Welcome to Had of Money. I'm Joel, I'm Matt, and today we're answering your listener questions.
That's right, buddy, We've got listener questions to get to. This Monday. We've got a relational money question that I'm actually really looking forward. It's not the best situation, but I am looking forward to it because we don't talk about relationship kind of stuff as opposed to like the nuts and bolts, which is typically what we talk about here on the show.
All right, so let's talk about this. Should you marry rich Matt? Should you marry for money? That's going to be the question that we get to. That's what actually Emily always tells me if you were to die, I would only marry for money the next time around.
Really, yeah, she's like one hundred percent. Serio.
I don't think she means it, Okay, I mean she says it a lot, so maybe she does. I think it was just trying to say. What she means is I love you. I could never love someone else like you. So for just the bank accounts, see, that's how you interpret it.
But I feel like there are more layers to this financial onion to appeal. But no we will get to that relational mini question. We've got somebody else who's trying to figure out when to ditch his car, when to replace it. Another listener is looking for different ways or I guess he's trying to figure out how to afford long term care insurance, which isn't something we often talk about on the show.
So wants to know whether even needs it to Yeah, yeah.
Yeah, So we've got a great show lined up for y'all today.
All right, let's do a frugal cheap we haven't done one in a second. This one Matt someone the other day My two thousand and five accurate SUV still running fine, nice, and it's it's been a good car. I've had it for a year and a half now. Bought it super duper used for cheap. But when I bought it, there was a crack in the passenger side of the windshield. And I remember the first time Emily got into it and she was like, what.
Are you doing? Man? Like, why did you buy this thing? I was like, because what kind of hoop do you?
Right?
Has parked in my driveway.
Because I can see just find out on my side. I don't care if you can see or not, and so I could see how it'd be more distracting from the passenger. The passenger that's way on the other side of the car, who cares?
Are you so?
And then I had someone that that they say, when are you going to replace your windshield?
Man?
I was like, this is a four thousand dollars car. I'm not planning on putting in a four hundred dollars windshield. Like it's not interested. I bought this knowing this. I knew I could see out of it. Not willing to pay ten percent of the overall cost of the vehicle just to have a clear windshield. I know in some states they actually either one they forced insurance to pay.
For it or zero deductible states.
Yeah, or they force you to do this because there are safety checks every year from the state. But in Georgia that's not the case. So I can keep rolling with this Florida busted windshield, New York, Arizona. I think those are all states that have the zero deductible. Essentially, it's like cracked windshield, boom, you get a replace for free.
Yeah.
I think it was in Virginia. I remember my friend lived there for a while and I think they had those safety checks and so if there was a crack or something, even just a nick, they might be like, hey, you gotta fix that thing. And so okay, am I frugal or cheap?
Is it? Uh?
Well?
Has it gotten worse or the same? It's bad, It's been bad. What's funny is I've written obviously I've ridden in the vehicle. I can't really picture it. It's pretty big crack, is it really? Oh yeah, it's that's so funny.
It's going up and down like three quarters of the windshield.
Okay, I would say if you didn't have the ability to see through your windshield clearly, sure it's appos dumb and dumber style looking out the side. Yes, like have you obviously you've you've driven it in the rain?
Right?
Does the crack impact the ability of your wipers to clear the windshield?
No?
Okay. I think if you, let's say you were a realtor where you did business out of your vehicle, you know, like if you had a sales like job or you had clients in your car, of course that would be cheap because that could hinder the potential sale.
That would be a cheap move. I'm trying to impress no one though.
You are a podcaster, so the visuals don't really matter so much, especially when it comes to our vehicle. So, dude, I'm with you, one hundred percent frugal, Okay, keep the crack windshield all right, and feel free.
If you are out there listening and you're like, that's so dump you should totally replace it, let me know why. Feel free to emails how to moneypod at gmail dot com. I always love hearing from you guys and hearing what I bet in some people's minds.
Matt, that is cheap.
It's not frugal, but I knew it buying it. It's got this crack, but to me, it's just it's basically what do you call it?
Cosmetic? That's it.
Yeah, And so because of that, I was down to buy it and to not replace that, and to hold on to this thing as long as I can.
I'm with you, okay, So I guess on a somewhat related note, quick question, another frugal or cheap though, The side mirrors on our van are twenty twelve hundred Odyssey. It's made of plastic, and the plastic is like or the paint. It's like a covering or something. It's coming off, you know, you go through the high powered car washes, and bottom line, it looks like it's it looks pretty ratty.
Do you think I should take the pressure washer and just blast it off completely and like spray it with some like black shiny spray paint to make it liquid or should I not even worry about that? This is similar because this, I would even say, is maybe even more visible because when people see our van, they know it's us because I don't know what it is. But it's like the it's almost like a vinyl covering that's getting that's that's peeling. Have you noticed it?
No?
I haven't, And honestly, clearly we are pointing out the fact that we don't care at all about what our vehicles look like. Yeah, I don't. I think that's true. That'd be like a that would come in about our bottle of spray paint or something.
Yeah, exactly, that's so much cheaper, and that would come down I think more less about oh what am I projecting to other people as opposed to what do I care about in the car that I'm driving?
Yeah, it's about like trying to keep our ride looking fresh. So like my dad.
He scraped the side of our van when he was driving it, like like last year, and I didn't even bother getting it fixed that He was like, oh, no, I'll pay for it. I'm not gonna make my dad pay for that, Like come on, yeah, that to me, that would be that'd be cheap, not frugal. So I'm like, no, Dad, let's just leave it. That's the story about it. The beauty of driving old cars is that I care less about those cosmetic things and dents.
But if you had pulled the trigger and you had a one to two year old Rivian and he did that in that case.
That's part of the reason I don't want to one. In some ways, I'm like, because I'll freak out more about it, and I don't want to because I don't want to care about cars. Yeah, all right, let's mention the beer we're having on this episode, Matt. This one's called Ube Macapuno Delight. It's by Brewyard Beer Company. This one was given to us by our friend Joel, and we'll give our thoughts on this one at the end.
