March 10, 2025 • 53 mins
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Should I be wary of changes made to my 401k match that are actually more generous?
2 - I already have my own long term disability policy in place, but should I drop if for one provided by my employer?
3 - How can I continue to contribute to my Roth IRA if I expect my income to continue to rise?
4 - What’s the best way to book a deal on some upcoming travel?
5 - Is it frugal or cheap to only charge my EV during off-peak hours?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Out of Money. I'm Joel, I'm Matt's and
today we're answering your listener questions.
Speaker 2 (00:24):
Happy Monday everybody, as you are likely recovering from having
lost one hour of sleep yesterday, well last night. Spring
Ford is the worst.
Speaker 1 (00:32):
Man. Oh yeah, fall Back the absolute best.
Speaker 2 (00:35):
I remember realizing that for the first time as a
freshman in college, someone mentioning that, and it was we're
hanging out and it's like eleven thirty at night, thinking okay,
maybe we should kind of wrap things up, but then
someone said no, it's actually technically it's more like ten thirty, and.
Speaker 1 (00:50):
We're like, yeah, let's keep gaming, you'll.
Speaker 2 (00:52):
We kept the party going then because of that. Fallback
is the best.
Speaker 1 (00:55):
Yeah, spring Ford is the worst. Hope you guys are recovering, Well.
Speaker 2 (00:58):
Yeah, this is our how to Money Monday episode. Though,
we're going to hear from a listener who's asking for
our favorite way to book a travel deal for all
the folks out there who are looking to get some
vacation under your belt this summer this spring. Another listener
she's got some four to one K match changes there
at her employer, who's it's getting a little more generous.
It's thrown her for a loop. She's trying to figure
(01:20):
out what's going on, and another listener is wondering what
our take is on long term disability insurance. Maybe we'll
even share whether or not we have long term disability ourselves.
We'll get to that and more during our episode today.
Speaker 1 (01:33):
Buddy and ebe charging question too, Mattha will take so
electric vehicles. If you want the electric vehicle to save
you the most money, you got to figure out think
about how you charge it and when you charge it.
Speaker 2 (01:41):
I don't know if there is anything else out there
that Jiel thinks about more that he doesn't have than
an electric vehicle.
Speaker 1 (01:47):
That's true that Yeah, you're right. One of these days though,
I'll get back in the EB game. Have that Nissan
lead for six years, loved it, that's right. I think
evs are fantastic. Just you were an early adopter is
what they're called, Joel. Yeah, and what do they say
that you've earned it? Pioneers get slaughtered and I might
have with my eighty mile range in Nissan Leaf, I
(02:08):
see people selling those now.
Speaker 2 (02:09):
You can still drive it around for like twenty miles
before the thing crapped out by the time you sold it.
Speaker 1 (02:13):
Well, I see people selling them now and it's amazing.
They're like, uh, it really only gets about forty five
miles which to charge these days.
Speaker 2 (02:19):
I'm thinking about it from a kids standpoint, like in
that kind of what you want, it's like they can't
get far from home before it's like a boomerang where
they have to kind of like get back home, Like, yeah,
I gotta charge charge the right.
Speaker 1 (02:29):
If you get that car for your kid, make sure
you have triple A because you might need to tow
it on occasion. It's true.
Speaker 2 (02:34):
Before we get going, I've actually got a frugal or
cheap for you. And this is going to be part
confessional as well. Oh yeah right, sure bring it. I
think our listeners you, I think equas I know what
I'm about to share, but listeners, hopefully should would get
a kick out of this.
Speaker 1 (02:50):
I like playing priests to your confession.
Speaker 2 (02:52):
So obviously we've got a small business here that we run,
and so obviously we have a business checking account, but
we don't just have one business checking account. We actually
have two separate banks who we bank with because.
Speaker 1 (03:05):
Of just the massive amounts of money that are gone
exactly once you go above that two fifty. Just kidding,
just kidding.
Speaker 2 (03:11):
Now, the reason that we have two separate bank accounts
is because so we've always had a Capital one checking account.
We got grandfathered in. It's a total, completely free account.
Speaker 1 (03:21):
One of the best business accounts. But then we found
another one.
Speaker 2 (03:24):
It's great, there's another one. And we've talked about this company,
this bank on the show before Leley. It's l I
l I dot Co. And the reason we'd previously mentioned
them it was, actually, I'm pretty sure it was in
response to a listener's question, Oh yeah, and they're looking
to find a place to stash their business funds for
their small business, and we went and found this bank.
And the reason we still have them is because they
(03:46):
pay three percent in the savings account that you can
link to the business checking account.
Speaker 1 (03:50):
And like, six nine months ago, is four percent? Wasn't
it was?
Speaker 2 (03:53):
I think it was a little bit higher, but even still,
three percent is fantastic, especially for.
Speaker 1 (03:56):
Business accounts which typically paid nothing.
Speaker 2 (03:58):
And so someone might ask, well, why are you keeping
that Capital Wan account around, Well, it's because when we
open that account with them, they send us a bunch.
Speaker 1 (04:05):
Of checks, a bunch of paper checks.
Speaker 2 (04:07):
We've got these big oversized almost you know, like the
big oversized check that business.
Speaker 1 (04:12):
Is, right.
Speaker 2 (04:12):
They make you feel so legit. It makes you feel
like a little kid, like you're writing fake checks. But
I don't know, but we rarely write checks except for
our four win k, which is with fidelity. The way
it's set up, we have to send in a paper check.
It's not something that we can do digitally. And I
think folks can probably hear when we're going with this.
(04:32):
In an effort to optimize, we keep most of our
cash over in Leley, earning that interest, which, by the way,
they charge you for the best rate, but of course
you earn back more than what that rate is if
you've got a decent amount of money in there. And
so when I cut checks for the employer portion of
our four wind k JUAL, I have to transfer money
from Leey over to Capital one. And guess what I
(04:55):
forgot to do in the most recent iteration reason.
Speaker 1 (04:59):
Yeah, got to send it over.
Speaker 2 (05:01):
There's just a lot financially going on with a business
in my life. Completely slipped my mind, and so I
saw the insufficient funds. Basically a bounce check is what happened.
And so we got hit you and I four fifty each,
I guess with a nine dollars insufficient funds charge. And
(05:21):
so the question here is are we being frugal or
cheap by having two separate accounts? And in this case
it came back to bite us or you know, I
dropped the ball basically as well. What I'm confessing here,
but I want to know no word. You know it's
worth it. I'm not mad at you if you're wondering, Yeah,
thank you. Well, I think the question comes down to
how onerous is it? And then how much are we
(05:42):
actually making by having a higher interest rate from Ley
and so part of it too, was just a testing
for so we could offer good information to our listeners
like you and O are guinea pigs of a sort
from time to time for financial products to a certain extent.
Speaker 1 (05:56):
So for that reason alone, it was worth at least
giving it a go. But point now that we've given
both a go, they're both great accounts. Yeah, should we
consolidate back to one? Maybe? Maybe just for simplicity.
Speaker 2 (06:07):
I like seeing that interest payment every single month. Yeah,
and it more than pays for the It's a fifteen
dollars a month charge and we make much more than that. Yeah, again,
not because we have the vast quantities of money there
in our business checking account, but enough in my opinion
to handle making one digital transfer every three months, which
is how often I typically do that.
Speaker 1 (06:27):
Yeah, so I think, yeah's let's hold onto both. I mean,
I have frugal multiple.
Speaker 2 (06:31):
It sounds like you sounds like you're giving up the
thumbs up frugal. I think so.
Speaker 1 (06:35):
And yeah, I think that's one of those things too.
Where Lily, maybe for someone who has a small business
that doesn't have much money sitting in there for long,
the three percent interest might sound great, and you might
be like, well, I haven't seen any other business accounts
that offer a rate of interest like this. But if
you don't have a decent chunk sitting there inside of
your business account, which you and I have to do
(06:56):
to pay other people, or when money just kind of
sits for a minute before we pay ourselves, it's gonna yeah,
have to cover rent, but futilities. Super small businesses, it's
it's just we're very small business. But super small businesses
might get you know, their eyes might pop open and
be like, WHOA great, this is awesome, But in reality,
it's probably not worth jumping through those hoops if you
got to pay the fifteen bucks a month and you
(07:17):
don't have much money earning interest.
Speaker 2 (07:19):
All right, The beer that you and I are going
to enjoy during this episode, it's called a beer a missou.
Speaker 1 (07:24):
That's right. It's like tier massou, but beer. This is
a gotta love a beer with a bad pun.
Speaker 2 (07:28):
An Imperial Milk porter. Buy six bridges and we will
share our thoughts on this one at the end.
Speaker 1 (07:32):
Of the episode, no doubt. All right, if you have
a money question, we'd love to take your question on
the next ask htm episode. Just basically record a voice
memo on your phone, email it over to us at
how too Money pod at gmail dot com. And if
you're like a little confused, just got to how to
money dot com slash ask for the simple directions spelled out.
Make it nice and easy for you. Matt, let's get
(07:54):
to a question specifically about what to do when your
employer changes the four h one K match that you're
eligible for. By the way, this comes from listener Chelsea, Hi.
Speaker 3 (08:04):
Joel, and Matt. I had a question about an update
that my company is making to the four to one
K plan. Specifically how they structure the matching of employee contributions.
So previously the way it worked was that the company
matched contributions up to seven percent of eligible pay, and
(08:27):
now they are dividing that into a three percent non
elective contribution. So the company contributes three percent whether or
not an employee pays into the four one K plan
or not, and then they're also adding a four percent
elective dollar for dollar match on top of that, so
everybody gets three percent, and then if an employee contributes
(08:48):
more of their own then they can get the full
match up to seven percent. And previously I don't believe
there was any non elective contribution.
Speaker 2 (08:57):
So.
Speaker 3 (08:59):
To me, it's it seems like the company is now
paying more into the employee's four one K accounts, basically
a three percent for everybody. It doesn't affect me because
they've always contributed more than seven percent and gotten the
full match. But I guess I'm just wondering why they
would make this change.
Speaker 1 (09:18):
I'm sure it.
Speaker 3 (09:19):
Maybe has tax implications or something, but yeah, just curious
in wondering if you could clear that up for me.
Thank you.
Speaker 2 (09:26):
Oh, I think Chelsea's got a suspicious streaking her she's thinking, Hey,
you guys are going to pull the wall over my eyes. No,
that's I don't think that's actually the case.
Speaker 1 (09:34):
I think Chelsea, I get that instinct because it feels
like in the financial world like they're trying to dupe.
Speaker 2 (09:38):
Yet there's they're gotcha's they're trying to get one over.
Yet Yeah, all over the.
Speaker 1 (09:41):
Place, you and I we highlight scams or we highlight
people who get taken advantage of, and so Chelsea's just alert.
Speaker 2 (09:47):
I don't want to become that person totally. No, I
don't think that that's actually what's happening. It sounds like, Chelsea,
and you didn't share what company you work for, but
it sounds like it's a just a generous, solid company.
It doesn't sound like that they're trying to the trick
here or anything. I think they might be paying a
bit more. Right, So you're saying, well, like, why would
they do this? There are many reasons I think that
we'll get to but bottom line, they're just making some
(10:09):
of those matching funds easier to access, no matter what
the financial status of the individual employee is. You, of course,
you were brilliant to have always gotten the free money
you've always gotten the full match, and that means that
you've been contributing with the employer money included at least
fourteen percent.
Speaker 1 (10:27):
Of your overall salary each year.
Speaker 2 (10:29):
Because I think she said she was even going above
and beyond that, and so that's that's amazing, that's fantastic.
Speaker 1 (10:34):
That's ultimately where we want everyone to be. The fact
that Chelsea was there even before she got an added
incentive from her employer is great, it's laudable, and it's
truly what most people should shoot for. Is I think
a minimum saving trade of fifteen percent, and that you
kind of alluded to this, Let's talk about why her
employer is doing this. I think at least in part,
(10:56):
they're probably doing it to ensure that every single employee
is at least saving something for their future. This is,
especially with Secure Act two point zero, kind of part
of the push to get the average employee invested, many
of whom don't invest at all if there's not an
automatic opt in. And so, you know, financial literacy in
(11:17):
our country is pretty bad. That's pretty self evident. And
your employer, well, they might see that a decent chunk
of folks are missing out on this perk altogether, like
they're just not banking anything for their future. And maybe
it sounds a little paternalistic, but I think of it
as a good thing for employers to kind of watch
out for that segment of the population and kind of
force their hand in that way, although really it's the
(11:39):
employer forcing their own hand to make those contributions.
Speaker 2 (11:42):
And sure, well, and you can always opt out. It's
not like you don't have a choice, like you automatically
get roll but enrolled, but if you don't want to
continue to do that, it's just back out.
Speaker 1 (11:49):
You can back out.
Speaker 2 (11:50):
It's just a nudge in the right direction.
Speaker 1 (11:51):
There's as yeah, right, I think this is this is
going to help write the ship at least for some
of those people at least a little bit, right, getting
them to invest something. And then you know, with these
automatic contribution requirements becoming normal, this is just an on
trend move for your employer, Chelsea, And it could also
make budgeting more simple for your employer. This is another
reason that they might be interested in doing this. Right,
(12:13):
with elective contributions, it's hard to know what percentage of
folks are going to invest and how much they're going
to invest. And so the employer's like, wait, is Chelsea
gonna max her four one K and we're going to
be giving the full match to her? And what about
other people? What are they going to do? Well, now
they're going to have at least a better idea of
how much the match overall each year is likely going
to cost them. I think it just makes for easier
(12:34):
financial planning for your employer, so maybe it feels a
little more generous, and it also just gives them a
little more future knowledge about what they're gonna have to
fork over.
Speaker 2 (12:42):
Yeah, I think that's definitely true. It's both for the benefit,
I think of the employer, but also the employee because
from an employee standpoint, it's like, hey, we're all in
this together, like we are all saving for our future.
