Ask HTM: Conquering Debt-Fuled Lifestyle Inflation, Investing a Used Car Payment, & Making the Most of a VA Loan #1135

Summary

How to Money – Episode #1135

"Ask HTM: Conquering Debt-Fueled Lifestyle Inflation, Investing a Used Car Payment, & Making the Most of a VA Loan"

Podcast: How to Money
Hosts: Joel & Matt
Date: May 4, 2026

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Episode Overview

In this lively and insightful Q&A episode, Joel and Matt tackle a range of real-life personal finance dilemmas from listeners. Key topics include handling the temptation of lifestyle inflation, navigating car purchases and financing, investing wisely, maximizing the benefits of a VA home loan, old 403(b) rollovers, and choosing optimal 529 college savings plans. True to their mission, the hosts provide down-to-earth, practical advice—always with humor, transparency about their own decisions, and an emphasis on "unsexy" financial fundamentals.

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Main Topics and Key Discussion Points

1. Debt-Fueled Lifestyle Inflation: Should I Sell My Rental? (07:17–20:38)

Listener Question: Matt, in Atlanta, wonders if he should sell a cashflowing rental property to pay off zero-interest window debt and a $50k 401(k) loan he took to build a pool, after his tenant decided to leave.

Discussion Breakdown:

• Lifestyle Inflation Trap

  • Taking a 401(k) loan for lifestyle upgrades (like a pool) is generally not recommended, as it deprives your future self and comes with risks.
  • “Taking out a 401K loan to do something that’s a bit more lifestyle-focused, putting in a pool—this is something that, were you to have reached out to us ahead of time, I think we would have advised against.” — Matt (10:08)

• 401(k) Loan Pros & Cons

  • It's an “almost never” money move, unless it's a true need, not a want.
  • Downsides: quick repayment required, risk if you lose your job, and your invested money isn’t growing.
  • “A 401(k) loan is a move you should make when there are needs, and not... for wants and lifestyle upgrades.” — Joel (11:58)

• Rental Property Math

  • Matt’s rental cash flows well, has a super-low 2.6% fixed mortgage rate, and has appreciated significantly.
  • Selling would dodge capital gains tax (lived there 2 of the last 5 years), but loses future upside and irreplaceable low-rate debt.

• Long-Term Mindset

  • Avoiding a “reactionary” decision based on tenant turnover or the temptation of a quick fix; instead, value the long game.
  • “I want him to not instinctually go for the path that feels a little easier... as opposed to the path that’s maybe a little bit less traveled” — Matt (16:25)

• Create a Plan

  • Work up a payoff plan for the 401(k) loan (ideally in 18 months) and window debt, rather than selling a great asset.
  • If it was high-interest debt (e.g., credit cards), selling the property would be more justifiable.

• Behavioral Insight

  • Using a windfall (like a big gain on a property) to fix overspending can be tempting, but if behavior doesn’t change, you may wind up with less flexibility later.

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2. Optimizing a Used Car Purchase & Car Loan Arbitrage (23:19–36:24)

Listener Question: Matt from North Carolina wants to buy a $35–40k used Toyota Sienna, wonders if he should finance it and invest the cash instead, and asks about paying by credit card for points.

Discussion Breakdown:

• Financial Impact of Upgrading Cars

  • Consider total cost of ownership, not just fuel savings.
  • “The older your car gets, typically you’re going to pay more in annual repair costs. But what you’re saving by not signing up for another car payment is superior.” — Joel (26:12)

• Where to Buy

  • Best deals often found with private sellers (search selectively on AutoTrader by seller type, Craigslist, Facebook Marketplace), though much harder in 2026 due to intermediaries dominating the used market.
  • Carvana and CarMax are alternatives, offering strong return policies for risk-averse buyers.

• Dealer Financing vs. Cash

  • Financing through a dealer sometimes nets you a price incentive, but may require holding the loan for a few months (beware prepayment penalties).
  • “If you can save a few thousand dollars (by financing), it ain’t nothing. It’s worth jumping through the hoops.” — Matt (30:56)

• Credit Cards at Dealerships

  • Many dealers charge a fee or set tight limits on credit card payments.
  • Only put purchase on a card if you avoid fees and/or are chasing a big signup bonus—otherwise, probably not worth it.

• Loan Arbitrage: Borrow at 5% & Invest?

  • The math: Since 1980, S&P 500 (with dividends) = 8.1% annualized return—BUT actual annual returns vary wildly.
  • Not guaranteed, and you risk taking a market loss on the invested cash versus the guaranteed “return” of paying off a 5% car loan.
  • “Optimization is something that’s worth pursuing... but there’s potential risk sometimes in the more far out methods... When you’re talking about ‘should I take on a 5% loan in hopes of outpacing it in the stock market,’ probably not.” — Joel (35:00)
  • Both recommend the simple route: stick to the basic rule of “no car loans,” pay cash if possible, and invest separately.

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3. Smart Strategies with VA Loans for Homebuyers (36:24–47:37)

Listener Question: Drew is moving to North Carolina, has $20k for a down payment, $52k in student loans, and can use a VA loan. Should he? Any tips for a first-time buyer?

Discussion Breakdown:

• Rent vs. Buy?

  • With a plan to stay 8–10 years, strong salary, and openness to house-hacking (with an ADU), buying can make sense—especially since house-hacking reduces net living cost dramatically.

• House-Hacking Advocacy

  • Both hosts are huge fans of house hacking for wealth-building, optionality (future space for family, childcare, etc.), and as an “easy” first landlording step.
  • “I don’t know that I’ve ever talked to anyone who did it and was like, ‘Man, I regret that.’” — Joel (40:35)

• Pros and Cons of VA Loans

  • Pros:
    • No down payment, no PMI, funding fee rolled into the loan.
    • Historically lower rates, flexibility to refinance with little red tape (“IRRRL”).
    • Assumable loan: Easier to sell house in future, especially valuable if interest rates fall and your rate is below-market.
    • “There’s something about a VA loan that’s special because you do have the ability for somebody else to assume that mortgage.” — Matt (43:44)
  • Cons:
    • Funding fee; not always the rock-bottom rate.
    • Less appeal to future buyers if rates are equal or lower.

• Loan Shopping Tips

  • Compare VA loans at multiple lenders and credit unions (recommendation: Navy Federal Credit Union), and include conventional options just in case.
  • For a short-to-medium timeline (e.g., “10:1 ARM”), consider adjustable-rate mortgages, as the house won’t be a long-term hold.

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4. Should I Roll Over an Old 403(b)? (49:04–52:44)

Listener Question: Katie has an old 403(b) from a prior employer; what should she do with it?

Discussion Breakdown:

• Minimize Fees
  • Most 403(b) accounts have higher fees than low-cost IRA options, unless your provider rhymes with “Modality” (i.e., Fidelity).
• How to Roll Over
  • Rolling to an IRA (or possibly to a new 403(b)), but IRA is usually best for control/fees/diversification.
  • Use a service like Capitalize for easy and penalty-free rollover.
• Key Quote:
  • “What we don’t want to happen is for high fees to eat away at the returns you should be getting.” — Joel (50:19)

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5. How to Choose the Right 529 Plan (52:44–58:19)

Anonymous Facebook Question: Feeling “analysis paralysis” over which state 529 plan to use for college savings.

Discussion Breakdown:

• Big Picture: Should You Contribute?

  • Only fund 529 after your own retirement savings are solid. “Put your oxygen mask on first.”

• How to Select a Plan

  • Check if your state offers an income tax deduction for contributions. In VA, yes—up to $4,000 per year, per account owner, and unused deductions can be carried forward indefinitely.
  • Look for low-cost, direct-sold options; skip high-fee “advisor” plans. “This is such an easy DIY thing!” — Joel (56:54)

• Choosing Investments

  • Choose a low-cost total market option (in Virginia, ER = 0.07%), or a target-date fund if your child is older or you want less hands-on management.
  • For more info & comparison, visit savingforcollege.com.