Of the episode.
Great job on the pronunciation there. We'll also reveal what ube means y o you had to look it up. So we both looked it up because because I didn't know either. Well, yeah, we'll talk about that later. But all right, let's get to listener questions. If you have a money question for us, we would love to take it. We'd love to hear it. You can just go to howtimoney dot com slash ask for simple directions on how to record your voice memo and send it our way.
But really that's all it is.
It's recording a voice membo on your phone, emailing it over to us, and hopefully we can take it next week on the show. Matt, It's time now to get to a money question that has a lot of relational dynamics infused into it.
Hey, y'all, this is Amanda from San Antonio. I have a bit of a doozy for you. My best friend in the whole world is in about twenty thousand dollars of credit card debt with interest rates ranging from twenty five to thirty percent as I understand it, and her husband's car was just repossessed for the second time in four years. She is a stable W two job. He works a job that is unstable and unreliable and also an hour and a half from their home, and now
he can no longer commute to it. They are living outside of their means. I don't have all the details, but from what I've gathered, they're going further into credit card debt month by month, and now they have this, you know, car repossession emergency. I've done all the things I've you know, suggested he get a job that's walkable, and they get an emergency fund under them, and everything you guys would recommend, I think I've recommended to them. So what I'm asking about is how to navigate this.
I want to be a good friend, and I have the money to help, but I also want to hold a boundary and I do not want to enable the behavior that got them into this position. Man. That's That's what I'm dealing with right now. I hope you guys can help. I love the show.
Thank you, guys, joel Man. This is tough to hear, like you can literally hear it in her voice, just how like this the situation that Amanda's friend is in is how it pains her aially.
I mean, it's tough to see your friends struggle, and it's tough to see your friends kind of especially when you know better, and it's tough to see them just continually put themselves behind me.
All like them. Yeah, as they continue to make some of these decisions that you know, continue to dig them into a deeper hole. It sounds like a lot of things need to change for your friend though and her husband, Amanda, Like, you know, they got the job issue, You've got the I think if there is just like one Cary possession, I mean, yeah, there's the car repo which has hit
me of things, the second one that's happened now. I think if they if this was a situation where they were kind of cruising along and everything, you know, maybe what you would call typical or normal, but then all
of a sudden something came up out of nowhere. Like I could totally see that being a situation where you might step in from a financial standpoint, But because of the fact that this seems to be ongoing behavior, I think the way that you are thinking about this is the complete right way of doing it, where you don't want to enable the behavior that has gotten them into this situation.
I think it can feel like the empathetic thing to do to step in and help make the fix, But I think then you could end up putting yourself in harmsuoy, you can put your relationship in harms. Way, it's you have to be really careful.
Amandon.
You mentioned the term boundaries, and I think that's a really good term to use. I think that's often necessary when we're talking about relationships, Like you have to have healthy boundaries so you can remain friends and be a positive influence in the ways that you can, and then realize the ways in which you maybe can't have an impact and don't try on those levels.
Yeah.
So, like, for instance, match you mentioned, Hey, I've got the money to help, but if you give your friends money, that's money you don't have in your bank account anymore, and you might not be enough to make any sort of real meaningful tents in their situation depending on how much you have. That is true, right, So, Yeah, over twenty thousand dollars in yeah, in credit card credit card debts, that's a lot of money. Yeah, I mean to get that car Loan back in good graces all of the
things that need to happen. Amanda might not have enough to actually fix all this stuff, and even if she did, it might not be the best thing for her or for them, And so I guess I would suggest that the biggest thing, Amanda, you can offer is a sympathetic here, some light guidance, preferably in a way that doesn't involve shaming, which doesn't sound like is something you would do anyway.
Shame obviously it creates the opposite instinct, right, Like it makes us want to stop sharing and hide our flaws. And that can happen with your friend where she's like, now, this isn't a safe place to talk to Amanda anymore, because every time I talk to her, she makes me feel bad about my choices, like, you don't want to do that. It can perpetuate negative feelings, and it can lead to more unwise behavior, which is what got them
here in the first place in so many ways. So one way to avoid that dynamic, I think, is to share some of your own mistakes with them. I think that can make them feel more comfortable learning from you. And when you do have advice, they're like, oh, Amanda's been here, she's been through hard stuff too, so she's a person worth listening to.
That's true. Yeah, it sounds like you have shared with them a lot of good advice, and so maybe that's not the tact that you should take. So maybe switching things up where you are not their main source of financial information might be the way to go. But that doesn't mean that you need to leave them high and dry. Like what I would do in this case would be to connect them with a helpful resource.
Oh, I thought you were going to say, put had a money podcast onto the background.
Ford, that's also good. How do you think something that's a whole other question. Do you think somebody hearing their situation being described on a podcast would make them more or less inclined to then want to turn things around? I don't know that depends, Amanda is gonna be up to you as to whether or not you share this
episode with them. But what I was gonna say, though, is to get them hooked up with someone like NFCC, the National Foundation for Credit Counseling or MMI Money Management International. They're a professional who has seen plenty of folks in a position just like your bestie there is going to be able to take the reins and help them out significantly. And even if you, Amanda, have been listening like for the show, to the show for a really long time.
Let's say like since episode one, you might have a whole lot of knowledge, but I think trying to be their their budget counselor that could actually do lasting damage to your relationship. And considering you said that this is like your best friend, this is something that I think I would want to risk. So instead, just help them to find someone else who can fill that role, and then you can just be more of like a supporter type, right, Like you can encourage your friend, you can be there
for them. Who can you know, chime in with some money wisdom from time to time, But your ability to be like the sole provider of the information, Like like if you are at the center of this whole plan, I personally I feel like it things can get really messy really quickly.
