Ask HTM - Paying Off Balance Transfer Cards, Emergency Funds while House Hacking, and What to do when Inheriting a 401k #168

a four oh one K. Plus. We've got two other listener questions that will just be a surprise, Yeah, surprise listener questions. Yeah, Matt, before we get into the actual questions. I'm completely fascinated by kind of something new ish happening in the housing market. And they're called virtual appraisals or desktop appraisals. I've heard of them, yeah, and like, I

love it because I don't know about you. Have you ever been burned by an appraisal before where you knew or really really strongly believed that your house was worth something and then the appraiser came in and was like, yeah, it's worth seventy thousand less than that. I do feel that way, specifically when it came to a refundance that I was doing, and I thought that the house was

definitely worth more than what he said it was. I think it had a lot to do with the fact that the backyard was thatched, like it was covered in Hey, okay, and so let's kind of run down. I'm like, dude, imagine if that was instead a beautiful green backyard, lush green yard. Yeah. I feel like he was letting some things that were maybe just on the surface kind of maybe influence his decision. Yeah, And I think that's the biggest downside when we're talking about humans doing appraisals, it

is human bias, right, Well, there's there's human bias. Is often the person doing the appraisal, they could live forty five minutes or an hour away from where you live, that they might be unfamiliar with the neighborhood. And sometimes the way comps are done, usually that appraiser is looking at three comps in your area, and your area can very street to street, especially where we live in town.

The value of our house is completely different than one neighborhood over, but the appraiser or even like one block over or even one blockover, and the appraiser might not see it that way, they might say, you know what this is, these are the comps I'm pulling, and then they might not, at least in our opinion, be accurate comps. Yeah, with the virtual or desktop appraisals, one of the ways that they're getting a way better is that they're able

to look at hundreds of different houses. They're not just looking at a few select homes. They're able to cast a much wider net when it comes to finding the value of your home. Yeah, and there's this specific company called house Canary, and I'm just fascinating kind of about what they're doing because, yeah, I've just had this these run ins with the praisers where first off, they're really expensive. An appraisal to do a refine can be four hundred

bucks maybe more or yeah, that's that's really affordable. Honestly, I think I think in a lot of areas it's closer to a thousand even. Yeah, it can be super expensive to get a human to appraise at home, and so it makes the cost of a refinance go up because of that. And so a company like house Canary who can do it for you know, a fraction of the cost, and essentially their artificial intelligence, their ability to pull a hundred comps in the area it to get

a more precise value for your home. I just love that possibility, and I love that that's kind of coming about. And the federal government actually just recently raised the purchase price amount where you're allowed to use a desktop appraisal as opposed to a human appraisal. So we're going to see more and more of these things coming, and I

love the direction it's going. It's not gonna work in all cases and in all circumstances, but I think these things are going to be a game changer, and hopefully more than anything, they're the lower prices for us as individuals, for us trying to buy or refinance at home, it'll

lower the transaction prices that we incur. Yeah. One of the benefits as well is that it happens faster, right, You're like, you're not waiting for a week, you know, before an appraiser is able to come out, Like it happens instantly, and sometimes they want to come in the house and then you've got to like find a time that works with Yeah. And while that's great and all, like, I don't care necessarily if it happens faster. I wanted to be convenient and I want it to be cheap,

and this is a way accurate hopefully inaccurate as well. Well. I mean that's one of the great things that you're talking about the AI, Like they've trained the software and programmed it to where it can recognize extra your features like lot elevation and privacy and just all these other factors. But based on good interior photos, it can see and recognize finishes as well. Like they're talking how it can

recognize Grantite like grantit countertops. So guess what that desktop appraisal. Yeah, it totally knows that you've got a nice kitchen and they'll factor that in when it comes to putting together a value for you. But I'm with you, man, I love the fact that we're cutting costs and we're democratizing the home buying or refinancing process. The technology is finally there. I mean, I think when you look at kind of

the Zillos estimates, they're not quite there. They're trying to get there, but it seems like this company, House Canary and a couple other ones like it, they're pretty much there with the technology and it works for home valuation in most cases. So I'm interested to see where this goes. We'll keep our eyes out and if big changes happen or they become even more widely available, Matt will talk

about it again on the show. Right all right, but let's mention the beer we're having today on this episode. We're having Blair's Breakfast out and this beer was crafted by Wilmington's Brewing Company. Yeah, this beer was actually gifted to me at Christmas by my uncle, or specifically, I should say my uncle in law. This is Kate's uncle.

