Ask HTM - Where a Minor Should Save and Invest, Security Concerns with Budgeting Apps, and Financing a Car to Boost Credit Score #144

invest your money? Turn up the volume, twelve and thirteen year olds, get ready. We're also going to address the security of from the different budgeting apps law that you've heard of, like mint, why NAB as well, yes, should you be scared to use those apps? As well as some considerations when financing a used car. And that's not something we have answered before. So all these questions I am excited to tackle with you today. Man, let's do

a buddy, all right. But before we get to the listener questions, I wanted to let you know I read an article about some economists created a report on how much of an emergency fund you should have as like a baseline. So I thought it was interesting because we've done episodes before about creating an emergency fund. They are incredibly important, very necessary, right, I have that margin in

your life, But how much should you have? And and there's always three months or six months, and there's a lot of debate, right, But these economists kind of ran a bunch of numbers and decided that there was a baseline amount that people should strive for, and that they should eventually strive to have more than this. They should strive for that three or six month level. But they came up with a really specific numbers. I thought it

was kind of interesting. Two thousand, four hundred and sixty seven dollars is the specific amount one should aim for when at least trying to kind of cover those baseline emergencies. What do you think about that number? Yeah, what I love about it is that it is a set dollar amount, right, And that part of what they were saying in the report is that three to six months, even though yes, like that is sound financial advice, that's what we've said before.

Three to six months, However, it causes you to do math, and folks don't like doing math, right, You have to actually calculate how much that is, like how much with folks by the way, I don't like to myself. It causes you to have to actually figure out the cost of living for yourself, right for a month, then you've got to multiply that by I don't know, three, maybe six.

But but it's a it's sort of a moving target, right, And that's one of the things they discussed how having a set dollar amount, how that's actually better because three or six months it can just seem like this overwhelming sort of goal for you to kind of pursue. Versus a very specific dollar amounts. It's very achievable and it's

something that most people can do. And they were saying that every single dollar that leads up to that two thousand, four or sixty seven dollars had a dramatic impact on how that affected people financially, but every dollar above that, certainly it helped, but it certainly had a diminished benefit

for any amount say above that. Yeah, yeah, it's interesting that that there's this number that one can aim for that puts you, at least, you know, not in the position to handle any emergency, but in the position to handle most emergencies. I would say, I think sometimes even when we think about an emergency fund, maybe we've fread over it a little too much, because when you think about it logically, what are the biggest emergencies that are

likely to happen? If you own a home, there are some more that you might have, or or you own a car, there are more that you might have than than someone who's renting or someone who who doesn't own a car. Oh, I like that, don't own a car. You don't have to worry about speeding tickets. You don't have to worry about seeding tickets. You don't have to worry about transmissions going bad. You gotta worry about, you know,

replacing a flat on your bike or whatever. But yeah, so depending on kind of what your lifestyle is, that that should influence how big your emergency fund is. But knowing that this is kind of a good baseline number to shoot for, that this will be able to carry you through you know, most emergencies in your life, and and you don't have to sweat it, and you don't have to put it on a credit card or ask a relative to to borrow some funds. This is just a nice kind of solid number to have as a

baseline for any fund. So yeah, I thought it was an interesting report and kind of nice to give people a specific benchmark, right, as opposed to kind of that more nebulous three to six months of your budget, right if your monthly budget in savings instead of having to set aside all that money, you know what, at least give people something to shoot for that feels a little more within grasp. And you know what, we can even just round up. It's twenty four, what is it seven?

Let's just say, you know, like that's a nice round number, just a little bit higher than the reported amount. But bottom line, what I love about it is it's sort of the psychological trick and if that's what it takes to get people to actually set that money aside versus them seeing six months of living expenses, like I'm I'm never gonna be able to do that, right, I'm a big fan of the different psychological tricks that might allow people who otherwise wouldn't set this money aside to actually

start doing it. Completely agree, All right, another, let's talk about psychological tricks for a second, Matt. Another psychological trick we do on the show is drink a beer every week so that other people out there will drink beer more often. Good beer, right, good beer. Yeah, we're not about quantity over quality, quite the opposite. Right, always quality, right, I'll always quality first. So today on the show, we're drinking a beer called Chance I p a by Wildly