There's like a cohesive team sort of like can do attitude. Sure,
and I think that that is well, especially for new hires.
You know, Let's say you're look, you're considering a few
(13:04):
different employers and you've got this one and they're saying, hey,
no matter what, and this isn't going to affect your pay,
but you're going to be enrolled in a four and
K where you get a three percent match of your salary.
It feels like free money. There's something that's really attractive
about that that I think I would be drawn to,
especially if I was early in my career.
Speaker 1 (13:20):
Well, I think the other thing that maybe goes underrated,
undernoticed is those benevolent employers. They tend to get good
street cred. I think about the employers in our town,
matt where we live, and there are companies who just
constantly make the headlines about being great places to work,
and part of that is often what the benefits are.
And some of these companies just have superior matches or
(13:43):
better four one K plans and.
Speaker 2 (13:45):
Completely free healthcare where everything is covered, including dude.
Speaker 1 (13:48):
Man, the word gets around in your network and people
are like, oh, ye, you should come over here to
work at mail Trimp because hey, they got these like
cool benefits that most people don't offer, and that's just
great press for anybody out there who's looking for work.
They're like, yeah, maybe well apply over there.
Speaker 2 (14:01):
It's funny that you mention that's totally what I was
thinking of when I mentioned the healthcare one, because I
get like I considered applying for a job like a
long time begue, because I had a bunch of friends.
So you're gonna say last week, I was gonna last week. Well,
that's the thing that this was years ago. I don't
know if they've changed their benefits since they were purchased
by the big company that took them over. But even still, yes,
like you said, I think that's something that absolutely that
(14:23):
is worth considering.
Speaker 1 (14:24):
It's like that halo effect, right. The company gets and
the more generous they are with their employees, the more
likely they are to get lauded for that, and that's
going to attract more great employees totally.
Speaker 2 (14:34):
And it's again so it's not just for the benefit
of the employee, but for the employer as well. I
think you're talking about budgeting, but I think it's just
going to be more I think it could be easier
to administer as well, when you know that everyone is
on board and that out of minimum they're getting a
three percent match. Like you said, it's good from a
planning standpoint, but it's gonna be much easier to administer.
I think the other big thing that this could do
for your employer is that it allows them to achieve
(14:56):
us known as safe harbor status by contributing to everyone's
for when who works throughout the company. They can avoid
certain non discrimination testing requirements, and this can be just
a big pain in the butt that the something that
the IRS requires. Many small businesses ought to go this route,
and basically it's just easier to ensure that their plan
is completely compliant with government regulations. And the cool thing
(15:19):
for employees about a safe harbor forlwan K is that
the three percent match also vests immediately. It happens right away,
so there's no need to wait a year or two
to ensure that those funds are actually years before they
have the ability to claw them back.
Speaker 1 (15:33):
Yeah.
Speaker 2 (15:34):
Yeah, And you and I we can easily count on
the dollars being yours.
Speaker 1 (15:37):
You and I were actually talking about that at lunch
time before we recorded Matt and just how with the
job hopping that happens so much in today's world, especially
younger workers not staying at jobs nearly as long those
You've got to look at the fine print of how
long it takes for that match to vest, because if
it's two years, if it's three or four years, and
(15:57):
you're not there that long, all those match dollars could
just like fly away vanish out the window, and so
that it's nice to know that in one of these
sorts of four to one K plans, the match is
vested immediately, there's no risk of losing it.
Speaker 2 (16:09):
Yeah, i'd call those phantom four one ks. Yeah, that'd
be the Friday flight headline. That's a it's a good term.
I'm sure it's been used before. Just take that one away, Okay, Yeah,
I actually probably have already used that. I probably stole
it from somebody just unknowingly. There's I think maybe a
potential downside for you, and that I just want to
highlight that you could dial back your paycheck deduction two
four percent right to where you're still getting the full
(16:31):
seven percent from your employer because of this change, but
your overall savings rate would go down, you know, And
I would just say, we're ok with you taking the
extra money and putting it into like, let's say a
roth IRA or an HSA or a different retirement vehicle
if your funds would be better suited. If you're like, hey,
I'm gonna get the full match, which means I can
reduce my overall contribution, but I hey, I'm gonna take
(16:52):
those funds and put them in another vehicle that's going
to be just as good for my future.
Speaker 1 (16:56):
That's great, But don't let this non elective match change
cause you to save and invest less overall. That's the
only way I think this could have a negative impact.
If you like cool, I'm just going to down my
contributions back. I'm investing instead of that fourteen percent, only
eleven percent, and I'm just going to consume the rest
and up upgrade my budget, increase my spending. That is truly,
(17:17):
as I thought about it, the real only downside from
your perspective that I could think of.
Speaker 2 (17:21):
And that's only I mean. So, yeah, you're taking a
more conservative financial approach to the long term, making sure
you have enough set aside. That's only a downside if
let's say you have only been contributing towards your four
one K or saving four retirement for like five years,
or let's say you are early earlier on in your career.
But let's say you've been doing this for twenty, maybe
even thirty years. I see this as not necessarily a
(17:44):
downside if you now have the ability to perhaps pull
back a little bit on your savings rate, and that
allows you to prioritize some other financial other not financial goals,
but other Oh yeah, financial goals too, like you gotta yeah,
Like those still take money, and so not knowing how
much you have set aside, that's the only thing that
makes me want to qualify the fact that that might
(18:04):
be a negative, because it could be a positive. It
could be a great thing. I think Chelsea, either way,
is going to continue to She sounds like a saver,
so she's going to get after it. And I love
that more of her fellow employees are going to have
the chance to get that nest egg rolling. Oh you know,
it takes a little bit. Sometimes it takes a little
kick in the pants, and in this case, the employee
is doing that.
Speaker 1 (18:24):
For for folks. And now when she passes the HR
person in the parking garage, she doesn't have to give
them the stink eye because she's like, way, oh no,
it's all good.
Speaker 2 (18:30):
She's like, oh, how come, Chelsea. She doesn't look nearly
as suspicious as we would pass each other. But we
do hope that that answers your question. Gives you plenty
to think about, Joe, We've got more to get to
including we're talking about retirement accounts here. We're going to
hear from another listener who has a proliferation of retirement
account options available to him. We'll get to that and
more right after this.
Speaker 1 (18:57):
All right, Matt, we're back. Let's keep the ask HDM
questions rolling. This next question is specifically about a benefit
that you get from your employer, but is it going
to be enough to cover you in a time of need?
Speaker 4 (19:09):
Hi, guys, this is Mike from Maryland, longtime listener and
I love the show. My question for you is about
long term disability policies. I'm a healthcare worker and I
bought a disability policy three years ago that pays out
about one hundred thousand a year, with riders to automatically
injust for inflation. I recently became a federal employee, literally
(19:29):
a week before the new administration came into office, and
reading through my benefit package, I saw that I have
the opportunity to buy into a policy through the federal government.
If you were in my position, would you drop the
private policy and join the government policy. There's a couple
of reasons I'm hesitant to drop my policy. One is
I work for an agency that the current administration is
(19:52):
not very fond of, and being a new employee in
the probationary period. Even though it's a federal job, I'm
not one hundred percent sure how secure my job is.
Second is I prefer not to rely on my employer
completely when it comes to my livelihood. For example, I
could purchase mal practice insurance through my employer, but I
always keep a private policy because in the end, I
(20:14):
don't think the company will always have my best interests
in mind. And third is, I've never stayed at a
job for more than two years, sustaining twenty years and
keeping the policy seems daunting, and I know it will
be more expensive to restart the policy when I'm older.
Curious to know what you think?
Speaker 2 (20:28):
Thanks, all right, long term disability insurance.
Speaker 1 (20:32):
Policy, and I start one thing out there before we
get into long term dispelling Sure. Just when Mike mentioned
he works for the federal governments and we talked about
this on a recent Friday flight with what doge has
been up to? Well, that's true. Just prioritize your savings
and be prepared for whatever might come down the pike.
It sounds like in Mike's case, his position and might
be disfavored. So I just want to yeah, put that
(20:55):
blinking in red on his radar, just to be prepared
in case he ort to lose his job or something
like that.
Speaker 2 (21:01):
Sure, Well, the fact is Mike has done his homework.
You know, he's purchased his own long term disability policy
before even taking this job. And we think that most folks,
not everyone out there, but we think most folks need
term life insurance. We talk about it fairly regularly, but
disability insurance it kind of gets a short end of
the stick. Talk about it, Yeah, nearly as much, and
(21:22):
it might even be more crucial. And that's because stats
show that one in four folks will actually become disabled
at least for a short period of time before they retire.
And so Mike, if you were to become disabled for
a couple of years, well, that's going to have a
significant impact on your income most likely. And while there
might be some different programs out there, like state or
government benefits that might be open to you, getting those
(21:45):
benefits is a it can be a hassle, it's a process,
and they likely won't provide anything close to what your
current long term insurance policy is willing to pay out.
Speaker 1 (21:54):
Yeah, it might be a drop in the bucket, right
compared to what you need compared to your current income,
and so that could help, but it's it's certainly not
going to cover the vast majority of your expenses. So
having a disability insurance policy, yeah, it could could help
you if you can't work for an extended period of time.
But you might not need the one you purchased on
the open market anymore thanks to this new policy offered
(22:16):
by your work. I say, you might not. But there
are a few caveats here, by the way, in our opinion,
most folks don't need a short term disability policy.
Speaker 2 (22:23):
There are oh good opportunity to talk about the duck insurance.
Speaker 1 (22:28):
That's right, Yeah, yeah, yeah, that's what that's that's what
AFLAC is typically trying to sell you, Like if you
get hurt.
Speaker 2 (22:32):
I try to avoid the actual names of companies just
in case they want to spised on the podcast.
Speaker 1 (22:38):
Well, but you will not hear us voicing for a flag,
that's for sure true. And so yeah, that's that's what
an emergency fund is supposed to help with. So some
folks might say, oh, yeah, let me get the short
term disability policy just in case I get injured, but
it doesn't last that long. Well, the emergency fund. We
think of that as self insuring, as essentially your short
term disability policy that you are covering with funds that
you have in a high heel savings account. We like
(22:59):
the idea right of self ensuring for a potential six
month work drout or something like that if you were
to lose your job. It's why we're so keen on
saving up a substantial emergency fund, and it's part of
our money gears if you go check it out at
how money dot com. But a long term disability policy
that can particul is something we're more keen on. It's
something that can help if something happens to you and
(23:21):
you can't work for quite a while, for an extended
period of time, and my given your particular circumstances, I'd
be reluctant. I would say to let go of this
individual policy right now.
Speaker 2 (23:31):
Well, and I think that it's clear that Mike is
he's hesitant to give this thing up. And I think
this in part comes down to your risk tolerance and
how comfortable you are playing around the edges essentially clips
to the edge of the cliff, And so if you
are someone who likes to be a bit more independent
or if you don't have others who you can count
(23:52):
on for income. This is absolutely something that you're going
to be more drawn towards. But at the same time,
like let's say you're thinking, Okay, what would happen if
I couldn't work, if I couldn't earn an income for
a couple of years, what would that scenario look like?
And if you've got a mom who would like basically
make you move home and take care of you and
help cover your expenses or something like that, Okay, well
(24:12):
maybe or you know, you've got some parents who are like, man,
I know that they would love to have me back
back home in my hometown, back in my childhood bedroom.
You know, like if that's the kind of scenario that
and there's like in a really solid financial position, well
guess what, I don't think long term disability is something
that you wouldn't necessarily want to consider all that much.
Speaker 1 (24:30):
And so, yeah, a lot of other backstops.
Speaker 2 (24:32):
A lot of it comes down to your individual situation. Yeah, yeah,
and just.
Speaker 1 (24:35):
Especially with the price of it, which is something we
need to talk about too totally.
Speaker 2 (24:38):
And it comes down to like, if you have a
I don't hear him mentioning a partner necessarily and so
it's kind of it comes down to him and his
ability to earn an income. But if you have a partner,
a partner who can work or who is currently working,
it's like, okay, well we're not going to necessarily be
in dire straits. If the worst were to happen to me.
Speaker 1 (24:53):
That dephrased some of that risk. The emergency funds as
well as another paycheck coming into the household, maybe having
kids yet that you would also have to support less responsibility. Yeah,
all those things would allow you to take a little
bit more risk. And it sounds like one of the
things Mike said is he doesn't necessarily plan on staying
in this job for too long, or any job for
too long. And I think even if you wanted to, Mike,
(25:15):
it sounds like your job might not be super secure.
But if neither of those things were true, we might
have different advice. Because opting for the work provided policy only,
you'd likely be paying a fair amount less every single
month for that coverage. But for everyone listening, I would
say double check and see what the actual coverage includes.
Because employer provided insurance policies rarely provide enough coverage on
(25:39):
both the life and disability front. So you might say, oh, great,
a free plan from my employer. Fantastic, I don't have
to buy my own policy because I am covered. And
that's just like maybe but probably not right. Sometimes doubling
up actually makes the most sense. I think, you know,
taking the minimum amount of life insurance for insta for
(26:00):
most employer plans and getting extra coverage on your own
often makes the most sense. Matt. Back when I worked
for a company getting a W two, they offered life
insurance at one x your pay, and so that just
wasn't enough life insurance, but you could buy more through
the company. But the race that they would charge if
you were to buy through the company were far in
(26:21):
excess of what I could get on the private market.
And so let's say I was uninsurable, that I'd had
a bunch of different health catastrophes, then maybe it would
make sense for me to get life insurance, more life
insurance through my employer, because it would be prohibitively expensive
on the open market. But for young healthy people in particular,
not getting more insurance through your employer and getting it
(26:41):
on the private market means you're going to have enough coverage,
it means it's going to cost less.
