Ask HTM - Work Provided Life Insurance, Compounding Returns with a 401k True-Up, & Selling a Home to an iBuyer #721

true up option. That's something that is offered, but he wants to know if this actually means that he's not leaving money on the table, not tune up, but true up true. We'll get into did I say true up? No, you said true But I know people might hear

but there's BA two six one. But so this is a law in Europe that basically says that you get paid if a flight is delayed or canceled and by a certain by a certain amount of time. So there's different rules about got that euro European feel to it? EU? Okay, yeah, exactly.

And so there were a couple people in my life recently who mentioned flight cancelations on a trip to or from Europe, or at least a substantial delay, and I was like, hey, you might want to check this out and file acclaim with the airline because you might be entitled the compensation. And you're like, oh, yeah, what twenty thirty bucks and it's like no, no, no, no, hundreds and hundreds and hundreds of dollars. So nice. Yeah, this is one of those things that a lot of people don't

know about. And by the way, the statute of limitations is like years long for some of these, So if you're like, man, two years back, I got screwed on this flight. And it doesn't have to be in inter European flight. It can be a flight to and from Yeah, exactly, so look at the details. So if you fancy like that, like all of Joel's friends are, make sure to jets threading up for parents and all the likes. Right, but the folks are just talking about bicycling from point A

to point B to to the grocery store. Right, We'll put a link to an article that tells helps you understand how to get compensation for EUT six to one if you had a substantial delayer at cancelation. But it's kind of cool, Like my sister did this a few years ago, got paid more in the compensation than the flight cost her because she got such a dirt cheap deal, so it's yeah, it's pretty sweet. They pay actual replacement cost, not depreciated cost of that ticket. And we've talked about

how these are. There are similar benefits that credit cards offer, but of course you have to know about that and have used the right credit card or even have the credit card. So this kind of size steps all of that, or it does not come down to payment. It's even if the European law. Even if you did, you could double dip essentially. And oh that's what the credit card and the EU six one. Yah, they're separate. Yes, it makes makes sense that you should be able to. That is

one of those things we're interesting. It would not be cheap. I think it'd be frugal to take advantage of the credit card benefit, the trip cancelation shirts, but also under your your legal right as someone taking a trip to or from Europe, like get the money. Oh and by the way, Matt, I don't think we've mentioned this yet. We're gonna have a listener hang here in Atlanta and our boy home city this coming Friday. We teased it was it last week or a couple of weeks ago,

but it's official. This is the official announcement. Yeah, so, if you live locally and you want to see our ugly mugs drink beer together, please come out to Inner Voice Brewing. We'll be there from four to eight pm. Let's incentivize folks as well. Let's we'll have a few pairs of our how to Money socks on hand. Sure, yeah, you beer, we'll see but yeah, we hope to see you there at Inner Voice How To Money Hang meet

your fellow listener this Friday from four to eight. All right, let's introduce the beer that you and I are going to enjoy today. This is a brew by Common Space. It's called Chubby Unicorn, and we will give our thoughts on this guava milkshake IPA at the end of the episode. That's right, But let's get to the subject of Handmatt. We're answering listener questions. We've got a good slate of them today on the show, and if you have a question,

we would love to hear from you. It takes all of three minutes to pick up your question, to talk it into your phone into that voice memo app, and then to send it our way. You can find the specific instructions for how to do that at howtomoney dot com. Slash ask can't wait to hear from you, and this listener wants to know whether or not they should sell their home to an entity instead of a human.

Georgia Bay, Yeah, I mean probably right. The water's just fun. It's pretty great here. But you're you're talking about selling your house, and lucky for you, even after own owning that house for just a couple of years, it's likely that you're still going to come out ahead. Right, In a normal time period, that could really come back and

kind of bite you. But just given the lack of supply, given the soaring prices that we've seen since you made that purchase, I'm pretty sure that you're probably still going to be doing Okay, Yeah, obviously it comes down to your personal situation here, but at least it's not like, let's say it was six o seven that you made the purchase and then if you're looking to sell two years after that, that would put you in a pretty painful position and be called taking a bath, right for ure.

And so yeah, definitely fortunate for Rosemary that even despite despite those transaction costs that are so heavy involved in buying and selling and taking out a mortgage and all that stuff, it would typically mean that you would lose money over such a short term ownership cycle. But that's not going to happen to you, Rosemary. But let's talk about eye buyers, and first, what is an iBuyer Maybe

let's define the terms. Well, simply put, their big companies that are willing to instantly and that's what the eye stands for. By the way, in eye buyers, they will instantly buy your house from you in order to turn around and sell it themselves on the open market. Open Door and offer Pad they are two of the largest

players out there there. You mentioned you mentioned open door, Rosemary in your question but Zillow and Redfin they had a large percentage of the market before they ended their eye buying programs, and basically they had a tough time buying homes at scale, right, and during the pandemic when there was a lot of money slashing around, they were overpaying for houses. They literally bought high and sold low, which is the exact opposite of what you want to

do really with any investment, right. And so since then, eye buying is kind of wised up, so you're really you're much less inclined to get an amazing offer today. Two three years ago you might have seen Zelo give you more money than you would have gotten if you put it on the open market. But now purely because of the novelty of it, because it was a new thing, it hadn't necessarily been proven. They were still trying to

figure things out. They're trying to establish market share, and so they're like, hey, cool, and they I guess they didn't really they hadn't other due diligence, they hadn't figured out what it took to buy and sell homes effectively without losing money. And then they realized, wait a second, it's actually gonna be really hard to pull this.

