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Q&A: When Being Good With Money … Isn't Good Enough

Afford Anything | Make Smart Money Choices

Tue Jul 22 2025

Summary

Afford Anything Podcast: Q&A Episode Summary Episode: "When Being Good With Money … Isn't Good Enough" Release Date: July 22, 2025 Hosts: Paula Pant and Joe Salsihai Network: Cumulus Podcast Network

Introduction to the Episode

In this insightful Q&A session, Paula Pant and former financial planner Joe Salsihai delve into complex financial dilemmas posed by listeners. The episode, titled "When Being Good With Money … Isn't Good Enough," explores the nuances of financial planning beyond mere budgeting and investing, addressing the psychological and strategic aspects of money management.

Listener Questions and Expert Insights

1. Prioritizing Financial Goals: Buying a Second Property vs. Investing

Question from Jalen (00:31):
Jalen, a 41-year-old physician, discusses her family's solid financial standing and poses questions about whether to prioritize purchasing a second property now or continue investing surplus funds into retirement accounts. She also inquires about balancing competing financial goals such as college savings and future expenses like children's weddings or cars.
Paula's Response (04:15):
Paula commends Jalen on her financial achievements and advises caution against committing to a second home for retirement at this stage. She emphasizes the unpredictability of future preferences and recommends focusing on investments that offer flexibility and robust returns over the next two decades.
Notable Quote:

“I would encourage you to buy an income-producing rental property if that's something that interests you. But make that decision purely on the basis of what is the price to rent ratio, what is the cap rate, what is the potential for appreciation.” (01:20)
Joe's Insights (05:45):
Joe echoes Paula's sentiments, highlighting that real estate and the stock market have similar long-term returns. He stresses the importance of keeping investments flexible to accommodate changing personal preferences and life stages.
Notable Quote:

“I love the idea of let's look at what's going to get you there the most flexibly and the most reliably.” (02:00)
Risk and Reward Analysis (07:29):
Paula delves into the concept of fungibility, explaining that while real estate is an infungible asset, financial flexibility through investments allows for better adaptability to future needs. She advises assessing properties based on their investment metrics rather than personal preferences.
Notable Quote:

“Money is fungible, so don't negate that benefit by trying to make it infungible.” (07:29)

2. Balancing Competing Financial Priorities: The MMA Cage Match Approach

Joe's Strategy (10:16):
Joe introduces a framework likened to an MMA cage match, where financial priorities compete against each other. This method helps individuals determine which financial goals take precedence by evaluating potential disappointments if certain goals aren't met.
Notable Quote:

“I would ask clients… which one would disappoint me more. So I would ask clients back in the day, let’s say, Jalen, that you couldn't retire at 62, but your child would get the car at 16. How would you look at those two?” (10:16)
Paula's Recommendation (13:10):
Paula summarizes the essence of their advice with a powerful reminder:
Notable Quote:

“Fundamentally, you can afford anything, but not everything.” (13:10)

3. Personal Financial Decisions and Social Judgments

Paula's Personal Example (16:03):
Paula shares a personal story about allocating funds toward her cat’s chemotherapy by saving on groceries, illustrating prioritization based on personal values. She addresses societal judgments regarding unconventional spending choices.
Notable Quote:

“It's absolutely okay to spend money on if that's something that you value.” (16:38)
Joe's Commentary on Social Perceptions (17:28):
Joe discusses the varying perceptions of financial decisions within different communities, emphasizing that judgments often arise when spending diverges from societal norms.
Notable Quote:

“The judgment can often come out because people don’t necessarily see how you have cut back in other ways in order to create the space for that.” (17:28)

4. Long Term Disability Insurance: Should You Continue with COBRA?

Question from Reece (27:42):
Reece, a 28-year-old recently laid off professional, seeks advice on whether to continue his long-term disability insurance through COBRA, given his changing circumstances and health considerations.
Paula's Advice (30:20):
Encouraging Reece to remain calm, Paula advises maintaining COBRA coverage since he has already met his deductible for the year, thus avoiding duplicated expenses.
Notable Quote:

