Ask HTM - Buying a Used Mattress, Best Use of an Inheritance, & Disqualified from a Roth #988

Summary

Podcast Summary: How to Money – Episode #988: Ask HTM - Buying a Used Mattress, Best Use of an Inheritance, & Disqualified from a Roth

Release Date: May 26, 2025

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Introduction

In Episode #988 of How to Money, hosts Joel and Matt tackle a variety of listener questions centered around personal finance dilemmas. This episode delves into the practicalities of purchasing a used mattress, strategically managing a substantial inheritance, and navigating the complexities of Roth IRA eligibility. Joel and Matt provide insightful, jargon-free advice aimed at empowering everyday individuals to make informed financial decisions.

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Section 1: Buying a Used Mattress

Listener Question: Buddy from Downers Grove inquires about the frugality versus costliness of purchasing a used mattress from a store's showroom.

Discussion Highlights:

• Joel and Matt's Personal Experience: Both hosts share their positive experiences with used mattresses. Joel mentions, “We slept on that thing for over a decade. Super comfortable mattress” ([24:42]).
• Considerations for Used Mattresses:
  • Comfort and Condition: Ensuring the mattress meets comfort needs and assessing its physical condition before purchase.
  • Return Policies: “I would want to know the return policy. Can I bring it back within 30 days if it’s not right?” Joel emphasizes the importance of understanding return terms ([29:14]).
  • Extended Warranties: Generally discouraged unless necessary, as Matt notes, “Extended warranties rarely are a smart move” ([30:32]).
• Negotiation Tips: Buddy’s scenario involves a 50% discount offer. Joel suggests negotiating further for better deals or added benefits ([29:13]).

Notable Quote:

“How often are you paying attention to your sleep score on your watch?” – Matt ([26:43])

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Section 2: Best Use of an Inheritance

Listener Question: Cheryl from Nebraska is set to receive a $150,000 inheritance and owes $110,000 on her mortgage. She seeks advice on whether to pay off her house or allocate funds differently.

Discussion Highlights:

• Immediate Considerations:
  • Mortgage Interest Rates: If Cheryl’s mortgage has a high-interest rate (e.g., 7%), paying off the house swiftly may be advantageous ([10:07]).
  • Low-Interest Mortgages: For mortgages with low rates (e.g., 3%), Matt advises that investing the inheritance might yield better returns than accelerating debt payoff ([10:09]).
• Tax Implications in Nebraska: Joel and Matt remind Cheryl to account for potential state inheritance taxes that could reduce the received amount ([13:20]).
• Liquidity Importance: Maintaining cash reserves offers flexibility to handle unforeseen financial challenges ([13:44]).
• Diversified Use of Funds:
  • Debt Elimination: Prioritizing high-interest debts like credit cards before considering mortgage payoff.
  • Investment Opportunities: Maximizing contributions to savings and investment accounts for future growth.
  • Life Enhancements: Using part of the inheritance to fund education, start a business, or other life-changing endeavors ([16:09]).
• Behavioral Finance Considerations: Matt cautions against impulsive spending, suggesting strategic allocation to prevent the inheritance from "burning a hole" in Cheryl’s pocket ([17:31]).

Notable Quotes:

“Cash is finally doing something for you now. It’s certainly not trash.” – Joel ([13:20])

“Allow yourself that freedom if you’re in that kind of place.” – Joel ([19:57])

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Section 3: Disqualified from a Roth IRA

Listener Question: Cheryl (possibly the same listener) has fully funded her Roth IRA for the year but, due to significant capital gains, may now exceed the income limits for contributions.

Discussion Highlights:

• Understanding Income Limits:
  • Roth IRA contributions phase out at $150,000 for singles and $236,000 for married couples filing jointly ([36:12]).
• Corrective Actions:
  • Withdraw Excess Contributions: Remove the excess amount plus any earnings by the tax deadline to avoid penalties ([37:05]).
  • Recharacterization: Convert Roth contributions to Traditional IRA contributions, which may be beneficial depending on overall financial goals ([38:55]).
  • Backdoor Roth IRA: For those consistently exceeding income limits, executing a backdoor Roth IRA involves contributing to a Traditional IRA and then converting to a Roth IRA ([41:49]).
• Tax Implications: Failure to correct excess contributions results in a 6% annual penalty on the excess amount ([40:33]).
• Long-Term Strategies: Adjusting future contributions through higher 401(k) contributions or strategic charitable giving to manage adjusted gross income and maintain eligibility for Roth contributions ([37:25]).

Notable Quotes:

“We are not going to be able to give a clear cut answer because it is so dependent on your personal money goals.” – Matt ([09:47])

“It's going to add up so 6% on the excess that you made.” – Joel ([41:17])

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Additional Topics Covered

1. Changing Brokerages:

   • Listener Question: Ryan considers switching from Schwab to Fidelity or Vanguard due to differences in interest rates and investment processing times.
   • Advice:
     • ACAT Transfers: Utilize Automated Customer Account Transfer services to move assets without triggering taxes ([55:42]).
     • Handling Proprietary Funds: Some funds are brokerage-specific and may require selling, which could incur capital gains taxes ([56:30]).
     • Money Market Funds: Explore higher-yielding options within Schwab before deciding to switch ([53:27]).
   • Notable Quote:

     “Don't pay these capital gains when you don't need to.” – Matt ([55:42])

2. Car Warranties:

   • Listener Question: Becca questions the value of a $6,100 extended warranty for her new Volkswagen ID4, considering the existing battery warranty.
   • Advice:
     • Manufacturer’s Warranty Sufficiency: Emphasize that the standard battery warranty provides long-term coverage ([47:16]).
     • Reliability Rankings: Suggest choosing reliable car models over buying extended warranties ([50:27]).
     • Consumer Insights: Citing Consumer Reports, most extended warranty buyers on reliable brands regret the purchase ([51:02]).
   • Notable Quote:

     “The initial manufacturer's warranty should be ample.” – Joel ([47:10])

3. Beer Tasting Segment:

   • Product Review: Joel and Matt share their enthusiastic review of Anatomical Transmutation, a double IPA from Burial Brewing Company.
   • Highlights:
     • Flavor Profile: Described as a “perfectly funky, perfectly dank, fruity, earthy” representation of a hazy IPA ([57:51]).
     • Craftsmanship: Appreciation for hand-selected hops and meticulous brewing processes ([58:22]).
   • Notable Quote:

     “We have reached IPA nirvana, man.” – Joel ([58:23])

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Conclusion

Episode #988 of How to Money delivers comprehensive advice on managing financial uncertainties, whether it involves making smart purchases, handling unexpected inheritances, or adjusting investment strategies. Joel and Matt’s engaging dialogue, punctuated with personal anecdotes and expert guidance, provides listeners with actionable insights to navigate their financial journeys confidently.

For more detailed discussions and resources, visit howtomoney.com.

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Notable Quotes with Timestamps:

• “How often are you paying attention to your sleep score on your watch?” – Matt ([26:43])
• “Cash is finally doing something for you now. It’s certainly not trash.” – Joel ([13:20])
• “Allow yourself that freedom if you’re in that kind of place.” – Joel ([19:57])
• “We are not going to be able to give a clear cut answer because it is so dependent on your personal money goals.” – Matt ([09:47])
• “It's going to add up so 6% on the excess that you made.” – Joel ([41:17])
• “Don't pay these capital gains when you don't need to.” – Matt ([55:42])
• “The initial manufacturer's warranty should be ample.” – Joel ([47:10])
• “We have reached IPA nirvana, man.” – Joel ([58:23])

Transcript

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[Matt]

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[Joel]

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[Matt]

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[Joel]

I'm Joel. I'm Matt, and today we're answering your listener questions.

