Ask HTM - Deciding How Much ‘Fun $’, Prepping for Long Term Care, & Doubling Down on Employer Retirement Accounts #967

Summary

Podcast Summary: How to Money Episode: Ask HTM - Deciding How Much ‘Fun $’, Prepping for Long Term Care, & Doubling Down on Employer Retirement Accounts #967
Release Date: April 7, 2025
Host: Joel and Matt from iHeartPodcasts

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In this episode of How to Money, hosts Joel and Matt tackle several listener questions centered around budgeting for fun expenses, planning for long-term care, and optimizing retirement account contributions. The duo provides practical advice, shares personal experiences, and includes insightful quotes to guide listeners in making informed financial decisions.

1. Balancing Finances for Newlyweds: Allocating ‘Fun Money’

Listener: Cheyenne from Memphis, Tennessee
Timestamp: [07:58] - [18:28]

Cheyenne and her new spouse are navigating the integration of their finances, specifically how much to allocate to individual versus joint spending accounts. They currently deposit most of their income into a joint account while maintaining small individual allocations.

Key Insights:

• Combining Finances: Joel emphasizes the benefits of a joint account, including shared goals, transparency, and trust. He states, “You get the shared goals, you get the easy tracking… it can really start living a rich life.” ([11:05])
• Individual Allocations: Matt discusses maintaining personal autonomy by allowing individual spending, highlighting the importance of each partner having discretionary funds for personal expenses without micromanaging each other’s expenditures.
• Custom Solutions: The hosts suggest that each couple should determine what works best for their relationship dynamics, whether it’s a fixed amount, percentage-based allocations, or separate credit cards for discretionary spending.

Notable Quote:

"You still don't know who you are when you're like, you were, like, 16 when you got married." – Matt ([09:15])

2. Prepping for Long-Term Care: Protecting Parental Assets

Listener: Nate from Oklahoma City
Timestamp: [32:11] - [42:14]

Nate seeks advice on how his parents can protect their assets from being drained by long-term care expenses, such as nursing home costs.

Key Insights:

• Long-Term Care Insurance Challenges: Joel and Matt discuss the rising costs and premiums of long-term care insurance, noting that many people drop their policies before utilizing them due to affordability. Joel mentions, “Long term care insurance premium inflation has been worse than eggs.” ([34:03])
• Alternative Strategies: They explore alternatives like Medicaid planning, reverse mortgages, and consulting with elder law attorneys to strategize asset protection without jeopardizing family inheritances.
• Importance of Planning: Emphasizing proactive planning, the hosts advise having open conversations with family members to alleviate future financial stress and ensure quality care for elders.

Notable Quote:

"If you're looking to or if your parents are thinking, well, Medicaid, I've got Medicaid. I don't need long term care insurance, or I don't need to like pay attention to not spending down my retirement assets... it's just not that simple or easy." – Joel ([35:30])

3. Optimizing Retirement Accounts: Employer Plans vs. Individual IRAs

Listener: Miranda from Logan, Utah
Timestamp: [24:04] - [31:42]

Miranda is evaluating whether to maximize contributions to her employer-sponsored retirement plans or to invest independently through an IRA, given her new job offers substantial matching contributions.

Key Insights:

• Maximizing Employer Match: Joel and Matt strongly advocate taking full advantage of employer matches, describing it as “a 14.2% raise” due to the generous employer contributions. Matt praises, “Hey, by the way, this is your salary, but you also got a 14.2% raise just like right out of the gate.” ([25:37])
• Diversifying Retirement Accounts: They recommend diversifying investments by contributing to a Roth IRA after maximizing employer plans to enhance flexibility and tax advantages.
• Choosing the Right Provider: The hosts suggest opting for reputable, low-cost brokerages like Fidelity over others like TIAA, which may have higher fees and less favorable terms.

Notable Quote:

"She is in a pretty fantastic matching situation here. Just, I mean, the fact that you get a match that's that generous here with your new job... that's off the charts." – Matt ([25:37])

4. Investing in Index Funds: Understanding Performance Variations

Listener: Dan
Timestamp: [51:24] - [57:08]

Dan questions why different S&P 500 index funds show varying performances despite tracking the same index.

Key Insights:

• Expense Ratios and Fees: Joel explains that differences in fund performance often stem from varying expense ratios and additional fees charged by fund managers, which can erode returns over time. He advises, “The biggest one is how much they cost to own.” ([51:30])
• Fund Composition: Matt adds that some funds may exclude certain micro-cap stocks to minimize costs, slightly altering their performance compared to others that fully replicate the index.
• Focus on Low-Cost Funds: The hosts emphasize prioritizing low-cost, well-diversified funds from major providers like Vanguard, Fidelity, and Schwab to ensure close tracking of the desired index without unnecessary fees.

Notable Quote:

“As long as the fund itself offers enough diversification to satisfy you, don't worry about which S and P500 fund or which total stock market fund has done better.” – Joel ([53:10])

5. Managing Hobby Funds vs. Emergency Funds

Listener: Matthew
Timestamp: [45:45] - [50:38]

Matthew inquires about keeping his hobby fund separate from his emergency fund, especially since unexpected bills often arise when he engages in his hobby of buying and flipping items.

Key Insights:

• Separate Funds for Clarity: Joel suggests that having a separate hobby fund can help prioritize discretionary spending without jeopardizing essential savings. “A little side hustle action” from fund flips can support hobby expenses without tapping into emergency reserves. ([46:07])
• Budgeting for Predictable Expenses: Matt recommends identifying and planning for recurring or foreseeable expenses to reduce the frequency of tapping into the emergency fund. He states, “If some of those unexpected bills could be planned for, then being able to rearrange like that is the solution.” ([47:36])
• Incentivizing Savings: Keeping hobby funds separate can also motivate individuals to increase their income through side hustles, as excess earnings can directly enhance their discretionary spending capabilities.

Notable Quote:

“It's the little bucket for hobby stuff versus the big bucket for emergencies… keeps it siloed.” – Joel ([46:07])

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Conclusion

In this episode, Joel and Matt provide comprehensive advice on integrating finances post-marriage, preparing for potential long-term care needs, optimizing retirement savings, understanding index fund performance discrepancies, and effectively managing hobby-related expenses alongside emergency funds. Their practical tips and relatable anecdotes equip listeners with the knowledge to make informed financial decisions tailored to their unique life circumstances.

Notable Takeaway:
"Once you start enhancing your skills, the sooner you'll be ready." – Matt ([00:52])

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Additional Resources:

• For more detailed guidance, listeners can visit howtomoney.com/ask to submit their own questions.
• Explore low-cost investment options at major brokerages like Fidelity, Vanguard, and Schwab.
• Consider consulting with a certified financial planner (CFP) to tailor financial strategies to your personal goals.

Transcript

[Joel]

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[Matt]

That's right, whether you've switched jobs or are just organizing your finances. Learn [e-mail] 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 We've all got different tasks in life that we enjoy doing. For me, that would be closing out the books on our family's personal finances every month. Nerd. But then there are some chores that are more of a pain. And for me that would be grocery shopping, something I try and avoid if at all possible.

[Joel]

Well, that's where Walmart steps in because their subscriptions have help you to stay stocked on the items you use most, whether that's milk and eggs or kitty litter and cleaning supplies. Find everything you need for your home at Walmart, in stores, online and in the app. Where do you see your career in 10 years? What are you doing now to help you get there? The sooner you start enhancing your skills, the sooner you'll be ready. That's why AARP has reskilling courses in a variety of categories like marketing and management to help your income live as long as you do.