Speaker 2 (26:45):
Yeah, just because there's a policy available to you through
your employer doesn't mean it's the best nor necessarily the
most cost effective way to go about it. And it
sounds like Mike's you know that he's got his own
solid policy there that's going to pay out well if
he does encounter a disability. And he also mentioned the
inflation adjustment as well. There's an inflation adjustment clause and
that's pretty massive, Like that's a huge deal. And so
(27:07):
I think if I were these days, yeah, yeah, well
hopefully yeah, hopefully re pass the worst of it, but man,
it's inflation. It is sticky. If I were you, Mike,
I would hang on to that policy at least for now.
And by the way, for folks out there who might
be considering this, if you are looking into it, just
know that a policy out there on the open market,
it's not cheap. It often costs one to three percent
(27:28):
of your annual salary. It depends on a number of factors,
elimination periods and things like that are built into your
specific policy. But given the stats, it is an insurance
policy that more folks should consider that being said, I
don't want to discourage folks, but I don't personally have
a long term disability policy in play strol, do you?
Speaker 1 (27:46):
No? I do not either, But I will say we're
risky dudes. I guess if I lost my voice completely
that would be that potentially put me in a bad position.
But talking about kind of how much risk we.
Speaker 2 (27:57):
Can, there's also other things well here before you keep moving, Yeah,
like you're touching on like a specialized career, right, and
if you, let's say you're like a concert pianist and
like this is the only thing that you can do
and you make a ton of money doing that, that's
the kind of scenario, the kind of situation where it
might pay to go with some long term disability.
Speaker 1 (28:15):
Or they're literally people who have like football players pianists
who have insurance policies on the parts of their body
that make them income. Right, they're specialized policies for those people.
And you and I don't think we qualify to get
that sort of level of insurance from our you know,
from our carriers.
Speaker 2 (28:33):
But anybody and can talk like I do, and most
folks actually can speak a little bit better.
Speaker 1 (28:38):
Than I can.
Speaker 2 (28:38):
Dole but that's an important consideration though, like if you
are flexible to doing other like I've done lots of
different things in my life. I don't have like a
career that looks incredibly specialized. I'm very open to being
flexible to trying new things. Okay, and I we've even
talked about this, and she's like, well, I would go
to work if something happened to you. It's like, okay, cool,
these are conversations that are important now. And if you
(28:59):
broke your back, maybe I would host for by myself
for a little bit and then you'd be back on
the mic, hopefully a no time, like they're also hosted
from the bed. Just be like, all right, this is true.
That's just what it looks like, right, we could do that.
Speaker 1 (29:10):
I think the other thing to note of why like
I don't have a policy is I'm comfortable holding on
to more cash self ensuring more even for long term
potential disability needs. And you're right, Matt, there's just a
lot of flexibility I think that we have that. Maybe
not everybody has exactly, and so I would say, yeah,
it's not for everyone, but more people should consider it.
Speaker 2 (29:30):
Yeah, And it depends too how close you are to retirement,
because that means you're you just you've got more money
set aside. You're less dependent on your income to provide
for your standard of living as opposed to your investment
dollars doing some of that heavy lifting.
Speaker 1 (29:41):
The culture you are to financial independence, the less likely
it makes sense to.
Speaker 2 (29:45):
Per But let's get to our next listener question. This
is from a listener who is considering a number of
different options to make sure that he is properly prepared
for retirement.
Speaker 5 (29:55):
Hi, Matt and Joel, this is Greg from Los Angeles.
I really enjoy the show and all the knowledge and
insight that it provides, and I keep telling my friends
and coworkers about it to help give them a better
financial footing. I am a public servant, so I am
(30:16):
contributing towards a pension when I retire. Over the last
couple of years, I have been maxing out my roth IRA.
My question is I am in the beneficial position of
potentially earning more than one hundred and forty thousand in
the next couple of years, and I wanted to get
your thoughts about you contributing to my personal wrath. Should
(30:41):
I continue to do the roth Ira and once I
get to that limit, just do.
Speaker 2 (30:47):
A backdoor WROTH.
Speaker 5 (30:49):
Or what I'm finding from my employer is that we
have the ability to contribute to a savings account which
is a four to oh one K, and I'm wondering
if I should just start that post tax and roll
over my current roth IRA. I am in the process
of also my pension. I contribute to the four fifty
(31:12):
seven offered by my employer, and this four oh one
K would then be a third bucket to fill, either
pre or post tax. Appreciate all your time and consideration
and wishing you the best in coffee and beer.
Speaker 1 (31:28):
Oh Greg, thank you first of all for spreading the word,
for telling other people about the show. We really appreciate it.
If every single one out there listening told one friend,
just told one friend, just proselytized a little bit about HTM,
we double our listenership. Joe. That's how it works, Matt.
So thank you, Greg. Appreciate that. And by the way,
great coffee and beer, they really are inexpensive ways in
(31:49):
modern way, in moderation to bring some extra joy to
your life, even.
Speaker 2 (31:52):
It can be in expensive ways sometimes ye like we
say it's our craft beer equivalent for a reason.
Speaker 1 (31:57):
We don't.
Speaker 2 (31:58):
We're not spending the bare minim on our beard drool.
Speaker 1 (32:01):
No, and you're not on your coffee either.
Speaker 2 (32:03):
In particular, I've actually I've kind of changed it all
them back a little bit.
Speaker 1 (32:06):
Yeah. Is that partly because coffee bean prices have gone
up so much that the kinds of stuff is going
to have?
Speaker 2 (32:12):
You personally experienced that if you were just to look
at what they call it, I mean interesting, I shop
mostly at Costco, but yes, I look at the price.
What if it's impacting the cheaper beans in because the
nicer stuff. So okay, So first of all, personally, all right,
try not to let this be a massive tangent. But
I have personally dialed back my coffee consumption. I don't
know if you've noticed, but I don't make coffee here
in the office.
Speaker 1 (32:31):
Anymore, now that you point it out, Yeah, no, I
didn't think about that.
Speaker 2 (32:35):
It's been a couple months and I realized, you know what,
I feel like my coffee drinking has gotten out of hand,
and not from like a health standpoint. I could totally
fall asleep at night, just fine, but I realized it
was something I wasn't needing I guess, I don't know.
It felt like it was getting just a bit out
of hand, in particular when I was and I was
just buying some of the nicer stuff, Like some of
the bags I was mining. Man, it's like a ten
ounce bag or like a twelve ounce bag for like
twenty five bucks instead of what I'm talking about were
(32:57):
fancy coffee that you're looking at like over two dollars
an ounce. But I think Kate and I have found
the sweet spot specifically, if folks want to know countercultures,
Big Trouble. They sell it at Whole Foods, which is
on our path to school Hu for carpool, and oftentimes
you can go in there and you get it on sale,
and like when it's on sale, I'm paying less than
a dollar an ounce. And this is like solid, really
(33:20):
tasty stuff that we're drinking on the regular. I still
go out and splurriage and we'll get like a bag
of the nice stuff, or someone gives me some really
good stuff, which you like to do. Yeah, one of
our local roasters. That's phenomenal. I'm still drinking, but those
bags are expensive. I'm still drinking the Kirkland signature. But
I don't know any better, and I kind of don't
want to know better. I'm like purposely blindfolding myself. That's
to fancy coffee to make sure that I don't spend
(33:41):
too much. I'm trying to do that with wine. But
the more wine I drink, I'm like, oh, that's now
I know. I don't even know how to say it.
Speaker 1 (33:48):
Rio hoo.
Speaker 2 (33:49):
Yeah, it's like a Spanish wine. I had like one
of those recently and I was.
Speaker 1 (33:53):
Like, oh, this is I like this. Okay, so sorry,
we'll stop this changent very soon, but I'm going to
pick you up a bottle. I haven't tried the Kirkland
signature version of the Rio. I wonder if it's anything. Oh,
we'll give it a try. Yeah, okay, I have to
give it a go. But let's get to Greg's question, Matt,
because that's what we do on the show, is answer questions.
Speaker 2 (34:09):
At some point. We will get to your question, Greg,
after we talk about all the things that we want
to talk about this right, this is our show, after all, Greg,
not yours. Hey, he's the one that brought up coffee
and beerus. I'm assuming he's a fan as well.
Speaker 1 (34:19):
If you didn't want that tangent. You shouldn't have asked
for it. Well, congrats on having a pension available to you.
That's that's becoming more rare obviously. But what should you do, Matt,
when you're making the big bucks and you can't contribute
directly to a roth ira? That is a question that
is actually a good question to have. It's a good
problem to have because it means you're moving up the
income spectrum. And some people they think of that as
(34:41):
a sad day, but I think of it as like
a happy day because it means you're crushing it when
it comes to the money you're making. I would rather
make more and lose access then make less and still
be ROTH eligible, like if I had to, you know,
had to pull the lever on that choice.
Speaker 2 (34:55):
It's like option A or option B.
Speaker 1 (34:57):
Which one would you choose? Is okay? Well?
Speaker 2 (34:59):
I hate that I ca contribute directly to a wrath,
but it means good things, right, And you know, Greg
must be single because the income limit for joint filers
is like two hundred and thirty thousand dollars, he cates
one hundred and forty six thousand dollars for single individuals.
Speaker 1 (35:12):
But as you crust that threshold. My first suggestion would
be to invest more overall dollars, which could help you
remain ROTH eligible one escially, I guess the solution more
people should consider him totally.
Speaker 2 (35:23):
Yeah, So if Greg were to start contributing to his
traditional four one K so not his WROTH, if that's
an option that's available to him, WROTH war one K
no no no no, go with a traditional four onin K,
and that could reduce your modified adjusted gross income, allowing
you to keep contributing directly to a WROTH, meaning that
there are going to be no extra hoops for you
(35:43):
to jump through. Basically, if you're right on that line,
every dollar you contribute to a pre tax account, it's
going to help you to lower that modified adjusted gross income,
potentially keeping you under that income threshold, which can mean
you can keep talking money into your roth ira L
like clockwork, just like you always have, and then you
know if your income does go up substantially over time,
(36:04):
or if you aren't keen on investing more money there.
Speaker 1 (36:07):
There's other ways to pull this off as well, which
you've touched on, but I think that's sometimes matts. People
are asking about, oh, student loan payments. If I contribute
more to my retirement account, I might be able to
lower those student loan payments. And I think that's just
another reason yes, consider investing more, particularly in those years
where it might make a difference in your monthly budget,
right and in this case where it might make a
(36:28):
difference in your WROTH eligibility and greg. You know, higher
earners such as yourself can take advantage of what's known
as the backdoor wroth. So that's something else that's worth mentioning.
It's not another account some people think that it is.
It's a process that you go through that involves basically
extra hoops. And so what happens is you contribute money
to your traditional IRA and then you convert those dollars
(36:48):
into your wroth IRA instead of making that direct contribution
to the wroth. And what you need to know is
you're not claiming any sort of tax deduction for that
initial contribution to your traditional IRA. You'll make what's known
as a non deductible contribution. Read up on the details.
We've got a piece on this up on our website.
We'll link to it in the show notes. But the
(37:09):
backdoor wroth can be the perfect way for you to
basically keep contributing to that account if your income continues
to rise. And we love that you're trying to continue
to put in after tax dollars into investments, because yeah,
I think having more WROTH dollars Matt is just going
to mean more tax flexibility for Greg when he gets
(37:29):
into his retirement years, he's going to have kind of
the ability to dial in his tax rate if he
has two bucks to pull from.
Speaker 2 (37:37):
And the last strategy that Greg mentioned contributing to his
four one K and then converting those funds to a
roth IRA. That's what's known as a mega backdoor WROTH,
which I know is kind of ridiculous, gets a bit confusing,
But if you've got even more money that you want
to invest on top of maxing out your roth IRA,
but contributing to that would allow you to invest even
(37:57):
more dollars there towards your taxi managed rath IRA. So
and with him, he's talking about all these options that
he's got available to him, right Like he's got the pension,
he's got the roth iray that he's been maxing out
every year. But then on top of that, contributing to
your employer plan as well, that's I feel like he's
entering Greg's entering beast mode sort of territory. He's like
(38:18):
or god mode you remember doing in Doom. Oh yeah,
back in the day. His eyes have glazed over, they're
like white, and he's like indestructible. From the retirement standpoint, it's.
Speaker 1 (38:28):
An embarrassment of riches essentially that Greg has here. And
I will say too, Matt, I feel like I got
a little confused listening to Greg's question. I just want
to make sure that we're not missing anything here. So
one thing I would suggest Greg, since there are there's
a lot of money you're investing at this point, and
there are a lot of options open to you, I
think it might make sense to talk to a financial advisor.
(38:49):
We have talked about two different places that we suggest
people go find an advisor. There's hellonectarine dot com, and
then there's Domain Money. Those are both too great places
to turn Domain Money likes to. They're all about giving
you kind of an all encompassing financial plan, and so
the cost is more expensive. Hello Nectarine, I've actually went there, Matt.
(39:09):
It used to be one hundred and fifty bucks flat
for an hour. Now they have advisors who charge between
one hundred and fifty and three hundred dollars an hour,
so they've changed their business model, and more of those advisors.
Speaker 2 (39:17):
Are offering premium model.
Speaker 1 (39:19):
Yeah, and more of those advisors are now offering domain
money ish sort of plans too. So if you're like
I just got a few questions about this, that might
be a great place to go. Especially again, you don't
want to let the tax tail wag the dog, but
you do want to make sure you're making a smart
decision for your future and for your current and future taxes,
So it might make sense to pay somebody for a
(39:39):
couple hours of their time to kind of dice the
details here totally.