[Matt]

Joel, I feel so relaxed and so blissed out because I took a little sip of the beer that you and I are going to enjoy during this episode right before you start talking about listener questions.

[Joel]

Yeah.

[Matt]

Which is what we're getting to today.

[Joel]

In fact, just the toughest part of our job, Matt. The fact that we're, we're forced by our, our bosses to drink beer while we talk about money.

[Matt]

Hey, it's not lost on me how lucky we are. I was talking to a buddy not too long ago and we were just talking about, he was talking about something that he had going on with his work and I was, I Was trying to relate, and I'm just like, man, I. I'm with you.

[Joel]

Bad boss, terrible coworkers. Yeah, man, I get it.

[Matt]

But then he kind of. He looked at me with incredulous eyes and was like, dude, don't you drink beer during the day on your podcast that you record? I was like, yeah.

[Joel]

And is it your co worker, your best friend? That doesn't mean I'm perfect.

[Matt]

We've got it Good. I shall not complain. We are answering listener questions, though. We've got a Frugal or cheap actually, that I'm excited to get to. This is a buying a used mattress edition. Frugal or cheap, which I'm excited to get to.

[Joel]

How used is part of the question.

[Matt]

That is true. Another listener is asking what to do with an inheritance. She's looking for the best options of what she should do with that money. We're going to talk about Roth contributions in particular. A listener is no longer eligible to contribute to a Roth, so what should he do? We'll get to that, plus more during today's episode.

[Joel]

Buddy, sounds good.

[Matt]

You looking forward to it?

[Joel]

Very much so.

[Matt]

I thought you might say that. Looking forward to him. Real quick, I wanted to do a quick little fitness update. Listener Brian reached out and was asking. He's like, man, I haven't heard you talk about CrossFit. How swole are you, Matt, on the podcast recently? And I'm still doing it. Totally still doing it.

[Joel]

Well, you're not doing CrossFit. You're doing Home gym.

[Matt]

I'm doing the mat fit. I don't know, whatever you want to call it, my version of it, in my gar. And I realized I hadn't really sat down and done the math or anything. But I've been at it now for 10 months at the home gym. Oh, and get this. The local gym that I've been going to, they upped the monthly charge. It's up to 200 bucks a month now. Yeah, really expensive. So I'm not totally sure when that took place, but I'm gonna assume 10 months. 200 bucks. $2,000. I'm not totally sure if I ever admitted to how much I spent. The full cost of what I initially built out the gym, but it's around $4,000.

[Joel]

Okay.

[Matt]

Which is a lot of money. It's like a used car. But that being said, dude, I'm halfway. I'm halfway there to claw on that money back, and that's just me. Kate's been out there working out as well. The kids are in There playing, trying to do pull ups because they know they'll, they'll get. I told them their first pull up that I witness without them jumping or anything, that they get paid five bucks. Trying to incentivize healthy living, man.

[Joel]

The other thing is you, you own the equipment and that equipment is valuable. So even though you've probably broken even at this point, cause if you sold your stuff for half price, you could probably get rid of it immediately.

[Matt]

Think about that. So basically it's an asset right now.

[Joel]

I'll say right now you've broken even. Hey, so congratulations.

[Matt]

I appreciate that. Joel, how much have you spent on staying healthy?

[Joel]

It's mostly just running shoes, which honestly I haven't spent that much on like my running shoes are pretty cheap. People are actually amazed because I think the average running shoe is like 150 bucks now for a decent running shoe. 130. 150. And I spend way less than that buying my Adidas when they're on sale. So I'm spending somewhere between like 30 and $90 per pair.

[Matt]

Nice. Here's the other thing.

[Joel]

And I stock up when they're on sale too.

[Matt]

I think that getting, what do they say, every three to 400 miles, something like that, to replace the shoes is what some of the, what the pros say. I think that's totally overblown. I think you can wear shoes well past the quote unquote expiration date because it has so much to do with foot strike.

[Joel]

Okay.

[Matt]

And how it is that you run. Right. And so picture folks in the Nike ads. You know, runners from the 90s, full strike, Gazelle stride. Full stride and not perfect, but just huge strides with their heel pointed out. And what's going to happen is they're going to slam into the ground, sending those shock waves up the leg as opposed to running with a more of a midfoot strike.

[Joel]

Yeah.

[Matt]

Anyway, if you run like that, yes, maybe you do need a little more cush. But if you are running in such a way to where your foot falls lightly on the pavement, I think the Kush, you know, the maximum padded running shoes might be a little less necessary.

[Joel]

That's a good point.

[Matt]

For more reading on this, read Born to Run.

[Joel]

Great book.

[Matt]

Which is a fantastic book.

[Joel]

Got me excited about it.

[Matt]

He talks a lot about it.

[Joel]

Last question for you on this topic.

[Matt]

Is we're getting all of our fitness talk out of the way.

[Joel]

Well, from a logistics standpoint, how nice is it to walk out your door and exercise? Dude, it's great. So yeah, you're not paying 200 bucks a month. You have all. All your own gear. But also you wake up three minutes before you work out. That's pretty nice, too.

[Matt]

And that's literally exactly how I do it. Just rolling out of bed, trying to maximize the amount of time I'm able to let my body recover. See, that's the other part of being healthy, is getting enough sleep. So stupid. But no, it is true. Like the ability to roll out there. I will say we don't have AC in the garage, though, so as it's been getting warmer, I'm certainly sweating a whole lot more.

[Joel]

Yeah. Oh, I believe it.

[Matt]

Because guess what? The free gym. No, the locker room. That's included with the gym membership. Free showers. Yeah, that's not included. That's true. I gotta pay for those myself.

[Joel]

Well, I'm glad you're still doing it. Glad to get your money's worth.

[Matt]

I'm glad you've been running this on as well. Dude, what's your next race that you're signed up for?

[Joel]

The Peachtree, July 4th.

[Matt]

Hey.

[Joel]

Yeah.

[Matt]

You and me.

[Joel]

I don't think I have one before then, so. And then half marathon after that. Full marathon in October. That's the plan, which I don't.

[Matt]

Yeah, we'll say that one. Maybe for some other time.

[Joel]

I don't know if we've talked about that. Yeah. All right. Let's mention the beer we're having on today's episode. This one's called Anatomical Transmutation. It is, of course, a beer from an IPA from Burial Brewing Company in Asheville, North Carolina. We'll give our thoughts on this one at the end of the episode. And if you have a money question we'd love to hear from you, just go to howtomoney.com ask or instead of doing that, just record your question on the voice memo app of your phone. Send it to [e-mail] hopefully we can take it next week on the show. Matt, this question comes from a listener who inherited some money. She's trying to figure out what's the best way to handle it.

[Cheryl]

Hey, Matt and Joel, It's Cheryl from Nebraska. I am going to get about $150,000 in inheritance. I owe about $110,000 on my house. I wondered if it would be smarter to pay off the house or just pay half on the principal or I don't know what. Give me your thoughts. I listen to your show daily. Love it.