[Matt]

That's right. AARP has a bevy of free skill building courses for you to choose from because the steps that you choose to take today will help you to love what you do in the future. And that's why the younger you are, the more you need AARP. Learn more at aarp.org skills welcome to how to Money.

[Joel]

I'm Joel.

[Matt]

I'm Matt.

[Joel]

And today we're answering your listener question.

[Matt]

That's right, buddy. Happy Monday to everybody. Happy spring break to those who might be celebrating if you participate, if you celebrate the spring break. Joel but we are gonna people don't celebrate.

[Joel]

So the people who don't, they're irreligious.

[Matt]

I hate According to the vacations listener is asking how much fun money should they be setting aside. They're trying to determine like how much seems fair between him and his new wife, his new bride. Another listener's asking about the cost of long term care and specifically what assets might be vulnerable to that unexpectedly high cost that his folks would be realizing. And then another Listener is asking whether she should, like, double down on her employer provided retirement account or if she should just kind of go out on her own, do her own thing. The individual retirement account. Joel, we'll get to that. Plus more. I said fun money, too. Actually, we got another question that's fun money related. We'll get to all that here during our episode.

[Joel]

But first, buddy, my favorite kind of money, by the way, is the fun one.

[Matt]

Hey, I've got a Frugal Achieve for you. Because I noticed the other day I was driving along and only half of the road was lit up. One of our headlights had gone out. And you know, they say typically once one headlight goes out, go ahead and replace both of them.

[Joel]

Yeah.

[Matt]

First of all, did you do that? Do you pull the one that's perfectly functional? That's working? Because you know it's going to go out very soon?

[Joel]

I typically do, only because if I'm gonna get a nicer bulb, I just want them to, like, be the same color and shine the same distance.

[Matt]

Like, you can keep up with the package or.

[Joel]

That's true.

[Matt]

Not the packaging. But if you wrote it down somewhere, look at your Amazon orders. That's not my question. My question was that. So I looked up the specific type of bowl that I wanted, and I saw that I could order it online. Actually kind of splurged a little bit. Wanted to get the nicer bulb, you know, like that kind of. It's even crisper, even brighter.

[Joel]

Shines farther.

[Matt]

Exactly. See, further down the Extravision Plus.

[Joel]

Well, you see what it looks like on the packaging, and you're like, I'm sold.

[Matt]

Well, of course I want it to look like that. Yeah. So I could order it online. The downside was that it was gonna take, like, seven or eight days. I was really surprised to see how long it was gonna take for that thing to show up.

[Joel]

Were you getting it from, like, TEMU or Shin or something?

[Matt]

No, I don't. I don't know who the provider was, but it was just gonna take a while. But then I looked up and saw that locally, I could just hop over to the store and get it at the local auto parts store, and it was gonna be like 10, $20 more expensive. But I had the added benefit around with one headlight out, and I got to thinking, wait a minute, am I being cheap by waiting in order to get the deal? By driving around for, you know, close to a week, all the while running the risk of potentially getting a ticket? Because depending. Depending on what state you live in, hitting A deer.

[Joel]

You never know.

[Matt]

Yeah, yeah. If your visibility is cut down low or somebody else even seeing you. But I decided that it wasn't worth it. And so I said, you know what? Normally. Normally I think I would kind of take the quote unquote cheap route, get the deal, but instead I just.

[Joel]

Let me share that with you.

[Matt]

I drove over to the local store, picked up the headlights in person, installed them, I was good to go. What would you have done, though, in that situation, do you think?

[Joel]

I would either have ordered it where it was going to come in in a day or 2, but 8 days is too long, I think.

[Cheyenne]

Yeah.

[Matt]

I was completely shocked, especially when we're so used to receiving something the next day.

[Joel]

There's also an auto parts store on every corner, basically, so it's not. It's not like you have to drive 25, 30 minutes.

[Matt]

Yeah. There's not some specialty thing.

[Joel]

There's like eight within walking distance. It feels like. Yeah, I mean, that's an exaggeration, but it feels like that's kind of true.

[Matt]

Well, it was that. And then also thinking through if I did the off chance, get a ticket in, that just the kind of excuse that an auto insurer is looking for to jack up your rates. Because then I started thinking, well, even aside from the, like, maybe hitting a deer or something like that, perpetually higher premiums down the road, like, all these things were going through my mind and I was. It took me like 10 seconds to convince myself just to hop over to the local store.

[Joel]

Well, a ticket, make it happen. It's going to cost a lot of money. But then if that ticket leads to higher insurance costs, you're talking about like a double whammy for like just one small little mistake. Right. That you. That you should have remedied earlier.

[Matt]

So not the kind of situation I wanted to find myself in.

[Joel]

Yeah. I'm with you from a safety and a financial impact sort of standpoint.

[Matt]

Did you say we are in agreement?

[Joel]

Did you replace both?

[Matt]

I did.

[Joel]

Okay.

[Matt]

Yeah.

[Joel]

I mean, again, like, if you're going from something that's. If I was putting in a matching bulb, then I would be okay. Holding off. But if you're upgrading, you just want those things to look the same. And typically those newer one, I feel like they're. They're kind of a bluer light because.

[Matt]

They'Re more led, a little more crisp. Yeah, yeah.

[Joel]

It's kind of. I hate it when I, like in the bathroom, if I put in two different light bulbs and they're slightly different.

[Matt]

Oh, my Gosh, Yeah.

[Joel]

It's the worst.

[Matt]

Okay. Do you know what temperature your family is? So with the bulbs, not off the top of my head, it's either 2700 or it's 3000 or even higher. But 27 is typically the warmest. That's like the soft light traditional bolt. Like, it's typical 60 watt that you're used to.

[Joel]

Well, you put different rooms, right?

[Matt]

You could if you want to. Or you go with the rock. The same color throughout the whole house.

[Joel]

In the same, like, light fixture. I want all the.

[Matt]

You want those to be consistent.

[Joel]

But sometimes, like, in my bathroom, I'm okay with, like, a slightly different light than I am.

[Matt]

You go for, like, a little bit crisper in the bathroom just so you can see everything on your face right. While you're shaving.

[Joel]

I mean, it's hideous, but it lights it up.

[Matt]

Well, so light don't make it look any better.

[Joel]

Joel.

[Matt]

Sorry.

[Joel]

All right, let's mention the beer we're having on today's episode. This one's called Bossy Blonde. It's by contrast brewing or Contrast Artisanals. Excuse me.

[Matt]

There you go.

[Joel]

They are right, Joel. Local brewery right around the corner. And we'll give our thoughts on this beer at the end of the episode. If you have a money question, we'd love to hear from you. Just go to howtomoney.com ask. We need Matt some great listener questions.

[Matt]

Yeah, we do.

[Joel]

So if you have a money question, you're like, eh, he's kind of in the back of my head. Well, I'd love to know what Matt and Joel think. Please do submit it. Go to howtomoney.com ask or just literally record your question on the voice memo app of your phone. State your name at the top and then email it over to us. Howtomoneypodmail.com we will, of course, take your question soon. Matt, let's take a question about newlyweds and learn how to muddy together.

[Nate]

Hey, Matt and Joel. This is Cheyenne from Memphis, Tennessee. Me and my wife got married last August, and we've done the fun task of combining finances. We're currently doing the approach of having all money go into joint accounts and then having a small amount that's deposited into our individual accounts each month. I can't say for sure, but I believe you both have been an advocate of this approach in the past. The issue we're having is identifying which type of expenses would fall into the individual spending versus the joint spending account. How do you guys determine this yourselves? Additionally, how do you determine how Much to put into the individual accounts. Do you do a fixed amount? Do you do a percentage based on the prior month savings amount, or is it something else? Thank you for the help.

