Ask HTM – Mortgage Payoff Loophole, DAFs to Maximize Tax Deductions, and Legally Evading a Medical Bill #1069

Summary

How to Money – Episode #1069 Summary

Episode Title: Ask HTM – Mortgage Payoff Loophole, DAFs to Maximize Tax Deductions, and Legally Evading a Medical Bill
Podcast: How to Money (iHeartPodcasts)
Hosts: Joel and Matt
Date: December 1, 2025

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Episode Overview

In this engaging and information-packed listener Q&A episode, Joel and Matt address a variety of personal finance questions—ranging from the so-called "mortgage payoff loophole" (velocity banking), maximizing tax deductions with donor-advised funds (DAFs), and legally minimizing or potentially avoiding medical bills. The hosts retain their trademark friendly banter and accessible language, making even complex financial strategies easy to understand.

Other topics include selecting retirement accounts with a pension, single-parent life insurance decisions, and practical tips on handling debts and charitable giving. The episode is rich with actionable advice and memorable quotes, ideal for anyone looking to optimize their personal finances in realistic, effective ways.

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Key Discussion Points & Insights

1. Industry News: The Demise of Rad Power Bikes

Timestamps: 03:08–07:07

• Joel laments the imminent closure of Rad Power Bikes, highlighting the changing economics post-pandemic for e-bike companies.
• Matt mentions the shift in demand and increasing competition, noting challenges from overseas manufacturers.
• Practical advice for listeners: Be cautious when buying from companies at risk of going out of business, especially if their products require specialized parts or warranty support.

Notable Quote:

"One good thing worth telling people is to think twice before you buy a bike from a manufacturer that might go out of business." – Joel (05:24)

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2. Listener Question: Mortgage Payoff Loophole & Velocity Banking

Timestamps: 07:39–18:19
Question from: Brock, Western Illinois

• Brock asks about velocity banking: using a HELOC to pay down a mortgage faster by juggling low-interest debts.
• Matt and Joel explain the hype around velocity banking and break down its pitfalls and overcomplications.
• Key takeaway: For most, simply making regular extra payments toward the mortgage principal is just as effective—and less risky—than velocity banking.
• The hosts caution against prioritizing early mortgage payoff over other financial goals (like retirement savings), especially with reasonably low fixed rates.
• Liquidity is highlighted as an undervalued asset in personal finance.

Notable Quotes:

"The secret sauce to velocity banking is making regular extra payments. And that is something that you could do if you're so inclined." — Matt (13:49)
"It just doesn't fit into our framework of prioritizing financial goals correctly." — Joel (16:06)
"Liquidity is just an underrated thing in personal finance." — Joel (18:19)

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3. Listener Question: Donor Advised Funds (DAFs) & Tax Deductions

Timestamps: 21:35–32:16
Question from: Austin, Alabama

• Austin wants to know if investment gains within a DAF offer additional tax deductions and seeks general guidance.
• Matt and Joel praise DAFs for making charitable giving easier and more tax-efficient, particularly Daffy, which boasts lower fees than Fidelity or Vanguard.
• The key tax insight: Your deduction is based on the contribution amount in the year you donate to the DAF—not any gains realized in the DAF thereafter.
• DAFs streamline tax receipts for donations and allow for appreciated asset gifting to further improve tax efficiency.
• There’s a philosophical discussion about the pros and cons of letting charitable dollars grow in a DAF versus distributing promptly to meet immediate needs.

Notable Quotes:

"You only get that tax donation based on what you initially put in." — Matt (26:11)
"Donating appreciated assets outside of retirement accounts is better than giving straight from the bank account." — Matt (31:19)
"I like the idea of putting money in my DAF to give it this year and next year, and also growing some of it for future giving." — Joel (29:26)

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4. Listener Question: Retirement Account Prioritization with a Pension

Timestamps: 32:27–41:58
Question from: Matt from Scranton, PA

• Matt (listener) asks whether to contribute more to a Roth IRA, a 457 plan (traditional or Roth), in addition to a state pension.
• The hosts advise prioritizing the Roth IRA at a low-cost brokerage (like Fidelity) for maximum control and lower fees, unless the workplace plan offers a strong match (which, in this case, it does not).
• After maxing the Roth IRA ($7,000–$7,500 per year), excess should be contributed to the 457.
• They discuss the increasing accessibility of retirement accounts and the importance of slow, steady increases in savings rates.

