaker 4 (30:40):
Well.
Speaker 1 (30:40):
I think we'll address all these things I just touched
on here.
Speaker 3 (30:43):
Yeah, yeah, no, I agree, And yeah, the only exception
to that answer of not paying off the mortgage is
typically if that money was going to blow a hole
in your pocket otherwise, But that doesn't sound like it's
the case for Jose, and I guess like there are
certain other reasons you might want to pay off your mortgage. Really,
if it's it's a personal preference, so as well, it's
just not our personal preference, and so we highlight that
(31:05):
because it's our show. But it also sounds like you're
in the wealth building phase of your life, Jose. If
you were in your sixties, right and you wanted more
financial certainty as you entered your retirement years, the discussion
would also be different. We might push you a little
more towards mortgage payoff just because of where you're at
in the grand scheme of things, but you've likely got
so many years ahead of you to make savvy financial
(31:25):
moves to grow your net worth, including buying that primary home.
And so if you pay off this mortgage, you might
find your ability to grow your net worth it's actually
hurt by prioritizing debt payoff.
Speaker 1 (31:37):
Yeah, that's right.
Speaker 2 (31:38):
And if you decide to pay off at debt, it
would increase your cash flow. That's that's certainly nice perk.
But if let's say another investment deal came along, something
that you were made privy to, well you might not
have the capital to jump on it. Imagine. So sounds
like so his first property ever purchase was an investment
property he's been renting.
Speaker 1 (31:56):
Imagine if you come.
Speaker 2 (31:57):
Across like the perfect house hack, let's say across just
this sweet duplex or triplex or a quadplex, and your
you know, the dollar signs are in your eyes, not
only because you see the potential, but also because it
costs you a whole lot of money.
Speaker 1 (32:10):
Oh but too bad. You used all the money.
Speaker 2 (32:12):
That you had in order to pay down that previous mortgage,
and now you don't have enough on hand for a
competitive down payment or even something above and beyond in
order to make you look like a more attractive buyer
to the potential seller. These are all things that you
want to want to keep in mind. That's the liquidity
aspect that I touched on earlier. But another downside of
paying off this debt would be paying tax. And it
(32:35):
sounds like the money that you'd be using is in
a taxable brokerage account, and it's highly likely that you
would have to pay capital gains tax in order to
access that money to pay more to the mortgage company.
This is a situation where trying to diminish your debt
where it could lead to an unnecessary tax bill and
likely just I mean a fairly substantial tax bill as
(32:56):
well as he's trying to get his hands on those
funds in an attempt to alleviate this debt.
Speaker 1 (33:02):
That isn't all that.
Speaker 3 (33:03):
Terrible, Yeah, yeah, And again we don't know the exact
mortgage interest rate. We're assuming that, how you have a
mortgage rate that starts with a three, right, And if
that's the case, then that's our advice for people Matt
who took out a mortgage within the last year and
their mortgage rates upper six is low sevens, Like there's
different advices story.
Speaker 1 (33:23):
Yeah, that's not what I'm hearing though, No, And I think.
Speaker 3 (33:25):
Part of what makes real estate also a compelling investment
is the ability to use leverage Wisely, if you had
to save up and fork over one hundred percent cash
to buy a rental property, the investment just wouldn't be
nearly as attractive and almost nobody would partake. It would
take forever to save up, and your profit potential would
be greatly diminished. And on the flip side, many real
(33:47):
estate investors have taken on too much leverage and they've
hurt their finances because of it. Right, They got out
over their skis and their debt load is just it's
too heavy of a burden for them. So there is
it's important to highlight both risk and reward when using leverage.
But Jose, that's not you, right, Like paying off the
mortgage would mean you're going the de leveraging route. Uh,
(34:08):
And I just don't think you need to do that
given where things stand with your finances and how smart
you've been in building up wealth. It's it's not like
your your asset poor. It's not like your your light
on cash uh, and the only way to have some
liquidity is to sell this place. You You've made a
bunch of other smart moves, So, yeah, de leveraging. There
(34:29):
are pros and cons to going that route. I just
don't think you're maybe at the place in your financial
journey where it makes sense to deleverage.