Brewing Company. They're about an hour and a half south of where we are, and they've turning out some great beers. Man, So and you you pick this one up for us to drink on the show today, So thank you, my friend. Yeah, man, happy to And this is for me. This is one of my kind of go to favorite beers that I like just keeping in the fridge to be able to drink without having a special occasion to celebrate necessarily. Yeah. Well, we'll let folks know what we think of this beer

at the end of the episode. But all right, Matt, Now it's on to the subject at hand. We're taking listener questions on the show today, and if anybody out there listening has a question they want to submit to be on the show, it's super easy. All you gotta do is go to how to money dot com slash ask and there are simple instructions there for you to be able to submit your question. Let's go ahead and take our first one. Now, Hey, Chel and Matte, this

is Lauren from Ohio. I had a question about credit cards. So I've been on my financial journey and really researching all of the best credit cards and I'm really excited because I know which ones I want to open and how to maximize cash back, rewards and travel awards. Super excited to get started. The problem is, I have an old credit card that I've had for about ten years, recently high a pr but I was able to negotiate that down not carrying a balance. But I just realized

that the card has an annual membership beat. There really aren't any rewards or any special perks that I could be getting from this card, and I'm just wondering, like, despite the day on my credit, should I just go ahead and close it versus sucking it up and spending the forty bucks figure. Lauren, thanks so much for the question, and congrats on getting a credit card or multiple credit cards that will work better for you. Anytime you can use your credit card like a tool to actually work

for you, that's what we'd like to see. So let's go ahead and first answer the question why someone might want to close a credit card altogether. And a really good reason to close a credit card is if you are tempted to overspend on that card, but for you doesn't sound like what's going on since you are looking

to maximize your credit card benefits. And so that kind of gets us to the only other reason that you might want to close a card, and that's if you're paying an annual fee where you're not receiving any additional benefits or perks like you mentioned. Yeah, and Lauren, when you're talking about closing this card, well, your history with that credit card, it'll still stick around, It'll still be

in your credit mix. You've built up some nice history over these ten years with that card, but you're not losing it all by closing the card. The card just doesn't continue to age in your credit mix, so it's not going to continue to boost your score over the years, but it will still sit there and reflect nicely in your credit mix, So it's not going to be as large of a ding to your score as you think.

And for someone who's handling their cards, well, like Matt said, closing a credit card for reasons of ditching an annual fee. I think it's a worthwhile reason to actually close a credit card, right because if you're not using it, if you're looking to find credit cards that work for your

spending style a little bit better that maximize your rewards. Well, ditching a ard with an annual fee that just isn't working for how you spend your money, that isn't helping you maximize those rewards, that's a really good reason to close it, even with that minor ding you're going to

receive to your credit score. And so Lauren, in regards to your credit report or credit score, even though it's sort of that bad history does roll off in either like seven to ten years, you know that that good history has the potential to stay on your credit report indefinitely.

Man I actually check my credit report a few days ago at annual credit report dot com, which is the only website that you should be going to to get your free credit report, and Man, I had a card from two thousand and four that I had on time payments with that I had closed a long time ago that was still sitting there on my report. So that positive history, those on time payments and the benefit that that card provided, it's still sitting there. It's not dropping

off nice. Yeah, it's it's nice to know that even closing that line isn't going to remove that all the way from your credit score, because then that would be a much bigger decision, right if you had to take those ten years of good payment history and completely remove them from your report, that would have a much different effect. But that's not what happens, which is good. Another thing that you can do, and Matt, I've done this before

and it's worked. You can ask your credit card issue if they will waive the annual fee on that card. So I have the Southwest card, Matt, there was a great sign up bonus. I've got enough points now because of that to to take like a four or five round trip flights depending on where the world around the world. Yeah, it's gonna be an epic trip now, but probably just you know, some little domestic flights here and there. But I called and I asked if they would waive the

annual fee. I still like having that card. As someone whose local airport has Southwest flying in and out a lot, I can get a lot of places on Southwest and they're a great airline with with great fares, and so that credit card is helpful, but I didn't want to pay the annual fee, and so you know what they did. They said, well, we can't wave it all together, but what we can do is offer you a statement credit in the same amount as the annual fee. And so

I was like, well, that's like they waved it to me. Yeah, it's the exact same thing basically. So you can call your issuer and see if they'll waive the annual fee, and if they're willing to do that, well then it might make sense to to hold onto the card at least for a year or so until you kind of have to have that discussion with them again. But if they're not up for it, then ultimately, really it's not gonna have that much of a negative impact by just

closing it. Yeah, so, Lauren, in the end, you want to be using credit cards, like likely maybe three to four of them in ways that do maximize rewards like you're planning to do, but just make sure that you are paying in full and that you are not carrying a balance, otherwise any of those potential benefits that you could be receiving will quickly erode. And you can see our favorite credit cards over on our website at how

do money dot com slash credit cards. If you were to sign up for a card through that link, it actually supports the show, So we would appreciate if you consider doing that. Yeah, and ultimately, Lauren, congrats on finding cards that work best for how you spend. And that's what our article was about. That's what we want people to do if they are going to use credit cards, well, use them as a tool, pay them off in full

