Ask HTM - Investing Deadlines, Building Generational Wealth, & Coping With Financial Regrets #808 - How to Money

Episode Transcript
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Speaker 1 (00:00):
Welcome to Hod of Money. I'm Joel and I am Matt,
and today we're answering your listener questions.

Speaker 2 (00:25):
Of course, it's Monday, and listeners know we've got listener
questions to get to. We've got a whole late host
is like, yeah, I guess a host of it's like individuals,
but like a slate. Feels like options. Yeah, and we've
got some great options, some great questions to answer today.

Speaker 1 (00:41):
I was just thinking, I want to say I have
a case of the Mondays and mean it is a
good thing.

Speaker 2 (00:45):
Makes me think of Monday Night brewing their mixed pack
of one of their beers. They called it a case
of the Mondays because their Monday Night, and it was.
And yet it's a beautiful thing. It's a fantastic thing.
Let's put a positive spin on we can change the
narrative on that. Some of the topics we're getting to today.
Listener is asking about an important investing deadline.

Speaker 1 (01:03):
We'll get to that.

Speaker 2 (01:04):
Another listener is wondering what might be the best way
to build up some generational wealth, and another fascinating one,
what financial advice would you give to your younger selves?
For instance, if we had to start all over again. Essentially,
they're asking about financial regrets. So I'm looking forward to
getting up to that one and more during today's episode
same a one. Just quick note on the generational wealth one.

(01:25):
You know what I love about that question, the optimism
behind it, like in an age of doumerism and people
saying like the end is near, the belief that you
can and should try to attain generational wealth.

Speaker 1 (01:40):
Says no way. I think that there's plenty of good
things coming down the pike. So I'm not wholeheartedly behind that.

Speaker 2 (01:46):
Sure, but is it misplaced optimism? Maybe we'll get to
that as well.

Speaker 1 (01:49):
See, I don't think it's misplaced optimism. We'll talk about that,
but maybe it's still not the right path. But all right, Well,
before we get to all those questions, Matt, let's talk
about how much to spend on a vacation. I saw
this article on the Art of Manliness, and interestingly enough,
the Art of Manliness. It's a website and a podcast
that is pretty thoughtful, and I think like even a
lot of women could get behind a lot of the
content on there.

Speaker 2 (02:08):
Just about living intentionally as opposed to being asleep at
the wheel in all areas of life. Yes, I feel
like we do that when it comes to money specifically.
But Brett McKay, that's in that the guy.

Speaker 1 (02:17):
Yeah, he does a great job. He's his wife, I think,
do it together. And I think a lot of that.
I think probably they started off as kind of this
manly thing and about growing like cool stashes and dressing nicely,
and then like as he grew as a person, his
what he the kind of topics that he covered grew
and changed and now it's really I think, appealing to
all sorts of folks. But he just had an article
about how much you should spend on a vacation. What

(02:39):
is the right rule of thumb? Matt? How much do
you think people should be spending or thinking about spending
on upcoming travels? And I think this is probably the
time of year people are starting to plan out summer travels.
What should I don't know, do you have any thoughts
for them?

Speaker 2 (02:51):
Yeah, okay, you give me a heads up, So I
knew to go do some digging in my own. I'm
a nerd, and so I have the ability to pull
up previous years of expenses and what I found. You
interested to figure out what I uncovered? Always when they
were literally my personal finance data. Earlier today, Matt was
telling me how much he spent on car repairs in
like twenty seventeen through twenty twenty three, and we're talking

(03:12):
about We're like, oh my gosh, why does it cost
so much to what did you just have fixed, like
said solon od or something on your odyssey? And I
was like, interesting, head gasket. Yeah, And so I was like, oh,
you know what, actually did the same thing two years ago, YadA, YadA.
But I think that was fresh on my mind, which
is what made me want to go digging through our
vacation spending over the past decade. Plug. I mean, I've

(03:32):
got I only looked at the past decade, and I
found that you could have gone further, I could have
gone further, but I found that we spent like, on average,
typically about two percent of our income on vacation. And
so yeah, when the general rule of general personal finance
advice of spending five to ten percent, personally, I'm like,
I see that, and I think, oh, that seems kind

(03:54):
of high. But then when I went and dug three,
I'm like, well, is it high compared to what I
have spent? And it truly is. I mean there's some
years where we literally only spent one percent of our
overall income. And you want to know what year that
was specifically, Well, you were involved. I don't know if
we've ever talked about this. We had bartered with some
clients of ours and they gave us for a discount.

(04:14):
They gave us their Jeckyll Island house. It had a
bunch of rooms, and so what we did, well, I
created a Google sheet.

Speaker 1 (04:21):
You've done that multiple times.

Speaker 2 (04:23):
We did that twice, we did we did that two
years in a row. But one of those really affordable
years was was that year a sheet? But it allowed
all of our friends to show up. They basically were
able to claim a room and I charged them twenty
bucks at night because I was basic, you know, like
we were taking a financial hit by accepting that house.
But it's like, okay, how can the clients win? How
can I win? And how can our friends win? I

(04:44):
mean we like, we had folks who were staying with
us at the beach for like one hundred bucks, which
is like, which is unheard of. So all that to
say five to seven percent, I think that might be
a touch high.

Speaker 1 (04:54):
Personally, I think not everyone can borter like you can
or could, I guess, but I think I think one
of the things that happens when you reduce the budget
that you're willing to spend on vacations is you have
to get more creative. And that creativity I think can
lead to some really interesting trips and excursions.

Speaker 2 (05:11):
So especially when you're younger, like that too. It was
so stick. It's not like that was a sacrifice. Now,
that was a ton of fun. We had folks dropping
in for a couple days. You and Emily, I think
y'all are there literally, I think the whole time y'll
claim the other room that I think the king size
bad as well. We played a lot of spike ball,
a lot of board games, spike ball and craft beer.
What's better than that? Man?

Speaker 1 (05:32):
So yeah, I think in this article he has likes
five to ten percent as a good rule of thumb.
I do think don't cheap out right and don't avoid
spending money on vacations because I think they can create
amazing memories. But also don't think that just by spending
more money you're going to create better memories. I think
sometimes we associate that or we think if I shell
out an extra four thousand dollars for the vastly more
expensive beach house, then the memories are going to be superior.

(05:55):
And I just I don't think that's true in the
same way, although take your vacation. Yeah, spend money on vacations,
enjoy it, but just don't overdo it.

Speaker 2 (06:03):
Totally agree. Yeah, And here's the thing is, I'm totally
fine with somebody spending even more money than that if
that is their craft beer equivalent. Right, Like, if there's
somebody who's saying, well, dudes, I love to travel. That
is my thing. Like your sister her and her assment
they travel all the time. In my mind, I don't
know her super super well, but it seems like that
that is her craft bureau equivalent. They're like super minimalist,

(06:25):
frugal people. They don't spend It doesn't seem like they
spend a lot of money on any other things.

Speaker 1 (06:29):
So they'll drop money on a flight or a hotel
at the drop all the time.

Speaker 2 (06:31):
Yeah, Like, anytime I see them all right, where you
hit next, because that's always the topic of interests, whatever
country and whatever awesome trip that they're taking. I'm totally
fine with that. You can't do that on everything. But
like you said, if you're more of a minimalist in
other areas and you want to maximize them, I'm not
that you're spending towards travel. I'm totally for that. They
also you can also change it because we again we

(06:53):
didn't spend much back in the day, but last year
so we ramped it. I said, on average it was
like around two percent, right, but last year it's go
closer to eight percent.

