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Ato six if afty five KRC E talkstation ain't very Happy Monday to you, Brian Thomas about to be back to work. Did enjoy my time off? Happy new Year to all, and I'm so happy it's a new year and we're still doing money Monday with Brian James from Aulworth Financial. Welcome back, Brian, Happy new year to you.
Happy new year, and happy first snow day of the year. And all the kids and some workers out.
It's a hell of a snow day too, isn't it, Brian Lord Almond?
This is a whopper. Have you seen this in a very long time.
That really long time. I know we've got a couple of topics you provided and we're going to get to those. And I don't think I'm throwing you much of a curve ball, since you are a financial planner. But I had a couple of things I just wanted to bring up, and I was inspired by my own personal experience. I get my credit score, you know, I know what it is, and there was an article on the Wall Street Journal.
I believe it was from yesterday, one man's attempt to get a perfect eight to fifty credit score, and rather interesting article. And I not bragging or anything, but there was a period of time where I did enjoy a perfect credit score for a while, and lo and behold, I launched the app to find my credit score and it dropped down by like, I don't know, twelve points or something. Nothing in my life had changed, nothing, All my bills are paid, you know, I got all these
perfect everything's perfect, Everything's perfect. Then they suggestion on the I don't know if his equifacts or whatever it was, I don't have enough credit card accounts. In other words, they want me to have more available credit in spite of the fact that all my bills are paid and I've got enough available credit to cover my family's basic needs and probably another family down the streets basic needs. What the hell is with credit scores? And why don't
they let people know? And they don't, as the article points out, they keep all this quiet. It's they said, the algorithms they assigned people are proprietary, so you don't even know. And so the article goes over all these different you know, you know the contortions this one guy went through in an effort to get an eight to
fifty credit score, and it just it was out. It was insane what he went through to try to do it, and he ultimately was able to do it just by maintaining a certain like teeny weeny percentage of some kind of balance on his various credit cards. Does it really matter once you get over and you're in that higher level? Does it matter? Should have concern anybody? And do you know anything about credit scores and how they come up
with them? Brian, I hate to put you on the spot, but this kind of irks me.
No, not at all.
And I've got clients who bring up these questions as well. Matter of fact, I have clients and there are frequent listeners. They may hear me say this, who had the same experience that you did and had that eight point fifty for that one brief shining moment, printed it out, brought it into me so we could celebrate, and then they framed it, hung it on the wall. So I think
it shortly after that went went. But to answer your question, these are great questions, but at the same time, once you're over, really seven point fifty, You're not going to get anything more special than you know, for being over eight hundred or or you know, even up of that eight to fifty range, there really aren't there. There isn't a you know, a special green room for people with super high credit scores, So it doesn't matter that much once you're Once you're at that range, you can kind
of get what you need. But yeah, so question for you though, did did they did you did they specify that they thought you should have more actual credit card accounts or do they think you should have more credit available meaning higher limits and lower balances?
Well, I didn't see anything but the limits. They gave me a specific number. I think I have, I guess ten specific accounts that they were able to identify within this list of whatever is an approved account credit or otherwise, and then I should have more like fifteen to twenty or something. It's just I'm like this, this seems vast awkwards, if you know what I mean.
Yes, and the algorithm that algorithm, like all algorithms, changes all the time because they're after whatever it is that they're after. But at the same time that the really the important things, you know, if you wanted that last marginal few points.
To get you to the eight fifty.
Then yeah, that's probably what you would need.
And that algorithm that you're asking to tell you to give you advice on what else do I need is really reaching to the bottom of the barrel for the ideas.
And that last bit is the number of accounts.
It sounds like, yeah, apparently, so it just seems just so so stupid. If you don't need the additional credit, then why would you want it available? So I don't know anyhow, And along those lines, I just want to bring this up because in case people aren't aware in terms of credit, my wife just got I don't know, a col statement or something. We don't even shop there anymore, but it was an announcement that their interest rate is
now north of thirty percent. Thirty and it was one of several cards, you know, it was some other small retail that we don't ever use. But I mean your thirty percent interest rate, Brian, that's insane.
