Welcome to How to Money. I'm Joel, and I am and today we're answering your listener questions.
You you kind of jumped the gun on that one. I barely had time to swallow my little taste of beer.
There time to get this train roll in my mouth was it.
Was still still watering. But this is and ask how to Money Monday episode for folks out there. We've got five listener questions lined up for you. A listener is asking about diagnosable money disorders, whether or not Joel, you in particular, whether or not you've been that you discovered that. This probably sounds really confusing, but we will get to that one here. In this question itself is a hip a violation. I just want to know.
I don't think we should be taking you after.
You can sign off and allow us to talk about it. Right, it's but it's your right.
I guess.
Is that how it works out?
Not to mesually.
But somebody else is wanting to know what he should be doing with this unsustainable housing market the way prices have been going. And another listener is wanting to make the most of a ten thirty one exchange. What is that and how does it pertain to real estate. We'll get to that here in a second, and we'll answer to additional questions. Ten thirty one exchange one of those things not a lot of people know about, but as a real estate investor, if you're planning on swapping properties,
it can save you a ton of money. We'll discuss that, along with a lot of other things on this episode. Right man, But some in laws I'll chatting with them, and they recently bought a new car. They're rich, so they've bought.
In this market, a brand new car must be loaded.
No, they are retired and they thought, you know what, it's time to get us a nice vehicle. That's you've never been owned by anybody else in.
The world, like that could have been my inheritance.
I'm hey, one day we might be driving that car. I don't know. We'll see how long you've been on a car last on the road. But they got a brand new Kia Sportage. And dude, that thing is I'll say, it's pretty stick and sweet. It's like a hybrid kind of suva, you know, it's like one of those one of those new types. It's not a hybrid, right, No, I'm sorry, No, Yes, it's not an actual hybrid. It's like a crossover.
That's what I meant to say. But they've really enjoyed it. But what they have in he is are so hot right now? They are?
They are?
Yeah, we talk about that with.
The car Dealership guide that tell you right in particular is I think that was the beginning of Kia just changing their image, changing their brand. And that's what I keep telling my in law, specifically my mother in law, is I'm curious to see if in ten fifteen years from now, if folks are gonna look at Kia's in the same light the same way that we look at Honda's and Toyota's.
Yeah, I think they already kind of are.
It seems like they're getting that way.
I remember my brother in law had a Hyundai like twenty years ago, and Hyundai's were trash. They were just like nobody respected them. They were so cheap. They had these tenyure warranties. They're like, why why would you buy a Hyundai Instace. You should get yourself a Saturn. That was like the only way they could convince people to buy Hyundai's was this ridiculously incredible warranty and all of a sudden, like overtime, Hyundai Kia, they both just started
to turn out better and better cars. Game Now, yeah, they rival with some of the better car manufacturers out there. Yeah, but that being said, they haven't up their game enough to for mind Lust to not have to take that thing back into the dealership multiple times.
Now. They've had some issues with the electronics. Things aren't working the way that they're supposed to obviously. But yeah, So this raises the question, then, is it's a good idea to avoid the first model year after a car gets revamped.
Basically that's been a baphorism for a long time.
Something that you hear, and so I actually dug into the data, dug into the facts, and if you look at that, it actually shows so JD power They've got like a vehicle dependability study, and if you look at the past multiple years, actually the first model year, it doesn't perform any better or any worse when it comes to that particular make and model of the vehicle. Why has that been a thing then for so long? I wonder I think people just back in the day, I
think it was more of a thing. But cars today and research kind of points this out. Cars just get tested so thoroughly. I mean they drive it like above twelve thousand feet for so many miles, and they take it to Death Valley and basically they're trying to break the car, and there is substantial testing that there truly
shouldn't be anything like that. It doesn't mean that if you were to buy a new car that anecdotally there will be instances where something might go wrong with a vehicle, but generally speaking, that's not necessarily something you should worry about. Don't let that be what keeps you from buying a new vehicle or even when you're.
Buying a used vehicle, like going back to be like, oh, well this was the model crossover year twenty thirteen. Maybe I shouldn't go for that, Maybe I should look for a twenty twelve or twenty fourteen instead.
Well that doesn't really matter.
Really good thing to know. And like you said, you can look back at stuff like JD Power, or you can look at consumer reports. Those reliability rankings are far superior than just kind of the first model year, the truthy non truth sort of way of thinking, kind of the gut reaction or the stories that you hear and actually and you can always especially and you're looking at use vehicles.
I think it's the National Highway Institute or whatever, but there's a website where you can go and you can enter in your VEN number and it'll tell you some of the different recalls that are outstanding on that particular vehicle. So we can make sure to link to that in the show notes.
Yeah, for this episode. Good resource for sure. Yeah. And by the way, it is always helpful to do a carfax report or to run some sort I think there's actually a free one too. Maybe I'll find that and link to that in the show notes as well. I think there's a free resource where you can kind of find out the vehicle's history, which is just all that's more helpful to know than whether it's the first model year or not, because I don't know what has happened
to this specific car over its history. And you know, those are imperfect, but they're still helpful. But Matt, let's totally mention the beer we're having on this episode. This one is called Pyrotechnic Pleasantries. It's by Sour Sellers out of California, out of Rancho Cucamonga, which is just a fun, fun city to say that's not a real city. It truly is that, and I want to visit just so I can say Rancho Cucamonga while i'm there.
I love it. But yeah, this is a cho kuka mundo cua manga manga. Yeah, pardon me.
This is a beer I picked up when I was in California a couple months ago. And did you you didn't actually go to sourseller? No? No, Actually, the guy at the beer store he recommended it, highly recommended it. So I'm super excited to check this one out today on the show. But let's get on to listener questions. And if you have a question you want to Matt and I to tackle on an upcoming episode, just go
to howdomoney dot com slash ask. You'll find the simple instructions there so you can record a voice memo send it our way hopefully we can take it in a couple of weeks on the show. But Matt, let's get to our first question of this episode. This one is about whether or not I'm diagnosably insane.
