Ask HTM - Selling Investments for Medium-Term Goals, Buying a Primary vs Rental Home, & If 15 Year Mortgages are Bad #817 - How to Money

Episode Transcript
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Speaker 1 (00:00):
Welcome to Out of Money. I'm Joel and I am Matt.
Today we got to answer your listener questions.

Speaker 2 (00:24):
And yes, that is how Joel always talks, at least
when we're not recording.

Speaker 1 (00:28):
That's how he talks, and he buttons it up for
the actual episode. Are you sad King's English, Matt? When
we're doing podcast recorded? But they'd slipped right there.

Speaker 2 (00:35):
No, it's Monday, which, dude, I'll say, Mondays are the
best days because we get to hear from listeners like
you and I. We create this podcast on Mondays, we
go and get coffee first, and but we like sit
here all day long, right.

Speaker 1 (00:47):
You and me.

Speaker 2 (00:48):
We do a whole lot of reading, a whole lot
of writing, and we sit down in front of the
microphones and we record. Within that we can get insulated
from like the fact that people actually listen to the podcast,
and so like I mentally, I know that people listen
to the podcast, but when we get to hear voice
memos and questions from listeners and then answer those questions,
it makes it just reconnects us with you, our listener.

(01:10):
And so I'm just going to say a big massive
thanks to everyone out there who's listening to the show
because like, truly, we wouldn't have a podcast without listeners,
and the fact that folks are sending in their voice
memos and trusting at least they're looking to hear our opinions.
They may not do what we say, but you know
that's okay. They don't trust us, that blandly jel.

Speaker 1 (01:26):
I'm looking forward to answering questions today and to hearing
people's questions. You're right, these the touch points matter. Like
I love the Facebook group. That's a touch point for
me with our audience. Same with emails, same with listener questions.
We love hearing from you and getting your feedback, your questions,
like all the above. It's all good stuff. Yeah, it
really is. And I feel like there used to be
like a layer of buffer between people who created content

(01:48):
and then the people more man. Yeah, now there's not,
like and I really actually maybe different people feel different
ways about that, but I appreciate it, Like, and I
feel like there's I get a sense of the pulse
when I get responses to the newsletter or people who
do submit their questions for these episodes. I get an
understanding what people are going through, Like we know we're
going through and what we've been through, and we try to,

(02:08):
you know that, use that as kind of part of
our impetus for what we talk about.

Speaker 2 (02:11):
But you know, hearing what you're going through be able
to be out there amongst the people. Yeah, all right,
I wanted to share a quick little personal confession Gool,
which is and he did. Okay, oh, sure you know this,
but listeners don't know this. I am not going to
invest anymore ever again, any more money, at least for
this year. So earlier this year, Kate and I, Yeah,
hopefully folks aren't freaking out if you're thinking all this.

Speaker 1 (02:34):
Because you're trying to time the market. Matt.

Speaker 2 (02:35):
Matt's got a that's in his midlife crisis. I Am
not going to go out and buy a red Corvette
that kind of thing. But Kate and I we did
talk earlier this year and we decided that, hey, let's
hold off investing this year because we've got some other
some other major goals, and specifically we realized that, hey,
if there's a chance of us staying in the house
that we're currently in, it would be really really good

(02:56):
for us to add on specifically, I mean, like, the
rooms are tiny and the two youngest girls are sharing
a bedroom, man, and we're it's going to be it's
going to quickly become untenable. This was what we realize,
and so I wanted to confess that amongst all of
the how to money listeners out there. But I feel
very comfortable with that for several reasons, one being you

(03:17):
don't always make decisions like this based on like how
to most financially optimize your life, right like sometimes.

Speaker 1 (03:23):
On how to have the most money in your eighties.

Speaker 2 (03:25):
Yes, like sometimes you have to make decisions that are
just like, well, is this going to work for us
as a family, as a couple, as an individual, is
this what I want my life to look like?

Speaker 1 (03:33):
So I'm comfortable with that.

Speaker 2 (03:34):
I'm also comfortable with the fact that I think there's
a decent chance we'll get if and when we sell
the house. The return on the investment might be decent.
It's not like we're just completely probably not a dollar
for dollar, but probably not a dollar for dollar, but
we're not just fleshing money down the toilet. But also
you consider mortgage rates, like the other alternative would be
for us to move, and dude, just given where mortgage
rates are right now. It makes that even more difficult.

Speaker 1 (03:53):
It makes adding on to make more sense.

Speaker 2 (03:54):
And it's why so many folks, I think, are hanging
on to their properties and potentially doing something like this.
But also because early on within our marriage, Can and I,
we invested a whole lot of money. Man, we're actually
we're gonna talk later on about savings rate. Same with
you and Emily, like, there are certain sacrifices front learning
the sacrifice. We talk about it all the time, but
we did a whole lot of that. And you know,

(04:15):
when you're technically coast fire, which you know, I think
both of our families have been roughly coast fire for
a year or two, Well, there's no longer as much
of a need to invest. If you're like, well, I
don't have to invest anymore in order to retire out
of it.

Speaker 1 (04:27):
I think it's a big part of the puzzle because
some people might hear you say that and they might say, wait,
mas's not can invest, Like maybe I maybe I should
dial it back, or maybe I don't need to be
saving for my future. And I do think that that
is a big part of the equation, is that you're
forty one, right, and you've done so much heavy lifting
on the investing side over the past like eighteen ish last.

Speaker 2 (04:45):
Years, close to twenty years of trying to like be
frugal and make wise decisions, and you can there's a
lot you can do over twenty years.

Speaker 1 (04:52):
Yeah, And my guess is you'll probably get back to
investing next year. This is literally just a kind of
super fund pay cash for this renovation, and thin I'll
be back at it, as my guess, even though your
coastfire literally means you never have, but you probably will.

Speaker 2 (05:07):
But it's just I felt the need to share that
because like I'm not trying to like pat myself on
the back or anything like that, but just because we
talk about investing so often on the show, and honestly,
there's like this identity crisis. There's this tension as a
cognitive dissonance, yes, that I'm holding with them on mind
because I'm just like, wait, am I allowed to do that?
And so I was thinking through this the other day
and I thought, man, there's a reason, a good reason

(05:29):
for us to talk about this here on the show.
And it's also helpful for me to be it's self
therapeutic jol for me to for us.

Speaker 1 (05:36):
To have these conversations. This is probably a month ago.
We had a question on the podcast from someone who
had been crushing it thoroughly for a long period of
time and it was like, can I stop investing now?
And it's like, no, you can, you know, like we
really do. The answer is not always more work, more pay,
more investing, like sometimes the answer is more balanced and
you know, doing some fun things with that money that

(05:58):
are going to improve your life, right totally. So alright,
Mettlet's let's mention the beer we're having on this episode.
This one is kind of an oldie, but a classic
Samuel Smith nut brown. Ale. I still remember the first
Samuel Smith beer I had and it was like it
was a game changer for me. I'm curious to see
if it holds up because it's been a while since
I've had one of theirs. I didn't realize that it
says on the bottom here product of the UK. So

(06:19):
this is a British that's right, Ale, the old Tadcaster
Brewery or something like that is what it says. Do
you see that on there? Oh? I see it? Okay, Yeah,
So I'd be curious to know what though you picked
it up because you thought it said podcaster? Is this
a podcaster? Beer? My eyesight has deteriorated in these years,
But lett, let's move on. Let's get to the listener
questions that folks have sent our away. And if you

(06:40):
have a question for us, a money question in particular,
please do submit yours. Go to how to Money dot
com slash ask for specific details on how to make
that happen. But really it's just recording a voice memo
sending it to us to be an email. Hopefully we
can take it next week on the show. Matt, this
next question is kind of about optimizing your finances on
the biggest purchase of your life.