Notable Quotes:

"Given the Roth IRA's greater level of flexibility, given the greater levels of control that you have, that's totally what we would be opting for here." — Matt (38:08)
"It's a fun money challenge to go after." — Joel (41:38)

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5. Listener Question: Paying Off Medical Debt—Should You Take the Discount?

Timestamps: 44:28–50:14
Question from: Drew, Richmond, VA

• Drew is offered a 30% discount on his remaining $1,037 medical bill if he pays it in a lump sum, but would need to use his emergency fund or a credit card.
• Matt and Joel recommend first checking if Drew qualifies for hospital financial aid or full/partial forgiveness, as hospitals often don’t proactively offer this.
• If not eligible, they suggest the discount is attractive—especially if Drew can replenish his emergency fund promptly. Using a credit card with a plan to pay it off before interest accrues (or leveraging a 0% promo card) could be justified.

Notable Quotes:

"The discount makes it pretty appetizing though, right? A 30% reduction in your bill is awesome." — Matt (48:39)
"If you can get it fully forgiven, that's the best. But yes, definitely take advantage of this discount." — Joel (49:05)

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6. Facebook Question of the Week: Single Mom & Life Insurance

Timestamps: 50:14–54:56
Question from: Anonymous

• A single mom is deciding if she should buy extra life insurance through her employer beyond a $100,000 company-provided policy, given her rental properties and retirement accounts.
• Matt advises for most healthy people, it's usually cheaper and more flexible to buy term coverage on the open market (e.g., Policygenius, Costco) rather than through an employer.
• Amount recommended: $500,000–$1,000,000 for 20 years (to match child’s dependent years), with a guardian—not the minor—listed as beneficiary.
• Revisit the beneficiary regularly to ensure it reflects current wishes and guardianship plans.

Notable Quotes:

"Many companies offer these small amounts...but it's best to shop for a policy on the open market." — Matt (50:55)
"Don't name your baby as the beneficiary of this life insurance policy. If you do, the court controls where that money goes." — Matt (54:33)

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7. Beer Review & Local Flavor

Timestamps: 54:59–57:52

• The hosts review Creature Comforts’ “Automatic IPA” (formerly “Automatic Pale Ale”), praising its approachable character and regional heritage.
• Matt shares backstory on local Athens, GA institution Weaver D’s—after which the beer is named.

Notable Quotes:

"It is luscious on the tongue, and I do appreciate that kind of voluminous feeling while simultaneously being radiant." — Joel (56:21)

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Memorable Moments & Quotes

• On Velocity Banking:

  "It makes it seem like the paid off mortgage is the most important financial goal to strive for...But going all in...would be what we would say is an over prioritization...It's trying to solve a problem that doesn't really exist." — Joel (15:07–16:14)

• On Donor Advised Funds:

  "Basically, what Robinhood did to investing is what Daffy did to charitable giving." — Matt (26:11)

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Important Timestamps

| Segment | Time Range | |-----------------------------------------|-------------| | Rad Power Bikes / Bike Industry Chat | 03:08–07:07 | | Velocity Banking (Mortgage Payoff) | 07:39–18:19 | | Donor Advised Funds / DAF Tax Q | 21:35–32:16 | | Retirement Accts & Pensions | 32:27–41:58 | | Medical Debt Repayment Strategies | 44:28–50:14 | | Life Insurance for Single Parent | 50:14–54:56 | | Beer Review / Local Athens Business | 54:59–57:52 |

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Language, Tone, & Style

Joel and Matt keep the tone breezy, personable, and conversational, often interspersing practical financial wisdom with relatable humor and friendly jabs. They avoid jargon, making complex topics digestible for all listeners—and always encourage balance and flexibility in personal finance decisions.

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Summary Takeaways

• Question bold claims: Many “shortcut” financial strategies aren’t worth their complexity.
• Prioritize liquidity and diversification: Don’t focus solely on debt payoff at the expense of flexibility and growth.
• Use tax advantages where you can: DAFs provide great, accessible ways to optimize charitable giving.
• Understand the fine print: With both insurance and debt repayment, always check eligibility, plan costs, and beneficiary implications.
• Celebrate steady progress: Building up your retirement savings is a marathon, not a sprint—mark your milestones.