at the end of every month. Well, we want you to find the credit cards that offer you the best rewards for how you spend. And I mean that's really important, right, That's an important piece in our financial tool belt, is using credit cards. Well, and actually, Matt soon on an upcoming show, we're going to talk about how we spend cash, credit and debit, and there are other benefits of credit cards besides just even those upfront rewards that we're going to cover two. So yeah, we'll get to that, I

think in a couple of weeks. But at last, we have more listener questions to take. In a particular we're gonna get to that question about the security of budgeting apps right after the break. All right, Joel, we are back from the break taking listener questions, and we've got one here from potentially our youngest listener. Let's hear it, Hey, Matt and Joel. I'm Enrique from West Pond Beach, Florida. I'm currently a junior in high school and I'm working

my first part time job delivering pieces. This makes me about two and fifty dollars a month. As I'm only working on weekends and I'm dedicating most of time towards schoolwork. I don't really have many expenses, so my current priority is to start saving and investing. I've already gotten started through my mom's robin Hood account, which I linked to my bank account, and I've invested in one share of vt I. But I'm not sure if i'd be better off asking for help opening a Vanguard account, and how

that would work with me being a minor. Would it be under my name or would it have to be transferred to me when I turned eighteen? What do you guys think would be my best bet? And are there any options? I'm not considering anything I maybe don't know about. At any rate, I have most of my money in ordinary savings account, which has no fees. Really but a really low interest rate of point zero one. I'd love to hear what you guys have to say, as my

options are probably pretty limited because I'm under eighteen. I love the podcast. Keep up the great work, and thanks for being so informative and entertaining on all my drives.

Oh man, I love hearing questions like that from young folks that are being super intentional with their money, that want to get started investing and saving well early, because Matt, you and I both know that the time value of money is so important, and and someone who's in Rique's age beginning to prioritize saving and investing now is going to have these massive cumulative effects because of the power

of compounding returns. It's it's just so so big. If you can get started saving at this young of an age. Oh yeah, Enrique, if you haven't played with compound interest calculators yet, just going there and enter your age to fifty right, and have a set amount of contributions every year, set the interest rate to seven eight percent, and then

compared that too. If you didn't start saving until maybe you're twenty five, which is on the early side for most still early for mons out of college, getting their first job, they're paying down student loans. A lot of

folks aren't putting money towards retirement. But Enrique, compare your number to the other number when you started saving when you're twenty five years old, and have that end date at fifty, and you will see a drastic difference in the total amount of money that's gonna be able to be saved for retirement. Yeah, even just a hundred bucks here, hundred bucks there, whatever you can stomach based on your part time job, that's huge. So I gotta say it's

inspiring too. I love that you're focused on your school work, but you also have a part time job bile in high school. For me, working while I was in school, I taught me so much. I feel like, if I had to do it over, the sixteen year old me would have probably preferred not to work. I probably thought it was lame, but ultimately it just wanted to play NBA jam exactly. He's on fire. I totally would have just been content to play video games. But it taught

me a lot. It taught me a lot about relating to you know, folks that were in charge of me, that were older than me, And it's so much different than how you relate to a teacher, and as a sixteen year old, it's so important to learn. So that's really valuable work experience. Not just the income that you're making now that you can actually used to save and invest, but this work experience that you're that you're gaining while you're in high school is huge, and it's gonna help

you on future job interviews. It's gonna help you on the work history you're gonna be able to put on your resume. Also, by the way, I'm really interested in in what got you interested in saving and investing at such a young age. So shoot us an email or post in the Facebook group and let us know kind of what the if this was for you to actually start thinking about this and focusing on your financial future,

your retirement age self at such an early age. Man, that's such a rare quality in someone your age, So I'm intrigued, all right, Enrique, Let's go ahead and get to it. Though, you mentioned saving and how you have your money in an account that is earning you point zero one percent, and yeah, it's true that that is basically nothing right now. So you want to open a new savings account and avoid those big banks and those are the ones that are typically paying those really meager

interest rates. Find a new bank that prioritizes paying a decent interest rate. Currently that's somewhere in the two percent range, which, by the way, that is more than you are currently getting right now. But like you mentioned, the options are going to be scarce if you are under eighteen years old, So you want to ask your mom you mentioned her for help to get you started there. She can open

a custodial savings account. That just means the account is in your name, it's your money, but she is the one that actually manages that account. You don't really have access to that money without her being one that kind of logs in, moves the money around, that sort of thing. Then once you actually turn eighteen years old, it's yours. You're the one who is then in charge of managing

that account. Yeah, you can also check out Capital One has a kid saving these account which has no fees and no minimums and they pay one percent, which which isn't quite as good as you know the top banks on the market, but it's still a good product. The cool thing about the Capital one Kids Savings account though, the way it differs from a custodial account. It's a joint account, so you'll actually have more access to the funds and more access uh to online and app based