Speaker 1 (34:37):
Yeah, I would want to hold on to that low
cost step for now. Yeah.
Speaker 2 (34:40):
Well, especially because I didn't hear him say anything about
retirement accounts. It would be different if he also came
in and said and said, hey, guys, I've got this.
You know, my net worth is at this level. I've
been maxing out my four one K my roth iray
for this many years, for a couple of decades. Even
that would be a different story. I would have a
different answer. But I didn't hear him saying anything about that.
(35:02):
He sounds financially savvy, like I've got a feeling that
he's he sounds debt averse, like he doesn't want to
have debt on him. But I don't hear him saying
he's risk averse. So I don't hear him not investing
those dollars. I mean, well, he is investing those dollars.
He mentioned the low cost ETF so I think he
has plenty of money socked aside. I assume he's maxing
out his retirement accounts. But Jose, if you're not absolutely
(35:25):
do that first. Those are table stakes and instead of
having to jump through these hoops of buying a property
that may or may not go up in value, that
where you can or can't find a tenant who's willing
to sign for twelve months for shoot, a tenant who
might be a nightmare tenant.
Speaker 1 (35:41):
Like these are all prerequisites to get.
Speaker 2 (35:43):
You to the point to where you might see an
average or slightly higher than average return on your money.
But you don't have to do any of those things,
zero prerequisites in order to experience that kind of return
by just simply investing in the market.
Speaker 3 (35:55):
Yeah, I think when it comes down to it, don't
pay off the debt is what we would suggest. But
also so don't spend that money, leave it investing for
the time being. And you might want to even slow
down your investing for now in order to enlarge your
cash cushion if that home purchase is a high priority. Right,
I'm not sure how much you have in liquid savings, right,
that's not invested. But that's the bucket I think you
want to prioritize for the next house purchase, so that
(36:18):
I don't know, maybe you could avoid selling some of
those positions at some point.
Speaker 1 (36:21):
At a potentially an opportune time.
Speaker 3 (36:23):
Right, Yeah, the more cash you have on hand, the
more likely you will be able to keep those investments
in place. And obviously, Matt, everybody knows this. Home prices
in southern California can be incredibly expensive. Buying instead of
renting there is going to cost you quite a bit
more on a monthly basis, especially these days. So factor
that in. You'll also get to participate, yes, in the
(36:44):
upside of appreciation in that market. But buying it's ultimately
a personal choice. I just want Jose to know it's
not a necessity for wealth building. He said, he just
signed a new lease, and if owning that home is
not a massive priority, he might be able to build
more wealth over by continuing to rent if he's so inclined,
and the just investing more in the market and in
(37:07):
other potential endeavors.
Speaker 2 (37:08):
That's right, man, all right, we got more to get
to Actually, we're gonna hear from a listener who is
considering a pension lump some something he didn't realize was
even possible up until recently. We'll get to that and
more right after this.
Speaker 1 (37:28):
All right, Matt, we're back.
Speaker 3 (37:29):
Let's keep taking listener questions. Now we get to the
Facebook question of the week. This one comes from Zain.
He said, I almost wish I didn't learn this, but
I found out recently that there is an option to
cash out my pension. Non attractive option, but it does
bring up a question. Is there any reason to include
that value when I'm listing personal assets such as for
a loan application or when calculating net worth?
Speaker 1 (37:53):
Oh, time to cash out?
Speaker 2 (37:54):
Well, this is something I feel like you can speak
to this a little bit when it comes to you've
got some personal experience when it comes.
Speaker 3 (38:00):
To very recent personal pension. Yeah, yeah, yeah, So, I
mean I think it's interesting. Zane basically said, it's not
an attractive option, but it might be an attractive option.
It's worth at least thinking through the pros and the
cons and running the numbers. And so I did that
recently because I got sent a letter from my former
employer about my pension and they basically said, hey, you
(38:22):
can take this lump sum, or here's what you would
get paid when you turn sixty five on a monthly,
ongoing monthly basis. And because I had the option of
rolling that into a traditional ira or into a roth
ira and then paying a little bit of that paying
the tax, I decided the best thing for me was
to roll it into a roth, get more money into
the roth, pay the tax now, and then hopefully watch
(38:43):
that money grow to become substantially more than would it
otherwise would have become had I just waited for that
pension payment to start right twenty five years down the line.