Speaker 3 (07:00):
Hi, Matt and Joel, I hope you're both doing well.
My name is Colin and I'm an avid listener of
how to Money out here in Iowa. Your podcast has
been instrumental in shaping my approach to personal finance, and
I admire the practical wisdom both of you share. I'm
reaching out today seeking your advice on a decision my
wife and I are grappling with. Currently, we reside in
a condo owned by her father, where we cover all

(07:21):
associated expenses totally approximately one thousand per month with our
diligent savings. We've amassed fifty thousand earmarked for a down
payment on our future home. However, as a realtor with
firsthand experience in property management and home repairs, I find
myself contemplating an alternative path. Given our low housing expenses
and my familiarity with the real estate market, I wonder

(07:44):
if it might be wiser to invest our capital and
a rental property instead of purchasing our own residence right away.
My wife's remote work setup provides us with flexibility to
manage additional properties, and my skill set complements this endeavor.
We're at a crossroads and would greatly value your insights
on whether to prioritize homeownership or sees the opportunity enter

(08:04):
the real estate investment market. Your perspective would be immensely
helpful as we navigate this decision. Look forward to hearing
from you, guys.

Speaker 2 (08:12):
Oh Joe, I love that Colin said that he was
looking to seize the opportunity. This question really gets me excited.
So capture the flag or something like that. Oh, yeah,
seize the day like there is there truly is a
massive opportunity here. And yeah, basically he's asking here if
he and his wife should buy a primary or should
they buy a rental home, And honestly, those decisions most

(08:33):
of the time they're close to being like polar opposites
of each other, like should I invest money or should
I actually spend it and buy a.

Speaker 1 (08:40):
Jet ski company or invest in the company that makes
the jet skies.

Speaker 2 (08:43):
Yeah, at least in this case, he's looking to buy
something that appreciates in value. But real estate owners, like
primary owners and investors, they're typically looking at two very
different things. When you are buying a home, you're like,
you're kind of buying a small business as an investor,
But the consider iterations and the financial reality is of
home ownership as it with it being a primary residence

(09:05):
are often more about buying something that makes sense for
you and your family, but that also fits into your budget,
maximizing returns and generating cash flow. Those are typically pretty
far from mind when you are looking at buying a
primary asident's.

Speaker 1 (09:18):
For you to live in. And I think you can
be a little more investor minded when you're buying a
primary residence. And for some folks, they've heard us talk
about kind of buying the house living in it, then
turning it into a rental property. And if you kind
of have that mindset, and so, yeah, that's the way
to have your cake and eat it too. That's right.
It's possible to kind of have that approach, but still
most people don't. Let's be honest, most people watch the

(09:39):
TV show House Hunters and you'll really quickly understand what
most people are looking for in a home and it
has nothing to do with return on investment at least
most of the time. And so really we're talking about
broccoli versus apples, Like we're not comparing apples to apples. We're
talking about two different food groups, veggies and fruits. But
the fact that you're asking this question, Colin, I would

(09:59):
say that means that you're keen to put your money
to work in a way that would generate returns instead
of just trying to maximize your lifestyle, right, And I
think that's a good thing. I think that would be
taking more of the broccoli route, like eating the vegies
know you're supposed to eat. And it sounds like you've
got a pretty sweet deal on rent right now. I
like the idea of keeping that bird in the hand
and then using the cash you built up to buy

(10:21):
rental instead, I would talk it over with your wife.
Of course, I'm sure you all are having this discussion,
because no matter how good the deal is, at some point,
if you have that desire, that innate desire to own
a home, that can outweigh the savings you're currently enjoying,
Especially if you hit that point in your life where you're,
like roots community, want to be in this one place
for a long time to come, that can often tip

(10:43):
the scales. And maybe, just like Matt who's not investing
for a period of time, maybe it makes sense to
make the non optimized choice. But if you guys can
agree at least for the time being, to postpone a
primary home purchase, maybe for a few years, buying a
rental property before buying a primary that can offer you
more financial exibility years down the road for a lot
of years to come.

Speaker 2 (11:02):
Totally, yeah, I think it's all about your goals, Colin,
because like we all know that kicking the can down
the road on a personal or on a lifestyle purchase
like this, that that can allow all of us to
invest more. It allows us to experience some more rapid
progress towards our financial goals.

Speaker 1 (11:17):
But Colin, he also has the tools to.

Speaker 2 (11:19):
Be a good investor. That's right, he's gonna he's gonna
save money on realtor fees. That's like a secret little weapon.
That's like a superpower that he has. It is, and
he might know about properties that normal folks wouldn't know
about because he's a realtor.

Speaker 1 (11:32):
He's got connections, his network of the word of mouth listings, right,
it's huge, pocket listings, pocket listings exactly. Gosh, the realtor
who helped us both buy our homes role. I think
he said, like eighty percent of his sales never hit
the market. Yeah, because that's he's pretty entrenched in the
community and he knows people, and so he might just
shoot you a text if he knows what you're looking

(11:52):
for exactly.

Speaker 2 (11:54):
But then on top of that, con said that him
and his wife are both willing to self manage. He's
willing to perform repairs and maintenance in part because of
his wife's flexible schedule.

Speaker 1 (12:02):
He mentioned that as well. So that's that's pretty sweet.
And the tag team approach, by the way, super helpful.
That's what I found like in the beginning, I was
usually responding to tenants finding tenants and managing a lot
of the day to day Emily was doing a lot
of kind of the bookkeeping, keeping up with the receipts,
all that stuff, the stuff I'm really bad at anyway
and hate doing. And so Joel in details like oil
and water, so not good, so not good. You know

(12:24):
this better than most people. And so i'm your business
wife basically, and so yeah, that that combo factor just
made it like an easier load. We got to specialize
in the things that we enjoyed that we were better at.

Speaker 2 (12:36):
That's kind of what it sounds like they might be
doing as well, because he said he's handy, he can
handle repairs.

Speaker 1 (12:41):
So, yeah, these are all funny. I wasn't really that
either thought more credit than yeah, you should give yourself
more credit. But I guess all of these things combined
makes it seem even more attractive for Yeah, for Colin,
I think the truth is investors who are more hands on,
especially in those early years, they have the ability to
maximize returns and boost your timeline to reach financial independence. Right,

(13:02):
and these extra tools in Collins tool belt make this
an even better decision. Right. It's the more you have
the ability to turn down the costs that you're gonna
incur to self manage to increase the productivity essentially of
this small business that you're buying, which is this rental property.
The more you have the ability to oversee it effectively,
I think, the more it makes sense feeding go that

(13:24):
route totally.