just has played out a little differently. It sounds really good, but the end result isn't necessarily awesome, and that's largely because they are acting as another middleman who's looking to get paid. So that means the offer that you're likely going to receive it's going to be typically lower than what you would get with a traditional listing. They are looking for their piece of the pie, they're looking for

their cut. Some folks might think that selling via an eyebuyer is actually going to reduce fees, which is going to maybe make the offer more competitive. In reality, like why not go digital? That is not the case, because the fees can be similar, if not more than the fees that a typical realtor would charge. And so why would you go with an option where you're essentially going to get hit with the same fees, but with us with an inferior service. Right With at least with the realtor,

you've got somebody, like a real person. It feels like a customized, bespoke, tailored care that you're receiving. But with Eyebuyer, man, that seems like the path to take if you're not looking for service, right, Like I mean, just Iyebuyer even in the name itself, like it makes me a think of eye Robot or whatever the movie and is robots and stuff. Well, you said service, But most people when they're in there to sell me an iyebuyer, they're not

looking for service. They're looking to sell it immediately, right. They don't care about like whether someone's going to hold their hand and walk them through the details and help them get their house in order so they can get top dollar. They want to be done, They want the transaction over completed, they want their cash, right, And so that is what ibuyers do. Well. They are the convenience play,

the convenience pick. But we're talking to one of the other big downsides of using an eyebuyer is that you're asking one single entity to make an offer for your house. You're skipping the open market, right and the competition that's generated when home is publicly listed, When it's put on the MLS. That's when everybody and their sister sees your listing on Zilo and says, Oh, that's a cute one on a cute street. I think I want to go

take a look at that. When you sell directly to an eyebuyer, you miss those eyeballs and you miss the potential interest from people you know. And even though obviously home buyers they're not lined up the sidewalk to see a house like they were back in twenty twenty one early twenty twenty two, still just a few competing offers, right, is all you really need to ensure that you're getting

the absolute best price. Having at least two or three interested parties looking at the house making offers on the home is going to ensure that you're getting what it's actually worth on the market. You don't get that with an iBuyer. You're getting literally just the one offer and got one buyer. That doesn't help you the iebuyer. That doesn't help you know whether or not that is what the house would actually go for if you were to put it up for sale. Plus, not all homes qualify

because eye buyers aren't available in all markets. They're available kind of more in the southern United States, less in the northern regions. So yeah, they are in Texas, but they might not be where a lot of our other listeners who listen Matt where where they are. It depends on the property too, because I think oftentimes they're looking for uniformity because that's how they're able to easily from

a digital standpoint, determine the value of a home. And if you have a piece of property that's on a lot of land or that's that's a really unique home, either A, they your house may not be eligible to be purchased by an eyebuyer, or b you might get severely lowballed because they're not really taking that into account as much as some of the other things that a

lot of folks are looking for. I fear has like a water slide from the second story down to the pool, and you got like a grotto or something, you might get qualified. I don't know they might not even want

to play with you. But like you said, folks who are wanting basically like cash now, which is a part of why we don't like this whole like the eyebuyer industry or sort of that mentality is it seems like almost like a desperate ploy to unloading your house quickly, which isn't how you should be approaching selling your home.

But yeah, the speed which you could sell your house, how it's streamlined, that's certainly one of the advantages to going with an eyebuyer, But it's also just going to be so much easier, right because like maybe some folks actually like they do have the time, right, it's not about how quickly they can do it. They actually have the time, but they just don't want to deal with

the hassle of it. They don't want to put up with the headaches of schedule, the appointments, of hiding all of their personal stuff so that potential buyers can envision their own stuff there in the house. It's the easy button. But you are paying a price for this convenience, and you know, we hope for your bottom line that you are able to take the time to actually do some

of these things. To do the legwork. There are meaningful dollars on the line, and we until the industry gets maybe more competitive or more efficient to where the eyebuars are taking less of a cut, we're not really in favor of going the taking the eye buy route. Sure, yeah, I mean a pawn shop will buy your stuff instantly too, and they're not, but they're just not gonna pay you

as much as you can get exactly. Typically if you list it yourself on Facebook, marketplace, or if you sell it on eBay, there are all sorts of ways where you can, you know, sell that an asset that you have on a shorter truncated timetable, but typically that means they're going to make less money for it does feel like the pawn shop of realtors. Like I think maybe that's the slight negative connotation again, not that the pawn

shops are serve purpose. They're a legit business and the ability to go in there and man, I don't have the time, I just need to unload some stuff and in order to have some cash on hand. It serves both parties well, But who stands to make a profit The person that's there in the middle, and that's what Eyebuyer is looking to do. Yeah, I mean we've all seen pond Stars. We know what happens there. Okay, I actually haven't seen Pundstas. Oh really, you've never seen one

episode of it? I don't think so. I mean I understand the premise. Next, you're gonna tell me you never saw one episode of Orange County Choppers or whatever that was. Oh, I know, I definitely Okay, Yeah, they're always fighting and yeah, stuff at each other. There's like two of the most popular reality TV shows of all time, that and like Deadliest Catch, Right, But I think Insummation Rosemary, we would say that it can't it can't hurt to get a quote from Open Door, from offer Pad to see if

they're in the ballpark. But get a quote from both right, and you might get a solid offer, you know, with

just a few clicks. But hiring an experienced agent who knows the ins and outs of your neighborhood could net you thousands of dollars more, if not tens of thousands of dollars more, and putting in some of that work up front, whether it's you know, taking out some ugly wallpaper and painting a neutral color or something like that, all those sorts of things that an agent is going to give you the tips on, Hey, spending a few thousand here could mean many more thousands right when it

comes to putting your home on the market and getting those offers. So I would talk to an agent once you have those offers in hand from the eye buyers, and say, hey, how much more can we get? Like and if it's not worth the hassle to make an extra couple grand, then you take the eyebuyer offer. But if you say, actually, the agent things we can get fifteen to twenty grand more, it's worth the extra time,

the extra effort. It doesn't hurt to at least bark up that high buyer tree, but in nl likelihood you're going to do better go in the traditional Totally agree. Yeah, it can be a great data point essentially to help you to decide what it is that you should be

doing moving forward. And given the criticism that we have presented on the podcast about realtors and the fees that they present or the fees that they charge, I think a lot of folks might be thinking, oh, man, I'm surprised that mandol aren't down with eyebuyers because it seems like it kind of automates things that kind of it's a more efficient marketplace, but it's not really like that's the problem is that you're holding to a single buyer.