But I think, Matt, a lot of people who opt
for a pension lump sum, maybe there's a lot of
hoops you have to jump through, and you have to
do it the right way, and you have to make
sure you get it into the right account, and you
(39:05):
have to know what is possible from a tax perspective
when you take that lump sum. If you don't do
it properly, you could be creating more of a financial
headache for yourself, more of a liability, yeah than a benefit.
Speaker 1 (39:17):
Yeah yeah, I think.
Speaker 2 (39:19):
I mean one of the reasons you do this is because, yes,
it could perform better in your capable hands, and so
actually run the numbers see what it could do.
Speaker 1 (39:27):
A reasonable goal would be that.
Speaker 2 (39:28):
Your lump sum if you, let's say, invested in a
total stock market or an SP five hundred fund earning
average returns, whether or not it would lead to more
income in retirement. I think that's a good goal that
for you to have for that money. Granted, this is
a return that's not guaranteed, which is unlike your pension,
and so I would want to think through the pros
and cons there. Like these are the two schools of
(39:50):
thought that I'd be bouncing back and forth between.
Speaker 1 (39:53):
Schwab.
Speaker 2 (39:53):
They actually have a pretty awesome calculator that will link
to you in the show notes for this episode that
will help you to get an idea the rate of
return that you would need to get investing on your
own in order to make cashing out worth it.
Speaker 3 (40:05):
Yeah, and then you asked the question, should use your
pension in your net worth calculations? I think you can.
I never did, but mine was also small, like right,
it wasn't some epic amounts. Others might want to, depending
on how much their pension is worth. I think the
best way to do that is to figure out what
your likely annual pension amount will be and then to
multiply it by twenty five. I think that's roughly what
(40:28):
it's going to be from a net worth perspective for
you down the road. You should certainly factor it in
for retirement planning. But there are also downsides I think
to including your pension in your net worth right because
you might overestimate your assets, you might underprepare in other ways.
Speaker 2 (40:42):
That's what worries me. Yeah, is thinking of baking on
this thing, and yah, maybe it doesn't pan out the
way well, And just how I think about net worth,
it has to do with how much money I have now,
Like I'm less interested in my future net worth because
like that may or may not happen depending on what
the market's going to do, And.
Speaker 1 (40:56):
So counting them chickens for the hast yes exactly.
Speaker 2 (40:59):
And so if I were were going personally, if I
was going to consider a pension, like I would consider
the lump some cash out for my net worth calculations
in the here and now. But and even then I
would only assume the most conservative of projections when it
comes to you know, what that number might be?
Speaker 3 (41:15):
Well, because the truth is unlike money you've saved up
in retirement accounts. Now, the pension is not liquid, right,
It's gonna pay out monthly as stated once you reach
retirement age, and if your employer has financial issues, your
pension amount could be reduced. So you might be counting
a chicken that doesn't hatch. And so yeah, that's also
something to keep in mind if your employer is struggling,
(41:36):
know that that's a possibility. And that's just I think
another reason that to at least consider taking the lump
sum pension amount if it's offered to you. Matt, you
use the term capable hands. I like that, like if
you if you feel like you are capable of using
that money effectively and investing it for your own future,
you'll likely perform better and do better than the pension
would on your behalf.
Speaker 2 (41:57):
Yeah, and the other thing he mentioned too is that
should he this out like when like, for instance, with
a loan application, I I don't see the advantage of
doing that either, because, like, if anything, what that might
do is cause a lender to think that you are
more credit worthy because of the fact that maybe you've
got additional assets on the books. And I think there
might be a slight temptation to borrow more than you
(42:20):
should because like bottom line, I think a good rule
of thumb is to borrow less than whatever than what
any lender is say that you are, that you're good for,
and so by having more debt, you know more on paper.