[Matt]

Memphis, Joel. You spent some time there.

[Joel]

I have.

[Matt]

Is that. Did you actually get married in Memphis?

[Joel]

We did get married in Memphis, yes.

[Matt]

Okay. I can't remember who's.

[Joel]

My wife is from there or Tennessee and got married at the Memphis Zoo.

[Matt]

I'm sorry, when I said Tennessee, I meant to say Chattanooga. You also spend time there.

[Joel]

We spent time in Chattanooga. But Memphis is also in Tennessee. They're both.

[Matt]

Yeah, exactly.

[Joel]

Just in, like, literally opposite ends of Tennessee. But no, the Memphis Zoo is a good place. Legit, lovely. Just a wonderful place. And I. Fond memories, for sure. Best wedding ever. I didn't go to yours.

[Matt]

Well, we didn't know each other.

[Joel]

Yeah. I'm assuming mine was better.

[Matt]

Well, yours was. You were older in life. Like, Kate and I got married pretty young. And I feel like the older you get, the more personality and the more your own. You can make it. True. I do.

[Joel]

You still don't know who you are when you're like, you were, like, 16 when you got married.

[Matt]

Not quite that young. I mean, yeah, like, there's a degree of, like, learning who you are, figuring yourself out, figuring out the things that you value, and it's hard to know all of those things. I'm an ever evolving, dynamic person, Joel. Even now. I mean, you know, you mature your wings.

[Joel]

Well, I liked craft beer back then, but I also liked dive bar beer. So, like, pbr. And I distinctly remember wanting my groom's cake to be a PBR can. And I remember Emily's dad being like, nah, man, come on, that's not cool. That's lame. So instead, I went with a Norwegian flag because that's my heritage. And I'm actually.

[Matt]

Well, that's fun.

[Joel]

I'm glad that I did that.

[Matt]

So, words of wisdom.

[Joel]

That's right.

[Matt]

The future fellow.

[Joel]

Yeah. Listen to your elders, people. Speaking of elders, I'm sure we're older than Cheyenne here. Let's answer his question. First off, congrats on getting married. And it sounds like you guys have taken a really smart approach to combining your finances. I mean, I prefer either everything being combined or having one combined account and two separate accounts. But ideally, I think the way you guys have it set up is great. Right? You get the benefits of combining everything. And, Matt, I think those benefits are many. Right? You get the shared goals, you get the easy tracking. You get the kind of transparency which builds trust. In that relationship, it's like he. I can look in and see what's going on with the account. You can look in. We both have essentially just as much control over this thing as the other one. And then you also get at least some autonomy because, yeah, you're merging lives, you're two becoming one flesh or whatever it is we say. But it also doesn't mean that you aren't an individual with your own hopes and goals and dreams too, that you share with your partner. Right.

[Matt]

But at the very least, your own spending.

[Joel]

Yeah, exactly. At the very least, you get to spend a little money without like, kind of no questions asked.

[Matt]

Yeah, I get that. I found that for us, having a singular account, that all of the money is in that, that is incredibly helpful. At least I think early on when you first get married, it seems like it's something you both want to keep up with. But I. I would not be surprised, Cheyenne, if it becomes pretty quickly apparent that one of you enjoys doing this more than the other person. And what you don't need to do is to then be responsible for multiple logins, like reconciling multiple accounts, having it all in, you know, just kind of spread out all over the place, basically.

[Joel]

Overcomplicating.

[Matt]

Yeah, just. It's just so much simpler to have a singular account. And when it comes to. So he's talking about having separate accounts for their spending, I think a way around that is just to simply have like a separate credit card. And that's something that Kate actually, actually does, that she has this separate card that I don't have, where she completely manages expenses on that because she know if. She knows if she goes out and buys something and she's thinking, there's a good chance I'm going to return this. She doesn't want me entering these transactions in where it's just like, oh, oh, that $67 hit a recorded. And then a couple weeks later she returns it. And then I'm like, okay, minus 67. Now I got to go in and do all this. She is able to mentally account for that. And it also allows her, like, birthday presents, Christmas presents. That's one of the reasons people talk about having their own account as well, is to, well, I don't want you to be able to see what I'm getting for you or even where I'm getting it from when I get you a gift. But the ability for her at the end of the month to say, okay, and she sends me a simple breakdown of like, this number of dollars from our Giving account. This number of dollars goes towards groceries, this amount comes out of the kids account, that kind of thing.

[Joel]

Yeah, it's.

[Matt]

There's a way to keep things separate whilst, in my opinion, not necessarily having a bunch of multiple accounts.

[Joel]

That's a good point. I think overdoing it with the accounts. I get why you might want to do that, but I also just don't think it's terribly helpful. And we've talked about this before, Matt, but maybe we should highlight the reasons that combining things is good. And especially you talked about getting married later on. And I think the further along you are in your life, let's say you get married in your 40s, right. Then you're like, I've already kind of built this financial life on my own. I don't necessarily know that I want to combine all the way, like, let's put the rings on the fingers, let's move in together. But that rental property that I bought five years ago, that's mine. Right. And I guess I can understand the reasoning behind that. But the benefits of combining accounts have been studied and they are significant because according to statistics, you're going to be happier if you do.

[Matt]

Yeah.

[Joel]

You're going to experience greater relationship satisfaction. Right. There's this added level of accountability that helps to instill trust in the relationship. And then both partners, as it turns out, are unlikely to spend in riskier ways. And that's partly because what they buy is, aside from, you know, the credit card that you're talking about that Kate has access to, Matt, although she's. She gives you at least generalities of what she's spending with that the partner is going to see what you're buying if you, if you're spending directly from the joint account. And so if you opt for those separate accounts for fun money, you, yeah, you're opting for a little more privacy, but that's not necessarily for the best for your relationship. And each couple is going to have a different stance on whether that's something they feel they need or not.

[Matt]

Yeah.

[Joel]

But I think the general statistics reveal an underlying truth that the combination of finances as a couple is going to make you stronger.

[Matt]

Totally. Yeah. But then how do you decide how much each of you gets to spend? This is going to be highly dependent on your relationship as well. Just the dynamics. And like, some folks out there think that the person who makes more money or that, like, they should be able to spend more, like you make more, you spend more.

[Joel]

Others think it's a percentage. It's like, hey, I bring home twice.

[Matt]

As much as you, then I'm going to have 10% more. You're going to have to less.

[Joel]

So I get the 32 ounce beer, you get a 16 ounce beer.

[Matt]

And maybe, I don't know. Do you ever take body weight into account, Joel, when you're splitting a beer with your wife? Yeah, oh, yeah, I actually do.

[Joel]

Yeah.

[Matt]

Because I'm like, if I give you.

[Joel]

I get 60, she gets 40. That's also just because she doesn't drink it all the way and I do.

[Matt]

So Kate's like a tiny person. So not like a literal tiny person, but like she's just significantly smaller than I am. And I'm like, I think, oh, if I actually pour you the same amount, this is going to impact you differently. It's going to impact me. That being said, some folks think that it should be split evenly each and every month, but then others think that they should be able just to spend however they choose, unless the cost of an item is going to exceed, let's say, a particular threshold, like 100 bucks, that kind of thing. And so these are all personal decisions. And I mean, in my opinion, I think this is something you need to talk about because I think every couple out there is going to arrive at a different dollar amount in our case. This is something that we've talked about. And Kate always gets more money than I do every single month. And that's because of what we've included in her personal category as well, which includes hair. Like if she goes and get, goes out and get for a haircut or gets her hair colored, that kind of thing. Makeup products, things like that.

[Joel]

You cut yours and your son's hair but not hers, huh?