“Keep the COBRA. You’ve already met the deductible. No need to pay deductible twice in the same calendar year.” (31:06)
Joe's Additional Insights (31:39):
Joe suggests assessing the cost-benefit ratio of continuing with the existing long-term disability policy versus exploring new options in the open market, especially considering potential future job prospects and coverage adequacy.
Notable Quote:

“Go to your state's healthcare exchange and just price it out. This is a one-hour thing to do.” (32:59)

5. Long Term Care Planning: Balancing Retirement and Future Healthcare Needs

Question from Kip (39:58):
Kip, a 47-year-old striving for early retirement, grapples with the uncertainty of future long-term care expenses, contemplating whether to continue working until sufficient savings are amassed or purchasing long-term care insurance despite rising costs and premiums.
Paula's Comprehensive Response (41:36):
Paula commends Kip for his proactive financial planning and suggests exploring phased retirement options, where he might transition to more fulfilling but lower-paying roles instead of ceasing work entirely. She emphasizes the importance of aligning work with personal fulfillment to enhance overall quality of life.
Notable Quote:

“I want to create a pathway through which you can do work that’s more fulfilling, more rewarding.” (43:14)
Joe's Practical Solutions (41:53):
Joe breaks down the complexities of long-term care insurance, recommending a balanced approach that may include partial self-insurance and selective coverage based on specific needs and risk assessments. He advises planning for a typical 2-3 year stay in a skilled nursing facility, which significantly reduces financial burdens compared to lifetime coverage.
Notable Quote:

“If you can afford one of you 36 months, you’ve vastly covered the majority of situations.” (52:45)
Paula and Joe's Joint Recommendations (51:55 & 54:32):
Together, they outline strategies to make long-term care insurance more affordable by adjusting policy parameters such as benefit periods and daily coverage amounts. They also highlight the statistical improbability of both spouses needing extensive long-term care simultaneously, advocating for joint coverage options with staggered benefits.
Notable Quotes:

Paula: “Lowering that daily benefit amount… split the costs.” (51:55)
Joe: “The likelihood of both in you needing the coverage… is very, very unusual.” (52:45)

Key Takeaways

Flexibility in Investments: Focus on investments that offer flexibility and robust returns rather than committing to specific future assets like a second home.
Prioritizing Financial Goals: Use frameworks like the "MMA cage match" approach to prioritize competing financial goals based on personal values and potential disappointments.
Fungibility of Money: Treat money as a fungible asset, ensuring that investments remain flexible and not tied to specific outcomes or possessions.
Insurance Decisions: Carefully assess the cost-benefit ratio of continuing existing insurance plans versus exploring new options, especially during life transitions like job loss.
Long Term Care Planning: Consider phased approaches to long-term care insurance, balancing self-insurance with selective coverage to manage future healthcare expenses without overextending financially.
Personal Fulfillment in Work: Align financial planning with personal fulfillment by exploring career changes that offer both satisfaction and acceptable financial returns.

Conclusion

This episode of Afford Anything underscores the importance of strategic financial planning that goes beyond standard budgeting and investing. By addressing listener questions with empathy and expertise, Paula Pant and Joe Salsihai provide actionable insights into managing complex financial decisions, prioritizing goals, and aligning money management with personal values and life satisfaction.

For more in-depth discussions and expert advice, visit Afford Anything Community and subscribe to the Afford Anything Newsletter.

Note: Advertisements and promotional segments within the episode have been omitted for clarity and relevance.

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Transcript

Paula Pant (0:00)

Joe, when you were a financial planner, did you have clients who came to you and said, you know what, I'm doing well, but I want to be doing better.

Joe Salsihai (0:07)

A hundred percent of them, like everybody. Well, why are you going to hire a financial planner? You're like, yeah, I think I'm doing okay, but I think with your help, I can supersize it.

Paula Pant (0:17)

But sometimes people hire financial planners because they're in a moment of financial distress. Right, agreed.

Joe Salsihai (0:22)

You know what's funny? I think it was a combination of the two. It was, I have this inflection which was generally I'm thinking about retirement and not thinking about about it 10 years from now. I'm thinking about it like in six months. We just had a baby, we're getting married, we're thinking about buying a new house. There was totally this inflection moment, but also they thought, I think I need help because I think I can do better.