Hey there, this is Keith from the Organ Coast again and I've got a question for you, Joel about how your relationship to money might have changed since your wife
has started going to counseling school. My girlfriend is in counseling school, and it's sort of brought out a lot of questions about my relationship to money and insecurities I have around money, Why that came about, and her diagnosing me with lots of psychological issues related to money, and yeah, I'm just curious if you've had the same experience, if it's been a net positive for you, let me know your thoughts.
I think this is the first time we've had a question directed at a specific host. So Joel, shall you take this away? My palms are sweating. Actually, I'm just going to kick back this one. Let's move on to are you feeling a little nervous? Keith? Why did you do this to me?
You're on the hot seat. Yeah, I'm feeling the pressure a little bit right now. So I'll answer for Joel, which is always what you want to hear. Yeah, when someone asks you a question about nature, it hasn't changed your relationship to money, but it's completely changed your relationship to your wife. You two aren't saying out to I anymore, right exactly?
Yes, No, she hasn't diagnosed me with anything formally, because I want to allow her because she's not actually a licensed professional at this point. She's just in school. Okay, No, I'm kidding, But this is actually a really good question, and it's it's fascinating that Keith is going through the same thing I'm going through to a certain extent, and it's helpful to hear that I'm not alone, I guess.
And yeah, and she's she's really kind of halfway through her education and she's learned a lot, and I'm like, it's honestly, her going to the school to become a licensed therapist, she's going to become a marriage and family therapist. Has been really good for our relationship and although not always easy, as Keith has figured out, it's definitely opened up a can of worms at some at different points, different fun, interesting conversations and also difficult conversations, but overall
a net positive. And I would say it's been good for me, it's been good for us. It's been good for our kids in a lot of ways. To see her dedication, to see her excel at something that's just really demanding. So yeah, I don't know. I think it's also fun to watch because it just very much feels like she was born to do this, which it's so fun for me to get to support her in that.
And she's like at the top of her class right like literally she is maybe completely not only getting a's, but she's like acing tests. She was sharing that with Kate and the other night at dinner.
And I was like, holy crap, you're you're gonna be really good at this.
And I'm sure not just from a textbook standpoint, but so much of like the testing involves actual, like the kind of counseling work.
It's not just like Scantron's. Yeah, it's not rote memorization right now, like one of the classes she's taking this semester, it's it's literally people pairing off and diagnosing each other with stuff essentially and working through issues. So it's like doing the practice of being a therapist. So why don't they do that with like heart surgery, And that's a good question. Yeah, you are, Mike a lot of cadavers. You two go off cadavers, that's true, Well, not on
each other. That it's not like if you and I were going to med school that we operate on each reason for that, although when we were in Edinburgh recently we learned some interesting stuff about cadavers. Do you remember that with people were digging up bodies in order to sell them to the school in Edinburgh, and that's why they've got those greats over over the over the g plats or whatever. Yeah, exactly, all right, so crazy stuff.
Let's continue talking about this for just a second. I will say that I've grown a lot as Emily's been in grad school, like and that I've done more self examination. And I do think that an unexamined life is kind of boring. That you have to kind of do some of this work in order to grow as a person.
So she's helped me do that, to help help me unearth different things over the past couple of years, which, like I said, has been kind of a mixture of like fun, hard and enlightening and and it's not always easy to do that hard work, but I think it's valuable. I think, uh, leaving those stones unturned isn't helping anybody, and not recognizing maybe some of those patterns that lead you to a certain place sure isn't healthy. So yeah,
growth as an individual, growth as a couple. But when it comes to specifically like money issues, I don't know I think I had actually done a lot of the hard work on that already. I think there are other things that we've probably unearthed more than the issues that I have with money, because honestly, if you've been listening to this podcast for a number of years, you probably heard our philosophy shift, morph and change and grow and
hopefully become a little bit freer in some ways. I think, Matt like, we've talked about my journey with frugality and extreme frugality at times, and I think I've grown a
lot in that way. I think a lot of what I experienced as in childhood and my parents' relationship with money and to each other about money was difficult and informative, but I've also had to grow past that because I think I had more like a too too secure of an attachment to money, or too insecure of an attachment to money, I guess, And so I've developed been able
to kind of work through. I think some of those issues slowly, but surely it's not something that you do over night snap of a finger or anything like that. Sure's I think some of the conversations Emily and I've had have you know, not necessarily any diagnosis I knew I was weird, and I knew that impacted me, but definitely has helped me work through some of those things even more.
Yeah, well, I like what you said about working through it too, because I think it is like, yes, it is important to do the work right and to dig in and phrase right, figure out what Yeah, figure out what it is that has impacted you. But simultaneously, I think it's important to make sure that you're not completely living in the past. You are not necessarily like yeah, you shouldn't be defined by your previous actions. What are you doing today? What are you going to do in
the future as you're moving forward? And this isn't to say bear your past ignore those feelings, like no, it is worth shove it deep down. It is worth paying attention to that and seeing truly how it has impacted specifically how it has impacted how you view things I guess in the past. But then to take that information
and then move forward. Like we've all seen folks who they just have certain hang ups, different things that have happened to them in their lives and they just can't seem to get past that, and it tends to come up in conversations as like an excuse for why they're choosing to not move forward. And I think that eliminates a whole lot of agency that we have as individuals to make the best of what it is that we've learned from those hard, very hard and painful at times experiences.
Yeah, but I think we lose some of our agency if we don't do the work of seeing where we've come from and how it's influenced us.
So you're just flying blind all this. You don't understand how it was that this, how the plane was put together that you're flying.
You know, Oh, yeah, you're treating symptoms instead of the root problem, right for the root cost and so sometimes you got you really do have to go back and look at some of that stuff. And it makes me think about how we talk about money here on the show. Numbers in math are obviously important when we talk about money, but even that is not as important as our own
psychology kind of what we're bringing to the table. Money behaviors, ingrained money behaviors, ingrained ways of relating to and thinking about money that have really been instilled in us over the course of a few decades. And so it's one of the like it does of course, take time to overcome some of those hang ups that we have with money and really to even kind of put a finger on how we got there. So I think that's why we try to talk about the psychological side of things.