[Matt]

Thanks, Joel. Cheryl is listening to us daily. I'm assuming she's catching up on the episodes. But what if we switched it up and started doing a daily podcast? Daily Financial News.

[Joel]

You wouldn't have to twist my arm. I don't think I like talking to you. I like talking about money. So doing that more, I wouldn't have.

[Matt]

To cut it down to like, I don't know, a 15 minute show. Perhaps they'd have to be shorter episodes, something like that.

[Joel]

Because the one part of the thing that we can't control is how much listeners like or dislike us. And if we, if we talk too much into their ears, they might fall into the latter camp.

[Matt]

That is true. Cheryl, I want to kick things off and say that I'm sorry to hear that you've lost someone close to you, someone who's close enough that they would leave you an inheritance. So condolences first off. But what it is that you choose to do with this lump sum of money, man, we are not going to be able to give a clear cut answer because it is so dependent on your personal money goals. It's so dependent on some of the specifics that we actually aren't privy to. So with that in mind, we'll try to provide a general framework. So hopefully you can make a smart decision with this cash infusion, which I'm sure is what this feels like.

[Joel]

For sure, most people like. The biggest cash infusion most people get, Matt, is their tax refund. Right. That they got recently. And that feels like a big thing that they can do a lot with. But this is obviously much bigger. You can address bigger financial concerns that you have. Let's address maybe the mortgage first for Cheryl here.

[Matt]

I just wish she's got her eyes set on paying off that house.

[Joel]

I get that. Especially when you're talking about big sum of money. You're like, what do I owe the most on? And that is a mortgage, typically for most people. So it makes sense, like, well, big lump sum, big mortgage. Let's try to eradicate as much of that as possible. If you just bought the house recently, Sheryl, the answer might be yes. Right. If you've got like a 7% mortgage or something like that, and you're, you're a debt averse person that paying off the mortgage, it can be a fine way, I would say, to use those inheritance dollars on top of paying it off, though, you'd still have $40,000 left to boost your savings and to invest. So it's not like that's the only thing you could accomplish either, which I think I think is great. And lends maybe even more credence to the goal of paying off your mortgage with, with the majority of this money. But if you bought your house a whole bunch of years ago, and let's say you're in the last decade of paying it off and you've got a really sweet locked in low interest rate, right, you're going to get a whole lot less bang for your buck. So if you've got that 3% or so interest rate, you've already paid a lot of interest over the first decades of ownership. If you've had that mortgage for a long time, while paying it off in one fell swoop can feel good, there are meaningfully better ways, I think, to use that $150,000. Because really that tail end of the mortgage, Ma, and you don't owe as much. You're just talking about paying very little in interest to the banks every single month. Because of the way a mortgage loan is amortized, that's when people are most likely to start paying off their mortgage in droves to start throwing more money at it. But it's also the time where it matters the least.

[Matt]

That is true. One thing I want to mention too, and you mentioned $150,000. So did Sheryl make sure, Cheryl, that you are accounting for taxes on this inheritance? Because yes, there is no inheritance tax, but Cheryl lives in Nebraska and Nebraska is one of the few states that does actually have an inheritance tax. And so it we may not be talking about the full 150. So I'm assuming, Sheryl though, that you are keeping that in mind. But Joel, like we're talking about the alternatives and what we can do with this money. We've mentioned this before, but when you can get that higher guaranteed return in a high yield savings account, why would you consider accelerating your debt payoff? It's hard to give up a guaranteed return on your investment by hanging onto a lower mortgage as opposed to paying it off early. Because most of the time there's risk involved when you are trying to invest money versus paying off that debt. And you know, you might want to invest some of those dollars too. But when there is that risk free route to earn more, it's really hard to turn down. And that's what a high yield savings account is for people with a mortgage in the low to mid threes, it's guaranteed. Plus, and this is another note, I think a lot of folks, maybe more recently folks, have sort of felt the advantages of having more cash on hand. But generally speaking, liquidity is incredibly underrated in personal finance. Everyone's looking for different ways to optimize as opposed to finding ways to be able to weather the storm. And when there are fewer and fewer storms, maybe you start thinking, oh, maybe all the storms, they don't exist anymore. It's like, no, you just, just wait. There'll be something that comes along.

[Joel]

And I think that the cash is trash mantra caught on for a whole bunch of years. Well, I'm just going to invest then and no matter what. And so, you know, paying off low interest debt didn't make sense. Putting money in savings didn't make sense because, hey, what's that cash really doing for me? Well, cash is finally doing something for you now. It's certainly not trash. And you're right, the liquidity piece, the liquidity that having cash on hand provides.

[Matt]

It gives you those options, man, there's.

[Joel]

Worth there, there's value, as opposed to.

[Matt]

Paying off the mortgage early. Like once you get rid of that mortgage, especially if it's a lower rate mortgage, there's no going back, possibly ever, but maybe potentially in your lifetime being able to secure a mortgage that low. Whereas if savings rates go down, you can always sort of change your plan of attack at that point.

[Joel]

Yes, yes, I think that's exactly right. Don't do something that you're going to regret. And I think maybe that's just another good point here too, Matt, that depending on where you're at, grief wise, Cheryl, people tend to make a decision with inheritance dollars more quickly than they should and give yourself a little bit of time, like a little breather to figure out, well, what is going to be the best thing for me. We just don't want you to make an emotionally charged decision here. I would be prone to do right if I'm grieving and also found a bunch of money that was coming my way. It would be tough for me to make the smartest decision, I think, in the heat of the moment. So, yeah, feel free to take some time and sit on it. And that's what a high yield savings account could do for you as well. There's even a potential, by the way, that you're getting an additional tax break for paying mortgage interest, although probably not if you, if you take the standard deduction when you file taxes. So just keep that in mind from the mortgage perspective, maybe it's helping you out in some ways tax wise. But we also want you to think big here. What else could you do? Well, you know, mortgage payoff, that's, you know, not the only consideration. You could get rid of other debts if you have any and you probably should, because no other debt you have in your life is going to be as low or advantageous as your mortgage debt. But if you have like a credit card debt or a car loan, there's just, there's no way that saving that money instead of paying those off makes any sense. So. So pay those jokers off and have no debt besides the mortgage. That's an ideal place to be. You could even use this money, though I won't even think bigger than that. You could, you could use it to start a business you've always wanted to start.

[Matt]

Yeah, you know, those are the big dreams that I was thinking about.

[Joel]

Yeah, yeah, like that. Paying off debt. That's still kind of basic personal finance stuff. But what else could you do? Like brainstorm how this money could change your life for the, for the, in the years moving forward. What about going back to school to get a degree and paying, paying for it in cash? Especially if that could lead to increased earnings for you, if that's something you're interested in. Those are both two things that this money could do. And they would probably honor the person who gave it to you.

[Matt]

Right.

[Joel]

Where you're like, listen, I'm using this as a catalyst to completely not just change my financial situation, but change my life in a really cool way moving forward. So I would consider that. And then another maybe basic personal finance thing that's still big is like, hey, how can I max out investment accounts for years to come with this money? Yeah, that, that's another really cool thing you could do with it. But I just, I guess I want to emphasize that the sky could be the limit here because we're talking about a pretty big sum of money. It could be life changing and you could do something kind of just like ho hum and boring, or you could opt to do something that was just potential catalyzer for your career, your life and future income too.

