Ask HTM - Mass Government Layoff Triage, If Declining Rental Income Is Still Worth It, and Generating Passive Income #958

Summary

How to Money Podcast Episode Summary Episode: Ask HTM - Mass Government Layoff Triage, If Declining Rental Income Is Still Worth It, and Generating Passive Income #958
Release Date: March 17, 2025
Host/Authors: Joel and Matt, co-hosts of How to Money

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Episode Overview

In this episode of How to Money, hosts Joel and Matt tackle pressing financial questions from their listeners. The discussions focus on navigating mass government layoffs, evaluating the viability of declining rental income from property investments, and exploring strategies for generating substantial passive income. Additionally, the hosts delve into the merits of the Costco credit card, providing valuable insights for listeners aiming to optimize their financial strategies.

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1. Navigating Mass Government Layoffs

Listener: Nancy from Washington, D.C.
Timestamp: [08:10]

Nancy shares her predicament after being affected by widespread layoffs in the federal workforce. Previously optimistic with goals like maxing out her 401(k) and Roth IRA contributions, and eliminating student loans, Nancy finds herself reassessing her financial plans due to the unexpected job loss.

Key Points & Discussions:

• Triage Approach to Finances:
  Matt emphasizes the importance of viewing finances through a triage perspective during emergencies.

  Matt: “When you get laid off, all of those other goals, they essentially get put on the back burner.” [10:11]

• Implementing a Bare Bones Budget:
  Both hosts commend Nancy for her proactive steps, such as creating a bare bones budget and moving in with family to cut costs. Joel underscores the significance of minimizing expenses to extend financial solvency.

  Joel: “Creating a bare bones budget is crucial to making your money last as long as possible right now.” [10:11]

• Maintaining an Emergency Fund:
  With $14,000 saved, Nancy is well-positioned to handle extended periods without income. Matt highlights how a robust emergency fund provides the flexibility to choose better job opportunities without immediate pressure.

• Advice on Debt and Savings:
  Matt advises Nancy to limit debt repayments to essentials and halt contributions to retirement accounts temporarily to preserve cash flow.

  Matt: “Stop completely contributing to retirement accounts. This is a period where cash is king.” [17:22]

• Mental and Physical Well-being:
  Joel and Matt stress the importance of maintaining mental and physical health during such stressful times, encouraging Nancy to engage in healthy activities and lean on family support.

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2. Evaluating Declining Rental Income

Listener: Chris from Southeast Michigan
Timestamp: [25:22]

Chris and her husband own a condo in the city, which they've been renting out since 2019. Recent loss of a residential tax credit has reduced their monthly profit, causing financial strain. They are contemplating whether to continue renting or sell the property.

Key Points & Discussions:

• Impact of Locking in Low Mortgage Rates:
  Joel underscores the long-term financial benefits of maintaining a low-interest mortgage, noting substantial interest savings over the life of a loan.

  Joel: “Imagine paying $200,000 in interest versus $500,000 with current rates. It highlights the value of a low-rate mortgage.” [26:47]

• Tax Implications of Selling:
  Matt discusses the tax consequences of selling the condo before and after the capital gains deadline, emphasizing the financial strains of potential tax liabilities.

  Matt: “Selling before the deadline to avoid capital gains taxes could alleviate current financial pressures.” [27:58]

• Long-Term Real Estate Investment:
  Joel points out that real estate often appreciates over time, providing steady equity growth even if monthly cash flow is minimal.

  Joel: “Over decades, this real estate can be a life-changing asset. It’s not as immediate as some Instagram real estate promises, but it’s valuable.” [28:05]

• Balancing Current Financial Needs vs. Future Gains:
  Matt plays devil’s advocate, suggesting that selling could help eliminate immediate debts and provide liquidity to manage current expenses more comfortably.

  Matt: “The $148,000 could help pay off the car loan and reduce home equity debt, providing financial flexibility.” [29:20]

• Family Considerations:
  Joel advises considering the impact of financial decisions on family life, especially with a young child, and balancing debt elimination with long-term financial health.

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3. Generating Passive Income for Long-Term Goals

Listener: Megan from Southeast Michigan
Timestamp: [34:53]

Megan seeks advice on establishing a secondary income stream capable of generating $60,000 annually within ten years. She is contemplating rental properties managed by a property management company versus investing in REITs or dividend-yielding ETFs.

Key Points & Discussions:

• Realistic Goal Setting:
  Matt emphasizes the aggressive nature of Megan’s goal, highlighting the substantial investment required to achieve $60,000 yearly passive income.

  Matt: “You’re looking at needing at least $750,000 to pull this off, assuming a perfect 8% return.” [43:35]

• Diversification of Income Streams:
  Joel advocates for a diversified investment portfolio, suggesting that real estate combined with other investment vehicles can create robust passive income streams.

  Joel: “Diversifying your sources, including real estate and index funds, can help you reach your goal.” [40:44]

• Active vs. Passive Investments:
  Matt contrasts the hands-on approach of managing rental properties with the more passive nature of investing in REITs or ETFs, noting that real estate might offer better control and potential returns but requires significant effort.

  Matt: “If you’re willing to put in elbow grease, real estate can accelerate your cash flow better than passive investments.” [39:42]

• Emphasis on Real Estate:
  Both hosts lean towards real estate as a viable option for Megan, citing the benefits of leveraging property investments and the potential for sustained cash flow over time.

  Joel: “Real estate offers concrete assets that can grow in value and provide steady income.” [41:15]

• Long-Term Planning:
  Joel and Matt discuss the importance of patience and long-term planning, acknowledging that building a substantial passive income stream takes time and consistent effort.

  Joel: “It takes time to reach $60,000 annually, but with dedication, it’s achievable.” [37:41]

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4. Cost of Home Ownership vs. Renting

Listener: Megan from Facebook Group
Timestamp: [53:56]

Megan seeks recommendations for a spreadsheet tool to analyze home purchases from an investment perspective, particularly focused on a five-year ownership timeline.

Key Points & Discussions:

• Transaction Costs and Timeframes:
  Joel explains that buying a home with plans to sell within five years can be financially disadvantageous due to high transaction costs, making renting a more sensible option for short-term stays.

  Joel: “Owning a home for a short period like five years often results in financial loss due to transaction costs.” [53:56]

• Market Stability and Future Predictions:
  Matt and Joel express skepticism about the continuity of recent real estate market trends, cautioning against assuming sustained rapid home price appreciation.

  Matt: “Recent trends are unlikely to continue, making short-term home investments risky.” [55:36]

• Recommendations for Decision-Making:
  Matt suggests using resources like the New York Times Rent vs. Buy calculator to make informed decisions based on individual circumstances and timelines.

  Matt: “Check out the New York Times Rent vs. Buy calculator for a more strategic analysis.” [55:51]

• Long-Term Investment Value:
  Joel emphasizes that real estate can be a valuable long-term investment but is less effective as a short-term strategy, advising Megan to consider her ownership timeline carefully.

  Joel: “For a five-year timeline, renting generally makes more financial sense than buying.” [58:53]

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5. The Costco Credit Card: Worth the Benefits?

Listener: Megan from Facebook Group
Timestamp: [49:47]

Joel and Matt discuss the Costco credit card, evaluating its benefits and advising listeners on whether it’s a worthwhile addition to their financial tools.

Key Points & Discussions:

• Advantages of the Costco Credit Card:
  Both hosts agree that if you’re a Costco member, obtaining the Costco credit card is a logical choice due to its competitive cash-back rewards, especially on gas purchases.

  Joel: “The Costco credit card offers 5% cash back on Costco gas, making it a no-brainer for members.” [52:41]

• Cash-Back Rewards:
  Joel highlights the card’s 3% cash back on travel and overall 2% on all Costco purchases, positioning it as a versatile card without an annual fee.

  Joel: “You get 3% cash back on travel and 2% on all Costco purchases, with no annual fee.” [52:41]

• Comparison with Other Credit Cards:
  Matt compares the Costco card favorably against other credit cards that offer higher cash-back rates for specific categories but lack the same benefits within the Costco ecosystem.

  Matt: “You can’t use other high-reward cards effectively at Costco, making the Costco card superior for these purchases.” [52:26]

• Accessibility and Ease of Use:
  The hosts appreciate the seamless integration of the card at Costco locations, especially for gas purchases, and encourage listeners to utilize the card for maximum benefits.

  Joel: “Using the Costco card at gas stations maximizes your cash-back rewards effortlessly.” [52:00]

• Additional Perks:
  Costco credit card holders benefit from exclusive offers and discounts, further enhancing the card’s value proposition for regular Costco shoppers.