This is insane, and it tells you exactly who they're shooting for. They are truly, truly hoping that you will forget about it. Because remember the way a credit card works, it has a grace period too. So as soon as you swipe that card and you rack up a month's worth of expenses, you're gonna get your statement and then you've got usually twenty five maybe twenty eight days. It can waiver around there somewhere, but that's how much time
you've got to get that paid off. What they're after, they're after the small percentage of people who are gonna forget to make that payment and pay that statement off. Most people do. Most people get their rewards and run away. And I know you and I both play that game. Yeah, but there are a handful of people out there who will not make that payment, and they'll go, I'll get
it next year. And if you annualize the interest that you're paying on those accounts, you are simply paying an enormous amount of money for the privilege to owe a bank money.
Yeah.
Well, and again I only bring it up in case people are not paying a ten because apparently, I guess they can adjust these interest rates in any damn well time they please, or maybe they have to do at
the beginning of the calendar year. I don't know what the rules are that apply to these credit card company are credit cards, but man't pay close attention, because I mean, let's face it, if you could find a credit card that only charges twenty percent versus one that charges thirty, you know which one you should be using if you're not, if you're going to carry a balance. But it's still it's like the word usery comes to mind.
Yeah, and and well i'd also add based on that thought process, And I know you don't really think this way, but if you're really looking at the interest rate, if you're comparing the interest rate across credit cards, then you're probably using credit cards incorrectly. If you've got a situation where you've got a balance on one of them, then you need to be looking for a balance transfer opportunity. Sometimes those are zero percent for twelve to eighteen months
something like that. But if you've got a significant balance, I would say that twenty percent is truly no better than thirty percent.
It's all way too high.
It is way too high.
All right, Well, let's.
I'm tempted to take an early break, Joe. Can we take an early break because we can go to the two topics afterwards, or you want to just dive into part of the first one, or how do you want to work it? Okay, Brian, We're gonna take an early break, a couple minutes early because I don't want to start either one of the topics we have remaining, because I'm afraid we'll not have enough time in the segment to
do it. So let's pause it. We'll bring Brian James back to talk a super sized limit for four to one k's and Trump's proposed tariffs could cost some US companies those two subjects next. It's eight thirteen right now, fifty five K see the talk station. I'll be right back fifty five the talk station. Jud just said it's bad. Don't get on the roads. You can avoid it. Brian James.
Money.
Money is Brian James from Allworth Mancher. We're talking well finances, and I want to do the second one first. This I am more confused having read the new four to oh one K rules after the USA Today article I just finished reading than I was when I started reading.
It.
Is the average human being supposed to understand how much money they can contribute to a four to one K given all the different breakdowns and subcategories and categories we have here in terms of you know, annual four oh one K savings and catch up contributions. I mean, this is baffling, but the number I'm reading here, can someone in any of these age groups that apply save up to thirty four thousand, seven hundred and fifty dollars for retirement next year in a four oh one K, then
well that would be this year. The answer is yes, yes, apparently right. So honestly, this is all all the confusion, Brian, is job security for me? If the Irs ever made things simple, or if Congress ever, you know, kind of tried to work a little harder to make things put things in English, then I don't.
Have a job.
So let's go over where we were so we can talk about what the changes are. Twenty twenty four, if you had a four oh one K, then you were. Everybody under the sun who had a four to oh one K could put in twenty three thousand dollars. Whether that's wroth or traditional four oh one K didn't matter. It didn't matter what your age is. The limit for everybody was twenty three thousand. If you were over fifty. We've had something called the catchup that's been around for
a long time. That was an additional seventy five hundred. So in twenty twenty four, somebody fifty plus could put away thirty thousand, five hundred dollars new for this year is a super ketchup contribution.
Another flavor for everybody to remember.
If you are age sixty to sixty three, instead of seventy five hundred, you get to put in the thirty four thousand and seven to fifty. So now you're at the twenty three for everybody twenty three and a half. That is actually the standard limit went up by five hundred bucks to twenty three thousand, five hundred. Those over sixty but under sixty three or under sixty four rather are allowed an additional eleven two point fifty. That's a
total of thirty four to seven fifty. If you're sixty four or turning sixty four this year, you don't get it. So this is the other confusing part. What old ketchup job security again, Brian, job security for me? Right, let's talk about what's important here.
So what I.
Mean, the older you get, the more life it is you should be able to get it. I mean usually your highest income earning years are older. So why would someone who's sixty five and still gainful employed and not be able to chuck board a four oh one. K. If that's what they want to do, you.