Paula Pant (0:47)

Well, we're going to talk to someone who has that question and is not so much in an inflection moment, but right at that midpoint of life where you're old enough to be established, but still young enough that you've got decades ahead of you and you've got the opportunity to make big changes ahead.

Joe Salsihai (1:04)

Awesome.

Paula Pant (1:05)

We're going to tackle that. As well as a question about health insurance, cobra and a question about long term care. Welcome to the Afford Anything podcast. The show that knows you can afford anything. Not everything. This show covers five pillars. Financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double I fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode ish. I answer questions from you and I do so with my buddy, the former financial planner, Joe Salsihai. What's up, Joe?

Joe Salsihai (1:35)

I like the ish. It's like the asterisk.

Paula Pant (1:37)

Well, you know, it's, it's a loose. Every other episode. It gives us some flexibility.

Joe Salsihai (1:42)

Yes. And we always want to build in flexibility no matter what you do. Right. We talk about having a cash cushion. The ish is Paula's cash cushion on this podcast.

Paula Pant (1:51)

Paula Pant (7:42)

Right. Well, and she can also rental properties. So to your point, Joe, the home that you personally prefer for personal consumption is very rarely the home that has a great cap rate relative to its risk profile. I know I keep talking about rewards commensurate with risk when it comes to rental properties. Let me unpack just at a basic level what I'm, what I mean when I say this. And Jalen, you, you may already know this from having listened to previous episodes, but I'm saying this for the broader audience. When you're looking at a property that would be used as an investment, broadly speaking, these properties have a variety of risk characteristics. The neighborhood that the property is located in, there's a level of risk associated with that neighborhood. The age of the property has a level of risk. The condition of the property has a level of risk. The amount of leverage that you use on that property has a level of risk. And broadly speaking, properties that are higher risk tend to have a better price to rent ratios, more landlord friendly price to rent ratios, and the potential for much bigger returns, but also the potential for much bigger losses. And by contrast, properties that have lower, you know, lower levels of risk in all dimensions. So newer in age, better in condition, better in neighborhood class a neighborhood. Right. Those properties tend to have lower risk, lower rewards. Their price to rent ratios tend to not be as great, their cap rates tend to be lower. Just like when you're picking any asset, you can choose the property that fits your ideal risk profile, but you want to make sure that whatever it is that you're buying has the best rewards for that risk category. Right. If you're going to buy a relatively new class A property in good condition, you want to take a look at other comparable offerings that share that same risk category and make sure that you're getting a great cap rate and a great price to rent ratio for Properties within that category. And likewise, if you're buying a class C property that's in a fixer upper condition, you want to take a look at what the other comparable offerings are and get something with a great price to rent ratio and a great cap rate relative to that class of property. As you're looking at different properties across these different categories or classes of properties, you know you want the one that has the great cap rate and that's rarely the one that you love because.

Paula Pant (21:20)

I would encourage you to buy an income producing rental property if that's something that interests you. But I would encourage you to make that decision purely on the basis of what is the price to rent ratio, what is the cap rate, what is the potential for appreciation, right? Make that decision purely on the basis of the numbers associated with that property and not on the basis of do I want to live in said property in 20 years into the future. There's another exercise, Joe. You talked about the MMA cage match between A versus B, B versus C, C versus D. The other way that I like to frame these prioritization decisions is make a long list of just brainstorm every single thing that you might want to spend money on. So kids, college expenses, kids, kids, weddings, your own retirement. Just make a very, very long list. Freestyle brainstorm, right? Every possible expense. Then in the next column write down a rough estimate, doesn't have to be precise, but a rough estimate of ballpark what you think that might cost. Then in the next column write down the time frame of how many years into the future you want to make that expense. And then in the following column you divide time frame by cost so you know precisely how much money year you would need to save in order to achieve that expense. And often when people do this exercise, they get to that column of how much do they need to save per year in order to be able to pay for that expense. And the amount of money that they would have to save per year per month. You could do it either by month or by year. The amount that they would have to save in order to cover every expense at the amount that they estimate those expenses will cost is completely unrealistic or untenable. Right? That's typically what happens when most people do this exercise. And that's a great thing because now that you have crunched those numbers and you know that total amount of what the savings would need to be, you can now go back and do one of three things. Lengthen the timeline, reduce the amount, or eliminate a few of those line items altogether. So that's the exercise that helps you decide how you're going to shift through all of these priorities. Which timelines do you extend, which amounts do you reduce and which categories of spending do you eliminate entire fairly.