Speaker 2 (39:42):
So on the note of planning for your future, one, well,
I guess one caveat too. It's always great to plan
for your future. But Greg I wouldn't spend too much
time on this as well, because so he said that
he in the future years might be getting close to
like earning close to one like you mentioned. One for
six is the cutof off for Rotha, right, but that
was actually for last year, for twenty twenty four, For
(40:03):
twenty twenty five, it's one hundred and fifty thousand dollars,
And so what I'm pointing out here is that by
the time you hit that, you get closer to a
one forty greg like there's a good chance that that
threshold is moved even higher. And I'm not saying that
you don't have the ability to like catch that threshold
at some point. More power to you, man, I think
you can totally do that. That's the goal. Yeah, absolutely,
I think there's likely a very good chance that you're
(40:24):
going to be able to earn more than what that
threshold is.
Speaker 1 (40:27):
Like a greyhound, you want to catch that rabbit or
whatever it is.
Speaker 2 (40:29):
But I'm just highlighting the fact that you're not quite there,
and they're going to continue to raise that with inflation.
I mean, I think like just a few years ago,
or maybe four or five years ago, it was at
like one hundred and twenty five thousand dollars or something
like that. So it has come a long ways, and
I think it will continue to do that as long
as inflation continues to be sort of a thorn in
(40:50):
everyone's side. So something else to keep in.
Speaker 1 (40:53):
Mind, no doubt. So, yeah, you might not actually have
much of a problem, and you might be able to
kind of keep going the easy route of contributing to
to that roth for many years to come. Just depends
on how quickly that income escalates. But Matt, we've got
more to get to on this episode, including we'll talk
travel tips. We'll get to that and more right after this.
(41:18):
All right, buddy, we're back from the break.
Speaker 2 (41:19):
Let's keep talking about money. And of course now we've
gotten the Facebook question of the week, and this week
it's from Nathan and he asked, I was wondering if
anyone had tips on booking flights and hotel? Are there
sites that are good? Should I book them together or separately?
Should I book directly with the hotel or with prices
I see on other sites if they are cheaper? What
(41:39):
do you think, Joel, all of the above.
Speaker 1 (41:41):
That's a good question. There's a lot to talk about here.
We'll do our best to offer a brief but helpful answer.
Speaker 2 (41:47):
Just don't travel. Look nothing. If you want to say
the most amount of money right, stay home.
Speaker 1 (41:51):
If you want to save you more, live in your
mom's basement. That is going to be the best way
to have that ninety percent savings. Right that everyone's shooting Formatt,
but occasionally.
Speaker 2 (41:59):
Buy some groceries for the house. Come on, man, you
don't want to be a total leech.
Speaker 1 (42:02):
Otherwise she's gonna kick you out. Well, we are all
about traveling and saving money on travel. Maybe we should
just mention a few of our favorite sites Matt for
travel and flights specifically, it used to be this combo
of Google Flights and Southwest, but now think the good
Lord above. Southwest Flights are included in the Google results,
so it's a one stop shop. You can set up
(42:23):
fair alerts, which is clutch, and I don't know if
you need any other sites for booking besides maybe a
Going membership which she used to be known as Scott's
Cheap Flights if you are a flexible travel nerd. I
think Going is great because they're delivering those sweet deals
to your inbox and you might be like, wait a
second Germany for three hundred and eighty two dollars, I'm in.
(42:46):
I didn't even realize I could get there that cheap.
And that's what Scot's Chief Flights does so well. If
you just take one international flight a year based on
their recommendations, you easily more than pay for the membership fee.
I think skyscanner is another solid site, But I don't know.
I think that combo of Google Flights Southwest Scotts Chief Flights,
if you're just using those three resources, I think you
(43:08):
can get mostly where you want to go.
Speaker 2 (43:10):
Yeah, and that's the typically the most expensive part of traveling.
Speaker 1 (43:14):
But one other thing on Google flights is setting fair alerts.
So when you're like, here's where I want to go,
make sure you set that fair alert and look at those.
Speaker 2 (43:22):
You don't have to keep checking on it every time.
Speaker 1 (43:24):
And Google even tells you, hey, actually, right now, this
is like an average time to buy, or hey, this
is a really good price. You should book now. And
that's always helpful. That helps me know when to pounce.
Speaker 2 (43:32):
Yeah, by make it happen, be done with it. As
far as hotels, though, hot Wire price Line they're great.
Don't forget about Airbnb, of course, we're always big fans
of them. But if you really want a hotel, we
like those third party sites, especially if you're willing to
book a hotel room without knowing specifically where you're staying,
like if you don't really care about the name of
(43:53):
the place and you just want like a star rating, right,
like a certain quality, certain caliber, of hotel that's totally
the way to go. The hot wire hot rates that
could give you an incredibly low price price line. They've
got the express deals, and I think that that can
be a great way to score a deal. And these
sites used to have the best deals the majority of
(44:15):
the time, but things have changed recently. Many of the
hotels that you see listed on these actual websites, they've
kind of wised up. And so if you see one
that you like, look up pricing directly on their website,
and what you can do. You can actually give them
a call, which very few folks are willing to do
these days. But if you call them up, there's a
good chance that they'll match or even be a deal
(44:37):
that you're seeing elsewhere. And then on top of that,
you typically will get a better cancelation policy as well.
By booking directly with hotel versus one of these third
party sites. Non refundable. It can be worth it if
you're getting like the absolute sickest deal, but if not,
you know, I like the idea of keeping your options
open just in case you want to change your mind
or something else comes up and you want to pounce
(44:58):
over there instead.
Speaker 1 (44:59):
Of over here, of the things that I think that
I've noticed, Matt, we're trying to book through hot Wire
or price line on occasion, is man, the deal the
nightly rate looks like it's way better than maybe what's
offered through the same hotel boo booking directly on their site,
But you click all the way through and you look
at the taxes and fees, fees, they're much more expensive
on some of these third party travel sites that talk
(45:22):
about helping you finding the best deal, and so you're like,
at the end of the day, I'm not really saving
much money, and yeah, the cancelation policy is way crummier,
and actually maybe I'm paying more my going through one
of these third party sites. Think going directly through the hotel.
That did not used to be the case. It felt
like you could almost always get a better deal on
a third party site. That just feels like the era
(45:44):
that hot Wire and price line, when they had the
monopoly on the best prices. That's not really where we're
at anymore. It's not like it used to be.
Speaker 2 (45:50):
Yeah, it's worth it to have another Safari or Firefox,
not Firefox.
Speaker 1 (45:55):
What is it?
Speaker 2 (45:55):
Chrome Browser open and doing the command till day to
be able to Firefox. Firefox is what the people still
use that. I'm sure there's some Firefox users out there.
But also, hey, we almost forgot about this costco travel.
Don't forget about that, because you got to mention, depending
on the type of trip that you're taking, you might
find better deals on all sorts of like in particular
like the all inclusive style travel packages. And that's particularly
(46:19):
true for like more exotic destinations like Cleveland, not Cleveland,
like Hawaii, like the Caribbean. And as always, the number
one way to get a great travel deal is just
to be flexible, not only on the dates that you're
looking to travel, but also the location. I think the
best way to think about going on a trip is
just to be like, at some point in this season,
(46:42):
I want to take a break. Yeah, and then man,
the world's your oyster and you're gonna absolutely get the
best deal. And then the Google Flights Explore feature is
going to be awesome. For that you might get crazy
cheap flights too, in awesome plays that wasn't even on
your radar just because you clicked around some you were
like doing a little bit exploring, see what's out there,
Look what the deals are? And it doesn't take long
before you're like, guess I'm gonna.
Speaker 1 (47:03):
Go to Mongolia?
Speaker 2 (47:04):
Sure, why not?
Speaker 1 (47:05):
Didn't realize you get there for two to eighty round trip.
That's yeah, that's the cool thing. When you click the
Explore feature, you might just be made aware of insanely
low prices to a destination that you hadn't even thought about.
And it might be guess what, especially if we're talking
about Europe, a train ride away from the place you
really want to go, And so you're like, sound, was
like fine, great, let me fly into Milan and then
I'll still get to hang out in Tuscany because the
(47:28):
flight to Milan was way cheaper're.
Speaker 2 (47:29):
Describing my travel back in gosh when it was two
thousand and three, Joel, Oh.
Speaker 1 (47:32):
Did you do that exactly? Tenrary?
Speaker 2 (47:34):
If we flew into Milan? Okay, we didn't. We went
took a It was like a really long train ride.
This is one of my first those train rational Yeah.
Speaker 1 (47:43):
Yeah, this one was rough. Well, especially when you're younger,
you got extra free time. Yeah, we're willing to do
it to save the money.
Speaker 2 (47:51):
We totally did that. And here is a little piece
of advice that Nathan isn't asking, but consider driving because
especially if you have a fam can't drive them alone,
You can't drive them alone. But like I mean, consider
something a little bit more local instead of going abroad.
Everyone thinks about something more exotic. But there's a lot
of amazing stuff here in the United States, and I know,
especially with kids, when they can't fully.
Speaker 1 (48:09):
Appreciate all that's out there.
Speaker 2 (48:11):
Plus they're also not appreciating how much it costs to
fly in a plane, the ability to pile everybody in
a car, and to go see the mountains of West
Virginia before we go see the mountains in the Alps.
Speaker 1 (48:21):
Says the guy who scoffed at my Cleveland suggestion.
Speaker 2 (48:24):
Hey, I'm going to hit up Cleveland at some point,
but just haven't been there one of these days. Yeah,
so something to consider as well.
Speaker 1 (48:29):
All right, Matt. One more quick Facebook question. This one's
from an anonymous poster. They said, frugler cheap, unplugging my
EV when peak hours hit and plugging back in after
seven pm when I'm home and don't need to go anywhere,
No brainer, one hundred percent approval. Right, I'd be curious
to know the killawatt per hour price difference here, but
often we're talking about getting that electricity for less than
half of the price of full PA costs. I don't
(48:51):
see why you'd pay extra if there's an easy way
to avoid it, Matt, I think for this poster too,
I would check with your electricity provider to see if
there's an even better plan that you can be on
as an EV owner at least or we live, the
power companies offer something that's known as a super off
peak rate, and so this rate is between eleven PM
and seven am. It's only two point two cents per
(49:12):
kill a whatt hour, which is like a fraction of
what it costs typically to get electricity.
Speaker 2 (49:17):
I think on peak is thirty and so literally it's
fifteen times more affordable crazy time.
Speaker 1 (49:22):
That's insane. So if you're an EV owner in particularly
that it's worth considering think about how much something like
that could save you, especially especially if you're the kind
of person who's willing to I don't know, maybe do
your start your washer and your dryer at night before
you go to bed to or early in the morning dishwasher. Also,
if you're using those appliances to during those hours and
charging your EV. I think it's a no brainer to
(49:43):
get that lower rate.
Speaker 2 (49:44):
Totally, and ultimately the biggest one is that you're not
charging while you're out and about on the road, because
if your unwillingness to pay peak prices meant that you
forgot to charge your car at home and then you
had to stop at is It charge point though some
of the different stations, you gonna paying a whole lot
more like five to seven times more. So the more
you can charge at home, even if it's not the
(50:06):
most optimized time, the more money that you're going to save.
This might be the last time I shared the story,
but when we were traveling in Colorado, we rented a Tesla.
Onturo wanted to get a feel for what it's like
to drive a Tesla and have an ev What that meant, though,
is that we charged were charging at the Tesla superchargers,
and I tracked my charges religiously, and the cost was
(50:27):
pretty much exactly the same as had we rented a
traditional internal combustion engine, based on the average price per
gallon there in Colorado, times the number of miles that
we drove. And so if that's you and you're constantly
paying top tier charging prices, you're not doing this to
save money. You're doing this for lifestyle.
Speaker 1 (50:45):
The money saving benefits of an EB come when you
charge at home, and it can be amplified if you
get one of those off super off pak rates, or
if you charge at work. Oh yeah, more folks have
a When I had, it's a benefit. Oh yeah, you
did that, so I I would. They had one hundred
and twenty bolt outlets, and I would plug in when
I got to work. But eventually they installed real charging
(51:07):
stations and they covered up all the one twenty volt.
You know, I'm true frugal enough, I would have kept
charging at the one twenty volt even though it was slower.
I just charged it home. Then it just changed my habits.
Speaker 2 (51:16):
The more employers are even offering that as a perk,
where it's just like, oh yeah, we got level two
chargers here, like they are intentionally promo stalling level two
the faster chargers for free. Speaking of attracting the top talent,
that's the way to get folks on board, no doubt.
When it's like a soft benefit.
Speaker 1 (51:30):
That folks were able to realize.
Speaker 2 (51:32):
But buddy, let's mention the beer that you and I
enjoyed today, which is beer Missou? Do you want to
say it? I said at the first time.
Speaker 1 (51:38):
Too, yea beer on massoue beer Massou, Tierra Missou, milk porter,
Imperial milk porter. This matt was thinner than I thought
it was going to be, but solid. It's a yeah,
but it was an Imperial Porter, so I was like, oh,
is it gonna be Is it gonna be bigger?
Speaker 2 (51:51):
Expecting it to be a bit heavier, kind.
Speaker 1 (51:52):
Of tasted more like a traditional porter, but I like
the flavor profile.
Speaker 2 (51:56):
I was super good.
Speaker 1 (51:57):
Definitely had the Tierra Masioux vibes going on. A little
bit sweet and lactosey for my taste, but a solid beer.
And this is a local option too. I don't know
that I've had much buy six bridges before. So yeah,
we mualty dark but not too dark.
Speaker 5 (52:10):
Yeah.
Speaker 2 (52:11):
I had the like it wasn't bitter. That's one of
the things that you get with a milk stout is
that it does have some of that lactose sweetness. But
I wouldn't call it. I don't think it was too sweet.
It was just like milky smooth, yeah, as opposed to
like hitting you over the head with a sweetness, just
like a touch, a sweetness, really enjoyed. It definitely makes
me realize I don't think I've eaten enough Tira Massou
in my life. Speaking of Tuscany, but that's gonna be
(52:32):
it for this episode. Listeners can find our show notes
up on the website at howto money dot com, including
that article to the back door roth Ira how to
pull that off. So buddy, let's wrap it until next time.