Speaker 1 (07:02):
Yeah, because it depends on the scholar trip.

Speaker 2 (07:05):
With you all, we did like a whole week at
Disney and Universal. It's that's that's certainly a more expensive year.

Speaker 1 (07:10):
And by the way, talking about my sister, they live
in a one bedroom Midtown apartment. It's not cheap, but
I guess it's small, right, and they have one car
and it's like a twelve year old Hondas.

Speaker 2 (07:19):
So that bounces around to get the rent discounts. That's
right as well.

Speaker 1 (07:23):
So so like if you're doing all those other things,
then guess what you can afford to turn up the
dial a little bit on your vacation spending. Yeah, I
love it all right, Now let's mention the beer we're
having on this episode. This one is called bone Shaker,
which sounds like the name of a.

Speaker 2 (07:34):
Monster truck shakers.

Speaker 1 (07:37):
By Moat Mountain. And this one was donated to the
show by lister Todd. Todd, thank you.

Speaker 2 (07:42):
It's got a it's got a biking motif, so bone
shaker in the sense of mountain biking. And I guess
not having shocks, but not in the monster truck variety, sadly,
because I like monster trucks. Well, I like bikes better
than They're both great.

Speaker 1 (07:57):
All right. By the way, let's we're gonna take a
lot of lisser questions, Matt, so let's to those. Let's
do it. And if you're out there listening and you're like,
I have a money question and I would love those
two gentle sweet idiots to take it on the show,
please do submit it to us. We'd love to hear it.
You go to how tomoney dot com slash ask several
instructions there basically recording a voice member sending it to
us via email. Now let's get to the first one.

(08:17):
This one comes from listener Chapman, and he's wondering if
he can take an investing route that avoids the stock market.

Speaker 3 (08:25):
Hey man, Joel, thanks for taking my question. First off,
I'm wondering your advice on long term retirement goals. If
I were to plan on owning several investment properties that
will hopefully be paid off when I'm ready for a
soft retirement in my forties. So, with that being said,
how should I be prioritizing investments to retirement accounts in
the stock market if I really want to do real

(08:48):
estate right now? I have a four to one K
and WROTH four one K option at work. I have
thirty five hundred in it, and I started it as
a Wroth option because I assumed that was better. But
which one of those would be best to go with
if I'm going to invest in real estate? And also,
how should I choose how much to put in a
retirement and how much to go with real estate considering

(09:09):
I need a lot of money up front now to
buy my second property because we already own our first house. Secondly,
we just love any of your advice on kids and
specifically newborns. We're about to have our first child in
two weeks, so I would love any advice on that
and maybe your dad hacks or anything like that. Thanks.

(09:30):
I'm a big fan and I appreciate you guys's level
headed advice on the show.

Speaker 2 (09:34):
So thanks level headed financial advice.

Speaker 1 (09:37):
That should be the subtitle of our shared toule.

Speaker 2 (09:40):
So Chapman is asking, let's kick it off with the
dad hacks because he's got a baby on the way. Congrats,
you probably already have that baby at this point. But
what we would say, and I think Joe you'd be
in agreement here, but prioritize the time that you're spending together.
I think early on this is going to be a
lot easier to do than when you are, like when
the kids are all and you're maybe a little busier,

(10:02):
or even when you have like multiple kids. So that's
where my mind immediately goes.

Speaker 1 (10:05):
Because we've got four.

Speaker 2 (10:06):
Kids, Joel, you've got three, and it becomes harder to
do spending like one on one time with the kids
where you don't have the other ones. Clamoring for your attention,
Kate and I we've instituted Mommy Daddy dates where we
alternate weeks and we'll take one of the kids. It's
an uninterrupted period of time where we get to spend
some quality time together. But Chapman, for you that, again,

(10:28):
you've only got one kid to keep that in mind.
I guess when you have when you have multiple kids,
but what has changed. One dynamic that certainly has changed
is the relationship between you and your wife or your
significant other, your partner. And so I, like I guess
this is somewhat unconventional dad hack, you know, new baby advice,
but make sure that you are prioritizing the amount of
time the quality of time that you're spending with your

(10:50):
partner as well, because I think that that is like
that is foundational, like that is the bed that should
be the bedrock of your family. And if that suffers. Yes,
you might have cute baby that you're excited to talk
about NonStop, and that's totally natural. I get that, another tiny,
cute little thing. But if you aren't leaving a room
for the two of y'all and for y'all to remember

(11:11):
what it is that brought y'all together in the first place,
then I think, over time, the high that you currently
have with that new baby that wears off and you
get more into the day to day drudgery of it start.

Speaker 1 (11:23):
To drift apart if you're not prioritizing each other at
the same time. And you're right, Matt, the baby who
in a bundle of joy can turn into this like cleaver,
that's separating your nonmost king not like that. I don't
even like that, but like it really can cause some
drift if you're not being intentional on that front. And
I think maybe some of the habits Matt even like
you know, you're not really typically reading to a newborn,

(11:43):
but like you can start if you want, I guess,
but that kind of like prioritizing that schedule and that
rhythm hopefully that can like stick around for years to come.
And I know that like yeah, the bedtime, the breakfast,
the dinner routines for us, or just I hate to
miss it, like if I'm out of town randomly for
a couple of days, like I'm so stoked to get
back for it. So just making sure those rhythms are ingrained,

(12:04):
I think is going to be incredibly helpful. It's going
to create kind of some of those important family bonds
that are going to deepen those relationships and make them
even more meaningful everything totally. Let's talk about Chapman's question,
specifically his money question. He mentioned retiring in his forties,
and I think you called it a soft retirement. I
think that's that's an amazing goal, by the way, to

(12:24):
want to retire that early. And I'm curious to know
what he means by a soft retirement. I don't know exactly,
but my guess is that what he means is that
he wants a more flexible work and work optional sort
of approach, right, kind of peace out money sort of
thing that we've talked about in the past. Having the
ability to do whatever you want even if you decide
that you're going to keep working or just dial it
back a little bit on that front. And a coast fire,

(12:46):
I guess, is what folks in the FI community refer
to it as. And I think that's a great goal
to have. I mean front loading the sacrifice that you
give yourself more options down the road even if you
do decide to keep working in some capacity, which let's
be honest, Matt, most people do. Going from working forty
hours a week to hitting your fine number quote unquote
fine number or whatever and then ditching work completely actually

(13:06):
ends up leading to a lot of unhappiness for people
in that crowd. So it's just but having the ability
and having the options can be such a psychological relief.
I understand why people go that route. I mean, so
I think this is something you can create for yourself
by starting early and by being incredibly intentional. I think
I think if Chapman takes the right approach, he can
wind up there totally.

Speaker 2 (13:27):
Yeah, and you mentioned front loading the sacrifice, and we
were just talking about vacations. But I think that's just
a great small example of ways that you might be
able to be a little more flexible now where you're
deferring some of that living large so that you do
have some of those options.

Speaker 1 (13:41):
Yeah, you're like further down the road, if you want
to retire in your forties, it's going to mean dialing
back on a bunch of different things, probably your car,
your home, your vacations, all that kind of stuff. Because
if it's that high of a priority, like you've got
a limited timeline to really get there, and you've got
to kind of put everything you got behind it, that's right.

Speaker 2 (13:58):
Yeah, and having some paid off rent properties that could
be a good path forward. So how should you be
looking to balance your interest in real estate as well
as your tax advantage retirement accounts and so much depends
on your risk tolerance. So Joe, literally we were joking.
After last Wednesday's episode, we talked about real estate maximalist

(14:19):
Alan Corey and this is you and I like after
the recording, but we were saying how he might not
have any money in the actual stock market.