Speaker 2 (13:24):
Yeah, So let's talk about another way though, that you
could have your cake and eat it too and do
both here and one fell swoop is to opt for
a house hack maybe even like a duplex or a triplex,
or maybe a single family home that has a carriage house,
an a to u, a basement apartment, something like that.
So I would at least consider looking at properties like

(13:45):
that if you have the desire for more space and
maybe you just don't have to take the elevator up
to your place anymore. But also if you want to
kind of scratch that rental property itch, I think that's
a way of doing it. Don't just consider the standard
single family home that maybe your thinking about before, Like yeah,
on the MLS, multi family housing like that is your
new best friend. But then, yeah, I'm just thinking of

(14:07):
your personal network as well, the ability to know of
other properties that have some of these income generating possibilities.
I think that could be.

Speaker 1 (14:14):
Huge for you, Colin. Yeah, and the longer you're able
to stay keep your cost of living low, the more
you're gonna be able to funnel into investments, in particular
some of these real estate investments. And that means the
more financial flexibility you're going to incur along the way,
because hey, guess what, most years you're able to increase
that rent a little bit. Yeah, the property taxes go
up too, but typically your mortgage payment doesn't go up

(14:36):
by very much at all, and your rent continues to
increase over time. That just means a lot more financial
flexibility and the ability to continue to invest more if
you want, or start to pay down some of that
mortgage debt, if you're kind of taking more of the
Chad Carson approach.

Speaker 2 (14:49):
Yeah, Colin has starting his real estate empire. I think
at a young age, just based on how I don't know,
I picture him being a younger listener.

Speaker 1 (14:56):
This sounds I think, so sounds like it, And I
guess another thing that Colin could do. Another approach would
be to buy a strict rental duplex right now, right
and look for an income producing property when the two
of you are ready to get out of that condo.
So maybe you buy a duplex or a triplex or
something like that. You're renting out all those units, staying
in the condo, and then you know, combine that with

(15:16):
your day jobs the income from this rental property. You
can build up that nest egg really quickly for the
next place you want to buy. And then maybe that's
when you buy the single family home with the ADU
and boom, look at all of the income producing properties
then you have in your life just because you delayed
this purchase just a little bit and you made the
smart investing move on the front end. This sacrifice you're
making and the prioritization of investing before buying pays dividends

(15:41):
for decades. Yeah, so I just I mean, I love
that Colin would be willing to kind of put that
off for a little bit, make the what I would
say is like the harder move. When you've got that
kind of cash saved up, most people would say, it's
time to start looking at the home that we want
to be in for the next five to ten years
old of our dreams.

Speaker 2 (15:56):
Yeah yeah, well yeah, and going back to I mean,
you said this at the very beginning but I think
for him and his wife, like finding a single family
home that they know that they're going to convert into
a rental property could be a really smart way as well,
because there's multiple benefits that you get there. By being
an owner occupant, you're gonna get a better rate that's
pretty sweet by living like I even hate saying this,
but you're not throwing away rent dollars, but because like

(16:19):
by living there and making your mortage payment for a
couple of years, you're gonna be building up equity. And
so that's the sweet advantage there as well. But then
you've got the lifestyle advantage as well, where it's like, okay, sweet,
we've got a backyard for the dog. Oh, now we've
there are some of those other more tangible lifestyle benefits
that you would experience as well. And so what that means, though,
is looking at homes while you're house shopping, not just

(16:41):
through the a lens of what would we like to
live in, but actually what'll work for now, what'll work
for the next couple of years, because you're not buying
the house of your dreams, you're buying a home maybe
for the next couple of years, and then after that
what you're hopefully looking for is a property that's gonna appreciate.
You're gonna you're looking to buy in an area that's
gonna smam that this area is gonna this part of
town's gonna really turn around. Oh yeah, I know about

(17:01):
because I've got my connections, and because he's a realtor,
he knows about another house further up the street that
somebody's moving into, or he knows about a commercial deal
that just went down, and the little square and there's
it's actually gonna be a coffee shop, and all of
a sudden, this little neighborhood is going to start blossoming.
That's the kind of property you want to get in
on now before a lot of that appreciation happen.

Speaker 1 (17:21):
Yeah, and that is I think thinking of kind of,
like we said at the beginning, your primary home purchase
with more of an investor mentality. And I do think
that more hout of money listeners would be wise to
do that, to say, cool, is there a way I
can force appreciation into this property? Most primary homeowners aren't
thinking along those lines. They're typically thinking do the walls

(17:41):
have fresh pain on him? Now? Like, how does the
home loook when I tour it now, like instead of
seeing with that vision, the eye for the future exactly.
And I think if you can think of as a buyer,
even of a primary home a little more with that
investor lens, you're going to be better off over the
long haul, even if it means putting in some of
that sweat equity yourself and building up the home with
over time, with your own efforts. Yes, right, So best

(18:03):
of luck, Tea. Colm. Let us know what you end
up doing. Matt. We've got more questions to get to.
And since we're on the housing front, let's talk about
when do you sell investments in order to fund a
down payment. We'll talk about that and more right after this.
All right, we're back from the break.

Speaker 2 (18:23):
Yeah, it seems like we've kind of housing theme going
on with this episode, because later on we're going to
talk about whether or not fifteen year mortgages are mistakes
or not. But before we get to that one, let's
hear from a listener in Wisconsin.

Speaker 4 (18:35):
Hey, Matt and Joel, this is actually from Madison, Wisconsin,
originally from Texas. We moved here for my husband's residency
and we'll actually be moving again for a fellowship in
Chicago for the next two years. I've been listening to
you guys since twenty eighteen when I was just out
of college and totally lost on all things investing. Well,
with your advice of the years, I've come to a
great problem to have. So we'll want to buy a
house at least a year after my husband is done

(18:56):
to training, probably in three to four years. We've been
able to have a lot at retirement accounts as well
as tax will brokerage accounts, which I've seen some really
high gains, and then any cash on hands our emergency fund,
and I've set aside our car payment which is paid
off soon. My question is how do I go about
selling investments for my down payment? Should I prioritize selling
funds with the smallest gains? Do I do all that

(19:17):
at once? And then how much do I sell? And
how do I easily estimate the tax liability? Also, I
will be transitioning to stay at home with her daughter
for the next two years, and we will most likely
break even with my husband's salary and expenses in Chicago.
Mind you, we are pretty frugal people. I really appreciate
all the work you put into this podcast, and I
look forward to hearing your thoughts.

Speaker 2 (19:38):
So, Jill, obviously we're going to answer Ashley's question as asked,
but it's also worth pointing out that, I mean, she
is specifically looking at how or when she should be
selling investments for, like you said, a down payment. But
I think we can even broaden this question a little bit,
just as to when should I sell? How do I
go about selling investments for any sort of medium term goal?

Speaker 1 (19:58):
Yeah, that's right. I mean there's just like so many
many factors you have to run that decision to sell
investments through before you just kind of say all right,
let's do it. You don't want to itch, you trigger
your finger and just like, well, wait the market looks
frothy or something like that, I guess I'll sell my
investments because I'm trying to time the market or something
like that. I mean, I think that is that is

(20:19):
one risk that people run. I feel like there's more people,
more questions we're getting now because of the extreme market
rise we've seen about selling investments and whether or not
it makes sense. But let's just say this, Ashley's in
a great position here, right, the fact that she's put
so much effort into investing over the past few years
will make it easier to dial back in a little

(20:40):
while for them as they move down to one income.
It's always tough to go from two paychecks to one,
but they have prepared well for this transition, right, And
this is just another reason to start investing early often
and to work towards having a high savings rate, because
you never know what life is going to hold and
when you might need to cut back dramatically when their
goals are going to shift in a serious way. Maybe

(21:02):
you get pregnant with triplets. Can you imagine that?