Best friends out, best friends out.
Speaker 1 (52:46):
Yeah, it's
Welcome to Out of Money. I'm Joel, I'm Matt's and
today we're answering your listener questions.
Speaker 2 (00:24):
Happy Monday everybody, as you are likely recovering from having
lost one hour of sleep yesterday, well last night. Spring
Ford is the worst.
Speaker 1 (00:32):
Man. Oh yeah, fall Back the absolute best.
Speaker 2 (00:35):
I remember realizing that for the first time as a
freshman in college, someone mentioning that, and it was we're
hanging out and it's like eleven thirty at night, thinking okay,
maybe we should kind of wrap things up, but then
someone said no, it's actually technically it's more like ten thirty, and.
Speaker 1 (00:50):
We're like, yeah, let's keep gaming, you'll.
Speaker 2 (00:52):
We kept the party going then because of that. Fallback
is the best.
Speaker 1 (00:55):
Yeah, spring Ford is the worst. Hope you guys are recovering, Well.
Speaker 2 (00:58):
Yeah, this is our how to Money Monday episode. Though,
we're going to hear from a listener who's asking for
our favorite way to book a travel deal for all
the folks out there who are looking to get some
vacation under your belt this summer this spring. Another listener
she's got some four to one K match changes there
at her employer, who's it's getting a little more generous.
It's thrown her for a loop. She's trying to figure
(01:20):
out what's going on, and another listener is wondering what
our take is on long term disability insurance. Maybe we'll
even share whether or not we have long term disability ourselves.
We'll get to that and more during our episode today.
Speaker 1 (01:33):
Buddy and ebe charging question too, Mattha will take so
electric vehicles. If you want the electric vehicle to save
you the most money, you got to figure out think
about how you charge it and when you charge it.
Speaker 2 (01:41):
I don't know if there is anything else out there
that Jiel thinks about more that he doesn't have than
an electric vehicle.
Speaker 1 (01:47):
That's true that Yeah, you're right. One of these days though,
I'll get back in the EB game. Have that Nissan
lead for six years, loved it, that's right. I think
evs are fantastic. Just you were an early adopter is
what they're called, Joel. Yeah, and what do they say
that you've earned it? Pioneers get slaughtered and I might
have with my eighty mile range in Nissan Leaf, I
(02:08):
see people selling those now.
Speaker 2 (02:09):
You can still drive it around for like twenty miles
before the thing crapped out by the time you sold it.
Speaker 1 (02:13):
Well, I see people selling them now and it's amazing.
They're like, uh, it really only gets about forty five
miles which to charge these days.
Speaker 2 (02:19):
I'm thinking about it from a kids standpoint, like in
that kind of what you want, it's like they can't
get far from home before it's like a boomerang where
they have to kind of like get back home, Like, yeah,
I gotta charge charge the right.
Speaker 1 (02:29):
If you get that car for your kid, make sure
you have triple A because you might need to tow
it on occasion. It's true.
Speaker 2 (02:34):
Before we get going, I've actually got a frugal or
cheap for you. And this is going to be part
confessional as well. Oh yeah right, sure bring it. I
think our listeners you, I think equas I know what
I'm about to share, but listeners, hopefully should would get
a kick out of this.
Speaker 1 (02:50):
I like playing priests to your confession.
Speaker 2 (02:52):
So obviously we've got a small business here that we run,
and so obviously we have a business checking account, but
we don't just have one business checking account. We actually
have two separate banks who we bank with because.
Speaker 1 (03:05):
Of just the massive amounts of money that are gone
exactly once you go above that two fifty. Just kidding,
just kidding.
Speaker 2 (03:11):
Now, the reason that we have two separate bank accounts
is because so we've always had a Capital one checking account.
We got grandfathered in. It's a total, completely free account.
Speaker 1 (03:21):
One of the best business accounts. But then we found
another one.
Speaker 2 (03:24):
It's great, there's another one. And we've talked about this company,
this bank on the show before Leley. It's l I
l I dot Co. And the reason we'd previously mentioned
them it was, actually, I'm pretty sure it was in
response to a listener's question, Oh yeah, and they're looking
to find a place to stash their business funds for
their small business, and we went and found this bank.
And the reason we still have them is because they
(03:46):
pay three percent in the savings account that you can
link to the business checking account.
Speaker 1 (03:50):
And like, six nine months ago, is four percent? Wasn't
it was?
Speaker 2 (03:53):
I think it was a little bit higher, but even still,
three percent is fantastic, especially for.
Speaker 1 (03:56):
Business accounts which typically paid nothing.
Speaker 2 (03:58):
And so someone might ask, well, why are you keeping
that Capital Wan account around, Well, it's because when we
open that account with them, they send us a bunch.
Speaker 1 (04:05):
Of checks, a bunch of paper checks.
Speaker 2 (04:07):
We've got these big oversized almost you know, like the
big oversized check that business.
Speaker 1 (04:12):
Is, right.
Speaker 2 (04:12):
They make you feel so legit. It makes you feel
like a little kid, like you're writing fake checks. But
I don't know, but we rarely write checks except for
our four win k, which is with fidelity. The way
it's set up, we have to send in a paper check.
It's not something that we can do digitally. And I
think folks can probably hear when we're going with this.
(04:32):
In an effort to optimize, we keep most of our
cash over in Leley, earning that interest, which, by the way,
they charge you for the best rate, but of course
you earn back more than what that rate is if
you've got a decent amount of money in there. And
so when I cut checks for the employer portion of
our four wind k JUAL, I have to transfer money
from Leey over to Capital one. And guess what I
(04:55):
forgot to do in the most recent iteration reason.
Speaker 1 (04:59):
Yeah, got to send it over.
Speaker 2 (05:01):
There's just a lot financially going on with a business
in my life. Completely slipped my mind, and so I
saw the insufficient funds. Basically a bounce check is what happened.
And so we got hit you and I four fifty each,
I guess with a nine dollars insufficient funds charge. And
(05:21):
so the question here is are we being frugal or
cheap by having two separate accounts? And in this case
it came back to bite us or you know, I
dropped the ball basically as well. What I'm confessing here,
but I want to know no word. You know it's
worth it. I'm not mad at you if you're wondering, Yeah,
thank you. Well, I think the question comes down to
how onerous is it? And then how much are we
(05:42):
actually making by having a higher interest rate from Ley
and so part of it too, was just a testing
for so we could offer good information to our listeners
like you and O are guinea pigs of a sort
from time to time for financial products to a certain extent.
Speaker 1 (05:56):
So for that reason alone, it was worth at least
giving it a go. But point now that we've given
both a go, they're both great accounts. Yeah, should we
consolidate back to one? Maybe? Maybe just for simplicity.
Speaker 2 (06:07):
I like seeing that interest payment every single month. Yeah,
and it more than pays for the It's a fifteen
dollars a month charge and we make much more than that. Yeah, again,
not because we have the vast quantities of money there
in our business checking account, but enough in my opinion
to handle making one digital transfer every three months, which
is how often I typically do that.
Speaker 1 (06:27):
Yeah, so I think, yeah's let's hold onto both. I mean,
I have frugal multiple.
Speaker 2 (06:31):
It sounds like you sounds like you're giving up the
thumbs up frugal. I think so.
Speaker 1 (06:35):
And yeah, I think that's one of those things too.
Where Lily, maybe for someone who has a small business
that doesn't have much money sitting in there for long,
the three percent interest might sound great, and you might
be like, well, I haven't seen any other business accounts
that offer a rate of interest like this. But if
you don't have a decent chunk sitting there inside of
your business account, which you and I have to do
(06:56):
to pay other people, or when money just kind of
sits for a minute before we pay ourselves, it's gonna yeah,
have to cover rent, but futilities. Super small businesses, it's
it's just we're very small business. But super small businesses
might get you know, their eyes might pop open and
be like, WHOA great, this is awesome, But in reality,
it's probably not worth jumping through those hoops if you
got to pay the fifteen bucks a month and you
(07:17):
don't have much money earning interest.
Speaker 2 (07:19):
All right, The beer that you and I are going
to enjoy during this episode, it's called a beer a missou.
Speaker 1 (07:24):
That's right. It's like tier massou, but beer. This is
a gotta love a beer with a bad pun.
Speaker 2 (07:28):
An Imperial Milk porter. Buy six bridges and we will
share our thoughts on this one at the end.
Speaker 1 (07:32):
Of the episode, no doubt. All right, if you have
a money question, we'd love to take your question on
the next ask htm episode. Just basically record a voice
memo on your phone, email it over to us at
how too Money pod at gmail dot com. And if
you're like a little confused, just got to how to
money dot com slash ask for the simple directions spelled out.
Make it nice and easy for you. Matt, let's get
(07:54):
to a question specifically about what to do when your
employer changes the four h one K match that you're
eligible for. By the way, this comes from listener Chelsea, Hi.
Speaker 3 (08:04):
Joel, and Matt. I had a question about an update
that my company is making to the four to one
K plan. Specifically how they structure the matching of employee contributions.
So previously the way it worked was that the company
matched contributions up to seven percent of eligible pay, and
(08:27):
now they are dividing that into a three percent non
elective contribution. So the company contributes three percent whether or
not an employee pays into the four one K plan
or not, and then they're also adding a four percent
elective dollar for dollar match on top of that, so
everybody gets three percent, and then if an employee contributes
(08:48):
more of their own then they can get the full
match up to seven percent. And previously I don't believe
there was any non elective contribution.
Speaker 2 (08:57):
So.
Speaker 3 (08:59):
To me, it's it seems like the company is now
paying more into the employee's four one K accounts, basically
a three percent for everybody. It doesn't affect me because
they've always contributed more than seven percent and gotten the
full match. But I guess I'm just wondering why they
would make this change.
Speaker 1 (09:18):
I'm sure it.
Speaker 3 (09:19):
Maybe has tax implications or something, but yeah, just curious
in wondering if you could clear that up for me.
Thank you.
Speaker 2 (09:26):
Oh, I think Chelsea's got a suspicious streaking her she's thinking, Hey,
you guys are going to pull the wall over my eyes. No,
that's I don't think that's actually the case.
Speaker 1 (09:34):
I think Chelsea, I get that instinct because it feels
like in the financial world like they're trying to dupe.
Speaker 2 (09:38):
Yet there's they're gotcha's they're trying to get one over.
Yet Yeah, all over the.
Speaker 1 (09:41):
Place, you and I we highlight scams or we highlight
people who get taken advantage of, and so Chelsea's just alert.
Speaker 2 (09:47):
I don't want to become that person totally. No, I
don't think that that's actually what's happening. It sounds like, Chelsea,
and you didn't share what company you work for, but
it sounds like it's a just a generous, solid company.
It doesn't sound like that they're trying to the trick
here or anything. I think they might be paying a
bit more. Right, So you're saying, well, like, why would
they do this? There are many reasons I think that
we'll get to but bottom line, they're just making some
(10:09):
of those matching funds easier to access, no matter what
the financial status of the individual employee is. You, of course,
you were brilliant to have always gotten the free money
you've always gotten the full match, and that means that
you've been contributing with the employer money included at least
fourteen percent.
Speaker 1 (10:27):
Of your overall salary each year.
Speaker 2 (10:29):
Because I think she said she was even going above
and beyond that, and so that's that's amazing, that's fantastic.
Speaker 1 (10:34):
That's ultimately where we want everyone to be. The fact
that Chelsea was there even before she got an added
incentive from her employer is great, it's laudable, and it's
truly what most people should shoot for. Is I think
a minimum saving trade of fifteen percent, and that you
kind of alluded to this, Let's talk about why her
employer is doing this. I think at least in part,
(10:56):
they're probably doing it to ensure that every single employee
is at least saving something for their future. This is,
especially with Secure Act two point zero, kind of part
of the push to get the average employee invested, many
of whom don't invest at all if there's not an
automatic opt in. And so, you know, financial literacy in
(11:17):
our country is pretty bad. That's pretty self evident. And
your employer, well, they might see that a decent chunk
of folks are missing out on this perk altogether, like
they're just not banking anything for their future. And maybe
it sounds a little paternalistic, but I think of it
as a good thing for employers to kind of watch
out for that segment of the population and kind of
force their hand in that way, although really it's the
(11:39):
employer forcing their own hand to make those contributions.
Speaker 2 (11:42):
And sure, well, and you can always opt out. It's
not like you don't have a choice, like you automatically
get roll but enrolled, but if you don't want to
continue to do that, it's just back out.
Speaker 1 (11:49):
You can back out.
Speaker 2 (11:50):
It's just a nudge in the right direction.
Speaker 1 (11:51):
There's as yeah, right, I think this is this is
going to help write the ship at least for some
of those people at least a little bit, right, getting
them to invest something. And then you know, with these
automatic contribution requirements becoming normal, this is just an on
trend move for your employer, Chelsea, And it could also
make budgeting more simple for your employer. This is another
reason that they might be interested in doing this. Right,
(12:13):
with elective contributions, it's hard to know what percentage of
folks are going to invest and how much they're going
to invest. And so the employer's like, wait, is Chelsea
gonna max her four one K and we're going to
be giving the full match to her? And what about
other people? What are they going to do? Well, now
they're going to have at least a better idea of
how much the match overall each year is likely going
to cost them. I think it just makes for easier
(12:34):
financial planning for your employer, so maybe it feels a
little more generous, and it also just gives them a
little more future knowledge about what they're gonna have to
fork over.
Speaker 2 (12:42):
Yeah, I think that's definitely true. It's both for the benefit,
I think of the employer, but also the employee because
from an employee standpoint, it's like, hey, we're all in
this together, like we are all saving for our future.
There's like a cohesive team sort of like can do attitude. Sure,
and I think that that is well, especially for new hires.