[Matt]

Not. I have, we've talked about this. I've even tried coloring. I've even tried the balayage at home before and it saved us some money, but it took a lot of time. I don't think we're gonna do that again. It didn't quite turn out, I think, as, as excellently as maybe she was hoping for as well.

[Joel]

Good for you. You'd be on the hook for doing it for the rest of your life if it did.

[Matt]

Yeah, but I mean, what I'm highlighting here though is that I think each couple is going to arrive at a different point and it doesn't necessarily have to be the same amount. It doesn't even have to correspond with who is earning more money, because that would be me. But in our case, in our relationship, she actually gets more to spend every single month than I do.

[Joel]

Yeah, I mean, I think the recurring fixed amount is a good way to think about it. And let's say one of you is a bigger spender than the other. Then I think you should make concessions for that. And sometimes, Matt, kind of like what you're alluding to. It's not even about being a bigger spender, but it's like the things that women need, and I'm just generalizing here, they can be more expensive than what men need. Like, I just spend less in general than my wife because I don't go get my hair did. Right. Like I.

[Matt]

But there's some dudes out there who do.

[Joel]

There are.

[Matt]

And if that's like.

[Joel]

So that's totally. Generality could be reversed. Yeah, they could be. But I think it's worth mentioning. But on the other side, I think about, let's say the grocery budget, Matt, and there were times where I could buy my craft beer at the grocery store and my wife's like, I'm not drinking that stuff, like, or I don't care about the $22 four pack or something like that.

[Matt]

And you're like, but I like it.

[Joel]

Right. And if I buy four of those, that's significantly adding to the grocery budget. So we have to have that discussion, like, okay, is that included in groceries or is that something that I have to fork over myself? And we typically kind of came down on the line of, well, if I'm going to go over a certain amount of craft beer spending, that's when it falls on me.

[Matt]

You give her like a little token sip. That way you can justify it being a grocery expense.

[Joel]

If I'm sharing, it goes back into the grocery fund. Okay. But on the flip side, we make room for other recurring purchases in our budget. It doesn't get taken from our individual monthly allocated amount. Like, let's say one of us is going to see a therapist and the other one isn't. Well, that doesn't necessarily come out of my wife's money, Matt. That's just something that we budget for as a family, you know, and one of us might spend more than the other and one of us typically does, but the money still jointly comes out of our account. And I guess one thing I want to make sure that Cheyenne knows and this is really important in marriage in general. But like, things don't always have to be perfectly fair. And sometimes you just have to, you have to give up on that desire to make things perfectly equal because that's just not going to be the best thing for your budget or for your Marriage.

[Matt]

Let's talk about big expenses as well because I'm thinking about, let's say Cheyenne wants to go on a big trip with a friend or a family member and his wife wants to stay at home. If that's the case, I think it might feel a bit unfair to her to hang out at home. And while he's using that, that joint money to pay for it. If that's the case, I think a conversation is again certainly needed. This is something you could talk about, but is this going to delay some other goals that we might be trying to achieve? If so, I think that's going to be tough to stomach and you're going to have to come up with a way to reconcile that for you. Shy maybe what that means in this specific example is just finding some money that pays for that trip in the joint account. But then maybe more of it come comes out of your individual account or like your fun or your blow money and then the, you know, in your case, since you're the one taking this trip, maybe you find a way to make some additional money on the side. Maybe you're working some overtime. Maybe you're kind of getting after selling, clearing out the garage. Actually we've combined not only our lives but our stuff and it turns out we've got a lot of redundancies here. Maybe I can unload some items on Facebook and then you can sort of channel some of that money into this trip as well. But I think looking for just different creative ways to fund something like this that might go above and beyond the typical monthly expenses could be wise.

[Joel]

And some other creative ways too, right? Like getting a credit card, getting the travel signup points and then saying great, this is going to fund at least the flight that I'm taking as that reduces the cost, the outlay that we're going to, that we're going to have. But yeah, those are discussions. I think you're right, Matt. You can find the money for multiple places in your budget. You just have to kind of come to an agreement and have an open, honest conversation about it. There's just no perfect or even right or wrong way to do this. But settle. The thing is you guys will settle into something that works for both of you over time and sometimes you kind of stumble upon it through trial and error too. Especially in those early years. Ultimately start out with kind of the best agreed upon thing and then iterate from there. It's going to take, you know, kind of communication, work, discussions to, to, to continue to hone in on what the best path for managing your money together is totally.

[Matt]

Yeah. 18 years in, it's like second nature. These are like conversations we easily have 18 months in. Yeah, it's something you're still waiting through. Totally get it.

[Joel]

Cheyenne, learn how to drive or something like that.

[Matt]

Yeah, you don't even think about it now. Like you just get in, you go. Whereas like, if you're, you know, 18.

[Joel]

Years old, all those accidents happen those first few years of driving.

[Matt]

That's why they're so expensive to insure. But Joel, we got more to get to. We're going to hear from a listener who is considering long term care insurance, whether or not it's a necessity. We'll get to that and more right after this. Asking the right questions can greatly impact your future, especially when it comes to your finances.

[Joel]

So if you're looking for a financial advisor you can trust, certified financial planner professionals are committed to acting in your best interest. That's why it's gotta be a CFP. Find your CFP professional at letsmakeaplan.org 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 howtomoneY hey there folks.

[Matt]

I am Matt and I'm Joel from.

[Joel]

The how to Money show. Matt It's April. I've got spring break on my mind. Please tell me you got something fun lined up.

[Matt]

Oh, dude. Typically I am a planner, but we're actually switching things up this year. We're going to go a bit more spontaneous. I've been searching on Airbnb for some inspiration. You know, we've narrowed it down to trying to find some warmer temperatures. We kind of got that spring fever. So we're gonna try to find something along the coast. Maybe. Maybe some sand to dip my toes into.

[Joel]

I like it.

[Matt]

But how about you?

[Joel]

Okay, so we've actually got our plans locked in. I'm taking the fam to this charming little Bavarian style town called Helen. It's up in the Georgia mountains.

[Matt]

I know about Helen.

[Joel]

Yeah, well, I found the perfect cabin on Airbnb, complete with a hot tub, which I'm definitely going to need after running a trail half marathon while I'm up there, too. Oh, that is right.

[Matt]

I forgot about the half marathon. Man, it sounds like an adventure. And you know what? While you're enjoying that hot tub, you could actually have your own place listed on Airbnb, earning some extra cash while you are away.

[Joel]

True. And now with Airbnb's co host feature, I hear it's easier than ever for anyone who's been overwhelmed by the idea of hosting. A co host can do the hosting for you and help manage your reservations and your guests. Find a co [e-mail] host all right, Matt, we're back. Let's get to a question about investing and whether or not the employer account is superior to doing your own thing.

[Cheyenne]

Hi, Matt and Joel Miranda here from Logan, Utah. I've got a question about retirement accounts. I recently got a new job that automatically contributes a 14.2% match of my salary to a 401A plan. They are also set up to do an automatic 3% from my pay to a pre tax 403B. I also have the option for further Roth 403 or 457B Roth or pre tax contributions. At my previous job, I contributed 6% to a Roth 401K to get the company match of 4.5%. Since I'm already used to contributing the 6%, I would like to keep at least that much contributing to another retirement account. My question is, what account is the best option one offered through my new employer? Or should I look at an IRA that I could potentially roll my previous 401k into as well? Some other notes. I'm almost 30 and anticipate staying in this job for several years. I also have the option of having these accounts with either TIAA or Fidelity. Any advice there? Thanks so much.