If it was more like a sophisticated marketplace where buyers are being put directly in touch with sellers and you are able to automate a lot of the stuff there in the middle to where there's not necessarily a middleman there and like taking a cut as opposed to just software that's kind of running in the background, that sounds more attractive to me, Like I'm more hopeful for that as opposed to just another player that's in between you

and your money. We're just saying we're not talking about widgets here, We're not talking about tennis shoes, we're not talking about T shirts. Right. This is a complex market, the market of real estate, and it varies from street to street. And like you said, madikuild a dog barking across the street, a troublesome house that's right next door, Well, that can make all the difference in what you're getting in what buyer see and what they're willing to offer.

And so I just don't know if I buyers are ever going to be able to compete in a hyper customized business like real estate. But we've got more questions to get to, including one about tossing bonus money into a retirement accoun Does that make sense and will it help him avoid more tax? We'll get to that and

more right after this. We are back and we will get to that four when kay question here in a minute, But first let's hear from a listener who is actually she heard us answer a question and now she's got another question. It's a question of a question. Take you back off of a question. We'll get to that one right now.

our income upon death of either of us. We have a healthy savings account and no debt beside our mortgage, and since we don't have any dependents, we have always thought this would be sufficient in the unlikely event that we'd need it. However, we do plan to start a family in the next few years and are wondering should we go ahead and established term life insurance now since we're younger and healthy in case something were to happen, so that we can ensure that we get it for

a good price, knowing that we'll eventually need it. Thanks so much for your thoughts and love listening to the podcast.

simple sitting. And so we're big fans of term Life by the way, in case you didn't know, if you're like I think I need some life insurance, term life is is the way to go. We'll actually put a link to an article I wrote about that on the

website in the show notes. But before we tackle this new term life policy, let's talk about work provided life insurance policies for just a second, because a lot of folks they might be thinking that, well, one and a half times your income, that's plenty, right if something happens to either of you, And the truth is it might be, but it does depend on the specific details.

That changes the dynamics, Right, if it's split fifty to fifty, it's like a kind of a simpler dynamic to think about. But and I know, like there's obviously a lot of emotions involved in this. This can be kind of like a morbid exercise. Would you be able to get back to work after a couple of weeks or do you think you need more months to mourn your law sentens. We don't know that right until we go through it.

So it's the kind of thing that's unlikely to happen, but it's worth envisioning so that you're properly prepared so that you you feel can feel comfortable that you have

enough insurance in the case of that worst event happening. Yeah, and it depends on just some of the different personal finance goals that you might have as well, because I think when you, like earlier on in your careers, you may not have a ton of expendable additional income where you might say, well, it wouldn't hurt to go ahead and get an additional policy, But if one is being provided for you at work, and if that's enough, then of course, why spend the additional money every single month

for a policy that you don't necessarily need. If you've thought through some of these some of those questions that joli in that workplace policy, typically it is one x or one and a half x your income that's given as a free perk. Buying more through your workplace plan doesn't typically make more sense because, especially if you're healthy and twenty nine years old, you're going to be able to get a much better deal shopping the open market.

So I wouldn't necessarily add to it at work. I would if you do end up believing or realizing that you need more, you're going to want to shop on the open market as opposed to going through that work place playing more. Yeah, but with that being or a perk that your employer might offer, totally take take advantage

of that thing. But I get the free style. Keep in mind though, that it's workplace provided, employer provided perk, So once you were to move on from that job, that's that thing is not going to be coming with you, which is the opposite. Of course, if you get your own individual term life policy, that's good for you, know, no matter who it is that you work for. But yeah,

important things to think through. And this is and this is coming too from a guy that got term life before we had kids, Like, this is something that we did because we kind of thought through some of those some of those different things. And Kate she was she just has like I guess, lower risk tolerance level and she was thinking, man, okay, I guess early on it became clear that I was becoming more of the main breadwinner, and we had purchased a home. We hadn't had kids yet,

but we did have a house. And I think it was about two years after we had that house that we had had this discussion and she was thinking, Man, I would still love to be able to stay in this house where you did. I don't know if I would be able to be able to afford the mortgage. And so that's literally something that we went ahead and did. That was like a solid two years, I think before

we even had kids. And so for us, it was more of a peace of mind, a way to mitigate risk, even though it was going to be highly unlikely that that was going to happen. But every young couple who doesn't have kids in their twenties or whatever is going to have different things to think through. Right, they might not own a home, but they might live exactly, they might live in an airstream and say, listen, our costs are really low and so the one X is plenty, right,

that's more than enough. Or maybe you've got like a a ton of family that are fairly well off and they've got basements and additional rooms or wings of the house that you can live in. These are all things to consider as you are trying to trying to decide if you should go ahead and go out on your

own and kind of get your own policy. But that being said, like you don't need to be in a rush to go out there and secure your own term life policy, Like this is something that I would maybe put on your medium term financial to do list, but not something that needs to happen right away, because you're asking about getting a policy early on, while you're young,

before it gets really expensive. Well, premiums they go up over time as you get older, yes, but they don't adjust a ton at all from your twenties to your thirties. You might end up literally paying just a few extra dollars every single month, but you will also be covered for a few extra years on the tail end, which are the most expensive years to be insured for more

important years. Yes, absolutely, So you're kind of rolling the dice here in one sense, right, Like you're hoping that there's not going to be like a medical catastrophe that's going to change those dynamics. But I think it's totally fine to wait two or three more years, even waiting but until you have kids before getting out there and getting your own additional policy. Like literally, it depends where

you look it up. But I saw one table and it showed that between the ages twenty five and thirty five, you are literally only paying two dollars more two dollars twenty four dollars a year by waiting a decade a decade of not paying for paying annual premiums on a policy that you are you know, unlikely going to need, especially in these early years when you're like, I'm just trying to max out a rothier area, just trying to get the match on my four oh one K. You

could maybe cut back from your investing to have more insurance. But these are the kind of hard decisions that people in their twenties have to make. I still remember Matt people being told by really smart people, hey, you need more term life insurance, and I was like, but I I'm just trying to become, you know, financially independent, and I feel like I need to sock more money into investments and that, Yeah, I get the value in that insurance, but I think I can wait a couple more years.