You know, Let's say you're look, you're considering a few
(13:04):
different employers and you've got this one and they're saying, hey,
no matter what, and this isn't going to affect your pay,
but you're going to be enrolled in a four and
K where you get a three percent match of your salary.
It feels like free money. There's something that's really attractive
about that that I think I would be drawn to,
especially if I was early in my career.
Speaker 1 (13:20):
Well, I think the other thing that maybe goes underrated,
undernoticed is those benevolent employers. They tend to get good
street cred. I think about the employers in our town,
matt where we live, and there are companies who just
constantly make the headlines about being great places to work,
and part of that is often what the benefits are.
And some of these companies just have superior matches or
(13:43):
better four one K plans and.
Speaker 2 (13:45):
Completely free healthcare where everything is covered, including dude.
Speaker 1 (13:48):
Man, the word gets around in your network and people
are like, oh, ye, you should come over here to
work at mail Trimp because hey, they got these like
cool benefits that most people don't offer, and that's just
great press for anybody out there who's looking for work.
They're like, yeah, maybe well apply over there.
Speaker 2 (14:01):
It's funny that you mention that's totally what I was
thinking of when I mentioned the healthcare one, because I
get like I considered applying for a job like a
long time begue, because I had a bunch of friends.
So you're gonna say last week, I was gonna last week. Well,
that's the thing that this was years ago. I don't
know if they've changed their benefits since they were purchased
by the big company that took them over. But even still, yes,
like you said, I think that's something that absolutely that
(14:23):
is worth considering.
Speaker 1 (14:24):
It's like that halo effect, right. The company gets and
the more generous they are with their employees, the more
likely they are to get lauded for that, and that's
going to attract more great employees totally.
Speaker 2 (14:34):
And it's again so it's not just for the benefit
of the employee, but for the employer as well. I
think you're talking about budgeting, but I think it's just
going to be more I think it could be easier
to administer as well, when you know that everyone is
on board and that out of minimum they're getting a
three percent match. Like you said, it's good from a
planning standpoint, but it's gonna be much easier to administer.
I think the other big thing that this could do
for your employer is that it allows them to achieve
(14:56):
us known as safe harbor status by contributing to everyone's
for when who works throughout the company. They can avoid
certain non discrimination testing requirements, and this can be just
a big pain in the butt that the something that
the IRS requires. Many small businesses ought to go this route,
and basically it's just easier to ensure that their plan
is completely compliant with government regulations. And the cool thing
(15:19):
for employees about a safe harbor forlwan K is that
the three percent match also vests immediately. It happens right away,
so there's no need to wait a year or two
to ensure that those funds are actually years before they
have the ability to claw them back.
Speaker 1 (15:33):
Yeah.
Speaker 2 (15:34):
Yeah, And you and I we can easily count on
the dollars being yours.
Speaker 1 (15:37):
You and I were actually talking about that at lunch
time before we recorded Matt and just how with the
job hopping that happens so much in today's world, especially
younger workers not staying at jobs nearly as long those
You've got to look at the fine print of how
long it takes for that match to vest, because if
it's two years, if it's three or four years, and
(15:57):
you're not there that long, all those match dollars could
just like fly away vanish out the window, and so
that it's nice to know that in one of these
sorts of four to one K plans, the match is
vested immediately, there's no risk of losing it.
Speaker 2 (16:09):
Yeah, i'd call those phantom four one ks. Yeah, that'd
be the Friday flight headline. That's a it's a good term.
I'm sure it's been used before. Just take that one away, Okay, Yeah,
I actually probably have already used that. I probably stole
it from somebody just unknowingly. There's I think maybe a
potential downside for you, and that I just want to
highlight that you could dial back your paycheck deduction two
four percent right to where you're still getting the full
(16:31):
seven percent from your employer because of this change, but
your overall savings rate would go down, you know, And
I would just say, we're ok with you taking the
extra money and putting it into like, let's say a
roth IRA or an HSA or a different retirement vehicle
if your funds would be better suited. If you're like, hey,
I'm gonna get the full match, which means I can
reduce my overall contribution, but I hey, I'm gonna take
(16:52):
those funds and put them in another vehicle that's going
to be just as good for my future.
Speaker 1 (16:56):
That's great, But don't let this non elective match change
cause you to save and invest less overall. That's the
only way I think this could have a negative impact.
If you like cool, I'm just going to down my
contributions back. I'm investing instead of that fourteen percent, only
eleven percent, and I'm just going to consume the rest
and up upgrade my budget, increase my spending. That is truly,
(17:17):
as I thought about it, the real only downside from
your perspective that I could think of.
Speaker 2 (17:21):
And that's only I mean. So, yeah, you're taking a
more conservative financial approach to the long term, making sure
you have enough set aside. That's only a downside if
let's say you have only been contributing towards your four
one K or saving four retirement for like five years,
or let's say you are early earlier on in your career.
But let's say you've been doing this for twenty, maybe
even thirty years. I see this as not necessarily a
(17:44):
downside if you now have the ability to perhaps pull
back a little bit on your savings rate, and that
allows you to prioritize some other financial other not financial goals,
but other Oh yeah, financial goals too, like you gotta yeah,
Like those still take money, and so not knowing how
much you have set aside, that's the only thing that
makes me want to qualify the fact that that might
(18:04):
be a negative, because it could be a positive. It
could be a great thing. I think Chelsea, either way,
is going to continue to She sounds like a saver,
so she's going to get after it. And I love
that more of her fellow employees are going to have
the chance to get that nest egg rolling. Oh you know,
it takes a little bit. Sometimes it takes a little
kick in the pants, and in this case, the employee
is doing that.
Speaker 1 (18:24):
For for folks. And now when she passes the HR
person in the parking garage, she doesn't have to give
them the stink eye because she's like, way, oh no,
it's all good.
Speaker 2 (18:30):
She's like, oh, how come, Chelsea. She doesn't look nearly
as suspicious as we would pass each other. But we
do hope that that answers your question. Gives you plenty
to think about, Joe, We've got more to get to
including we're talking about retirement accounts here. We're going to
hear from another listener who has a proliferation of retirement
account options available to him. We'll get to that and
more right after this.
Speaker 1 (18:57):
All right, Matt, we're back. Let's keep the ask HDM
questions rolling. This next question is specifically about a benefit
that you get from your employer, but is it going
to be enough to cover you in a time of need?
Speaker 4 (19:09):
Hi, guys, this is Mike from Maryland, longtime listener and
I love the show. My question for you is about
long term disability policies. I'm a healthcare worker and I
bought a disability policy three years ago that pays out
about one hundred thousand a year, with riders to automatically
injust for inflation. I recently became a federal employee, literally
(19:29):
a week before the new administration came into office, and
reading through my benefit package, I saw that I have
the opportunity to buy into a policy through the federal government.
If you were in my position, would you drop the
private policy and join the government policy. There's a couple
of reasons I'm hesitant to drop my policy. One is
I work for an agency that the current administration is
(19:52):
not very fond of, and being a new employee in
the probationary period. Even though it's a federal job, I'm
not one hundred percent sure how secure my job is.
Second is I prefer not to rely on my employer
completely when it comes to my livelihood. For example, I
could purchase mal practice insurance through my employer, but I
always keep a private policy because in the end, I
(20:14):
don't think the company will always have my best interests
in mind. And third is, I've never stayed at a
job for more than two years, sustaining twenty years and
keeping the policy seems daunting, and I know it will
be more expensive to restart the policy when I'm older.
Curious to know what you think?
Speaker 2 (20:28):
Thanks, all right, long term disability insurance.
Speaker 1 (20:32):
Policy, and I start one thing out there before we
get into long term dispelling Sure. Just when Mike mentioned
he works for the federal governments and we talked about
this on a recent Friday flight with what doge has
been up to? Well, that's true. Just prioritize your savings
and be prepared for whatever might come down the pike.
It sounds like in Mike's case, his position and might
be disfavored. So I just want to yeah, put that
(20:55):
blinking in red on his radar, just to be prepared
in case he ort to lose his job or something
like that.
Speaker 2 (21:01):
Sure, Well, the fact is Mike has done his homework.
You know, he's purchased his own long term disability policy
before even taking this job. And we think that most folks,
not everyone out there, but we think most folks need
term life insurance. We talk about it fairly regularly, but
disability insurance it kind of gets a short end of
the stick. Talk about it, Yeah, nearly as much, and
(21:22):
it might even be more crucial. And that's because stats
show that one in four folks will actually become disabled
at least for a short period of time before they retire.
And so Mike, if you were to become disabled for
a couple of years, well, that's going to have a
significant impact on your income most likely. And while there
might be some different programs out there, like state or
government benefits that might be open to you, getting those
(21:45):
benefits is a it can be a hassle, it's a process,
and they likely won't provide anything close to what your
current long term insurance policy is willing to pay out.
Speaker 1 (21:54):
Yeah, it might be a drop in the bucket, right
compared to what you need compared to your current income,
and so that could help, but it's it's certainly not
going to cover the vast majority of your expenses. So
having a disability insurance policy, yeah, it could could help
you if you can't work for an extended period of time.
But you might not need the one you purchased on
the open market anymore thanks to this new policy offered
(22:16):
by your work. I say, you might not. But there
are a few caveats here, by the way, in our opinion,
most folks don't need a short term disability policy.
Speaker 2 (22:23):
There are oh good opportunity to talk about the duck insurance.
Speaker 1 (22:28):
That's right, Yeah, yeah, yeah, that's what that's that's what
AFLAC is typically trying to sell you, Like if you
get hurt.
Speaker 2 (22:32):
I try to avoid the actual names of companies just
in case they want to spised on the podcast.
Speaker 1 (22:38):
Well, but you will not hear us voicing for a flag,
that's for sure true. And so yeah, that's that's what
an emergency fund is supposed to help with. So some
folks might say, oh, yeah, let me get the short
term disability policy just in case I get injured, but
it doesn't last that long. Well, the emergency fund. We
think of that as self insuring, as essentially your short
term disability policy that you are covering with funds that
you have in a high heel savings account. We like
(22:59):
the idea right of self ensuring for a potential six
month work drout or something like that if you were
to lose your job. It's why we're so keen on
saving up a substantial emergency fund, and it's part of
our money gears if you go check it out at
how money dot com. But a long term disability policy
that can particul is something we're more keen on. It's
something that can help if something happens to you and
(23:21):
you can't work for quite a while, for an extended
period of time, and my given your particular circumstances, I'd
be reluctant. I would say to let go of this
individual policy right now.
Speaker 2 (23:31):
Well, and I think that it's clear that Mike is
he's hesitant to give this thing up. And I think
this in part comes down to your risk tolerance and
how comfortable you are playing around the edges essentially clips
to the edge of the cliff, And so if you
are someone who likes to be a bit more independent
or if you don't have others who you can count
(23:52):
on for income. This is absolutely something that you're going
to be more drawn towards. But at the same time,
like let's say you're thinking, Okay, what would happen if
I couldn't work, if I couldn't earn an income for
a couple of years, what would that scenario look like?
And if you've got a mom who would like basically
make you move home and take care of you and
help cover your expenses or something like that, Okay, well
(24:12):
maybe or you know, you've got some parents who are like, man,
I know that they would love to have me back
back home in my hometown, back in my childhood bedroom.
You know, like if that's the kind of scenario that
and there's like in a really solid financial position, well
guess what, I don't think long term disability is something
that you wouldn't necessarily want to consider all that much.
Speaker 1 (24:30):
And so, yeah, a lot of other backstops.
Speaker 2 (24:32):
A lot of it comes down to your individual situation. Yeah, yeah,
and just.
Speaker 1 (24:35):
Especially with the price of it, which is something we
need to talk about too totally.
Speaker 2 (24:38):
And it comes down to like, if you have a
I don't hear him mentioning a partner necessarily and so
it's kind of it comes down to him and his
ability to earn an income. But if you have a partner,
a partner who can work or who is currently working,
it's like, okay, well we're not going to necessarily be
in dire straits. If the worst were to happen to me.
Speaker 1 (24:53):
That dephrased some of that risk. The emergency funds as
well as another paycheck coming into the household, maybe having
kids yet that you would also have to support less responsibility. Yeah,
all those things would allow you to take a little
bit more risk. And it sounds like one of the
things Mike said is he doesn't necessarily plan on staying
in this job for too long, or any job for
too long. And I think even if you wanted to, Mike,
(25:15):
it sounds like your job might not be super secure.
But if neither of those things were true, we might
have different advice. Because opting for the work provided policy only,
you'd likely be paying a fair amount less every single
month for that coverage. But for everyone listening, I would
say double check and see what the actual coverage includes.
Because employer provided insurance policies rarely provide enough coverage on
(25:39):
both the life and disability front. So you might say, oh, great,
a free plan from my employer. Fantastic, I don't have
to buy my own policy because I am covered. And
that's just like maybe but probably not right. Sometimes doubling
up actually makes the most sense. I think, you know,
taking the minimum amount of life insurance for insta for
(26:00):
most employer plans and getting extra coverage on your own
often makes the most sense. Matt. Back when I worked
for a company getting a W two, they offered life
insurance at one x your pay, and so that just
wasn't enough life insurance, but you could buy more through
the company. But the race that they would charge if
you were to buy through the company were far in
(26:21):
excess of what I could get on the private market.
And so let's say I was uninsurable, that I'd had
a bunch of different health catastrophes, then maybe it would
make sense for me to get life insurance, more life
insurance through my employer, because it would be prohibitively expensive
on the open market. But for young healthy people in particular,
not getting more insurance through your employer and getting it
(26:41):
on the private market means you're going to have enough coverage,
it means it's going to cost less.