They live in Wilmington's and he drew my name for that extended family gift exchange secret Sannah, Yeah, exactly, and he was wise and savvy enough to know that you can't go wrong with a nice craft of beer. So I wanted to share this one with you, buddy, awesome man. Well thanks, I'm looking forward to having this one on the show with you. We'll give our tasting notes at the end of the episode. All right, but let's get

to our listener questions for today, Matt. For anybody out there who's listening and they want to submit their question to potentially be featured on the show, It's really simple. Just go to how to money dot com slash ask. It'll take you a minute or two at most to submit your listener question via the simple directions there. And the first one for today is about paying off a zero present credit card. Hi man, Joel. My name is Chelsea and I'm from originally in Virginia, but I moved

to Seattle about six and a half years ago. I have a question about credit cards. I've definitely gotten myself into a little bit of trouble and I am in the process us of paying them off. I definitely am a little embarrassed about how much I have accrued. Let's just say that I paid off eight thousand dollars this summer and I basically put into my credit card bills.

My question is, as I've moved some balance transfers around so that I'm utilizing the zero percent introductory rate for you know, ten months or a year, what have you for my cards? Should I be trying to pay the zero percent balance down on those cards or should I be going towards the cards that have an interest rate even though there's a deadline essentially on that zero percent interest balance transfer. Love to know what you think. Love

the show. Thanks so much for hearing me out. Hey, Chelsea, we are glad to hear that you are focused on paying off that debt. Paying eight thousand dollars off last summer. That is great, So don't beat yourself up about some of those past mistakes that you've made. You're well on your way to being rid of it now by essentially paying off of your debt in one season, that's amazing. Like, if you are able to continue at that pace, you should be completely done with his debt within the next year.

That is a really good debt paid on pace. And also, Chelsea had mentioned those zero percent transfers. If you're listening and you don't know what those are all about, you can read about those over at the website. Head over to how to money dot com slash balance transfer and you can learn how those work, as well as some cards that we recommend. Yeah, Matt, you did a good job,

right and now one up buddy. All right, let's get to some of the specifics of Chelsea's question, though, we really would not recommend prioritizing paying on those zero percent cards first. Instead, Chelsea, pay as much as you can towards the cards that are currently charging you interest, as this is going to cut the overall amount that's going towards your interest, and it will ensure that more of

your money is tackling the principle of your debt. You are taking advantage of some of those zero percent balance transfer cards, WOUL, which is great. That means by default you're subscribing to the avalanche debt payoff method, not the snowball, which means you're focusing on the rates. And so while you have zero percent period on lockdown, prioritize funneling all of your money above the minimum payments towards the credit cards that are currently charging your interest. Yeah, most definitely

continue to prioritize those interest rates above anything else. And she'll see part of your desire to want to knock out the debt on those zero percent cards that might be due to a false sense of urgency. Right, it might feel like you should since you can probably feel the clock ticking as that zero percent period is winding down. But even though there isn't a time constraint on your other cards, they have something worse, which is higher interest. And so even though it feels like you might have

forever to pay on those balances. In reality, you really want to focus on those because of those increased payments that are going towards interest. But the thing is, if you do run out of time, you can still try and transfer the balance again to another zero percent card to buy yourself even more time. It's also probably a great idea to make sure you're aware of what the regular rates are going to be on those zero percent cards.

That way, if you do run out of time and that and that introductory window does close and you're not able to open a new card, at least be a little more familiar of the a p R that you will be paying. That might honestly kind of light a fire under you to make sure that you knock out that debt within that limited window. Yeah, Matt, one of the things that helps people when they're attempting to do

a balance transfer is having a high credit score. So hopefully Chelsea is maintaining a high credit score able to and she's able to transfer that balance over to another card that offers zero percent for an introductory window somewhere between probably twelve and twenty one months, and with her ability to pay it on this debt rather quickly from what it seems I mean, I know she seemed a little down on herself, but I think she can do it yea quickly and pay very little interest in the process.

