How to Money: Episode #1027

“Ask HTM – Acorns to Jumpstart Investing, Seasoning a Cash Gift, & Social Security Running Out”
Hosts: Joel & Matt
Release Date: August 25, 2025

Episode Overview

In this engaging Q&A episode, Joel and Matt take on burning listener questions about getting started with investing (is Acorns worth it?), saving up for major purchases (cars, houses, and the role of “seasoned” funds), and concerns about the future of Social Security as its trust fund runs dry. The show blends approachable financial advice, lighthearted banter, and candid anecdotes about negotiating customer service and the best vessel for a craft beer.

Key Discussion Points & Insights

1. How to Get Started with Investing (Acorns & Alternatives)

Listener Question from Denali, 24, Carpenter near Asheville, NC [09:51]
Denali wants to start investing—should he use Acorns? What about beginner-friendly real estate tips on a $45k salary?

Hosts’ Insights:

• Acorns: Pros & Cons
  • Joel: “Would I personally use Acorns? No, but it’s not because Acorns is bad.” [15:15]
    • Originally innovative, Acorns made investing accessible via roundups and automation.
    • Moved from an assets-under-management (AUM) fee to a flat fee model.
    • Flat fees (e.g., $3/month) are proportionally very high for small balances.
      • “When you do the math...it can be insane.” [15:25]
• When Acorns Can Make Sense:
  • Matt: “If it is a decision between using them and investing, or going another path and not investing at all, I would say go for it with Acorns 100%.” [16:00]
  • The round-up feature can nudge beginners into consistent investing.
  • But aim to "graduate" to more robust, lower-cost platforms after the fundamentals are learned.
• Preferred Brokerages for DIY Investing:
  • Both recommend starting with Fidelity, Vanguard, or Schwab—low-cost, straightforward, and great for beginners.[16:21]
  • Robinhood is improving for long-term investors, but be wary of temptations to day trade or overload on speculative assets.
  • “Where it is that you invest, it matters.” [16:58]
• Best Account for Starters:
  • Matt: “Roth IRAs are clutch... especially for folks in the early wealth-building stages.” [17:45]
  • Pay taxes now (at low rates), avoid them later.
  • Set up automatic, recurring contributions to build the habit.
• Real Estate on a $45k salary:
  • Build savings aggressively—side hustles help.
  • Use your skilled labor (Denali = carpenter) to buy a fixer-upper (“sweat equity”), keep expenses down, and improve value over time.
  • Joel: “Being willing to wait a little bit longer...what can my realistic timeline be?” [23:04]
  • Avoid borrowing from family as “investors”—accept gifts, not complicated arrangements.

Memorable Quote:
Joel: “Don’t say yes to the first thing a company offers...just that extra little pushback...” [07:07]
(More on negotiating as a customer, but emblematic of the importance of advocating for your best financial interests.)

2. Is Social Security Running Out? What Should Younger Workers Do?

Listener Question from Katie, Ithaca, NY [26:53]
What’s going to happen with Social Security, given declining populations and a shrinking trust fund? Should we be worried by the projections?

Hosts’ Insights:

• The Reality Check:
  • Social Security’s trust fund is projected to be depleted by 2033.
  • After that, benefits would be automatically cut ~23% unless Congress acts.
  • “This game of chicken is starting to get scary…” – Joel [29:59]
  • Declining birth rates and fewer workers per retiree worsen the situation.
• Could Things Get Worse?
  • If unemployment rises or birth rates decline further, the “cliff” could come sooner or be more severe.
  • Matt: “It’s just like smashing the gas pedal on the accelerator toward this Social Security cliff...” [32:41]
• Preparation Advice:
  • Save more in Roth and 401(k) plans; don’t rely on Social Security projections for your financial planning.
  • “It’s more incumbent on us as individuals to save for ourselves.” – Joel [35:48]
  • For older listeners, claiming SS early may actually make sense, given looming uncertainty over benefit cuts.
• Policy & Politics:
  • They doubt Congress will act until the last minute.
  • Don’t base your retirement assumptions on “projected” Social Security payouts.

Memorable Quote:
Joel: “I do think, at some point, someone’s going to have to do something [about Social Security] and that will mean changes to the system.” [35:13]

3. Financial Advisors: When Do You Need One? Are the Fees Worth It?

Listener Question from Wendy [39:06]
Should I follow my sister’s advisor from Schwab to LPL? Do I need an advisor at all?

Hosts’ Insights:

• Do-It-Yourself First:
  • “A lot of folks…start to wake up in terms of their finances, they start to look for a financial advisor immediately...They’re almost looking for a magician...It’s less a magic trick and more like cultivating a seedling.” – Matt [42:39]
  • Most early and mid-career investors can handle things themselves—read, listen, and learn before hiring ongoing help.
• How to Hire Smart:
  • 1% assets-under-management (AUM) fees sound small but add up to massive sums over time. LPL, compared to Schwab, may charge even more.
  • Prefer hourly or flat-fee models for targeted, objective advice.
  • Recommendation: Seek out fee-only, fiduciary planners via services like Hello Nectarine or Domain Money for one-time planning.
  • Pay for advice/sessions as needed, rather than long-term management.