  Matt: “With additional travel rewards and no annual fee, the Costco card is highly advantageous for members.” [52:41]

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6. Final Discussions and Recommendations

General Takeaways:

• Prioritizing Financial Health:
  Joel and Matt consistently emphasize the importance of prioritizing personal financial health over other goals, especially during unforeseen circumstances like job layoffs.

• Flexible Financial Planning:
  The hosts advocate for flexible budgeting and investment strategies that can adapt to changing financial landscapes, ensuring long-term stability and growth.

• Resource Recommendations:
  Listeners are directed to various resources for further assistance, including financial planning tools and calculators to aid in making informed decisions.

Notable Quotes:

• Joel: “Even if you’re a money whiz, it can still be helpful to have some professional backup and advice.” [61:36]
• Matt: “Setting aside $4,000 every month is really tough, but with dedication, it’s achievable.” [43:53]
• Matt: “The bare bones budget can help you see what your money can do for you.” [13:15]

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Conclusion

In this episode, Joel and Matt provide insightful and practical advice to listeners grappling with financial challenges such as job loss, declining rental income, and ambitious passive income goals. They stress the importance of strategic budgeting, long-term investment planning, and making informed financial decisions tailored to individual circumstances. Additionally, their evaluation of the Costco credit card offers listeners actionable advice on maximizing financial benefits through smart credit choices.

For more personalized financial guidance, listeners are encouraged to visit domainmoney.com/howtomoney to book a free 30-minute strategy session with certified financial planners from Domain Money.

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Resources Mentioned:

• Domain Money
• New York Times Rent vs. Buy Calculator
• Bare Bones Budget Guide

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Listener Interaction: Listeners are encouraged to submit their financial questions via email at [e-mail] or through voice memos on their phones for future episodes.

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Best friends out!

Transcript

[Joel]

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[Matt]

Plus, Navy Federal gives you access to financial advisors and online tools to help you find the investing and savings plan that work for you. Sign up@navy federal.org Navy Federal Credit Union members are the mission Savings products insured by NCUA Investment products are not insured not obligations of Navy Federal and may.

[Nancy]

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[Joel]

Cloud bill in half if you move to oci. Minimum financial commitment and other terms apply.

[Matt]

Offer and see if your company qualifies for this Special [e-mail] strategic that's oracle.com.

[Joel]

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[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. I'm Matt and today we're going to answer some of your listener question.

[Matt]

Yeah, some questions like what to do when someone is without work. We've got a listener, Joel, who is part of the mass government layoff Another listener is wondering if it's worth continuing to rent the condo that they used to live in. They're currently in a tight spot financially, so they're trying to, like, weigh the pros and cons there. And another listener, she's got her eyes on some passive income streams. Specifically, she's trying to figure out, like, what is the best way to achieve this. She's got a. A few options that she's considering, but. Hey, man, you notice I got a nice clean shave over here?

[Joel]

Oh, yeah, I do see that.

[Matt]

Do you want to touch it?

[Joel]

I'm good. Thank you for the offer.

[Matt]

Have you ever been invited by another friend to touch their face?

[Joel]

Not that I know of.

[Matt]

I feel like normally it's the opposite. You're the one normally reaching out, touch other people's faces uninvited, which is like, I'm a hugger. Borderline assault brain.

[Joel]

I get in people's zones sometimes.

[Matt]

I ask that because I had for the longest time.

[Joel]

I will touch your face. Bring it over.

[Matt]

You're gonna do it.

[Joel]

All right. That's pretty soft, maybe smooth.

[Matt]

Luckily, you touched where whiskers don't normally grow. Which is most of my face.

[Joel]

Yeah. You don't ever have hair there, but I do.

[Matt]

Chin and the upper lip, of course. And for the longest time, I had Harry's. You like the orange handled Harry's razor?

[Joel]

They're one of the first direct to consumer models.

[Matt]

Did we voice for them, like, years ago?

[Joel]

I think we did, yeah.

[Matt]

Okay. So literally, I still have the same razor. This is so embarrassing. But literally the same razor from them. I've never.

[Joel]

Why is that embarrassing?

[Matt]

Because it's been dull for a long time, and I continue to use the same. I didn't buy new heads. I still have the same. It came with two heads.

[Joel]

Yeah.

[Matt]

And that's what I've been using for. I don't know. I guess we can look it up for years.

[Joel]

I shave so rarely, partly because I have a similar follicle challenge as you. I have to buy new blades almost never. I also use, like, a electric razor most of the time.

[Matt]

Okay, well, I do like a clean shave because when it grows out, it gets itchy. That's what I don't like is laying down to bed, having the whiskers scratch against the pillowcase, and it's just a little bit scratchy. So I haven't shaved recently. But you want to know the best way to convince yourself that the razors that they sell at Aldi are the absolute best? I guess keep using Your nice razor for maybe a year past when you should then get the four pack for $3. And. Oh, my gosh, I shaved this morning, dude. And it's like I was in heaven. It felt glorious. But I was curious what your thoughts were on the uber cheap disposable razors that you can get.

[Joel]

I'm fine with that. I think big razor makes everything cost too much. You remember when Dollar Shave Club first came about? It was a revelation.

[Matt]

Normally it's like $20 shave club.

[Joel]

Yeah. I still remember that ad that they. That was like, potentially the best. It was so inventive, the ad they put out. It was like a YouTube. YouTube ad with the CEO kind of walking through the factory. And it was hilarious. And it kind of changed the game for how direct to consumer ads were done. I feel like you, as an ad.

[Matt]

Man, you should go industry that needed disruption is what they would say.

[Joel]

And he totally did. He totally did. And he caught the attention of people, and I think that's why it took off in a lot of ways. And then Harry's was another one of those companies trying to do something similar. And I think those are really cool, but those also bring the prices down some, but they don't bring them down to Aldi prices.

[Matt]

Exactly. And I think it's totally great. You know how I wised up was because I did realize it was painful. I was not looking forward to shaving because I'm like, oh, it hurts so much. I'm like, wait a minute. Why does it hurt? I was like, oh, my gosh. I think I've had the same razor head or whatever blade that's on here for maybe years, I guess. And Kate gets the cheap razors. And I, like, reached over the shower and grabbed one of hers, and it looked kind of gross and old, but even still, that thing, oh, my gosh, it was so much better than my current razor. So that's when I decided, okay, at the very least, I can get the Lacura or whatever cheapo brand that they sell at aldi for like 70 cents a pop.

[Joel]

Yeah.

[Matt]

Okay.

[Joel]

So again, I use an electric razor. Most of the time I just kind of trim it up. I don't go all the way down to the face, but my go like.

[Matt]

Mad Men style just like, perfectly.

[Joel]

Right. But my good buddy Clark, he is. He's a big fan of drying your razor thoroughly, and he says that makes them last a whole lot longer.

[Matt]

Water degrades the blade.

[Joel]

Yeah. So I don't use my razors enough. Like, in, like, traditional shaving to know that. That's what I hear from him, 100%. He's, like, always trying to test himself, see how long he can make a blade last longer.

[Matt]

Oh, nice. So doing that helps the blade last longer. And also running it against. So what I do is I run it against my forearm the opposite way. So honing it. Yeah, yeah, exactly. You're basically honing it. So I didn't know how up to date you were on the blade lingo.

[Joel]

Joel, what's up?

[Matt]

But it gets rid of all those tiny little nicks and smooth the blade out.

[Joel]

Okay. But Ollie blades for the win.

[Matt]

Totally a frugal move in my book, man.

[Joel]

Yeah, I dig it. All right. Malice mentioned the beer we're having on this episode. This is a KBS by Founders. A classic beer if there ever was one.

[Matt]

The craft beer scene. Indeed.

[Joel]

We'll see if it holds up. We'll give our thoughts on this one at the end of the episode.

[Matt]

I like how under it says the original. Like, they don't even need it doesn't need any other explanation.

[Joel]

Yeah, it's true.

[Matt]

Than this.

[Joel]

Yeah, you just see those three letters put together and it's like irs. And you know what's coming for you when that happens.

[Matt]

For those who aren't in the know, Kentucky breakfast out. Looking forward to sharing our thoughts at the end of the episode, bud.

[Joel]

Yeah, man. All right. If you have a question, by the way, a money question you want Matt and I to tackle or really any question. If you have a relationship question, if you have send it our way, we'll. We'll take any questions here on the show.

[Matt]

I'm not sure what kind of advice or how we might steer you wrong, but. Sounds like fun.