Would have to ask your friendly neighborhood actuary as to why this was a good idea. So what you've just pointed out is the Ketchup contribution applies two different times in your life. Currently, it applies from ages fifty to fifty nine, and then from sixty to sixty three you have the super Ketchup. And then currently, from when you become sixty four and older, you go back to the old Ketchup super Ketchup. Does that understand? Does that help you understand that?
I mean, I do have an understanding of it. It just doesn't make any sense when you practically talk about it in real life. You know, terms like wait a second, how come it's you know, up to sixty four and that shuts off after age sixty four. Someone explained that to me, and I know you're not going to be capable of or in a position to do that, but super Ketchup. That sounds like the thing you buy at Costco, the giant size, as opposed to the regular.
The generic version of the Ketchup. Yep.
Well, and the other thing is now this will apply to me, since I am fifty nine. I turned sixty in September. I still qualify for this age sixty through sixty three super ketchup because I turned sixty in the calendar year.
That is correct. But you will you will be sixty by twelve thirty one.
Therefore this is a super ketchup year, not the regular ketchup for you, the good kind.
Okay. And I know there's a WROTH provision in here too, but roths are only available to people within certain income levels.
Correct, that's correct. Yeah, so that's kind of correct. Here's another fun thing too.
So, yes, there is an income limitation on ROTH contributions, and that's in the range for the perry, depending on how you know, whether you're married, whether you're single, so forth. It's in the range of say two hundred thousand dollars something like that. But the fun thing there is that you can do what's called a backdoor WROTH conversion because there are no income limitations on converting traditional or pre
tax assets from a pretax IRA to a WROTH. So the trick there is you make a non deductible traditional IRA contribution. This is not new, This is an old thing, been around for a while make a non deductible traditional IRA contribution and then immediately convert that, and then you wind up with the exact same result. So if you may, if you're married, you make over two hundred one thousand dollars,
then you are not able to make a roth IRA contribution. However, you can make a pre tax non deductible contribution and then convert that and get the exact same outcome. And what's really crazy about this, Brian, this was this started off as a loophole, but eventually the IRS said, yeah, you know what, you guys, this is fine, go ahead
and keep doing it. So rather than just removing the income limitation on a WROTH contribution, they've simply said that if you file a couple more pieces of paper on your IRA, you can get the same end result.
God, that is so insane. And you know you call it a loophole. If it's written that way, I don't consider the loophole. I mean I consider that the intended consequence of any legislation that comes down the pike, because they wrote it that way the extent they didn't consider something one way or another. It's not you know, it's not illegal or anything, but it's just something that's built into the tax provisions or in this particular case, ira A provisions.
Ryan just anyway, why on Monday morning it is all of this out for the listening public.
It is well, talk to your financial planner. To the extent you don't have one, I recommend getting one. Anyhow, Trump's proposed tariffs. I have heard and read so much about Trump's proposed tariffs. I mean, he every other day he comes out with another tariff he's proposing. I think, you know it. It seems to be getting some traction
in terms of global affairs. I know the Mexico's president now plans on working with the Trump administration in terms of taking back some of the illegal immigrants he wants to send over, certainly in part because of threats of tariffs. And I see Trudeau's getting ready to resign in Canada, and one of the concerns they have in Canada is tariffs on Canadian goods. But this transcends that, and we're talking Chinese goods primarily. China is obviously a difficult competitor globally.
They don't have any OSHA rules, they have slave labor, they don't have minimum wage, so it's a lot more difficult to compete with the Chinese companies, So at least conceptually, I understand wanting to perhaps tariff Chinese products, which we've all gotten used to because they are so inexpensive compared to anything that we make here. What's your take on this, because some people are all in favor of this for some of the reasons I mentioned, and some people think
it's going to ruin the economy. Do you have any personal thoughts on this or anything.
