Q&A: The Goalposts Moved — Is That Actually a Problem?

then those charitable contributions would necessarily have to stop as I do not think I would be able to support my current lifestyle and continue the same amount of charitable giving. This makes me think that I may want to continue some part-time work in order to fund those additional charitable expenses in the future, which are a personal goal of mine.

How would you go about thinking about this and trying to balance this out with some financial freedom in the future? Thank you and appreciate your time to weigh in.

There are two models that I've seen. One is a model that was practiced by a person in the fire movement named Leif Dalin. He wrote a blog called Physician on Fire. He's a former anesthesiologist. He also had big charitable giving goals. He worked until he hit his Phi number or his fire number, and then he worked one additional year that was purely for the purpose of charitable giving. So his final year of work was purely a charitable giving year and that allowed him to reach his giving goals.

That's one possible model. The alternate model is what you said in your voicemail where you could continue to work part-time.

in retirement purely for the sake of charitable giving. And if you think about it, Joe, you know, you mentioned earlier that you often saw retirees donations would stay consistent, but volunteer hours would rise. And there is certainly social and psychological benefit to contributing volunteer hours for for the purposes of getting to know the people who are involved in a given organization, but from a purely economic perspective, particularly if you are a highly compensated worker.

It often is more efficient, monetarily efficient, to rather than put in low-wage volunteer hours, put in high wage worker hours and then dedicate that money towards giving, like from a pure economic lens, that is the most economically efficient thing to do. I mean, that said you do lose there are social benefits, there are non economic benefits to volunteering.

that I would call a podcast asking this question is because maybe I feel a little hemmed in by this goal. I want more flexibility, but at the same time, I really want to support these very important things in my life. But I think that's the nature of financial independence. It's really cool that you have the independence to be able to do this. And so if you're thinking about it in terms of affecting your financial independence, I think you're already there.

Which I think then instead of feeling hemmed in, this is really a freeing.

And was saying that for many, when you talked about volunteering, for many people, if he has skills that are great for the organization, It might actually make sense to go the other way and use those skills to help the organization instead of the donation. I remember Chris saying, and I don't remember the exact quote, but saying uh something to me like, Yeah, you know, if somebody wants to give a hundred bucks, that's great. But if you're somebody who knows how to do social media

That is a skill that we, you know, every nonprofit in the world wants and needs, uh the ability to get the word out. Or if you're somebody that knows AI or you're somebody who knows How to fix computers, even. You know what I mean? Like some of these tasks that are somewhat specialized can be worth. much, much more than whatever equivalent uh amount of money that you give would be.

And the Instagram lives telling people about how the race is gonna go. Guess who made all the videos of the race course for everybody? Like that's that's in my wheelhouse. It's super easy for me to do, but not easy for anybody else on our to do.

Just hypothetically, let's say that you want to put two hundred thousand dollars into a donor advised fund and then at a four percent drawdown rate, that means you can distribute eight thousand dollars a year to charity in perpetuity. Right. That would be one approach. The other approach is that you can create a foundation. There are two types of foundations out there. There are foundations that

are actively engaged in doing things. And there are foundations that exist primarily for the purpose of distribution of assets. And if you have a foundation that is formed for the purpose of distributing assets, then your role as the manager of this foundation will be exactly that, to to nurture the endowment, very much in the same way that

that all of us nurture our own portfolios, manage the investment, manage the endowment, and then make distributions every year. And the IRS requires actually five percent. And they have specific guidelines and timelines for when those need to be made, but that's another approach. And what's nice about the foundation model is that you can get other people involved as well.

Yeah. Whereas a donor advice fund you would largely be managing on your own. But either way, regardless of whether you choose donor advice fund or foundation, The common thread is that you are creating a base endowment. And then making annual distributions from that base endowment. And in that regard, it's pretty similar to.

Building a retirement portfolio and then living off of that, right? What is a retirement portfolio? It's basically an endowment that you're building for yourself for the rest of your own life.

So thank you Les for the question. Cheers to you for prioritizing this so highly. Yeah.

An initial rollover from my previous employer, which is about forty percent, my employer match, which is about twenty percent, and the other five percent is under a company base. I'm not quite sure where that came from, but I'm not asking either. My question is essentially from a simplicity standpoint, if those three are all tax deferred accounts anyway, can or should I somehow combine those and are there any advantages or disadvantages of doing so?

Or does that even matter and should I just think about having tax deferred versus tax free uh account? I currently split my contributions between Vanguard's Total Stock Market Index Fund and the International Version eighty twenty, and I've been meaning to push it to the Africian frontier, but when I look at my account summary and already see four sources times two funds.

Uh I wonder if I'll just be multiplying and complicating things if I further diversify. Uh and if I want to initiate Roth conversions in the future, how do I manage that across those different sources or should I even care about? In general, I've been pretty confident in my DIY skills to date, but uh wonder if it's finally time for me to engage a professional financial advisor I can discuss such questions and concerns with. So thanks for your no-nonsense, wisdom, and insights.