But I think it's another important thing to mention for Chelsea and for other listeners who are in this position. Once you've paid off all that credit card debt, it's really really important to resolve to not get into that position again. Focus on building up your emergen and see phone, and try to mend your spending habits. If that's proving to be difficult and you're having a hard time curbing your behavior, remember remember that it's good for your credit

score if you don't close the account. But there's one step you can take to actually make it harder for you to spend, and that's kind of this old antiquated way Matt of literally throwing your credit card in a zip block bag full of water and tossing it in your freezer. This isn't a credit freeze. This is a credit card freeze. Very different, very different, but super necessary if you have a hard time not spending when you've got that credit card in your wallet or your purse. Right, Yeah,

essentially you're setting up a guardrail. You're creating a process that essentially keeps you from spending the money that you don't want to spend. I know, for us, we've never actually put cards in the freezer before, but there have been credit cards that we didn't want to spend on, and so in that case we just cut the cards up. Right, Like, the account still exists, but we don't have the plastic

in our wallet. I'm not attempted to spend on it while I'm out, but then once a year I have a reminder on my calendar to spend some money on that car, just to make sure it stays active. That way, the issuer doesn't close that account in this case, I'm a little more methodical. But if you want to have these additional lines of credit open so that it positively affects your credit score, sometimes there are steps you need to take, and for us, this is something that has

definitely worked for us. Yeah, Matt, Chelsea's well on her way. I think she's got this debt handled in short order. And those ballot transfer cards, they're just a good part of that arsenal in kind of paying down your debt even more quickly by paying less interest on it. All Right, but we got a couple more questions, including one about inheriting a four oh one K, and we'll get to

those right after the break. All right, Joel, we're back from the break, and let's hear from a listener who he and his wife man they are doing some amazing things with their money. Hey, Joel and Matt. My name is Joe from Minnesota, and I first wanted to thank you for creating such a fun and relatable financial podcast. While I'm recording this listener question, it felt only fitting that I enjoy craft beer here myself. I have a

couple of questions, but first some context. My wife and I recently finished paying off our mountain of student loan debt and are in the midst of house hacking after buying a duplex late last year. In our scenario, we live in one unit and rent out the other. To date, we have set aside all of our rent to build up our emergency fund. We feel fairly comfortable with the amount we have set aside, but we aren't sure how

much we really need. We have set aside enough to cover any single major fix, such as if the heat goes out or we need a new roof. Because we are house hacking and have a responsibility to our tenant. How much more should we be setting aside to account for emergencies that may affect both us and our tenant. Do we put enough in our emergency fund to cover

two major fixes or three? Is there some magic number we need to save to or is it simply all about mitigating whatever level of risk we're willing to take on. Thank you guys, and keep up the great work. And I hope you enjoy the beer I sent you. Cheers, Joe Man, thanks so much. And by the way, we loved the beer that was the King's that you sent along, and we found out from you as well as from a ton of other listeners. And are you idiots? How

do you not know? I did not know what Kingsue? Well, Sue King Sue is, I guess the name of the beer, But Sue is the name of the biggest I think, or the largest Tyrannosaurs Rex specimen ever found. It's like the most complete set of bones from a single Toyrannosaurs Rex, which is pretty cool. And it's only sixty seven million years old I found out, so pretty young, yeah, pretty young, but yeah, it's super cool that I had no idea, but really cool to see. I saw a picture of it,

I was like, this thing looks incredible. Yeah, pretty dope. We gotta make a trip to Chicago, man and check that out. It looks awesome. I was t Rex bones. Yeah. Were you ever into dinosaurs as a kid, You know. I feel like a lot of times kids go through like a massive dinosaur phase. Sure, I don't think I had a massive one, but just like every other kid, I was into them for a little bit there. I was really into like building, like connects and constructs or constructs.

I don't even know how you say it. It was. It was like this building tool from the from the eighties. It was different than like legos because like they had like being aimes, but then also like pieces that attached is way more like construction. Oh yeah, I know what you're talking about, like gray little connectors and then like the in between pieces were blue. I was rolling with Lincoln logs, man, Lincoln loungs are fun. Yeah, they were cool,

not quite as advanced. Well, it's constructs and connects, man. I just used to spend hours doing that and not playing with dinosaurs. Yeah, well, all right, to each their own, but big props to to Joe by the way, awesome job paying off your student loans and your your house hacking. I mean, he's crushing it. Yeah, what an amazing place to be in. I mean this really in your marriage, and I assume you're not, you know, in your fifties and sixties. It sounds like you guys, you know, just

got married. Sounds like y'all just got the house. It sounds like you're pretty early on your financial path. But what a way to start, man, especially house hacking, to be able to reduce their expenses that's going towards their own housing by a significant amount. They may not even be spending any money towards our housing. Dude. Yeah, that's what house hacking can do, and it's amazing. That's why we love it. But I think Joe brings up a