[Joel]

We'll try.

[Matt]

I'll give it if you give it a go.

[Joel]

If you have, like a style or a wardrobe question, send that in to Matt too. He's a style genius. But for real, if you have a money question, go to how to money.com ask. We would love to take your question on an upcoming Ask a How to Money episode. Maybe next week. All right, Matt, let's get to a question specifically about what to do when you're impaled by doge when a layoff occurs.

[Chris]

Hi, Matt and Joel. This is Nancy from the Washington, D.C. area. First, I want to start off by thanking you both for sharing your knowledge and making personal finance so accessible and relatable. So here is my dilemma. I started this year off with high optimism and some pretty big financial goals, including plans to max out my 401k contribution for the first time. I also plan to max out my Roth IRA contribution which I have been doing for the last three years. Lastly, I also had plans to finish paying off my student loans to become debt free. Unfortunately, these financial plans for the year have taken an unexpected hit. As I was recently affected by the mass layoffs in the federal workforce. I wanted to reach out for your advice on navigating this difficult transition. So here are a few things that I have done so far. One is that I have already implemented a bare bones budget, something I learned from your podcast. Two is I plan to move in with family to minimize some expenses, including rent. Lastly, I will also be applying for the unemployment program for the state in which I worked. So my emergency savings is currently at $14,000 because I have been working on building six months worth of living expenses as calculated from my bare bones budget. I would greatly appreciate any advice on anything else that I should be doing during this time. I truly appreciate any insights that you can share and look forward to hearing your thoughts.

[Matt]

Joel, I love that Nancy started off with all of the awesome goals that she had laid out before her. Right. Like that is a lot of stuff, Nancy, that you were trying to accomplish this year in 2025. Yeah. But the truth is when you get laid off, all of those other goals, they essentially get put on the back burner. And I think this more than anything, it can be tough from an emotional standpoint when you are chomping at the bit. You're trying to eliminate debt, you're trying to grow your wealth. And like we still want to see you get those student loans paid off. We want to see you max out a 401k off in the future. But for the time being, it's important to look at your finances through more of a triage kind of perspective.

[Joel]

Right?

[Matt]

Joel, you mentioned like her getting impaled by Doge. Like right now what you want to do is stem the bleeding and the ability for you to stay solvent for a longer period of time. That is for you right now incredibly crucial.

[Joel]

And that can be so demoralizing. Especially let's say you've been listening to the podcast for a couple years and you're like, boom, Learn so much. I've cut here. I'm like just got a raise. Maybe I'm accelerating my ability to hit all these goals and like I'm going to be doing some of the things that Joel and Matt have talked about a bunch and I'm so pumped and I can't believe like all the progress I'm going to make and then something like this happens. It's a massive setback. Feels like a gut punch. And you know, it's our goal here, Nancy, to help you the best we can. And yeah, the sort of triage thing, it's the name of the game right now. You're already doing a lot of what we would suggest based on kind of how you've reacted already in your question, which just shows, I think, that you didn't say breathless for long. Incredibly nicely done. On the bare bones budget front, for listeners who aren't familiar, we want everyone to have a bare bones budget. You create it. You don't necessarily implement it though, until a need arises. But it's a really helpful exercise to perform and it's crucial to enact it. If income stops flowing in totally, you're basically, you know, taking expenses down to the bare minimum. No eating out, you're cutting subscriptions, you're cutting back on travel, all that kind of stuff. Because when we're trying to make every dollar that we have go as far as possible, we want to limit those excess expenditures that aren't necessary. They're nice to have, but man, you don't want to have those because you don't want to run out of your money. You're trying to make it last as long as possible right now.

[Matt]

Yeah, it's like a break glass in case of emergency type of budget. And I mean, we've got one. And I will say too, I think it could be even helpful. So for everyone who, you know, maybe they think they are immune to getting laid off or don't foresee an income emergency in the near future, but even just going through the practice of creating a budget that is slimmer than the current one can allow you to weather different storms. And this is something that Kate and I have done. Like we've got a bare bones budget, but we also have like a just a lean budget like where we haven't cut back to the bone and certain expenses in our life, we're not going to change. If things were to get a little bit more tight, like our grocery budget, every month is pretty much going to stay the same. We're not really going to. We've realized that, you know what, that's kind of of important to us. But there are other things that we save up for throughout the year, like vacations or how much we spend around Christmas, things like our blow money, things like that that we, you know, it's unaccountable dollars that Kate spends, money that I Spend. Those are things that we can pare back. So, like, literally just being able to cut it by two thirds allows us to have a not so bare bones budget.

[Joel]

Yeah.

[Matt]

And so what's great about going through.

[Joel]

This exercise, which, if you're not completely devoid of income, you can implement if you're completely devoid of income.

[Matt]

Oh, yeah, yeah. You wanna come. You wanna come back to the bone.

[Joel]

But this.

[Matt]

So I'm. I guess I'm addressing. This is especially helpful, I think, for folks who might be interested in financial independence, because you might be thinking, all right, how much money do I have? Like, okay, if we wanted to say, or even like take a sabbatical or something like that. We talked about that a few months ago. The ability to stretch your dollars and have those dollars go further. I think that's just a great exercise to allow you to see what your money can do for you, which is ultimately the name of the game.

[Joel]

Agreed. Yeah. And that's how I think the bare bones budget can be powerful, even if you never actually have to use it. Like, there is something about the exercise that opens your eyes to maybe some of the, to use a doge term, the waste, fraud and abuse in your own life that you might want to look at.

[Matt]

It's like having a parachute. Right. Or like a life raft on a boat. It's like, well, we don't hope that we ever have to use that thing, but it's nice to know that it's there just in case the worst were to happen.

[Joel]

And it would be nice, I think, if you could easily cut something like a car payment that's typically harder to do. Right. And you don't necessarily want to get rid of your liquid cash to. To eradicate a car payment because then you don't have money for the other bills. But in some cases, I would say it's worth looking towards those bigger line items to see if you can reduce or mitigate the impact of that expense. Right. Nancy sounds like she doesn't have a mortgage. The fact that she can move in with her family is huge.

[Matt]

From a cost savings perspective, that is massive.

[Joel]

That's one of those line items that typically is impossible to undo, at least in the immediate short term, maybe in more the medium term when your lease is up, you can make a decision like that. But the fact that Nancy's been able to reduce her living costs to that extent is impressive. And by the way, Nancy, having amassed that $14,000 emergency fund, this is exactly why it's there, right? Oh, yeah, Job loss, it's Often unpredictable. And you're going to be thankful that you had more savings rather than less if you're out of work for a while.

[Matt]

And part of the reason is because job hunting isn't always quick like you. Like, we think that, like, oh, I've got the ability to jump back out there and land something. But we don't want you to feel like you have to take the first job that comes along. We want you to have some options. And if your budget is tight, you've got a nice little savings nest egg, well, you can have a bit more confidence to turn something down that isn't necessarily going to be a good fit for you. Maybe something, a position or a job that doesn't make sense for your career trajectory, or even one that doesn't pay enough. The ability to have more money on hand allows you to hold out for a job that does meet those parameters. And I just mentioned Katie north, the Art of the Sabbatical. That was the episode we recorded with her. And I remember one of the things that she wrote about in her book was the fact that it typically takes three months longer to land a job than people think. Yeah. And what I love about that, though, is that, is that it depends on the individual. Because you can take somebody who's super optimistic and they're like, oh, I'm going to find something in like two weeks. It's like, okay, maybe actually it's going to be three months in two weeks.

[Joel]

Yeah.

[Matt]

But then you got somebody who's a bit. They're like, you know what? I'm not totally sure what's going to be out there for. I'm, you know, I'm kind of getting older. I don't have a ton of skills. It might take me, like, I don't know, six months and like, nine months. Okay, maybe it'll take you like nine months or a year. But it, according to her clients and the folks that she ends up coaching, she found across the board that it typically took folks three months longer than they thought it would in order to find that. That next position.

[Joel]

And what you're highlighting here, Matt, is that having a robust emergency fund puts you in a position of strength, and that's. That's where you want to be. Right. You don't want to be in kind of that place where you are coerced into taking a job not because someone forced you to, but you had to coerce yourself to take the first job that came along. And Nancy, she also mentioned that she's applying for unemployment benefits. You pay into that system, Nancy, and now you get to tap it. This is not contrary to what many people believe, Matt, some form of government benevolence like we all pay into the unemployment system and so we deserve to get that money. If we lose our job, this is going to help bring in some income, but it's not going to be any anywhere near the paycheck that you're used to getting, Nancy. So just note that. And what else should you be doing? I would say tap your network. You want to get the ball rolling on that asap. Similar to unemployment benefits. You've built this network out, now it's the time to use it. So set up coffee dates. I mean let them, let, let the people in your network know that you're looking for work and what you're looking for. And I mean the whole point of developing that network over a long period of time and staying in touch with people is to be able to. When you're thirsty, you've already dug the well. As our friend Jordan Harbinger says, time to get out your straw and start sipping. I guess if we're going to follow the analogy, I'll drink your milkshake, Joel.