[Matt]

Oh, I never heard the term catalyzer before. Makes me think of fertilizer.

[Joel]

Can you use it that way?

[Matt]

Like catalyst?

[Joel]

Just say it.

[Matt]

I like catalyzer though, even better. But cher, let's address like the behavioral, consumer science, psychology sort of side of things. Will this money that you now have burn a hole in your pocket if you leave it there in your savings account as you are trying to find some different big awesome ways to spend it or invest it? Because if you've got an itchy trigger finger and you're finding yourself wanting to spend, well, in that case, paying off the debt, even mortgage debt, I think that that would Be a superior choice. What are the alternatives? And if the alternatives are going to be to totally blow that money, we don't want to see you doing that.

[Joel]

Yeah.

[Matt]

So at least think through the behavioral side of this decision. Because many folks who suddenly inherited money weren't well prepared, you know, and that money was frittered away in a few short years. That's the kind of situation we don't want to see you emulate.

[Joel]

It's almost like lottery winners where I think when it's unexpected, it feels like something that you can more easily just kind of blow.

[Matt]

Sure. Because easy come, easy go.

[Joel]

Exactly, exactly. And we don't want you to find yourself in that sort of behavioral position where you're like, well, I didn't have to work my butt off to earn this money, so let me use it. I can use it in kind of a more happy, go lucky sort of way. And know this money could really, could really change your life.

[Matt]

Yeah. I was going to say on the note of spending it, I think it could and maybe even should be worth considering spending a portion of this money on yourself in a way that feels a bit wasteful. That maybe feels like the craft beer equivalent in your life. The thing that you splurge on that, you know, isn't great from a long term perspective, but if it can act as like a pressure relief valve in a way, and if that allows you to stay on the straight and narrow with the remaining dollars that you have, I think that could be a good thing. Some folks will say, hey, spend 5, 10%. But because this is such a large amount of money, like that makes me a little bit nervous. Right. Like, if we're talking about, let's say this is 150 after taxes there for Nebraska, truly that's what she's looking to have on hand to be able to do with $15,000. That is a lot of money. As opposed to mean, I don't know, I feel like I could see myself being a little bit uncomfortable with that sudden sort of timer ticking in the back of my head thinking, well, I'm supposed to spend a certain amount of it. I think there are ways maybe where you can be just very intentional with some of your spending dollars, Whether that's spending it on other people or just marking a special occasion. Just some way to like, I don't know, memorialize even the person who you receive this money from. I think could be a great way to honor this inheritance that you have as well. But I don't know, it just depends on who you are because if you're behind the eight ball when it comes to some of your other savings goals, and if you have the desire to do all the smart things with this money, by all means, go for it. But if you are fully funded from a retirement standpoint, you have zero credit card debt, cars are paid off. If you have full coverage on your insurance, you have life. If you have, if you've done all the things, then you might be the kind of person that we need to encourage to spend the money.

[Joel]

Yes, allow yourself that freedom if you're in that kind of place.

[Matt]

It just depends on the situation and who you are.

[Joel]

I'm guessing Nebraska winters aren't warm, Matt and so maybe like, hey, start planning a January trip to Hawaii if that's like, if that's in your, if you're interested in that sort of thing.

[Matt]

I thought you were going to say, get you a nice warm jacket.

[Joel]

She can probably afford both. All right, we've got more to get to on this episode, including, hey, should I switch from one low cost brokerage to another and what if I lose Roth IRA eligibility? We'll get to questions on both of those right after. What does the future hold for business? Ask nine experts and you'll get 10 answers. Will we have another bull market in 2025 or we're going to get a bear market? What about inflation? Will it continue to calm or will higher prices remain sticky? Wouldn't it be cool if someone could invent a crystal ball that would give us some foresight?

[Matt]

Well, until then. Joel Over 41,000 businesses have future proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory, HR into one fluid platform with one unified business management suite. There's one source of truth giving you the visibility and control you need to make quick decisions. With real time insights and forecasting, you're peering into the future with actionable data. When you're closing the books out in days, not weeks, you are spending less time looking backwards and more time on what is next. Our business is really small, but if we needed netsuite, we would be pumped about the time the cost savings that it provides. Whether your company is earning millions or even hundreds of millions of dollars, NetSuite helps you to respond to immediate challenges and seize your biggest opportunities.

[Joel]

Speaking of opportunity, download the CFO's guide to AI and machine learning at netsuite.com howtomoney the guide is free to you at netsuite.com howTomoney that's netsuite.com howtomone when investing your money starts to feel like a second job, betterment steps in with a little work life balance. It's the automated investing and savings app that handles the work so you don't have to.

[Matt]

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[Joel]

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[Matt]

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[Joel]

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[Matt]

Nice.

[Joel]

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[Matt]

That's right, man. Get control of your overall finances with Monarch Money. Use code how to [e-mail] in your browser for half off your first year. That's 50% off your first [e-mail] with code howtomoney we are back for the break. Joel. We've got more listener questions to get to. Let's now hear from a listener. And he has a particularly fun Frugal or Cheap for us.

[Announcer]

Hi Matt and Joel. This is Buddy from Downers Grove. I have a frugal or cheap question for you. So you walk into a mattress store. You're looking for a new mattress. You've been there before. You Know the sales rep that's work with you. And you go and you say, hey, I want the same bed that I bought two years ago because I need to swap one bed out at my house. And they say, hey, listen, we got one in back. It's going to have this 50% off and you could add on an extended warranty at a pretty low rate. Is that frugal or cheap to be buying a used mattress that was on the show floor of a mattress store? Thank you so much for the show. Hope you have a great day.

[Joel]

All right, Matt, Normally when I hear the words used and mattress in the same sentence, my ear perks up and I'm like, tell me more.

[Matt]

Because I get excited in a good way.

[Joel]

But sometimes like, is there a horror story coming here? Or like, because I don't know, when I was much, much younger, I was more inclined to do whatever it would take to save a buck. And I still think of myself as a pretty frugal dude. But used mattresses, I have outgrown that used mattress.

[Matt]

Regrets regerts when it comes.

[Joel]

I think you guys something similar. An inherited mattress.

[Matt]

Well, sort of. Okay, so the problem with Buddy's question here is that he's asking a guy who slept on a used mattress for over a decade, and this is a used mattress, not by somebody. It wasn't inherited. It was not from somebody we knew. It was listed on Facebook. And it just so happened that it was next door to some folks that we know, some friends of ours. And so I was able to kind of quasi have them vouch for their neighbors.

[Joel]

Are these weird, messy, nasty people.

[Matt]

But I mean, they did have cats and there were, you know, some cat hair that I drove extra fast on the way home because the mattress was strapped to the top of the car. I'm like, okay, maybe that'll get all the. Did it work? Oh, they cat hair off. Okay, so here's the thing. We, like I said, we slept on that thing for over a decade. Super comfortable mattress. And now, so we upgraded to a king a couple years ago and guess who sleeps on that on that mattress now? One of our kids. So we still have that mattress and everybody in our household knows that that is the most comfortable mattress in the entire house, bar none. Like no questions asked, everyone knows was a smart move for us at least.