Speaker 1 (14:25):
Yeah, he might.

Speaker 2 (14:26):
We didn't ask him, but yeah, but like it kind
of makes sense because he has gone so hard in
that direction. He is such an expert within that realm,
and personally we don't feel comfortable with that, even though
we are investors of real estate. But Alan has owned
a skill and I don't think I would fault him
if he didn't have anything within a traditional retirement account.

(14:46):
But is that the route that Chapman should take and
most people in general or everybody else? Yeah, I think
it depends on well, it depends on your market. It
depends on how much time you're willing to dedicate towards
investing in real estate. You need to know what the
numbers look like. Financing is a part of it, and
it's not purely passive either, right, Like, that's the biggest

(15:07):
difference between investing in real estate Chapman is essentially you're
signing yourself up. Maybe you're saying soft retirement because you
want to have the time on hand to be able
to manage these properties yourself. Well, good, because that's what's
going to be necessary if you are going to be
taking that on yourself, if you want to pose to
the market, investing in the stock market, which is purely passive.

Speaker 1 (15:23):
And if you want to better cash flow, better return
from those properties, it's going to mean self management. But
that takes time, right, And if you're going to be
the super too, right, if you're going to be over
there replacing the toilets, doing the fixes, and you and
I have talked about this before. Some people overblow that,
oh the three am toilet bursting phone call. I've never
had that one, but that's always what gets described from

(15:45):
people who don't want to be landlords. And it's time
if you don't want to be a landlord, but Chapman
wants to be. And I think you know, some of
that stuff's over. Some of that stuff's just bluster, it's
not true, but it's at least we're thinking about what
that looks like in your life and the amount of
time you're going to need to dedicate and what the
ROI is going to be on that totally. I think
it depends too on your personal preference and what it
is that you're looking for out of your overall portfolio,

(16:05):
because like, this is where I think you and I
differ slightly in some of the like the finer points
or whatever. But about five years ago, I'm looking at
my overall net worth and my asset allocation essentially of
my investments, and I'm like, man, I've got way more
money in real estate than I personally felt comfortable with.
And so for me, what that look like. And this
is back when rates were stupid low, But I went

(16:27):
ahead and refined pulled equity out because I wanted to
have more of my overall percentage of my portfolio invested
in the market. And so for me, it was almost
like a right sizing because I was like, oh, I
feel like I'm too.

Speaker 2 (16:38):
Heavy within real estate. And so essentially that was personal preference.
And so that's something else to consider Chapman, is what
do you want your net worth to be made of?

Speaker 1 (16:47):
Well, yeah, I think this leads to the next thing
we need to talk about perfectly, because for the sake
of conservatism and diversification, I think it's still a good
idea to do someone both right, So you know, for
maybe for this especially early on. Yeah, yeah, yeah, for
the extreme person who who learns a scale and does
it incredibly well, like Alan who we talk to, then
then I think it's okay maybe to go all in

(17:09):
on one thing. If you have an outsized advantage, take
advantage of that outside advantage. So if you reach this point, Chapman,
in your real estate investing journey, where you've got this
amazing system, you feel like, you know, traditional retirement account
investing and contributing to those is holding you back from
scaling something that you've become an expert at that could
tip the scales, I think eventually to reducing your to
dialing back those retirement contributions, But for the time being,

(17:31):
I would I think we would both say, Matt, do both.
It's going to take more time then to buy the
rental property you want. It's going to take more time
to save up that down payment, but it's worth the
delay because you're mitigating your risk and you are creating
some of that diversification. So which account you asked scimvially,
which account you should you should start investing in? We
would say, make sure take advantage of whatever match you're offered.

(17:51):
In a four to one K and then after that
probably the roth IRA. That's it's just such a flexible account.
It's such a good.

Speaker 2 (17:57):
One and options.

Speaker 1 (17:58):
Yeah, and you know, I think if you're getting the
match where you're maxing out the WRATH, then all the
money that's left after that, I feel comfortable stocking away,
socking those dollars away into your your rental down payment fund.

Speaker 2 (18:08):
Yeah, and going back to just this idea of diversification,
I think what's important to point out here is that Chapman,
like you think right now that you want to go
all in on real estate, but generally speaking, you've just
gotten your toes wet, and it's tough to know what
life is going to look like in a couple of years.
You're about to have a baby. What does that mean
for your partner? What does that mean for your career,
your job, The amount of time that's going to be

(18:30):
required of you when it comes could be next match,
you know. And well even even still right now, he's
thinking through, Okay, it's pretty easy for me to run
down there, change out the locks, schedule cleaners, whatever is
required of him at this point when it comes to
managing that one property that he has. But beyond that,
it's like five years from now with a five year
old in tow that could look a whole lot different.

(18:51):
And so what I'm pointing out here is that, like
you said, you'll continuing to invest in the market, obviously
taking advantage of that match, but also continuing forward with
real estate. It gives you the option a few years
from now to then decide, Okay, what do I now
want to continue.

Speaker 1 (19:07):
To go after hard because.

Speaker 2 (19:09):
There might be another, like a completely another opportunity at work,
or maybe you want to start your own side hustle,
like a you're going to go down the path of entrepreneurship.
That could be something that you're excited about. And then
it would be a little more difficult to say, perhaps
make the numbers work with real estate if you now
have to rely on management because you know you're paying
you're ten to fifteen percent, because you don't have a

(19:31):
network as you're doing it yourself. You don't have a
movie high a manager who's cutting you a discount rate
at like seven eight percent.

Speaker 1 (19:38):
If you do that, Chapman, if you've got multiple properties,
that's all okay, I think let me just say one
one thing or a couple things maybe on the super
positive side of real estate. I think one reason to
invest in real estate, especially if you have the goal
of early retirement, is because like having that mortgage, the
mortgage stays the same while rents continue to increase over time.
That is a generality, but it is over over time true,

(19:59):
because rents do moderate sometimes. We're seeing that in Austin
right now. We're seeing that actually in other places across
the United States too. But that's going to put you
in the position over the years that have greater cash
flow the further you move along that ownership timeline. And
so just like Alan mentioned last week, Matt, you aren't
tapping into the capital like you do with an investment account, right,
so collecting rents doesn't have the same psychological impact that

(20:22):
taking money out of a retirement account has, so and
it doesn't have the same tax consequences either, if you're
pulling money out of a retirement account early. So I
would just say remember if early retirement's on your radar,
and you're investing, by the way, for even more decades,
and that real estate it can provide cash flow in
those early retirement years, and the money you're putting into

(20:42):
traditional accounts can help fund those later decades. You want
to make sure both. One last thing I'll say is
if you're planning on doing some house hacking, I think
that can move real estate investing up the ladder even
above maybe some of those traditional retirement accounts, because not
only are you investing in real estate, you're making a
person sacrifice to increase the gains you can see in

(21:02):
those real estate endeavors. And we have a whole episode
that we did with Craig Kurlop on house hacking that
we'll link to in the show notes.

Speaker 2 (21:08):
Yes, right, we'll include that up at how to money
dot com. But Joel, we've got more to get to.

Speaker 1 (21:13):
Today.

Speaker 2 (21:13):
We're gonna hear from a listener who's trying to figure
out what to do with some company stock that he owns.
We'll get to that and more right after this.

Speaker 1 (21:28):
All right, we're back Now, we got more listener questions
to get to, and this next one, it's not about
investing for retirement, it's about investing for future generations.