And then you start thinking when you're trying to wrap it all up and make a plan like Jamie is, like, okay, how do I make this a cohesive thing? The good news is we can get you close to the efficient frontier, Jamie, and without a lot of a lot of worry. There's only one thing I want you to look at before we start talking strategy at all, because your question is about combining these. And it appears that you probably can. However, if any of this, especially that rollover portion, if that

was all pre-tax money before. And the match is obviously pre-tax money. I'm not sure what the company base is, but we'll assume that that is wasn't yours, wasn't put by you. So it would qualify as pre-tax money. Assuming those things then you certainly can combine them. You can think about them as one entity. And in the future, you could after you leave employment, you could roll those over. Now, I would talk to a tax expert about that beforehand.

I would have them go through your actual company documents to make sure. But it sure seems to me that if this was all pre-tax money before. And that's the only thing that we're looking for. Well, then certainly you can put them all together and make it make it an easier plan. But even if they're not.

Even if they're not, what what I would often do, Paula, when I was a financial planner was you'd have clients that would have five or six different accounts and for whatever reason we couldn't combine them. So if anybody came along and they broke into my client's computer and they saw these different accounts, they would go, this is not diversified at all.

Why is this one account all in small cap? And why is this account all in international? And this account is all large cap value? Because I'm not really worried about the individual account.

So we would look at which fun can we use that does the least damage? I think you can look at it that way, Jamie. I think you can can take these different pieces and begin lining up what percentage is close to where I need to be with large cap. in general or large cap value or whatever whatever the asset allocation is that you're looking at and say this fund is this piece, this fund is the other piece, this fund is the third thing.

When you begin changing them over to Roth that can create some changes only if it changes your distribution strategy. If your distribution strategy is to take money from this account first, this account second, this account third, based partially on the taxability of the account, then that might change your asset allocation uh sum. But if not, if it doesn't change your withdrawal strategy, I don't know how much that's truly going to change the investment type that you're in.

Joe, what do you think about his question as to whether or not he needs a financial advisor? I'm I'm always curious as to what you'll say because as the former financial advisor, I realize there's a risk of, you know, asking a barber if you need a haircut.

then you're gonna have a bucket of money that you're gonna save for, you know, later in life just in case you need need uh help and you need a fund to pay for that help. Or are you going to buy insurance or for, you know, for most people it's gonna be some type of a hybrid of those two, right? Somewhere on a sliding scale. So how do you dovetail that? And that's going to be a function of his withdrawal strategy and how much money he wants to live on versus how much he's saved. That whole piece.

The dovetailing of all these together is where a good financial planner who does this every day, you can benefit from that experience. The asset allocation Use AI and build one dashboard so it doesn't look like five accounts. It only looks like one. And you then piece it together in a way that makes sense. As I mentioned earlier, all my international in this one, all my large companies in this one. You don't need a financial planner for that. Either way, though, Paula.

I would run what I said about combining these accounts if he's if he wants to move them all into a rollover IRA later. Mm-hmm. I would just check with somebody who knows. a little more than I do about the nature of the accounts of where this money came from. Right. Don't take our word for it, because we haven't seen any of the statements. We don't know anything about it.

Check with a tax advisor on that before you make that move. Cause if there is any after tax money there for whatever reason, it's gonna create a frickin' mess. Right. That was me being very polite.

So I like what you're thinking. I like the direction that it's going in. And overall, you've built a great tax triangle. You've got a good balance of tax deferred and Roth. You've done a great job of saving and investing. So congrats on what you've built.

in our backyard here, tiny house, and then we bought a Ocala three two. in twenty twenty one um uh house there. So the house by UCF is So bizarre because we have had such great luck with renting it out, with inquiries, with just maintenance and tenants over the years and recently our tenants moving out at the end of the month so we've had it posted for the last like six weeks. And we have had zero bites. And of course everything in Central Florida has changed. There's been so many units.

put up by UCF, put up downtown, put up all over the place, just sprawl happening. And we have a ton of corporate landlords that are now undercutting us in that neighborhood. So I'm just kind of wondering if maybe it is time to sell that property. As a longtime listener, I I thought we would have it until literally the cows came home and, you know, we'd pass it to our kids because it's been such a fantastic asset. But at this point I'm wondering if maybe we should do an exchange and buy

to other properties in Ocala or somewhere else. So yeah, I'd love to hear what your perspective is on that as these little micro economies and you know rental markets How do you move forward? You know, do we just kind of m try to bring it down and match those corporate landlords and just say, hey, it is what it is? Or do we look elsewhere in all the work that comes around with selling and buying properties? Uh really appreciate your insight and I look forward to your response.

There may be a way to either make your product stand out in a crowded market, which you could explore first. There may be different places where you should be marketing and just the place where you're marketing. If it were me, Paula, the only piece of this that I would feel competent helping Tina would be to say, Let's look first at at how you're marketing this thing and how we can either A make it stand out or B is uh change the location so more people might see it. Mm.