[Matt]

All right. Miranda's got all the different accounts available to her. Joel. Listeners, should Alphabet soup hit hit back 30 a couple times if you wanted to re listen to all the options that have been laid out here before us in her question. And Miranda, I'm going to say that you are in a pretty fantastic matching situation here. Just, I mean, the fact that you get a match that's that generous here with your new job for. She said 14.2, I think. So where did it point to come from? I don't know. But like, I love it. The fact that she's got that much coming out of her paycheck now, like that amount of her paycheck that her employer. Employer is choosing to stick in is what she's got going on.

[Joel]

That. That feels so good, right?

[Matt]

Yeah. I mean, it's like, hey, by the way, this is your salary, but you also got a 14.2% raise just like right out of the gate.

[Joel]

When you think about what the average American savings rate is, it's far below that. So to feel like you're hitting that just amazing because of the generosity of your employer from the get go is that's off the charts.

[Matt]

It's no wonder that she's planning on staying put. Like, who wants to give up that kind of a benefit, right? It's amazing. I'm also pumped that she's planning on keeping her contribution amount to where it was before. I think it's a pretty phenomenal idea to keep an investing floor, essentially. Right. Like, she's like, you know what? 6%. That's what I was doing before. I'm going to keep it going. I'm not going to go below that. Even if the match grows, even if the total dollar amount that she is socking away for her future is going up significantly, by doing that, she's going to hit that financial independence stage of life before she knows it, man.

[Joel]

But Miranda, should you be going deeper into the 403B, 457B direction, or should you be going into your own IRA? I mean, I think you've got so much money going into the employer plan, which is, again, awesome. But there's a benefit in diversifying which accounts that you contribute to. So having an IRA in addition to those two workplace accounts offers you some additional flexibility. And we prefer for you to opt for a Roth IRA over a traditional. So I think that's where I Come down, Matt, that's often where we come down. Once you get the match, it's like, hey, going to the Roth IRA and then maybe coming back to the employer plan after you've maxed out the Roth is typically, not always, but that's typically the best way to go. And it sounds like your workplace plans are really fantastic. Right. If you had even more match dollars available, we'd want you to snag those.

[Matt]

Additional debt, soak them up.

[Joel]

Yeah, but they're not there though. No. So that's not the case. So having your own Roth IRA and building that up over time with those excess personal contributions above and beyond, I think that would be the superior choice for your investing dollars right now.

[Matt]

Sure. I'm going to be a little two faced here because I was just talking about how great it is that I think she's not going below her threshold or going below an investing floor, essentially. It's admirable. But I'm going to introduce the nuanced conversation of intermediate medium to short term goals because it is so easy for us to beat the drum of Miranda. You need to be investing more. You need to be. If it's the more the better, the sooner the better. And that's because the vast majority of folks who are out there are not setting aside enough for their retirement.

[Joel]

True.

[Matt]

Given the fact that this is a new job for her, given the fact that the percentage that she's got going set aside towards retirement has also increased. That's. I'm thinking about it. That's a significant amount of money. And I don't, I would hate to see her in a position to where she's a little cash strapped because she isn't necessarily thinking about some of these more medium term intermediate goals like I.

[Joel]

Want to buy a house, upgrade a car.

[Matt]

Those two things specifically. Yeah, I mean, because those, yeah, that takes a lot of money to save up a down payment. And so she didn't say anything about her housing situation that I heard her say, no. Okay, but house and a car, I mean, ideally you're paying cash for your car, but that takes up, I mean that takes a lot of money to set aside that much money. Same thing with the down payment for a house. I don't want you to forsake some of these, I don't even want to call them lifestyle goals, but just, I mean, they are, I guess. Right. But isn't everything lifestyle eventually like you call it retirement, but at some point we're talking about your lifestyle within retirement. And so I don't Want you to forsake these short term goals with those.

[Joel]

Two things in particular. You're either talking about getting better financial terms, right? Or Whereas, say saving 20% to put down instead of having 5% to put down, you're going to save a bunch of money in that way. Or if you're paying cash for the car instead of financing it, you're talking about not having to take out a 6 or 7% loan these days. And that's if you've got good credit. So I think what you're getting at is if you over index towards retirement and you're not also saving for goals and things that you want to purchase in the coming years, then you're being too myopic, right? You're being too laser focused, too laser focused. Retirement, retirement, retirement. And I think that's obviously a really important consideration, but you don't want to do it to the neglect of other upcoming outlays that you're going to have to make.

[Matt]

I think most listeners, yeah, keep saving, keep investing. But for her, specifically, because she listens to the show and because she is the type of person to send us a voice memo that tells me she's probably a little bit more buttoned up than she's got a decent nest egg set aside.

[Joel]

So she asked too about where maybe she should open up an account. And I think we should.

[Matt]

Specific companies, let's talk about that.

[Joel]

And we typically highlight a few. Right. And we point to low cost brokerages basically every time we talk about this map, Schwab, Fidelity, Vanguard, those are the top three. They're not only like gargantuan behemoths, but they also have just incredibly low cost index funds that people can invest in. You could even opt for Robinhood, which you love, Matt, because of their match. I know Betterment has been doing something similar because yeah, Robinhood kicked it off and now some of these other online brokerage firms are saying, wait a second, are we going to offer matches to our customers too? And they're like, I guess we have to. Since Robinhood did it, the cat's out of the bag. So yeah, it's amazing how that's just a brand new thing that never existed before. A match that you get from your brokerage and not from your employer. Super, super cool. Just prioritize. Of course, low cost, well diversified funds, no matter which one of those firms you go with. And you know, you mentioned too the ability to choose which company you go with from your employer, Fidelity versus tiaa. And Fidelity is the choice there. And it's not because TIA is like a bad company or anything like that. Like, far from it. They are the go to for a whole lot of nonprofits when it comes to the investment brokerage house they choose. But if you have the option of Fidelity, it's a superior choice basically all the time from a fee perspective. I think of them, Matt, and you can, I think, appreciate this. They're kind of like the Aldi of investment houses. Yeah.

[Matt]

Not the Costco.

[Joel]

No, I think they're Aldi.

[Matt]

Who would be the Costco? Is Costco like Charles Schwab maybe. Seems like they've got a little bit more going on the customer service. Maybe some fancier options for you, but they're not quite as discount. That's. Yeah, that might be accurate. I don't know.

[Joel]

Dangar might even be Aldi. I'm not sure. But that's true. They're all great choices.

[Matt]

I mean, at the end of the day too, Miranda, she's not even 30 and it sounds like she's investing close to a quarter of her income. So just mad props to you. Keep it up, you're going to find yourself within that FI territory well before most folks. And even before that, I think you are going to be able to open up a lot of different options, give yourself a ton more flexibility in the not so distant future. Let's hear from a listener who is looking ahead to the financial situation of his parents. He wants to make sure they're in a strong position in their later years.

[E]

Hey, Joel and Matt, it's Nate from Oklahoma City. First off. Love you guys. Been listening to you guys for I think five years now. You guys helped me set on the path to simplify my finances. Thank you so much for that. I had a question about long term care. I was curious. My parents asked me this question and I didn't know it. For long term care, when someone's in a nursing home, we were wondering what assets were protected from nursing homes to access, like retirement accounts or homes or anything like that. That's just my question.

[Joel]

Thanks, Matt. I wish we had like a medal or something like that that we could send to people who've been listening as long as Nate has. They deserve it.

[Matt]

Like a challenge coin from the Stoics. What's his name? Yeah, Ryan Holiday. Yeah, he's got like all the coins and stuff.

[Joel]

He keep it on you.

[Matt]

He drops them and they hit the table and you can hear him like, like, we've got beer caps.

[Joel]

That's right. We can send those out.

[Matt]

Can you hear that?