Speaker 4 (21:36):
Hi, Matt, Joel Aja here from Coralville, Iowa. My wife
and I have hit a couple of amazing milestones and
achievements recently, and they have gotten me thinking. First of all,
we are twenty eight in money gear seven and just
hit our theoretical coast find number with some help from
the recent market upswing. Second, and much much more importantly,

(21:58):
we just had the birth of our born child. Before
I ask my question, I want to share that we
are one hundred percent on board and agree with the
common airplane metaphor of you have to take care of
yourself in order to effectively take care of others. Well,
we have no intention to take our foot off the gas.
Our son being born has made us think about tax
efficient ways to pass money from generation to generation. Just

(22:20):
to be clear, we do still plan on contributing to
our retirement accounts, and we have several other money goals
that we are still striving towards. We have started a
five to twenty nine account under our son's name and
are looking for other opportunities to grow our future families
wealth under current tax codes and laws. My question is
do you two have any recommendations for where we can
get started? Thank you so much for considering this question,

(22:42):
And if you guys are in the Coroville or Io
City area, there are several great beers that I'd love
to show you. Thank you so much for all that
you do, and I appreciate your time with this.

Speaker 1 (22:50):
Question, Matt, Matt, what's in the water all that? How
the money listeners having babies?

Speaker 2 (22:56):
Honestly, like, I love hearing for folks who are in
this stage of life right because there's so much change.
It's it's an incredibly dynamic period of life where life
changes like quick.

Speaker 1 (23:07):
You change for a person every few years, it feels
like you do.

Speaker 2 (23:09):
But it's it's a good thing, but it certainly requires
some changes maybe to how it is that you are
preparing for the future. And in this case, AJ sounds
like they've been doing an incredible job. He said they're
in money gear number seeven at this twenty eight, which
is unreal but sort of like what we're saying with
with Chapman. I don't know. I really like the overall

(23:31):
philosophy of giving yourself options, and I'm glad to hear
that you're not completely giving up on investing. You're saying that, like, yes,
we want to make sure that we're giving setting money
aside for our kids, but we're still going to continue
investing ourselves. And I think it's so important to do
that for a couple of reasons. A. He mentioned the
recent returns stock market that we've seen in the market,
like basically over the past year, we've seen like a

(23:52):
thirty percent return. Well, don't count on that. Like it's
great that we've all experienced that, but we was not normal.
Not normal, And we want to make sure that you
have prepared for scenarios and situations that aren't just the
best case scenario. But then going back to kind of
what we're talking about with Chapman right now, is when
your expenses are probably going to be the lowest love

(24:12):
they'll ever be in your life. And I say this
maybe from personal experience, because I remember like ten years
ago sitting down with Kate at our even then we
had nerdy financial review meetings at the end of the year.
I feel like it's about a decade ago we sat
down and we're like, all right, we can be financially
independent in about five years three if we really get
after it. But then life happens like you have a kid,

(24:36):
or there are different other interests that you have, or
basically you're spending more money. And what we're talking about
here is lifestyle creep, and typically like lifestyle creep is
this boogeyman like we always see it as like this
big bad thing that's terrible and that we should be
avoiding at all costs. But I don't think that's necessarily true.
As long as you are mindfully spending your money in

(24:56):
a way that reflects your values, I think it's totally
fine to reap some of the rewards of the sacrifices
that you've made, of some of that front loading the
sacrifice approach that a lot of folks have taken in.

Speaker 1 (25:07):
This intentional lifestyle creep instead of just kind of happenstance
exactly exactly.

Speaker 2 (25:11):
So all that to say, Aja, I think you're in
a period of time now and I'm not at all
trying to discount what you have been able to accomplish
up up until now. I think it is amazing that
y'all are in the position where you are. I'm just
commending you for continuing to invest because you never Yeah,
stuff gets more expensive, your interests change, and there's a
chance that you switch to hobbies or your interests lead

(25:34):
you to saving money over the next five to ten years.
But I think that's pretty rare. Like, typically, especially with
kids on board, you spend more money. Like, if you
would have told myself, told me ten years ago, a
decade ago, the amount of money that we spend on
extracurricular activities, on clubs, on camps, even on vacations. Now
we were just talking, we've been talking about vacations, I

(25:54):
would not have believed you. I would have said, shut up,
there's no stinking way. But I think that's more of
the reality than the Yeah, I think that's truly agree Well,
I think it's very true. Yeah, And I think you
don't want to approach it from like a defeat a
standpoint and be like, you can't win no matter what,
it's gonna end up costing you more.

Speaker 1 (26:09):
Well, the ways in which you're willing to be frugal,
they changed too, right, So I remember sleeping in a car,
like on a road trip. I remember, like literally a
three month road trip, never paid for a place to stay.
We say that we were comfortable staying in the most
random spots, sleeping in the tent, random places, or just
staying in a hostel or something like that. Yeah, or
on a stranger's couch right the CouchSurfing dot com. Those

(26:31):
are things.

Speaker 2 (26:31):
Sleeping in a tunnel underneath train tracks, in Europe. Yeah,
done it. Those bitchiest places I've ever spent a night.

Speaker 1 (26:37):
Those are things I was not just like willing to do.
I was happy to do when I was in my
early twenties, and now like you could probably pay me
to do those things. And so, yeah, it costs more
every time I go on a trip. It's not like
I've got, you know, four seasons sort of taste these days.
But I'm just not willing to cut costs to the
extreme like I used to be willing to. And so's

(26:58):
it is worth no voading that that's true for most people, right,
You don't see and more power to you if you're
still staying in hostels when you're like in your fifties
and sixties. But that's just not kind of the way
most people roll. So now let's get back to the
heart of Aja's question. I think I love how we
said that he's going to take care of his own
future first. I think it's really really important, right, because
I think that's the best gift you can give to

(27:19):
your child and any future kids you might have. Absolutely,
it's the oxygen mask on the plane example, right, So
putting it on yourself first, so that then you can
help the person next to you. And I'd say after that,
the question isn't as much about how you can invest
for your kid's future. The first thing I would ask
is are you making sure you're not scrimping on experiences

(27:39):
that would broaden their horizons in their childhood in the
coming years. Right, you were just talking about the extra
calculator cloud and Sam over here. I mean, it's not
just about making sure they've got a million bucks in
their retirement accounts by the age of thirty five, which
you could do right if you're a proactive saber and investor.
It's about the experiences like traveling, camping, learning an instrument

(27:59):
organized yes, your free time also right, making.

Speaker 2 (28:03):
Sure ability to raise them in a way that reflects
your values and how you want them to turn into
an adult.

Speaker 1 (28:08):
Basically, so be thinking, I think, and we'll talk about
this in a second, about investing on their behalf, but
also think about how you can free up more money
to prioritize some of those totally totally yeah.

Speaker 2 (28:18):
I feel like we're hearing the term generational wealth more
and more these days, and I know some folks find
that to be a high priority. It's really important but
it's just not something that we value highly. And over
time I've found myself thinking about investing actual dollars for
my kids. I find that to be less and less
of a priority, and in some cases, depending on how
you handle it, I think going that route it can

(28:38):
actually reduce their own initiative and work ethic. I've know,
like I don't know how many times I've mentioned this
on the show, but the Vanderbilt Kids, Fortune's Children was
the book, but they talked about essentially the downfall of
that family, and I think it was Willie Vanderbilt who
said that inherited wealth as a handicap to happiness. It's
too ambition, as cocaine is too more. And so the

(29:01):
ability to set your kids up for success in a
way like we think that money is going to help them,
but in fact, like maybe the best thing that we
can do is set a good example for them of
what the good life looks like and then they have
the ability to go out there and get it. Sort
of like going back to the first question where we're
talking about, Hey, lay the framework or the foundation for
what a healthy relationship looks like with you and your partner.