Paula Pant (24:58)

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Reese (27:42)

Hey Paula and Joe. This is reece from episode 417. You guys give me some great advice about long term disability insurance because I have depression. That was a couple years ago. I'm now 28, still young to be disabled long term. But I was calling it to see what your opinion is now that my situation has changed. I was recently laid off from my job job big bummer. And I enrolled in COBRA coverage which was painfully expensive but I already have met my $7,000 out of pocket max because I tore my ACL earlier this year and I was like there's no point in a marketplace plan with a new deductible and I might not be able to keep my physical therapist. So anyway I enrolled in cobra. That was a little bit of an easier decision because I knew that I needed medical insurance. Now I've actually before I understood that COBRA is retroactive. I was afraid to leave my house because I was like what if I get hit by a car? It was terrible. Anyway, your girls no insured. My question is should I continue my it was an employee paid long term disability insurance through my former employer. I just got the letter. I'm wondering if you guys have any perspective on this on one hand, I obviously am looking for another job. Realistically, that could take six months to a year. But the risk of me becoming disabled long term in that time feels a lot lower than the risk of me needing health care. Mostly because I'm still recovering from this ACL repair and I know I'll need health care or I'll get sick or something, you know, something will go wrong. But the chances of me being disabled for a long time and running out of money and needing to draw on that are much lower. Should I wait and not continue the coverage and just get another employer provided plan and if my next employer just doesn't offer that benefit, get long term disability insurance on the private marketplace in my brain Continuing COBRA made sense because I'd already met the year's deductible in February, so switching plans was would be silly to pay almost the same premium but have a new deductible. But that isn't the same with long term disability insurance. Does it make sense to keep the same plan and provider over a long term or can I just kind of switch with impunity and not have an issue? Would love your perspective if you have any. I had decision fatigue. I have figured out way too many things that I never thought I'd have to figure out in the last couple weeks. So I would really love some things to think about and any advice you might have. Thank you guys so much. You guys always give such great advice.

Joe Salsihai (34:07)

And even large companies sometimes go really cheap, they will tell you that you're going to get X percentage of your income, let's say 60% of your income. But they will also cap that number to a number like 3,000 or $4,000 a month, which could be for some people, 60% of their income. But for others, as you get raises and promotions, may not even come close to covering it. There was often when I was a financial planner and even lately answering questions where people will send me their coverage because they think they have a number like 60%. And in that fine print, Paula, it shows that no, they're not covering that. They think that they are. So looking at specifically what percentage of her income that the disability coverage covers is a good part of prudent planning. Let me cover that as well. While I'm on the topic of it being a percentage of her income, the fact that it's a percentage of income and right now your income is zero, you're paying for a benefit benefit that you can't receive because it's a percentage of what you make. That would imply that eliminating that coverage over the short term makes a bunch of sense until you get the new job because you're paying for something that you can't get. Some people will hold on to it though. And the reason why you hold on to this is you may have to prove insurability again in the future. And I can't guarantee, and you can't guarantee that you'll be eligible for a long term care policy in the future. Now if it's a group policy, they can't discriminate against you as a piece of the group. So if your employer does offer it, you can easily latch on to their policy. But again, if they decide to go cheap, you're going to be at the whim of whatever they do. So clearly in the hierarchy of needs, if I'm looking at two policies, a health care policy and a long term disability policy where you don't get the benefit, health care comes first because that's not based on a percentage of your income. That's based on if I get sick and or if I need the coverage for whatever reason, I can use that coverage. The disability question, I think for that reason, Paula, is a little more nuanced because we can't predict the future and we don't know. So that's the reason I go back to knowing what the Achilles heel is. If I eliminate that on the short run, that seems like a good move because I'm saving this money in premium, the Achilles heel. What if I don't qualify in the future? What if my new employer goes cheap? I can't predict the future. I don't know what that is. But if you're willing to say okay to that Achilles heel, and you know that going in when you eliminate the coverage, then I think you're making a decision with your eyes wide open if you decide to eliminate it.