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Notable Quotes & Moments

On lifestyle inflation and debt:

• “Taking out a 401(k) loan to do something that’s a bit more lifestyle-focused... were you to have reached out to us ahead of time, I think we would have advised against.” — Matt (10:08)

On car financing:

• “If you can save a few thousand dollars, it ain’t nothing. It’s worth jumping through the hoops.” — Matt (30:56)
• “Optimization is something that’s worth pursuing... but there’s potential risk sometimes in the more far out methods.” — Joel (35:00)

On house hacking:

• “I don’t know that I’ve ever talked to anyone who did it and was like, ‘Man, I regret that.’” — Joel (40:35)

On VA loans:

• “There’s something about a VA loan that’s special because you do have the ability for somebody else to assume that mortgage.” — Matt (43:44)

On 403(b) rollovers:

• “What we don’t want to happen is for high fees to eat away at the returns you should be getting.” — Joel (50:19)

On choosing a 529 plan:

• “This is such an easy DIY thing!” — Joel (56:54)

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Segment Timestamps

• [01:28] — Show kickoff and set up
• [07:17] — Selling rental property/lifestyle inflation & 401(k) loans
• [23:19] — Car purchase strategy: finance vs. pay cash, investing the difference
• [36:24] — First-time home purchase, using a VA loan
• [49:04] — What to do with an old 403(b)
• [52:44] — How to pick the best 529 plan
• [58:20] — Beer discussion & listener appreciation

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Final Thoughts

Joel and Matt emphasize the importance of behavioral discipline, thoughtful decision-making, and sticking to core financial principles amid the seductive but risky opportunities offered by windfalls, easy credit, or the latest market trends. They steer listeners toward simple, evidence-backed strategies—building wealth “the boring way”—and away from shortcuts that don’t address underlying money habits. Listener questions provide practical examples of common financial crossroads faced by everyday people, and Joel and Matt respond with the combination of expertise and relatability that fans of How to Money have come to expect.

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Want your own question featured? Record a voice memo and send it to the show!
Community tip: The How to Money Facebook group is a “nice little corner of the internet” for crowd-sourced wisdom and support (50:03).

Find all referenced resources and more at: howtomoney.com

Transcript

[Matt]

This is an iHeart podcast. Guaranteed Human Is it just me or is it getting really hard to figure out the best way to save for retirement? Well, Fidelity can help you to find clarity so you can save the best way for you. With a free personalized plan, goal tracking, and timely insights, you'll be set to take on retirement your way.

[Joel]

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[Matt]

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[Joel]

spontaneously doing something extra for a loved one? So use Empower and get good at money so you can be a little bad. Join their 19 million customers [e-mail] not an Empower client, paid or sponsored.

[Matt]

Struggling to see up close? Make it visible with viz. VIZ is a once daily prescription eye drop to treat blurry near vision for up to 10 hours. The most common side effects that may be experienced while using VIS include eye irritation, temporary dim or dark vision, headaches, and eye redness. Talk to an eye doctor to learn if VIZ is right for you. Learn [e-mail] welcome to how to Money.

[Joel]

I'm Joel.

[Matt]

And I am Matt.

[Joel]

Today we're answering your listener questions.

[Matt]

You know what, buddy? Happy Monday to everyone out there. And we have qu the bevy of personal finance questions to get to today. For instance, the listener is looking to finance new used cars. That's an oxymoron, Joel. New used cars. But we think folks.

[Joel]

New to them.

[Matt]

New to you. Exactly. New to you. We're going to talk about assumable mortgages maybe. Yeah. What's that all about? You remember back when that was like a hot topic a few years ago when mortgage rates shot up and folks were like, what is this thing about assumable mortgages? I know we talked about it back then, but it's worth revisiting because it's actually a product that is, that might be more available to folks. Maybe not in the way that you're hoping, but we'll talk about that here in a second. And we'll talk about 529 plans and making the most of what your state is offering when it comes to being able to save for your kids higher education almost said college. But now since you can apply it to all types of education that costs you some money. It's on the table for a lot more folks. But we'll get to those plus more during our episode today.

[Joel]

Sounds good. Yeah, look forward to that.

[Matt]

Yeah, man. By the way, wanted to mention, I recently. So this was a couple weeks ago back in April, but I had to call it Fidelity, right. So everyone knows we love Fidelity. And I finally got around to opening up a Roth IRA for our eldest daughter with the money that she earned last year from babysitting. And let's just stop you there.

[Joel]

Incredible that a 12 year old is investing for the far off future. It's insane.

[Matt]

You know what was fascinating is so she's got like a pot of money essentially. And I was just like, well, this is how much you've earned, so you can't invest more than what it is that you earned. So of that portion, how much are you looking, you know, what would you be interested in investing? And she's like, well, I don't want to invest all of it. I was like, no, I'm not asking you to invest all of it. So it was interesting kind of talking through just the percentages. I'm like, well, you know, 10% is a broad rule of thumb. A lot of folks don't even do that though, but. And she was like, well, what do you, what do you and mommy do? I was like, well, when, you know, back when we were really getting after it, we were like closer to 20, 25 some years, depending on our income for the year, we're investing like 50%, 60% just depending on the year. That's what it's like being self employed. And so she settled around 20, 25%. All that to say we got some information wrong. And so I had to call Fidelity because they were wanting. They're like, oh, actually you need to confirm some stuff. And while I was on the phone with her, she said, oh, there's one more question here that just popped up and this is kind of a standard thing we have to ask you. It looks like she has a large percentage of her holdings in cash and this was specifically within her cash management account. And she's like, we always have to ask to make sure that you are aware that those dollars aren't invested as opposed to, you know, you wanting it to sit there in cash. And I was like, oh yeah, yeah, where she's just using it like a checking account. Basically. But I was like, I really appreciate that you asked me that, though, because I was like, I'm actually kind of a fan of personal finance.

[Joel]

That's why I told her. I was like.

[Matt]

And I know a lot of people, they think they're investing, but they just have those dollars sitting there.

[Joel]

She wasn't like, cash, is this the. The mat?

[Matt]

She would have been like, who? But yeah. And she wasn't able to share any. Any juicy morsels as far as, like, stories about people who maybe had a bunch of money set aside. So the conversation didn't go beyond that. But I was just like, I appreciate

[Joel]

y', all, like, an SEC violation if she did.

[Matt]

It was like the. Yeah, HIPAA equivalent. This is information we cannot share with you, random stranger. But. But, yeah, I just say that to say that I appreciated that that is something that they're looking out for with folks who have money with Fidelity. And just a note for all the folks out there, just because you've got money in your Roth ira, perhaps that does not mean you are investing those dollars. You have to actually pull the trigger and deploy those funds and actually get them invested, let's say, in a s and P500 index fund, as opposed to it just sitting there in the Cash Sweep, the government Sweep account.

[Joel]

And that's a not uncommon rookie mistake, is to get excited to open the account to. To put money in and then look back potentially years later and be like, oh, wow, how come this hasn't grown

[Matt]

as much as seeing any growth here?

[Joel]

What's that all about? Yeah, it's grown a little bit, but. And that's because you never actually took that additional step of investing those funds. But, yeah, really cool that that Fidelity is looking out for its customers in that way.

[Matt]

I love it, man. Yeah, I wanted to share that.

[Joel]

Very cool.

[Matt]

Yet another reason why Fidelity is. Man, it's them and Vanguard right there at the top. And I don't know, the more I interact with Fidelity, the more they might be edging out Vanguard a little bit. They're both great, although the proprietary funds, that's always. Yeah, that makes it tough, too.

[Joel]

Yeah.

[Matt]

So.

[Joel]

Well, let's. Let's mention the beer we're having on this episode, Matt. This one is.

[Matt]

Let's do it.

[Joel]

DDH Cosmic Debris from Creature Comforts out of Athens, Georgia. And, Matt, this beer comes from listener who. Second beer we're having from him.

[Matt]

Yet another beer from Nick.

[Joel]

Yeah, thank you, Nick. Appreciate it. We'll give our thoughts on this one later on down the line after we answer some of your questions. And by the way, if you have a question, just record on the voice memo app of your phone. Send it our way and we'd love to take it next week on the show. Man, we love taking your listener questions and more interesting, unique, even weird, the better. Let's get to our first question of this episode. Matt. This is actually from a listener named Matt who is trying to decide whether or not he should sell a rental property.