(29:22):
Hopefully that can be a model of what it looks
like to live the good life.

Speaker 1 (29:26):
So basically, I think what you're saying is you could
win the generational wealth battle but lose the war. Yes,
you achieve the thing you set out to achieve, and
it turns.

Speaker 2 (29:34):
There's a lot of money. Yeah, but then in the end.

Speaker 1 (29:38):
Losing there's a reason trust for fun. Kids get a
certain kind of wrap, right, and it's probably not all justified,
but there's truly a reason for that. And you read
that book about the Vanderbilts. We talk about it. I
haven't ready yet. I need to read it. But like
the sort of ambition draining reality of having money in
the bank that you haven't earned, that someone else has
done for you, I mean, it would sap my ambition.

(29:59):
I'm just be honest. If someone gave me three million
dollars tomorrow, would it would probably change my work ethic
or and.

Speaker 2 (30:06):
I think you would have had the same fire or
it leaves you of joy. I think at least like
within the developmental years, where you were thinking, Okay, what
do I want to do with my life? Where do
I want to go to school? How hard am I
going to study? How hard am I going to pursue
this internship when you know that in the back of
your mind that, oh, I can always fall back on
mom and dad, And that's an awesome thing for kids
to be able to know that they can count on.

(30:28):
There's essentially like a floor, right, Like there's a safety net.
And I think you don't want to underestimate the importance
of that for kids, the ability of kids to be
able to go out there and take risks. But yeah,
you don't want to prepare the road for the child.
You want to prepare the child for the road.

Speaker 5 (30:41):
Yeah.

Speaker 1 (30:41):
By the way, I wouldn't turn down three million, just
saying if someone out there really really wants to give it,
if you're feeling it will take. But I would say, too,
let's talk about like five twenty nine accounts, because there's
obviously nothing wrong with saving something for your kids for
their future, especially with the high cost of college these days,
if you have the additional financial means, and AJ mentioned
that the first account that we would have too, the

(31:02):
five twenty nine. If you're crushing your own finances, five
twenty nine accounts are the next best place to sock
money away if you think your child is likely to
go to college. But even if not, if you want
to play the new Secure Act two point zero loophole,
because you can actually get money from a five to
twenty nine now into a roth IRA because of the
changes made there. So the good news, by the way,

(31:22):
is you get a tax break in many states for
making that contribution to a five towenty nine plans, So
it's a win for you. You're socking money into an
account for your child for their potential future college needs,
or I mean, you could even use it for private
school I guess earlier on if you wanted to. But
then on top of that, you can funnel that money
into a wroth over time down the road as well.
I just think that that account now allows for a

(31:44):
whole lot of flexibility that it didn't used to. That's right, yeah.

Speaker 2 (31:46):
But then beyond that, if you want to funnel more
and more dollars into accounts that are under their name,
I would say the next goal would be to just
directly fund a wroth IRA with them once they have
earned income. I think creative parents out there can find
ways for their younger kids to earn a little money
on the side and therefore start contributing to a roth
earlier than most. Of course, you can wait until they

(32:08):
get their their first high school job as well, but
then another route would be to just put money in
a custodial brokerage account in their name. The downside here
is that this can reduce their ability to qualify for
financial aid for college. And so this is another instance
of potentially shooting yourself on the foot or the you
shooting them in the foot because the put like you're

(32:31):
trying to help them out, but then you might end
up actually missing out on free aid money that they
would have qualified for because you do have so much
money to decide true in their actual name.

Speaker 1 (32:39):
All right, So one more thing I think I want
to do that worth mentioning, is that you can just
give some of your money to your kids as they
get older. And so the more money you sack away
in your own accounts, the more wealthy you're building. Will
you just opt to give them eighteen thousand bucks.

Speaker 2 (32:54):
A year at least that's the current amount right according
to law without any sort of tax issue, that's right,
which will likely increase too over like over time, right
like when the and that's and it's double if you're
a couple as well, like that's for an individual eighteen thousand,
so you're looking at thirty six thousand dollars.

Speaker 1 (33:08):
A kid gets married, you can give like double that
seventy two thousand dollars, right, So that's a whole lot
of money. I like this approach, Matt, because, you know,
giving money to your kids when they're on the prespice
of buying a new house, let's say, or they are
you know, in those kind of thirties years or in
their their those early or in those twenties years, and
they've been doing a great job after college, like they're

(33:28):
working hard, that knows to the grindstone sort of thing,
and you want to kind of give them a leg up.
This is a great time to funnel money into their life.

Speaker 2 (33:34):
Yeap.

Speaker 1 (33:35):
Doing it earlier than that, though, I think can have
some of those negative side effects we've talked about. But
I mean, I think that's.

Speaker 2 (33:41):
Still a big chunk of money though. I mean, like
you said, it's like, assuming they get married, they've got
a partner, seventy two thousand dollars. You can do a
lot of things with seventy two thousand dollars. And I
like how that just provides like a pressure relief out
that gives you the options to be able to without
tax implications, give them some money, while like you said,
avoid some of the more potential harmful downstream effects of

(34:01):
having set aside massive amounts of money that they know about.

Speaker 1 (34:04):
I think that's because they're old enough to understand and
appreciate your generosity. Totally agree without hopefully like adopting the
spirit that they're entitled to the money that you've worked
to build.

Speaker 2 (34:12):
Totally.

Speaker 1 (34:12):
And I think one last thing is the great thing
about owning real estate paid off real estate is the
stepped up basis, right when when people inherit a home,
when if your kids were to inherit a home that
you owned, or multiple homes that you owned over time.
Going back to kind of the beginning of the episode
and investing in real estate, that's one of the great
things about real estate if you own it for always

(34:33):
and you never sell it and your heirs inherited, is
that hopefully it was a good investment that went up
in value significantly and there's no tax time bomb at
the end of the road either.

Speaker 2 (34:42):
Yeah, that's right, So you can always consider real estate
just like Chapman's doing. But Joel, you've got another question. Here.
This is from a listener who is maybe he's been
accidentally investing with a single company. Let's hear his question
about what to do with some of these stocks.

Speaker 5 (34:57):
Hi, Joel and Matt, this is Paul from the Mountain
outside of Pittsburgh, pennsylvan I have a question for you
about my company four one K. But first I want
to give you a real quick frugal or cheap so
my local Aldi, the people there have a habit of
returning the carts with the quarters left in it, and
if I find those carts, I do not use my
own quarter and end up with that quarter and have
a pretty good stash to where I think I can

(35:18):
have a free beer soon. So is that frugal or cheap?
But the real question is that my company match is
automatically put into my portfolio as company stock. Now that
feature has been disabled on Fidelity to change how the
match is allocated within my portfolio. So my question is
how often is too often to manually sell that for

(35:40):
an S and P five hundred or total stock market fund?
Thank you very much. I love the show.

Speaker 1 (35:45):
Well, Matt, let's to dig into here, But first and foremost,
frugal or Aldi frugal or cheap. First, I'm going to
say cheap and not to throw shade Paul, but I
think the reason people leave the quarter in the cart
is to pass on some kind right. It's it's it's
like what people do in the drive through, paying for
the person behind them. I guess like for their food too.
I've ever done that, but it always seems sweet. Right.