And so that might be the key here. Too. Possible to over ensure you don't want to you don't want to overdo it towards keeping you from achieving some of those other things that you're getting after, right, So those are the trade offs, Like everything comes with the trade off, right, Like that's that's the reality behind everything in personal finance. And so in a couple of years, you'll probably want to grab a thirty year term policy, megan, but shop around,

like when you get to that point. Policy Genius is one of our favorite spots to get quotes. Costco members

should also get quotes there are too. And the reason you only need a policy, by the way, for three decades instead of for life, instead of getting like a whole life policy, is because we're hoping that the need for life insurance is going to evaporate by the time the kids that you're playing on having the theoretical kids by the time they're grown, right, and that you've been saving and investing for such a long stretch that at that point in time you don't need the coverage. You

could pay a bunch more. You can get life insurance for the rest of your years, but should be better off with the term policy and the much smaller premiums that accompany it, which would allow you to funnel even more money towards better financial goals, like investing even more.

It's a virtuous cycle. Yeah, and like we said, as far as like your kids being out of the house, like that gives you a solid twelve years to have like multiple failures to launch in order for those for those kids to get out of there before you know, obviously they're no longer dependent on you. Yeah. So really

it's it's not like an easy slam dunk decision. But if you think through all those things and you say, wait a second, kind of like Matt and Kate, I feel like we need a little bit extra coverage, and really it's not that expensive and we're meeting all of our other our other financial goals anyway, so let's go ahead and make the purchase. It's really only going to

be nineteen dollars a month or something like that. But then again you might say, no, no, that would keep us from being able to achieve this, this and this, and so actually we're going to hold off for a couple more years. I think you could really make a pretty good argument either way. Yeah, but bottom line, know that it does not get significantly more expensive hardly at all. Like, really, it really starts ticking up once you hit forty. But hey,

let's get to our next question. This is from a listener who, bottom line, is wanting to make sure that he's not leaving money retirement dollars on the table at the end of the year via his four o one K. Let's hear it, Hi, Matt and Joel.

to day expenses. I've been making no contributions to my four oh one K weekly, but will calculate to take enough out of my bonus to make sure that for the year I've contributed enough of a percentage to get the match. Also, I did confirm that my company does a true up. An extra benefit that I've seen to do this is that because I'm contributing to my four oh one K and the funds come out pre tax, my taxable amount, which being a bonus attacked at a

higher percent, is less. So I'm saving a good amount on my bonus taxes by doing this. My question is, by only contributing one time per year, am I losing the long term benefits of compounding interest in my four oh one k? Thank you guys, have a great.

same place. Is kind of weird, right, exactly? No, But it really is like it's this community we're trying to build of people who are like minded, and you want to see other people achieve success too, So I think of it in some ways as a family, and I don't know. Maybe you're the godfather of it, but what does that make you? Godmother? Maybe fairy godmoma? Yeah, I will say that, all right, go with that. But Gavin,

I'm glad to have your round. Man, thanks for listening to the podcast, and congrats on getting the full match on the four to one k even though you've got four kiddos at home. Matt, that's like a bigger hurdle to jump over. Yeah, it maximizing those retirement accounts per personal experience. Welcome to the four kids club, right, You've got that. Not easy. He's the mama bird right like or daddy bird. He's got those mouths defeat. It's not easy.

And so I'm glad that you've confirmed that your company does a true up. By the way, not every plan offers this, and so I can come back to bite you if, let's say you don't contribute for a few paycheck cycles, but you're trying to invest money in bigger chunks later in the year in order to try to get that full match. Well, if your employer's plan goes the true up path at the end of the year,

like Gavin's does, you'll be fine. Right, you receive the full matching dollars you otherwise would have received if you had invested like normal, like clockwork along the way. But if your employer does not offer the ability to true up, you will have missed out on some of those free matching dollars. So this is just an important detail to make sure that you're aware of with your employer if you're not committing money to your four one K regularly

throughout the year. Yeah, And basically the reason that the true up is necessary is employers basically are lazy, and so oftentimes the way the match is calculated is they base it on your annual salary, and so at the beginning of the year, they say, okay, if we provide a six percent match based on your salary, this is how much we would contribute. This is how much we're

going to match every single paycheck. But if there are some gaps, and I totally get it, Gavin, if you're kind of like, I'm not totally sure if we're how aggressively we're gonna invest this year, I got four miles to feed you. There might be times when you're just like, all right, things are looking kind of tight, so you skip out on some of those contributions. But basically, when you contribute to your four and K, it acts as a trigger for your employer to come to match with

their matching contribution. And so what that means is that if you invest at the end of the year with a lump sum and you don't have that true up. If let's say you just invest over three paychecks towards the end of the year, well you're only you're only going to get that match on those three paychecks, and the whole rest of the year you're missing out. And so what's actually interesting is that this works both ways too.

Let's say you are a very aggressive investor and you're like, oh, I want to I want to get I want to get invested as soon as possible, and so you invest let's just say the first three months of the year. Well, you're literally putting like ninety percent of your paycheck aside to hit the limit. Yeah exactly. And were you to do that, then each one of those page you would get the match that was calculated there for each paycheck,

divide it out like over the entire year. But once you stop contributing to your four win K because you've hit your maximum contribution limit, well, your employer. Again, it's not going to be triggered, and so they're not going to be matching it with dollars because they aren't calculating it on a per pay cycle basis. Some employers do that.