really good point here, man. It's not something we've talked about very much. You know. We advocate for folks having roughly a basic emergency fund. That's a good start for most folks. It's a good it's a good number to aim for if you don't have much money in your bank account right now, and having a total of three months of savings of the bank. Well, that's killer if you're able to achieve that. But there are some circumstances

where you'll want even more money on hand. If you're a landlord with aging properties, for instance, or have a tenuous job position, or maybe if you have to like some special health issues. Yeah, you want more cash on hand to deal with the things that pop up in those cases. But you can't really plan for everything, right, and that's where insurance comes in, and so being properly insured is crucial, especially as a landlord, and that insurance is something that you really only want to use in

catastrophic scenarios. Like we're not fans of actually using the insurance you have just having the insurance until it's actually needed. But you really do need to have the money on hand to cover a potential deductible. And you also want to have the money on hand to fix the things that pop up in your unit or your tenants unit. And that's best done with money that is in a savings account, and not just any old savings accountul a high interest savings account, of course, And so it's helpful

to to take your specific property into account. Right. You can ask yourself, is the roof old well if not, you probably don't need to set aside, you know, seven thousand dollars to replace it. Yet, even though you can't predict the future, knowing the age of your systems and

different appliances that can help you assess your savings needs. Obviously, newer systems means there's probably a less likelihood of them breaking down, but creating a fund that you can contribute to monthly that will help you to have a cash on hand for when those systems do need repairs or when they do need to be replaced. With you guys banking all the rent from your tenant next door, I don't think it's gonna take very long for you guys to quickly arrive at a dollar amount that you do

feel comfortable with. And one thing I did want to mention as well, Joe, is that let's assume you go down the path of real estate, and maybe you do acquire more properties. I think it's helpful if you set aside an emergency fund for each specific property, because let's assume maybe you have three properties down the road. You might have a single pot of money and it could

seem like a lot of money. But let's let's say in one year you replace three rous, well, that could be twenty dollars right there, and your emergency fund is completely wiped out. And so having you know, some separate emergency fund accounts within your high interest savings can allow you to kind of stay more organized and on top

of things. Yeah, and I think one helpful kind of rule of thumb that it's not always you spot on, but it can be helpful is estimate that you're going to spend roughly one of the purchase price of your home every year in repair costs. So if your home costs two thousand, you'll likely spend roughly two thousand dollars annually in repair costs on that home. Yeah, it might be zero dollars this year and next year, but in three years you might be dropping six grand. Yeah, it

just completely depends. But that's a nice rule of thumb in most cases. If I were you, Joe, I'd also consider opening up a helock, a home equity line of credit. It's really the perfect fit for you because you might need quick access to money, but it stinks to have a heap of unnecessary cash around that you could be funneling towards more investments. The helock can kind of split the difference for you, and you won't pay interest unless

you actually draw down on it. I like these as kind of a secondary reserve e fund that you try not to tap, but it's better to be safe than sorry. It's important that you have enough cash on hand to easily cover likely maintenance needs, but a helock is kind of this awesome backup to provide some peace of mind in the unlikely case that let's say a hot water heater and a furnace and a roof are all just needing to be replaced in short order. That's when the

helock kicks in and it's really nice to happen. That's like really crappy winner, right, that's a bad year. Um, you know. I'll add to that, Joel. One of the reasons they're so great is because typically there is very little cost or no cost at all to set these up with banks, and so they're really attractive from that standpoint. But do remember that when you do use that money, you are paying interest on it, so it's not like it's completely free money. So a lot of this kind

of depends on how comfortable you are with that. I know, Joel, Kate and I for pretty much our entire marriage, we've always had pretty much three months worth of living expenses set aside. But when we renovated our home, we dipped into that a little bit or a lot, and that put us in a position where we didn't have much of an emergency fund. And dude, I did not like that at all. Like it. It was interesting how it made me feel. It just felt vulnerable. I mean, I

don't have a very stable job. Maybe it would be different if I had a regular paycheck coming and all the time. But I realized that part of the reason we built that up was to account for some of that risk that we experience on the income side of things. And so yeah, that's something I learned about myself twelve years into our marriage, which is crazy. So know that it does come down a lot of times to you

as an individual. For us, we're building back up to that three months now for sure, And with our apartment now, we're actually going to maybe go a little over that three months because I guess essentially, like we do kind of have a duplex. The apartment's pretty small, so it's kind of like a very lopsided of duplex. But but there are some expenses that are going to be associated with just the apartment that we need to make sure