Yeah, there's some saying, man, I've heard that be the wall that holds them up, not the roof over their head, right, And maybe that's Hey, I'm going to be one of the support pillars in their lives, but I can't be
the whole thing to them. I think you're right, Like, there are great organizations out there doing good work, and there are awesome people who work there, and it's not going to call them an arm and a leg if you go to one of these not for profit places that you mentioned, and with all of the issues you've described, man, it's kind of a litany of things going on. This situation could get worse before it gets better, and there's
a chance that bankruptcy might be necessary. But the folks at these nonprofit organizations can help determine that by digging into their numbers and looking at the specifics, and they should not only be able to help with budgeting, but also in creating basically a triage list of which money
moves they need to make and in what order. They're also going to have access to working with some of the companies, some of the credit card companies in particular that they on their own or you helping them won't have access too, So I think that's an important thing
to mention also. And then once they have their marching orders from one of these non nonprofit debt counseling centers, your encouragement, your insights are going to come in handy because they're going to be making progress, they're going to be bouncing things off of you. They're probably going to have lots of questions, and it's going to be really nice to have someone they trust deeply, who knows their stuff on the money front, who they can bounce those questions off of.
Yeah, and I mean remember too that turning this around, I think is going to take a long time. It's taken them a long time to get into the mess that they are currently finding themselves in, and so I think it's going to take a while for them to get out as well. You are a good friend, you can continue to be one there who is helping them, But just know that you aren't going to be again like at the center of their universe as they're turning
their financial lives around. That doesn't mean you don't check in with them, certainly do that talk about it. You know, Joe, you mentioned a shame there earlier that can easily take over, meaning that your friend might even just go silent for a while. And a good friend knows that that can be a tendency, and so reach out see if she's
willing to or wanting to talk about that. And by the way, if you actually if you do feel compelled to financially help in order to help your friend to accelerate their progress as they are making changes, as you've seen, you know, positive movements in the right direction. Essentially, I would avoid loaning the money instead see it purely as a gift, something that they don't have to return, just again because of the relation dynamics and how messy things
could get. But I think if I were in your situation, though, I would find different ways to be present as a friend, to demonstrate that you are willing to give in a way but specifically that invests in your friendship together. And so practically speaking, what that means is like if y'all go out to get some Mexican food or something like that, like picking up the tab, or like if you're gonna go grab coffee, paying for it, because it shows that, Hey, it's not that I'm not willing to put forth some
of my financial resources towards us. It's just that this particular problem seems like it's something that that y'all keep finding yourselves in. And so I think what that demonstrates, though, is that you are there for your friend no matter what, in this case, for richer or for poor. Yeah, it's not like you you didn't take any vals. It's not
like y'all got married or anything. But like, that's what a good friend is is someone who sticks with you through this hard phase in life, which also begs the question, Joel, do you think do you think it ever would get to a point to where Amanda shouldn't maintain the friendship with her friends, Like, because what I hear in her voice, like kind of going back to the beginning we're talking about how exasperated she sounds, is that like almost it almost seems like she's at the end of her row.
That's a good question. I guess I'm pointing to Amanda's mental health.
I think you don't abandon your friends when they're when when they're in a hard situation. Yeah, I think that's what that's that's my gut reaction and totally I guess if your friends are like, we love the lifestyle we're living, that's jeopardizing everything we've worked for. I don't know that that might be a different conversation than that's sure, but I think if they're trying, and they and they actually want to get better, yeah, you continue being there for them.
Yeah, stick it out. That's yeah, as long as they are respecting boundaries, right, Like if you are saying, hey, I'm not willing, I'm not able to help you for the for X SO and so reasons, and if they keep coming back to you, like not demanding money, but but asking, I feel like that would warrant a bigger conversation where it's just like, look, you need to know what kind of impact this is having on me from a mental health standpoint. But it doesn't necessarily sound like that.
That's where you are, at least not yet, Amanda. And it's a bummer to find yourself in a situation like this, But hopefully we've given you some fodder, giving you some good thoughts as you are trying to be a good friend. But Joe, We've got more to get to, including that question about long term care, our thoughts on that and more right after this.
All right, Matt, we got more money saving information to get to on this episode. Let's get to a question about cars, Wendy upgrade and how do you do it?
Well, Hey, Matt and Joel, my name is Jay and I am calling from Marietta, Georgia. I have a couple of car related questions for you guys. I currently own a used Hyundai Accent that I purchased back in twenty eighteen. Since I've owned this car, I have experienced a variety of small to major mechanical and other issues with this car that have ended up costing me a lot of money to maintain. The conventional wisdom that I inherited from my parents is that when you own a car, you
should drive it basically into the ground. But since this car has cost me so much money, at this point, I am ready to look at selling it and purchasing a different car. A quick search on CarMax and Carvana gave me a trade in offer that looked like it was a lot lower than my car might actually be worth. So my question is, do you have any advice on finding a private party that I might be able to sell my car to. I've looked at other places like an auto trader, but if you guys have any other
advice in that area, I would greatly appreciate it. Additionally, my plan right now is to try and hold onto this car and hope that I don't have any more major issues until around the end of the year, as that looks like it might be a better time to look at purchasing a newer car, since dealerships typically offer a lot of discounts or rebates during the holidays. In terms of purchasing a new car. I was also wondering if you have any advice on financing and purchasing a
newer car. Would it be better to go through finance from a car dealership or a used car dealership like CarMax or Carvana, or would it be better to seek out an auto loan from a credit union or other financial institution. I appreciate any advice you can offer. I really enjoy listening to the podcast.
Thank you so much, Right, Joel, do you feel like Jay cheated a little bit? He has like three different questions, so many questions at once. It's a complex situation when you're like, do I keep it? If I'm selling it? Sure? How do I go about it? What I'm buy the new car?
I mean, there's of course it's because it's really one big decision that's a big expense and wrapped up to a bunch of different ones. It's sorry that you've had so many problems with this car, by the way, Jay, that's that is the worst, Matt. It's a bummer to have.