[Matt]

Another piece of advice I would share with Nancy is to not pay down on debt any more than she needs to in order to maintain those minimums and to stop completely contributing to retirement accounts. She said that she wanted to max out her Roth IRA this year. Well, if you get another job like super quick, well you might still be able to do that, but definitely don't contribute at all until then. Like this is an instance in a period of time in your life when cash is king. Like you want to be liquid, you want to have that in hand. And we almost never tell folks to avoid putting money into their Roth IRA or to decelerate debt payoff. But if your income, if it dries up, you know, at least for a small season here, so should those goals. And so you want to focus on it's triage is keeping the boat afloat. It's doing only what's necessary in order to free to get by.

[Joel]

I think last but not least, what we would suggest, Nancy, is to take care of yourself mentally and physically. It can be easy to get down about being jobless, but you didn't lose your job because you stink. Like you didn't get fired because you're a bad employee. This is something that's totally out of your control. It was like vibe shifts in the political space. So just we would suggest finding healthy outlets, maintaining your friendships, work out, go running, do some pushups. It's hard not to be anxious, but know that you've set yourself up to maneuver this setback well. You are well prepared to handle this downturn.

[Matt]

I think for her specifically too, since she's a part of this mass layoff, there's almost, I feel like there's more of an excuse almost. I think folks are gonna be like, oh, man, yeah, you were part of just like the insanity that took place last month. Totally get it. There's a part of it that does feel a bit external to her and.

[Joel]

Hopefully there's no resume gap that needs to be explained. It's self explanatory.

[Matt]

I think that might be able to be helpful from an emotional, sort of emotional health, mental health standpoint. And again, I want to go back to the fact that you, the fact that you are moving back in with your family tells me that you've got a good relationship with your folks or with your family. I would also lean on them. I think this could be an awesome time for you to kind of rekindle a relationship with them where like, I just think back to my younger years and all I wanted to do was get out of the house, like, do my own thing and start my own life. But then like, as you get older, you realize that, man, like your, your parents, your family, there's some wisdom there. Even if you don't necessarily want your life to look exactly like your parents, there's still benefit to be gained there or even benefit that you can share as well. So, Nancy, I want you to look at the silver lining, I guess, of moving back in with your folks and for it to not necessarily be this like, oh, man, I guess I'm just not cut out to be a grown up on my own. No, this is a great time, I think, for you to strengthen those relationships even further.

[Joel]

Agreed. All right, Matt, we've got more to get to on this episode, including the Costco credit card. Is it worth the benefits that they tout? We'll talk about that and more right after this. Are you 100% sure you're doing all the smartest things for your money? To be completely honest, I wasn't. And that's coming from someone who has committed their life to personal finance for nearly two decades.

[Matt]

That's right. So you looked into a company called Domain Money. Their team of expert certified financial planners get to know what matters the most to you. They analyze every aspect of your financial life. They build you a personalized plan with clear steps to reach each one of your goals, they make it incredibly easy to make money. It's like having your own personal cfo, therapist and money coach all in one.

[Joel]

Yeah, I personally worked with Katie Song. She's an absolute gem. And the best part is that you can work with Katie or one of the expert certified financial planners on her team. I'm always looking out for great resources to recommend to the how to Money community and I can confidently tell you that Domain Money exceeded my expectations. 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 a current client of Domain Money. I received a financial plan as part of the compensation for Domain Money's advertising on the podcast and therefore I have an incentive to promote domain money.

[Mary]

Geico's motorcycle expertise gives me the coverage I need like 24.

[Matt]

7 claims I'm on cloud 9 disclaimer.

[Nancy]

Clouds are wholly unable to support the weight of an adult human.

[Joel]

What's happening?

[Nancy]

Furthermore, clouds are not numbered. Even if you procured a jetpack and searched, you'd find no cloud numbered nine. However, at that altitude, you'd likely befriend a flock of migrating snow geese. Geese who'd encourage you to leave your 24.7geico motorcycle claims insurance behind as they would take you in and even share their dinner of crickets and clovers with you. Geico assumes no liability for any indigestion that may occur from a clover, cricket dinner Geico expertise for your motorcycle Love at first swipe?

[Young Pueblo]

I highly doubt it. What's your biggest red flag? No, no, no. What's your ultimate green flag? These days, reality TV and social media have us thinking love is instant. We're marrying strangers at first sight, we're finding love through walls, or we're even judging people by balloon pops. But what really makes a relationship last? On this episode of Dope Labs, poet, author and relationship expert Young Pueblo breaks down the psychology and biology of loving better and he provides eye opening insights and advice that we all need.

[Matt]

It's a big realization moment that you should not be postponing your happiness. Like your greatest happiness is not necessarily going to like come from a relationship. Your partner. They should add to your happiness, but your happiness is really coming from within you.

[Young Pueblo]

Listen to Dope labs on the iHeartRadio app, Apple Podcasts or wherever you get your podcast.

[Matt]

Of course, Joel, if you can only talk about one retailer, it's going to be Costco. And of course my One retailer is going to be Aldi. Quite fitting during this episode.

[Joel]

You remember like the mtv, they would have the, the Claymation, death battles, death match. What if there was. What if there Was an Aldi vs Costco one? Who would win?

[Matt]

I mean, I gotta think it'd be Aldi. They're just, they're just so dang scrappy.

[Joel]

You're so wrong.

[Matt]

Well, we will get to the Costco credit card question. Maybe we'll even get to a Jake, Paul and Tyson a secret like early retirement question. We'll get to those here in a minute. Let's now hear from a listener who has been a landlord here for a minute and they're trying to figure out whether or not it's still all that it's cracked up to be.

[Mary]

Hey, Matt and Joel. My name is Chris. My husband and I bought a condo in the city in 2019 and refinanced in 2020 with a rate of 2.875. We then bought a house outside the city after having a baby in 2023. We kept the condo and have been renting it out for the last two years at $3200 per month. This year, we lost the residential tax credit, which increased the monthly mortgage payment to $2,408. Monthly HOAs are 220 and the annual insurance is about 660. We are now making only a couple hundred dollars a month off it in cash. The equity grows a little over 900 per month and the numbers will only go up from there. If we were to sell right now, we would pocket about 148,000 after taxes and fees. The house we bought has already appreciated about 50%, but selling it would mean having to find somewhere else at the current higher rates and we wouldn't get as much for our money. We plan to slowly fix up the house and sell it in about four years. Money is tight right now with our high rate on the house, child care expenses, and a home equity loan we have. After needing to pour a large chunk of money into just making the house livable, we had to remove about 40 years of smoking damage that was so bad that a major national disaster cleanup company wouldn't touch it. We both picked up side jobs to help pay for this. I drive for Amazon Flex a few nights a week and my husband works at a local retailer. Although selling the condo could pay off our home equity debt and also our car loan, which is only about $15,000 right now, I'm not sure we should give up the extra income, no matter how little it is to avoid capital gains we would need to sell before August 31, 2026. My question for you guys, is it worth holding onto the property long term if we're making less than 6,000 dol dollars per year? If you incorporate repairs and incidentals, I would hate to lose the low mortgage rate. And we hope to use the income from the property in the future to fund our daughter's 529 plan. I would love to hear your take on this. Best friends out.

[Joel]

Oh, Matt, a lot to cover here.

[Matt]

By the way.

[Joel]

That best friend's out the smoking damage.

[Matt]

Chris is a long time listener.

[Joel]

Yeah, she is. She knows what's up. We say that at the end of every episode.

[Matt]

Yeah and for the folks who don't.

[Joel]

And then we leave last all the way till the end which why wouldn't you.

[Matt]

I'm guessing it's most folks probably two.

[Joel]

Now before cut out five or ten minutes. Well that smoking damage sounds nuts. It does damage disaster companies. I had a friend who worked for one and they, I'm sure they see.

[Matt]

Some crazy, nasty weird stuff.