that we account for. Yeah, and so much of it is a level of comfortability, your own personal comfort level with where your funds hands. And yeah, that's why I think you want to have on hand enough to cover most reasonable fixes you can expect to incur right over the next year, and if you're particularly risk averse, you won't even more than that. But then the helack can be that perfect balancing act that you hope you never

have the tap. All right, Matt, let's get into our next question, and it's about inheriting a four oh one K. Hi, guys, my name is Cassandra, and I'm calling from Brooklyn, New York. My father recently passed away and left me a four oh one K and I'm wondering what the best way to go about handling that is. I'm in my twenties, so I would like advice on any tax applications that

sort of thing. Thank you, Hey, Cassandra, we are so sorry for the loss of your dad and you are now trying to figure out what to do with a four one k. Um. What to do with it is one question, and then the tax implications. That's another question as well, and so let's go ahead and discuss the latter. First,

let's talk about taxes. When you inherit A four one K, you are going to roll that money over into an ira A upon actual inheritance, and you used to be able to draw down on that inherited ira over your entire life. But the new Secure Act that forces you to actually liquid a all of your inheritance within ten years.

So the clock's ticking because of that, You'll want to consider specifically what your current and what your potential future income over the next ten years is going to be when you choose to take distributions is going to impact

your income when you file taxes. So, for example, if you know that the you know next year or two, your income is going to be much lower, it might make sense to take out an increased distribution that year, you know what, Like if you're taking a gap year or something like that and you basically have zero income, it might make sense to withdraw all of that money in that period if you know that after those couple of years you're gonna launch into your professional career. Yeah,

so much. It depends on the amount of the inheritance and kind of yea, what your pay structure is over the coming decade, and then what should you do with that money? Well, that's definitely another element of the equation. And first we'll make sure you have your inherited ira a with a low cost provider so that you're not being eaten up with fees. You definitely don't want your money to be slowly eaten away by the expensive fees

that a lot of investment companies charge. You might already have a traditional or a roth ira a, but this inherited one is going to be separate. And one way that it's different is that you can't contribute any more money to it. And what you do with this inheritance really has so much to do with your own specific goals. So I take some time think through, like what you actually want to achieve in the coming years. Are you saving for a house, well, depending on the amount, this

could help you with that down payment. Are you hoping to start your own business, Well, you might not need to go into debt to fund it. Generally speaking, we would first recommend that you pay off any outstanding debts that you have, especially higher interest rate debts like credit card debts with an inheritance like this and then start to invest before you start looking at these bigger picture goals.

But it's helpful to kind of put your whole financial situation under a microscope so that you can see what priorities exist. One of the biggest priority are in your specific financial situation and the Cassandra, assuming that maybe you are going to be taking that money out of those accounts within the next few years, well, it doesn't make

sense to invest that money at all. We recently had an episode where we talked about saving versus investing, and if you're looking to take that money out and maybe three to five years, essentially you just want to protect that money and the best way you can do that is by keeping it as cash within that inherited i ra A. But if you know that it's gonna be maybe seven to ten years, like if you're thinking it'll be closer to a decade before you're gonna draw all

that money, it might make sense to put that money into a conservative fund. I think like a target retirement fund of twenty thirty could be a great spot for you to definitely to to grow that amount a little bit, but at the same time, you're not subjecting yourself to, you know, the dramatic ups and downs of the market if that money was going to be invested over the course of the next you know, thirty years or something

like that. Yeah, for sure, that that timeline is is so crucial to where you put the money inside of that inherited I arra having it in stocks when you need it in the next five years not a good idea. And also we recommend to Cassandra that when you come into a large chunk of money and inheritance, a big bonus or a sale of some of your investments, that you take a small portion, maybe five or ten percent, and spend it in a way that you normally wouldn't

have fun with it. Think about the rest as kind of that jump start towards achieving those bigger life and investing goals that you may have. But a small portion, and especially I think in the aftermath of of losing someone that you love, using a portion of that money in a way that is kind of adventurous and fun I think can also provide some helpful closure at the

same time. Yeah, Joel, that's great advice man. And Cassandra, it sounds like you you're asking all the right questions, and so it sounds like you're gonna do some amazing stuff without money. It sounds like you're gonna honor your dad. Well, so, if we're talking about a small amount of money, this

is probably something you can do on your own. But if you feel pretty intimidated by this entire process, because this is a really large amount of money and you don't feel comfortable with it, then we would most definitely encourage you to check with the tax professional. That way, you fully under nderstand all of the tax implications, that you understand the tenure deadline, and that you're fully aware of all the different ways that you could handle this money.