[Joel]

Yeah, well, then Nate could keep it in his pocket. Every time he touches his pocket, he'd be like, oh, yeah, I love that show.

[Matt]

Someday I'm gonna die. Like the. What's the Stoics Memento Mori. There you go.

[Joel]

Someday I'm gonna die. But for now, I'll listen to how to money is how you should think about it. Glad the show's been helpful, Nate. Thank you for listening. Let's talk about long term care insurance and just kind of thinking about planning for the extreme future and for your parents. Less about extreme future, more about near term stuff. These are questions Matt, I'm sure you're having with your parents. I'm having with my parents to a certain extent as well.

[Matt]

Oh, yeah.

[Joel]

A lot of folks buy long term care insurance specifically because they're told to. And in some cases it does make sense. But long term care insurance can be so stinking expensive, it's not even funny. And it's a far cry from what it was like 15 years ago. Premiums have skyrocketed. Some are up something like 500% over the last 10 to 15 years. Talk about inflation, Matt. Long term care insurance premium inflation has been worse than eggs. While long term care insurance can provide an incredible benefit for a really expensive need. And that's the thing. It's like you kind of want to insure against something like this because of how prohibitively expensive it can be. Most Americans will need a few years of nursing home care on average. Right. And many who opt to take out long term care insurance, well, they actually end up dropping it before they're able to use the benefits because of how expensive the premiums get.

[Matt]

Ouch.

[Joel]

And yeah, it just tends to become more than they bargained for. So, you know, while avoiding long long term care insurance, it sounds like a risky move. Like, hey, if I don't get that stuff, even though it's like ridiculously expensive, it feels like highway robbery. Then like, I'm not going to be taken care of. Well, dropping it before you use it is like the worst thing in the world. It's like, it's like going to college for three years, racking up a ton of debt, and then dropping out before you get the degree.

[Matt]

Which is maybe an okay situation to find yourself in. If you say go to the local community college. But we're talking about like Ivy League prices here when it comes to what this long term care is going to cost. And then with folks living longer with the supply and the demand imbalance as well of the providers who are Offering this care to the elderly. I think this issue, it could actually get worse in the coming years. So let's talk about funding long term care specifically. If you don't have long term care insurance, well, you gotta spend your own money specifically until you reach the point where Medicaid kicks in. But even then, Medicaid coverage, it's only gonna help in certain situations. It's not gonna help most middle class folks out there. And oftentimes what that means is you're kind of out there on your own.

[Joel]

It's basically for people who are impoverished, who are destitute.

[Matt]

Medicaid. Yeah. It's not.

[Joel]

If you built up, not a ridiculous Elon Musk net worth, but just like even. Just a nice little tidy sum. Sorry, Medicaid isn't going to kick in to help you with long term care stuff.

[Matt]

Yeah. And so for Nate, hopefully your parents, they've been diligent savers. It's just important to factor this in. Right. Like don't just project 25 times your expenses and call it a day, but also consider these future potential costs and how you know they're going to add up over time. This is one of those massive considerations that too many folks aren't paying enough attention to. And you know, there are other potential financial products and vehicles that can help if you end up in a financial pinch. I'm specifically thinking of a reverse mortgage. I think that's something that folks are like, oh yeah, we've always got that, we got the house, but that's not ideal either. They can be really expensive, the fees that are associated with those, sky high. And they can also prevent you from leaving your home to your heirs if you intend to. And yeah, like the home specifically is just kind of like one of those emotional things where I guess it depends on where you live. You know, if you are living in a city and it's much more transient and your family isn't local, well, maybe you don't care so much. But if you are somewhere, I don't know, he's. Was he in Oklahoma? But I don't know, I picture like out in a more rural setting and.

[Joel]

There'S a family farm there. Yeah, it's been in the family for generations or like a home that, I.

[Matt]

Don'T know, a family member built and it's kind of been passed down through the generations, that kind of thing. It's not the kind of thing that you want to tap in order to fund some of those later years.

[Joel]

Right.

[Matt]

Is all I'm saying.

[Joel]

Okay. So Nate Specifically asked about nursing homes draining assets. Like, is that a possibility? Well, in some ways, yes. But in other ways, no, I don't think. Not in the way that Nate intended it. They can be really expensive is the way in which I'm saying they can be asset drainers. Because some predictions are saying that in like 20 years, we'll be talking about on average spending $200,000 a year for the average nursing home facility. So to stay in one for a year with a private room, 200 grand.

[Matt]

Does that include food? It's like an unlimited buffet or like.

[Joel]

Well, yeah, of course it includes food. But like, I'm sure that we're gonna have more like robots and stuff imported from Japan, because think about. They're kind of going through that ahead of us. Hopefully we'll learn a lot from.

[Matt]

That's actually a thing, isn't it?

[Joel]

Oh, yeah.

[Matt]

That's crazy.

[Joel]

Yeah. Robots taking care of you. I think we'll see more of that in the future too. But the nursing home can't. And I think this is what Nate was getting at. They can't drain your assets without your permission. Right. They can't like garnish your stock portfolio or start selling stocks off, start selling positions to pay for your career. But you know, if you've been a good saver investor, you're going to exceed. Kind of like you're talking about here, Matt, eligibility requirements for Medicaid. Every state, though, has different requirements, so familiarize yourself with them. But if you're looking to or if your parents are thinking, well, Medicaid, I've got Medicaid. I don't need long term care insurance, or I don't need to like pay attention to not spending down my retirement assets all the way because Medicaid is going to kick in. It's going to cover those costs. Well, it's just not that simple or easy. Most way too many people, man, I looked up the statistics. Something like 46% of people assume that Medicaid covers long term care for them. And again, for middle class folks, that's not the case. You're gonna have to spend down your assets to make that happen. You're gonna have to meet their resource limitation test. And there are all sorts of like, different nuanced ways to. It's really complex tackle that. It's very complex. Yeah, but there's. It's not like a fun process.

[Matt]

No. Yeah. And like you mentioned spending down assets like your primary home. It doesn't count as an asset under Medicaid rules. And so if you spent, you know, $200,000 renovating that home in an attempt to spend that money down. That's actually a strategy that some folks use. And then, like, there's also these Medicaid complaint annuities that. All that being said, though, consider talking to an elder law attorney in your state who specializes in Medicaid strategy. This is like a specific niche. It's a specific sort of branch of law that I wasn't aware of up until recently.

[Joel]

It's like, my cousin's a hand surgeon. Like, there's all sorts of surgeons, but she specializes in hands. And this is like the same thing for attorneys. Like, it's like no elder law, but a Medicaid specialist.

[Matt]

Totally. Yeah. So for you, Nate, you know, I hope this doesn't freak you out, but it is another reason to be saving and investing for your future. But what he's really asking is what you already addressed there, Joel. Like, it's not like you owe money to a debtor and they've won a judgment in a court of law and now they're gonna, you know, garnish your paycheck. It's not like the federal government coming after your 401k because you owe money to the IRS, that kind of thing. Like, none of this is actually gonna happen. And I think it's worth also having. I mean, hopefully this is a conversation that you've already started, Nate, with your folks. It is a conversation because it sounds like that they asked you this, but for everyone else out there, I think it's worth having the conversation of what does it look like for us to be a multi generational household? I think it's highly underrated. And when we're talking about the high costs associated with long term care, you kind of alluded said at the beginning. I bet this is a conversation you and Kate are having. We totally are. It was a big reason why we were very comfortable with putting a bedroom on the main level of our house. Master on main, dude. Not because we're going to need it in the not too distant future, but maybe one of our parents might be living with us at some point. These are conversations like that we're literally in the middle of. And once we get to a point to where we feel comfortable with the decision, I guess, that we've made. And maybe I'm saying this out loud as like, accountability to a certain extent, but I think it's important to have these conversations with your parents because I think that can alleviate some stress that they might be feeling as they're Looking ahead and thinking, well, what if one of us ends up end up in a assisted living home? That kind of situation. As opposed to being like, hey, we got you, like, we're going to take care of you.