Speaker 4 (21:04):
Man?

Speaker 1 (21:04):
I mean, that's going to change everyone's life in a
big way, and it's going to change your finances in
a big way. Nobody maintains, of course, a strict fifteen
percent savings rate in and out every single year for
their entire life. You got to roll with the punches.
And for you, Matt, your savings rate has been significant
higher than that for so many years. Most people haven't
earned that flexibility because their savings rate is so paltry

(21:24):
to begin with. That's true.

Speaker 2 (21:25):
Yeah, So for Ashley specifically, when it comes to selling
some of the different investments that you have you're not
gonna want to sell anything that are in tax advantaged accounts,
and so definitely keep those locked up because the penalties
and the tax that you'd have.

Speaker 1 (21:40):
To pay would be.

Speaker 2 (21:42):
Very prohibitive to that making any sense at all. So
we're really talking about selling some of the holdings within
a taxable brokerage account. And even then, we're only talking
about positions that you've held for at least three hundred
and sixty five days because crossing the threshold from short
term capital gains to long term capital gains, this is
going to reduce your taxable burden for three sixty four.

Speaker 1 (22:04):
Sorry, you have to pay your period income tax, right right, Yeah,
and then you you talked about how much to set
aside for those long term capital gains that you're going
to be experiencing, not the short term capital gains.

Speaker 2 (22:14):
It's actually not all that hard to do the math
on that. Just make sure that you have fifteen percent
of the total sale amount in cash come tax time
next year, you'll be prepared.

Speaker 1 (22:23):
That's right. Basically, just a little under a year from now,
you will need to have that money to pay the irs.
You cash out one hundred k in gains specifically, in gains,
and that's just the amount you cash out. That is,
you'll o fifteen grand and tax coman this time next.

Speaker 2 (22:39):
Year, and even not specifically next year, but whenever it
is that you actually make the make the sale.

Speaker 1 (22:44):
If you make the sale in tax year twenty twenty four,
that's that's right.

Speaker 2 (22:46):
Yeah, Because maybe you don't make the sale at all,
maybe you change your mind and something else happens, So.

Speaker 1 (22:51):
Right, right, right, I think that's that's worth giving your
mind as well. So she also asked about how much
she should sell and win, and she basically said that
this money isn't urgently needed. We're talking about three to
four years, so it's probably not going to take.

Speaker 2 (23:04):
That's a really nice runway of time to be able
to look into the future and start preparing.

Speaker 1 (23:09):
Yeah. I really like the time friend that she's got. Yeah,
So if you needed the money a whole lot sooner,
let's say you were like, no, no, no, we going to
need it like this year next year, I would want
to make more of a swift exit. I would be
more concerned about letting that money ride in the stock market.
But as it is, I think what I would do, Matt,
I would take a dollar cost averaging approach. This is
exactly the way most people get into the market, putting

(23:30):
dollars in with every paycheck every two weeks. Well why
not take the same sort of approach selling funds every
month or every two weeks until you get to that
desired amount. And it also just means you're not trying
to time the market. You're selling funds consistently no matter what,
just like you would buy them. And then I'd also
be setting aside extra cash along the way, like you know,

(23:51):
she mentioned the car note. Once that's paid off, set
aside those dollars into a savings account. And maybe that
means you actually have to sell fewer investment dollars if
you can save more cash along the way, right, yeah,
you have.

Speaker 2 (24:02):
The first time I listened to her question, like the
before I listened to the whole question, I was just like, well, no, no,
don't don't sell any investments.

Speaker 1 (24:08):
Actually just save up the money.

Speaker 2 (24:10):
But then she talked about how they would basically just
break even because of their living expenses and the fact
that they've got to reduced income. But obviously that's that
would be more ideal is to not have to take
any investments out as opposed to being able to sit
on that cash, because.

Speaker 1 (24:22):
When you do take investments out, you're you're interrupting what
is it? Is it Warren Buffett's rule that Aremonger? I think, okay,
you're interrupting compounding unnecessarily. But then again, you can have
such a focus like Buffett and Monger and your investments
skyrocket overtime, and yet you have a hard time finding
yourself able to enjoy the results, the fruits of those returns.

Speaker 2 (24:42):
Sure, yeah, so you mentioned dollar cost averaging by exiting
the market. I would so I would actually do something differently.
It feels me personally, because what is important to keep
in mind, And this is why I was looking to
the fact that she said that they're looking at three
to four years out from now, and that's at the
market three out of four years goes up. And so honestly,
if it was me, and actually if you are willing

(25:04):
to take on perhaps a little more risk, you have
a higher chance the odds are in your favor, you
have a higher chance of your investment actually increasing in value.
Were you to just leave it in the market over
the next three to four years, that's going to be
a personal decision.

Speaker 1 (25:16):
Though, because but we'll you get outpace savings and CDs
over the next few years, especially with those on average elevated.

Speaker 2 (25:24):
Yeah, but on average, I mean it's I guess the
FED hasn't announce that they're going to cut rates yet,
but there is a chance that those rates could come down.
And when you look at historical averages, I mean the SMP,
like you're looking at over ten percent over the long haul.
And so it comes down to if you could stomach
the market tanking and you needing that money, that's the
risk that you're basically taking on because it's not guaranteed.

(25:45):
But since the fifties, that is the return that you
can expect from the SMP.

Speaker 1 (25:49):
And that's where dollar cost averaging helps take a little
bit of that emotional risk called d risks for sure.
And so yeah, you're saying, listen, I'm willing to miss
out on some of the potential upside to ensure that
I don't experience the real potential hardship of a bear
market for multiple years on end. And so much of
that comes down to I guess your personality, your personal

(26:10):
risk tolerance and how important it is, Like I don't know,
could you be flexible in some of those goals on
whether when you quit your job, if not, you might
want to make sure you're taking the less risky approach. Yeah. Yeah.

Speaker 2 (26:22):
Another reason I think that if it was me that
I would wait to pull that money out is, like
you said, like your flexibility. But also there is a
chance that I mean, I think her husband's a doctor.
What if he gets like a fat sweet signing batus
in order to go to a certain hospital and he
takes that and all of a sudden they find themselves
with more cash on hand.

Speaker 1 (26:38):
What if she stepped out of work right in order
to take care of the baby.

Speaker 2 (26:42):
Would if her former employer is just like, hey, we
really need you back twenty five thousand signing bonus boom?
What if there is an inheritance or parents that want
to give them money a few years from now. There
are all these other things that could lead to you
actually having more cash on hand than you realize that
you're expecting now. In grant it, I don't want you
to count on receiving those funds down the road, but

(27:03):
all of those situations could lead you to a situation
where you have sold investments over the past three to
four years all the while paying long terms capital gains
tax on that and now you're like, tang it, I
wish I would have left that money invested because actually
don't need it right now.