[Listener Matt]

Hey, Matt and Joel, I think I started listening to your podcast back in 2020 and I have to say that it has helped me really climb the money gears at the moment due to becoming comfortable with our lifestyle inflation. I've found myself a little more over leveraged than I'd like to be and want to do a bit of a reset. I'm in your neck of the woods in Atlanta and have a rental property that does cash flow each month, but my tenant has informed me that they are leaving at the end of this month. This news has me thinking about selling the property, even though it was something that I had planned to hold long term. We did live in this house for two of the last five years, and I believe that eliminates the need to pay capital gains on the sales proceeds. We bought the house for 200,000 and Zillow tells me it's worth about 355 today. Our tenant has been paying $2,100 a month, which easily covers the mortgage, taxes and insurance, which are about 1360amonth. The mortgage is locked in at 2.6%, so I'm pretty sure I'm crazy for even considering sale. But we've recently taken on some zero interest debt for 18 months to put in new windows in our current house. And I also owe 50,000 to my 401k because I borrowed from it when we put a pool in the backyard. Like I said, lifestyle inflation, lots of variables here, but curious to hear your thoughts on what you guys would do in our situation. Thanks very much.

[Matt]

All right, so first of all, Matt mentioned the money gears, which is a helpful little way of viewing the world and your money to help you to progress through the gears. He actually, he, he said climbing. I think climbing. Climbing the gears, which I guess that's fair. Yeah, I like to think you progress through the gears as you're gaining speed.

[Joel]

Well, and we call it the money gears because you and I, we like bicycles.

[Matt]

We like to bike and rode my bike here today, buddy.

[Joel]

Nice. I've been doing some training on my bike lately, which has been fun.

[Matt]

Oh, that's right. Yeah, how's, how's the. Are you still doing the.

[Joel]

Dude, I did a 50 mile ride.

[Matt]

It was hard this morning. You did 50 miles?

[Joel]

No, not this morning. No, no, like last week. But okay, it was hard. But we still love Viking. We don't talk about it as much anymore, but that was part of the reason we called it the Money Gears

[Matt]

is to start off with that easy gear.

[Joel]

That's right.

[Matt]

You gotta build that momentum. If you try to start off, you know, like let's say on seventh gear. Oh man, you're gonna hurt yourself. You might even break the bike.

[Joel]

Especially if you're going up a hill and you're like, my legs can't do this. It makes it so that, that's. If you're wondering, you're like a noob here, you're brand new to how to money. Go check out the Money Gears clip. Click the Start here button. That's [e-mail] and you'll find them there.

[Matt]

Absolutely. But Matt is not alone in finding lifestyle inflation hard to avoid. And it's funny because actual inflation, it's a part of that. Real wages have only recently started ticking up, but even still, it can feel like you are barely treading water. This is according to data by the bls. And that's just an average. Right. Like some individuals, they have seen an inflation adjusted rise in their income while others have actually see their inflation adjusted income decline in recent years. So on top of those factors, you know, that we have less control of, though it's important to note that we do make individual spending choices and decisions that are fully within our control. So Matt, not trying to hate or anything, but got to say, man, taking out a 401k loan to do something that is a bit more lifestyle focused, putting in a pool. This, this is something that were you to have reached out to us ahead of time, I think we would have advised against. I guess it does depend on how much maybe you had set aside already in your. Let's say you've got, I don't know, let's say you're $4 million. Okay. You know, I'm like, why don't you have any cash on hand? Yeah. So it depends, it does depend on some of the particulars. But knowing that he's got kids, I doubt he's in a situation like, I'm sure he was looking at it and saying, oh, we really want this thing. Oh, this is also going to be a little painful taking out a 401k loan. But I think we're going to go ahead and move forward with that. And that's not what, we're not biggest fans of 401k loans.

[Joel]

Typically we would say save up a little longer, pay for that in cash, mostly in cash. Maybe you know, take out a HELOC that you can pay off in 12 to 18 months or something like that. But you just don't want this hanging over your head for a long period of time. And you know, we, we talk about the downsides of borrowing against your retirement account. Some people think it's not so bad. Right. It's a minor infraction because hey, ultimately at the end of the day you're

[Matt]

paying yourself back like it's the bank of me.

[Joel]

Right.

[Matt]

That I owe the money to.

[Joel]

And so that feels, I guess less egregious which I get. But there, there's still many downsides. And so including you have to pay it back quickly if you were to lose your job or facing the tax and penalty consequences if you can't. Plus that money isn't growing in the market for your future.

[Matt]

Exactly.

[Joel]

So for, I wouldn't say that a 401k loan is a never money move, but it's more akin to an almost never. And it's really only a move you should make when there are needs and not, not for wants and lifestyle upgrades. That's, that's kind of our view on 401k loans. We know it's not everyone agrees but yeah, that's where we land.

[Matt]

Yeah. But moving forward. So like you've already done that. We're not going to spend any more time talking about that. The key thing I think Matt is to figure out your timeline whether or not you can pay that 401k loan off pretty quickly. So I'm thinking 18 months, maybe even less. Like are you able to do that without selling the rental? And if so, I think I would definitely do that. I would definitely hang on to the rental. Especially considering you're mentioning the, the mortgage rate that you have with that property is fantastic. And you are already planning to hang onto that rental property for, I don't know, maybe forever. Sounded like. Yeah, like it was a long term play. Right.

[Joel]

Like your cash flow and a smart one.

[Matt]

Yes. Like this is a property that's working really well for you. And just over the, not just the years, but even the man I'm thinking of like 10 years from now, like the mortgage is getting more and more paid down, rents are going to rise. And that's the beauty of rental properties, man. Like they make themselves more known the longer you hang on to them. And you are already benefiting, like right now. And so just imagine the kind of situation that you're going to put yourself in five, ten years from now. And so, yeah, I just wouldn't want to sell an asset like this that's going to produce even more additional cash flow that has a historically low fixed rate to pay off this loan sooner than your 401k loan, if I could help it. And actually, so let's not ignore the window. So, no, the windows. He mentioned that the windows had the 18 months of zero percent. And so I might even extend that out slightly. Like, I think I definitely want you to focus on the more near term goal, making sure that you're not paying interest on those windows, certainly eliminating that in less than 18 months. I think if it was me, I think I would cut myself slightly more slack given that the IRS gives you, I believe, typically five years to pay that 401k loan back. But even still, it's not something that you are just going to like, hope happens. Like, it's something that you need to work towards.

[Ad Voice]

Yeah.

[Matt]

Prioritize like creating a plan to ensure that that happens. So if I found myself with the ability to make that happen in the coming years, then yeah, I would do that.

[Joel]

Okay, so how would you respond to Matt? Because he's talking about he's in this sweet spot, window, Matt, where he can avoid paying capital gains tax if he sells this property. Right. Which. Which I think is alluring, especially true story.

[Matt]

Like, that's absolutely where he is. And I get that. That is why he's asking himself this question now.

[Joel]

And that is like a hard line. You pass that line of demarcation and all of a sudden, hey, that $150,000 in profit that you've got in appreciation you've seen on that property, when you make the sale, it goes from literally $0 in taxes owed to tens of thousands of dollars in taxes owed. So that's a big dividing line. And so I get why Matt's asking the question. Even still, though I don't know about you, I don't think that's quite a good enough reason to sell if you're an unhappy landlord, let's say. I think it would be a reason in favor of selling, but it also doesn't weight the scale too heavily as long as you plan to hold that home for many, many, many years after you pass that line.

[Matt]

Yep. Right.

[Joel]

And he also, he mentioned the tenant moving out. Again, that's a not A, that's not a trivial thing. It's a pain to find a new tenant. You might incur vacancy for a little bit of time, but it comes with the landlord territory. And Matt mentioned wanting to hold onto this property for a long period of time. And so I would think about both. I'm assuming he thought about both of those things before he turned this into a rental property. And so now those might be, those might feel like good reasons or like excuses essentially to be like, yeah, let's just unload it now. Yeah, but it's, it still doesn't mean it's in your long term best interest.