[Joel]

Yeah. That's a conversation to have with your siblings, too, if you have them.

[Matt]

Yes, exactly. Yeah. Just to, like, divide and conquer a little bit. Like, okay, what kind of situation are y'all in? Like, do y'all have the ability to take this on? What do you think? Five, ten years from now? And obviously it's fluid, it's. It's dynamic. But I just like the idea of taking some of that stress off of them so that they can focus on quality of life in the here and now, as opposed to being like, well, we have to sock this away for some unknown future that might, you know, that may or may not be something that we experience. And yet there's also a fine balance between them. Like, I'm not saying that for them to spend unwisely and foolishly.

[Joel]

Right.

[Matt]

Because would it be nice for a parent to show up with some assets to be able to, like, pitch in towards household expenses? Sure, of course. But I think all of these situations are better had when there's an open conversation that's taking place.

[Joel]

Yeah, I mean, my. My grandma is in her mid-90s. She's been living with. With my parents first and then my uncle now recently. I love it, dude. For over a decade. And then that's just involved a lot of back and forth discussions between siblings.

[Matt]

And I think conversations that are probably hard but are probably so good to have.

[Joel]

And so much comes down to, like, health, because even in that, if. If health took a turn for the worst, then things change. Right. Or your flexibility to family values. So just make sure that all those topics are on the table. You're discussing that so that you can, eyes wide open, kind of march into the future as your parents age. But best of luck with that. Nate. Matt, we've got more to get to on this episode, including index funds. Are they all created equal? Because it sure seems like they might not be the same. One listener's worried about the differences in performance between some of them. We'll talk about that and more right after this.

[Matt]

Asking the right questions can greatly impact your future, especially when it comes to your finances.

[Joel]

So if you're looking for a financial advisor you can trust, certified financial planner professionals are committed to acting in your best interest. That's why it's got to be a CFP. Find your CFP professional at letsmakeaplan.org 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 the guide is free to you at netsuite.com howtomoney that's netsuite.com howtomone hey there folks.

[Matt]

I am Matt.

[Joel]

And I'm Joel from the how to Money show. Matt, it's April and I've got spring break on my mind. Please tell me you got something fun lined up.

[Matt]

Oh, dude. Typically I am a planner, but we're actually switching things up this year. We're gonna go a bit more spontaneous. I've been searching on Airbnb for some inspiration. You know, we've narrowed it down to trying to find some warmer temperatures. We kind of got that spring fever. So we're gonna try to find something. Maybe, maybe some sand to dip my toes into. I like it, but how about you?

[Joel]

Okay, so we've actually got our plans locked in. I'm taking the fam to this charming little Bavarian style town called Helen. It's up in the Georgia mountains.

[Matt]

I know about Helen.

[Joel]

Yeah, well, I found the perfect cabin on Airbnb, complete with a hot tub, which I'm definitely going to need after running a trail half marathon while I'm up there too. Oh, that is right.

[Matt]

I forgot about the half marathon. Man, it sounds like an adventure. And you know what? While you're enjoying that Hot tub. You could actually have your own place listed on Airbnb. Earning some extra cash while you are away.

[Joel]

True. And now with Airbnb's co host feature, I hear it's easier than ever for anyone who's been overwhelmed by the idea of hosting. A co host can do the hosting for you and help manage your reservations and your guests. Find a co [e-mail] host.

[Matt]

Alright buddy, we're back from the break. And of course now it is time for the Facebook question of the week, which is from Matthew. And he wrote, do y'all keep your hobby fund money separate from emergency fund? Basically, I buy and flip a ton of stuff to fund my hobby, but it seems whenever I do this, an unexpected bill comes up. I do have a nice emergency fund.

[Joel]

I like this question.

[Matt]

What do you think, Joel?

[Joel]

I mean, it sounds like Matthew is already doing the emergency fund thing. Well, which is important, right? I like the idea though of kind of flipping stuff to fund a hobby. A little side hustle action.

[Matt]

Yeah, it's kind of keeping it siloed.

[Joel]

Yeah, yeah, it's that mini side hustle to pay for things that you might not otherwise have the funds for. Right. Or you'd have to cut back on other financial goals. So let's say you're like, oh no, I got to hit that 20% savings rate, but I still want to fund this hobby. I can't do both. Well, then you got to find a way to make a little bit of extra money. Or let's say you're prioritizing saving for a down payment or maxing out your Roth ira. You don't have to cut back on those things because you're finding another source to find the money so that you can pay for that hobby. Whether it's like skiing, I would say disc golf, but that's a really cheap one. So you don't really have to find much money to do that one. But this is a great way, I think, to ensure that you're prioritizing something you care about without sacrificing the wealth building necessities that we think people need to be employing over the long haul.

[Matt]

Totally. I think a question I've got for Dan is what are these what he calls unexpected bills that keep popping up? Because if they're happening this frequently, like every time he is looking to spend some money on his hobby, is it possible to, to plan a little bit better for them or you know, like to put them into your regular budget? Because there are true emergencies that come along and that's of course, what your emergency fund is there for. But we also find that some folks dip into the emergency fund a bit too regularly because they haven't planned as well as they could have for expenses that happen every year or at the same time every month. Yeah, Christmas that comes around the same time every year.

[Joel]

It's like not a real emergency, but people like, they chalk it up to an emergency because they didn't really have much foresight to talk about things coming up.

[Matt]

Yeah, it takes foresight. I like what you said there. And so as you're looking at your budget, just. Or maybe that's the thing. Maybe he doesn't have a budget. But even if you do have a budget, and let's say these are expenses that haven't been accounted for, revise the dang thing. Because if some of those unexpected bills could be planned for, then being able to rearrange like that is the solution here. And it's going to help you to touch your emergency fund a whole lot less as well, to really for it to be there for the true emergencies in your life.

[Joel]

Right. Yes. And Matt, you just mentioned tires briefly there. That's like a great example of something that's coming down the road. That's a good pun. Right.

[Matt]

Quite literally. There it comes.

[Joel]

They're balding as we speak. Right. And you need to be saving up ahead for that expense. And hopefully you can kind of figure out, well, what's a usable life left? How much is it going to cost me when I do replace those things, and how much do I need to start saving now to be repaired? Or it's the same thing that happens every year around Christmas time. People are like, oh, crap, I think I'm going to spend like $900 this December. And I didn't plan for that. It's not an emergency. That's something that needs to be thought of ahead of time.

[Matt]

Start that saving in January.

[Joel]

Right, exactly. So should your hobby budget be a line item in your budget? Well, it depends. I think the reason to keep it separate would be to incentivize you to keep making extra money to fund your hobby. So if you make less money in a given month, you enjoy your hobby less. But if you make more, you get to ramp it up and enjoy that hobby even more. Or at least bank more so you can keep it up longer. Right. So makes me think of a listener. I don't remember his name off the top of my head. Matt. I should know that, but I don't remember. But he donates plasma to go on vacations. Ryan K. Ryan K. Okay, Ryan, you're the man. And he still does this. He's been doing this for many, many years. And I think this is a great way. It's similar to the way Matthew's thinking about it. It's like, I'm gonna go on a vacation up to the level at which I bank money from donating that plasma. Right. And so the reason to include it in your budget is to know that you'll get to enjoy it no matter what, that the money's always going to be there because you've set it aside. But the reason to not do that is because I think it incentivizes you to push the envelope on that side gig or on that plasma donation side hustle so that you actually have. You're incentivized to go make the money to pay for the thing you want to do.