We try to bring on financial therapists something like that. I mean, we really do want people to the whole gamut of a healthy approach to money. We want people to consider that, not just know the maximount you're allowed to contribute to a roth Ira this year and the mechanics of doing it.
Like, not just about the mechanics. Yeah, absolutely, Yeah, if we were just a bunch of automatons, then what's the point of even like having a podcast, because well, here is on a single sheet everything you need to know. Follow these steps, and you will be wealthy right by the time you hit fifty years old.
And there's some of that, right. Some people need to you need to know about compounding, You need to be kind of have your imagination open to how it works and what it can produce. But that's why the behavioral element is so crucial, so crucial to understanding. So I guess, yeah, I don't know. I guess over time I realized that money was like a security blanket for me, and that it was unhealthy and I had to kind of work
through that. I will also say it's something that I continue to wrestle with and I continue to think about it like that because those experiences from childhood still loom large. And so, yeah, I still worry and I have to run like worst case scenario things in my head, realizing that well, the worst case scenario really isn't as bad, and sometimes it's just catastrophizing in my own brain and it's like, well, really, come on, that's unlikely to happen, and even if it did, we'd still be okay.
Still be okay. Well, and I mean this is a part of why we have the podcast. We are saying these things not because we don't know them, but because we forget them. We have you know, when it leaders talk about Mission leak, right and how you kind of lose sight of what it is you're striving after the same thing happens when it comes to some of these different personal finance tenets that we need to make sure that we're living.
By as well.
But okay, so one other things you said too is that it takes time, which I completely agree like it's something that you know, it's something that you need to work on over time. You're not just like healed, right, Like, yeah, you can't just snap your finger, snap your fingers. But okay, so my brain's kind of go in multiple directions here. I think a takeaway maybe for a lot of folks out here who unlike Keith and yourself who you know, you both have girlfriends or wives that are going through
who are becoming counselors. But there's a lot of folks out there who don't have that. Yeah, but I still think and this I'm not saying that these are the same thing, but when it comes to talking about money with your partner, I think you can do a lot of some of this work with your partner by just being very intentional about some of the conversations that you have and specifically just carving out time on your calendar to have some of these deeper conversations, which do take time.
Its relationship, right, and relationships are messy and they're not efficient, but that's oftentimes how you're able to draw out a deeper fear or a bigger goal out of a life partner that maybe you didn't even realize that they had, or maybe you'd heard them mention it before, but you're now realizing for the first time after talking about this and that they're serious in this way a second that
makes you tick. Yeah, yeah, exactly, And so I don't know, I just wanted to mention that because I know we can be awkward sometimes to talk about some of these It's like, oh man, we've never talked about money this way. This is this is brand new, and it's going to feel real clumsy. But I think it's really important to have some of these conversations, especially when you're when you're trying to get a partner on board financially.
Yeah. All right, One last thing I want to say too on this one. And I'm not sure if I'm reading into this or not Keith, but it sounded like maybe you were like somewhat slightly just annoyed at maybe the diagnoses that your girlfriend is like bringing down on your head or.
Maybe taking aback a little bit by like oh man, which I didn't know I had all this going on.
He's totally understandable. And I will say, like, I am kind of one of those people who's like instantly defensive at times, and I don't want to Necessarizy. I don't want to be told who I am, what I like. Don't reveal that about me, like cause it hurts or it's or it's just a tough thing to hear. And sometimes I would rather just like close my ears and go lah la la la la la and not hear it.
And but it's it's important too. As much as you can kind of lean into those conversations because I think they're good for you, they're good for her and she to be able for her to be able to share that with you, and you to be able to have those conversations with her, I think it's going to be mutually beneficial if you enter into those conversations with like a willingness to learn and a willingness to grow. Again,
easier says said than done. But the more you can, the more you can do that, I think the better it's going to be for both of Yeah, totally.
Yeah, And Keith, you are not alone. I think for those who are like I never have to deal with that. I think a lot of those folks just haven't spent the time, they haven't been left alone with their thoughts, or they haven't worked through it with a partner before. I think there's a lot more folks out there that do have issues when it comes to money and how much individuals are relying on that money to feel a sense of security.
And it's just one of those more socially acceptable ways of being insecure in this world.
Right.
It's like you.
Dress it up as like success or ambition.
Or workaholism is another one of those things where it's like, oh, look at that person, they get stuff done, but really, yeah, it doesn't look the same and it's not nearly as devastating in some ways as a drug addiction or something else, but it's still just very much comes from the same root source.
Totally.
Yep, Keith, best of bluck to youse. You guys continue to have these conversations. We've got more questions to get to on this episode, less personal in nature, hopefully, but we are going to specifically gonna kind of zero in on one listener and his holistic financial situation. Will get to that and more right after this.
All right, Jill, we are back from the break and we will get to that listener question from the guy who wants us to take a look behind the curtain of all of his finance like everything he owns. Honestly, I feel like he's he's more typical. I know, it's sort of like Keith's question. I feel like a lot of times we think that we're alone in our situations, are just just so weird and dysfunctional or whatever it is. We're all the songs you might you might think, but
yes we are all. We are all that way, And in particular we're talking about Sean. We're gonna get to him in a second, but.
I'm just trying to function dysfunction mat.
His his financial situation is. I think it's more typical than he would actually think it is. But we'll get to him here in a second. But first let's hear from a listener who's asking about a crazy housing market.
Hey, Matt and Joel Steve from Boston. Long time, first time. Your recent podcast on home ownership got me thinking about my own goals of owning a home one day. But as someone in my late twenties, especially in my local market, it seems like home ownership is a long ways away, and there might be some truth to that. In your podcast, you shared a stat that over the past thirty years, the average growth rate of real estate was five point
three percent. Well, I did some of my own research and I found that over the same period of time, the average wage growth rate was three point thirty nine percent. To me, this comparison doesn't seem sustainable for younger generations to buy homes at the same point of life as their parents or grandparents. But I want to get your take on it. Is this concerning to you too, especially since we know the power of compounding returns, But in this case, compounding returns doesn't work in our favor.
Thanks aw Matt. Let's take a macro question here, put on our point to economy.
Wages versus housing.