banking by signing up for that account instead. Yeah. And also, I think one other banking note that we should discuss is that there are local credit unions and local banks that offer just really really killer rates on savings for young folks to to kind of entice them to put their money with that bank or credit union. I saw a billboard mat just this weekend for a local credit union paying five boom on cash savings for kids. And also they were offering fifty sign up bonus, so that's

double boom dude. Yeah, the fifty bucks is huge. I mean it's huge for me. I want fifty bucks, right, I know, right, I'm thinking about, you know, faking an I d to to act younger so I can go get that bonus, right, But I mean, especially for a teenage part time worker, fifty bucks, man, I'd be all

about that. Yeah. Typically with a rate that good, you're only earning that five percent on cash that you have saved with the institution up to five hundred or a thousand or fift nd bucks something like that there's a low limit where you're actually earning the highest rates of interest.

But it's a great place to start. And so yeah, Enrique, if you see a billboard or if you do some online searching for a local credit union that might offer just some incredible deals for young savers, that's a great place to start. And honestly, it's not a bad idea to form a relationship with a local credit union early on in your life too. Local credit unions mayn there are always coming to the rescue, you know it. And

then you mentioned investing as well, Enrique. You know, when it comes to actual investing, you mentioned van Guard, which is a great company. But for you, man, we would love Fidelity and Charles Schwab to be on your radar for actual custodial accounts and that's because of lower minimum requirements and in the case of Fidelity, you'll have access to their zero fee funds. But before you invest more money into the market, we want you to also consider

what you're actually saving and investing for. Right. If you're looking at maybe a more long term goal like actual retirement, then you do want to invest that money in the market, right because you are in it for the long haul.

But if you are saving and you're thinking about investing for maybe more shorter term goals like college, or maybe you're saving up for a new vehicle or something like that, like those are gonna be instances where you probably do want to have your money liquid and accessible in a high interest earning savings account and not have your money

locked up in the markets in a roth ira. A. Yeah, Ultimately, that roth Ira is an awesome vehicle if you are really looking at keeping it in there for a minimum of ten years, and then that's definitely the place you should be stashing that money. And ultimately, like Matt said at the very beginning of answering this question, you're going to see you just amazing returns over the next decades.

Now is the perfect time for you to begin. But if you need that money in the more near term, you don't want to put it in the market because you could experience a sudden drop and you'd have access to less money than you put in And that's no fun. That's the opposite of what you'd like. That's not good.

But I love thinking long term, and Enrique, you know, set up an account with a bank or credit union that's going to pay you a better rate of interest, to start investing with a company like Fidelity or Charles Swab in one of these custodio accounts. Again, you'll need your mom's help to set one of those up. But man, you're on your way. Then you're totally on your way

to a sound financial future. And Man, if you keep making decisions like this through your high school and college years, I'll be super excited to hear back from you a decade or two down the road to kind of hear where things are, because you're starting strong and we can promise that future. Enrique, Well, thank you, all right, Matt Let's get to that next question. Hey, guys, this is a droop from Missouri. I've got a two part question

for you regarding budgeting. I recently got arried, and even though my wife and I share many similarities, we do have a few differences. One of them is that I love to budget with spreadsheets and she could care less. However, she's on board with trying to follow them on the budget as long as it's simple. I, on the other hand, really enjoy looking at the nitty gritty details of our

spending habits. The first part of my question is is there a budget app that would provide my wife with a simple way to look at how much we've spent this much and how much of our budget we have left to spend, but also provide a way for me to look more closely at the details of our budget. My second question is I'm intrigued about some of the budgeting apps out there, like mint and y N a B that do your work for you. However, I'm a bit larry of turning my bank account information over to

a third party. Can you all comment about these apps and their safety? Should I be concerned or is this just me worrying for nothing? Thanks for your help, guys. I love listening to the podcast during my commute and makes time go by super fast and always leaves me with ideas for what I ought to do about our finances. Hey Drew, congrats on getting married and man, you know those differences that you mentioned, they can actually be really helpful.

Hopefully you'll find that your relationship can help kind of bring some balance maybe to how you and your wife view money, how you kind of view savings, and especially

how you view spending money. Yeah, they say opposites attract, and I don't know that Emily and I are opposites necessarily, but our differences are really really helpful because the things that I'm terrible at or just don't want to do I'm not interested in, she does pretty well or is interested into some degree, and so we can kind of pick each other up and in ways that if we were the same we wouldn't be able to do. So. I think those differences in the marriage are just quite helpful.