[Matt]

Yeah, yeah, I want to. I'll say a quick note. I know not everybody out there is, like, super organized. Like, some folks love it. I myself, I just, just yesterday spent some time in Excel organizing some expenses, checking in on the budget, seeing where things are landing this month.

[Joel]

I know for you, that feels like one of those nice, heavy anxiety blankets.

[Matt]

I like keeping tabs on it, man. Not everybody. It's not their cup of tea, you know, and if. And that's totally fine, but you have to, I guess, account for that. And so while maybe for us, because we've got all the different savings buckets set aside, we've got three to six months worth of living expenses in our emergency fund if you have no buckets. And it's just this, I'm going to call it the emergency slush fund.

[Joel]

How about that?

[Matt]

It's like this one big giant pile. All the money just gets piled in there. I think that's totally fine, but you just are going to have to have a little bit more. You're going to have to have more margin on hand to be able to account for some of these things that otherwise you would have planned for. But instead, you're kind of drawing it from the emergency slush fund, which I kind of like. The more I say. But just get to another quick one. This is an email from Dan, and he wrote, if these funds, if they're all tracking the S&P 500, which should be the same, how come there's a wide difference between the performances? And he specifically, he highlighted the different returns between, let's say, Voo Vanguard's S&P 500 fund, FX Aix, which is Fidelities mutual fund, the actual S and P. There's a lot of different funds out there. What do you have for Dan to chew on as he's considering these different options?

[Joel]

Joel? Yeah, this is a good question. I think if you do look at the returns, you're going to see little idiosyncrasies and you're going to say this is not the exact same thing. What's happening there? These funds are attempting to mimic a specific index, but there are also just these little idiosyncrasies that lead to slightly different results. The biggest one is how much they cost to own. I'm talking about the expense ratios at least in part, but also potential fees that some old school fund managers charge to own those funds. While costs have overwhelmingly gone down for everyday investor, specifically on index funds like Dan is highlighting, there are still some firms using the old playbook. They're feeding people to death. It's amazing the price discrepancy between 1s and P500 fund, the cheapest ones, and then another fund that mimics the S and P. But it's within old school provider who just charges norm and a leg still. Right. And those costs eat into returns. It could make one ETF look better than the other. The higher the fees, the greater divergence from the index itself and then from other low cost competitors. So that's at least one reason that you might see more of a divergence there.

[Matt]

Yeah, yeah. So for instance, let's take the case of VTI versus FZ Rocks. So VTI is Vanguard's total stock market etf. The other is offered by Fidelity. They're both attempting to track the total stock market. VTI has a minimal expense ratio, minimal cost. FC Rocks, well they charge nothing. But to pull that off, Fidelity, they omitted some micro cap stocks from their fund in an effort to minimize costs on their end. But still the performance of both is quite similar. FC Rocks is up around 92% over the past five years. And VTI, it's right up there with it.

[Joel]

But just a few percentage points below 89 or 90. Something like that. I mean it's like.

[Matt]

Yes, same ballpark, it's not too far off.

[Joel]

They're probably both in left field, close to the fence. Right.

[Matt]

But yeah, and some of the reason too why they admit some of those different companies is just the way that they're structured as well. ETFs are, they're just more tax efficient. Specifically when you are owning, if you've got let's say an ETF versus a mutual fund within A brokerage account that's taxable. Well, there are fewer taxable events that take place with an etf. But if we're talking about in a retirement account, there's not much difference there because you don't actually realize those taxable events with it being tax deferred.

[Joel]

I think, and this is a good question, Matt, but I think the ultimate reality for everyone out there listening is just don't get bogged down in the minutia. I think you could go in and you could research Every S&P 500 fund and you can say which one performed the best over the past five years and then you can make your decision based on that. I think it's a bad idea. I think there's really one thing worth looking at, which is how much the funds cost to own and whether they mimic closely enough. And so as long as the fund itself offers enough diversification to satisfy you, don't worry about which S and P500 fund or which total stock market fund has done better. The performance over time really shouldn't vary significantly. Target day funds, I think, are a different story because the construction of those can vary pretty meaningfully from like Vanguard to Fidelity to Schwab. Like everybody has their own kind of proprietary formula. The thinking like KFC, the 37 herbs and spices. Like you're going to use some different herbs and spices if you work at Church's Chicken. And so they probably don't even call it herbs and spices because they don't want to compete with KFC on that. But they're going to look a little more different. Like the variation is going to be more significant because the percentages of different things are going to change more significantly. But when it comes to, I guess, specific index trackers like an S and P or a total stock market, that I would worry a whole lot less about those micro differences in outcomes.

[Matt]

That's right. All right, let's go back to the beer that you and I enjoyed, which was a bossy blonde, an Imperial Blond ale, by contrast, artisan ales. What'd you think, buddy?

[Joel]

So in my mind, an Imperial blonde feels like a unicorn. Like how often do you get your hands on it?

[Matt]

It's kind of a specialty. Yeah, variety.

[Joel]

Because blondes are typically just these super lackadaisical, laid back sort of beers that I think even non craft beer people can appreciate. But a bossy blond, it's like it's a serious blond.

[Matt]

Right. By the way, let's. Okay, so the, the artwork, because we're all. They don't Hear or they don't see what we're looking at. They just hear saying, bossy blonde. But they've got the. The manager from office space standing there.

[Joel]

You know, the golden retriever form.

[Matt]

Yeah. The guy that's like, yeah, I'm gonna need those deep. What are the TPS reports on my desk by this afternoon. And it's a golden retriever.

[Joel]

I'm gonna need you to come in on Sunday.

[Matt]

He said, yeah, I'm gonna need those biscuits on my desk by tomorrow. So just don't want folks thinking that contrast is out there denigrating the blondes. That's true.

[Joel]

That's all just the golden retrievers are in charge. Right. Yeah. I think blondes, to me, can be kind of blessed. But this one had more oomph, so I really enjoyed it. Even though blonde is not a style I normally go to, I think an imperial blonde might be one I'd be down with.

[Matt]

Yeah, it didn't like. It's got no roasty flavors. It's got no dark, malty kind of flavors. It's got that lager y kind of blonde, like, flavor profile, but just bigger. It's just like a bigger, more serious version. It's chewy. It does. It's funny. It says something. You know, they're talking about dog biscuits, but it does almost have, like a breakfast biscuity kind of flavor profile going on, but just kind of amplified up in a serious way. That just makes this a bigger, in my opinion, more enjoyable beer for sure.

[Joel]

Agreed.

[Matt]

Glad that you and I got to enjoy it during our episode today. And you can find our show notes up on the [e-mail] we'll make sure to link to any of the resources we may have mentioned up there. For instance, the elder law attorney, we'll link to a site where you can find somebody locally who specializes in that. If you find, for instance, your parents in a situation like this where they're trying to find. They're trying to be a bit more strategic about how they. How they might qualify for something like Medicaid.

[Joel]

Yeah.

[Matt]

But. Yeah, again, you can find [e-mail] and so, buddy, that's it. So until next time, best friends out. Best friends out. Joel, we've all got different tasks in life that we enjoy doing. For me, that would be closing out the books on our family's personal finances every month. Nerd. But then there are some chores that are more of a pain, and for me, that would be grocery shopping, something I try and avoid if at all possible.

[Joel]

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[Matt]

That's right, and for a limited time they're doing free 30 minute strategy sessions. So start today by booking a free strategy session with one of their experts by going to domainmoney.com howtomoney I am.

[Joel]

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[Matt]

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