[Matt]

Yeah, yeah. I think that's the part that rubs me the wrong way. The fact that I like, there's a part of me that wonders if he would have considered this had his tenant said, yeah, we're gonna, we're gonna sign for another year. Right. Like, there's a part of it that feels a little bit reactionary. And that's the thing that I want to question. It's almost like when things are automatic and automated, like you don't just, you just like, oh, yeah, we're going to continue to invest in the 401k because it's just already doing that. And there's a part of me that thinks that had his tenant continue to just continue to pay him rent, that he wouldn't be asking this question. But of course, life circumstances caused you to say, oh, is this, oh, now that there's a fork in the road, when before there wasn't a fork in the road. Right. So I don't know, I just, I guess that's. I want him to not instinctually go for the path that feels a little easier, the path of least resistance, as opposed to the path that's maybe a little bit less traveled that's going to lead him to the best longer term financial standing.

[Joel]

All right, Robert Frost over there. You're the Robert Frost of personal finance.

[Matt]

A little poetic, but I mean, again, you know, we don't like 401k loans, but it would, it would also be different if we're talking about credit card debt at like 20%. Because if that was the case, man, I don't know, like, maybe some more extreme measures might be in order. But the truth is you are paying yourself back and the interest that you pay on the 401k loan is going back to you. So it's not a reason just to take out the 401k loan, but it's also not a reason to sell the property in order to get rid of it in one fell swoop. My mind goes back to creating a plan because I think about a lot of what Matt was discussing was like, lifestyle creep. And it is so much easier to spend money on things that you're excited about and things that present themselves. Right. Like, I think about all the things I like to do at my house. Like, I want to put an arbor,

[Joel]

like this big arbor over the garage

[Matt]

door so that our trumpet vines can grow, and I want to play in jasmine. We're talking about putting some new steps from our back porch to this new portion of the garden. It's springtime, right? So we're spending a lot of time out in the yard. But, like. And I'm sure there's some people who are just like, who are you, old man?

[Joel]

Are you bird watching now, too?

[Matt]

I know. Oh, my gosh. I'm sure birding is in my future. But, like, those are the things that get you excited because it's very tangible. You know, what's not tangible is the thing you already have, because you already have it. Like, it's. It's not like you are getting excited about paying off some debt for something that you already have. It's not new, it's not novel. And so that's why I think coming up with a plan and really sticking with it is going to be crucial, because if you don't do that, I don't think you're going to naturally gravitate towards eliminating this debt.

[Joel]

This is.

[Matt]

This is the slippery slope that folks find themselves in. So I. Yeah, I think sitting down, figuring out the plan is how much you're going to pay not only every year, but every month in order to eliminate this thing within a set period of time. I think it's so important.

[Joel]

It's also alluring to have a silver bullet, right? And this is kind of a silver bullet.

[Matt]

It's been presented to him on a silver platter, right?

[Joel]

And it's like, hey, there's actually a lot of money that I can have pretty quickly, and I can right some of these wrongs. I can eradicate what might have been a premature decision and take that out of my life. Get. Get the cloud that's hanging over me. Boom. I can shoo it away instantaneously, and quick fix. I get how that feels good or seems like the right thing to do. But you're also, like, if you sell this house to right the ship, you won't be able to make a move like this again, right? You will have used that capital up and so I think I just want to point out how important it is to address the behavior element of this and you know, the decision that you made, the decisions that you made that got you here. So you don't find yourself in a similar position down the road. But then down the road you don't have the ability to quickly unload a property to fix it like you can right now if, if you sell this one. So you just have to take that into account because yeah, maybe you're able to, you know, use that silver bullet, the good fortune of rapid price appreciation on this rental property for the position you find yourself in now. But if you do that and then let's say you continue to spend in a similar way, then you find yourself without that ability down the road you find yourself between a rock and a hard place.

[Matt]

Exactly. Yeah. Like there's a little bit of front loading of the sacrif he did in order to not unload that property when he purchased the new one. If you don't set up these additional like paydays essentially. Yeah, like so like you said, once you use this one up there are no other likely paydays. And in fact you do have to.

[Joel]

Yeah, you've got your like rich great aunt dies or something like that. You don't want to be hoping but

[Matt]

you're not really actually hoping it happens. Yeah, but yeah, yeah, you've got to alter that behavior which I think again coming up with some sort of plan that's going to be key to your success. Matt, we wish you the absolute best. And Joel, we've got more to get to. We're going to hear from more listeners. We'll talk about 403bs. We'll get to VA loans as well. All that and more right after this.

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[Matt]

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[Joel]

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[Matt]

That's right. PolicyGenius is an online insurance marketplace that allows you to compare quotes from some of America's top insurers side by side for free. I love doing stuff for free, Joel. They also help you to find your most affordable policy that meets your needs. They're able to answer your questions, they handle the paperwork and they advocate for you throughout the entire process. This is what has earned Policygenius all those five star reviews.

[Joel]

With Policygenius you can see if you can find 20 year life insurance policy starting at just $276 a year for $1 million in coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you could save. That's policygenius.com all right, we're back from the break. Still taking your questions. Love taking your questions. Matt. Let's get to a second. Matt. There's three mats so far in this episode. If you're counting.

[Matt]

If you're counting me, yes.

[Joel]

The most. It's the day of Matt's generic name in Human. Human history.

[Matt]

Just. And we're all between the age of 39 and 45 probably.

[Joel]

I think if my name was Matt, I'd go by Matty or something just to like switch it up.

[Matt]

Yeah.

[Joel]

What do you think?

[Matt]

That's why I went by alt mix so much in school because I always was surrounded by other mats. So when I was really little or. Yeah, that's funny. Like a little kid. I was Little Matt.

[Joel]

Little Matt.

[Matt]

Because there is another Matt on the cul de sac and he was Big Matt.

[Joel]

Okay.

[Matt]

So yeah, I was little Matt.

[Joel]

You have to distinguish sometimes.

[Matt]

Exactly.

[Joel]

Let's get to another question from a different Matt.

[Listener Matt]

This is Matt from Lincoln, North Carolina. My wife and I are looking to buy a new 2S car in the next month or two. We've decided on a 2021-2024 Toyota Sienna. The mileage and trim we like costs about $35,000 to $40,000. The gas savings from switching from our 2005 4Runner will be about $200 per month. My question is, what is the best way to purchase a car? I have the cash to buy it outright, but will I get a better price if I finance it through the dealership and then just pay it off? I think I would like to put as much as I can on my credit card and pay it off immediately. But I've read that a lot of times dealerships pass the transaction fees for credit cards onto the buyer. I can get an auto loan from USAA for around 5% APR, depending on the length of the loan. Should I just take that cash and park it in my taxable brokerage along with another 50,000 I have in there and just pay off the loan monthly from that? I've historically gotten much better returns than 5%. I'd love to hear your thoughts. Love the show. Best friend Al.

[Matt]

I wonder if Matt feels more convinced with the higher gas prices that we're all experiencing. Right. Like you're doing the math on. Oh, man. It used to be not quite the savings that we were experiencing, let's say, last year, but now, given the elevated price of gas, I think a lot of folks basically are. They tend to overestimate the impact that a vehicle that has a higher mile per gallon gas mileage, how much that's going to impact them.

[Joel]

But in a straight switch to an ev, a used ev.

[Matt]

Oh, it's. Matt, It's. It's much more significant.

[Joel]

And you're a heavy driver. It can be much more significant. But then we. Again, like we've talked about, you have to factor in the total costs of ownership. You have to factor in, well, how much more am I gonna pay in depreciation if I upgrade to a much newer car over the next decade versus this, what do you say, 2005 4Runner? That's probably fully depreciated, essentially, like that thing's. Actually, it might go up in value over the next 10 to 15 years. It really might.

[Matt]

Nothing is paying you. Yes, Matt. In order to.

[Joel]

I mean, that's how I feel about my 064 runner. Matt and I are in a pretty similar position here. I'm like, I don't think this thing is gonna be worth a whole lot less 10 years down the line and that I can justify maybe paying a little bit more in gas.

[Matt]

He's looking at Siennas. And so I'm sure some, some of it has to do with maybe a growing family.

[Joel]

Sure.

[Matt]

It sounds like he is doing a whole lot of driving and in, in his case he actually has figured out how much this is going to save him every single month. So I'm with you as far as the hybrid goes because he's looking at the early twenties Sienna.