All right, Joe, We've got a couple more questions. We've got one about life insurance, and we also have one about living a life without a credit score. We'll get to those right after the break. All right, Matt, we're back in the break. We got two more questions. First one about life insurance. Hey, guys, this is Josh from Illinois.

I have a question about whole life insurance. The way it was pitched to me was that it's a backup to your rath or four O n K. So if the market is in a down year, you can borrow against the insurance instead of taking money out of your retirement, which would slow the growth potential in the upcoming years. And since the insurance is also market based, the interest from the amount invested in the policy helps to pay back the loan. It seems like a good idea to me?

Or is there just better ways to do life insurance and protect your retirement in the future. All right, Josh, great question, And you know what, there's a key phrase and what you said that really helped me kind of understand what you're what's happening here, you said, wondering what you're about to say, jel he said when it was pitched to me, There you go. And whole life insurance sounds nice in the pitch, but it's almost never the

best idea for people. The real reason for getting life insurance is replacement of income, but in that pitch that's something that rarely gets mentioned. You really only have a need for whole life insurance if you are a high income earner who has fully maxed out tax efficient retirement and savings accounts. It also might potentially be beneficial if you have a child with special needs. But whole life

insurance is just not a product best suited for most people. Yeah, Joel, And so often whole life insurance plans that they are sold as a way for you to protect your retirement, almost as as a backup. Right, Just like Josh said, Well, the best way that you can actually protect your retirement and your investments is to invest more over time, not spend more on an insurance policy that rath that you mentioned that will give you some access to your money

if you need it in hard times. In Another way that you can protect your retirement is to reallocate your funds over time as you get closer to being in the wealth preservation stage of your life. Yeah, and there are better ways to do retirement, like you just mentioned map, but there are also better ways to do insurance. So the best way to do life insurance is to buy

a term life insurance policy. Whole life insurance typically cost six to ten times more than a term policy every month your premium, your cost for having that policy is so much more with the whole life policy than it is with the term And the person you're talking to, well, they likely stand to make more in commissions by selling you a whole life policy instead, a term policy makes an insurance salesman almost no money, and it's why the pitch tends to sound pretty good. Also, we're not fans

of combining insurance vehicles with investment vehicles. It tends to drive up costs and fees, and it decreases transparency. It

also inhibits returns in the long run. So you can protect your retirement by investing more of your money in tax advantage retirement accounts, and then you can better protect your loved ones by having a great term life policy that you buy at a site like let's say, policy Genius, and that site does a great job shopping the market, giving you the lowest potential insurance costs, as opposed to listening to an individual insurance salesman and hoping that they

have your best interest at heart. All right, gel, Our next question is from a listener who will be graduating from college later this year. Let's hear it. Hello, Joel and Matt. My name is Austin Smith and I live outside of Nashville and Murphy's Boro, Tennessee. I have been listening to your podcast for a few weeks now and enjoy it every afternoon. I turned twenty one on Monday,

and I know you guys enjoy a good beer. So my first question is what is your favorite beer that I can buy either at a brewery around the Nashville area or at any of your local grocery stores. I want to start my drinking life with the good alcoholic drink that I will enjoy, and it's something much better than Budweiser. I drink coffee and prefer it black, but every once in a while I had a little cream

and sugar in there. I have started my working career life and currently working full time while also in school. I will graduate from MHSU in December debt free. Because I have no debt. I also have no credit score. My fiance has a great score in the seven hundreds. So when we plan to buy a house, will you plan on putting her name down? It's a primary besides beer.

My main question is what is the downfall in living life without a credit score and a world where a credit score is very important while also living the how to money lifestyle? All right, Matt, First things first, on Austin's question, Happy birthday to Austin. Yeah, let's talk about his his beer needs before we address, you know, the credit score thing, and he lives in Murphy's Borough. My wife, by the way, also graduated from MTSU where he's soon to graduate from. Oh no, I didn't know that. So

Austin and I we could be buds. Why did I think she was in an l s U for some reason? Well she did, she was there for work for a while, but she actually graduated from Middle Tennessee. Blue Raiders, Baby sweet right Blue Raiders. I think I just know that they're really big in the music industry, Like, if you wanna be a music producer, you basically go to school there. Actually, someone I work with, radio producer, he he went there too. They supposedly have a good education in radio as well.