Perpetual car problems can be really frustrating. And I think the general rule of thumb that Jay's parents taught him is a pretty good one, right, that the longer you hold on to the car, on average, the more freedom you're going to have to save and invest intentionally, the more margin you're going to have in your life, because hey, guess what it means not having a car payment for
potentially a long period of time. And we think that the longer you can go in life without having a car payment, or if you can essentially make that commitment to not having a car payment ever, that's like a financial cheat code. That is game Genie for your money. Because for Matt, for the average American, they're spending so much money on their car every month. To not have any of that, it just gives you a lot more
wiggle room into making other decisions. But as mechanical issues proliferate, right, we get that you want to drive something more reliable, and I think when to ditch a used car is kind of this perpetually difficult question. I think the truth is money is only one part of the equation. Makes you think Matt, I was talking to a friend recently. He's got this Toyota Siena that's like twenty twelve or something. It's in good condition, and he's like, should I get
rid of it before the issues start. I'm like, dude, if you do, I'm buying it from you because that's a great car. But that's how people tend to think of cars. They want to beat it to sell it before the issues begin. But oftentimes I think we need to get more comfortable with realizing that repairs are a part of life. Is or age, Yes, exactly.
And that's that's kind of where I want to go is because I'm reading between the lines a little bit and I want Jay to be honest with himself because he said that there have been a lot of expenses and it's been maybe inordinately expensive, but.
I want to know how much and over what period of time?
Yeah, and like what's the mileage on the vehicle, because if we're talking, you know, is it because you've recently rolled over one hundred thousand miles? Well, that's when there are a lot of more expensive sort of maintenance and repairs that need to be done. Break system, Yeah, to a vehicle like that. And it's not like that this is an expensive vehicle to maintain. Like we're not talking about like a land Rover or something like that, some
foreign or European car. I should say this is a Hyundai, a Hundai Accent. Those aren't expensive cars to maintain necessarily, and they get pretty good gas mileage, and they're also not flashy or sexy. So Jay, I guess I want you to be honest with yourself, and I hope that you're not using some of these repairs as any excuse to be like, you know what, maybe it's time for me to go ahead and make the upgrade. I'm kind of not so keen on the old used Hyundai Accent
anymore because he said he bought it. He bought it used several years ago, so it's an older vehicle. I get that. I understand when you're at the car shop and you get hit with like a five hundred dollars repair, you start doing the math, You start calculating in your head and you start thinking, dude, I could have a brand new, sweet new ride for that much money. But and you start to justify it.
If I sign up for seventy two months of payment.
Yeah, basically to do this for the rest of my life. So again, I'm assuming a lot here. Reading between the lines, I hear a used Hyundai Accent that you've purchased in twenty eighteen, and I think that sounds like sounds like you're just hitting your stride when it comes to that vehicle and some and you've made some of these repairs.
Maybe that means this is something now that's good for another fifty to seventy five to one hundred thousand miles, Like maybe you're about to like this is going to put you on the path to being able to drive that thing for another one hundred thousand miles to where you're at two hundred thousand miles and the entire time you don't have a car payment.
So yeah, I think base what you're saying is even if you're paying two thousand dollars a year in like maintenance and repair costs for that car, that would be far less than the payments you would even buying like a gently used newer car. To you like that would be a cheaper route to take. So make sure. If this car is a lemon, that's one thing. But if this car, if this is just traditional maintenance that most cars of this age need, I would just realize that that's part of the game.
Jay's probably like, man, of course, this is when the guys have recently talked about crack windshields and pain coming off their side mirrors. Yeah, Jay, you should know what kind of answers we're gonna give when it comes to potentially upgrading and getting a new.
Car, right, Yeah, well, and okay, so if you are going to upgrade, let's say this car is having more significant issues, right, that these are perpetual there, they're bad, And.
Let's say that we actually believe you. Jay.
We're not calling here your truthfulness in to question here, but we are just saying, like, think again. But sure, Let's say you're gonna buy another car. You mentioned buying from a dealership. That could be a solid route to take. But it sounds like you've got some time here, right, You're not in a massive rush to ditch this car. It's not like it's currently in the shop and it's got like a transmission issue and so you don't have
any way to get around. If you've got the patience to do some digging, you might be able to score a better car at a nicer price. If you're buying, I would say directly from an individual, that is, it's becoming harder and harder sadly to do that. More people are matt selling their cars to middle men like Carbon and Carmacks are buying from those companies too. They're not bad companies necessarily, and in fact, some of their warranties
are nice. I appreciate that. But they've become the go to for sellers and buyers alike, meaning that there's less buyer to seller face to face transactions happening. But this also means that those people aren't going to get as much money for their ride. So where should you look? I would say, look at auto Trader, right, but filter down to private sales only. There's literally button at the bottom left you can click and you can say, don't show me anything from dealers, just show me from private
individuals who are listing their automobile for sale. Facebook Marketplace is another one, but Matt even that's gotten a little scammy at times, or not even scammy, but just overrun with auto brokers who are buying from the auctions and then selling them on there. I personally prefer to find a private individual who's selling a car that I'm interested in. I think that's the way to get the best car for the for the best price, and then they've got
the records to show that they've had it. Yeah, for how however long that they've maintained it. I think, no matter what though, you always get that car checked out by a mechanic you trust, whether it's from a dealership or whether it's from an individual.
Yeah. And because of the fact that Carvon and Carmacks have made it so easy, I think fewer and fewer folks than ever are actually selling their vehicles via a private sale. They're basically trading in every single time. And dude, I have always felt like it's worth the extra thousands of dollars that you can net buy dii wining that sale. It's not a joyous experience. It's not the most fun that you've ever had in your entire life, but the financial stakes are high when it comes to these larger
ticket items. I think it's worth it.
You don't love when me and people are random parking lots letting them to test rive your car.
No, you come to me first, all, but go ahead, get a quote from both Carvana and CarMax. If you went see how it stacks up to what KBB says that your car is worth, and if the gap is significant, we'll go ahead and list it on Auto Trader. Get it up there on Facebook. See what sort of response that you might get. Because if it's minimal, well then
just hit the easy button. But again, if there's a lot of folks clamoring for that vehicle, because it turns out maybe you made all the expensive repairs and this is a very attractive vehicle. Now I'm going back to the whole thing about him keeping his access. I suppose to selling it. But if you see a lot of interest in your vehicle, then that could either a make you reconsider selling it or B means that it's going to be an even better financial decision to sell it privately.