And actually I think you're gonna find that maybe drew your more into the apps and the budgeting and looking at those things, and maybe your wife is better in other ways that maybe helping you dream big about the future and see what the possibilities are. Who knows, like how you guys are gonna be able to help each other out. But I think those differences are actually really important and ultimately really helpful. I think you'll find that

the more the longer you're you're married. Nice. Yeah. One of the reasons I mentioned how I felt like it would help, especially when it comes to spending, is because for me, me and Kate, like that's the biggest difference in how we kind of viewed money when we first came to our relationship together because I was a cheap tight wad and I had maybe like five shirts, a hoodie and a motorcycle like that. That that is it.

And you know, she helped me to learn how to prioritize, like what it is I actually care about and spend that money, and to not be a total cheap skate man. Yeah, not be a miser. Yeah, that's kind of kind of how I was too when we first got married. Emily kind of helped me bring me out of that. So I wasn't like a recluse with the hordes of money or something like Scrooge McDuck. You know, look at us

now though we're big spenders. There we go, Well, I wouldn't say that, not big spenders, but also a joke. All right, drew our our favorite apps. Let's talking about this real quick. Our mint and wine app. I think those are the best to budgeting apps out there. There are a couple others out there, but honestly, actually the selection in the budgeting apps is kind of thin. But I would give both of these to try and see

which one works best for you. Mint gives a solid snapshot of where you currently are and you can see kind of how much is in your accounts currently right now, in a in a quick second. But wine apps approach

is a little bit different. It's a little more proactive, and that can be really helpful, especially I think as a couple is trying to get on the same page with money, So if you're willing to spend just a little bit of money, I think wine app can be more helpful for young couples trying to figure things out together. So mint is free, but wine app costs about seven bucks a month. You can get a free thirty four day trial if you go to wineab dot com slash

how to Money. Ultimately, I think wine app is probably what you're looking for if you're looking to set some goals and you want kind of this budgeting software to help you hone your behavior over time, and and I think Wineap both being able to log into it, both being able to to do it together, is probably going to have more of an effect on helping you guys get on this same page in regards to money than Mintwood, even though they're both solid and I think probably better

for different people. Andrew, let's not forget Excel because I love all the details right that can come with spreadsheets as Matt pushes his glasses further up on his face because I do. That's one of the reasons I love Excel, man. And here's the thing. I am not an Excel whiz or numbers. You know, if you have a Mac you can kind of be in the numbers as well. I

have a Mac. I work on Max all the time, but I still use Excel because all my old spreadsheets, man, they're in Excel and they go back to those PC days before I started working on a Mac. But here's the thing with Excel. I really value the flexibility to customize and to be able to change things to work the way that I want them to. It does cost me some time. It takes me maybe about an hour every single month to compile that information to kind of look at what changes I can make because I'm always

looking to tweak it. For me, this allows me to see things on a very granular level, and so because of that, that makes me happy, right like. That satisfies that in me. But for Kate, she could totally care less. She doesn't care about all the details, and so she maybe is like your wife Drew, where she just kind of wants to see so an overall snapshot. She just wants to know where things are, where we are that month. So with that in mind, I know that I could

create a chart of that month spending. It's pretty easy. But even still, she's not that into it. She's not gonna get on the computer pulled up it's just inconvenient. She's not gonna do it. So because of that, man, what I do is about three times a month, I make sure I've got the numbers updated and I just text her. I text her the main areas of spending that we have set every single month that she most directly impacts. Those are the numbers that she wants to

be aware of when she's gonna be going out with friends. Uh. Those are the numbers so that she keeps an eye on, especially when it comes to buying groceries, because she's, you know, basically in charge of that our giving category. There's a certain amount of money that we set aside to give away every single month. She also really likes to know that amount. That way, if there's an opportunity for her to you know, buy something for somebody or to donate

some money, she has that as an option. For us. We found that there are a surprisingly few number of categories that we really need to watch closely because a lot of the categories that we spend our money and are are fairly automated and they're fairly fixed. Yeah, and I think really any of these pieces of software, or using using Excel, spreadsheet, using Mint, using wine app, any of them can be a great idea depending on kind

of how you work together. But one word of caution I want to say is just don't think that a budgeting app is going to fix it all or magically get you guys on the same page. It really does require also just a lot of back and forth, a lot of discussion, a lot of kind of at the dinner table talking about your goals, your dreams, how you want to spend your money. Learned from some of my beats, because yeah, early in my marriage, like we just were

not really good at communicating. I was bad in particular at communicating with Emily about kind of our goals and our dreams and kind of how I thought we should be spending our money and what we were kind of working towards. And so I think at times she felt like I was being cheap or I wasn't being and at times I was being cheap, and and so she felt like she couldn't spend money when she wanted to, and that was just a hard position to put her in.