I wonder what the podcasting program looks like. Probably getting there, getting there, all right. So let's mention some of our favorite Nashville Ish beers, because Murphy's Boro is outside of Nashville. Austin Bearded Iris and Southern Grist are some of our favorite Nashville area breweries. We've had great stuff from both of those breweries on the show before, so definitely try to get your hands on them for your birthday. Beer and Matt It's funny Austin kind of mentioned how he

likes to take his coffee. Yeah. Well, I'm sure that sounded completely random to our listeners. Right, yeah, but what was that all about? But when you know kind of how you take your coffee, it actually kind of helps point you in the direction of what kind of beers and wines that you like. Right. Yeah, well that's totally true, and I'm sure it probably caught listeners off guard. Austin actually asked about the beer and we got back to him real quick asking how he did like his coffee. Uh,

and he shared that with of our listeners. Yeah, now we know how Austin likes his coffee and so, but but what sort of recommendations would you have for Austin based on the way he drinks his coffee. Are there specific beer styles he might like more than others? Yeah? Well, I first want to mention too, that I didn't come up with this on my own. I actually learned this from the owner of a local craft beer store. Yeah, let's give him some street Craig Craig over at hop

City Great Beer Store in Atlanta. Yeah, they've got some fantastic selections and he knows how to help people find their favorite beers, find find the beers that suit their palette the best. Yeah, he actually did this exercise on me, maybe one of the very first time I ever went into the store. And so, Austin, you you mentioned how you like your coffee black. Well, that tells me that

you can handle beers that have a little more bitterness. Specifically, you might be able to handle some West Coast I p a s because they tend to be a little more bitter. But if you're a listener out there and you don't like your coffee black and instead maybe let's say you like tons of milk and tons of sugar in your coffee, well, not only are you gonna want a beer with maybe some more sweetness, but some more body as well. So I'm thinking of like a big

old barrel aged Doubt, or even a nice balanced brown ail. Yeah. I mean I think that's interesting. Man. I think so many people listen to the show and they're not into craft beer, and that's totally cool. We're welcoming. I mean, we think you're wrong, but we're welcoming. We'd love to have you here. And and so yeah, I think if you are trying to figure out maybe what you want to get into. If you're a wine I fish grenado, you might want to try a sour get some of

that fruit. Yeah, exactly, And so yeah, there's all sorts of ways that you can judge based on your palette what sort of beer you might be into. All right, but let's get to Austin's main question, and that is about living life without a credit score. And I feel like, by the way, because he lives outside of Nashville, he's in Dave Ramsey country, and being debt free is a high priority there. Dave calls a credit score, and I love debt score. But really, Matt, we disagree with that.

We we think that a credit score has much further reaching implications than just being able to like accrue some more debt. It affects our finances in so many other ways that we're not fans of living life without a credit score. Yeah. One of those ways is your insurance rates. They're going to be affected by your credit score, and most states, insurance companies are allowed to set your insurance

premium based at least partially on your credit score. You might be able to save hundreds of dollars every year by having a good credit score instead of a poor or even a non existent credit score. Also, your credit will likely be checked when you're applying for an apartment. You could easily freak out the potential landlord and lose that apartment due to not having a credit score. At or at a bare minimum, they might require you to

pay a higher security deposit. Yeah, and let's say Austin applied to live at, you know, one of my rental properties and I ran his credit and I saw that he didn't have a credit score. I would be freaked out. I would be like, there's like, what who is this guy?

And then Austin, being the cool, affable chap that he is, he would probably try to explain to me, you know, how he's living life without a credit score and how good he is with money, and me, being a semi understanding human being, I would I would probably potentially consider Austin to live in my place. But most landlords and most corporately owned apartment complexes, they're not going to be nearly as understanding, and so a credit score is really

important in those cases. Also, Austin, when we're talking about getting alone, you mentioned how you could buy a house and potentially purchase it in your wife's name. But this work around could lead to other issues. Assuming you'd want to count both of your incomes when applying for the mortgage, well, the lender will look to the lowest of your two scores, and that could be a major hindrance to you buying

a house. A low or nonexistent score could keep you guys from getting the best mortgage trade or potentially from even qualifying at all. And one other potential downside of living life without a credit score is if you're applying for a job. Specifically, some government jobs will reject you completely if you don't have a credit score, or if you have a really low credit score. So credit scores really are so much more than I love debt score. They just have a high importance kind of in the

modern economy for us as individuals. Yeah, the credit score tentacles work their way into lots of areas of our life. Yeah, they do. And Joel, while we're talking about credit score, let's talk about this new credit score model that's been unveiled the company that develops the FICO score. They are changing things up. Personal loans they have always been a poor borrowing choice, but they're gonna affect you even more