Speaker 1 (27:17):
Yeah. Yeah, So it's hard to predict some of those
things to know, Yeah, but all things to consider. Yeah,
I guess those are all things to weigh in your
mind as to win how how much you end up
taking out from your taxable brokerage account. And of course,
taxable brokerages accounts can be great for medium term investing
goals like buying a house for instance. For any how,

(27:39):
too many listeners out there and they're wondering, well, what
should I do if I'm saving up for a down payment? Well,
a taxable brokerage account is the right answer if you're
five plus years off from buying a house, right. If
you're like, I'm eighteen months off from buying a house, well,
the high held SAMES account is probably the better answer. Notes, right.
But the other thing too Matt to consider is that
if Ashley and her husband can hit the twenty percent

(27:59):
more when it comes to how much they're able to
put down on the property that they're buying, it'll reduce
the amount they need to borrow, which is even more
helpful given how high interest rates are, and you know,
also will help them to avoid PMI, which is another
pesky monthly fee. So those are all things worth considering too.
If you take out enough to get to fifteen percent down,
but then you end up paying those other things, well
it might have been worth taking more money out of

(28:21):
investments and interrupting that compounding, not just for the lifestyle
goals you have, but also to save money and fees
on in other ways.

Speaker 2 (28:29):
I like the fact that she's almost practicing taking money
out of the market by funding this short term goal
of hers that also most likely will increase in value,
because I feel like that you can get sucked into
this trap of thinking, oh, anytime you sell investments, that's
a bad thing. But like this is precise Like we're
pointing out the fact that brokerage account is good for
medium term goals. It's precisely what it's designed for. Because

(28:51):
if you're talking long term, well, that's what retirement accounts
are for, and they've already got those funded and so
this is like exactly what this brokerage account should be
use for. She's using the account ask prescribed as exactly exactly,
and when it comes to which investments to sell, honestly,
I wouldn't think.

Speaker 1 (29:07):
Too much about how much they've appreciated or not.

Speaker 2 (29:10):
Instead, I think about which investments that you have the
most faith in moving forward. So I'm not sure if
you own any individual stocks or a bunch of like
sector specific ETFs, but I would ask myself which funds
would I buy first with any extra cash on hand today,
and just keep those around and sell the others. I
think this could be a good opportunity to potentially call

(29:33):
some of your investing mistakes if you feel like you've
made any, and then you know, selling the losers will
up to a certain point that'll help you out from
a tax standpoint as well. So something to keep in mind,
I wouldn't be too concerned over what it is that
you're selling.

Speaker 1 (29:46):
Yeah, I agreed. So Actually, I feel like our answer
in so many ways here is choose your own adventure,
but hopefully we gave you enough thoughts to help you
choose wisely. Matt, let's get to our next question. This
one comes from a listener. He homebrews great beer. He's
got a nerdy question about savings rates. Hey, Matt, and Joel.

Speaker 5 (30:03):
This is Graham from Atlanta aka your local homebrew supplier.
On a previous episode, a caller asked if four to
one k match should be considered as part of their
savings rate. I personally include the match as part of
my total income and do include it as part of
my savings rate calculations. My question is this, should folks
consider a five twenty nine plan contributions as part of

(30:25):
their overall savings rate? On one hand, the beneficiary of
a five twenty nine plan can be changed to any
family member, including oneself, at any time, but the purpose
of most folks five twenty nine plans is for the
benefit of someone other than themselves. Similarly, how would you
classify the saving that folks do for a large purchase
or for gifts for the holiday season? Perhaps a better

(30:46):
question is what'll qualifies as saving versus not saving? Thanks
for all that you do, and I would like to
cast my vote for the next How to Money Atlanta
meetup for the Beer Garden behind Brick Store pub or
contrast artisan Ales and Shambly.

Speaker 1 (31:01):
Graham.

Speaker 2 (31:01):
Great to hear from you and we will definitely get
another Atlanta meet up beer meet up on the calendar soon,
he mentioned.

Speaker 1 (31:07):
But only if he brings us more homebroom. It's brew. No,
you don't have to do that, Graham. The first actually
he does. He brewed us free Fruit Gal.

Speaker 2 (31:15):
Remember we completely We should have like turned in our
dad cards for not getting that pun.

Speaker 1 (31:21):
The name of the beer was free Freu now suspended
for six months. He had to email us and it
was like, dudes, it was fru frugal or fruit. Yeah.
I don't know exactly know how you say it, but
basically it's a frugal pun. I love it. He mentioned
the brick store. We love that as well. And also
you mentioned artisan ales, contrast artists and nails.

Speaker 2 (31:38):
I'm sorry, yeah, contrast artisan nails. We're actually going to
get one of those near us, I guess. I guess
it's their second location there.

Speaker 1 (31:44):
I'm very excited.

Speaker 2 (31:45):
Me too, me too, because we don't have the best
craft beer. We went from being in town where it
was hip, where all the great beer was, to someplace
where there's not great craft beer.

Speaker 1 (31:54):
We're in a craft beer desert, and that's about to change.
It's true.

Speaker 2 (31:57):
But the savings rate or chat continues because Graham says
that a four to one k match should definitely be
considered as part of your savings rate, which we're okay
with as long as it elevates your desire to I
think reach a higher savings rate, because if you get,
let's say a six percent match from your employer, and
you've heard us say that, hey, shoot for fifteen percent,

(32:19):
and so what you then end up doing is bumping
the total amount that you're soalking away down to nine
just so you kind of like plateau at fifteen percent. Yeah,
I think that may not be and like, that's not
what we're trying to encourage you to do. We're not
setting a limit, well, like an upper limit. We're trying
to set like a lower limits. We don't want you
to go any below fifteen percent, and anything above that
it's gravy.

Speaker 1 (32:39):
Yeah, I think it's a letter of the law or
spirit of the law to right. And there is that
sort of going with I don't know I'm going to
get in trouble for this, but going at the flow
of traffic instead of just going the speed limit sign,
if you're holding everybody up, at least in Atlanta, we
know that quite well, and you're more likely to get
an accident if you're going fifty five and certain.

Speaker 2 (32:54):
Sectuals, following the letter of the law and going exactly
the speed limit you will cause.

Speaker 1 (32:59):
Rex I will get a negative emails for that.

Speaker 2 (33:00):
But I think this is the that's the jol Sol
is the one that advocates for speeding on our interstate.

Speaker 1 (33:06):
It's me, it's my fault. So and in school zones too.
Ive seen him do that. No, but the letter of
the law or spirit of the law. Right, there's some
things where when we say fifteen percent, and you're like, oh,
how can I craftily make sure I'm hitting that by
doing the bare minimum, Well, you're not gonna have as
much flexibility as some of the other people, some of
the listeners to the show who are saying, well, how

(33:26):
can I increase my saving strate to opt for maximum
flexibility and to reach greater levels of financial independence a
little bit sooner. And that doesn't mean breaking your back
with a hardcore, fire centric sort of approach, but I
think it does mean probably challenging yourself a little bit
and not just doing the bare minimum, even though you can.
I guess that's what you want to do. And I

(33:46):
think if you you know, if you're only saving fifteen percent,
which again we want to be the floor. If that's
what's going into your retirement account, that's really good, but
you'll also likely find you're keeping dead around longer than
you probably should, or that you're not able to save
for some of those more media term goals very well,
like buying a car with cash. And yeah, so I
guess we don't mind you including it in your savings
rate as long as you ensure that your savings rate

(34:10):
floor moves higher.