And so much of it came down to my act of communicating well with her and actually sending up time for us to talk about money, just expecting that she would understand how I was handling it and and assuming that she would be on board, I guess. And so, yeah, make sure that the lines of communication are open, that you're using the spreadsheet or the app as a tool to kind of help you guys monitor things, but that you're continually talking about those goals and kind of where

you where you're heading towards. Yeah, Joel, I really like how you said. A lot of that takes place around the dinner table, right. A lot of these conversations and getting on the same page happens outside of the actual budget. Like the budget is the tool that allows you guys to stick to what you've agreed on. But like you said, you like that dream casting, right, Like dream forecasting and the kind of sharing your vision for for your life together.

That's the kind of stuff that happens, you know, on dates or while you're on vacation. Or like while you're walking in the park, the basic kind of stuff that you share with each other as you're living your life together. Yeah, no doubt. All right, let's get onto the second part of Drew's question. He asked about security, this security of these apps, and I don't think it's silly at all

to be considering the safety of these apps. I mean, with all of the hacks that have taken place in our information seemingly compromise from so many major companies, we should consider strongly the security of a certain app or service before we decide to sign up for it. Even then, though, I know that issues can pop up even when secure measures have been taken. So I guess the two big things I would say is to use complex passwords and

to not use your budgeting apps on public WiFi. If you can do those two basic things, you're protecting yourself in a major way by when you're using these budgeting apps. Those are basically the two things that are in your hands that make it easier to avoid getting hacked or having someone right like see all your sensitive information. The thing is that there has been nothing to actually indicate that apps like y n app and mints have any sort of security issues that we should be concerned about.

In fact, these apps actually have read only access to your information, so that even if a hack does get through the encryption and the multi factor authentication, they can actually move your money right Like they can look but they can't touch. They see the snapshot and they're like, Oh, this dude's rich, but I got no access. Oh man, this guy is really smart with where he goes out to eat. But he's his his his entertainment. But it

is so low. How does he do it? That's half off Wing Night and wind Ad has a great ride up on their security measures that they take to keep your information safe. We'll link to that in our show notes. Yeah, always good to kind of see that. And wine app takes it so seriously. I'd love to see that their ride up is so thorough and man, I've got full confidence in using these apps just like anything. I mean, who could have predicted that equivax right was gonna get

breached and they're a major company. You would think if anybody has their stuff together and isn't going to release a hundred and fifty the personal information of a hundred fifty million people, it's a major credit bureau with tens of thousands of employees, right or whatever. But yeah, that wasn't the case. So yeah, the server password must have been ABC one two three. It probably was. It probably was,

so you never know. But ultimately I feel completely comfortable and I feel like the security measures are really strong with wine ABDMINT, So check out that right up. If you have more concerns. All right, man, We've got two more questions that we've gotta get to, including that one about financing a used car, and we'll get to those

right after the break. All right, man, we are back from the break, Joel, and we've got a couple more questions, and we've got one here we're part of the answer might be CDs, and that's something we hardly ever talked about, so let's hear it. Hey, guys, this is Julie from Boise, Idaho, and I have a question about living off of your savings. I just got a big chunk of money that will be funding me while I go to school. I'll need to be making regular withdrawals from it for monthly expenses,

and I'm wondering where to put it. I think it is in my regular savings account. It will be a little too accessible. I would love your suggestions. Thank you so much, Oh, Julie, interesting question. Yeah, this is unique living off your savings, living off a lump sum, especially you're not even talking about retirement, right, We're talking about during your college years. That's a good question, and so let's kind of get into some of the possible ways

to think about how you withdraw this money. One, if you need to make regular withdraws, well prioritize having that money in an online savings account that pays a high rate of interest. A couple that Matt and I've mentioned on the show before. We like Discover Ally and c I T. Those are three of our favorite online banks that pay high rates of interest and have great customer service.

You'll also need to be disciplined in order to make sure that that money lasts for the intended duration you mentioned. Maybe having ready access to that money might make it difficult to stick to a budget. So if you do sign up for a new bank account and one that's paying you money on that lump sum. Again, you've got a lot of money in savings right now, and you want to make sure that you're earning money on that money.

So make sure that you have a budget and that you're sticking to it diligently became as you you don't want to withdraw all that money in one love song and then not have money for months as you're trying to to finish out school budget for those potential emergencies too. You don't want to just have this super rosy budget where if everything works out perfectly, then you're good to go. You want to make sure you're factoring in for some of those potential emergencies to make sure that you can

actually handle those unexpected expenses when they arise. And Julie, if you think you might have a hard time sticking to that budget, one thing that can help is to put part of that money that you don't immediately need into a certificate of deposit a k A that c D. We haven't really talked about CDs much, man, I know, I know. So this is the way that you can

use CDs essentially for behavioral modification. This can be an awesome way to restrict your access to that money so that you don't blow it all at once, right, like maybe on a new car, whatever it is that you feel like spending. Julie, don't buy a new car. And here's the thing. While it might be easy though to control your spending around some big ticket items like that new car or maybe a fancification, the sort of subtle creep of lifestyle inflation like that can be harder to notice.