negatively in the future. In Austin, he sounds like the kind of guy who's not going to take out a personal loan. But it's still important to note, Yes, those personal loans will affect you negatively, even though I don't think Austin will go that route. But late payments that have happened in the past two years, those are also

going to negatively affect you more. Even though this is all good to note, keep in mind that we have a plethora of different credit scores that are being created by the different credit bureaus and different companies out there, so don't fret over changes to one specific score, especially since it takes a while for companies to transition to using the new scoring models. The general principles of maintaining

a solid, healthy credit score they're going to remain the same. Yeah, man, I feel like your quick analogy earlier on was was the best way of thinking about a credit score. It's it's like an octopus that has these tentacles that seem to kind of drift into all these areas of of the way that we of the way that we currently live life in this country, and for for better or for worse right. Yeah, yeah, And having a good credit score is a near essential part of modern human life.

And and I think it's okay for us to recognize that it's a silly game that we have to play, but it's one I think we would be silly to not take part in. And so Austin, I hope that helps. I think building up a solid credit score is going to be beneficial to you for decades to come. So I wouldn't ditch it all together. Know that it's an important part of modern life. And it stinks, and it is. It's kind of a weird game that we have to play, but it's one that we should be playing. Yeah, Joel,

we live in a mad world. Cue the music. Oh wait, we we don't have licensing for that, nor do we actually have a producer. It's just you and me. But if we did have a producer, they would be saying, wrap it up, let's take it back to the beer. So they would I will go ahead and say that, man, let's take it back to the beer that we had this episode, which was a Blair's Breakfast stouts. And I will say, based on our tasting notes earlier, or are

coffee tasting notes. If you like a nice staindard coffee with a normal amount of sugar, normal amount of cream, I think you would be really into breakfast stouts. Joel, what were your thoughts on this beer? Well, you said normal amount of cream, normal amount of sugar. I don't know what that is. Like, what is is that like like a teaspoon? Okay, all right, that's what I do at least, like my little mug of coffee at home. I just get sick of spoons, just a leveled off,

small spoon of sugar. And for me, it's just a little splash of whole milk. Okay, I'm whole milk, but no sugar over here. A little creamy, but you like get a touch a touch dry. Yeah, So all right this beer in particular, man, I love when cold brew season comes around, when it comes to coffee, and we're getting really close to that, yeah, so you know, late spring, I'm into that. And this really tasted to me like

a delicious beer version of a great cold brew. It had those roasty coffee tones and kind of a nice subtle sweetness to go along with it. So I really like the mixture of breakfast outs that are well done, are really really good, and man, this was a really really good breakfast out. So it makes me excited about late spring rolling around where I can fire up the cold brew, except that you don't actually use fire to make cold brew, because that's like the whole point. It's

super smooth. No fire, no heat would make me look like an eaty, and no bitterness from the oils from the coffee, right like in that in that how it gets so smooth when you do cold brew, I think. So I'm not really good at talking about a professional, but those are my thoughts on that. Well, what I liked about this beer, man were the darker chocolate flavors that you got from those cocoa nibs, like they really

came through. And then as the beer warmed up, I felt like it almost had this wet earthiness that was sort of mixed in with those roasted coffee flavors. It felt like a really grounded beer. I felt like I was one with the earth as I drank this, And you can, you know, definitely take some of those those coffee notes in it as well, which got me thinking too, do you know if there's actually any caffeine in breakfast outs? Or any beer that includes coffee. That's a good question.

I don't know. I don't know either. I would think a small trace amount, but I have no idea. Yeah, well maybe sort of like our Toyrannosaurus Rex full path that we did it with King Sue. If you're a listener and you know the answer to that question, hit us up because I actually don't know if there is caffeine and breakfast stouts, and i'd like to know. Well, you're gonna hear about it, but we will hear about it.

And I that's why I love our listeners, man. They always let us know when we say something stupid or we have no idea about something, they send off the emails. Man, they start commenting in the Facebook groups. See, it's great to have people watching our back. All right, Matt, that's gonna be it for this episode. And for anybody out there listening who wants the show notes for this episode or wants to see, you know, the recent articles we posted.

Make sure to check out our website, how to money dot com, and you can do as a huge favor by heading over to Apple Podcast, where you can rate and review us. And you're not only doing a massive favor for us, but that's a favor for all the listeners out there who have not yet found our podcast All Humankind exactly, so we really appreciate that, Joel. That's gonna be it for this episode, man, Until next time, Best Friends Out, Best Friends Out, m BO