Yeah, so usually values, Usually we're more in the micro personal finance space. But I think this is really interesting because I think the macro often impacts the micro. Right, We talk about that on the show. So we'll do
our best here to answer this one, Steve. And it is true that living in a market like Boston, yes, it's going to be more difficult to become a homeowner there than it would be in Let's say, I don't know Mississippi or parts of Ohio, right that they're just there are a lot of cheaper places in the country to buy a house than Boston, depends on where you're at in Boston as well. Right, sure, yeah, real estate
markets are hyper local. But as we said in that episode, you're referring to that specific market matters even inside of a city, even specific locations within that city, or sometimes it's even street to street like that's how real estate functions, that's how it works. There's just thousands of markets really across the country, not just a handful, which is surprising, I think to a lot of people. It is obviously
hyper local. And here's the thing though, the longer you own a home, no matter where you end up buying, the more likely it is to be a solid financial move as well. Time is really key on the home lining front. That's something we maybe didn't we talked about we touched on on that episode, but that is one
way in which buyers can be helped over time. As rents continue to increase, if you've locked in, in particular a lot of those folks who locked in low rates on thirty year mortgages, it is a hedge against inflation. But you're right, at the same time, home prices continue to outpace wage growth. So Matt, what do you think how do we tackle that as individuals?
Well, I think that's the key point, is what can we do as individuals, because obviously there's nothing that we can do from a macro level, but as individuals we have a lot of control over our lives. But I think maybe the best way to discuss this might be to give an example, so Toronto. It turns out that unsustainable housing prices can be sustained for quite a long time.
Home prices in Toronto they have kadrupled in just about fifteen years or so, but only in the past year have prices started to correct, and they're actually plunging pretty rapidly. We don't know exactly how far it will be that they'll fall. But what I'm pointing out here is the fact that markets go through cycles, and it is difficult to predict when those cycles will occur, how it is
that they will evolve. But at some point, any sane individual is going to opt to rent in an environment like Toronto's when it's vastly more affordable and when it just becomes financially impossible to buy. The thing is that all those micro decisions eventually does have an impact on the macro because when enough people do that. When enough people choose to rent, over time, prices do start to correct. Essentially, it's just supply and demand. And with housing in particular,
like housing it's a freight train. It's this massive industry, and it takes a long time for things to slow down. It takes a long time for things to ramp up, in particular when it comes to new developments. And we've seen it depends on who, like what research you're citing, but I think there's something like seven million. We have a shortage of something like seven million homes here in the US, And it depends on the statute read, depends on someone's say four mil. Some would say yeah, whatever,
But but bottom line, like, there is a shortage. And since the Great Recession, like that knocked out a lot of homebuilders and we didn't see that rebound right after that, and so we've been underproducing as a country, we've been underproducing homes and there just is a shortage. And so eventually, as money continues to flow into housing in the industries that support it, it will correct. But again we're not totally sure when well.
And like we said in that episode, one of the things you have to consider along that big long timeline of how wages haven't kept up with home price growth, Well, homes have changed over that period of time. Homes have gotten bigger home price growth. Of course it's going to outpace wage growth because it's not just inflation. They're fancier products, yes, right, yep.
And at the same time, COVID changed what a lot of people wanted in a home, and so especially with work from home, that has really I think that is people have a lot of Americans have placed more of a premium on their home, willing to fork over more of their take home pay to pay for lodging because now it works as office space.
Too, right, So it's been a shift in priorities as to what it is that we're spending our money on exactly. Yeah, So what should people do about this like a housing market that yes, it's more expensive than ever to buy a home and it's going to take more of your higher percentage of your income. Well, one the first thing you could do, I think is cry. You could just be devastated. And I get that.
I get that impulse because it is it's disappointing for if you want to buy a home and you're like, this has become prohibitively expensive. I don't know how long it's going to take for me to be able to afford it.
Yeah, and we're kind of joking, but we're also kind of not joking, like like truly, I think it's worth like mourning the fact that, dang it, the market does truly look a lot different than it used to. It's okay to face the it's sort of like going back to.
Its require some patience.
Yeah, Keith's question, like, recognize that this is the facts on the ground, but also don't let that this large your macro trend perhaps be a distraction as to what it is that you can do as an individual.
Yeah, and you can say, listen, I really want to buy a house, and you can force it, but you wouldn't want to do that at the expense of making a decision that's not in your best financial erst. So let's get maybe some more helpful suggestion that cry. And also, you know, knowing that wage increases on average won't keep up with home price growth, it's important for you as an individual to find ways to grow your income at
a faster clip. So you know, whether that's moving up the ladder at your current job, going down the street for a sweet pay bump that's going to help you
stock away more money for that down payment. And another important move money move you need to make if you want to buy a house at some point is to be an investor, because you know, if you're still a ways out from being able to purchase a home, from being in the market, it could make sense to invest some of those dollars in an effort to outpace home price escalation with you know, stock market returns from the money that you're able to stock away. So I think
those are a couple of things to consider. It's like, hey, grow your income, find ways to grow the money that you're bringing in so that home, you know, buying that home becomes more of reality. And hopefully if the market stalls out, which it's doing in lots of the country we are seeing home price corrections in a whole lot of places, well then you have the opportunity, the ability to pounce because you've been paying attention to your finances for years leading up to that point.
That's right, but we don't necessarily know that that's going to happen specifically there in Boston as well. What will actually happen with us home prices moving forward. I think that's going to be I mean, that's anyone's guess, because it is just again, such a complex market. And the truth is that there are thousands of many little markets around the country, and prices are declining in some of
those markets and they continue to rise in others. But again, that lack of supply is keeping prices higher than many folks have predicted. But then interest rates, they factor into the price of homes more than they impact any other purchase these days. But even as it's become more difficult to afford a home and a lot of the country, we just don't see signs of Toronto esque bubble from what it is that we read and see, primarily due
to the supply and demand that we're seeing. A price plateau could certainly happen given the factors, the more recent factors that we've seen in the past twelve eighteen months, but ultimately, markets go through cycles and shifts, and no
market can defy the laws of gravity forever. Another issue too, with looking at very large pieces like macro data, looking at average wages and average home prices home values too, is that you're going to talking about this early on, but that ignores the fact that there are certain neighborhoods within a city and certain streets within that neighborhood. And when you buy a home, you're not buying the quote unquote average home like you are buying a specific home.