Yeah, and I think, Matt, there's actually more nuanced to this question than ever before.
Too.
If you're thinking about buying a used electric vehicle, for instance, because of the way the tax credit works, you would want to buy that car from a dealer, because you don't get the credit if you buy from an individual. If I buy a Nissan Leaf from my neighbor, Matt, I'm not getting a four thousand dollars tax credit. But if I buy it from the dealership, And this depends on where you follow in the income tax bracket, but you are going to get a tax credit of four
thousand dollars for buying that vehicle. So make sure you know that too, and you might actually save money, by the way on tax by training in your car in certain states. And Jay mentioned he lives in our fair
state of Georgia. This we're in one of those states where if you're planning on buying from that same dealership, it's worth finding out what they would pay for your beat up Hundai because by training that in, maybe you don't get as much money, but you will save money on the sales tax portion, I think, which bridges that
gap at least a little bit. And I think one last thing I want to say here, Matt is don't forget to look at the reliability ratings on the new car you're looking at purchasing from a site like Consumer Reports, because we want you in a car that rates highly so you can keep this next one you buy for many, many many years to come.
That'd be the goal.
I think if you just kind of, oh, I like the way that one looks, I get why people do that. But if you look at the reliability ratings, find that nice overlap of a car that rates highly from Consumer Reports and then also looks good to you sure.
And then you asked about financing. Definitely get a quote, maybe two or three from local credit unions. Every stat points to the fact that you're going to get a lower rate from a credit union versus financing via the dealership or financing with like one of the bigger banks. But that being said, and we basically have to say this every single time, but we are fans, big fans of buying cars in cash. I also know that this
is easier said than done. But because of the fact that it does not sound like you are in a rush to unload that vehicle, I think it sounds like, at least that this is more maybe a lifestyle sort of decision as opposed to I need a reliable vehicle to be able to get to work. And I think another part of this too is the inconvenience of having to take it into the shop. Like you have a string of repairs and you start getting on a first name basis with a mechanic. That's not a good feeling.
It's a noise, like, Hey, you want to go out for beers? After this? You're like, I mean, you seem cool. I'm here way too much. Man, I'm sorry. I was hoping not to have that relationship with you though, But like, nobody likes the inconvenience of having to take their vehicle in, But I think that's that also just gets blown out of proportion much more than it actually inconveniences or prevents us from doing the things that we want to be able to do, and typically basically because of uber and
left the ability. Like I don't want to have to drop twenty or thirty bucks because I got to take the van up to get the get a break job done. But you know what, twenty or thirty dollars is nothing when in comparison to a monthly payment where I to finance a vehicle. So again I'm kind of going back to the jay me wanting you to not use this as an excuse to get a new vehicle if that's
the case. But if it's not the case and you do need a vehicle and now you're considering financing, just realize that financing and paying interest on a depreciating asset that is not a winning formula to getting ahead.
With your fight, which means you want to prioritize taking on as short of a loan as possible. Maybe that's two year loan or a three year loan at Max. But if you're buying a used car taking out a forty eight or sixty month loan, it's just it's really bad news bears. So we would say buy a cheaper car if you can find reliable cars that aren't thirty grand, despite you know, I think popular assumptions. So make sure, yeah, you're getting that loan, likely from a credit union.
You're going to get the.
Best rates and keep that loan term as short as possible because that's going to be in the best interest of your overall holistic financial situation. All right, let's get to another question. This one's from a listener who wants to quit his job.
I joll them, Matt. My name is Kip and I live out in the western suburb of Atlanta. I really appreciate the show that you guys do, and the one approach to advice that you guys provide is just really encouraging and I enjoyed. I'm forty six and my wife is forty seven, and personally I'm ready to bag work and retire. Over the years, we've been able to get all expenses down to about five K a month, and
we have enough for the four percent rule. And so what I thought was that we'd go sit down which was built as a produciary financial planner, just to give the final blessing to pull the trigger on this. And you know, and then the interview that we had with him, all he really wanted to do was U pitch us a bunch of our annuities and that kind of thing. But you know, it's one thing he didn't mention that got me to think in it is long term care.
Just looking at some of the costs, you know that the long term chara can you know, if you need to go nursing can end up being you know, ten km month, you know, ten k for me CA for my wife. So you see how that that could really
skywrocket your expenses. But you know, I started trying to find some some various insurance plans and for long term care, and you know, they all had some really define benefits and in some cases, you know, you could pay the insurance for years and they just keep raising the prices and ultimately end up with nothing but a bunch of money spent. So I started thinking, you know, I'd really feel horrible if you know, I quit work at forty six and you know ended up broke, you know, fifteen
years down the road. So what I'm wondering guys, if you guys have had any ideas on how to deal with the whole long term care issue or you know, do you you just got to get six million bugs saved up so that you know you can have enough money on four percent rule. Thanks you, I I appreciate any of us will be helpful.
Kip, thank you so much for your question. And Joe, the first thing and I think we should address here is the fact that he is ready to.
Retire, but he's only forty six years old, which is basically, I'm done with that job. I'm tired of that jump quote unquote. I think he said he's ready to bag it. I think he's just love it. He's tired of being a working stiff. And I get that sometimes the nine to five can grind on it.
I get it, I get it. But that being said, so maybe the first thing worth talking through is it might be helpful to think through what your life might end up looking like were you to do something else. Let's say you've been working over fifty hours a week like the typical American. If that's the case, I get the fatigue, I get the exhaustion, and the fact that you've got so much money saved up that's incredible. So if you have the capacity to retire, you are financially ready.
But from a retirement lifestyle perspective, as well as the financial concerns, I think it's important to at least consider maybe finding more enjoyable work, maybe find some different ways to keep the paycheck flowing a little bit, but maybe just reducing your overall workload, even if that also means a reduced income, because you can always dial back even more over time if you're like, no, guys, I really
want to be done with work altogether. Going from you know, we've talked about retirement not necessarily being an on off switch DOL, but like a dimmer switch, and I think finding a way to gradually phase out of work could lead to more positive outcomes in multiple areas of life, not only financial, but that lifestyle. So you get used to the idea of not having to, like you said, go in and slog at the wherever it is that you're working from nine to five at a minimum every single.