[Joel]

I think that's a clutch part of the answer here. Is it comfortable? Oh, yeah. Because if you're saying, hey listen, I'm thinking about trying to save money on this thing and the mattress is alright at Best, but actually it's not giving me the best night's sleep. There is something and sleep's important, man. This is also probably middle aged me coming out, but my sleep matters more than it did.

[Matt]

How often are you paying attention to your sleep score on your watch?

[Joel]

Every day I look at it and I always let that inform how I slept. I'm like, how did I sleep? I don't know. Let me check my watch. I try to actually like think about how I feel first and see if it matches up with the number. Because it doesn't always just to not.

[Matt]

Like brainwash yourself by whatever the score happens to say. Yeah, on the Garmin.

[Joel]

Yeah, but I get it. I guess I just don't want Buddy to make a decision here solely for money because yeah, yeah, your sleep matters. It's going to influence a lot of things, including potentially how much money you make. Like if you're like showing up groggy eyed to your job and stuff like that. Like it matters.

[Matt]

Old Buddy got the cheap mattress, but not making nearly as much at work anymore.

[Joel]

Yeah, but I think where Buddy's coming from and the way he phrased this question makes me think that it is frugal and not cheap because a couple of things, it sounds like he's purchased this model before, he's had good results. So he knows that this particular brand of mattress is a good one, at least for, you know, the way he's used it in the past. That bodes well. I too, similar to Buddy, would be willing to buy a floor model in order to score 50% off if I was a fan and I other mattress. I'd rather buy a nice floor model mattress in order to score a higher end bed that I otherwise wouldn't be willing to purchase or able to afford than to buy a brand new, much cheaper model. I just think the construction could be much worse on the, on some of those fly by night mattress in a box sort of things. Although some of the mattress in a boxes are pretty good and just depends.

[Matt]

On what you like.

[Joel]

I sleep on one now, but I think that, you know, the comfort level could be inferior on a lower end mattress. And so if you're like, hey, I know this, it's nicely, it's well made, I'm getting a great deal. I know I like this thing. Save the money.

[Matt]

Sure. I almost see the floor model as like a benefit because of the fact that it's had some, some folks kind of, you know, bouncing on a little bit, kind of like walking around on their knees. So I Will say that when we purchased our new mattress, I was like, man, this thing's kind of stiff, but like, it takes a minute to actually break in. And anytime I've talked to folks who know a thing or two about mattresses, they literally will on their knees, like, walk around on the mattress to kind of like break it in essentially. But also, I think what Buddy said was that the sales rep or the salesperson, whoever, they started at 50%. And so I almost see this as an opportunity. Like, he came to him already with 50% in mind. And I think that there is a chance that he would even be able to go down a touch more, perhaps.

[Joel]

Yeah, why not negotiate?

[Matt]

I want to see Buddy have a conversation. Hey, somebody he knows, someone he's familiar with. I think there's an ability for them to get rid of a model maybe that nobody else wants that's been in the back of the store for a minute. While also Buddy getting an even better deal than he thought possible.

[Joel]

I'd also probably want to know the return policy. That is true. Hey, granted, this is a store model and I'm getting a sick discount, but if I take it home and I realize that it is bent out of shape or something like that, and the right side of the mattress is worn in a little more than. Than I thought, can I bring it back within 30 days? I think the return policy matters here. You really only might be able to figure out what kind of condition it's in after sleeping on it for a few nights. That's at least one question I would have. Then the one thing in your question that might be a bad idea would be to get an extended warranty, though, because the risk of a mattress having significant issues is pretty low. It's not that extended warranties can never be a smart move. It's just that they rarely are. Self insuring is almost always the best bet. It's almost always what you're going to hear from us as an answer. So if you're getting this bargain basement price, what you're going to pay for the extended warranty would probably be a decent portion of the overall cost that I wouldn't want to fork over.

[Matt]

Yeah, that's true. And I like the fact though, that he is familiar with this particular brand and you already touched on that too. And I'm actually, I'm curious because you mentioned that y' all have a more foam memory foam based mattress. Personally, I'm not a fan. I'm not a fan of those, and I'm. I'm actually a Little curious, too, if they. I mean, I guess those companies have been around for a minute, but, like, one of the things that you see with foam mattresses is that over time, they collapse in particular on the edges. And so folks will say that, like, oh, it feels like I'm going to roll off the edge of my bed because of the fact that it doesn't have that inherent structure. I don't know. I think I'm a bit suspicious, a touch skeptical of, like, the newer mattresses that have some of the foam built into it as opposed to the traditional padded tufted spring mattress.

[Joel]

Yeah. So, of course, Matt, the place I got my mattress from when I did upgrade was Costco, and I wanted to find the best value mattress. One that was.

[Matt]

Did you pick it up in the store?

[Joel]

Picked it up in the store.

[Matt]

Okay, so you were able to test it out then?

[Joel]

I forget exactly what I paid. I want to say it was five or maybe a little bit below 500 bucks for a king size. And it's the Costco. I just pulled it up here. The Nova form 14 inch comfort grand memory foam mattress. And it gets pretty good reviews. And it actually does well on.

[Matt]

It's a handsome looking mattress.

[Joel]

Yeah, it does well on Consumer Reports and wire cutters well. And it's actually much thicker than a lot of mattresses, too. It's like 14 inches thick, which is. It's pretty darn thick. So pay attention to that because some of them are like 8 inches thick. Like, they're just. To me, that's not enough padding. But yeah, I like it. Emily and I both like that mattress. And so that's just like one last thing is look at Consumer Reports. Look at Wirecutter. When you're shopping around at mattresses, they have good recommendations. And it is interesting. It seems like one of those things where the price. The sky can be the limit on price. You can. You can drop five grand pretty easy on a mattress if you want to. But a lot of the top picks are. Are low four figures, like a thousand bucks or less for a really good one. So just don't feel like I'm not. If I don't spend a lot of money, I'm not going to get something that's great because you really can.

[Matt]

That's true, man. All right, let's hear from another listener. This is someone who has a question about one of our absolute favorite retirement accounts.

[Cheryl]

Hey, Matt and Joel, fellow Marietta in here. At the beginning of the year, both my wife and I fully funded our Roth ira. However, over the course of the year, we've had significant capital gains from our investments. Pretty sure this has pushed us out of the limit to be able to contribute to the Roth ira. Assuming we're no longer eligible, how do y' all recommend we proceed prior to the end of the year? Thanks, guys. Best friends out.

[Joel]

Well, Matt Thomas lives in our neck of the woods.

[Matt]

He's also an honorary bestie. He said best friends out.

[Joel]

Yeah. So you count, you count. We include you. We include you. Thank you. And by the way, Matt, we think it's typically a smart move to fully fund your Roth IRA at the beginning of the year. This is something you have emphasized a.

[Matt]

Lot because we talk about, I'm a big fan.

[Joel]

We talk about dollar cost averaging regularly on the show, which is essentially putting money in every time you get paid. So you get paid every two weeks. You're sticking money into that 401k. If you've got that through your employer. And if you have a Roth ira, like you're, you're just letting it auto draft out of your account every single month or every couple of weeks so that you fully fund it by the end of the year. But if you have the money to fully fund the Roth IRA at the beginning of the year, which we know not everybody does, but if you do stick it in because one, it just kind of gets it out of the way like you've done the thing, and then you're actually going to be better off the majority of the time too, as an investor.