It's kind of like the opposite of what we're talking about the beginning with new cars and how anecdotally, Yes, unfortunately, there might be a time when you have to take your car in and get it fixed, even though it's brand new. So even though the data points to the fact that home values have been rising faster than ways, just doesn't mean that you have to buy a home that is more expensive than you would like to purchase.
That's why Kelly Blue Book estimates are so much more accurate than zestimates. Sure, like cars are from car to Carter car, they don't change really very much, but from home to home to home they're pretty consistent. Yeah, but those are the opposite of condes.
Yes, yeah, I mean I don't know. I mean, I know Back Bay, that's one neighborhood in Boston because that's where Kate and I stayed when we visited there. We stayed in airbnb. Is very nice, But I don't know, besides that other neighborhood's there in Boston, but like here in Atlanta, it makes me think of like the difference between some nice Intewl neighborhoods like inmand Park or Buckhead or Midtown. Those neighborhoods are so much different than East Point, than Capitol View.
Even those neighborhoods you mentioned are different from one another.
Yes, absolutely, but generally speaking, I mean you're talking about if you're taking the average Atlanta home, it's incorporating all of those prices, but that doesn't necessarily mean that you are considering living in some of those much much much nicer neighborhoods. So just something to keep in mind that it's good to see some of these averages, but when it comes to purchasing a home, you're not buying the
average home. You are buying a deal. You're looking for a deal, and you're going to buy a specific home that's going.
To work for you. And I think that's we've seen a lot of migratory shifts and where people are moving and the kind of homes are looking for, and they're moving to more suburban and rural areas in order to get more house or in order to save more money on that purchase, and so sometimes you have to look and see where the opportunity is and it might not
be in the neighborhood you're currently living in. And if you really if home ownership trump's location for you or those are all things to be taken into consideration as you're kind of starting to think about purchasing a home. It's a massive difficult purchase to consider, and the market, the current market in particular, makes it even more difficult
for a lot of people. I totally get it. I think there are things you can do as an individual on all these levels, though, to prepare yourself, including kind of preparing financially and hopefully you're able to increase your income and increase your returns being savvy with your career and with the money that flows into you every paycheck.
Yeah, the ability to make those right decisions and have the money on hand to pounce when you see that deal. All right, Let's hear from a new listener and he is wanting to know what he should be doing with his money.
Hey, Matt and Jowel, this is Sean from Salt Lake City, Utah. So I need your assessment on my money.
Situation.
So I'm forty years old. I make about three thousand dollars a month, netting twenty four hundred roughly. I invest three hundred to five hundred and fifty per month, kind of depending on what bills are coming out of that check and how much the check is and whatnot. I don't currently have a retirement plan at my job, although I hear that upgraded benefits might be on the way. Recently, I started a rough IRA and I have thirty two
hundred dollars in NI. Roughly, in robinhood, I have about twenty six hundred with a sixty four split between ETFs and stocks, and from listening to your guys's suggestions, I've started dumping some money into the S and P five hundred the last few times i've put money in. I also have twenty seven hundred dollars in crypto. Currently, I have no savings. Let's see debt wise, I have about thirty five hundred dollars in credit card debt and I
owe about eighty five hundred dollars towards a camper asset. Wise, I have a car that's worth about eight thousand, which I plan on driving into the ground and I take good care of it, and maybe a few thousand dollars elsewhere in smaller things. Yeah, So just wondering what you guys's suggestion would be on where to transfer my money to or to change it at all, just to make sure my money is working the best for me and that I'm doing the smartest thing I can with it.
Thanks all right, Matt, lots still aid through here. I feel like Sean kind of bore his soul, his financial soul. Thanks for all the info. Sean will do our best to give the most robust advice that we can. But and one thing, Matt. First. Thing's first, Sean is saving sounds like between ten and fifteen percent of his pay. Yeah,
that's really great. That's really good. Right, And by the way, fingers crossed, right, that your employer starts offering better benefits soon, because that can make a massive difference when you think about like something like a three percent match and how that can add up over years and decades. That is, that's not nothing. So I sure hope that that your employer moves in that direction. If not, I don't know, it might be time to start looking for a place
where they have better benefits. Those benefits can add a significant amount to kind of your total comp totally.
Yeah, So okay, The biggest concerns that I have with what Sean has said is that he doesn't have any savings on hand, and that he's still got some credit card debt lingering around. We want every how the money listener out there to be investing, definitely, but only when they've taken care of these two things first, only once
they've taken care of some of the basics. And so what I would do if I were you, I would take your robin Hood holdings, the crypto money that you've got, sell that in order to save up that basic emergency fund that we always talk about, and that means getting to at least two thousand, four hundred and sixty seven dollars in savings. We didn't pull that number out of thin air. That's a number that economists, that researchers have
landed on. That is enough to have on hand to handle most kind of small emergencies that the majority of folks are faced with in life that tend to derail them on their quest to financial freedom. That should be enough for you to weather a bunch of financial storms. It's at least the starting point that you need to hit yeah, but then use the rest of any additional money that you have on hand to crush that credit
card debt. And by the way, just moving forward, we only want you to use credit cards if you can pay them off on time, if you can pay off that balance in full every single month. We love taking advantage of some of the different benefits we've been talking about that recently that credit cards have to offer, but make sure that you are receiving. You don't want to pay for those benefits right in the form of interest.
Only take them if they're free, and they're only free to you if you use credit cards properly the way we describe in the show. And also, Matt, the money that that Shawn's invested in crypto goes against another principle we have, which is to invest in the basic boring stuff with ninety five percent of your funds. We only want crypto or single stocks and I think to be five percent of your overall portfolio. And since you're just getting percent max five percent.
Max like you do, if you don't want to even mess with five percent, you can keep it at totally two and a half.