It's like, oh, actually, you know, let's just say it's
for a home or something like that. Actually, you were
going to be approved for a six hundred and fifty thousand
dollars loan. I was going to bump that thing up
(42:40):
to eight hundred because we see that you've no, no.
Speaker 1 (42:42):
See I don't like yeah, yeah, I don't. I don't
like that, although I would.
Speaker 2 (42:46):
I think this is just a there's a small chance
that this would happen because typically they're looking at your income.
They don't really look at like what you're asked like, yeah,
they should be looking at your assets.
Speaker 1 (42:54):
Usually debt to income ratio.
Speaker 2 (42:55):
Yeah, that's exactly, like you wanna you want to credit
limit increase on your credit cards? What are they asking about?
They're asking about your income. Actually, they ask about your
if you own a home too, and what your primary
mortgage is oftentimes, but they should be considering your assets,
because I feel like that's more indicative of your capacity
to sacrifice, to defer, pleasure, to invest in, to sock
(43:15):
away money. But instead they just care about what you're
going to earn that year. They're using a more basic metric.
They're just looking at the near short term. Yeah, but
even if they do take that into account, I think
it can only have the potential to get you in trouble.
Speaker 1 (43:28):
Agreed.
Speaker 3 (43:29):
All right, man, Let's get to another question. This one
comes from TJ in the how to Money Facebook group.
He said, frugal are cheap churning Jim free trial memberships
with no intention of signing up. I like the community
aspect of working out in a class with other people,
but I also work for a nonprofit where I don't
take home much money, so I'm good with just running
jump roping and doing workout routines from dareb dot com,
(43:50):
which I've not heard of before. I've heard of them
in my bedroom. Well, of course you have. So is
that frugal cheap from TJ? It completely comes down to
how he goes about doing this.
Speaker 2 (44:01):
Okay, you know, like you know what it makes immediately
makes me think of It makes me think of the
free samples at costco, the taste tests, and if you
walk up to that nice person there manning that little booth,
that little table, the little card table.
Speaker 1 (44:12):
There with a little air fryer or what or whatever.
Speaker 2 (44:15):
It is that they're doing, and if you like look
them down the eyes and you're like, I'm not going
to buy any of this, but let me have a taste,
that's like a total jerk thing to do. You might
be thinking that, but you can't say it out loud, right.
And the reason I think it's okay to think that
is because it is up to them to convince you otherwise.
Like if there are free samples, if there's a free
taste test or something like that, it means that that
(44:37):
manufacturer or that business owner, whoever it is, they believe
enough in their product to convince you otherwise when you
have made up your mind that this is not something
that you're going to partake in, but they're willing to
give you.
Speaker 1 (44:48):
A little taste of it for free.
Speaker 2 (44:50):
Knowing that, well, in this case of the gym, knowing that, man,
our members are so awesome, you're gonna want to come back.
Our coaching is so top notch that you're not to
be able to live without it. Whatever it is that
they think they're gonna be able to attract you in
with is up to them to sway you. And so
you might think that there's no way I'm not gonna
join the stupid it's so expensive, or I do this
(45:11):
stuff at home for free, but you can't say that
out loud, and it's up to them to convince you otherwise.
Speaker 1 (45:15):
See that's what I think.
Speaker 3 (45:16):
That's exactly where I was gonna be ready to answer,
because I think that's the whole reason people off for
free trials is because they think you're gonna love the
thing enough that you're gonna stick with it. And so
you might say, I'm gonna sign up for the Netflix
seven day free trial, but I'm not giving them my money,
and then you might get hooked on I don't know,
it's good game or something like that, whatever they're showing.
I don't have Netflix these days. I've had Netflix in
(45:37):
a long time, say whatever it is. And I think
that's true. Like TJ has to be ready to one
either cancel the free trial in time before he gets
charged if he's not interested in sticking around. That would
be I think cheap. If he wasn't. But on top
of that, be ready to fall in love with the
thing that you're checking out because it might happen.
Speaker 1 (45:55):
Because it might happen.
Speaker 3 (45:56):
Yeah, and it might be worth the money, even though
right now you don't think it is. I remember signing
up for a Discover bank account map because there for
like a three hundred dollars bonus, and I was like, oh,
this is really easy like that, the hoops are not
that significant. I just have to like have the account
open for sixty days with a certain amount of money
in it.