4. “Seasoning” a Cash Gift for a Car Purchase (and Credit Score Impact)

Listener Question from Authentic Elk, Facebook group [49:22]
If I’m gifted funds for a car down payment, how long do they need to "season" in my account to boost my credit score? (And does it matter for my car loan?)

Hosts’ Clarification:

• Seasoning applies mainly to buying a house.
  • For home loans, large deposits must be “seasoned” (in your account 60+ days to avoid disclosure hassles).
  • For car loans, requirements are less stringent, and depend on lender policy—usually not an issue.
• Credit Bureaus and Cash Holdings:
  • Having more cash does not affect your credit score.
  • Credit scores reflect payment history, amounts owed, credit mix, etc.—not your bank balance.
  • “They don’t care how much money you actually have. They just want to see consistent behavior.” – Matt [51:36]
• Best Advice:
  • Use cash on hand to buy a car outright, if possible—avoid payments! “Having no car payment is such a gift...I am allergic to car payments.” – Joel [52:58]

5. Debating Down Payment Size: Save for 20%, or Buy with FHA?

Listener Question from Kaden [53:42]
Should we wait an extra 2-3 years to save a 20% down payment, or buy now with a 3.5% FHA loan and pay private mortgage insurance (PMI)?

Hosts’ Guidance:

• Patience Pays:
  • Joel: “For the first time in something like 15 years, maybe waiting longer will actually mean that you can buy the home you want for less money.” [55:32]
  • Recent cooling in the housing market may help savers catch up.
• Risks of Low Down Payment:
  • Less “skin in the game” = more risk; PMI may last for the full term on FHA loans (not just until 20% equity).
  • “It can create problems…like buy now, pay later. I want the thing before I actually have the money to really afford it.” – Joel [57:36]
  • A conventional loan with 15% down may be a (marginally) better option, as PMI can eventually be removed.
• Best Practice:
  • Save for 20% to ensure lower risk, better terms, and no PMI.

Notable Quotes & Moments

• On DIY Investing:
  “Just adding a tiny bit more complexity...getting a bit more comfortable with some of the different platforms is going to allow you to have more of your money working for you...” – Matt [16:00]

• On Fee-Only Advisors:
  “A few hours of their time could cost you far less than what that 1% charge absolutely adds up to over time.” – Joel [44:37]

• Customer Service Wins:
  “Just that extra little pushback and saying...‘this battery is not great’...They made it right.” – Joel (Woot Apple Watch story) [07:07]

• Car Payment Aversion:
  “I would prefer to spread this allergy through this microphone...I want this allergy [to car payments] to be contagious.” – Joel [53:26]

Fun Banter & Beer Talk

• Best Beer Vessel? [11:25]

  • Both Matt and Joel are firmly in the glass camp, avoiding frosted mugs (“I’d rather drink beer out of a cereal bowl than a frosted mug” – Joel [12:07]) and loving classic “nonic” glasses.
  • Splitting beers = sharing and moderating alcohol intake for health.
  • “Splitting beers is the way to go...You get to drink something awesome with someone that you love.” – Matt [13:57]

• Favorite Asheville spots & road trip dreams [11:09, 29:03]

• Social Security, Banana Peel, and Adam Sandler Tangents [32:41-33:10]

Timestamps for Major Segments

• Acorns & Beginner Investing: 09:51 – 23:04
• Social Security Sustainability: 26:53 – 38:48
• Hiring Financial Advisors: 39:06 – 46:11
• Cash Gifts & Car Buying: 49:22 – 53:26
• Down Payments & Mortgages: 53:42 – 58:02
• Beer Review: 58:02 – 59:37

Summary & Takeaways

• Automate saving and start investing ASAP, but choose platforms carefully—don’t let fees eat away your gains.
• Roth IRAs and index funds remain the best starting point for most new investors.
• Social Security’s future is uncertain; don’t rely on it as a chief pillar of your retirement plan.
• Hiring an advisor is rarely necessary for beginners; prioritize learning and seek fee-only, fiduciary help when appropriate.
• Buying a car? Cash is king—avoid payments if at all possible.
• Wait and save for a substantial down payment on a house to minimize risk and unnecessary costs.

Hosts’ Parting Message:
“Thank you to everyone who sent us a question. And again, reach out to howtomoney.com if you’d like instructions on how to send along your query. The weirder, the better!” [59:55]

How to Money’s mission:
Money doesn’t have to be complicated—start with the basics, beware shiny distractions, and aim for long-term security over quick fixes. And don’t forget to enjoy life’s simple pleasures along the way (like a perfectly poured craft beer in good company).

Best friends out!