And sure, maybe nothing about the property itself has changed, but Tastes have changed, and Especially now, you're competing with corporate landlords and they've got amenities, they've got an on site gym, they've got a pickleball court, they've got This, that, and the other, right? You don't have that, but what you do have is X, Y, and Z. You've got um maybe a better location. You've got

better parking, you've got m historic charm, right? You wanna be like rewriting the listing to respond to the new competition that's out there. First thing I would do, I agree, Joe. audit the way that you're marketing it. You know what? Here's another thing. A lot of people are now using Photos that are digitally staged, like you see this in a lot of listing photos. People are using AI to stage a listing photo. So for example,

put a disclosure at the bottom that just says staged by AI. But if you have a listing photo that is just an empty room, like you've got a photo of an empty bedroom, you've got a photo of an empty living room. Stage it. Use AI to digitally stage it, just like you would if you were selling a home. That can go a long way in just making your photos stand out and put the little disclaimer at the bottom of the pictures, like staged by AI. For anybody who doesn't know what staging is.

Staging is the act of placing things in a room that make the room look desirable to live in. So for example, instead of an empty bedroom, it's a bedroom with a bed and a couple of bedside tables and some art on the walls and a nice rug. A bunch of those fluffy pillows that are like stacked on top of each other. They're really uh Yeah. Yeah.

You'd spend an afternoon doing that, right? Because you you have to s set it all up and then take it all down. Now you can digitally stage a photo. So the solution might be improving the listings. In those ways. That might be part of it.

If you can lower the price point and by virtue of doing so equal your previous vacancy rate, what would that mean for your new net operating income? What's the new net operating income? What's the new cap rate? And how does that look relative to any other potential alternate property that you might purchase?

Because if you were to 1031 this and buy, let's say, two additional homes, now you've got two sets of roofs, two sets of siding. What's going to be the cap rate on those two additional properties? I'm not convinced they would necessarily be better. They might be, I don't know. I think it's tempting to believe. That 1031-ing into something into the next thing that is further away from this competition would yield better returns. I'm not convinced that that's necessarily the case. I would first

focus on pricing strategy and marketing strategy around the asset that you have. I would do that first before looking into shedding the asset that you have. Because the thing is, right now, we know that you've gone six weeks with almost no interest and no lead. What we don't know is the answer to the question, at today's prices, right, and at today's rent.

And with today's new marketing standards, once we fixed the pricing and the marketing and the positioning and all of that, given today's set of data Would asset A be preferable to asset B? That's the problem that you're trying to solve. That's the question you're trying to answer. And I think until you first focus on pricing and marketing and positioning, you're not going to know how to answer that.

But I do understand the shock, like the emotional shock that comes from Owning an asset that was previously kind of a money printing machine, and then reaching a point in in market saturation where your money printing machine is no longer, you know, you can't just turn on the money spigot.

Which you used to be able to do. And that that and that does come as a shock because you're like, Oh, I have to be more efficient. Like I have to up my game to get this to perform. I have to work twice as hard to get half the returns.

My money printing machine is broken. How do I fix it? Tina, the other thing that I would be careful about is don't assume, you know, with with the alternate properties that you're looking at, don't assume that cheaper is necessarily better. Because it might be that the cap rate on alternate properties are not necessarily going to be an improvement.

And and maybe they will be, maybe they won't, but just because they're cheaper, that doesn't necessarily mean the returns are going to be better. And again, I think at this stage, comparing alternate investments seems a little premature. Because before we get to the step two of making comparisons to alternate investments, I think the step one is optimizing the investment that you hold. Because it's only once we've optimized

your current investment, that you can then see how well it's performing under an optimal set of conditions. And then you can use that as the baseline for step two comparison moving forward. So hang on to the property for now, rethink the pricing, rethink the marketing, both the composition of the marketing and the location and straty like where you're marketing.

where those listings are appearing, how those listings are appearing, rethink all of that, and based on that, develop a set of numbers that will form your new baseline moving forward. And then you'll know how to make comparisons.

So thank you, Tina, for the question. Call us back in a couple of months and let us know what ends up happening. What do you end up pricing it as? How do you change the approach to positioning this property? Call us back and give us an update. Joe, we've done it again.

uncertainty and how our brain handles uncertainty and how to navigate uncertain conditions. So for a time like now, I think it's a it it is a conversation that we all need. So that's tomorrow on the Stacky Benjamin Show, the greatest money show on earth, which Paula, you know, we call it that because it can be a circus.

We also have a newsletter. You're gonna love it. Your mom's gonna love it. Your grandma's gonna love it. Share it with all of them. The newsletter is free. It's found at afford anything dot com slash newsletter. That's afford anything dot com slash newsletter. Thank you so much for being part of the afford anything community, for being an afforder. I'm Paula Pant.