[Joel]

Oh man, you've been busting after this.

[Matt]

When I was listening to his voice memo, I immediately looked it up. I was like, oh yeah, that's the one. They look so good. They got the all wheel drive, the hybrid. They're just, they're fantastic vans. I would love to have one of those.

[Joel]

How much did he say it's costing him every year in maintenance for this? Didn't he say 800 and something dollars maybe? Did he say that? If he did, maybe I'm like adding that in after the fact.

[Matt]

Or maybe that was in the email.

[Joel]

When you look at the like Consumer Reports lists out what an average older vehicle costs and repairs over a given, average given year, that's insanely small. And so just, just know that too that like, hey, actually you're probably the older your car gets, typically you're going to pay more in annual repair costs. But what you're saving by not signing up for another car payment is superior.

[Matt]

Right.

[Joel]

To that is a whole lot more. And so, but I'll say this too, I'm not against. I don't think we're against Matt making this change. We just wanted to do it with eyes wide open. Yeah. And so he's asking specifically about financing via a dealership. Well, we want to prompt you to consider looking at the private sale market and not just at dealerships for these vans because you might find that you can get more bang for your buck buying from an individual selling their gently used Sienna versus heading into the dealership. And sadly, sadly, as I found out the hard way too, it's easier said than done. In 2026, I think the middlemen have taken over the used car market, Matt. There's just so much less person to person selling that happens now than when we were younger. Right then, then 15, 20 years ago, it was super normal. And there were a lot of ways where you could buy from a private,

[Matt]

private seller crying a deal on Craigslist.

[Joel]

Craigslist the main way.

[Matt]

That's how you did it.

[Joel]

And there's still Facebook Marketplace, but even, even now there are tons of auto brokers on there and it's harder to find an actual individual. Actually we're my favorite place to Go is auto trader. And to scroll all the way down and list by seller type. And you can click private individual. And it's shocking how much it reduces the number of vehicles.

[Matt]

Two results.

[Joel]

Exactly.

[Matt]

Exactly like 56 results down to 2.

[Joel]

100%. So it's like searching for a needle in a haystack. But I think it is worth it. That's how I have found the best vehicles for our family. And so you just have to be a little patient if you take that route.

[Matt]

That's right. But let's say you don't feel 100% comfortable buying from an individual. Or maybe you're not wanting to put the time in or, you know, maybe you don't have the patience, perhaps. I have successfully purchased a vehicle from Carvana. Carmax falls into a similar category, though, as far as what it is that they're offering. And the reason that I want to bring this up is because they, you know, they've. Obviously they've got a lot of choices out there. Currently looked, there are tons of Siennas listed on both of those sites, but both offer that time period that allows you to test out the vehicle. But if you're not happy with it, they've got a sweet return policy. You can bring it back. You've got seven days with Carvana and you've actually got 10 days to return that vehicle back to Carmax. I think it actually used to be like 30, like an entire month.

[Joel]

I remember when they could the 30

[Matt]

that thing around and it was just like, what?

[Joel]

Shocking. Shocking.

[Matt]

Why would I not just drive something around for. Yeah. I'm sure there's certain transaction costs that were.

[Joel]

There's like a mileage limit. So you can't be like, I'm just gonna.

[Matt]

There was. That's right. I remember. I'm gonna rent my car. 50. Yeah, maybe something like that. You can.

[Joel]

Couldn't drive it like across the United States and back and still return it.

[Matt]

Yeah. And in both cases, it's like a no questions asked sort of policy, which I think is really cool. So I wanted to share that because it's not quite as generous as it used to be, but it's still better than every other car seller out there. And I don't know, it could leave some of the nervousness that you might have with an individual seller as well, because guess what? That individual seller is not going to do unless you have the car. Like, hey, I'll see you in a week if I don't like it. All right, man.

[Joel]

But many will at least. And they should Let you get that car checked out by your mechanic.

[Matt]

Right. That's in. Either way, you absolutely need to use the time. Whether or not you're just taking on a quick test drive with the owner, or if you're looking at Carvana or CarMax, but you need to be able to take it to a trusted mechanic, make sure that there aren't any issues if the car starts acting up or even if you end up not just loving that particular vehicle. When you are purchasing with CarMax or Carvana, you can just take it back and Continue your search 100%.

[Joel]

The specifics of Matt's question, though. Taking out a loan on this used car, it might score you a slightly better deal, but at the end of the day, it might not save you much or be worth the hassle. That's because, hey, there might be a prepayment penalty if you try to pay off that loan too quickly, which forces you to hold onto that loan for maybe three or six months. If you do that right, the interest you pay might negate the savings you get from the F and I department at the dealership.

[Matt]

It might, but it might not. Which is. And we've talked about my in laws, they did that and they. I think they had to hang onto it for two or three months. But certainly know what the fine print says because in their case, I mean, they saved a few thousand dollars, which

[Joel]

if you can save a few thousand

[Matt]

dollars, it ain't nothing.

[Joel]

It's worth jumping through the hoops if you're talking about saving a couple hundred. You're like, is it's worth me accidentally, like not paying it off as quickly as I thought or holding onto this loan and. Yeah, so not to mention dealing with

[Matt]

the pressure of the salesperson who's like, it's like, well, technically, yes, there's no prepayment penalty, but the whole time they're like leaning on you. But it would be great if you just kind of kept that thing around indefinitely.

[Joel]

Well, as far as using a credit card, man, he's right, Matt. They'll often either charge a fee or cap the amount you can put on your card. That's because it costs them money. Of course, we're seeing this even just at gas stations around the country. It used to be just a flat price, but now there's a credit price and a cash price at almost every gas station I go to. Now, that didn't used to be the case. And so it's worth asking because if you can score some points, especially if there's like a sign up bonus you're trying to meet on a new credit card that's going to make it even more worth it for you, then go for it. But if not, I don't know, you might just want to bring cash to the table and pay for it all at once.

[Matt]

That's true. A quick note, as you are negotiating with, I guess a dealership in particular, don't talk about how it is that

[Joel]

you're going to pay.

[Matt]

Right. So Joe, you talked about showing up with cash. Don't get to that until you've actually agreed upon the actual price of the car. Right. So paying the methods, we'll save that. For once you've agreed on the price because the goal is to get the best actual price that you want and then tell them how it is that you would like to pay for it. But if you start talking about how it is you're going to pay, well, the deal can get a bit wonky pretty quick. He's talking about taking on the loan in order to maybe invest a bit more. So he's like, alright, do I pay off this 5% loan or not even take that versus taking that cash instead and investing that I would recommend. We actually talked about this recently. There's an Ask how to Money episode from a couple weeks ago. You know, we talked about the behavioral downsides of trying to essentially over optimize a car purchase. So definitely listen to that in this case for you, Matt, the arbitrage play here is actually even less because a couple of weeks ago we're talking about, I think it was like right at a 2% loan and you're looking at a 5% loan. So I mean, yes, if you look at your recent stock market historical returns, like you have done better recently. But that may not always be the case. I mean you certainly can't guarantee it. And that's one of the differences here is that by paying that you are guaranteeing that 5% return. And actually so I crunched some numbers here to be able to provide. Provide Matt, because I think he's got his mind set on investing those dollars. And if you look Back to the 80s, the S&P 500 with dividends has returned over 8%. It has returned 8.1%.

[Joel]

Right. Since the 80s till now.

[Matt]

Yes, since. Yeah. I don't like going back any further than that because I feel like there's too many other factors that impacts the modern era. Yeah. That kind of impact the markets. Just how it is that folks were able to trade. Yeah. Anyway, I like going back to the 80s. That's also when we were born, Joel. Again, that's when all the mats were like, came into existence.

[Joel]

That's right.

[Matt]

And so you might be thinking 8.1%. Well, we're looking at a 3.1% spread here, but it's not guaranteed. And when you look at the individual years since the 80s, there is not one single year where the return was actually 8 something percent. Yeah, not a single year. Guess what it was instead it was like 14, minus 12 or plus 14 or minus 30 plus 19, 20. So it is all over the place. And that is a part of the beauty of the stock market. I mean it's volatile. But when you can sit, not change your allocation, write it out, you're going to see those outsized returns over time. But if you were looking at a more condensed period of time, man, Matt, I would hate for you to have one of those negative six years over the next few years when instead you would have been better off if that money had gone to paying off a plus 5% loan.