Well, I mean, in terms of the impact here, it's really kind of the same discussion as when I'm doing a financial plan for somebody. What are your priorities, right,
what's the most important thing to you? And what I mean by that is if you are someone who says, you know what, the United States has just got to get more competitive because twenty thirty years from now we're not going to be able to be at the same level that we currently are, then you might say that it's worth laying tariffs against especially China, for the reasons you just mentioned. It's a lot easier for China to produce goods more cheaply than it is here because of
all the rules we have. However, if you're somebody who says, you know what, inflation is the thing, that's the thing we've got to focus on, then you're not going to be in favor of these things because there's no way to have our cake and eat it too. We can't reduce we can't attack China with tariffs without having any kind of inflationary impact, and heaven knows, we've seen plenty of it in the last few years. So it really just depends on what you feel is the most important,
what's the best for your situation. If you are a small business owner who imports goods, who imports natural resources and things from China that you need, you're probably not real excited about these tariffs. Right.
On the other hand, you.
Know, you might be if you're a company that competes directly with China, then you might feel a little bit differently.
Yeah, I just the whole idea. It's an artificial tinkering with the market. But it's brought about because we have well, I guess, pretty healthy trade relations with China. For example, We've gotten used to it. I mean I always just kind of wonder, I mean, had we treated China the way we treated the Soviet Union, We wouldn't be having this discussion because we wouldn't be trading with them, period.
End of story. Yeah, I read this article this morning, our National security advisor telling us that China could basically just flip the switch and shut down our entire electric grid given how much it's infected our our infrastructure with software and things like that. That is an enemy of ours. So if we just quit trading with them, period. And I understand the the practical effect of just shutting off
that light swhich is impossibility. But I mean, we have to contend with them on some way, but we've just gotten I think fat and happy on cheap Chinese made stuff.
I think you're exactly right, and I use the term on these airwaves pretty frequently that we're the United States a profit margin. The one thing for how, whether we've actively decided this or just passively by not objecting to it, the one thing we will not touch is the ability of our publicly traded companies to make money because that's how we all get richer. I'm not saying that's good, bad, or indifferent. I'm just saying that's the decision that we've made.
That's why it was not hard at all. To cut off Russia because they were never a huge trading partner, and Russia never made the moves that China has to become a major player on the kind of overall world economic stage. They don't make plastic garbage that they can sell for nothing and undercut everybody else. China does. So therefore, you know, look at the things you're buying on Amazon. If you're looking for a phone charger, how many of those you think you're actually made in the United States.
The ones that are made the United States are probably four or five times more expensive, probably maybe a little better quality. That's a different topic. But if you're simply going for cheap, cheap, cheap, that's China. That's what they've been doing for one hundred years when they figured out that that's a way to get under the skin of
the United States, and we're addicted to it. You know, if you've been bringing in cheap product and cheap components for whatever it is that you build, and it's going to be real hard to give that up.
Well, it certainly is. And I'm just wondering, are these tariffs going to apply to all the like for example, rare earth minerals that are brought into this country through China to build electric vehicles, or to wherever that happened. The electric vehicles have to be built, we don't have our own because our own environmental laws won't allow us to extract them, even though it's right there in front of our faces. So I don't know, I'm just confused
by the whole thing. But the geopolitical the realities of the world have changed dramatically since Nixon normalized trade relations with China. They weren't a sworn enemy back then. They were, you know, a second world at best country, And clearly they've moved ahead in advanced significantly and seek to compete with America on a globe on you know, directly on a global scale, and pretty successful at doing it because they don't have any regulations.
Hmm yeah, go figure.
So if you think about it, it's almost a kind of a perfect capitalist story.
They found a.
Need that that is out there and people were willing to throw money at it. Happens to be here in this country, which where where our goal is profit margin.
That's our number one goal.
So if they're the cheapest offering of whatever resources we need, it's going to be real hard to go against that number one goal and say that you know we're going to sacrifice these other things.
Well, we always care about morality and how people are treated and you know, suffering, and of course the Chinese people suffer mightily for lack of a lot of the regulatory struct infrastructure we have here. So maybe there's a moral argument that can be made for us paying more for Chinese products. Don't know, Brian James, always a distinct pleasure to have you on the program on Mondays. I appreciate this segment. I'll look forward to next Monday for
another edition of Money Monday. And be careful out there, my friend.
Happy New Year and who day anyway.
Right, that's the first time that came up this morning. Thanks Brian, eight twenty eight. Right now, if you have care se de talk stations, stick around. We've got care se Cares coming up Todd Sledge and since Ata is going to go over some topics with us at eight forty, I'll be right back fifty five k RC dot com. The Simply Money Minute is sponsored by Emory fed