Speaker 2 (36:07):
Yeah, I was gonna say, I was gonna ask if
you maybe I should ever done that. I've never done
that myself either, but I feel like that would be fun. Yeah,
all right, maybe do that ways to spontaneously give.

Speaker 1 (36:16):
But then then I guess you're the person who's not
passing it on if you just drive off and don't
pay for the next one, so you end the chain
and free lunch. Yeah, that might be what you're doing
here with this quarter thing. Like, I don't think that
you're using it as intended. I think you're funding your
personal stash for the beer purchase, even though you're planning
on spending it on something of course holy, righteous and

(36:37):
good that we would totally get behind it in the
form of craft beer, good beer. Probably don't steal the
quarters to do that. That's that's just my take. Okay.

Speaker 2 (36:43):
So initially I was I would totally agree with you.
But the more I thought about it, though, the more
I realized that the reason those quarters exist is so
that Aldi can have a reduced staff so there's not
somebody who's working full time gathering all the carts out
there in the parking lot. So otherwise it's it's chaos, right, Like,
it's just gonna end up looking like Costco.

Speaker 1 (37:01):
Where that's the reason for the quarter system, but that's
not the reason people leave quarters in the right.

Speaker 2 (37:06):
But if you leave your quarter there, you've provided no
incentive for the next person because they're like, well, it's
not my money. And then before you know it, you've
got a bunch of carts with quarters in them and
they're all just it's again, it's not orderly. Now most
Aldi customers are too cheap. They surround them all up here.

Speaker 1 (37:19):
Okay.

Speaker 2 (37:19):
So as I thought about it, though, I thought, well,
that sort of short circuits the reason that the quarter
even exists, and the it sort of breaks the whole system.
And so what I would do is go ahead, take
the quarter, because you want to contribute to the orderlyness,
the law and order that Aldi.

Speaker 1 (37:35):
Is trying to create. If you don't do this, all
thee will break down and die.

Speaker 2 (37:39):
But then once you have enough for beer, just spend
that on a friend, by your buddies beer as opposed
to buying it for yourself. That way, you're still being generous,
you're still paying it forward, but you're not short circuit
and you're not causing havoc they're at Aldi. I just
like the I like this system that ALDI has created,
and I feel like you're kind of going around it
by by doing that.

Speaker 1 (37:59):
All right, Well, I feel like you're trying to save
Aldi and you're making sure that Paul gets the beer
he wants.

Speaker 2 (38:04):
Yeah, and he's still able to be just not beer
for him, he's going to buy the beer for a friend.

Speaker 5 (38:08):
Yeah.

Speaker 2 (38:08):
So you can be generous while at the same time
participating in the systems and the structure that have been implemented.
All right, And I think all you would get behind that.

Speaker 4 (38:16):
Right.

Speaker 2 (38:16):
They're a German company. It's all about engineering and very efficient.

Speaker 1 (38:20):
It's very efficient, right, clearly they are. If you've been
in the one, I mean, the way they're set up,
it's just it's very well conceived and there's just there's
not much room for fluff in and aldi, right, So
that's why you save so much money when you shop there.

Speaker 2 (38:31):
Incentives matter, That's all I'm trying to say.

Speaker 1 (38:33):
Let's talk about the four one K match thing, though,
because having too much money in your employer's stock and
your retirement account is a really bad thing, no matter
what company you work for. I don't care where you work.
And you might say, but this stock has done so
well over the past ten, twelve, fifteen years that I've
been working there, I've made out like a bandit being
in this stock and instead of just kind of a
general S and P five hundred fund or total stock

(38:54):
market fund like you guys typically talk about. So how
could I be wrong? Well, it can work for your benefit.
It's important to mention that, like if you have worked
for Apple or something like that, then you've made out
you've done really well, or in Nvidia, but that still
doesn't mean that it's a wise move because you're not
very diversified. You've got too many eggs in one basket.
It's just not a good idea to invest substantial sums

(39:16):
of money in a single stock, much less the stock
of the company that writes your checks. Yep, that's just
too much concentration, and so that ramps up your risk levels.
If the company experiences difficult times, not only could you
lose your job, which your retirement funds can see a
substantial hit too. That is something worth worrying about, that's right.

Speaker 2 (39:34):
Yeah. The goal is to never have the amount of
employer stock exposure above five percent of your total investable assets.
And even that could be too much. I mean that's
in total with all the other individual companies or crypto
or whatever else that you might be interested in investing in.
But I think the best way to get out of
your company's stock position would be to take a dollar
cost averaging approach. That's how you're buying the stocks, and

(39:57):
so why not take a similar approach when you are
selling it. And so, if it's not too much hassle,
just log into Fidelity, which is where it sounds like
your employer has your four O one K, and just
immediately sell those shares and instead purchase let's say some
f z Rocks zero expense ratio there so it's totally free,
and that way you completely eliminate having to think about

(40:18):
whether your timing is right, because you know you're just
executing your plan. Basically, you know that this is your
system and every two weeks, this is just something that
you do. And for other folks their employer, I mean,
they might only match like quarterly or even annually. But
you can still keep it simple by selling it as
soon as it hits your account, You're not having to
weigh the decision of whether or not this is a

(40:39):
good time or not. I like this sort of knee
jerk automatic reaction of just executing that plan as opposed
to having to make a judgment call.

Speaker 1 (40:47):
Yeah, I agree. And there's also the behavioral or psychological
side to this as well. Right, for a lot of folks,
the less they log into their retirement accounts the better.
So if you're logging in there every other week, you
might be tempted to like fiddle with your allocation. That's true,
makes some other changes, and you might say, okay, I
won't double down on my company stock, but maybe actually
be buying up some video it's popping right now. Well,

(41:07):
we don't want you doing that either, right, And if
that's you, you're more tempted the more often you're actually
logged in, we'll just make it quarterly or even annual
reminder to sell that stock and buy a more diverse
fund with those dollars, or if you just don't want
the hassle of doing it every two weeks and then
you know, I would say a total stock market or
an SMP fund that's likely where you're sticking your other dollars.
Just put those dollars in there too, and avoid logging

(41:28):
in as frequently. So I think it is true, Matt.
The less frequently we see what's happening with our retirement accounts,
the more likely we are to stay the course. If
it's coming out of our paycheck with regularity and we're
logging in once a year just to make sure that
everything looks okay, we're going to be those folks who
stay the course and build wealth totally.

Speaker 2 (41:47):
Yeah, No, I think there's like the like. So you're
talking about being tempted to mess with your investments, but
I think there's also the temptation to think you're richer
than you are, Like there is an impact that those
unrealized gains have on you, I think, and how it
is that you spend because if you see like we're
talking earlier, over the past year, you've seen your portfolio
grow significantly, you're thinking, I'm rich, I'm gonna go out

(42:09):
and finance a finance a car, or.

Speaker 1 (42:12):
I don't have the funds to spend ten percent of
my income on a vacation, but I'll put it on
a credit card.

Speaker 2 (42:17):
May or maybe I'll maybe I'll take a four one
K load. Like there's all sorts of other temptations that
come with being aware to the fact that your portfolio
has grown significantly, And if that were to be the case,
I'd rather you have like blinders on. I would rather
you be completely unaware to it.

Speaker 1 (42:32):
And so a lot of the wealth effect man again,
it's insidious.

Speaker 2 (42:34):
It comes down to your personality. And if you know
that you can just top in there, sell, click, buy,
be done, log out, then I think the dollar cost averaging.
That's what I would do personally, because I would want
my money out of that single company stock as soon
as possible, a for diversifications sake, but also hopefully for
better returns. And the sooner I can get my money

(42:56):
invested more broadly, the happier I'm going to and.