So maybe putting yourself on a quote unquote monthly salary is a good productive step to take. You're sort of setting at these guardrails to kind of keep your financial spending from kind of careening off the cliff. Right. Yeah, depending on how long you're looking to lock that money up for, you could do CD ladding and you could put some of your money in a one year CD some of it into two. It just depends when you're

gonna need access to that money. You might want some of the savings someone a one year cd H. So much of it depends on your timeframe. But I will say this, especially with kind of the falling rate environment that we're in, that almost nobody could have predicted that we would be in that rates for savers would actually

be kind of falling off a cliff right now. Well, a CD can actually help your money to continue to earn higher rates of interest while the rates the banks are paying on saving us accounts just continue to drop. So having some of that money in a CD can be great for behavior modification to to keep you from from spending all of it, but also at the same time can kind of in pet you're ready to return

on that money. So yeah, some of it in a high interest rate savings account, some of it in a CD that you can't touch for a period of time. I think I would probably choose something like that, And Julie, we just highlighted a specific bank. But here's the thing. The interest rates of the higher interest savings accounts and the interest rates offered in the different CD products, they're always changing. So make sure that you do a quick

Google search. You can go to bank rate. They always have a good ride up of some of the best offerings out there currently, and make sure to do a little bit of research, do your due diligence to make sure that it is a reputable bank and not a quick little bank startup that you know is offering five percent on their one year CD, because that's gonna be maybe too good to be true. Yeah, as long as it's fd I C insured, that is the biggest thing

you want to make sure of. And there are a lot of kind of fake banks, companies offering bank like products these days. So yeah, just check to make sure that their fd I C insured. That's a really good step to make sure that if for some reason that company folds, your money is not lost. It is insured by the federal government. That is where you want your money to be. All right, Matt, let's get onto the next question. We're getting to that one about financing a

used car. Hi, guys, this is Eric from Tampa. First off, I love the podcast. I've been a long time Dave for EMZ listener. As much as I can appreciate his principles, I think he's a little stuck in his ways when it comes to a credit card and credit score. We are forty six and just paid off our mortgage and have no other debt. We still drive a two thousand four Toyota four Runner that we bought new and love it.

We are saving for a newer used vehicle. However, since paying off my mortgage, I've seen my credit square drop from to eight seventeen and about two months. I do use my credit card as much as possible and never carry a balance. My question is, if this trend continues, should I finance a newer used vehicle and invest the cash or just pay cash for the vehicle. Personally, I'd rather see my credit score drop than pay unnecessary interest. Again, I love the show and love the review on Beers

and look forward to your opinion. Thanks guys, Eric, thanks so much for that question, and man, we are with you when it comes to your opinion of Dave Ramsey. He has helped a lot of people, specifically helped a lot of people get out of debt. But we agree he's overlooking the impact that a great credit score can have not only in the type of loan that you can get, but just in lots of different areas of our lives. Yeah, we've talked about that before, Matt, that

a credit score doesn't just affect your loan terms. And you know, if you're a Dave listener, you're probably not taking out money loans, but it affects all these other areas of your life, like how much you pay for auto insurance or home insurance potentially. Right, So having a good credit score matters for a lot of reasons. Yep, that's right, man. And first off, let's go ahead and talk to you about the fact that Eric has this old car that he's got for almost sixteen years. Eric,

that's awesome. Buying a new car isn't a terrible idea when you keep them as long as you have, and especially if you are really into cars, that could be something that you find a lot of value in. And then on top of that you also have to paid off mortgage. Dude, you are killing it, Joel, we gotta get some mad props to Eric. Yeah, seriously, Eric, you want to come host the podcast For a second. That

sounds like, yeah, you got this figured out. But yeah, I agree, Matt, Like, buying a new car is something we would typically recommend people not do, but some people are really into buying a new car. They're they're really into actually being the first person to drive that car. And I understand that desire, But when you keep it for sixteen years, like man, buying a new car is not really that big of a deal because your total

cost of ownership really really isn't that large. But in regards to that credit score drop that Eric was talking about, well, we would say also to that, we're with you. I would rather see my score drop and avoid paying interest as well. Maintaining a good credit score is important, but it's a way less important than avoiding debt payments secure you interest. Your score is already in the stratosphere, so even if your score drops a few dozen points, well,