[Joel]

That's why I think optimization is something that's, that's worth pursuing in personal finance. But then there is a swath of people, Matt, who want to over optimize and, or optimize to the fullest extent. And I do think there is potential risk sometimes in the more far out optimization methods. And this isn't even ridiculously far out. But yeah, when you're talking about like, okay, should I take on a 5% loan in hopes of outpacing it in the stock market? Well, probably not. Like you're probably getting too comfortable with car debt and there's not enough of a win there. I would just rather stick to the basic principle of never having car debt, never financing cars, paying for it in cash, and then at the same time being incredibly optimistic about my return assumptions in the market with all the other money I'm investing in that direction.

[Matt]

That's right, yeah. And I guess something else I don't think he shared was how much cash he has in the bank. So I don't know. There's also a liquidity issue.

[Joel]

Right.

[Matt]

And that's one of the things we talk about when we're talking about paying for something with cash as opposed to taking out a loan. So you know, you get, you've got to take that into account as well. And Matt, we certainly don't want you to be in a weak position when it comes to your emergency fund and how much cash you have on hand. But Joe, let's keep moving. Let's Hear from a listener who is looking to purchase a home in a new town.

[Listener Drew]

Hey Matt and Joel, this is Drew and I have a question about loans for a first time home purchase. My wife and I are in our early 30s with three kids. We will soon be moving to Winston Salem area of North Carolina and plan to purchase a home. We have completed money gear number four. We have $52,000 in student loans and no other debt. We've been saving about seven to $800 a month, but still only have about $20,000 set aside for this home purchase. I will be starting a job with a guaranteed annual salary of $140,000 plus bonuses based on the production of other people in the same position. I expect to earn around $165,000 a year. This will be our only income for the next several years. We expect to be in this home for 8 to 10 years. The purchase price will likely be in the 400 to $450,000 price range. There are not many multi unit options available in the area that we are moving to. We would be interested in a home with an ADU if that is something that we come across. I have access to VA loans through my previous military service. The lenders that we have talked to have encouraged us to use the VA loan due to the no down payment requirement, no PMI and the fact that the funding fee can be rolled into the loan. I would appreciate hearing your advice on loan types along with any other tips you have for a first time home purchase.

[Matt]

All right, man. VA loans, they're awesome. That's the answer, Drew.

[Joel]

They. I mean they can be. They certainly can be. And a benefit for individuals who have served our country. Right.

[Matt]

In the military.

[Joel]

Absolutely.

[Matt]

So first of all, Drew, thank you for your service.

[Joel]

Yes. And I love that this is available to you. Right. And we'll talk about the pros and cons of VA loans as we answer your question here. I guess I do want to ask the question. Is buying a house right for you? And you mentioned in your email actually, Drew.

[Matt]

Oh, as opposed to renting.

[Joel]

Yeah. Because when we're looking at the macroeconomics right now, big picture, it's worth just at least asking the question. And Drew mentioned that he might be willing to punt on this home purchase and rent for longer if that would make the most sense. I think with his savings, with their salary, buying a home in their timeline, buying a home could really make sense, especially given his willingness to do a little bit of house hacking.

[Matt]

Yes.

[Joel]

I think the cool thing is that an ADU on the property, it doesn't always raise the price significantly, but it can reduce your housing costs because of the ability to rent that thing out. So I. If you're willing to do this and maybe even narrow your search and hone in on those properties that have income producing potential, then I think that makes buying just even more of a, like, smart, savvy decision than, you know, saying, oh, we're just going to rent here for the next seven plus years. If you could find something that's going to pay off a little bit and actually like reduce your overall living costs.

[Matt]

Well, that's what's so great about house hacking.

[Joel]

Right.

[Matt]

Like, I'm also more comfortable with him taking out a VA loan, putting less down, generally speaking, regardless of the, of the loan type, if it is going to spit off some income. Like it's, it's a lot different than buying a fancier car and then stretching out the loan in order to reduce your payments. Like in this case, you're signing up for a bigger payment. Yes. But actually it's also going to lower your housing costs. So, yeah, I think, I think that would be smart. And it allows yourself to kind of experiment with the easiest form of landlording as well. Yeah, we're incredibly pro house hacking over here. I'm thinking about when we renovated our last house. We literally finished it out to be able to list it on Airbnb. And we're making over $1,500 a month with that property. It was with that, with that unit. It was awesome. It was so great. And the other thing that was great was that when we got tired of that, and specifically as we were ramping up the podcast, Joel, the ability for us to move into that space like we treated. That was our, that was our first official, you know, studio, essentially. So the optionality that that gives you is incredible, man. Such a, I'm such a house hacking booster. Right.

[Joel]

I don't know that I've ever talked to anyone who did it and it was like, man, I regret that.

[Matt]

No, because it's so great.

[Joel]

Yeah. And it might make things a little uncomfortable for a small period of time. You might be like, there's like somebody walking on the back of our property at all our, like, you know, they went to the bar last night and they got in a little bit late and I noticed because they live in our backyard now. And I get that that can be. Or, you know, you. There was, you were cognizant of like your kids making noise in the kitchen because there's somebody living below yeah, yeah.

[Matt]

I mean, we could have been. We also could have not cared quite as much and I guess that would have impacted our revenue because maybe we would have gotten some bad reviews. Yeah, maybe we wouldn't have had five stars, but. Yeah, I mean, there. I guess I think about the optionality as well. I'm thinking about to spring break. Kate and I stayed in an Airbnb that was. It seemed that it was created specifically to like in a similar way to list on Airbnb, but there was another unit as well that they stated that oftentimes family lives in. So don't go in the door that's straight ahead, go to the one to the right and there. So I mentioned that because Drew said something about he's got three kids and the optionality that that gives you down the road when it, like child care is expensive. And so maybe what does it look like to have an aging parent stay to help with the kids when they're younger for a set shorter period of time or even indefinitely, as maybe you might have a parent who's getting older? It just gives you so many potential avenues to consider when you have that available, whether it's a revenue generating or if it's just a. Oh, this is going to be a way for us to enrich our life experience and also keep costs down because we no longer have to pay for a nanny or childcare during the day.

[Joel]

I say don't sleep on that and maybe actually prioritize it even more highly since you're open to it. Let's discuss the pros and the cons of a VA loan, Matt, as well, because first, I think it's going to keep your down payment intact. The money that Drew has saved up, he's been admirably working towards that. Seven or eight hundred bucks a month, I think, is what he said he was putting towards his down payment fund. Well, you get to keep the money that you've been saving on hand. And he's already got a substantial E fund, which is clutch. But this allows flexibility. Right. To make improvements on the property if it's necessary and to plan for unexpected repairs which homeowners are finding out are more expensive than they used to be. Plus what he's been able to save. It wouldn't be enough to get him to 20% down if he had, let's say, a much bigger down payment saved up. Let's say he had $85,000 saved up. Well, even though he has access to a VA loan, it might be worth considering a conventional loan and putting 20% down. But given where he's at, I guess specifically a VA loan is probably his best bet.

[Matt]

Yeah, I totally agree. I mean, especially considering oftentimes VA loans have the discounted rate since it's backed by the government, which, again, this is something that you've earned, Drew. Right. Like with your military service, the fact that you've served our country, you've perhaps delayed your professional career or whatever it is that you're doing currently. That's something. I think that's something that you've earned, that you deserve. But then also, what I was hinting to towards the beginning, the fact that there's something about a VA loan that's like, special because you do have the ability for somebody else to assume that mortgage. There's something about that that just makes it stand out amongst all the other mortgages out there.

[Joel]

Yeah. Talk about that for a second. Because most loans.

[Matt]

Most loans you can't assume so. Exactly. So the lender is not willing to essentially say, o, we will take this product and assign it to the new buyer. But with this being backed by the VA Veterans affairs, the Department of Veterans affairs, this is something that they allow.