You can keep it at one one hundred percent boring. Yeah, yeah, there's nothing wrong with that, but you this, considering where you're at in your investing journey, it's just too early to have any exposure to alternative asset classes like crypto when you're just getting started, and so at basic index funds or target date funds are where you should be laser focused. Sean and I wouldn't stake any more money
in that Robinhood account either. That brokerage account, it's just not as tax efficient as the WROTH that you're sticking money in. Robinhood does offer a roth IRA and they're they're actually the only brokerage out there that's offering a match,
so that's kind of cool. If you're going to invest in a ROTH and you're gonna do it with Robinhood, that's fine, But just don't invest in the brokerage account right now, because you want to make sure you're maxing out the WROTH before you do any other types of investing. And so reah, regardless of where you've got your roth ira, preferably with one of the low cost companies that we love, plow all of your investable dollars into that WROTH instead.
Of the brokerage account in order for you to basically avoid unnecessary taxation later on.
Totally. Yeah, ROTH always comes first before any other investible account. But Sean also loved just how you talked about your car, you know, taking care of that thing, keeping that puppy running for as long as you can, running it into the ground, keeping that expense low, which is this is a major expense transportation. This is going to allow you to then funnel more towards paying off your credit card
debt and then ramping up that emergency fund. But once you've done those those two things, you should resume those regular contributions to the WROTH at that point. And also, I'm not totally sure what the interest rate is on the camper. You didn't mention that, but if it is north of seven percent, that's that's kind of our dividing line. If it is that, then it would be a good
idea to start paying that off more quickly as well. Basically, the quicker that you can pay that off, the more flexibility you're going to have to save and invest moving forward. And the balance actually on your trailer is actually pretty high, and so that tells me that it's pretty sweet which is great and hopefully you're getting a lot of value out of it, but not just you know, we're not
just talking about financing a car. We also want to make sure that you're not financing any additional fun toys essentially, So maybe you've got the sweet camper and you're also thinking, I need a sweet electric mountain bike to go with ethnically, but man, those things run like eight thousand dollars, but I could finance it, And no, we don't want you to do that at all. It's okay, Like we've all got different goals and different things that we're saving up for.
It's okay to save up and maybe achieve that as a goal sooner than later. But I think ideally you would also have a fully funded emergency fund before you're dumping more money into things that are going to depreciate in value rather than maintain a solid foundation of financial stability.
Yeah, and once you pay off the credit card debt, hopefully you never have any again moving forward, and hopefully you're able to also just grow that gap so that you can save up more for those purchases math that you're talking about.
That's the fun stuff.
That's the goal, is that you're not financing stuff like that, especially in today's environment where interest rates have gone up. It's like the less the more you can pay in cash, the better, right, So saving up for whatever you're trying to buy. But Sean, it sounds like you're well in your way. You're getting the information, and you're making the changes. So we wish you continued success.
Man.
All right, we got more to get to on this episode, including a listener who wants to know whether he should sell a car in order to pay off some of his debts. We'll get to that and more right after this.
We're back in. Before we get to that question about whether or not a listener should sell his car, let's hear from a listener who's looking for he's considering this sweet way to avoid the tax man when it comes to real estate.
Let's hear it.
Hey, Matt Jeel, this is Neil from Texas. I'm selling my home and an investment property in order to purchase a four plex. One of my sales closed a week ago. The other sale is closing in a few weeks. I'm going to be a nomad for a while, so I don't need the funds for a new home. I want to do a ten thirty one exchange, but I don't know where to start. What do I need to do to make sure that I follow the rules. My follow
up has to do with realtor fees. I found the four plex on my own, and I think I can handle the negotiating process. It's selling for five thousand dollars, so the realtor fees would be substantial. Is it common to make a deal with a realtor to work for
a flat fee? Since I've done most of the legwork myself and I only need help with the closing process, I was thinking that if my offer stated that my realtor fee is only two thousand dollars or whatever it is agreed upon, it might be a more attractive offer.
What do you think?
Thanks for your help and for all the great content.
Love the show, all right, man, this is a good question, and there's a lot to a lot that we can learn about real estate investing in this one. First off, though, I think Neil said that he was buying this four plex or five grand. I bet that's not the case. My guest is at five hundred grand, right, five hundred k. That's what the hell we'll think of it.
That's my assumption.
Five thousand dollars four plex would be amazing. You'd be financially independent immediately. I'd buy it same here, no matter the condition, no out of the location. Well, it depends on the location a little bit. But Neil, we love
that you're upgrading through a four plexure. You're like legit big time landlord now, which is great, and even more so because you're looking to do this ten thirty one exchange, which can be an awesome move when done properly, allowing real estate investors to sell a property snag another one while avoiding any sort of taxation. But I said when done properly, and that's because the devil's in the details.
When we're talking about a ten thirty one exchange and the price of messing it up, it can be steep.
Right.
It means paying capital gains tax on the sale of at home fifteen percent of the proceeds for the average person basically of all the games you've accrued on that property. So it is it is worth dotting your eyes, crossing your t's and kind of getting a little more familiar with the ten thirty one exchange that you can proceed properly totally.
A big aspect of making sure that you perform at ten thirty one exchange properly is the timing. A ten
thirty one exchange is an incredibly time sensitive procedure. Specifically, you've got to know the forty five day and the one and eighty day rule, and so within forty five days of the sale of your current property you need to have designated a property that you want to purchase a new property basically, So what that means is that the clock is ticking and you can't actually be in possession of the excess funds from closing when you make
the sale on your current investment property because that money actually it has to be held by a qualified intermediary. It's typically a law firm.
And ORKI me me just reach out. I'll hold on to a point.
Well, it can be an individual as long as so. There are actually pretty strict requirements as to what the IRS allows to be a QI a qualified intermediary. So it can't be someone that you have financial ties with, it can't be family. It also can't be an agent. It can't be somebody who you've employed in the past two years. So it can't be like your broker, real estate agent. It can't be a closing attorney. It needs to be somebody that's completely new.
And typically there's a fee for holding these funds.