Speaker 2 (34:11):
So I don't know if this is semantics, but like
what you're pointing to is the fact that, hey, you
should be saving more so that you can achieve some
of those medium term goals. Is that what you're saying. Yeah,
So what you're saying then is that So this is
to Graham's other question, is that those medium term goals,
like a vacation or something like that, that that should
be included in your savings rate? Is that what you're saying,
because you've kind of umped it into the savings rate.

Speaker 1 (34:30):
Okay, So I guess a vacation I would see as
a different thing altogether, because I think of that as
a short term goal, something that probably should be in
your budget every single month that you're saving for whatever
that vacation is in.

Speaker 2 (34:41):
August, or you go on vacations every month, you should
be if it's a five thousand dollars vacation, you should
be setting aside a little bit before other bucks every
single month.

Speaker 1 (34:48):
I get that. Whereas the car man, I'm hoping, I don't.
I don't until the ribbone comes out in twenty twenty six.
But most of the time, I'm hoping that I buy
a car every eight or ten years something like that.
And because of that, I'm I think of that as
adding to my saving right. Because sure, I'm saving up
for a potential car purchase, I don't know how much
it's gonna cost or when I'm gonna need to pull
the trigger and buy that thing. But I am thinking
of all the money that I'm talking into liquid savings,

(35:10):
not just investments, as part of my savings right, even
though eventually at some point I'll need to access it.
I guess this is.

Speaker 2 (35:16):
Where personal finance is personal, because like the way I
think about vacations up until I guess fairly you know
more recently, is that like we weren't never sure if
we were going to take a vacation every single year.
Like there were some years where we spent like a
ton of money on because it's like, hey, we're gonna
go to Europe for three weeks, which is something Kate
and I did like before.

Speaker 1 (35:34):
We had kids.

Speaker 2 (35:35):
But then there's years where we didn't go on vacation
at Also, in my mind, I pictured vacations truly a
lot like you picture buying a new car, because like
it's this unknown variable.

Speaker 1 (35:43):
It's like, oh, maybe we'll go a little bit, or
we'll go to the beach, like that kind of thing.
But as most people budget a certain amount for that,
they've got an idea in mind, a lot of people
go back to the same place. It is For most
people at least they think of it as like a
recurring annual expense.

Speaker 2 (35:56):
Yeah, so, I mean personally, I guess so much of
this I think has to do with what I'm saying
is you're weird.

Speaker 1 (36:03):
Maybe so, maybe so.

Speaker 2 (36:04):
But like I feel like my relationship to my savings
rate is very fluid because like being self employed virtually
my entire adult career. Be Like, so having a very
fluctuating income meant that that my savings rate varied wildly,
Like some years it was massive, but then some years
it was pretty it was pretty lean. But what that means, though,
is that the additional income that I had to set

(36:26):
aside towards something like a vacation, towards something like a
nicer car or a vehicle, or maintenance, just different things
that you save up for, it varied on how much
money we had left over after setting aside a floor
base floor amount for investing. And so that's why me personally,
I don't include those medium term goals within my quote
unquote savings rate because I want to create a floor

(36:48):
where I'm like, Okay, no matter what, I'm always going
to set aside fifteen percent if not more, towards long
term retirement investing. So for me, I don't know, And
maybe this it's like a nerdier way like super by
the Boks. There are, you know, very black and white
way of seeing the world. But Graham, I don't know
if that's helpful for you, but that's how that's how
I look at it at least.

Speaker 1 (37:06):
Yeah. So I mean, really, this question of what is
savings is actually more complex than it might seem like, Yeah, yeah,
it really is. You might think that's simple question, guys,
let me tackle that one for you. But I think
when you delve into a little bit further, you're like, wait,
does paying off Hyder's debt? Does that kind of count
as savings? And I guess the answer is probably know,
but it's.

Speaker 2 (37:26):
But it's not consumption, it's not living expenses for this month, right,
So in that way it kind of does, and so
it's not When.

Speaker 1 (37:33):
We're alway talking, we're talking about growing the gap. Part
of that is funneling more money towards paying off the debt.
And if you had like a minimum fifteen percent savings, right,
and you're funneling money into investments, but it means you're
keeping around high intrastraate debt even longer, Well, then you
want to go dip into your savings rate for a
little bit and reduce it so that you can pay
off that high interra strate debt. It is a tricky conundrum,
but I like, I think, you know, saving and investing

(37:56):
are both kind of forms of delayed spending too, right,
So the goal is to eventually, you know, maybe kind
of sort of die with zero, right, as Bill Perkins
would say. The goal isn't to store up sums of
money so that we can hand it down to our
airs when we eventually pass away. And you know, debt
is essentially the opposite. You're prolonging the pain of a purchase.
But then savings, I think, Matt, savings is also more

(38:18):
than that. It's almost a little I think of it
in an existential way. I think of it as a
recognition that we have more than we need, and the
ability to set aside larger amounts of money feels like
a counter cultural act in today's America. That's true. We
talked about this recently, the average savings rate of everyday Americans.
It's paltry, it's pathetic. I think savings has this dual impact.

(38:39):
Living on less allows us to reach higher levels of
financial independence more quickly, and it also just allows us
to be comfortable living on less too. That's right.

Speaker 2 (38:48):
And then Graham, okay, let's talk about the five twenty
nine part of your question. Should that be considered part
of your savings rate? Well, I kind of think so,
because even if you aren't saving for yourself, you're still
puting those dollars aside. And honestly, I think for me,
that's the biggest difference, is that money that you're quote
unquote saving are you setting it aside for more near

(39:08):
term use like a savings goal, or are you investing it?
And guess what, all the money I've got set aside
for my kids in five twenty nine accounts isn't in
fact set aside, It is actually invested. And that's why
for me, the savings rate includes five twenty nine s
because I'm investing those dollars.

Speaker 1 (39:24):
Well, why does your savings rate only include investments?

Speaker 2 (39:26):
I think it's just the at some point, what am
I going to live off of my investments? And so
it's about saving for the It's just like the squirrels,
like I don't know, storn up, the storing up the
acorns sweep for the long winter.

Speaker 1 (39:37):
Distinguished between saving and investing. And there are savings accounts
right that we put money into for kind of the
That's where this gets so tricky.

Speaker 2 (39:45):
R Yeah, yeah, Well because there's not there's not an
investing rate, Like, no one calls it that. They call
it a savings rate. And I think most people when
they say a savings rate with there what they're referring to, though,
is an investing rate. That's how I picture it, at least,
But if others out there if you're lumping in Christmas
because guess what, that's a bit expense and it happens
every year.