[Joel]

So it would be more helpful, I guess, if he was taking out a loan in 2019 at our 2021 or something like that, at a 4% or 3% rate that was then assumable in the future.

[Matt]

But maybe folks are less interested in assuming a mortgage today, given. Yeah, exactly. Given where rates. Where rates are. But then that points on another pro in the VA loan category, which is. It's. Okay, let me see if I can get this right, because, Joel, neither you and I have served, so neither of us have VA loans. But it is the IRR IRRL product, which is the interest rate reduction IRL in real life. No, no, no. It's the interest rate reduction refinance loan product which really streamlines the ability to refinance at an incredibly low cost. Super easy. There's no paperwork. Right. So there's no appraisal. That has to happen. You don't have to verify your income and you can roll the low expenses right back into it. And so that almost makes it future proof, you know, from the ability, as you see rates go down. I don't know, it makes it a bit more attractive. I know you've had luck with the ARM because given the fact that you didn't serve, for you, that was a good option because of the fact that it was. It was discounted. But I mean, even today, that's something that we're seeing discounted even more.

[Listener Matt]

Right.

[Matt]

Like that that spread that margin is even greater.

[Joel]

Sure.

[Matt]

On arms on like a 10:1 arm as opposed to a 30 year conventional arm.

[Joel]

And you can get an ARM as a VA loan. Right. So you that might be worth considering too getting like a 10:1 arm or something like that. If he said what seven to 10 years is how long they'd likely live in the home. So don't automatically assume that a 30 year fixed interest rate is the best product for you. Then if you have a kind of long time, the longest time window you're likely to be in the home is 10 years. Then a 10 one arm makes can make a ridiculous if you can save 3 quarters to a full point right on the interest rate. Just make sure you think about those things and you look at competitive products across the board including VA and conventional loans just in case you can find a better rate that way. But I agree with you Matt. I think there are a few reasons that a VA loan in particular would and likely makes the most sense here. Also, his income is great. They're moving through the Money Gears fully funded emergency fund.

[Matt]

Right. He said They've completed Money Gear 4. That's incredible. That takes folks a long time.

[Joel]

It does.

[Matt]

That can take years.

[Joel]

For some folks, that's a big old step. They've got a healthy approach to savings. They're keen to build wealth. I would just say no matter whether you opt for a VA or a conventional loan, just shop around with a few different lenders and compare apples to apples. Go to a lender that specializes in VA loans. Navy Federal Credit Union would be a good place to check out. Maybe a local credit union as well. Talk to a mortgage broker. When it comes down to it, that is one of the things that ultimately costs people a lot of money is putting very little effort into where they go and how much they shop for a home loan because the disparity in offerings can be significant. And yeah, the more you shop, the more you get quotes. The more you engage lenders to compete against each other, the better off you're going to be, the better you're going to do. But best of luck, Drew, and we hope you're able to find an awesome property. Hopefully a property that you can get a little income from on the side as well. We got more to get to on this episode, Matt, including what do you do with an old 403B account that's sitting around? We'll talk about that and more right after this.

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[Matt]

to see up close? Make it visible with Viz VIZ is a once daily prescription eye drop to treat blurry near vision for up to 10 hours. The most common side effects that may be experienced while using VIZ include eye irritation, temporary dim or dark vision, headaches and eye redness. Talk to an eye doctor to learn if VIZ is right for you. Learn [e-mail] let's say you've always wanted to take a spontaneous trip to the Caribbean. Well, here's the thing. If you get smart with your money, you can do things like that. With Empower you can start making the most out of your money so you can go out and live a little. Isn't that why we work so hard to have some fun with our money? Like treating yourself to something special or

[Joel]

spontaneously doing something extra for a loved one? Matt so use Empower and get good at money so you can be a little bad. Join their 19 million customers [e-mail] not an empower client, paid or sponsored.

[Matt]

All right buddy, we are back from the break and it is now time for the Facebook Questions of the week. I think we're gonna take two of them today. This one is from Katie who writes hi how to Money Family. I left my previous employer about a year ago and my old 403B account is just sitting around. Just curious. Any ideas as to what I should do if anything? I didn't look at it for several months and just a few days ago checked and was surprised to see that it gained several thousand dollars in value over the past year. I have a new 403B with match, my new employer and have also recently opened a Roth IRA independently. Thanks. I don't post much in this group, but I do look frequently and appreciate the feedback and ideas that get tossed around. I'll start off by addressing that Katie man, the Facebook group.

[Joel]

I love it.

[Matt]

Full of great people. I love that there's folks in there helping each other out, providing really good advice. 100%. You don't have to post. But yeah, just checking out like you're 43B checking in from time to time. You're always going to learn something.

[Joel]

There's a lot of lurkers in a good way. Right. Where people are like, I'm curious to hear the money saving and there's a lot of great questions and a lot of great advice. And even just yet the people who are asking questions and answering questions and they're doing a service to fellow listeners and to fellow Facebook group.

[Matt]

It's a nice little corner of the Internet.

[Joel]

It really is. And you know what? There are fewer great portions of the Internet these days. Matt agreed. They've all been kind of torched into rough spots, I think. Or many of them have, I would say too. What we don't want to happen is for high fees to eat away at the returns you should be getting. Katie which means it's probably best to roll your $403 over into an IRA with a low cost brokerage firm. I don't know who your 403 is with, but if the if the name of the brokerage firm does not rhyme with modelity, there's a good chance it's costing you too much.

[Matt]

I was wondering what you're gonna come up with. Modality.

[Joel]

So it's like almost a slam dunk, I would say, to move an old 403B and just know there are specific things you need to realize about moving over an old retirement account. And people have made mistakes in the past and it can cost you a significant amount in terms of taxes and penalties. So one of the things we typically mention when people are talking about moving over an old retirement account into an IRA is a service called Capitalize. We'll link to an article we've written about it in the show Notes. But if you're looking for someone to hold your hand and essentially help you do it and they're not going to charge you a dime, which is probably pretty rad as well, then Capitalize is the way to go because you can do it seamlessly and you essentially eliminate the risk of taxes and penalties eating you up because you accidentally took a little bit too long.

[Matt]

Yeah. You know what? Fidelity should have called their youth accounts Kidelity. But they didn't.

[Joel]

Should have worked in marketing, sir.

[Matt]

So you could roll that 4.3B into your new plan with your current employer if they allow it. But still, because of how low the fees are with Fidelity in particular, it's likely best just to roll it into an ira because then now you're going to have a traditional and a Roth ira, which is fantastic. You're diversifying that tax liability. You get that pre tax and post tax accounts. That's going to give you solid flexibility over time. And that's going to put you in the catbird's seat. Joel, I'll read this next one from an anonymous poster. I'm having analysis paralysis on 529 plans. Is there some type of process for sorting through the options? I live in Virginia, if that makes a difference. Thank you.

[Joel]

Okay. What you think, Joel? Yes, let's talk about the process. But first, I just want to talk about for a brief second Whether or not 529 plans make sense for you to invest in.

[Matt]

You're starting broad zoomed out, big picture.

[Joel]

I love it every time I feel like we have to, just because before

[Matt]

we dive into the details, I think

[Joel]

there is this like more. I don't know. I think millennial parenting is very different than the way our parents parented Matt. Like, you know, you hear about latchkey kids and stuff. That seems to be less of a thing in 2026 as it was in. We're just trying to take it back to the 80s, 1990s.

[Matt]

Right.

[Joel]

Yeah. So just because of that, I think we put more pressure on ourselves to provide for our kids in a way that might not be best for our overall family financial situation. That's how I'll say it. And so I think some analysis paralysis is in order about whether you should open a 529 account in the first place because some folks are just too keen to invest for their kids. They open up a 529, they start stuffing money in before they've optimized their own investing. And we just, we just don't want this poster to be one of those folks. I mean, I think saving for your kids education is awesome, but only if you're well along the path to financial independence on your own.

[Matt]

That's right.

[Joel]

And so we think that that 529 contributing to 529 plans for the most part, apart from some of the kind of savvy moves you can make to open one up to start the clock ticking even with just a few dollars, should really be done inside of money gear number seven. Kind of talk about the airplane analogy of putting the oxygen mask on yourself first. Right. Then that allows you to take care of the people around you. This is kind of pretty similar from a personal finance perspective.