Exactly because they want to make a little bit of spread on doing all the work. Because there is work involved, you have to you can actually become it's almost, I don't know, it's not quite like becoming a notary, but you like you get a qualified intermediary ei N and that's basically like a Social Security number for employers, an
employer identification number. So there is some work involved with the reporting that they provide the IRS to make sure that there is a clean paper trail and that truly that money has gone to the right person and that you haven't that you weren't in possession of it. But then the one hundred and eighty day rule, it stipulates that you must close out on this new property within one hundred and eighty day of the sale of the
old one. And so it sounds like you've already identified that new quadplex, that four plex, so you might be able to make it happen within this tight window. And if so, congrats kudos to you man.
Yeah, you just avoided tax or at least kick the can down the road for a little while, which is great. That's the whole point, yeah, is to avoid that all together.
And for everyone else out there, by the way, Matt, ten thirty one exchanges, they're pretty cool and they're a great tool really in the tool belt of the experienced real estate investor, allowing them to kick that taxation can down the road, sometimes even forever, because in particular, I mean forever if you die owning that home and you leave it to let's say a child, that they get what's known as a stepped up basis, and so taxation can be avoided almost in perpetuity with the use of
ten thirty one exchanges and just real estate in general, which is kind of one of the things that makes it cool. But I would say this too, don't let the tax tail wag the dog. If you can't find the right property, let's say, you know, don't force something just in order to avoid taxation, right potentially buying the wrong property that doesn't make sense for you. So I think ten thirty one exchanges are helpful when used properly.
I think if you allow the ten thirty one exchange to be the goal instead of a means to the goal. Then you might be enticed into using it in a way that's not in your best interest.
Yeah, hopefully for everyone else out there who might have an investment property, you're not just learning about the ten thirty one and now thinking I've got to find a way to use this tax loophole. We don't want that to be the case. But then, on the subject of
realtor fees, I think those are most definitely negotiable. I've certainly had realtors offer their services at a discount just because they'll know that I'm going to give them more business in the future than the average person who's playing to just live in their primary residence for the next ten years.
Real estate, and that's sure that kind of thing can often get a better rate just because that agent knows, well, I might be helping this person buy three or four houses in the next.
Three or four years exactly. Yeah. But I also say this, I've been more than happy to pay agents full price, full commission, because the great ones they're well worth that three percent.
But it's worth.
Asking if they'll be willing to take a reduced commission just based on a reduced workload and the likelihood of more purchases. With you being an investor, you're going to be able to provide them with more business off there in the future. I know that if I was a realtor, I would most definitely be willing to cut an investor a break. Joe, Let's move on. Let's get to our last questions for this.
Becoming the costco of realtors.
Last question has to do with whether or not a listener should sell his car in order to pay off some credit card debt.
Hello, Matt and Joel, this is Armuu. I'm calling from Los Angeles, California. I'm a pretty new listener to the podcast. I was wanting to know is it a good idea for me to sell my car to pay off my credit card debt? A little background is through a pandemic. I use my credit cards quite a bit out of necessity, just because they're everything that was going on. I wasn't working as much, and so now I find myself in a situation where my credit card balances are pretty high
and I'm having a hard time paying them off. I'm basically paying the minimum every month just to make sure that they stay in good standing, but of course, due to that they're not being there, the balances aren't going down, and of course my credit has taken a hit for
that reason. So I have a twenty nineteen Nissan Ultimate, I owe about eleven four hundred dollars, and I have about six thousand dollars in credit card debt to payoff, and through Carvana, my car is currently worth eighteen thousand, seven hundred dollars. So what I was considering doing is selling my car, paying off the remainder of my car loan, paying off my credit card debt, and using what's left of what I sell my car for along with another few one hundred dollars I have saved to put as
a down payment on a new car. My only apprehension about doing so is car prices are pretty high, interest rates aren't very low, and of course I'm a little worried about what I would.
Get approved for.
My score is currently around five seventy. Is it a good idea for me to sell my car and pay off my debt based on the factors that are outlined previously?
Arman, thank you so much for being a new How to Money podcast listener. By the way, we used to call it poor, not poor, But I'm glad we don't do that anymore because it made it hard to find. Yes, but we are glad to have you on board. But let's talk about what you've got going on here. It's a you know, we're bummed here. We're sorry to hear that the pandemic and messed up your finances. And yet again, you are not alone on that front. I think a lot of folks went through the tough season of life
back in starting in twenty twenty. So don't beat yourself up. You know that's not helpful at a time right now when you're trying to basically write the ship, when you're trying to take the correct steps moving forward. But at the same time, it's crucial to find a way out of this. You can't continue to make those minimum payments and selling a car that is a pretty big step. It's one that we have encouraged folks to do in the past, for sure, and it could work if you
went about it the right way. But there are a few other things that we want you.
To consider first, Like first things first, how are you going to get around? Do you have to drive to your job? And if you do well, then I mean you can't necessarily sell this car and not find another one. Selling this car to pay off your credit card debt and then buying a more expensive new one, though that doesn't ultimately help your financial situations real either, you're kicking
another can down the road. And you specifically mentioned saving up enough for a down payment, which means that you're you're looking to take out another car loan, which is going to be more than the one you have now in all likelihood, given the fact that you'd be buying a new car, and that's not something we like hearing. Like you said, you'd be paying more, you'd have a higher interest rate. Even if you did get approved, the
terms would be massively unfavorable. They'd be worse than the ones you're carrying on the car that you have now. So no, we don't love this plan. That's not what we would suggest. If you're going to sell your car to pay off credit card debt, we'd want you to either go car less. Just hard to do in Los Angeles, of course, Yeah, how I need a car to get around most of the time in that city in particular, or to buy something much much cheaper with cash, saving
you money each and every month moving forward. But that'd be difficult to do too, because it sounds like there's not quite enough cash on hand to buy something suitable.
Yeah. Well, and then on top of that, it's not easy to buy even a used car right now, Joel, you learned that firsthand in recent weeks. And it would also be different too, Armand if you had a fancier car, right like if you had a few years ago you had gone out and bought a new Jeep brand Wagoneer for eighty thousand dollars, if.
You're rolling with a Ribbean, Yeah, that would.
Be it would be a different story because it's like, yeah, you don't need to have that much car compared to what you're dealing with and the rest of your personal finances. But that's not necessarily the case. Yeah, you've got a twenty nineteen Ultima.