Speaker 2 (26:45):
Yeah, just because there's a policy available to you through
your employer doesn't mean it's the best nor necessarily the
most cost effective way to go about it. And it
sounds like Mike's you know that he's got his own
solid policy there that's going to pay out well if
he does encounter a disability. And he also mentioned the
inflation adjustment as well. There's an inflation adjustment clause and
that's pretty massive, Like that's a huge deal. And so
(27:07):
I think if I were these days, yeah, yeah, well
hopefully yeah, hopefully re pass the worst of it, but man,
it's inflation. It is sticky. If I were you, Mike,
I would hang on to that policy at least for now.
And by the way, for folks out there who might
be considering this, if you are looking into it, just
know that a policy out there on the open market,
it's not cheap. It often costs one to three percent
(27:28):
of your annual salary. It depends on a number of factors,
elimination periods and things like that are built into your
specific policy. But given the stats, it is an insurance
policy that more folks should consider that being said, I
don't want to discourage folks, but I don't personally have
a long term disability policy in play strol, do you?
Speaker 1 (27:46):
No? I do not either, But I will say we're
risky dudes. I guess if I lost my voice completely
that would be that potentially put me in a bad position.
But talking about kind of how much risk we.
Speaker 2 (27:57):
Can, there's also other things well here before you keep moving, Yeah,
like you're touching on like a specialized career, right, and
if you, let's say you're like a concert pianist and
like this is the only thing that you can do
and you make a ton of money doing that, that's
the kind of scenario, the kind of situation where it
might pay to go with some long term disability.
Speaker 1 (28:15):
Or they're literally people who have like football players pianists
who have insurance policies on the parts of their body
that make them income. Right, they're specialized policies for those people.
And you and I don't think we qualify to get
that sort of level of insurance from our you know,
from our carriers.
Speaker 2 (28:33):
But anybody and can talk like I do, and most
folks actually can speak a little bit better.
Speaker 1 (28:38):
Than I can.
Speaker 2 (28:38):
Dole but that's an important consideration though, like if you
are flexible to doing other like I've done lots of
different things in my life. I don't have like a
career that looks incredibly specialized. I'm very open to being
flexible to trying new things. Okay, and I we've even
talked about this, and she's like, well, I would go
to work if something happened to you. It's like, okay, cool,
these are conversations that are important now. And if you
(28:59):
broke your back, maybe I would host for by myself
for a little bit and then you'd be back on
the mic, hopefully a no time, like they're also hosted
from the bed. Just be like, all right, this is true.
That's just what it looks like, right, we could do that.
Speaker 1 (29:10):
I think the other thing to note of why like
I don't have a policy is I'm comfortable holding on
to more cash self ensuring more even for long term
potential disability needs. And you're right, Matt, there's just a
lot of flexibility I think that we have that. Maybe
not everybody has exactly, and so I would say, yeah,
it's not for everyone, but more people should consider it.
Speaker 2 (29:30):
Yeah, And it depends too how close you are to retirement,
because that means you're you just you've got more money
set aside. You're less dependent on your income to provide
for your standard of living as opposed to your investment
dollars doing some of that heavy lifting.
Speaker 1 (29:41):
The culture you are to financial independence, the less likely
it makes sense to.
Speaker 2 (29:45):
Per But let's get to our next listener question. This
is from a listener who is considering a number of
different options to make sure that he is properly prepared
for retirement.
Speaker 5 (29:55):
Hi, Matt and Joel, this is Greg from Los Angeles.
I really enjoy the show and all the knowledge and
insight that it provides, and I keep telling my friends
and coworkers about it to help give them a better
financial footing. I am a public servant, so I am
(30:16):
contributing towards a pension when I retire. Over the last
couple of years, I have been maxing out my roth IRA.
My question is I am in the beneficial position of
potentially earning more than one hundred and forty thousand in
the next couple of years, and I wanted to get
your thoughts about you contributing to my personal wrath. Should
(30:41):
I continue to do the roth Ira and once I
get to that limit, just do.
Speaker 2 (30:47):
A backdoor WROTH.
Speaker 5 (30:49):
Or what I'm finding from my employer is that we
have the ability to contribute to a savings account which
is a four to oh one K, and I'm wondering
if I should just start that post tax and roll
over my current roth IRA. I am in the process
of also my pension. I contribute to the four fifty
(31:12):
seven offered by my employer, and this four oh one
K would then be a third bucket to fill, either
pre or post tax. Appreciate all your time and consideration
and wishing you the best in coffee and beer.
Speaker 1 (31:28):
Oh Greg, thank you first of all for spreading the word,
for telling other people about the show. We really appreciate it.
If every single one out there listening told one friend,
just told one friend, just proselytized a little bit about HTM,
we double our listenership. Joe. That's how it works, Matt.
So thank you, Greg. Appreciate that. And by the way,
great coffee and beer, they really are inexpensive ways in
(31:49):
modern way, in moderation to bring some extra joy to
your life, even.
Speaker 2 (31:52):
It can be in expensive ways sometimes ye like we
say it's our craft beer equivalent for a reason.
Speaker 1 (31:57):
We don't.
Speaker 2 (31:58):
We're not spending the bare minim on our beard drool.
Speaker 1 (32:01):
No, and you're not on your coffee either.
Speaker 2 (32:03):
In particular, I've actually I've kind of changed it all
them back a little bit.
Speaker 1 (32:06):
Yeah. Is that partly because coffee bean prices have gone
up so much that the kinds of stuff is going
to have?
Speaker 2 (32:12):
You personally experienced that if you were just to look
at what they call it, I mean interesting, I shop
mostly at Costco, but yes, I look at the price.
What if it's impacting the cheaper beans in because the
nicer stuff. So okay, So first of all, personally, all right,
try not to let this be a massive tangent. But
I have personally dialed back my coffee consumption. I don't
know if you've noticed, but I don't make coffee here
in the office.
Speaker 1 (32:31):
Anymore, now that you point it out, Yeah, no, I
didn't think about that.
Speaker 2 (32:35):
It's been a couple months and I realized, you know what,
I feel like my coffee drinking has gotten out of hand,
and not from like a health standpoint. I could totally
fall asleep at night, just fine, but I realized it
was something I wasn't needing I guess, I don't know.
It felt like it was getting just a bit out
of hand, in particular when I was and I was
just buying some of the nicer stuff, Like some of
the bags I was mining. Man, it's like a ten
ounce bag or like a twelve ounce bag for like
twenty five bucks instead of what I'm talking about were
(32:57):
fancy coffee that you're looking at like over two dollars
an ounce. But I think Kate and I have found
the sweet spot specifically, if folks want to know countercultures,
Big Trouble. They sell it at Whole Foods, which is
on our path to school Hu for carpool, and oftentimes
you can go in there and you get it on sale,
and like when it's on sale, I'm paying less than
a dollar an ounce. And this is like solid, really
(33:20):
tasty stuff that we're drinking on the regular. I still
go out and splurriage and we'll get like a bag
of the nice stuff, or someone gives me some really
good stuff, which you like to do. Yeah, one of
our local roasters. That's phenomenal. I'm still drinking, but those
bags are expensive. I'm still drinking the Kirkland signature. But
I don't know any better, and I kind of don't
want to know better. I'm like purposely blindfolding myself. That's
to fancy coffee to make sure that I don't spend
(33:41):
too much. I'm trying to do that with wine. But
the more wine I drink, I'm like, oh, that's now
I know. I don't even know how to say it.
Speaker 1 (33:48):
Rio hoo.
Speaker 2 (33:49):
Yeah, it's like a Spanish wine. I had like one
of those recently and I was.
Speaker 1 (33:53):
Like, oh, this is I like this. Okay, so sorry,
we'll stop this changent very soon, but I'm going to
pick you up a bottle. I haven't tried the Kirkland
signature version of the Rio. I wonder if it's anything. Oh,
we'll give it a try. Yeah, okay, I have to
give it a go. But let's get to Greg's question, Matt,
because that's what we do on the show, is answer questions.
Speaker 2 (34:09):
At some point. We will get to your question, Greg,
after we talk about all the things that we want
to talk about this right, this is our show, after all, Greg,
not yours. Hey, he's the one that brought up coffee
and beerus. I'm assuming he's a fan as well.
Speaker 1 (34:19):
If you didn't want that tangent. You shouldn't have asked
for it. Well, congrats on having a pension available to you.
That's that's becoming more rare obviously. But what should you do, Matt,
when you're making the big bucks and you can't contribute
directly to a roth ira? That is a question that
is actually a good question to have. It's a good
problem to have because it means you're moving up the
income spectrum. And some people they think of that as
(34:41):
a sad day, but I think of it as like
a happy day because it means you're crushing it when
it comes to the money you're making. I would rather
make more and lose access then make less and still
be ROTH eligible, like if I had to, you know,
had to pull the lever on that choice.
Speaker 2 (34:55):
It's like option A or option B.
Speaker 1 (34:57):
Which one would you choose? Is okay? Well?
Speaker 2 (34:59):
I hate that I ca contribute directly to a wrath,
but it means good things, right, And you know, Greg
must be single because the income limit for joint filers
is like two hundred and thirty thousand dollars, he cates
one hundred and forty six thousand dollars for single individuals.
Speaker 1 (35:12):
But as you crust that threshold. My first suggestion would
be to invest more overall dollars, which could help you
remain ROTH eligible one escially, I guess the solution more
people should consider him totally.
Speaker 2 (35:23):
Yeah, So if Greg were to start contributing to his
traditional four one K so not his WROTH, if that's
an option that's available to him, WROTH war one K
no no no no, go with a traditional four onin K,
and that could reduce your modified adjusted gross income, allowing
you to keep contributing directly to a WROTH, meaning that
there are going to be no extra hoops for you
(35:43):
to jump through. Basically, if you're right on that line,
every dollar you contribute to a pre tax account, it's
going to help you to lower that modified adjusted gross income,
potentially keeping you under that income threshold, which can mean
you can keep talking money into your roth ira L
like clockwork, just like you always have, and then you
know if your income does go up substantially over time,
(36:04):
or if you aren't keen on investing more money there.
Speaker 1 (36:07):
There's other ways to pull this off as well, which
you've touched on, but I think that's sometimes matts. People
are asking about, oh, student loan payments. If I contribute
more to my retirement account, I might be able to
lower those student loan payments. And I think that's just
another reason yes, consider investing more, particularly in those years
where it might make a difference in your monthly budget,
right and in this case where it might make a
(36:28):
difference in your WROTH eligibility and greg. You know, higher
earners such as yourself can take advantage of what's known
as the backdoor wroth. So that's something else that's worth mentioning.
It's not another account some people think that it is.
It's a process that you go through that involves basically
extra hoops. And so what happens is you contribute money
to your traditional IRA and then you convert those dollars
(36:48):
into your wroth IRA instead of making that direct contribution
to the wroth. And what you need to know is
you're not claiming any sort of tax deduction for that
initial contribution to your traditional IRA. You'll make what's known
as a non deductible contribution. Read up on the details.
We've got a piece on this up on our website.
We'll link to it in the show notes. But the
(37:09):
backdoor wroth can be the perfect way for you to
basically keep contributing to that account if your income continues
to rise. And we love that you're trying to continue
to put in after tax dollars into investments, because yeah,
I think having more WROTH dollars Matt is just going
to mean more tax flexibility for Greg when he gets
(37:29):
into his retirement years, he's going to have kind of
the ability to dial in his tax rate if he
has two bucks to pull from.
Speaker 2 (37:37):
And the last strategy that Greg mentioned contributing to his
four one K and then converting those funds to a
roth IRA. That's what's known as a mega backdoor WROTH,
which I know is kind of ridiculous, gets a bit confusing,
But if you've got even more money that you want
to invest on top of maxing out your roth IRA,
but contributing to that would allow you to invest even
(37:57):
more dollars there towards your taxi managed rath IRA. So
and with him, he's talking about all these options that
he's got available to him, right Like he's got the pension,
he's got the roth iray that he's been maxing out
every year. But then on top of that, contributing to
your employer plan as well, that's I feel like he's
entering Greg's entering beast mode sort of territory. He's like
(38:18):
or god mode you remember doing in Doom. Oh yeah,
back in the day. His eyes have glazed over, they're
like white, and he's like indestructible. From the retirement standpoint, it's.
Speaker 1 (38:28):
An embarrassment of riches essentially that Greg has here. And
I will say too, Matt, I feel like I got
a little confused listening to Greg's question. I just want
to make sure that we're not missing anything here. So
one thing I would suggest Greg, since there are there's
a lot of money you're investing at this point, and
there are a lot of options open to you, I
think it might make sense to talk to a financial advisor.
(38:49):
We have talked about two different places that we suggest
people go find an advisor. There's hellonectarine dot com, and
then there's Domain Money. Those are both too great places
to turn Domain Money likes to. They're all about giving
you kind of an all encompassing financial plan, and so
the cost is more expensive. Hello Nectarine, I've actually went there, Matt.
(39:09):
It used to be one hundred and fifty bucks flat
for an hour. Now they have advisors who charge between
one hundred and fifty and three hundred dollars an hour,
so they've changed their business model, and more of those advisors.
Speaker 2 (39:17):
Are offering premium model.
Speaker 1 (39:19):
Yeah, and more of those advisors are now offering domain
money ish sort of plans too. So if you're like
I just got a few questions about this, that might
be a great place to go. Especially again, you don't
want to let the tax tail wag the dog, but
you do want to make sure you're making a smart
decision for your future and for your current and future taxes,
So it might make sense to pay somebody for a
(39:39):
couple hours of their time to kind of dice the
details here totally.
Speaker 2 (39:42):
So on the note of planning for your future, one, well,
I guess one caveat too. It's always great to plan
for your future. But Greg I wouldn't spend too much
time on this as well, because so he said that
he in the future years might be getting close to
like earning close to one like you mentioned. One for
six is the cutof off for Rotha, right, but that
was actually for last year, for twenty twenty four, For
(40:03):
twenty twenty five, it's one hundred and fifty thousand dollars,
And so what I'm pointing out here is that by
the time you hit that, you get closer to a
one forty greg like there's a good chance that that
threshold is moved even higher. And I'm not saying that
you don't have the ability to like catch that threshold
at some point. More power to you, man, I think
you can totally do that. That's the goal. Yeah, absolutely,
I think there's likely a very good chance that you're
(40:24):
going to be able to earn more than what that
threshold is.