Speaker 1 (46:11):
It was like all they want is my first name.
That's right.
Speaker 3 (46:14):
It was so easy, and I was like, three hundred bucks,
this is great. It's way easier than like some of
the the big physical banks want, like I don't know,
you have to go into the branch. It's so annoying.
And then I ended up saying, well, this is a
great interface. Yeah, this is a good bank. And I've
been with Discover from many years since. So what I
thought was playing the system that was gonna be temporary.
I got played, but not in a bad way, because
(46:35):
it's it's a great product, but.
Speaker 1 (46:36):
That costing you anything, right, But it might end up
costing TJ.
Speaker 2 (46:39):
Right, And that's the thing I think, like, I like
what you said about being prepared to potentially pay, and
you might think, well, guys, because he mentioned that he
works for a nonprofit, and he's like, hey, I can't
afford that, but you might love it so much. You
might get creative with your expenses. You might do some
budget rearranging because now all of a sudden, this is
such a high priority for you. You you found your people.
It kind of reminds me. You remember, at some point
(47:01):
we talked about I think it was on a Friday flight,
about a girl who hasn't paid for eating out, hasn't
paid a restaurant bill in like two years, and it's
because she goes on dates for free. They're not free
dates that well, I mean, I guess technically they are,
but she goes on dates and they pay for dinner.
And I think it was a frugler cheap then, because
it kind of feels deceptive, right, But I remember, even
(47:22):
at that point in time, I remember thinking the same thing.
It's like you might be thinking or saying to yourself
that there's no way I'm going to be into this dude.
But in fact, after meeting him. Oh, he's got a
great since a humor. You get to know him, and
then all of a sudden, I guess what happened with
my wife? And all of a sudden you get tricked. Yeah,
and you've been married for fifteen years.
Speaker 5 (47:41):
Right.
Speaker 2 (47:41):
See, that's that's what these gyms are banking on TJ.
And So I don't think it's it's cheap at all.
I think it's a frugal move. But you know, like
Joel said, be prepared to start to start paying a
monthly fee in order to access their services, no doubt.
By the way, so you mentioned Darby dot com, I've
been I still been using my push jerk dot com,
(48:03):
which is free programming. Did it this morning? Freaking love
it push jerk. It could be a workout app. It
could be I don't know, a strike back app of
people you don't like.
Speaker 1 (48:11):
I'm not a solid.
Speaker 5 (48:11):
OK.
Speaker 3 (48:12):
It was good, all right, Just the name of it's funny,
all right, Matt, let's mention. Let's let's we're double questions. Now,
let's get back to the beer that we had on
this episode. This one's called a Little Biggie on Chrome.
It's a coffee stout and Yeah, we're your thoughts on
this one.
Speaker 2 (48:24):
I feel like we're going along in the episode, so
I'm gonna make it short and sweet, dude, solid roasted
coffee flavors. I thought it was gonna be. I thought
it was a roast, a barrel aged, but there's no
way that.
Speaker 1 (48:33):
This is barrel age. There's like zero of those woody notes.
But really good.
Speaker 2 (48:37):
It even had like a creaminess to it. I was
picturing it was coffee with a little bit of a
little bit of milk right there. Yeah, there was definitely
some milk vibes going on. Definitely some lactose in the
making of this beer. This one is a little thinner
and almost like had more porter vibes than stout vibes
going on for me. But yeah, solid beer from the
brewer right down the street, which we are trying to support,
(48:57):
Like Mad wanted to stick around because when you you
have a good brewery in your neighborhood, it is your
pride and joy as everyone.
Speaker 1 (49:03):
But that's going to be it for this episode.
Speaker 2 (49:05):
Find her show notes up on the website at Howtomoney
dot com. We will see you back here on Wednesday.
We're going to have an awesome conversation about taxes, because
you know that's on everyone's mind right now, Joel, but
with an influencer on taxes indeed, but she likes influencer
who really knows her stuff. That's right, So look forward
to that and until next time, best friends Out, Best
(49:27):
Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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