[Joel]

Yes, yes they do. And yeah, that man, his job, I did not envy it. I'll say that. Chris, let's get to the heart of your question. That condo with the sub 3% rate, it's a gorgeous thing and I think I just want to talk about this for a second, Matt, because it's hard to put a number to how much it's actually worth to hold on to a low interest rate mortgage in an environment where inflation is higher and where you couldn't get a mortgage anywhere close to that these days, Friend of the show, Ben Carlson, he tried, he tried to wrap his arms around this question recently. I think this is at least helpful even if it's not a fully sufficient answer. He said two years ago you would have been paying around 40% of the purchase price in interest costs over the life of a 30 year loan. Now interest costs are more than the cost of the house. So let's say you bought a $500,000 house, Matt. What Ben Carlson is saying is you would have paid $200,000 in interest back in those in those low mortgage rate days. Now you're paying more than $500,000 in interest over the life of the loan.

[Matt]

That sucks.

[Joel]

We're talking about hundreds of thousands of dollars saved in interest versus buying that property today. It's insane when you put it like that. But maybe that puts some helpful context around how valuable it is to have that locked in low rate.

[Matt]

That doesn't mean, it's a slam dunk. Free to hang onto it though. It's very attractive. But let's discuss the tax implications because it's, it's rare that a tax that's due goes from nothing to a lot based on one singular deadline. But in the case here of selling a former primary residence, that's exactly what happens. If you sell in the next year, you get to avoid tax altogether. But if you wait a bit too long, yeah, you're going to end up owing a boatload. So if you're not in it for the long, if you don't want to continue to be a landlord, selling it before that deadline in order to avoid capital gains taxes, it makes a ton of sense. Yeah, I, I get why she's also thinking through that, because I don't necessarily hear her saying that she hates being a landlord, but she's highlighting the numbers here. Before she was making a good bit of money. Now she's like, man, we're not making nearly as much. It almost feels like an insult. Like it's like getting slapped in the face. But that doesn't mean just because your monthly cash flow isn't as strong as it used to be doesn't mean that there's still not a case for keeping that property for hanging onto it.

[Joel]

I wouldn't be making the decision to sell based on the monthly profit alone, but the real value of holding onto real estate, it's often an increase in value you're going to realize over time. She mentioned, I think, that the Property was adding $900 a month in equity. That doesn't sound far fetched. The truth is when it comes to real estate, someone else is paying off your debt. You make maybe not a whole lot every month, but you also watch the value rise over time. And so over the course of a couple decades, this piece of real estate can be a life changing financial asset. It's just not as easy or as sexy, right as some of the folks on the Instagram real estate. Right. They want to make it sound, those influencers. They make it sound like your instant path to riches is owning some real estate. And as any normal person who has bought rental real estate knows, it just doesn't work like that. So I think the answer to buy or sell, at least in part, comes down to whether you want to go through the pain to get those gains or whether you want to sell and snag the gains you've made already in order to do smart stuff with it now to relieve some of that current financial pressure. It's this is a tough question, Matt.

[Matt]

Totally. Yeah. So I'll play devil's advocate. I'll make a case for selling because that $148,000 that she's going to pocket, it could help to pay off that car. Of course, she could eliminate that home equity debt, which I'm guessing is probably fairly high now given where interest rates.

[Joel]

Have headed close to a 9% rate.

[Matt]

And I think it could also allow a little more flexibility to work maybe a little bit less, maybe even DIY some of those repairs that you want to make to your current home and.

[Joel]

Then no one else will do them for you.

[Matt]

Yeah, well, so it sounds like she already had to do that, but like they're looking to make additional improvements in order to, I don't know, to be able to reap even more of an equity reward in a few years. But there's something to be said for selling an investment tax free in order to get rid of debt to cash flow these expenses that are also increasing the value of your current home. Right. And so like it's not like going on a vacation, I guess, where it's. Or buying a super fancy car that's going to completely depreciate, but selling it could also allow you both to focus a bit more, I think even on growing your career. You didn't say what it is that you and your husband do full time, but if you're able to focus on that like a laser and are able to inordinately boost your income at your day job, I think that could be a totally reasonable argument as well. And that's because I think side gigs are good from a short term perspective. Right. Like if you've got a near term goal that you're trying to pursue and you got something that you want to eliminate, I think a side gig, a side job, working nights, weekends even, they can allow you to achieve that goal faster. But I think that they can be detrimental for most folks over the long haul.

[Joel]

But I mean it's hard to sustain, especially when you, once you start growing your family and you have kids in the mix.

[Matt]

Yeah, yeah, no, I agree. But I mean, I guess that being said, like, if I were in her shoes, if I was like, and obviously we don't know all of her, all the details here, everything that's going into her decision making, but she said that they, they basically have a baby at home. It sounds like they had a baby like two years ago or something like that. As a parent, if I were in your shoes, I would be more willing to sacrifice now while they're young, before they have permanent memories in order to achieve and like just go after whatever it is that you want to do to eliminate this debt, to get rid of that car loan and to allow yourself more opt as they get older. And this is the question, like I've asked a lot of older parents, other friends of ours, because it's in my mind a debate. Am I going to wish I had more time in the here and now or like more time down the road like once the kids are off to college and like almost, it's almost unanimous. Like there's been like a couple folks who are just like, man, the kids are often in college. The time that we've been able to spend together as a couple in our empty nester years, it's awesome. We're going on vacations, we're doing this, we're doing that. But the vast majority of folks are saying, man, I wish I had more time in like these prime parenting years when they're forming these permanent memories and like when you are like imparting so much wisdom or at least that you're trying to. Right. You know, you're like trying to raise.

[Joel]

Your kid right, or at least you're playing Legos together.

[Matt]

Yeah, yeah. And so like, and you get to a point to where that's not as necessary but the stage of life that they're in, they're in like this early stage where you know, their daughter is like two or three or something like that. So yeah, I don't know, I think I'm leaning a little bit towards like getting after it, maybe not selling the property, not selling the condo, hanging onto it like grinning and bearing it in the here and now, knowing that this is going to be something that's going to be wind at your back for years and decades to come.

[Joel]

So one other thing that might help if Kris and her family, if they decide to make that decision, is to not prioritize investing in a 529 plan. She mentioned that as being a big goal and I think it's a noble goal, but it's also one that should be put on the back burner, like way on the back burner. We always want folks to prioritize their own financial health and investing for their own future before they start socking away money for their kids college. One little caveat here, Matt, that's aside from a small early contribution, I don't know, a lot of 529 plans have like a minimum $20 investment or something like that. Put 20 bucks in just to get the 15 year timeline rolling for the Roth IRA conversions. It's just like a. Just a small nerdy note, but I do think it's important. So put 20 bucks in, but then don't stick anything else in that 529 plan. There are just no scholarships for retirement, but there are for college. Right. There's so many ways to reduce the price that you pay for higher education. Also, do you know if your kid's going to go yet? You don't. And so if you were, I'm down with prioritizing 529 plans if you've jumped through all those other hoops first. But please don't feel the pressure to make a big decision like selling this condo in order to accomplish what I think is more of a secondary or tertiary money goal. You can always ramp up contributions in the future. And maybe you don't amass as much in that 529 plan as you hope for, as you thought you were going to get. But that's okay. I mean, we want to make sure that you're planning for your own financial future and that you're not burning the candle at both ends so hard. Right. That you can't achieve some of those financial goals that you've set out for yourselves.

[Matt]

Totally. And even though you do have that ability to roll funds from a529 into a Roth, keeping that money there in that condo to where that thing's cash flowing off down the road 15, 20 years. No, it gives you the option, yes. To be able to pay for college directly, or if you're not in a position to do that, to be able to help supplement you and your husband's income.

[Joel]

Right. That's a great point.

[Matt]

It just gives you more options like you're not completely earmarking it and siloing that money to only go towards higher education.

[Joel]

A lot of people think the 529, that's the vehicle to save for college, but you're right. Holding on to you just pay for it. Rental property is invested. That's what when we talked with Brandon Turner back in the day, he bought, I think, a quadplex for. And he basically had this plan to pay it off in 18 years so that all the cash flow coming from it could fund his daughter's college. Again, it's an outside of the box approach, but it's a good one.

[Matt]

It's one of the ways that it's basically magical how fungible money can be.

[Joel]

Yeah.

[Matt]

But, Joel, let's hear from our next listener this is a listener who is looking to cultivate a secondary source of income for herself.