[Matt]

Because that's what the data shows.

[Joel]

Right. Three out of four years, the market goes up. Something like that.

[Matt]

Exactly. So you're more likely to have a larger sum, a larger balance at the end of an investing lifetime, were you to have invested at the beginning of every single year as opposed to the end of every year.

[Joel]

I know most folks opt for dollar cost averaging because they just don't have $7,000 January 1st to toss it in. But if you do, it's a good.

[Matt]

Goal to work towards, though. I think that if that's something that.

[Joel]

Over the course of a few years.

[Matt]

If that's something that you can work towards where you've got enough set aside that you can, every year maybe you dump a little bit more at the very beginning of the year. And in a similar way, I think it does a similar behavioral trick where I think what's great about dollar cost averaging is that it just takes the guesswork out of when it is that you want to buy into the market. You're essentially doing the same Thing, though, when you do the lump sum investment at the beginning of every single year, you're just like, well, that's just what I do come January 1st, every single year. It's not something where I'm. We're having a conversation about a babe. Like, this is just, we are investors. This is what we do. We're going to be better for it.

[Joel]

It's basically dollar cost averaging on just a far less frequent timeline because you're like, you're still doing the same thing. Like, you're not like, well, maybe I'll wait till like July and see if the market's up then, or something like that. You're still doing it like clockwork on the same, you know, the same season, same date, hopefully every year.

[Matt]

Yeah. And you're also not saying like, okay, I'm only going to invest in even years or something, or, you know, I'm just going to wait until I'm 40. And I think it's going to be better then. Like, you're not timing the market at all in that way, of course, but there is that occasional situation that Thomas has found himself in where you end up regretting it and not because the market goes down, but because you find yourself ineligible to contribute to that Roth. It's a good thing on one hand, right, because it means that you've made too much money. And that is worth celebrating. In Thomas case, it's great to have maybe capital gains that he was not expecting.

[Joel]

Some people, like, when they talk about capital gains, they make it sound like it's like the worst thing ever. Like, dude, I got this.

[Matt]

Like, yeah, and I get it emotionally about my tax bill, but like, big.

[Joel]

Picture, well, that means you made money.

[Matt]

Let's zoom out a little bit. You're doing well. We are happy for you. But the current income limits are $150,000 for single folks to be able to contribute to a Roth, and it is $236,000 if you are married, filing jointly. So Thomas and others out there, if you're going to be close to that line, it might be worth prioritizing some other tax advantage moves, like contributing more to a traditional 401k or maybe even batching your giving so that you still meet the adjusted gross income requirements. Maybe typically you take the standard deduction, but you're like, you what? Let's hold off on giving. We'll give all of our money at the beginning of next year and then essentially pre fund your giving at the end of that next year for the following year. That way you're getting credit for all of that charitable giving all in one year. It allows you to itemize and take more of a deduction.

[Joel]

Makes sense for a lot of people where it's like standard deduction one year, don't take the standard the next because you've just batched some of those like tax oriented tax saving choices into one given year and then you back off the next year. And that can make, you know, a small dent in your ability to save on taxes, but also in your ability to then contribute to a Roth.

[Matt]

Yeah, exactly. And Roths truly are one of our favorite accounts in large part because of the flexibility and the options that they give folks. That being said, man, the ability to contribute a little more to a traditional 401k for instance, even if there isn't a match, well, okay, you are still investing, but then you are also bringing down your adjusted gross income, which then in fact allows you to be able to sock maybe fewer dollars towards your Roth, but at least you're eligible for it right out of the gate as well.

[Joel]

Agree. So, so okay, what do you do though, if you've contributed to a Roth and you find out that your income was over and above the limit for 2025? Well, there are a few moves you can make. You're not going to face any penalties if you actually just choose to withdraw your, your excess contribution plus any income that it's earned by the due date for your tax return. So you will have to include the taxable earnings portion in your taxable income. So like let's say the money you stuck into the Roth, well, it made money because it was invested in the market. Well, that you will have to include in, in sort of your. I forget what the IRS form number is, Matt, but there's a form you have to fill out to report that on your taxes. But because of the way Roth IRAs are taxed, you can take your contribution out at any time. Like you don't need to wait until you're 59 and a half because you're paying the tax up front. So because of that you can just literally plow back that contribution. No harm, no foul. Another option is to recharacterize that contribution and move it into a traditional ira. And I do believe this is something that you've done right, Matt?

[Matt]

I have, but that's also before the larger brokerages out there, so like Fidelity and Vanguard before they were offering this like a withdrawal of excess contributions. That's what they're calling it now. And so the recharacterization I mean, even just the term, right. It sounds like it was something that was invented by a bunch of accountants or the IRS where it's like, oh, you need to recharacterize your contributions for sure. And there are times when you're going to want to do that. But I truly think that this is a new thing because this was not available when I did this a number of years ago when, when we had to recharacterize contributions. But truly the ability to go onto a brokerage like Fidelity or Vanguard and initiate an excess contributions withdrawal, like, I love it, it's, it makes so much sense and it's oriented towards everyday retail investors as opposed to feeling, feeling like you have to hire an accountant to make sure that you're handling this thing correctly. And so I know that there are certain situations where someone is going to want to re characterize. It's pretty easy as well. There are forms. When I initiated that for us with Vanguard, it was just an online form that you filled out. In particular, it was easy because I was recharacterizing those contributions, those dollars from a Roth IRA that was held there at Vanguard to a traditional IRA that was also held there at Vanguard. It's a little more complicated. If you are sending that to a different brokerage, there's a little more handholding that needs to take place. But especially if you're doing an in house recharacterization like that, it's pretty simple. But again, this withdrawal of excess contributions option makes this even easier.

[Joel]

Yeah, so. Well, we should also mention that in the future for Thomas, like, if, if you remain above this income threshold, which you might not because it sounds like the capital gains, it might make this a 2025 specific problem. And maybe your income's not always like crushing above that level. And if so, you can potentially apply these Roth contributions to future years as well. That's just another option. And it's really important to do this in a timely manner, Matt, because as you know, part of the reason that you had a fire under your butt to do the recharacterization when you did is because if you don't, the IRS charges you a 6% fee not once, but each and every year that the money stays planted in your Roth, which, which can add up so 6% on.

[Matt]

The excess that you made.

[Joel]

So yeah, so if you oopsie that for a few years, like what you owe the IRS could add up. No bueno, you don't want to do that. And then also just for future years, it's worth mentioning that a backdoor Roth could be a good option for Thomas or for other listeners who find themselves in this place where, hey, I'm earning lots of money. Now the Roth feels unavailable to me. Can I still access a Roth? Yes, you can. We have an article on howtomoney.com that explains just how to do that. Do you want to do that? That's another question. But if you do, that's a way to get more money into your Roth.

[Matt]

That's true. Speaking of brokerages, we've got more to get to. More personal finance goodness, including Schwab. We don't want to leave those guys out. We'll get to a question regarding them, plus more right after the break.

[Joel]

What does the future hold for business? Ask nine experts and you'll get 10 answers. Will we have another bull market in 2025 or we're going to get a bear market? What about inflation? Will it continue to calm or will higher remain sticky? Wouldn't it be cool if someone could invent a crystal ball that would give us some foresight.