Speaker 1 (40:01):
That's that's fine to do that. I think that's different
because I think that's that's something you expect every single year.
You need to be budgeting for that. You need to
be setting aside money for that, like you just said,
But you're also saving for other things that aren't just
post fifty nine and a half lifestyle, and that's where
you have to have some room, I think to include
other elements of saving in your savings rate. And I
don't know, maybe we've just kind of beaten the dead

(40:24):
and I'm with you. I'm with you on the five
twenty nine accounts, and I would also count that into
my savings rate. But this is also, Matt, why we
deemphasize five twenty nine plans so much on the show. Yes,
of course, they've gotten better with recent rule changes allowing
you to turn some of those five twenty nine dollars
into roth Ira dollars for your kids in future years.
But the main goal of saving money is for your

(40:44):
own financial freedom, and you know five twenty nine plans,
they are reserved for money. Gear seven and By the way,
there are only seven money years. They're reserve for that
final year, not because you want your kids to take
on loads of student load debt or anything like that,
but because they're only really appropriate if you've been crushing
your own finances for quite a long while, which likely

(41:04):
means you've had a high savings rate and now you
can dial back on personal investments in order to invest
in the next generation. Or maybe you've just got the
ability to expand your savings rate and do both at
the same time.

Speaker 2 (41:15):
Oh, which, okay, So a whole other can of or
just open up in my mind, which is donor advice funds,
because is that money considered? Say it because there's money
that you've given away but you're in fact investing it.
Maybe we just won't go there. We'll say that for
another episode.

Speaker 1 (41:30):
It is more complex than we give it, and hopefully
we get people's brains thinking about how they calculate their
own savings rate.

Speaker 2 (41:36):
I think, more than anything, that's what I want people
to leave this particular question with is the fact that, man,
there are so many different ways to engage and to
think about your your own money. And that's what I
love about personal finances. You can kind of customize it,
chop it up, slice it, partition it however you want,
and specifically how it makes the most sense to you
because it's your money. But uh, Joel, we've got another

(41:56):
question to get to. We're going to talk about whether
or not the fifteen year mortgage, whether that's a mistake.
We'll get to that more right after this.

Speaker 1 (42:09):
All right, man, we.

Speaker 2 (42:10):
Are back and we always have our Facebook Question of
the week. I feel like we always try to live
our life without any regrets. But this listener this question,
they're wondering if maybe they've they've made that mistaken I.

Speaker 1 (42:22):
Look at in the rear view mirror and they're like,
what have I done? What if I did?

Speaker 2 (42:25):
Did I make the right decision? This anonymous person said,
wondering if I made the right decision about my mortgage
a while back. Bought my house right before the pandemic
with a four percent rate, thirty year term and was
paying PMI at one seventy seven a month. About two
years later, when the rates dropped and home values increased,
I refinanced four two point three seventy five percent for
fifteen years and was able to drop the PMI, which

(42:46):
is always that's a good thing. The savings from the
PMI and the rate drop, coupled with the shorter term,
meant that I was only paying an extra three hundred
and twenty dollars a month.

Speaker 1 (42:55):
At the time, I.

Speaker 2 (42:55):
Thought it was worth it to pay a little extra
and finish that much sooner, and I didn't think of
the overall monthly payment difference. I'm wondering if the shorter
term was the right decision. I hated the idea of
paying a higher rate than the two point three seventy five,
although not significantly higher and still under three percent. But
what I hated more was the idea of going from
having twenty eight years.

Speaker 1 (43:16):
Left back up to thirty.

Speaker 2 (43:18):
I love the idea of being mortgage free in fifteen years,
but now I'm thinking the thirty years would have allowed
me to save.

Speaker 1 (43:24):
And or invest more.

Speaker 2 (43:26):
And if I went from the remaining twenty eight years
to a new thirty year term, my monthly payment would
have been seven hundred and twenty dollars less. Instead, I'm
paying three hundred and twenty dollars more. It's a big
difference there. Should I have used that extra one thousand,
forty dollars somewhere else, Joel.

Speaker 1 (43:43):
What do you think.

Speaker 2 (43:44):
I think a lot of folks are finding themselves in
a situation like this where they're just like, oh man.

Speaker 1 (43:48):
Because can I make the right move? Yeah, it's difficult
to know. Well, it's hard to predict the future, right,
This is totally a hindsight is twenty twenty sort of question.
We can all look back on our life and not
just on matters of personal finance. And by the way,
this should be a minor regret, if a regret at all,
because of how small it is, right, and nobody is

(44:09):
typically crying about having a rate that's under two and
a half percent these days, But at that point in time,
it was really hard to predict the future. We didn't
know mortgage rates we're going to skyrocket and then you
would be able to earn more in a basic highield
savings account than what your mortgage rate was. Because Matt,
back then, what savings rates were paying half our percent,
they were trash. It was really bad. And so locking

(44:29):
in low interest rate debts for longer well seems smarter
today than it did in the moment. But I did
something very similar, Matt, And if I could go back
and do it over again, I probably would change my route,
but I refined multiple investment properties into fifteen year notes,
and I kind of balanced it with refining other rental
properties into thirty year notes. In the moment, it seemed

(44:51):
really reasonably smart. I tried the fifteen year loans for
thirty year loans if I could go back in time,
freeing up that cash, right because because of the ability
to earn more, not just in aimings, but to funnel
more into investments. But back then, long term interest rate
debt just didn't seem as good as it does today.
And I get that it's hard not to feel like
it was a mistake, but I'm pretty sure you're not
going to feel all that bad when you pay off

(45:11):
your mortgage ahead of most of your peers either.

Speaker 2 (45:13):
I will point to the fact that you mentioned funneling
dollars additional dollars into investments as well, because even though
we could not have foreseen like let's just say the
past five even the past ten years, of what the
market would do, we still know historical data. And that's
the part that I have a tough time, I guess,
getting past, because again, since the fifties, the S and
P five hundred has earned has annualized over ten percent.

(45:37):
And does that mean it's guaranteed to continue at that rate.
Absolutely not. But that is the historical data that we have,
which is literally why I guess you and I we
have slightly different takes. But I refinanced from a fifteen
year to a thirty year because like, in my mind,
I'm like, rates are really low, and granted I'm paying
more than I certainly paying more on a thirty year
note than I would a fifteen it's still, in my mind,

(45:58):
felt like the right decision for us, because like, I
want to keep that mortgage around as long as possible
knowing that I would invest that money right, knowing that
I would invest that difference, And that's the in my mind,
that is the key distinction, because would you have actually
done that? And I think for a lot of folks
the answer is like maybe they think they would, but
it's difficult to know whether or not they would invest

(46:18):
the difference. And that is why the forced savings method
that homes that it requires of you. That's why it's
the number one tool for people building their wealth in America.
We don't love that that's the case, but it's because
if you don't.

Speaker 1 (46:31):
Pay your mortgage.

Speaker 2 (46:32):
If you don't pay, you don't you can't stay like
you are forced to pay your mortgage.

Speaker 1 (46:36):
And you'll skimp on everything else, including four h one
K contributions to make sure you're able to continue to
pay that mortgage. Yeah, you're right, You're right. I think
the thirty year note.

Speaker 2 (46:43):
But I wanted to mention that because even like five
years ago when we were telling we were I mean
here on the show, like we were encouraging folks to
refinance it. Like we were saying, Hey, generally speaking, this
is the anomaly, and we are used to it because
it feels like that this is all we've known, because
it truly was all we had known. So of negative
interest rates, you remember that since to Yeah, like it's
almost like Japan or something like that, But since nine

(47:05):
twenty ten, those were the rates that we knew and
it felt normal. But at least I recall on the show,
like we were telling folks, so please REFI because this
is not normal. And I guess that historical data is
what we want folks to keep in mind, like take
the long view, don't be swayed by the headlines and
what it is that folks are talking about today, but
just truly look at the historical data to essentially wayfair yourself,

(47:26):
you know, as to figure out as you're trying to
pinpoint where you are on the map with your money.