Day, not to mention a commute all the whole nine yards, and I get especially if you've been in the same industry for twenty plus years and you're like, I'm just done with this, man, I'm burnt out. I think that happens to a lot of people, and not many people have kIPS ability because they don't have the savings that
he's amass to be able to make this choice. But I do want to say, like, yeah, you are only forty six, and so maybe it's some sort of part time work, or maybe it's working for yourself, maybe it's doing something ultra part time, or maybe just pivoting to another career that doesn't pay as much but where you have more freedom over your lifestyle. Those could be worthwhile considerations because I think typically Matt, we talk about it as a dimmer switch. Most people think of it as
an on off switch. That's the traditional views. And so it's like retirement. I guess my choice is either to keep working here and doing something I hate, or to stop and retire fully. That's not those aren't your only choices.
Where you're kicking it on the front porch, right, that's a lot of a lot of decades of hanging out on the front porch. If that's if that's the case.
Yeah, and he listened to the South like us, so he's gonna be drinking sweet tea on the porch like I would be, which is great. But you talked to Kip. You you've taken this, this brilliant route of reducing your expenses and of increasing your investments. That's the classic recipe that leads to more choice for you. Our next pushback, though, I guess, would be on the subject of annuities. You
mentioned talking to the financial planner. Jeez, yeah, be very careful talking to that person any longer I would want to get a second opinion from somebody else, I would consider talking to somebody at Domain Money or Nectarine. Those are cheaper ways to talk to a financial planner. And while annuities, yes, they can offer a more predictable stream of cash flow and more peace of mind, and potentially
they can be quite expensive. And so the way those most annuities get sold, they're typically done through fear based tactics, and often the fear is you're going to run out of money in retirement, so you need this predictable source of income, and you've done such a good job saving and investing that you really might be able to stop working before you turn fifty, which is awesome, but we don't think you need to buy an annuity to turn that into a reality.
That's right. Yeah, he's doing a lot of his math based on the four percent rule, which basically states that if you've saved up twenty five times your annual expenses and so this is the inverse of the four percent rule, that for you to do that, you should feel comfortable making this decision. But you've also got to make sure that we're not just talking about your current expenses, but that we are talking about your expenses way off there into the future, and.
Why there's long term things considerations coming to exactly in the play.
Yeah, and well and also too, like considering what you want your retirement years to look like. I guess I'm
pointing to a lifestyle inflation. And again, we don't want to push you to work like a dog until you seventy years old, but we do want to make sure that you're not bowing out too soon and that you can handle a potential you know, a potential downturn in the market from a mental and a portfolio perspective, and that you are taking into account some of the future lifestyle choices that you and your wife might have in store for yourself.
Would you still be meeting the four percent rule if the stock market were to drop fifteen or twenty percent. That's a that's a good question to ask, and Matt, I think let's talk about long term care specifically, which is basically the need for support as you age, right, especially if you have like a chronic illness or disability, and even if Kip, if you're in fantastic shape, you don't know what things are going to be like thirty
years down the road. You might need some sort of long term care at some point, and it can be crazy expensive. It's gotten so much more costly over the past ten or fifteen years as well. Insurance companies basically they didn't price some of these policies appropriately, Matt. And it's amazing to see some of the premium increases that
people have gotten stuck with. And what ultimately ends up happening for so many of those folks is that they bought this long term care policy assuming that premiums would increase you moderately at most, and then what happens is they get stuck with a thirty forty fifty percent premium hike and they have to ditch their long term care insurance. So it basically feels like and it actually kind of is money that was tossed aside, completely wasted. Yeah, it
feels like you threw it into a fire. The other thing, too, is stats from insurance companies show that something like seventy percent of folks are going to need at least some form of long term care insurance in their life, and they always give this stat mat that the costs can exceed one hundred thousand dollars per year, which certainly makes it opens my eyes, but those facts can be a
bit misleading too. And plus, your insurance company could go out of business in that time where your claim could be denied, or again, like I said, those premiums could skyrocket, making it unaffordable long term care insurance. The market for it sucks. Yeah, there is potentially a need for greater spending in some of those later years. I'm not sold on the fact that long term care insurance is the
proper product though for most people. And the truth is, middle class folks often find themselves in the most uncomfortable positions because they've saved decently well and Folks who haven't saved much at all can often depend on medicaid, and folks who have saved tons of money can self ensure. But if you're in that messy middle, that can be a really tough spot to find yourself.
Totally. Yeah, that messy middle, it seems like that that's where Kip is finding himself. I would say, if you can comfortably afford the premiums on a solid long term care policy, that might be the best course of action. But it's also worth highlighting here too that you're only forty six years old, and so that's actually way too young to pull the trigger on getting a long term
care policy in place. Typically a lot of experts say to look around the age of sixty and so if you were to go ahead and get one of those in place, now, that's what fifteen years of potentially paying premiums on something that you don't need to be paying
premiums on. And at that age, you would still likely qualify with the medical underwriting to still qualify for affordable products without having to pay these annual premiums from now until then, which is most likely going to be when you wouldn't need that policy in place and Something else worth pointing out here too, is that it sounded like this was not something that was on Kip's radar until he met with the financial advisor who was trying to
sell him on the annuities, which is great because it didn't the sales pitch didn't work on the annuities, but it has gotten him thinking about this. But they're always going to run through the worst possible scenarios where they're looking at the largest amount possible to end up paying
for long term care. They're looking and they're also forecasting years and even decades of this long term care because if you're thinking, oh, yeah, we're talking about one hundred thousand dollars each, but when you look at the numbers, I think the average stay in a long term care facility is only something like three point seven years. And so I'm not saying that that's not a whole lot of money, But that being said that it's also not a guarantee that you're going to find yourself in that
sort of position. So at the very least, I'm glad that this is something that you are thinking about in the here now and for you to make informed decisions, but it's definitely not something that you need to look at getting in place right now.