[Megan]

Hey Matt and Joel, My name is Mary and I'm from Southeast Michigan. I've been listening to your show for years now and I've learned so so much from the both of you. And Joel, I used to listen to the Clark Howard show when you were on it as well and so I learned a ton from you back then too. Thank you both and keep up the good work. My question for you today is about cultivating a secondary or supplemental income source. I have a W2 job and I would like to start up essentially a side gig that will supply me with a secondary source of income. In addition to that W2 job, I would like for that secondary income source to in 10 years time provide me at least $60,000 a year. So achieving that $60,000 a year in 10 years or so. I originally planned to use rental properties to get there, but I'd also like to get your take on other options. Would using REITs or dividend yielding ETFs be comparable? And for your information for this question, I plan to use a property management company when it comes to the rental properties to deal with the typical day to day activities. But I'd love to get your take on what I might need to consider if the income that I'll get from dividends and ETFs will be similar to that of a rental property. And for your knowledge as well, for rental properties I would be looking at properties that provide a 6 to 10% cap rate. Love to get your thoughts. Thanks guys.

[Joel]

Oh Matt, Mary, she mentioned my work with Clark back in the day and worked with.

[Matt]

Was that the Clark that you mentioned earlier too? As far as he likes to extend his razors?

[Joel]

Yep. So I worked with Clark Howard for 14 plus years. It was glorious. Still stay in touch with those folks. My little sister still works on the crew over there. What a great formidable period of my life. Mary, I love this goal that you've got by the way. Attempting to build up another source of income to replace your W2 income. It's brilliant. The emergency fund. It's basically short term insurance to help you if you were to lose your job. But you're thinking about cultivating some long term insurance too, which we think everyone should be doing to one extent or another. And often as you alluded to, that takes a while to develop. Right? It doesn't happen overnight. Whether we're talking about doing it through the stock market or we're talking about building a business on the side. While you're working full time to generate more revenue, or we're talking about owning rental properties, it's going to take time to hit that critical mass of $60,000 in income a year that you're shooting for. Yeah, but you're giving yourself, I think, a long enough Runway here. We really think that you can meet this goal in a decade. But, Matt, some people want to turn on that spigot immediately. They're like, how can I get this in a year? And it's like, well, not gonna happen. Probably not. Yeah. But 10 years, maybe that's long enough.

[Matt]

Yeah, it depends on a few things. Like, this makes me think of. We recently interviewed Shung, and she actually had a similar goal. We talked to her last week. Even though she had a fancy job, she had that fancy consultant gig, she still started a side hustle as a photographer in order to bring in extra money to accelerate that goal. And so the first suggestion that we'd make is to at least consider start a side business as part of the answer here. Like, you don't have to work over 90 hours a week like Shung did, but building up a small stream of side revenue is going to help you to get closer to that income goal, and it can increase your ability to invest at the same time because you're going to have more dollars flowing in. So, so much of this comes down to how much personal time you're willing to give it. Yeah, and that's my biggest concern, is that she named a lot of passive sort of avenues to, you know, have an additional stream of income. And, like, you can do that, but that's going to take an incredibly ambitious amount of investing over the next 10 years. If you're looking to draw down $60,000 annually, I'm assuming that she's expecting to continue that stream going for the rest of her life, basically. I don't know. Let's say we don't need to dive into the details yet. But bottom line, that is some seriously aggressive investing that she would have to do in order to pull something like that off.

[Joel]

Agreed. I think what you're hinting at here is Matt is probably going to take pulling a bunch of different levers, one of which will be reducing expenses, another which could be increasing your income. And a side hustle might be a big part of that. Yeah, and.

[Matt]

Well, the big. I think the biggest difference here is the. Is, like, how much sweat equity are you willing to put into it? Because if you're thinking like, well, no, I just want this to be this automated thing, like you said, it definitely can't be pulled off in one year, but even 10 years is a pretty tall ask. However, you can change the equation, you can change the factors that go into this cake that you're baking. If you're willing to give it a little bit of sweat equity, like, that changes the game. And she specifically was asking about real estate. I mean, I think that's one of the reasons that makes that so attractive is that you're combining capital, but then also your ability to dive in there and like mess with it.

[Joel]

That's exactly right. Yeah. I mean, I think I do lean towards real estate as, as the answer for this. I think that that's for a couple of different reasons. You know, if done wisely with a long term mindset, leverage can be your friend on the real estate front. You can buy a property that has positive cash flow with a 20 to 25% down payment on top of that. Actually, you might be able to get incredibly creative by house hacking. We have a guide to that on our website. If you're looking and willing to think outside the box a little bit, I think that can accelerate your returns and accelerate your cash flow. By being a more flexible homeowner investor, you might be able to either decrease your timeline or increase your cash flow goal too. It just all depends on kind of what you're highlighting here, Matt. How uncomfortable you're willing to get, how much elbow grease you're willing to put.

[Matt]

In, how much of the suck are you willing to embrace.

[Joel]

Right. And how much dedication are you willing to put into kind of amassing a small real estate portfolio. Local real estate markets, they're less efficient than the overall stock market, which means smart investors can find deals that are harder to find in, let's say, the publicly traded stock market space. You mentioned though, using a property management company, that would make the numbers harder to pull off. We always suggest for newbie landlords to do self management for a couple of years at least to learn the ropes, to know the questions to ask, and you get pretty familiar with the whole process by doing that. So I don't know, maybe that's another place where you could use some of that elbow grease to manage the property yourself, make sure those numbers are better, and then at some point down the line, you can offload that to a property manager.

[Matt]

Totally. Yeah. This is why I think this is sort of like a secret early retirement question, because there's not a whole lot of her saying that I'm looking to start a whole new side business A whole new gig. And that's when it gets challenging. Because she did mention investing in dividend producing stocks. And I think this is truly at the heart of her question. I don't think that there is any particular magic in going that direction or opting for REITs that are shedding dividends, that kind of thing where you are earning money that way. Instead of focusing on dividends, dividends, just focus on creating a diverse portfolio of investments that's going to grow meaningfully over time. When you look at the data, stocks that pay higher dividends, they actually underperform the s and P500. And so maybe instead just invest in Voo, something as simple as Vanguard's S&P 500 ETF. And abiding by something like the 4% rule, you could tap those funds down the road even if you aren't fully retired. I think there's, there's sort of like this mental hurdle, like people don't want to sell their positions, they don't want to sell their securities, but like that's what they're there for folks a lot. There's like the, oh, how do I get income generating assets? Well, that's what stocks are. And so once you get past that mental hurdle of knowing that like, okay, if I need those funds, I then sell some shares.

[Joel]

I'd rather grow.

[Matt]

That's your income.

[Joel]

I'd rather grow the pot bigger than have a smaller pot that throws off dividends. Right. That's kind of what you're getting at. And when you look at the numbers growing, the bigger pot is typically done through investing directly in something like an S and P or total Stock market index fund. It's better than prioritizing companies who pay higher dividends.

[Matt]

Totally. So again, kind of speaking to the early retirement part of her question. I mean, assuming like it sounds like she's got some money, but let's just assume that she's starting from zero. If she's looking to be able to draw down $60,000 a year 10 years from now, so a full decade from now, that means she needs at least $715,000 on hand. And that's something with like a four, I think I put in like a 40 year Runway before that turns into a negative number, which means investing $50,000 a year starting now. Again, assuming that she has $0 set aside. Let's just say that you woke up and you're like, oh, this is a new goal of mine. I've not prepared at all for this. This is what it would take. It's something. It's like setting aside, like, a little over $4,000 every single month, which is really. That's really tough to do.

[Joel]

I think you're throwing cold water on this one, Matt.

[Matt]

I'm just saying I want to be realistic. You're going to need to have at least $750,000, if not more.

[Joel]

I was going to say that would be.

[Matt]

That assumes a perfect market. That assumes a perfect 8%. So I figured, on average, you're looking at 10%, 8% with inflation. So that assumes a perfect 8% every single year of compounding.

[Joel]

And that assumes inflation calms down a little bit. Exactly.

[Matt]

There's a lot of risk, a lot of assumptions here.

[Joel]

People would say you need to save, have invested at least a million dollars.

[Matt]

Even more than that, in order to.

[Joel]

Be able to pull this off.

[Matt]

But at a minimum, to be able to pull this off, you're still looking at a pretty large sum of money, which is totally doable. But I'm just trying to be realistic here. When you actually crunch the numbers to see what does it take to be able to pull this thing off.

[Joel]

And again, Mary, this is not us crapping on your goal of getting here. We're all for it, and we think it's possible. It just might take extra work on your part to pull this off. And thinking outside the box a little bit more, being willing to maybe go to lengths that other people aren't willing to go to in order to get this secondary source of income. But we've seen other people do this. Like, we highlight people. We talk to people on the show, Matt, who have done similar things. You and I have done similar things.