[Matt]

Well, until then, Joel, over 41,000 businesses have future proofed their business with NetSuite by Oracle, the number one Cloud ERP bringing accounting, financial management, inventory, HR into one fluid platform with one unified business management suite. There's one source of truth giving you the visibility and control you need to make quick decisions. With real time insights and forecasting, you're peering into the future with actionable data. When you're closing the books out in days, not weeks, you are spending less time looking backwards and more time on what is next. Our business is really small, but if we needed netsuite, we would be pumped about the time, the cost savings that it provides. Whether your company is earning millions or even hundreds of millions of dollars, NetSuite helps you to respond to immediate challenges and seize your biggest opportunities.

[Joel]

Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com the guide is free to you at netsuite.com howtomoney that's netsuite.com howtomone Matt, you remember that time we forgot to hit the record button when we started an interview?

[Matt]

Yeah, I do.

[Joel]

Didn't feel great, but at least we recognized our mistake. Fifteen minutes in and not completely after the fact.

[Matt]

It wasn't super painful, just only. Yeah, no, it was still painful.

[Joel]

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[Matt]

Right, and creating a will or trust is something that we need to do correctly the first time, right? Like getting it almost right. That doesn't cut it. This isn't horseshoes and hand grenades. And I've got peace of mind knowing that trust and will is created and designed correctly by attorneys. Each will or trust is state specific, it's legally valid and is customized to your needs. It's a relief to know that this isn't something that you have to figure out on your own. Trust and Will's simple step by step process guides you from start to finish, one question at a time. And if you do have any questions, live customer support is available through phone chat and email.

[Joel]

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[Matt]

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[Joel]

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[Matt]

That's right. Learn More about a 401k rollover at fidelity.com rollover consider all your options and the applicable fees and features of each before moving your retirement assets. Fidelity Brokerage Services, LLC Member NYSE SIPC.

[Joel]

All right, we're back. Got a couple more money questions to get to today on the show. It's time now for the Facebook Question of the Week. This one comes from Becca. She says, got a car warranty question here. We just bought a VW Volkswagen ID4 with 13,000 miles. It's an electric vehicle. They pushed a warranty on us that we have 30 days to back out on. It's $6,100 and it includes most drivetrain issues, tire alignments and rotation, as well as scheduled maintenance. The car comes with a no cost hundred thousand mile battery warranty. I did not want to spend that much on a warranty and was wondering about trying to find a different warranty or just kind of saving that money as a buffer.

[Matt]

The old car warranty is what Becca's dealing with here, Joel, and she said that they pushed it on me. You are not alone. Because warranties are such a big money maker for car dealerships, it's no wonder that they made the hard sell on you.

[Joel]

Many people have been pushed over, bowled.

[Matt]

Over by those salespeople. And you know why I think that a lot of folks accept it is because of the fact that oftentimes we finance our cars. And so when you take, if someone's just like, hey, pay up $6,000 for this thing, you're thinking, I'm not going to be able to afford that A B, I don't know if it's worth it, but when you roll it into a payments like that, it makes it a much more pleasant pill to swallow. At that point.

[Joel]

It's like it'll be an extra $42 a month, but it's also going to be peace of mind.

[Matt]

Don't you exactly. Don't you want the peace of mind that that's going to give you?

[Joel]

It's going to protect you and your car against anything that could come its way.

[Matt]

Yeah. Typically we are not fans of extended warranties, especially like on technology, on electronics like tech gadgets. Instead, take care of your stuff self insure and you're going to come out ahead like the vast majority of the time. If you bought one of those every single time you made a purchase like even on like appliances, you're going to be spending all of your money on electronics. But car warranties are a little bit different. But still they can provide that peace of mind but they are rarely worth the money that they actually cost you.

[Joel]

And it sounds like the basic warranty that comes with the car provides a heck of a lot of peace of mind in and of itself because that what is the number one potential problem with an electric vehicle? It's that the battery craps out ahead of time. And when you have she's at 13,000 miles. When you have 87,000 miles in front of you, that where the battery is covered, that's a long time. And that in and of itself should provide a lot of peace of mind. 6,100 bucks is so much money. And if you already have kind of that warranty that gives you that much coverage, I mean, that could be many, many, many years of coverage on that battery. To me, that's the biggest thing I would feel taken care of by that. And it sounds like, yeah, your extended warranty includes some extras, but I would also say this scheduled maintenance on an electric vehicle is minimal. And so I think the initial manufacturer's warranty should be ample. It should assuage your concerns and you just really don't need to add this extended service contract. Also, think about what fine print and exclusions it might come with. Like, you'd be wise to know what's covered first. There is a small chance that you come out ahead by buying this thing, but the gamble just doesn't pay off for most folks. And so if you opt. Also, one last thing on the. On this extended warranty that I want to mention is if you do opt to go for it, make sure it is from Volkswagen directly. Because third party warranties are the worst possible kind. The company might not be there when you need it. There's typically more fine print. There are just a lot of third party warranties that aren't direct from the manufacturer that I think are worth a pittance to almost nothing. And so I would be completely unwilling to pay for that, that's for sure.

[Matt]

Do you see warranty or warranty? Because I swear I was hearing you say both interchangeable warranty, like guarantee. And I'm like, I don't think I've ever said warranty. Like warranty. I always say warranty. 30 year warranty.

[Joel]

Yeah.

[Matt]

Drivetrain warranty.

[Joel]

I guess we say it differently, but.

[Matt]

Towards the end, you say tomato, I say tomatoes. It sounded like it was, I don't know, Becca. Aside from self insuring, I think a better thing to do is just simply buy a vehicle that rates high in reliability. I haven't looked at your specific car, so I'm not being critical here. We're talking to the public at large here because if we're playing the odds, hoping that our repair bills are going to come in lower than the price of the extended warranty. Well, buying a car make and model that consistently rates well from different sites like Consumer Reports, that would be wise. An extended warranty is rarely an awesome idea, but it just makes more sense if you buy a car that's, you know, prone to experiencing problems when it comes to some of the different mechanicals.

[Joel]

Getting that Land Rover, you might want to consider the extended warranty.

[Matt]

What about the Jaguar?

[Joel]

Right. Yeah, just a little more. I would think about it for a second longer.

[Matt]

Okay, so to that, to the defense of that, there's a survey of Consumer Reports readers that find. So after a decade, they find that the vast majority of Honda, Toyota and Subaru extended warranty buyers would never ever buy one again. They ended up paying a lot of money, didn't have to use it. And I think that that's just. It's not anecdotal, it means it's a survey, but it just points to the fact that it's not necessary when you purchase the right vehicle.

[Joel]

Which is interesting. Like you might hear that at first pass and say, oh, then why are Honda, Toyota and Subaru selling these things that people don't like?

[Matt]

Well, because it makes the money.

[Joel]

Well, because it makes the money. But also interestingly enough, like when you opt for cars that are more reliable historically, it just means that the people were most displeased because they didn't need to use it. But the ideal would be to buy a car that's not going to need. And you can never fully 100% assure yourself that even a new car isn't going to have problems that you're going to need to pay for just. Especially if it happens just outside that warranty, period. And like, man, I should have got the extended warranty. Matt and Joel were so wrong. At 102,000 miles, the battery crapped out on this VW and man, they're idiots. And the truth is those kind of anecdotal stories happen too. But if we're playing the odds here, keeping that $6,100 in your bank account and relying on the warranty that already comes with the vehicle should provide plenty of peace of mind and plenty of financial ammunition in your bank account to pay for something that might or might not happen to this car in the future.