I think Kip's got plenty of time to plan for that and to put himself into that self insurance camp right where if he not. Like, we want you to work for the next thirty years, Kip, but I think you can plan for potentially a few hundred thousand dollars worth of potential long term care needs at some point
in your future decades down the road. But that might mean delaying your retirement date by a couple of years so that you can continue to fund some of those accounts and that you can have more of a cushion to fall back on the long term care insurance market.
Yeah.
Like, I think you're right, Matt. I think it's probably too early to be looking there anyway. But the truth is a lot of those policies that are expensive, they can be volatile. The premium need, the premium amounts can change, and self funding is a better approach to take if you can pull it off.
And it's also.
Important to note, Matt that there are other ways. Let's say I don't know if Kip is a renter or a homeowner, but if you own your home free and clear, well there's a lot of equity built up in that home, and so lots of times people choose to do something like a reverse mortgage instead of having a long term
care policy. Those can be expensive, those aren't the best product either, but that might be a better choice for a lot of people than a long term care policy too, especially when a lot of those long term care policies get ditched before it gets time to use them. So I think that might be at least a more flexible approach.
Yeah, and another consideration too, and this wasn't at all something that get brought up in his question, but I think look into family because, like I think one of the reasons people don't like reverse mortgages is because they start to think, well, then I don't have anything to give to my kids, right, they're thinking about generational wealth. But if you have kids, I think it's worth having a conversation with them and considering a multi generational household.
It's something that's very common in other countries, but it's just not a part of our society. It's not a part of our culture here in the US. But I think it's like it's the best of both worlds because you've got aging parents where they're at the point in time where they might need some of that help and it would be more affordable for them for the assets that they have to be able to offset the costs associated with an adult child who's then helping to take
care of them. And then they also have additional time with their kids or even the grandkids. You've got built in community, Like it's just a win win. And if that's not a conversation, and again may not be a part of Kip's situation, but for everyone else out there, I think this is a real consideration. I want this just to be more of a talking point, something that comes up, something that's considered, because it's totally on our radar as something that might be off in our future.
We just live in a world, in a country specifically that glorifies and holds up independence and sort of in that independent sort of lifestyle as opposed to being more reliant in community with each other, which I think can be more beautiful and healthier on multiple fronts, not only in relational ways, but also financially as.
Well, especially that familiar level. And I think this is just keeps asking a great question at a great time for him, because he still has so many options in front of him. He's still working, still earning an income. He could choose to prolong that retirement age by just a little bit. There's so many different choices he can make on the way to be prepared for these possible future large expenses coming down the pike. I wouldn't you know, put blinders on and assume that you're not going to
encounter any sort of health headwinds. You know that as you get further along into your retirement years. But now is the right time to start planning for those things and to start saving ahead so that you're ready to tackle those things and so you don't feel kind of hoodwinked into buying some sort of expensive policy that doesn't make sense for you and your family.
That's right, man, But everyone out there stick with us because we've got more personal finance content to get to just right after this break. All right, we're back.
It is, of course time now for the Facebook question of the week. Comes from the how to Money Facebook group, which you should join if you're not a member of This question comes from Catherine. She says, Hey, Matt and Joel love your podcast. Thank you for everything you do and everything you've taught me. I'm newly married and my husband and I are opening a joint bank account at the end of this year. We discussed Bank of America, being that it's conveniently located near where we live. But
I just listened to your Friday Flight episode. Please tell me the cons of banking with a big bank so that I can explain it to my new husband. Why do you favor online banks such as Discover? My husband loves the idea of being able to go to his bank and pull out cash at any given time, so that's his reasoning the bank with Bank of America. Let us know what you guys think. First, we got to say congrats on getting married. Oh yeah, yeah, congrats to you too.
And let's go ahead and just address that specific question, which is that most of the online banks reimburse ATM fees, so you can pretty much get cash. You don't have to go to the actual actual bank branch in order to get your hands on some cash.
They're part of some sort of ATM network, and they're like at the local drug store. Instead of the bank that's on the street corner, it's at the drug store thread around the corner. So in fact, Target, like I think Capital One has all their banks have They've got ATMs at every target around the country.
So it's actually more convenient for your husband to get his hands on cash. I think most likely were he to go with some of the online banks.
That we loved, and you need cash these days, not much the ability some people.
I don't know. I don't want to make it assumptions about Catherine's husband.
I pay with the that they put in my wrist map, which you don't actually, although I see that a whole Foods you can pay like Amazon customers can pay with a chip in their body.
While someone's they're buying pizza. Though a little freaky it was out of order or whatever. Did you see that? Yeah, the cath Let's highlight some of the main issues. First of all, bad customer service. Uh. This makes me think about Wells Fargo and all that they have done to their customers, some of the awful ways that they've treated folks over the past decade. We would rather see you
do business with companies who don't actively hate you. The culture at some of these gargangum banks is just so toxic that we would just we would honestly rather see how money listeners completely avoid them, and maybe you're thinking, well, yeah, customer service, like what kind of customer service do you actually have when it comes to some of these online banks.
You know what, maybe it's not any better than were you to reach out to a bigger bank digitally online, but the fact that they haven't participated in underhanded schemes to be able to open accounts as branches are trying to reach certain quotas. There's just there's a history of untrustworthy behavior that we've seen some of the bigger branches that were not fans of I think.
And actually a lot of the banks that you and I talk about, Matt, it's actively less bad and it's it's proactively better too. I think it's easier to get a human on the phone to talk about a problem you have. Yeah, there's no bank branch you can walk into, but the one hundred numbers are typically better with the online bank. So if you need or you care about customer service with your bank, I think that is a selling point. The truth ist too, the products from the
big banks often suck too. Like think about savings accounts, for instance, the big banks don't come close to paying you a reasonable return on your savings. I think Wells Fargo, Matt, who you just aptly mentioned, they're paying point one five percent on their savings account. That's awful. Chase is paying point zero one percent, which is even worse. And then at Bank of America, which is the bank that's right around the corner from Catherine, point zero three percent is standard the gold tier.