[Matt]

Right.

[Joel]

In order to grow that gap in a meaningful way so that we didn't depend nearly as much on our W2 income. We think it's a fantastic goal, and we think this is very doable for Mary. She just might have to adjust her expectations, I think, either on timeline or on the amount of effort she's gonna have to put into reaching this goal.

[Matt]

Totally. And again, based on the fact that she says she used to listen to Clark back in the day, based on the fact that she's listened to us for a while. She's got money on hand. I'm guessing she might have. Like, she's easily got five figures.

[Joel]

She might be on second base already.

[Matt]

If not six figures. And she's just looking for how to best deploy that money. And that's when you. Yeah, like we said, you look more to some of the lifestyle moves that you're willing to make. If you're looking to not change your lifestyle at all. All right, you're looking, yeah, you're looking to the market. You're looking to invest passively. But if you're willing to roll up your sleeves a little bit, bust out some of that elbow grease, you can achieve that goal a bit faster.

[Joel]

No doubt. Where did the term elbow grease come from, by the way?

[Matt]

Because I don't know, I don't feel.

[Joel]

Like my elbow's terribly greasy, but maybe I'm the anomaly there.

[Matt]

Is it grease that you get on your elbows from getting down and dirty or it almost. Were you thinking that, like, you need to apply some grease to your elbows like a tin man?

[Joel]

That's poor interpretation on my part. All right, we've got more to get to, including. What about ownership timeline of a home. That certainly impacts whether or not it's a good decision. We'll talk about that and more right after this. Are you 100% sure you're doing all the smartest things for your money? To be completely honest, I wasn't. And that's coming from someone who has committed their life to personal finance for nearly two decades.

[Matt]

That's right. So you looked into a company called Domain Money. Their team of expert certified financial planners get to know what matters the most to you. They analyze every aspect of your financial life. They build you a personalized plan with clear steps to reach each one of your goals. They make it incredibly easy. Domain Money is like having your own personal cfo, therapist, and money coach all in one.

[Joel]

Yeah. I personally worked with Katie Song. She's an absolute gem. And the best part is that you can work with Katie or one of the expert certified financial planners on her team. I'm always looking out for great resources to Recommend to the how2money community. And I can confidently tell you that Domain Money exceeded my expectations. 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 I am a current client of Domain Money. I received a financial plan as part of the compensation for Domain Money's advertising on the podcast. And therefore I have an incentive to promote Domain Money.

[Young Pueblo]

Love at first swipe? I highly doubt it. What's your biggest red flag? No, no, no. What's your ultimate green flag? These days, reality TV and social media have us thinking love is instant. We're marrying strangers at first sight, we're finding love through walls. Or we're even judging people by balloon.

[Matt]

Pops.

[Young Pueblo]

But what really makes a relationship last? On this episode of Dope Labs, poet, author and relationship expert, Young Pueblo breaks down the psychology and biology of loving better. And he provides eye opening insights and advice that we all need.

[Matt]

It's a big realization moment that you should not be postponing your happiness. Like your greatest happiness is not necessarily going to like come from a relationship. Your partner, they should add to your happiness, but your happiness is really coming from within you.

[Young Pueblo]

Listen to Dope labs on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Matt]

Welcome to Pod of Rebellion, our new Star Wars Rebels rewatch podcast. I'm Vanessa Marshall. Hi, I'm Tia Sircar.

[Joel]

I'm Taylor Gray.

[Matt]

And I'm Jon Lee Brody. But you may also know us as Harrison Dula's Spectre 2, Sabine Wren, Specter.

[Joel]

5, and Ezra Bridger, Specter 6 from Star Wars Rebels.

[Matt]

Wait, I wasn't on Star Wars Rebels. Am I in the right place? Absolutely. Each week we're going to rewatch and discuss an episode from the series and.

[Joel]

Share some fun behind the scenes stories.

[Matt]

Sometimes we'll be visited by special guests like Steve bloom voices Zaborillio, Spectre 4, or Dante Bosco voices Jaquel.

[Megan]

And many of sometimes we'll even have a lively debate.

[Joel]

And we'll have plenty of other fun surprises and trivia too.

[Matt]

Oh, and me, well, I'm the lucky ghost crew Stowaway who gets to help moderate and guide the discussion each week. Kind of like how Kanan guided Ezra in the ways of the Force. You see what I did there? Nicely done, John. Thanks, Tia. So hang on. Cause it's gonna be a fun ride. Cue the music. Listen to Potter Rebellion on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. All right, buddy, we are back for the break. Let's now take the Facebook question of the week, which is from Megan. She asks, does anyone have the Costco credit card? I'm a new Costco member. Welcome to the fold. Meghan and I would love to hear about your experience with their credit card. Thank you. Joel, do you like the Costco credit card? Are you a fan?

[Joel]

Yeah, I am.

[Matt]

By the way, are you only a fan of the big box retailer?

[Joel]

I still love itself. I still remember the day I joined the club and no, not really. But you get your picture taken.

[Matt]

A lot of us probably do remember it because it's not often that you stand there in front of the screen and you know, they tell you to smile at the camera.

[Joel]

Do Whatever else, it wasn't life changing in the way I thought it would be. But I'm so glad I did because being a Costco member has given me a lot of benefits.

[Matt]

I actually do recall as well because it was only a couple years ago or two years ago.

[Joel]

Gosh, let me. Hold on, let me pull out my.

[Matt]

I was not able to.

[Joel]

Credit card right here.

[Matt]

Busted out. Man, look at that.

[Joel]

Because it tells you how long you've been a member since. Since February 2014. So I've been a member now 14, over 11 years.

[Matt]

Yeah. Okay. I was not willing to join because it was so far from where we used to live. We used to live in town and, man, you had to drive out to the burbs. And I realized, at least for us at that point in time, it was not going to be worth it.

[Joel]

Spoken like a true plebe. Yeah, but now I don't even know what that means. I hear the kids say it.

[Matt]

No, I love it.

[Joel]

Yeah. Okay, let's talk about specifically the Costco credit card. It is great. Like, Costco membership is fantastic, but so is the Costco credit card. I think if you're a Costco member, it's a no brainer. Like, I don't know why you would be a Costco member and not have the Costco credit card sometimes. Matt, I'm at the gas station filling up, obviously using my Costco credit card, and I see people using a different credit card and I'm like, huh? I like, scratch my head. I don't understand it.

[Matt]

What kind of spying you doing on other people looking at what they're pulling out there? I don't look at anybody at the.

[Joel]

I'm like, head down.

[Matt]

Oh, it's not head down. It's just I have like, I want to spend as little time in the gas line as possible. Oh, I'm quick and plus.

[Joel]

But then while it's pumping, what else are you doing? I'm people watching.

[Matt]

Oh, are you? Yeah, I'm cleaning out the car.

[Joel]

Oh, there's a.

[Matt]

There's free trash can right there that I don't have to like, empty the bag every single time. You don't clean out the car while you're waiting. You just stand there and stare at people.

[Joel]

Usually my kids are like running around in there and I'm, you know, I'm like just standing there for. I like, do a little bit of stretching maybe. And then I'm like, what credit card do they use on?

[Matt]

No, man. I open the door, pull all the trash out of the Side compartment, you know, like you got all the different pockets and there's always gum wrappers and like coffee cup, whatever, just all sorts of trash. That is the. At least for us, the clean out the van. Let's get this thing looking half decent time.

[Joel]

Okay.

[Matt]

Yeah, that's smart. Not looking at other people's credit cards. But I love that. You do?

[Joel]

Yeah. Well, I mean, when I look and I see people using something else, it makes no sense to me.

[Matt]

You go there and try to explain to them that, hey, why are you doing this? You should get this card because of the store specifically.

[Joel]

Well, part of it is because the gas cash back. Right. So, so it's 4% at gas stations. It's 5% now only recently when you're buying gas at Costco. So you get 5% cash back on.

[Matt]

Costco gas, which is also the most affordable, highest quality gas that you can purchase.

[Joel]

So it's a no brainer if it's nearby and in your, in your schedule. So. And you have to pay with a Visa, by the way, at Costco used to be an Amex. I just don't think there's any reason to use a different Visa card when you're checking out. Like, get the Costco card, especially because there's no annual fee attached.