Speaker 1 (40:27):
Like a greyhound, you want to catch that rabbit or
whatever it is.
Speaker 2 (40:29):
But I'm just highlighting the fact that you're not quite there,
and they're going to continue to raise that with inflation.
I mean, I think like just a few years ago,
or maybe four or five years ago, it was at
like one hundred and twenty five thousand dollars or something
like that. So it has come a long ways, and
I think it will continue to do that as long
as inflation continues to be sort of a thorn in
(40:50):
everyone's side. So something else to keep in.
Speaker 1 (40:53):
Mind, no doubt. So, yeah, you might not actually have
much of a problem, and you might be able to
kind of keep going the easy route of contributing to
to that roth for many years to come. Just depends
on how quickly that income escalates. But Matt, we've got
more to get to on this episode, including we'll talk
travel tips. We'll get to that and more right after this.
(41:18):
All right, buddy, we're back from the break.
Speaker 2 (41:19):
Let's keep talking about money. And of course now we've
gotten the Facebook question of the week, and this week
it's from Nathan and he asked, I was wondering if
anyone had tips on booking flights and hotel? Are there
sites that are good? Should I book them together or separately?
Should I book directly with the hotel or with prices
I see on other sites if they are cheaper? What
(41:39):
do you think, Joel, all of the above.
Speaker 1 (41:41):
That's a good question. There's a lot to talk about here.
We'll do our best to offer a brief but helpful answer.
Speaker 2 (41:47):
Just don't travel. Look nothing. If you want to say
the most amount of money right, stay home.
Speaker 1 (41:51):
If you want to save you more, live in your
mom's basement. That is going to be the best way
to have that ninety percent savings. Right that everyone's shooting Formatt,
but occasionally.
Speaker 2 (41:59):
Buy some groceries for the house. Come on, man, you
don't want to be a total leech.
Speaker 1 (42:02):
Otherwise she's gonna kick you out. Well, we are all
about traveling and saving money on travel. Maybe we should
just mention a few of our favorite sites Matt for
travel and flights specifically, it used to be this combo
of Google Flights and Southwest, but now think the good
Lord above. Southwest Flights are included in the Google results,
so it's a one stop shop. You can set up
(42:23):
fair alerts, which is clutch, and I don't know if
you need any other sites for booking besides maybe a
Going membership which she used to be known as Scott's
Cheap Flights if you are a flexible travel nerd. I
think Going is great because they're delivering those sweet deals
to your inbox and you might be like, wait a
second Germany for three hundred and eighty two dollars, I'm in.
(42:46):
I didn't even realize I could get there that cheap.
And that's what Scot's Chief Flights does so well. If
you just take one international flight a year based on
their recommendations, you easily more than pay for the membership fee.
I think skyscanner is another solid site, But I don't know.
I think that combo of Google Flights Southwest Scotts Chief Flights,
if you're just using those three resources, I think you
(43:08):
can get mostly where you want to go.
Speaker 2 (43:10):
Yeah, and that's the typically the most expensive part of traveling.
Speaker 1 (43:14):
But one other thing on Google flights is setting fair alerts.
So when you're like, here's where I want to go,
make sure you set that fair alert and look at those.
Speaker 2 (43:22):
You don't have to keep checking on it every time.
Speaker 1 (43:24):
And Google even tells you, hey, actually, right now, this
is like an average time to buy, or hey, this
is a really good price. You should book now. And
that's always helpful. That helps me know when to pounce.
Speaker 2 (43:32):
Yeah, by make it happen, be done with it. As
far as hotels, though, hot Wire price Line they're great.
Don't forget about Airbnb, of course, we're always big fans
of them. But if you really want a hotel, we
like those third party sites, especially if you're willing to
book a hotel room without knowing specifically where you're staying,
like if you don't really care about the name of
(43:53):
the place and you just want like a star rating, right,
like a certain quality, certain caliber, of hotel that's totally
the way to go. The hot wire hot rates that
could give you an incredibly low price price line. They've
got the express deals, and I think that that can
be a great way to score a deal. And these
sites used to have the best deals the majority of
(44:15):
the time, but things have changed recently. Many of the
hotels that you see listed on these actual websites, they've
kind of wised up. And so if you see one
that you like, look up pricing directly on their website,
and what you can do. You can actually give them
a call, which very few folks are willing to do
these days. But if you call them up, there's a
good chance that they'll match or even be a deal
(44:37):
that you're seeing elsewhere. And then on top of that,
you typically will get a better cancelation policy as well.
By booking directly with hotel versus one of these third
party sites. Non refundable. It can be worth it if
you're getting like the absolute sickest deal, but if not,
you know, I like the idea of keeping your options
open just in case you want to change your mind
or something else comes up and you want to pounce
(44:58):
over there instead.
Speaker 1 (44:59):
Of over here, of the things that I think that
I've noticed, Matt, we're trying to book through hot Wire
or price line on occasion, is man, the deal the
nightly rate looks like it's way better than maybe what's
offered through the same hotel boo booking directly on their site,
But you click all the way through and you look
at the taxes and fees, fees, they're much more expensive
on some of these third party travel sites that talk
(45:22):
about helping you finding the best deal, and so you're like,
at the end of the day, I'm not really saving
much money, and yeah, the cancelation policy is way crummier,
and actually maybe I'm paying more my going through one
of these third party sites. Think going directly through the hotel.
That did not used to be the case. It felt
like you could almost always get a better deal on
a third party site. That just feels like the era
(45:44):
that hot Wire and price line, when they had the
monopoly on the best prices. That's not really where we're
at anymore. It's not like it used to be.
Speaker 2 (45:50):
Yeah, it's worth it to have another Safari or Firefox,
not Firefox.
Speaker 1 (45:55):
What is it?
Speaker 2 (45:55):
Chrome Browser open and doing the command till day to
be able to Firefox. Firefox is what the people still
use that. I'm sure there's some Firefox users out there.
But also, hey, we almost forgot about this costco travel.
Don't forget about that, because you got to mention, depending
on the type of trip that you're taking, you might
find better deals on all sorts of like in particular
like the all inclusive style travel packages. And that's particularly
(46:19):
true for like more exotic destinations like Cleveland, not Cleveland,
like Hawaii, like the Caribbean. And as always, the number
one way to get a great travel deal is just
to be flexible, not only on the dates that you're
looking to travel, but also the location. I think the
best way to think about going on a trip is
just to be like, at some point in this season,
(46:42):
I want to take a break. Yeah, and then man,
the world's your oyster and you're gonna absolutely get the
best deal. And then the Google Flights Explore feature is
going to be awesome. For that you might get crazy
cheap flights too, in awesome plays that wasn't even on
your radar just because you clicked around some you were
like doing a little bit exploring, see what's out there,
Look what the deals are? And it doesn't take long
before you're like, guess I'm gonna.
Speaker 1 (47:03):
Go to Mongolia?
Speaker 2 (47:04):
Sure, why not?
Speaker 1 (47:05):
Didn't realize you get there for two to eighty round trip.
That's yeah, that's the cool thing. When you click the
Explore feature, you might just be made aware of insanely
low prices to a destination that you hadn't even thought about.
And it might be guess what, especially if we're talking
about Europe, a train ride away from the place you
really want to go, And so you're like, sound, was
like fine, great, let me fly into Milan and then
I'll still get to hang out in Tuscany because the
(47:28):
flight to Milan was way cheaper're.
Speaker 2 (47:29):
Describing my travel back in gosh when it was two
thousand and three, Joel, Oh.
Speaker 1 (47:32):
Did you do that exactly? Tenrary?
Speaker 2 (47:34):
If we flew into Milan? Okay, we didn't. We went
took a It was like a really long train ride.
This is one of my first those train rational Yeah.
Speaker 1 (47:43):
Yeah, this one was rough. Well, especially when you're younger,
you got extra free time. Yeah, we're willing to do
it to save the money.
Speaker 2 (47:51):
We totally did that. And here is a little piece
of advice that Nathan isn't asking, but consider driving because
especially if you have a fam can't drive them alone,
You can't drive them alone. But like I mean, consider
something a little bit more local instead of going abroad.
Everyone thinks about something more exotic. But there's a lot
of amazing stuff here in the United States, and I know,
especially with kids, when they can't fully.
Speaker 1 (48:09):
Appreciate all that's out there.
Speaker 2 (48:11):
Plus they're also not appreciating how much it costs to
fly in a plane, the ability to pile everybody in
a car, and to go see the mountains of West
Virginia before we go see the mountains in the Alps.
Speaker 1 (48:21):
Says the guy who scoffed at my Cleveland suggestion.
Speaker 2 (48:24):
Hey, I'm going to hit up Cleveland at some point,
but just haven't been there one of these days. Yeah,
so something to consider as well.
Speaker 1 (48:29):
All right, Matt. One more quick Facebook question. This one's
from an anonymous poster. They said, frugler cheap, unplugging my
EV when peak hours hit and plugging back in after
seven pm when I'm home and don't need to go anywhere,
No brainer, one hundred percent approval. Right, I'd be curious
to know the killawatt per hour price difference here, but
often we're talking about getting that electricity for less than
half of the price of full PA costs. I don't
(48:51):
see why you'd pay extra if there's an easy way
to avoid it, Matt, I think for this poster too,
I would check with your electricity provider to see if
there's an even better plan that you can be on
as an EV owner at least or we live, the
power companies offer something that's known as a super off
peak rate, and so this rate is between eleven PM
and seven am. It's only two point two cents per
(49:12):
kill a whatt hour, which is like a fraction of
what it costs typically to get electricity.
Speaker 2 (49:17):
I think on peak is thirty and so literally it's
fifteen times more affordable crazy time.
Speaker 1 (49:22):
That's insane. So if you're an EV owner in particularly
that it's worth considering think about how much something like
that could save you, especially especially if you're the kind
of person who's willing to I don't know, maybe do
your start your washer and your dryer at night before
you go to bed to or early in the morning dishwasher. Also,
if you're using those appliances to during those hours and
charging your EV. I think it's a no brainer to
(49:43):
get that lower rate.
Speaker 2 (49:44):
Totally, and ultimately the biggest one is that you're not
charging while you're out and about on the road, because
if your unwillingness to pay peak prices meant that you
forgot to charge your car at home and then you
had to stop at is It charge point though some
of the different stations, you gonna paying a whole lot
more like five to seven times more. So the more
you can charge at home, even if it's not the
(50:06):
most optimized time, the more money that you're going to save.
This might be the last time I shared the story,
but when we were traveling in Colorado, we rented a Tesla.
Onturo wanted to get a feel for what it's like
to drive a Tesla and have an ev What that meant, though,
is that we charged were charging at the Tesla superchargers,
and I tracked my charges religiously, and the cost was
(50:27):
pretty much exactly the same as had we rented a
traditional internal combustion engine, based on the average price per
gallon there in Colorado, times the number of miles that
we drove. And so if that's you and you're constantly
paying top tier charging prices, you're not doing this to
save money. You're doing this for lifestyle.
Speaker 1 (50:45):
The money saving benefits of an EB come when you
charge at home, and it can be amplified if you
get one of those off super off pak rates, or
if you charge at work. Oh yeah, more folks have
a When I had, it's a benefit. Oh yeah, you
did that, so I I would. They had one hundred
and twenty bolt outlets, and I would plug in when
I got to work. But eventually they installed real charging
(51:07):
stations and they covered up all the one twenty volt.
You know, I'm true frugal enough, I would have kept
charging at the one twenty volt even though it was slower.
I just charged it home. Then it just changed my habits.
Speaker 2 (51:16):
The more employers are even offering that as a perk,
where it's just like, oh yeah, we got level two
chargers here, like they are intentionally promo stalling level two
the faster chargers for free. Speaking of attracting the top talent,
that's the way to get folks on board, no doubt.
When it's like a soft benefit.
Speaker 1 (51:30):
That folks were able to realize.
Speaker 2 (51:32):
But buddy, let's mention the beer that you and I
enjoyed today, which is beer Missou? Do you want to
say it? I said at the first time.
Speaker 1 (51:38):
Too, yea beer on massoue beer Massou, Tierra Missou, milk porter,
Imperial milk porter. This matt was thinner than I thought
it was going to be, but solid. It's a yeah,
but it was an Imperial Porter, so I was like, oh,
is it gonna be Is it gonna be bigger?
Speaker 2 (51:51):
Expecting it to be a bit heavier, kind.
Speaker 1 (51:52):
Of tasted more like a traditional porter, but I like
the flavor profile.
Speaker 2 (51:56):
I was super good.
Speaker 1 (51:57):
Definitely had the Tierra Masioux vibes going on. A little
bit sweet and lactosey for my taste, but a solid beer.
And this is a local option too. I don't know
that I've had much buy six bridges before. So yeah,
we mualty dark but not too dark.
Speaker 5 (52:10):
Yeah.
Speaker 2 (52:11):
I had the like it wasn't bitter. That's one of
the things that you get with a milk stout is
that it does have some of that lactose sweetness. But
I wouldn't call it. I don't think it was too sweet.
It was just like milky smooth, yeah, as opposed to
like hitting you over the head with a sweetness, just
like a touch, a sweetness, really enjoyed. It definitely makes
me realize I don't think I've eaten enough Tira Massou
in my life. Speaking of Tuscany, but that's gonna be
(52:32):
it for this episode. Listeners can find our show notes
up on the website at howto money dot com, including
that article to the back door roth Ira how to
pull that off. So buddy, let's wrap it until next time.
Best friends out, best friends out.
Speaker 1 (52:46):
Yeah, it's
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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