[Matt]

That's true. Okay, let's take a quick email from Ryan. I've been looking to switch after tax brokerages from Schwab to Fidelity or Vanguard as Schwab pays big bank interest rates on uninvested cash. Like point you can go higher, but it'll take three days to invest it. While Fidelity and Vanguard pay small bank rates. 5% last I checked and no time waiting. So I was wondering what the best way to do that would be. Should I slowly sell and Schwab and buy in the other? Or would it be possible to do a trustee to trustee swap similar to pre tax retirement accounts?

[Joel]

What you think Joel That's a good question. I would be frustrated if I was with a brokerage firm and like those sweep accounts where your cash is kept before you make investments. If that was earning next to nothing, I would be like, what gives? Because there are other brokerage firms that don't treat their customers like that. Schwab is a great low cost brokerage firm. So I was like, wait a second, is this for real? Does Schwab pay nothing to cash customers? Well, I would just encourage Ryan to check your money market funds again. Check what Schwab is offering. There are likely multiple money market funds that they offer. You might be in an inferior one because it looks like the one I checked out is returning more than 4% right now, which is pretty close to what other money market funds are offering at some of our other favorite.

[Matt]

I think he saw that, but what he wrote was that it'll take three days to invest it. So I think maybe he's seen those. But the big question then, then turn. If that's the case, then the big question is, what's the rub with the three days?

[Joel]

Why does it take three, Ryan, it shouldn't take that long.

[Matt]

Well, it's. I mean, it takes time for transactions to go through. And maybe, I don't know, he's talking about transferring the money and then placing the purchase order and then just the.

[Joel]

Fact that it's in the ether for.

[Matt]

Yeah, yeah. So I don't know. Like, it's. Maybe it's more of a principled sort of decision that's driving him to want to change brokerages. But that being said, if it was, I mean, I personally wouldn't let the three days rub me the wrong way.

[Joel]

Yeah.

[Matt]

But maybe he also.

[Joel]

Is the question differently, I guess. I think I heard him saying that, hey, money that sitting there ready to be invested. I can't earn any meaningful return on it while I'm waiting to invest. If that's the case, then I would just say look to swvxx, which is their savings equivalent money market fund. That might be the only move you need to make. But if Matt's right here, then I think this might be an issue that you encounter at other brokerages too. Not just swab.

[Matt]

Take some time.

[Joel]

It's probably not that you're being lazy.

[Matt]

It's just to move money around.

[Joel]

Yeah, those money moves don't happen instantly. It's like a Venmo transfer from your Venmo account into your bank account. That typically takes a couple of days unless you hit the instant thing where you have to pay extra for and.

[Matt]

Then you're paying off the no. Which you don't want to do. You also, I mean, even if you did, let's say you did want to switch over. Maybe there's other reasons. Like, I wouldn't say that this is the only reason to switch. Switch brokerages. Fidelity is great. So let's say you wanted to do that. But if you were to sell your assets there in a brokerage account and then buy them again at another brokerage, that would also trigger tax consequences. And that's something that you certainly want to avoid. Don't pay these capital gains when you don't need to. So if you decided that you're going to be better off at Vanguard, you just do what's known as an ACAT transfer. You call the new brokerage firm you want to start doing business with and they should help you to be able to do this. Essentially, you're just changing custodians of the funds that you already own. It's like slapping a new label on them. Essentially you're not selling and then rebuying, which is how you're going to. If you were you to do that, you're going to be paying a ton of money. Well, just depends on how much you got you're selling. But you are most definitely going to be paying capital gains tax.

[Joel]

That would be an inefficient way to do it and a tax inefficient way to do it that we don't want you to do. And so you mentioned the trustee to trusting trustee transfer. That's basically what the ACAT process is. But for brokerage accounts. The only potential problem I see in that, though, Matt, is the reality of proprietary funds. If you're invested in a proprietary fund, like a Schwab specific fund, or for instance with Fidelity, FC Rocks is an example of this. You likely won't be able to transfer it to another brokerage. I would ask your desired new brokerage firm about that first, though. I ran into this actually when trying to donate appreciated securities of FC Rock specifically. And they were like, oh, sorry, proprietary fund, we can't take that. And I was annoyed by that.

[Matt]

You got to sell it, right?

[Joel]

And I'm like, well, that's. That defeats the purpose. I will donate money for my savings account instead. But yet that. That is a problem that I wasn't aware of until I ran into that little buzzsaw. But there is, there's probably a good chance that staying with Schwab is going to make total sense for you, Ryan. I get the frustration, but. But hopefully you can overcome it either by choosing the right money market fund or just getting Zen with a three day annoyance.

[Matt]

All right. The beer that you and I enjoyed today, Joel, was called an anatomical transmutation. This is the double IP over at Burial.

[Joel]

What you think this was an almost perfect IPA map.

[Matt]

It had everything.

[Joel]

I. I can't say perfect just because. What is perfection? Yeah, yeah.

[Matt]

It's once, Once you've had the perfect beer.

[Joel]

I know.

[Matt]

I think at that point you just have to hang it up.

[Joel]

But this is pretty.

[Matt]

You stop drinking beer.

[Joel]

I guess so. I guess so.

[Matt]

And I am not willing to do that.

[Joel]

That's right. But this one was like just an incredible representation of a hazy ipa. I don't know, I read the back of the label. It said that there's heavy resin in the making of this beer. And also, you know what else I love to see?

[Matt]

I guess I love heavy resin. Yeah.

[Joel]

I was like, I don't know what that is, but it sounds good. And there were hand selected hops, so I think that's kind of cool too, that, like, why is Burial, at least ahead above the rest?

[Matt]

They're out there in the hop fields or whatever. Pointing to Vine. Yes, that one right there.

[Joel]

I mean, there is, there is something about their selection process, the way they craft their beers that makes them just some of the best in the world. And I think maybe the fact that they're going down to that nitty gritty detail of saying, we're hand selecting the hops that we stick in these beers. And this one, it showed.

[Matt]

It's perfectly funky, perfectly dank, fruity, earthy, all at the same time. I don't know how they're able to pull it off, but it certainly has all the different flavors that I'm looking for when it comes to my double IPAs that I like to partake in.

[Joel]

We have reached IPA nirvana, man.

[Matt]

That's what it feels like. Now you know why I was so blissed out after like the first sip at the very beginning. Just like, like, oh, my goodness. I think I was just emotionally blown away with what it was that they were able to pull off.

[Joel]

I bought this at the brewery and.

[Matt]

Now it's the only way to get the good stuff.

[Joel]

I'm going to drive four hours and buy more. It's just that good.

[Matt]

You don't pass it up when it's available.

[Joel]

Yeah, that's going to do it. For this episode, you can find links to some of the resources we mentioned in our show. Notes up on the [e-mail] Matt that's going to do it. Until next time. Best friends out.

[Matt]

Best friends out. In a world of economic uncertainty and workplace transformation, learn to lead by example. From visionary C Suite executives like Shannon Schuyler of PwC and Will Pearson of iHeartMedia, the Good Teacher explains the great teacher inspires. Don't always leave your team to do the work. That's been the most important part of how to lead by example. Listen to leading by Example executives making an impact on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

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