[Matt]

Totally. Yeah. And on top of that, you get 3% cash back on travel, including if you purchase like one of those Costco travel bundles, which I personally have never done, but one of these days I'm gonna get around to doing it. Joel. But you can't use one of the cards where you're earning 5%. Like the custom cash card is what I'm specifically thinking of. You have to use a Visa card. The warehouse clubs also don't qualify as a grocery store. So it's not like you can get Blue Cash preferred 6% back because it's not a grocery store. On top of that, you can't use the Amex. And so like, and you can't use the Citi Double cash either. Like, you got to get the Costco card like 100% because you get 2%.

[Joel]

Cash back on all Costco purchases with the Costco credit card. So again, why would you use anything else? I could see if there was an annual fee attached. Like, you might have to run the numbers, do some math. But there's no harm, no foul in having an additional credit card. Even if, let's say you only use this credit card for Costco purchases and for gas, then I would say this card, having this card in your arsenal Makes sense.

[Matt]

Makes sense. Alright. Another quick question from this is actually a different Megan on the Facebook group, but she wrote, anyone know of a spreadsheet that analyzes a home purchase from an investment perspective? We know that we're only going to be there for five years so we want to be more strategic about what we buy. Joel, what you think I'm going to.

[Joel]

Say don't buy the home. Probably that's the tldr, that's the quick answer. But Matt, you and I, we always talk about the importance of timeline when it comes to homeownership and whether or not it makes sense or it's going to pay off or it's going to be a better financial move for you, the expense of buying and selling can be significant. There are significant costs associated with both of those endeavors. If you're bumping them close together within a five year time frame, the cost could be prohibitive. If you own a home, let's say for a couple years, even if you see some equity growth, the seller in this case often has to come to the closing table with cash to cover closing fees and agents costs and stuff like that. I think big ups. By the way to Megan for asking this question before she buys the house. I've heard way too many folks, Matt, who buy the house, they've heard homeownership is smart. They haven't thought through the details and it ends up costing them because let's say they live in the home for three years or something like that. Well, their own homeownership timeline wasn't long enough and they ended up losing in the process. They would have been better off renting.

[Matt]

Totally. Yeah. And Megan also said she's looking at this from an investment perspective, but I don't think that she wants to own this as a rental property. I think what she's asking about is whether the financial benefit will be superior when you are considering owning a home versus renting a home. Given those transaction costs that you just mentioned there, Joel, and when you look at what home prices have done over the past 15 years or so that you know the typical reaction for most folks, especially realtors, folks in the real estate space, they're going to tell you to buy every single time instead of rent, they would say that you'd be, you'd be an idiot to not purchase a home. You're going to come out ahead. And in one sense do they have.

[Joel]

A vested interest in telling you that, Matt?

[Matt]

Of course you've got that. But like, like, yeah, like if you look at history, yeah, Your homeowners, they have made out like bandits in recent years. But you also can't count on these recent trends continuing far off into the future or even for the next five years specifically.

[Joel]

Right. I mean, the truth is it's highly unlikely that the housing market is going to experience similar, ongoing, significant price increases over the coming 15 years. I would be shocked if the coming 15 years looked a lot like the last 15 years in terms of home price acceleration. That's because price increases can't outpace inflation. They can't outpace wages forever. We're already seeing prices stalling and predictions of price declines in the near term from some outlets. The truth is, if you look back, you bought in 2013, you sold in 2018, or if you'd bought in 2018 and sold in 2023, those are both five year timelines, you would have done quite well for yourself. But those might be the exception, not the rule. And so if you look just a recent history instead of a longer stretch of history, you might be doing yourself a disservice. Assuming that something's going to be true that likely isn't going to be. When you zoom out the five year ownership timeline, it's really the minimum to avoid potentially losing real money in that transaction. At least when we're talking about a longer perspective. I'm worried, Matt, about someone sticking to a five year ownership time. We always say five to seven and typically we prefer seven. Five years just might not be long enough.

[Matt]

Yeah, well, especially given the massive disparity between rent prices right now and then the typical mortgage payment these days in most cities. And specifically because she said that she knows she's only going to be there for five years. Like maybe they're moving to a college town, they're there for like a graduate degree or something. I don't know. Especially given that I would suggest renting. It's what I would do if I were in your shoes, given a similar timeline. And we don't have a. So because of that, we don't have a spreadsheet recommendation when it comes to something like this. But do check out the New York Times Rent versus Buy calculator, which is totally great. And the only other way that this, that I would change my mind were I in your situation is if the, what it is that the NRA is like, if the industry gets a massive shakeup, basically when it comes to commissions fees paid towards realtors, because we haven't seen that, but we haven't seen that.

[Joel]

Like there's been talk it's the nar, not the nra. I always say that very different organizations.

[Matt]

National association of Realtors, they've had a stranglehold where you're paying 6%. And if that completely gets upended, well, my answer is also going to change because all of a sudden the vast majority of the transaction costs gets eliminated. Housing prices for the most part are fairly stable over time. We see them typically go up and to the right. Cross your fingers. We don't see another massive decline like we saw in 0708 with a great recession. But that, that's like a once in a lifetime thing in my opinion. You eliminate these massive transaction costs. I think we do see people purchasing a home, living there for two or three years. Maybe they see a little bit appreciation, maybe they don't. But it's not even that big of a deal because the transaction cost, the known expense that comes with selling a home is no longer there.

[Joel]

It would make the whole real estate market more liquid. People would be willing to buy and sell a whole lot more easily. But because the transaction costs are so prohibitive, we have to basically prescribe an ownership timeline of a minimum of five. Better to be seven. Ten is ideal or I don't know.

[Matt]

The long Mr. Conservative paying so many.

[Joel]

Then you move, you move elsewhere and you hold onto that home and you rent it out. That's like the ideal ideal. But yeah, I think given a five year timeline and what's happening in the market right now and how much you could save every month by renting instead of paying that mortgage, renting makes sense for the vast majority of people on a short time scale.

[Matt]

Totally, man. Let's get back to the beer that you and I enjoyed, which was a KBS by Founders. What'd you think, man? This is the beer we've had many a time.

[Joel]

Yeah, but it's been a while. It's been a long while for me. And this is.

[Matt]

Wish we had some more.

[Joel]

Yeah, this is a classic. I will say though, a good, a really good barrel aged out, but it can't compete with some of the modern incarnations at a lot of smaller craft breweries now of a barrel aged out. I just don't think it has as much going on as some of the, some of my favorite local players maybe are able to bring some more.

[Matt]

Don't you. Don't you think sometimes there's too much going on? Like what I love about this, it's like a classic tuxedo, man. Like it's so freaking sharp. Not like, like in a taste, like how it Tastes kind of way. But like, it's, it's classic. Like you got those classic cocoa nib, chocolatey notes. You've got those coffee notes. It could use a little more barrel, in my opinion. A little more wood. It's like Will Ferrell. More cowbell, more wood. And I would be, I'd be happier. But yeah, still so good.

[Joel]

That's the thing. I'm like, it's. It's really, really good. It's like a solid B, but it's not like an A. It's not an A. It's just not. It's.

[Matt]

Oh, my God. Those are like fighting words.

[Joel]

I think for most folks, I guess at some point. It's kind of like some of those early beers that were highly touted. I'm thinking of like Pliny the Elder or whatever. Like, that's a great IPA from out on the west coast, but it doesn't compare to some of the IPAs coming out of, let's say Bissell Brothers or Different style. Yeah, they are, but different style. I'll take Bissell Brothers every day.

[Matt]

I would still. This is a barrel aged stout. I still give it a solid A. Is it my absolute favorite? No. There's some super interesting ones that I've had out there, but in my opinion, this one still holds up.

[Joel]

And the cool thing is this is readily available on shelves these days. It never was in the past, so.

[Matt]

Pretty much get a day.

[Joel]

I literally just went in, grabbed a single and I was like, that's amazing. Sweet. I thought of that when buying that. I was like, that's. It's amazing how.

[Matt]

What a world we live in now.

[Joel]

Yeah, it really is an abundance of riches for sure. So, Matt, that's going to do it for this episode. We'll put links in the show notes to some of the resources we mentioned on today's episode. If you have a money question for us, please do send it our way recorded in the voice memo app of your phone. Email it over to [e-mail] Matt. That's going to do it. Until next time. Best friends out.

[Matt]

Best friends out.

[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]

A current client of Domain Money. I received a financial plan as part of the compensation for Domain Money's advertising on the podcast and therefore I have an incentive to promote Domain Money.

[Matt]

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[Mary]

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I just meant that I feel really.

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[Nancy]

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[Chris]

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[Matt]

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[Chris]

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[Matt]

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[Chris]

Listen to leading by example executives making an impact on the iHeartRadio app, Apple.

[Matt]

Podcasts, or wherever you get your podcasts.