Joe Salsihai (44:34)

Yeah. Every policy will specify how many daily activities of daily living you can't do before you qualify for it. So you want to know exactly what those are because the way to look at long term care insurance is in the details of the policy. Kip's already looked at this. It sounds like you can't just look at the top line number, what's this going to cost? You have to see what it actually covers. Because you could pay on the surface, Paula, less money and never use that coverage. Or if you pay a higher premium, then the chance of you actually using it goes up. That may end up being a, quote, better deal and a better financial option than going with the budget insurance policy. But the idea of using insurance at all. I think the issue is a lot of people start with insurance and whether I should buy the insurance or not. I don't even think that's the place to start. I think there's two places to start. Number one is what's the quality of care that you would expect for you? And really even more than you, I would phrase that because he's married, the quality of care for your spouse that you would want. So what's the quality of care that you are looking for? If late in your life that doesn't matter a ton, that is going to open up a lot of options. If you want a high quality of care that's going to point you toward more spending in that area and the insurance options become greater. The second piece is what would you do with your money if you and your spouse didn't spend it on yourself? And for someone that's single, this becomes a little easier. Hopefully at that point in your life when this would happen to you. In the vast majority of situations, there's nobody else living in your house besides you. And so for a single person, you're just worried about you. For married people, there's the complication. And you pointed to this earlier, Paula, if one of you goes into a long term care facility or you need help at home, the other person, person, if they're still alive and they're healthy, you're draining the bank account very quickly while the other person still needs to live. So this is much more often a married conundrum than a single person conundrum, with the exception of what do you want to do with your money afterwards. And single people and married people have very definite answers to that question. Almost like we talked about with the MMA cage match earlier for Jalen, everyone goes, well, duh, I want to, to make sure of xyz, they feel very strongly about it. But I'll tell you, it's different for everyone if you're not worried about an inheritance, right? Which he mentioned inheritance. So I don't know. But if Kip's not worried about inheritance and he thinks he has enough money saved for one person to go through a long term care experience, which generally lasts, if you again looking at statistics, about 36 months. Now, there's the exception, right? Grandma was in a long term care facility for 12 years. Years, yes, that can happen. But if we just play the vast probability, which is what insurance is all about anyway, you're going to come up with a number that if you can afford one of you 36 months, you've vastly covered the majority of situations. So Kip, if you can retire and cover that, then I think that makes this easier. So then we get to do I insure it or do I not insure it? Once I get to past quality of care and my thoughts around inheritances and money beyond my lifetime, most people then look at this as one of two ways that they're going to go. And Kip, it sounds like you may be in this case yourself, which is I either insure it myself, I shoulder the burden myself, or I hand it to an insurance company. I think, Paula, there's a third one which is I take a portion of it and I give a portion of the responsibility to a long term care insurance policy that I know doesn't cover the full thing, but it makes my burden lighter. Right. As you can see, there's various degrees of that middle ground and I think that's where the truth is. If you talk to most five Financial planners is going to be for most of us in that middle ground. But if you don't have a lot of money to protect, let's say you started late and you're not worried about inheritance. Well, after you spend your assets, Medicaid will, will pick up long term care costs by and large. And that's a whole longer discussion, but you can leave it to Medicaid. And again, this also gets to quality of care because Medicaid facilities may not be what you want, quality of care while wise, which is why we start there. But if you're not worried about quality of care, you're not worried about inheritance and you started late, well then focus on financial security for you and quote, roll the dice on long term care. Kip, it sounds like, has something he wants to protect. And so for Kip, he's in that this middle ground of I don't have enough for both of us in long term care, but I also have enough that I want to protect. But still for you, Kip, I think there may be a middle ground of maybe I self insure partly and then I give a little bit to insurance, but not as much as it would cost. If you're looking into covering all of it and these huge out of pocket situations of 10, 12 years, if we look at maybe 36 months and a portion of that versus partial covering out of pocket, I think you might be able to leave work earlier than you think. And then, Paula, there's the other part of that discussion, which is can you take on meaningful employment that pays a lot less, which is, I think, the whole other side of this equation.