It's just it's more work, and I understand it. It's a pain in the butt for them to basically calculate how much you're deciding to contribute for that pay cycle to your four oh one K. But from an employee standpoint, that would be the easiest route because then you literally they're matching dollar. You know, they're matching how based on however much that you're putting aside. But unfortunately that's just

not how the majority of employers do it. Yeah, so you just have to know before you kind of figure out how what like what your contribution cycle is going to look like. You want to know the details of whether or not your employer's plan does. You want to

know the details contribution matching or not. And so if your employer doesn't, let's say, offer the true feature, you'd be well served to do whatever you in to make sure that you regularly invest right at least up to the match with every single paycheck not waiting let's say until the end of the year, like Gavin's doing, right, And his question is basically whether or not taking this route and investing in a lump sum at the end of the year is okay because his employer is still

going to contribute those matching dollars. And I would say the simple answer is yes, Like, as long as you're getting the full match, which you are because your employer does the true up, then you're totally fine, no worries, right, and more than anything, like more than anything, we don't want you leaving matching contributions on the table because as long as you're contributing enough to get the full match, when and how you do it is really less of

a consideration. It's more minores. Right. But that being said, if you and this is what we talk about here on how to Money, we get a little nerdier with it. If you really want to optimize those dollars that you're waiting to invest until December towards the end of the year, well they obviously won't be invested in the market quite as long. And since the stock market goes up essentially three of every four years, you're actually going to be

investing at a less than opportune time. The reality is that the sooner that you can get your dollars invested, the sooner you can get your dollars into your four O one K, the better off you're going to be because that gives those dollars more time to experience the magic of compounding returns. And it may be more or less on a given year, but year after year. Again, we're talking about compounding here. It's not just the fact that it happens once. We're talking about the fact that

it just snowballs, right, it builds upon itself. Twenty five percent of the time, you're gonna come out ahead, like in twenty twenty two. If you wait until December, you're like, whoo, Like I actually I actually made out like a bandit by waiting. But most of the time that's not going to make it exactly. So that would mean, then, you know, rather than waiting to invest at the end of the year, investing regularly with every paycheck, that would be a better pick.

But if you want to get really nerdy with it, the superior option is going to be to invest. Invest as aggressively as possible and as early in the year as possible. But again, you know, we're talking about optimization here. We're not really talking about what's right or wrong. But either way, if by waiting to invest either at the squeeze it in at the beginning or if you squeeze it in at the end of the year, either way, Gavin, for you, you're going to be made whole and you're not

leaving any dollars on the table. Yeah, we're not trying to put pressure on you because again, you've got four miles to feed, So it's not like start mex it out in January, right, I mean, but this is something worth noting that by delaying, you're not optimizing to the fullest extent that you could. By the way, you mentioned a common misconception gap that I wanted to clear up, which is that bonuses are taxed at higher tax rates,

which is actually not true. It kind of feels like it because more taxes withheld from bonus dollars that are paid out. Typically we're talking about a flat twenty two percent that the employer holds back in taxes when they pay out a bonus, not to mention social Security, State taxes, Medicare, So it can feel like, wait, I just got a ten thousand dollars bonus. Why is it like fifty five

hunderzo in my account? Like, I don't understand. I mean, everything gets sorted out though, when you file your taxes, and so, if your effective tax rate is lower than twenty two percent, that's going to shake out in the form of a tax refund for you when you file your taxes. In this and so, bonuses are awesome, and hopefully you're even more excited to get yours this year knowing that it's not actually taxed at a higher rate. Man.

I hear that from people all the time. They're like, oh, it's a misconcepts love getting a bonus, but man, the taxes suck on it, and it feels like it. But you're gonna probably come out ahead when you file your taxes.

You're gonna get some money back here. Yeah, I mean it kind of comes back again to just some of the most common paths that employers take, which is when they apply the standard twenty two percent tax rate on bonuses earned like that it's the potentially easiest path for them to take, but it isn't the most optimized for you for your own personal finances. Similar to the true up method or the option. The fact that that's there.

It's to be able to make up for the fact that they're not doing things perfectly optimized, which if you live in a perfect world, of course everything would be perfectly optimized. But employers got other things don't worry about. But Gavin, we think that you're going to be set. We appreciate you listening to the podcast, Joel. We've got two additional questions that we're going to get to, and speaking of podcasts, like, we're gonna get a little meta

with it. We're going to talk about the medium of podcasting itself plus one other right after the break. All right, Matt, in just a second, we're gonna help a listener out who has been crushing it with his own podcast, creating great content for a lot of years. But how does he scale. We'll get to that one in just a second, but let's first get to a question from a listener who's wondering if you should build a new house and then rent it out.

but it seems like it could be pretty good long term. Alternatively, I could just take the money I would use to do that. I'd probably get it from pulling a heelock out of my house and put it down payment on the duplex or quad or something. Yeah. I don't know, But what's your guys thoughts on this, Matt?

hiking and laugh at us. But Keith, we really like your question because normally we would be a little more cautious of this approach, right, building something from scratch and you know, with this long kind of drawn out plan in order to have an investment property. But you specifically check a bunch of boxes. You own the land, so check the utilities are already in the ground. That's another check. That's awesome, like the opposite of like when people are

trying to sell you lakefront property. I know it's like for ten grand, you can get this lake front spot. Here's somebody we know that will provide septic and yeah, yeah, all that. But Keith is also the builder, and I think if any of those details were different, our advice would likely be different as well. Like if Joe Shmoe was asking about just buying random dirt in a far off location, like no, like a country song that is, that would be our advice. We'd say, yeah, probably not.

But it sounds like, you know, Keith, he's got to know how and he's got the ability, I think to pull this off. It makes me think that we've got a friend and maybe this is like ten, twelve, thirteen years ago something like that. He in town purchased a plot of land in the goal for him was to build his house on that property, but unfortunately it didn't the American dream. It did not work out for him.