Speaker 1 (42:59):
It's the least amount of time then that your money
is in that single stock and you're de risking more
quickly that way too. The good news on top of
that is that this is not a taxable event. When
you buy and sell funds or stocks inside of a
tax advantaged account, it doesn't trigger any sort of tax
consequences would be It would be different if you were
like doing that inside of a taxable brokerage account that
would create a capital gainer loss. Not so in a

(43:20):
four to one k though, So I think the frequency
is up to you whatever works best. We offered a
few different kind of routes for you to take, but
it's all about de risking regularly enough that you aren't
signing yourself up for undo and unecessary risk totally.

Speaker 2 (43:33):
I think Paul's doing the right thing. And it's not
that your company is likely going to be the next
Enron where it's going to completely ruin your financial future,
but it just doesn't make much sense to have a
lot of exposure to their stock. I think getting stock
options as a result of maybe being at a startup
early on, like that's one thing, But being forced to
invest in your company with regular stock purchases inside of

(43:54):
your tax advantage acount is just a whole other thing
that we would recommend for you to avoid. But congrats
on recognizing this but also in rectifying it right getting
invested in the broader market. We think that's going to
get you to where you want to be.

Speaker 1 (44:06):
Super smart move for sure.

Speaker 2 (44:08):
Yep, all right, Matt.

Speaker 1 (44:08):
We got a couple more questions to get to, including
one about financial regrets, another about timing the market. We'll
get to those right after this. All right, man, we
are back and.

Speaker 2 (44:24):
Just keep it rolling with the Facebook question of the week,
which is from Laurie and she wrote, Hello friends, I'm
wondering if I open a roth Ira this week. Am
I able to contribute to twenty twenty three until the
tax deadline or not because it was not an active
account at the end of the year.

Speaker 1 (44:40):
Fort times say, She says, Hello friends. That's how people
talk to each other in the how to Money Facebook group.

Speaker 2 (44:44):
Hello comrade, it's not fine as Marxist is at but
just sweep everyone's kind in there.

Speaker 4 (44:50):
Man.

Speaker 1 (44:50):
It really is a lovely place. So if you're not
a part of the how to Money Facebook group, come
join head to.

Speaker 2 (44:54):
Facebook search how to Money. You'll find it. But Lloyd
to answer your question, this is a quick one. Yes,
it does don't matter if you have never had a
wroth before, if you didn't have one open at all
in twenty twenty three, it doesn't matter, because you can
open it up, let's say on April fourteenth for the
very first time. You can establish and then fund that
account on the same day and not run a foul

(45:15):
of the irs when it comes to the roth contribution guidelines,
as long as your income for last year doesn't exceed
what they allow, of course, but specifically, the max income
that you can have for a roth ira as an
individual is one hundred and fifty three thousand dollars, and
if you are married and filing jointly, it's combined two
hundred and twenty eight thousand. So that's really the only

(45:37):
thing you need to keep in mind.

Speaker 1 (45:38):
Basically, what you're highlighting is that you can move like
a sloth and you can still take advantage of this. Yea,
you can. I forget my kids know what, just as
they move they tell me sometimes like they like a
foot an hour or something like that, are incredibly slow.
But you can be that person move really slow on
the roth IRA thing and still have the ability to
contribute for two years. You still got time.

Speaker 2 (45:57):
I picture it more like a rabbit who's just sitting there, oh,
and their waiting until the very last second, and then
it just like boom. Yeah, you just do a little
hot boom you're in.

Speaker 1 (46:05):
Yeah, because I guess you could move too slot like
it and just miss it all together. But we would
say it's a fantastic idea to prioritize filling the twenty
twenty three wroth bucket over the twenty twenty four oh yeah,
because even if you can't max out both, that's the goal, right,
and you never know what could happen with your finances
in the coming year. So I think Lori's question Matt
can act almost as like a public service announcement for

(46:27):
everyone out there. You still have time to get money
into your roth for last year. The clock is ticking.
Don't be the hair who waits too long. Lets the
tortoise win. And then you can't because once that time
clock is up, you can never get money into your
wroth for a previous year. There's annual contribution limits, and
so the more money you can get into the wroth
earlier you can get it in there, the better it's

(46:48):
going to be.

Speaker 2 (46:48):
Yeah. I really like the idea of focusing on twenty
twenty three and then just setting for yourself that a
challenge of hopefully being able to contribute some to twenty
twenty four, but even better, the ability to potentially max
that thing out and start even saving for next year
for twenty twenty five. That way, you've got that money,
that cash on hand, ready to deploy.

Speaker 1 (47:05):
And let the tax refund be the catalyst for ROTH
conversions too, because if the average person's getting three K,
that's that's almost half of your what you're allowed to
contribute to a ROTH in a given year. So why
not get started with that?

Speaker 2 (47:17):
I love it all, right, Joel, Let's do one more.
This one is from anonymous in the Facebook.

Speaker 1 (47:22):
Group, who's my favorite person.

Speaker 2 (47:24):
I'd love to know what you would do differently if
you were starting your money journey now, how would you
have invested five hundred dollars back then knowing what you
know now? And I assume know that they're asking not
like if you knew the future and what horses would
win the Kentucky Derby. Yeah, they're not asking that. They're
not asking like a back to the Future Part two.

Speaker 1 (47:44):
No type of question. Now, there's all sorts of things
that you very much do differently if you had that
foresight ability right. And this is such a smart question though,
I think because first and foremost asking the financial regrets question,
it can shed some light on how beginners should proceed.
If you ask other people and say, what would you
have done ten fifteen years ago if you were in
my shoes? What an amazing ability to pick somebody's brain

(48:04):
and get special insight that's hard to gain from just
reading blogs and how to posts. The goal in this
question is to learn from the insights of others who've
been there, who've gone before you, and maybe maybe they
made a mistake or two along the road right, or
at least they just didn't do it perfectly. And so
I think even those small mishaps, Matt, they cost us
money where they prevent us from prioritizing the thing that's

(48:25):
going to be in our own best interest. I just
I'm thinking of two things that I did early on,
not like major faux pause or anything like that, but one,
I was just too conservative and it makes me think
I was investing in target date funds. And then the
more I read over time, I was like, the younger,
why am I why don't I have any exposure to bonds?
Why am I allocated in this way? And so I
went more towards the S and P five hundred direction

(48:47):
because I saw, especially in those wealth building years, you're
costing yourself gains. Another thing I did, YEP, was paying
off student loans too early. My student loan rate, I
want to say, was like one point eight seven five percent,
and I remember dropping thousands of dollars in one lump sum,
and I thought it was the smartest thing I'd ever
done to pay off those student loans when I could,
when I wasn't able to max out my wrath. I

(49:07):
was making so little money. There's no way I could
do both. And so it was just I should have
let that student loan linger, and I should have prioritized
investing over paying off that debt. Those are the kind
of thing again, not like filing bankruptcy type faux pause
or mess ups or anything like that, but still those
are the kind of things I look back on and
I'm like, I could have done better.

Speaker 2 (49:24):
Well, that's the thing too, It's hard to say that
you would have completely done something like drastically different because
the things that we experienced early on make us into
who we are today, right and so like even like
it makes so like. One of my regrets is that
I invested before I had an emergency fund set asign basically,
and what I needed to do is I actually had
to reach in and pull some of that money out
in order to help cover a move when I was

(49:46):
moving to Atlanta. But what I recognized at the time
was that that was something that I did not like doing.
Like I realized that this isn't what this is for.
It doesn't feel good. No, it didn't, And it started
me down a path of handling my money well so
that it was enough of of a spark to help
me to sort of start writing my ways as opposed
to maybe had I not experienced that, I would have

(50:07):
continued to make them moves and then further down the line,
maybe it would have cost me even even more money. Perhaps.
So I think the ability to learn some of those
lessons early on is I think it's vital.