Speaker 1 (47:30):
My guess is too that this this poster because of
the specificity of the numbers here one thousand and forty,
like they say, ah, somewhere in the thousand dollars rings
Like they've run the numbers. They know how much they
would have had on hand, Yeah, and that they would
have in all likelihood used that money to do better things.

Speaker 2 (47:45):
Maybe they would have been disciplined and kind of yeah,
for so much a.

Speaker 1 (47:48):
Market, like you're saying, though, depends on who you are,
how you handle your money, what you do with extra
money that comes in totally, and if you're of the
bent to increase your savings right, funnel that into your
four one K, your WROTH, I like, max out your
HSA whatever. If you're gonna do those, take those steps
with it, and you could maybe afford to fifteen year mortgage,
which is awesome, but you're out for the thirty so
you can do better things with that money. I think

(48:09):
that is a reasonable and potentially an excellent choice. But
if you are of the other bent and you're like,
I can barely afford this house even on a thirty
year note, lots of times that just gives people license
to buy more house than they should. That's true.

Speaker 2 (48:21):
Yeah, I mean, at the end of the day, like,
I don't think it was a mistake for this individual. Like,
it depends on what you're optimizing for. Because if you
optimize for peace of mind knowing that I own my
home free and clear, nobody can take that away. If
that's what you're optimizing for, then awesome, that's great, And
a lot of really smart people do that. We recently
talked with Marco about bitcoin on the show. That's something

(48:44):
that that he's done. Morgan Housel, one of the smartest
minds in personal finance right now, wrote The Psychology of Money.

Speaker 1 (48:51):
He has done that.

Speaker 2 (48:51):
We've known other folks who have paid off their house,
not just gone for the fifteen year, but literally paid
off their home so that they don't have any debt
on their own. But if you are optimizing for the
most financial return, like, that's where I have a hard
time look and past the historical data. Ultimately, I mean,
you can't go back in time, and in either case,
you are doing really well, especially compared to the to

(49:13):
the rest of the rest of the rest of America.
And I think that that is more important to focus
on the fact that you are still head and shoulders
above what the majority of folks are doing.

Speaker 1 (49:22):
Yeah, And I do think that he's the poster is right.
I don't know if it's he or she. Actually it's anonymous,
but I think the poster is right to talk about
kind of going back to the starting line. When you refinance,
Let's say you've paid on your loan for five six
years in this case it was just two, but then
you refinance back into another thirty it does feel like
you're starting from square one. Is like time lost. Yeah,
And that can be a tough financial reality and also

(49:45):
a tough psychological reality. So I think I think in
that case, I also understand the impetus to try to
actually accelerate that payoff, move things forward into a fifteen
year note instead of a thirty And clearly this poster
is in the good fortune of being able to afford
that higher payment and then hopefully they're also able to
do enough great things saving and investing regularly.

Speaker 2 (50:04):
Also, Yeah, Yeah, you can't underestimate the accountability that having
a mortgage payment like that, that you know, because again
I goes back to what would you have done? And
it's tough to know without there being some sort of
alternate reality, which is of course impossible.

Speaker 1 (50:17):
But uh, all right, Joe, lest you want to talk
about nut brown Ale, the Samuel Smith's beer that you
and I both enjoyed on our show. Like I said
at the beginning, this brewery, I feel like I stumbled
upon them early in my kind of craft beer newbie days,
and I really enjoyed their stuff. And so I was like,
oh man, I saw this, and I was like, he
gave me some little bit of bite of nostalgia nostalgia vibe.

(50:38):
I was like, I gotta let's we gotta try this
one out on the show. And this has nutty light
brown vibes. But it's not as good as I remember it.
It's just and I just have this vision in my
head of what it used to taste like, and it
doesn't taste like that. It's pretty good, it's good, but
it's just I don't know. I was in love with
this beer back in the night.

Speaker 2 (50:54):
You did you have a story as to when the
first time, the first time you enjoyed this beer.

Speaker 1 (50:58):
No, there was just this beer store, like right in
the heart of the city, heart of Atlanta, that I
would go to and I just remember what it is
that there was, Like they had a porter, there was
the Winter Welcome that would come out just in like
around Christmas time all and I just remember like loving
every single one of them. They had this unique flavor profile,
kind of a thread running between all those beers. Interestingly enough,
even though there were different styles, Yeah, it just tasted

(51:20):
awesome because it wasn't but lighter, because it was way
better than anything else I've ever had.

Speaker 2 (51:24):
Yeah, it makes me think it's funny because one of
the early craft beers quote unquote craft beers that I
found myself gravitated gravitating towards was a brown Ale as well.

Speaker 1 (51:33):
Abita's Turbo Dog was.

Speaker 2 (51:36):
A favorite of mine. That was one of my favorite
shower beers. Living up in the woods of North Carolina
with then the house that we rented had a window
that you could open into the shower and so literally
it was awesome.

Speaker 4 (51:47):
Man.

Speaker 2 (51:47):
I would come in from chopping wood like literally, that's
how we heeded our house. Mountain man splitting wood and
take a shower, open the window to the to the
great outdoors, and I would have the beer sitting there
on the shelf. I'll take hot shower. Didn that sound great,
sounds pretty lovely. Shower beer underrated, but this the flavors,
the toasting notes reminded me of as a kid. I

(52:08):
used to peel the crust off of slices of bread
and I would say that for last because I loved
it so much. And that's what those days would like
to the bread.

Speaker 1 (52:16):
I get that.

Speaker 2 (52:16):
Yeah, you know like the you just just the dark
brown part. Yeah, loved it. That's what this beer tasted like.

Speaker 1 (52:21):
That's to me, the opposite of my ten year old
takes the crust off and it annoys me. I'm just
I just like being the contrarian. Do you like the
taste taste pretty similar to the rest of the bread.
Just eat it, except for better. He's got more molts
or something, especially on homemade bread. The crust is delicious.
Oh yeah, caep, you buy the store bought Stuff's saying.

Speaker 2 (52:37):
It's it's a little it's phenomenally better. Homemade bread way
sneaking better for sure. All Right, I feel like we're
going along. That's gonna be it for those episode. We'll
link to some of the different resources we may have
mentioned during this episode.

Speaker 1 (52:48):
And we'll link to three hour off the air conversation
that Matt and I have about saving straight if you
want to get even down of dirty ear. Oh why not? Why?

Speaker 2 (52:54):
But that's gonna be it, buddy, Until next time. Best
friends out, Best friends out. Hey, your wife's.

Speaker 1 (53:12):
Been the one who's blows the bus stop sides? Yeah,
on accident, sorry, yeah, threw her into the bus final.
She deserves it. She's done it twice now, it's crazy. Yeah,
I know, she feels really bad. Expensive tickets, Yes,

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Ask HTM - Selling Investments for Medium-Term Goals, Buying a Primary vs Rental Home, & If 15 Year Mortgages are Bad #817

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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 - Selling Investments for Medium-Term Goals, Buying a Primary vs Rental Home, & If 15 Year Mortgages are Bad #817