Like that's a that's a pretty affordable.
Car in twenty nineteen, So technically that probably means it's from twenty eighteen, so that think is five years old if you've owned that entire time, like you've already taken most of the depreciation hit on that vehicle typically like a roup fifty to sixty percent, and so what more affordable car could you potentially go to if you were buying, if you're going from like no car to one car right now, yes, maybe we would point you like towards
something that is a little more affordable. But twenty nineteen Nissan Ultima is a pretty solid car.
Yeah, I mean it's still in the grand scheme of Armand's finances. That's a big commitment, but it's better than the alternative, right. And so there's just not an easy solution to getting you in a solid car Ormond to get to and from work while also paying off that
credit card debt that involves selling that car. And so the best solution, although it's not an easy one, is to increase your income, and that is I think the best suggestion we can give a side hustle is probably the best thing for helping you get through this pinch. We were not like hustle culture dudes who want to suggest that people like work for jobs in order to
crush their finances, right, stuff like that. But when you're in a position like you are, if you can find a way to increase your income to help you pay off that credit card debt more quickly and simultaneously keep that Ultima on hand, because it's a reasonably priced car that is going to probably perform well for you for years to come. Well, then that solution just makes the most sense.
Yeah. Well, and I mean we talked about this last week, but cutting back, like taking a step into frugality is the most immediate step that you could take. And maybe you have done that, but if you haven't truly gotten serious about cutting back in some of the other things that you're spending money on, I think that could also be.
That's the other lever that you can pull, right basically questioning every outgoing expense exactly exactly, But ultimately you don't necessarily you're probably not wanting to live a prolonged lifestyle where it feels like you are depriving yourself of everything.
So when in credit card debt and like living that monastic existence for a short put time period, I think it makes sense.
Yeah, exactly, Like when you have an end goal in goal in mind, like when you see the light at the end of the tunnel, then it can be a worthwhile pursuit. But living, yes, sticking with that for a long period of time is going to be difficult, and in with that mind, it will be important to find ways to either increase your income, make some more money so that you can pay more than just the minimums
on your credit cards. But if you're not able to do that at this point, right like if there's just not enough time left in your schedule, if you are working all the possible hours with no way to increase what it is that you're bringing in every single month, you might want to speak to a nonprofit debt counselor at an affiliate of NFCC, the National Foundation for Credit Counseling,
or with a group called Money Management International. Will make sure to link to both those organizations in our show notes. And then, by the way, drive that ultimate for years after you pay that thing off. Once you're able to pay off that credit card debt and you've got to pay it off car, then you're gonna seriously be ready. You're gonna be able to make some big money moves. At that point, you're no longer digging yourself out of
a hole. Instead, you're like you're using that shovel to build a mountain for yourself.
Most most people start in some sort of a hole, especially if you went to school or you've made financial mistakes like everybody has to dig themselselves out to some degree in armand like you're gonna dig yourself out, you just might need a little bit of help from one of these organizations that Matt mentioned. Those are the places to go. Or you might just need find a way to get a bigger shovel, which is get that they get that income up. Yeah, all right, best of luck,
Armond rooting for you, man ur R. Matt. Let's mention, get back to this beer that we had on this episode. This one's called Pyrotechnic Pleasantries by Sour Sellers out of Rancho Cucamonga, speaking of California. Say it, enjoy it, hold it up on the label so I could say it properly. But oh my god, Well, first of all, I want to mention the label because did you ever have you ever seen the Triplets of Bellville? Oh yeah, it's got that style of art.
Yeah, yeah, done it. It kind of has like so for everyone else out there. It's a it's an animated short film. It's a movie, but it's got a very unique style of illustration. It's this French illustrated movie about bicyclists, and it's got a bunch of other quirky stuff in it as well. Anyway, all that to say, I like this beer. This is pyrotechnic pleasantries. Joel, what were your thoughts on it?
So this is a strawberry sour, so it was like re fermented with strawberries, I believe. And this is a bunch of different beers that they've blended together they made over the years, which just gave it a depth of character, Oh my goodness, which was wonderful.
I love. So they've actually got the blend info on the side there, which I love for a data nerd like you, Oh my gosh, I love having those data. So I'm going to go through it real quick. Thirty five percent fifty four month barrel aged brown mixed culture twelve percent. That's like spontaneous four and a half years on that beer. Yes, nineteen of a nineteen month barrel age Sayson And then thirty four percent of this beer is a twenty six month barrel aged golden.
So this is like science in a battle.
It's like a science experiment. This is the suicide from a chem lab.
But a great beer blender knows how to blend all these together and create something special, and they really did on this.
There's no way that this isn't good for our digestion.
Yeah, and it's so it's so tart and very sweet with the strawberry vibes going on. I think it could probably used a tiny bit more strawberry actually going on, But overall I was thrilled with it.
I feel like it had the right amount of strawberry.
As far as the fruit that.
Was on the nose, I feel like it could have used a touch more sweetness because then I think that sweetness would have pulled that strawberry forward a little bit rather than it feel like it was just kind of there in the background. But it was really aggressive, yeah, you know, acidic, punchy. But man, I really I did really like it. Like the first sip, I was like, ooh, that's that's tart, that's brash.
Yeah, made you pucker for sure.
But then the more, you know, as I continue to have more SIPs, I enjoyed it just even more and more. Maybe it was the perfect blend.
This is one of my favorite styles, and it's something that I feel like because it's a finer, it's a more specialized kind of beer we don't drink as often, and they're more expensive too, so this one. I'm glad I picked this up while we were in California. While I was in California, Yeah, brought it back because you did. It was delicious and we've never had a beer from these guys before, so it's fun to try something from a completely new group of folks, for sure. Yeah, all right, Matt,
that's going to do it for this episode. We'll put show notes up on the website at how to money dot com with some of the links that we mentioned in answer some of these questions. And that's right by the way. For if you have a question you want Matt and I to tackle on an upcoming episode, just go to how to money dot com slash ask send your voice memo over. Hopefully we'll take it on the next ask HTAM episode.
That's all right, but buddy, that's gonna be it for this one until next time. Best Friends Out, Best Friends Out.