Speaker 1 (50:18):
It makes me think of that Avitt Brothers' lines. All
my mistakes led me to you. It's a love song, right,
but it's like that's the sentiment that you're getting at
with our money, it's even our mistakes can kind of
like funnel us in the right direction if we learn
from them exactly. And again, actually, I think sometimes they
feel so painful that it helps us make progress more
quickly after the mistake.

Speaker 2 (50:35):
I think that can totally be true. But so this person, though,
is asking how to invest five hundred dollars based on
what we know now, and this kind of approaches this
from the money gears perspective, because we don't know what
job this person has, we don't know where they're at
in their career, if they own a home, that kind
of thing. And so my first instinct is to tell
this person to make sure that they have enough money
on hand within that emergency fund in order to weather

(50:56):
a potential financial storm. And this is going to my
own experiences as a single person who had some big
expenses come up that I was not prepared for. And
I know five hundred dollars isn't a lot of money
in the grand scheme of things, but not having enough
savings on hand can just blow up even your best intentions,
your plans, and what you're hoping to be able to do.

(51:16):
And so hopefully this is money that you have on
top of your already robust savings, but if not, make
sure to have that emergency fund in place. And essentially
after that, we would tell you to go down the
money gears. Like so, after having that basic twand four
hundred and sixty seven dollars on hand, make sure that
you're getting that four one K match because that's a
guaranteed one hundred percent return on your money. You're not

(51:37):
going to experience any returns anywhere else. But then beyond that,
make sure that if you've got any high interest rate debt,
that's what you're going to want to focus on. Let's
say you don't have that, though, then truly you are
looking at investing your dollars. You're looking at towards the
different tax advantage accounts, for instance, like the ROTH.

Speaker 1 (51:54):
Ira Ye, So you say you got time for twenty
twenty three to put that five hundred bucks in the
twenty twenty three WROTH and then hopefully you're able to
sock even more into twenty twenty four. But I agree, Matt,
I love the first thing you said, like, make sure
you have enough for the E fund. That is huge
because you don't want to have to claw back out
those investments. That's super painful. But then outside the realm

(52:14):
and the framework of the money gears. And by the way,
we'll post a link to an article about the money
gears that's basically our financial order of operations.

Speaker 2 (52:20):
So you've talked about them, Yeah, in a minute, we
prefer to them like we have, but it's been a.

Speaker 1 (52:24):
Second Yeah, we kind of lean on those regularly because
it's just a helpful way to identify where you're at
in progress with your money and what the next step
is for you, what the next goal can be. But
the next thing really is to invest in yourself. If
you've got five hundred bucks, you know, funnel that towards
a degree or a certification, well, that can have a
significant impact on your earnings over the decades, right, don't
just put it into an investment account and cross your

(52:44):
fingers and hope for the best. Anything you can do
to increase your marketability in today's job market with five
hundred bucks could be well worth it. Just don't leave
that stone unturned. I mean, you can even be Matt
something like a public speaking class, right, if that's going
to help you, you think, get the promotion, get the
next get the job that you really want. If you're
able to increase what you make. That is like the

(53:05):
goose that lays the golden egg, right, You're gonna then
have much more to invest over the years if you
can use that five hundred bucks as kind of like
a seed fund for yourself. I think that can be
a brilliant approach. And I think oftentimes, especially if you're
the hyper optimized spreadsheet sort of person, a lot of
people fail to see that. It's always all about well,
how do I optimize returns and how do I get

(53:26):
more money into those tax advantaged accounts? And that is
certainly a good question, but just don't forget about the
value that can that can be derived from kind of
boosting your personal capital Totally.

Speaker 2 (53:35):
I love the money gears, but it doesn't leave a
whole lot of creativity, right because you're just going from
like step to step to step, and only you, as
an individual know some of the different opportunities that are
available to you, the different preferences that you have, or
like even of the type of work that you want
to do, or the opportunities that lie before you. Maybe
you are the only person who knows that, like, Okay,

(53:56):
this is a work trip that's not going to be
paid for But I know if I can make it
to this work trip, I'm going to be in the
same room as some stakeholders I don't know, like business
talk right, who have a big impact on my future promotions,
or maybe there's somebody else from a competing company and
the ability to get in front of them like there
are I'm just making stuff up because there are so

(54:17):
many different possibilities depending on what career you have and
what industry that you're in where you have the ability
to know. Man. Yeah, the numbers say I should be
paying off this high interest rate debt with that five
hundred bucks, but I know in my life experience tells
me that instead I should be focusing my efforts in
this direction because, like you said, the ability to make
a massive increase when it comes to your income can

(54:39):
pay for years to come. Yeah. I think that's wise.

Speaker 1 (54:42):
Yeah, I love it. Let's get back to the beer though,
how about that?

Speaker 2 (54:44):
Let's do it man. This was bone Shaker. It's a
brown nail by a Moat Mountain Brewing Company, donated to
the show by Todd. Who is this the last beer
by Todd? I think it is?

Speaker 1 (54:54):
What your thoughts well, I told Todd when you drop
the beers off that. I want to go running with
them at some point, but I don't think I could.
I don't think I keep up. So is he Is
he a fast boy?

Speaker 2 (55:02):
Oh?

Speaker 1 (55:02):
I think he's white.

Speaker 2 (55:03):
Yeah.

Speaker 1 (55:03):
Oh yeah, Well I'm also I'm a slow boy, So
there's that. I think he's vast, white animal slow boy.
So the gap is huge. You're you're totally getting faster.
That's that's true.

Speaker 2 (55:10):
Slowly, but surely you have. You started doing the when
you go for a couch to five the couch? Do
you like the intermediate one? Because you've been running for
a minute here. It's not like you've never run before. No,
like you've got like a solid foundation.

Speaker 1 (55:22):
With tons of beasts. I think you about like fifteen
miles or something. I was like, all right, okay, we're
different people, and what does that have to do with
uh this? He don't need the beer. I was just yea, yeah,
this and background on Todd but this. I was gonna
reveal social Security number right now too, but he might
be upset. So this there's a classic brownail vibes. I
thought it was like a little bit bitter. Some brownails
tend to be a little sweeter some tend to be
a little more bitter. I kind of like both sides

(55:44):
of the equation, but I think I usually prefer bitter
and this one, this was like a just a slightly
bitter brown than I really dug.

Speaker 2 (55:49):
Yeah, it had those dark, toasty flavors without getting bogged
down with like the like the heavier body right, like
you have the flavors without the calories because it's a
lighter ABV beer, but also like literally just the weight
of it made it a lot easier to drink. So
certainly enjoyed this one on a beautiful spring day like
it is today. Man.

Speaker 1 (56:07):
Yeah, thanks Todd, appreciate you. Man. Matt's gonna do it
for this episode again. We'll have links in the show
notes up at how money dot com. We mentioned a
few that I think will be helpful, so please do
check that out. But until next time, best Friends Out,
Best Friends Out.

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Ask HTM - Investing Deadlines, Building Generational Wealth, & Coping With Financial Regrets #808

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Ask HTM - Investing Deadlines, Building Generational Wealth, & Coping With Financial Regrets #808