you're still in that top tier territory. And it sounds like you don't have a lot of need for more funds to take on another loan considering how careful you are with your money, so your credit score is even less relevant in that case. Again, it does affect other things. But since we're talking about someone who doesn't need to take on another car loan and already has a paid off mortgage, well I would say your your credit score is even less important than it is for the average person,

so you don't overthink it. I think you're on the right path, and I would not take out debt in order to improve your credit score. While credit scores are important, taking on debt to gain a higher score, well, to me, that's the tail wagging the dog, and it just doesn't make sense. Yeah, we didn't really get into this, but let's explain real quick why his credit score is dropping now that he's paid off his mortgage, and that's because the type of debt that he has is less diverse.

When you have a mortgage or a car loan that is an installment loan. You've got a large sum that you've taken out and then you pay back these set amounts every month as installments versus a credit card, and that's revolving type of credit. Those are two different types of credit, and when you have both, that's when your credit score can benefit the most. So Eric, our advise to you, though, would be to go ahead and pay for that car in cash and man enjoy that car.

You'll likely enjoyed even more knowing that it's one paid for. It's probably a similar feeling that you already have with your home. I'm sure it feels better living in a home that you own outright, and then keep this newer used car for a long while as well, which we have no doubt that you'll do. It sounds like financial independence is right around the corner for you and for your family. It sounds like you have been making some

smart financial decisions uh your entire life. In the end, don't lose sights of the big picture trying to sort of nail that perfect credit score when in the end it doesn't matter all that much when you have a great score as it is so Eric, I feel like you were on the right track to begin with. You kind of had this figured out, but hopefully this kind of helps cement things for you. And ultimately, man, just a big congratulations to you and your family. You're handling

money so well. And yeah, like Matt said, financial independence, I gotta imagine and it's coming soon for you guys, and and man, what an incredible achievement. So, Matt, these were some great questions, really diverse. But let's get back to the beer that we had on this episode, which, speaking of diversity, is not very diverse because we really like to drink I p A another I p A. Yeah, but it was a really good one man, Yes, it was. So Today on the show we had Chance I p

A by Wildly Brewing Company. This is kind of their year round flagship I p A and I'll go first. I would say this was fresh and vibrant. I feel like they really were going for kind of that newer style of I p A. But they weren't going head over feet into the fat. What they did was it was kind of this restrained version of the newer, juicier I p A style. It had a lot of those notes and a lot of that flavor profile without being

kind of overwhelming. And so I feel like this is one that I would recommend people try if they're kind of dipping their toes in the water of I pas because it's not too bitter. It's also not kind of insanely out there, like going too far or pushing any boundaries. But I would say it was really really solid, man, really really good beer. And I know it's like one

of your go twos right now, Yes it is. I don't know how far they distribute, but if you're in the southeast and you can get your hands on a chance I p A, I would definitely recommend it. It's this is a just really fruity I p A. In my books, it has like this fresh, juicy, tropical nest

to it. I was almost picking me up on some passion fruit notes as well, which sometimes it can be hard to sort of identify it because a lot of times whenever a beer includes passion fruit notes, they also include guava, and so you almost expect to have one with the other. But for me, I was picking up on that one specific fruit, passion fruit. And if you are getting into I p A s and yeah, you're not a fan of the big ones with the the

where you get socked with that big bitterness. I would definitely recommend this beer, and I'm thankful for yet another beer joll that you and I can share together on the show. No doubt my friend always good times. Uh, And that's gonna do it. For this episode, we'll have links to a couple of the things that we mentioned on the show today, including that wine ab write up about their security measures that they take to keep your information safe, and those show notes are available on our

site how to money dot com, Yeah and JEL. Normally, this is when we say, hey, if you haven't already,

be sure to subscribe and review. And while that is valuable and helpful, what we would really love for you to do this time, if you haven't already, is to tell a friend you know who might be interested in learning more about personal finance, or instead of hitting the subscribe button yourself, hit the subscribe button on your friends phone and that way they're like, what is this podcast appearing? You might feed? Yeah, there's nothing like getting surprised by

and that purchases that your friend made for you. Surprise subscribe all right? Well, yeah, so you feel free to do that, but also you don't have to. But yeah, just telling a friend that broadens the how the money community and kind of brings more people into the fold for hearing money saving advice and kind of getting started on their journey towards financial independence. Yeah, and plus, isn't it just so much more fun to talk about stuff in real life? I mean, that's how we do the podcast.

You and I are sitting here having a beer, So let's make sure that we are taking this discussion offline and we're incorporating it into our daily lives. Man, So, Joel, that's going to be it for this episode. Man, until next time, Best Friends Out, Best Friends Out,