Whether I think it was a combination of maybe not having done quite as much due diligence, but also I think maybe some slight dishonesty on the part of the cellar.

But bottom line, it was basically FEMA flood maps made it unbuilt, could not build there, and I don't I think he ended up he might still own the piece of property, or maybe he donated it, and I think he had to donate it for tax that was like the best way she's gonna lost money, much less than bottom money, and this area think it ended up end up being like thirty thousand dollars, maybe that he'd originally

originally paid for that. So Keith, for you, we think this could be an excellent route and an excellent path to take for everybody else out there, listen to why we think Keith is well suited to do this, because he truly is.

would likely be able to put in. Keith, it means like maybe you're doing the tiling right, maybe you're even installing some of the electrical I don't know, but those factors are critical when you're trying to figure out if this is a sound decision, because the cost of building has gone up substantially, but still have rents in home values and so as long as the numbers make sense for you and you're not taking on crazy high interest debt to pull this off, it seems like a sound

decision to us. And it also makes me think, Matt, he mentioned buying a duplex or a triplex. Well, Keith, what if when you build this house a hybrid approach, you build a duplex or a trilex, but you build a next one that's I had a neighbor across the street back when we lived in town as well, and he built a really nice duplex. He lived in one half and he rented out the other. He eventually moved

away from that from that part of town. He lives elsewhere now when he rents out both and this has been like a money maker for him hand over fists for a whole lot of years. So if you the next duplex, I think maybe that is the best of

both worlds. That's right. Also, before we keep talking about real estate, Keith, he didn't mention any of his specifics, but this is also assuming that Keith, that you are already maxing out your retirement accounts, which are going to be the easy button when it comes to growing your net worth. But just because it's easy like that doesn't mean that investing in the overall market that that is

an inferior option. And because in many ways it's actually going to be the superior option, right, Like you're going to be more diversified, it can be fully automated, you don't have to worry about managing the properties. And of course, like there's the chance that you may not quite get the juicy returns like you would with real estate. But that doesn't mean that you should skip investing of course

in boring tax advantaged accounts. And keep in mind too, like one of the things you said was you haven't heard many folks talk about taking this path. And I think the reason that is is because oftentimes you have real estate developers. You've got developers, right, and they are the ones who are like choosing the sites and figuring out how many houses they're going to kind of c I'm on to put on the land. And then you've got property real estate managers. They're typically specialized in what

it is that they do. From a business standpoint, that makes a lot of sense. But as an individual, Keith, if you want to be scrappy and are willing to learn and do both of these things, man, you've got the ability to see this thing through from soup to nuts, right like you are. You've got the plots of land, you can figure out like how it is maybe even that you want to orient the house is on the property, Like you have an ability to create some awesome places here.

But then see it through right like get it ready, show it, manage it. And with that in mind, again, like Joel said, this is it's almost like a it's a superpower, but it's almost like an unfair advantage that you have compared to anybody else who's looking to get

into real estate. Yeah, so put it to use. And especially if you're going to live in half of it, maybe maybe you say, oh, for two years, I'm willing to live in the property, and maybe that's going to make this and even better, make it even make more sense, right, make it even better investment. But assuming you're good to go right and you're ready to put that superpower use, it's really important to make sure that you're performing your

due diligence right. Gathering the data, running the numbers is a really important step in this whole process. You got to figure out how much is this going to is this house or multi family resident's going to cost me to build? And what are you likely to be able to get in rent for it? Is there a dearth of rental units where you currently live? Like, knowing all good information to be looking up in those local dynamics are crucial in the real estate right and local zoning

as well. Like, so the fact that you mentioned that the utility is already in the ground, I picture a development of a bunch of houses, and maybe zoning may not allow for multi family, or maybe there's an hoa that keeps you from being able to rent that out. These are obviously all things that you want to make sure that you have a good grasp on. Yeah. Yeah, And I love that he's taking a long term by the way. I think it's really important because you got

to know the local dynamics. But you also got to say, all right, well, how long am I willing to hold on to this? And it sounds like Keith is willing to make this decision and build this house and manage it as a rental for years and years to come. And so if the numbers make sense from the get go, the longer your ownership timeline, the better it's going to perform for you over the years. When we had Chad carsonon recently, what did he say that owning a house,

owning rental property over the long term? Eventually it starts out as a part time job and it turns into a blue chip stock, and so the pain on the front end can pay off in the back on the back end in a meaningful way. So Keith, if yeah, if the numbers make sense, even in the infancy of the project, then I think it's it's only going to get better over the years. It really makes sense down the road, assuming there's not something terrible that happens next

you know, next door or down there. But Keith, we appreciate your question and we really like how you are thinking about this potential real estate investment. Joel, let's get to our last question. This is from Doug and he has an affinity for the eighties.

or maybe how you guys got started. It's something that I really haven't heard you guys talk about. And I know that this is not a money question, So if it doesn't make the show, I totally get it. But anyway, thank you so much, shameless plug. The podcast is good times, great movies. I don't know you can cut that out. You don't need to play that if you don't want to. All right, thanks guys. I really enjoy the show, Doug.