[Matt]

Absolutely. Yeah. And she mentioned. Well, I guess I don't even know if it's A she, I guess maybe the last poster was Katie. And I keep seeing Virginia in my mind. Right. Which is the state that she, that this person lives in. But it may not be a female. They just live in Virginia. And that is important. I'm glad you mentioned that because each state does offer its own plan. But you shouldn't always invest in your state plan. It's going to depend on a number of factors and one of the the biggest ones is whether or not your state offers a state tax deduction or not.

[Joel]

It's probably numero uno, right?

[Matt]

Yeah. And it turns out Virginia is a state that offers that benefit. So certainly take advantage of that. You can deduct up to $4,000 of income per kid essentially that you have. In addition to that, digging through the investment options that Virginia has available there for you, there are some pretty great low cost choices and options there. If your child is young, you've got let's say a decade plus to invest. You can go for total stock market fund option that they have available there. It's got an expense ratio of 0.07%.

[Joel]

Nicely done, Virginia.

[Matt]

That's what I'm talking about, man. They've got other options there too. They've got like the target date fund equivalent for the kids where it adjusts over time. Not surprising, especially if you're just starting

[Joel]

out and your kid's 13. Like you might.

[Matt]

Maybe you don't want to go all in on the full market. Not surprisingly, the expenses on those are a bit higher, but they're also not totally unreasonable. But I was happy to see that the expense ratio was so low on that total stock market index. I wanted to mention too, I was happy to see that Virginia is actually one of a few states that allows for you to carry forward additional deductions. They allow you to deduct 4,000 per year. But let's say you plunked down 40,000. Well, obviously like a boss. Yeah, yeah, yeah. Like big old bonus or something, whatever. Obviously you are only allowed to deduct 4,000 of that. But you can carry forward those that remaining 36,000 into future years indefinitely. That's cool. It's really cool. Virginia, Yeah. I think is one of the other

[Joel]

states and still get that full tax benefit. Yes.

[Matt]

And take advantage of that every single year moving forward. It does not expire. You can carry that forward. So yeah, keep that in mind as well.

[Joel]

Last thing we should mention, Matt, is where you go to get a 529 set up. And you and I were fans of Direct sold plans is what they're known as. There are advisor sold plans that come with higher ongoing fees and you could.

[Matt]

Should I go to bank of America, Joel, and set up my 529?

[Joel]

Clearly that's the best way to skin this guy. No, no, not at all. This is such an easy DIY thing. You can go directly to whatever your state is, right? If you're in Virginia, which This poster is, invest529.com is the website for Virginia's plan and DIY it. Put the money in and then pick the funds that you want to invest in.

[Matt]

Actually deploy those dollars like we talked about earlier.

[Joel]

Just talked a little bit about which fund you should choose and why and then you're done. Just sit back and sip some lemonade or something.

[Matt]

It is that easy.

[Joel]

It's really easy. This is like, what if you're looking to do even more in depth research, there's a great website called savingforcollege.com and you can see all the list of funds for each state. You can see the different plans that might be available. This direct sold plans are almost always the best choice. And they're in a few states, Matt, that don't have a state tax benefit that have ridiculously high fees. For those people, it's worth considering a low cost plan that another state offers. But often the 529 plans have gotten better across the board across the past decades. Going with your own, especially if there's a state tax benefit going with Your own state's 529 plan, direct sold plan is the way to go.

[Matt]

That's right.

[Joel]

Joel.

[Matt]

The beer that you and I enjoyed during today's episode was a ddh, which stands for Double Dry Hopped Cosmic Debris. This is an Imperial IPA by Creature Comforts out of Athens, Georgia, donated to the show by friend of the show, friend of the pod, Nick. And what'd you think, bud?

[Joel]

Okay, so you have a much better palate than I do.

[Matt]

I don't know.

[Joel]

I'll readily admit this. It's not even a question actually.

[Matt]

So I just make stuff up, man.

[Joel]

That's not true. That's not true.

[Matt]

I do mix a lot of stuff up. But like, I'm just like, oh, what is that? Kind of. I just get. I get fancy with it. I get, you know, get kind of creative with it. I'm like, oh, what does that taste like? Well, it tastes like this one time, I remember when I was 5 years old and picked up a rock and licked it, you know, like it's got

[Joel]

the minerality you also tasted more things because of the weird stuff you put in your mouth over the years.

[Matt]

So you're just missing out on.

[Joel]

You have a bigger frame of reference on the world. I guess so.

[Matt]

So this one being said, what did you think?

[Joel]

This one had more floral than, like, citrusy, just straight up juicy notes, in my opinion. And it kind of brought me back to an era of IPAs from like 10, 12 years ago.

[Matt]

Totally agree that.

[Joel]

But we don't really see as much now because they're so either heavy juice bomb or heavy bitter. The kind of like that floral note that can be really fun and interesting in IPAs is, I would say, largely missing. And this one was like, it was a nice, pillowy, cloudy mouth feel kind of vibe going on. And then it had that. Those just kind of floral notes on the back of your tongue as it cascaded down your throat. So I. I enjoyed it. And it was also just kind of a nice change up from what the average IPA that you can get these days.

[Matt]

Yeah, it felt like a blast from the past. Like, these are the kind of IPAs that we drank, like you said 10 years ago, for sure. And I think for me, the coolest thing about this beer is the label art or the can art, which reminds me of our actual album art. It's got, like, hop graphics and similar color, too. It is a similar color. Yeah. Head over to the show [e-mail] and you can see for yourself what this can looks like. It's just so fun looking, you know, it's just.

[Joel]

I don't know, it makes me think

[Matt]

it's like partying a can.

[Joel]

It is. Do you think we need to update our. So that our art's been the same for eight years now?

[Matt]

Let's do it this year. We're 20, 26.

[Joel]

At some point, we don't look as young anymore. So do we, like, do we advertise to everyone that we're old curmudgeons with, like, you know, canes and stuff now or not?

[Matt]

Yeah. No. Well, folks want to see your mustache. That's true. And so if you haven't seen Joel's mustache, it's wonderful. I look. Oh, I don't. I don't have, like the swoopy kind of emo hair looking as much. I don't. It just depends on the time of year, so. Right. I actually just cut my hair recently, so I've kind of got my summer

[Joel]

high and tight, my summer cut.

[Matt]

You know why? Because I got myself. When I'm running, I'm working out in the garage. I want to stay cool. So that's, that's what it comes down to. I'm a seasonal opportunity hair kind of guy. Like, if it's winter, well, then it can be allowed, but in the summer, I ain't got time for that.

[Joel]

All right. We won't change it too heavily, but we'll at least update our pictures. Yeah. Because I still, I still like his classic, man.

[Matt]

Yeah. Yeah. I think we can just swap out the actual photo. We just have to treat it in the same way, provide the contrast. That's the thing. People can't really tell how old we are in the photo because it's been treated.

[Joel]

That's true.

[Matt]

You know, it's real bright and contrasting.

[Joel]

And if we get a lot of graphic surgery between now and then, they'll be able to tell even less. Yeah.

[Matt]

Which is absolutely not something that I think either of us are going to do. But that's going to be it for this episode. Like we mentioned, you can find the show notes up on the [e-mail] that's going to be it for this one, buddy. So until next time, best friends out. Best friends out. Is it just me or is it getting really hard to figure out the best way to save for retirement? Well, Fidelity can help you to find clarity. So you can save the best way for you with a free personalized plan, goal tracking and timely insights and you'll be set to take on retirement your way.

[Joel]

Get [e-mail] future expenses charged by your investments and other costs and fees associated with trading or transacting in your account. Apply Fidelity Brokerage Services Member NYSE SIPC

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[Matt]

Struggling to see up close? Make it visible with viz. VIZ is a once daily prescription eye drop to treat blurry near vision for up to 10 hours. The most common side effects that may be experienced while using VIS include eye irritation, temporary dim or dark vision, headaches and eye redness. Talk to an eye doctor to learn if VIZ is right for you. Learn more at viz. Com this is an iHeart podcast.

[Listener Matt]

Guaranteed Human.