Oh you want to know what that is, Matt, point zero four percent.
Oh, and then oh you want to go platinum dog point zero five percent. It's you can't make this up. It's these like incremental increases that mean essentially nothing, whereas like competitive banks are paying you know, four and a quarter four and a half percent. Say, but you missed
out on Platinum Honors, which is point zero six percent. Yeah, you found you missed the upper tier, which maybe you're thinking, Catherin, you're hearing to say these numbers, and you're like, yeah, but like he doesn't that doesn't mean all that much. All right, listen up, because if you run the numbers, the average two person household in America has seventy five thousand in annual expenses. So cut that in half, you're
looking at thirty seven thousand dollars. That's what you should roughly have in your emergency fund if you've got six months worth of living expenses set aside. Now, if you go with a bank like cit who I believe at this point is paying four point seven percent, it's definitely over four percent. That's good, not point zero four like
literally four plus percent. You're talking about earning seventeen hundred dollars on the money that you've got just sitting there parked in your emergency fund versus guess what it is you'll at point zero six percent, guessing it's about ninety two cents.
It's not that lot. Okay, twenty two bucksky, but still over seventeen hundred dollars versus twenty two dollars. That there's a big difference there. Just in a credit mathmath, it's revealing of what you think of of the large I have so little regard for those big banks and matt So you're talking about rates of return, but then talk
about the fees too. So a lot of these these checking accounts or savings accounts again worse with some of the big banks, they might that one hundred and seventy dollars or whatever you might have earned can be completely wiped away thanks to the monthly service fees they are going to charge you. So, I mean the big banks, they keep threatening to bring on new fees even while
the banks we love are taking fees away, they're eliminating them. Yeah, the rates on the product, like on the loan products as well, are going to be much worse. And so I just I literally searched the first credit union that popped up in the mind here locally, and it's over half a percent better than what it is that Bank of America's got, and that's for a just a thirty year mortgage with twenty percent down.
It's amazing. The big banks are actually banking on name recognition and brick and mortars near you, yep, to retain your loyalty. And we would say that's not good enough, Like there's so many reasons to choose the online banks and credit unions instead. People remain, though, Matt, because inertia bias it's hard for humans to overcome. I'm hoping here that we've convinced Catherine and that she can convince her husband, because the best banks these days are online banks like
Discover ally cit We mentioned them all the time. Low cost. Broker's firms like Fidelity and Schwab actually have good banking products too. Betterment has a good one as well. They pay really good rates on your savings. Customer service is superior. They're still big enough to have solid fee free ATM networks. I mean, you get all the modern amenities without the horrible downsides.
That's right. So just point that out. And for me it's I mean the savings rate that they're paying, like if you are willing to pay over but you're basically paying over fifteen hundred dollars for the convenience every single year to be able to pop into your local branch.
Not worth it, Not worth it, You're right. I think of that as a gargantuan fee that the big banks are charging. And to have that comedian brick and mortar location, it ain't worth it. You don't want to fund that building for them.
But all right, let's get to the beer that you and I enjoyed.
Joel.
This was the Ube Macapuno Delight. It's an Ube chocolate coconut porter donated to the show by our buddy Joel, and this is brewed by Brewyard Beer Company. What were your thoughts?
Well, I had to look up ube. Ube is apparently purple yam. Yeah, I didn't even realize that it's like a so yams were harmed in the making of this beer.
It's from the Philippines, so ube is like it's evidently it's got like sweet potata like vibes. But it's often used in making desserts, which makes sense because the can is purple. It looks like a cake, like a layered cake of sorts. But uh, yeah, what were your thoughts? I thought this was good.
Yeah, it had like coconut, vanilla, and chocolate be vibes kind of all combined together in a porter package, which is kind of a lighter version of a stout in so many ways, And I enjoyed it. It was it was a little a little sweet for my taste, like not my favorite thing, but I thought it was solid.
Was it sweet or were you convinced that sweet based on the icing that the design ont of this can that's dripping down, so it makes you think that, oh, this has got it. There's maybe a little more vanilla than I would totally typically go for. Yeah, the vanilla and the coconut kind of joined forces and both come across stronger than I think they would have otherwise. Yeah, but it's also like I guess maybe the roasty sort of flavors, but do you remember clove. Well, I'll just
leave it at that. Clothes like you know, like a like a Christmas ham, Like, yeah, you set the clothes in there. You know what kind of spices that you're talking about With clothes? It almost says that kind of flavor profile going on. But it makes me think of I don't know, it also makes me think of the holiday. So I actually kind of like it. As the temperatures are starting to cool down a little bit and we're getting into maybe some of these beers that have a little more backbone.
The Porter is a great drink for October. Like you don't want to drink a Porter in August, but once October.
And then maybe you're not even ready for the barrel aged out yet. Yeah, in October either, like between you want to say that for December for January.
I had a good october Fest the other day and I was like, oh man, I'm not Usually Octoberfest isn't the thing I yearned for, but in this time of year, it just it's the right drink.
It fits the mood nice. All right, Well, that's gonna be it for this episode. Listeners can find our show notes up on the website at howtomoney dot com. Oh, I meant to say too. We're talking about, uh, it was Catherine, her husband. Why he uses cash all the time. Why don't you just use a credit card? You're also giving up so many benefits by not using a credit card,
like even a basic credit card. And you can hop over to the site at howdomony dot com forward slash credit card tool and you can literally sort it by I want a card that's free, so zero annual fee, and I just want to earn simple cash back, and it'll pop up several options there for you, as long as, of course, you don't rack up a bunch of debt, which is maybe that's why Catherine's husband is completely avoiding cards all Maybe and he likes dealing in cash or maybe yeah, he just.
Used to doing it and he hasn't changed his ways. And if he handles credit cards, well that would be a better form of payment. So yeah, all right, that's gonna do it for this one, Matt. Until next time, Best Friends Out, Best Friends Out.
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