I'm trying to hunt down John clop band. Yeah really, Oh yeah, the Underground Fighting Arena, remember that, dude. I just remember Jean Claude vandam doing the splits and yes, it was like a cultural phenomenon, right, Like basically, as a kid, you knew that if you could do the splits like like him, somehow you'd get just as ripped. Somehow you'd be able to kick everybody's butt. And it's just science. I've managed to never do any of the

above things. But yeah, actually Doug covered blood Sport in episode ninety five, So if you're interested in hearing more about what an epic movie that is, go back and listen to that. Well, we'll do it in the show notes. But yeah, he's blinded at the end, and he's like, yes, John Lee, Oh it's so good. But Doug, we're glad you're getting you show off the ground. And he's been at it for like two hundred something episodes, but he's

that's right. There are a lot of personal finance podcasts, and there are a lot of good ones out there too. We're really thankful that How to Money listeners listen to this show and that they trust us. And so I don't know exactly, Matt, I don't know if I could boil it down to like how or why people listen to us these seven steps, Right, We're not going to have that per se. Hopefully it's because we have a passion for the topic. Hopefully it's because we're decently well

versed in it, and hopefully it's because we're trustworthy as well. Yeah, we've resonated with a specific audience, but also we've been consistent, right because one of the things, Doug, I'm sure that you've noticed is that the podcasting space is crowded. So you were talking about Europe Joel at the beginning of the episode. It's kind of like Europe in July, which

is why you should travel during shoulder season. But it is totally true that there are basically millions of podcasts out there who are vying for listening time, but a huge percentage of this podcast that exists, well they've only released one single episode, and then another massive chunk have only released something like ten episodes. So with you being

in the hundreds, consistency clearly isn't a problem. That's like step one, right, Yeah, it goes there, but I know for us that was sort of one of the first things that we focused on was to be incredibly consistent, not only with making sure that we that we did it, but just the same time every week as well. Because we wanted to create something regular that listeners were looking forward to. They knew that, like, oh, at the time

was Wednesday. That's when our first episode. When when we only had one episode, we would release them on Wednesdays. But you want to start building in that regularity. And as you are starting to build up that base of listeners, what they used to call it in the world of

radio was appointment listening. Right, Oh, okay, it's like, oh, at six oh eight, you know when to tune in, Yeah, your favorite host is going to come on and they're going to talk about this or whatever like, And so that's kind of what we wanted was, Hey, every week, you get used to listening and learning, and you kind of keep doing it because hopefully it's helping you and it's fun. It's a part of your routine, right exactly.

And Matt, we also learned a lesson pretty early on when people thought they were turning into a personal finance podcast, and we talked about beer for like ten minutes at the beginning. You remember that I do. Yeah, Well, early early on we also called it poor not poor. Yeah, like you poor beer not poor bro, which is also just a confusing name, also a tong twister. We had to change over the marketing to appeal to the audience that we're looking for as well. But obviously we're fans

of craft beer and we included in the show. It's a part of our vibe. But over time we found more subtle ways to we've been into the show, and so for instance, asking our guests about their craft beer equivalent. That's a great way for it to be baked into the show, But dominating the initial most important ten minutes of our conversation with beer talk not so great, especially when people are like looking for money, advice and the

practical help in that department. So of course you don't want to neuter your show and remove all personality from it, but finding a way to garner feedback where you're listening to any critiques can help you to refine your podmat We had an email address specifically dedicated to that, right. It was it was like how tomoney dot com slash get better. I don't know the yeah, the rl chep that alive or not, but that was the way people could submit negative feedback and say like, listen, you guys

suck on this. You really need to approve on this, or constructive criticism. I can't believe you said this always helpful, and so we try to listen from that feedback and make adjustments because yeah, we're learning on the fly too. Yeah. Yeah, we are always trying to create a better product at the end of the day. And that being said, like I'm going to take this opportunity if you have some feedback for us, totally let us know. I think we still have that page up. If I think Ford slash

get better or do better. Maybe that was it, but either way, just email us. Email us at howtomneypod at gmail dot com. It goes to both Joel and I. We always read those emails. But Doug mentioned some of those different services that you can pay to promote your show. Obviously, don't do that because a lot of those are scams. I'm sure you're aware of that. Just today I dove into the what are the message requests in Instagram which I only look at like once every quarter. Basically I'm

missing like eighty percent of them. They're so there's like something like thirty promotion things where it's just like for ten dollars, you get one thousand or one hundred new you know, one hundred new all of that kind of stuffs. Every like friend request I got on LinkedIn is the same thing exactly. And you know your follower count or those downloads that you know they might go up, but

that might just be the product of bots. So I wouldn't trust any of those actual you know, those requests, those Internet scam artists who promise to raise the profile of your show. And I also want to mention that you're probably narrow casting with the content of your show, right. This isn't a problem though, given what it is you talk about, given the length of your show, it's just likely I think that you're going to have fewer, yet more rabid listeners and fans of good Times what was it, Great,

Good Times? Great Movies. Yeah, So I'm not sure if you're looking to monetize the podcast, but if you are taking the route of Patreon or buy my Coffee, these can be great ways, Like those platforms can help to just turn some of those diehard listeners into some actual money where you're able to monetize the show gradually. It doesn't have to be this all or nothing kind of thing.

I think there are ways for folks to come to kind of dabble and kind of start offsetting some costs and maybe maybe eventually you're, oh, man, are we actually generating an income? That would of course be an awesome thing. I mean, the real way to have the most successful podcast is to pivot into a crime show, because that's what people love and listen to the most. And that's what actually Matt and I are going to do starting next week. We're ditching the personal finance that we're gonna create.

We're going to commit the crimes. Yeah yeah, and then we're gonna detail it along the way. We're gonna document it. It's gonna be it's gonna be insane. We're gonna hide in the woods in trees, and we'll be on the

run for hopefully years. But the quietly podcasting like Blair Witch style about right, that would actually think about it, that would crush because if you were creating a show in real time and in the new run, yes you're on the run, But then I guess you would get deplatformed, right like they would, because they wouldn't want that going out unless somehow you had control over your platform, you know, like if you were you know, Elon musk Rich, you

can control the means of which you're communicating with folks, right, Well, so enough of that, and if you or you'd have other ways to promote your podcasts, for sure, But and I of course I'm joking, But the real reality is there's certain genres and certain types of podcasts that just have more purchase with a broader audience, right, And so I think a personal finance podcast it's not going to be as listened to as one of the more popular

long form interview or crime podcasts. That's okay, But it's the thing that we want to create. And so you're creating the thing you want to create, and that's the most important part you Yeah, I think if you're this far into it, you have found your people. Yeah, and that is what's important. Yeah. Yeah. And the other thing, I mean, Seth Godin talks about the minimum viable audience, and I think you have to figure out, Okay, what is that for me? If I've got fifteen hundred, eighteen hundred,

two thousand people listening every single episode I create? Well, would I show up to a lecture hall if two thousand people wanted to listen to me talk about eighties movies? Heck yeah I would, right, because I'm that passionate about it and to see that many people in one place, But sometimes we look at it as numbers on a screen when these are real human people digesting our content,

which is super cool. So think about it like that and then also realize, actually, there's a lot of people I'm speaking to, a ton of people who really like and care about the same thing I care about, and so I love that. Doug called it a hobby, like I think the number one rule of podcasting is that you should do it if you feel compelled to get a message out into the world. You've got to love it, and it's okay to want to grow, but don't forget the reason you started it and why you take the

time every week to continue creating. So, Matt, the way we started was like literally we said, hey, we're going to be triple A at everything. We're not going to be pro level because that would take too much time,

too much effort. But as long as we're hitting triple A marks, as long as we're professional, doing our best, and we're being consistent, like you said, and then we try to get on another podcasts to kind of raise the profile of our show and help other people find out and were not just podcasts that did the exact

same thing we did kind of tangential podcast right. Yeah, But that being said, we didn't do a ton of that, like like literally maybe just like a few, like a handful, but slowly over time we did build up an audience. And I guess I'm thinking of marketing like it makes me like early on we made coozies, but we didn't even send those out to listeners. I think we just gave them up to our friends because we thought it was cool, Like we were just nerdy and it was

something that we enjoyed. But that's kind of what Joel's speaking to, like, make sure that it's fun for you. Don't worry too much about the marketing side of things. Obviously, with it's like so we were able to grow the show and then you know, we're with iHeart Now and so they do a lot of the marketing for us as well. But at the end of the day, don't I honestly wouldn't even worry too much about that because marketing.

I heard this quote where they said that basically marketing wins the day, but quality content wins the year, Like like, marketing is good for the short run, but unless you're creating a quality product. It doesn't really matter what the marketing plan is. It depends on what it is that you're creating. And so Doug, I think focusing on the quality of the show, don't forget that. That is what you need to be focused on, you know, first and foremost.

And you're supposed to worry about the marketing and the scaling and growing side of things. And Dugs is the kind of show where people it's going to get word of mouth trash right, people who are like I love eighties movies and they know their best friend loves eighties movies and they're like, you got to listen to this pot cast. I'm listening to that. That's gonna be the best way for it to grow. I think you could get on you know, try to get on another podcasts.

You can, you can work on other ways to grow and to find your audience, and you can put a lot of effort into that, But do you have the time and the like the biggest thing, focused the majority of your time on creating something great that you like creating, that's gonna be the most sustainable. It makes me think we have a we have a listener Matt who writes about a newsletter about fitness, and that's this thing when

it comes to fitness is like, do what's sustainable. You might like be able to go hard seven days a week for two weeks, but then you're gonna burn out, you're gonna stop. And so whatever workouts you choose, make sure it's something you want to replicate, you want to keep doing. And that's kind of I found that to be true in my own life. If I try to do something that I hate, I'm probably gonna like, you're

gonna burn out. Yeah, exactly. All right, Doug, we wish you the best man, and hopefully you get millions of downloads just from this Sweet Heat of Money podcast est the Sweet HTM plug. The boys gave me a HTM bumps what we'll call it. That's right. The beer you and I enjoyed, Joel was chubby unicorn again. This was a guava milkshake. I pa by common Space. What were

your thoughts? You know, it's funny on the on the can it says it came with it had guava puree in it, so I expected it to be a little thicker. It wasn't. Oh yeah, it was a little sweet, little vanilla smoothie vanilla smoothness to it, and so I would say with yes, some of that guava note, but not

as much as I expected. Yes, so the guava lent it that like guala passion fruit, like tropical flavors, like it makes me think of like not Skittles, but the tropical skittles yea, where you know, I don't know, it's it's hard to explain kind of that softness that you

get with some of the tropical flavors. But we definitely had that going on in conjunction with the fact that I assumed there was lactose in this considering it was a milkshake milkshake I pa, but with it being an ipa that also it wasn't overly sweet because you had the bitterness from the hops that worked really well. And actually really dug this one, and I dug the label too. It's got the unicorn on there, and we were joking before we hit record that, uh is it weld works?

They They've got like a lot of unicorn imagery with their brand, and so it might be them. Somebody's got the ninja versus unicorn. All Yes, yeah, I think that's what works. I could be wrong. No, I don't think it is. I think it's it's half acre or something like that. Maybe. Oh, I don't know. I should We should not. We should. We're craft beer experts, Matt, we should know. But they've got multiple beers that are all unicorn,

unicorn based whatever. So I hope Common whoops almost dropped Common Space doesn't get shut down because they got the Unicorn on there. Hope they don't get the cease and desists. There's plenty of There's plenty of room out there for just like there's plenty of room for all the different podcasts out there, there's plenty of room for unicorn and craft beer. I love a good like fruited milkshake IPA like. One of my favorites of all time is the strawberry

milkshake IPA from I Want to Wrecking Bar. Oh, yeah, that is a delicious one. But yeah, this one was solid and it's Yeah. If you like sours any like IPAs, put them together, this is what you get, right, that's right. We'll make sure to link to any of the different resources we mentioned during this episode up on the website and in our show notes at howtomoney dot com, and if you are not yet a subscriber to the how to Money newsletter, make sure that you are howdomoney dot com

forward slash newsletter. You can see some of the previous issues there to get a sampling, but go ahead and sign up to ensure that you don't miss the next newsletter that goes out on Tuesday, right tomorrow morning. But buddy, that's going to be it for this one until next time. Best Friends Out, Best Friends Out,