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For those seeking jargon-free, actionable financial advice—with a sense of humor—this episode delivers on all fronts.

Transcript

[Matt]

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[Joel]

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[Matt]

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[Matt]

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[Austin]

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[Joel]

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[Joel]

Welcome to how to Money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're going to answer some of your listener questions.

[Matt]

That's Monday. You know what we're gonna do today? All that clockwork. If you are a new listener, welcome. We hope you enjoy the show. But this is where we do take listener questions. We're gonna talk about velocity banking. We've got a listener who's interested in paying down some debt. We're gonna talk about the easiest, the best, the most efficient way to give your dollars. That's right. We're gonna talk about donor advised funds, some of the ins and outs there. And then we're also gonna discuss some legal ways to pay less of your medical bill. So yeah, totally legal. We'll get to that more during our episode today.

[Joel]

Move to Antarctica. They can't reach you there.

[Matt]

Fake your death and hop on a plane.

[Joel]

That's right. But you get caught, then you're in trouble. So it's probably not worth it.

[Matt]

What's the, what's the group? The global international group. Interpol. Interpol comes after you. I was about to say it was named after a bit.

[Joel]

Do they go down to Antarctica?

[Matt]

Interpol?

[Joel]

I don't know.

[Matt]

I actually literally don't know what Interpol does, except I feel like it's some sort of global coordination when it comes to different law enforcement efforts.

[Joel]

It's a good rock and roll band too.

[Matt]

Yeah.

[Joel]

Yeah.

[Matt]

Are they still around?

[Joel]

I don't know. It's a good question.

[Matt]

Kind of got that drone droney voice.

[Joel]

Yeah. Yeah. Okay, before we get to Lister questions, Matt, I wanted to mention like, I wish I had like a grave marker or something. It looks like one of our, one of my favorite companies is about to not exist anymore. Rad Power Bikes.

[Matt]

Rad bikes.

[Joel]

I saw this. Yeah.

[Matt]

Pull one out for all of our homies over at Radio.

[Joel]

Yeah. So like the bikers biking and bike companies had a big run up in those early Covid days where everybody was like, ooh, let's bike. And so a lot of bike purchases were front loaded and these companies were like expanding their footprint and it seems like there's been a pullback in demand and some of the bike companies just haven't known how to deal with that. After having bumper years in for a couple of those years, the demand pullback, they're just like, ah, we're freaking out. And sadly, Rad Power Bikes, unless they get some sort of cash infusion is going to be toast in the next month or two.

[Matt]

The, it made sense when it made sense, you know, but I guess the, the, the economics don't. They're not maintaining the business.

[Joel]

Right.

[Matt]

Whether it's the increased demand that we had then maybe there's a decrease in demand. But also the whole supply side of things too.

[Joel]

Right.

[Matt]

Like given tariffs and when you are a company like Rad who's trying to compete, I think with some, the companies abroad who are making very affordable products like this, it's tough to kind of beat them at their own game.

[Joel]

Yeah. They live in that, what, thousand to $2,500 price point. Now some of these electric bike makers are making stuff and they're just shipping.

[Matt]

Them straight from the factory five, six.

[Joel]

Seven hundred dollar price range. And so rad's like ah, we can't, we can't roll with those profit margins.

[Matt]

It's tough to compete.

[Joel]

Yeah.

[Matt]

Which actually maybe so when I saw that article I hopped over and did some searching because I was curious if so I had a non e Bike, but it was a cargo bike. So you had the rad wagon which was an E cargo bike.

[Austin]

Still do.

[Matt]

Oh, that's right, yeah. You still still holding up?

[Joel]

Yeah, still great.

[Matt]

Serving you. Well, I sold mine sometime last year since we never no longer used it. But I looked up Yuba and I was happy to see that they're still in business. Although they did move their headquarters to Europe which doesn't seem like it aligns with market. I guess that made more sense for them too. I don't know. Who knows actually why they moved. I don't know. I just found that really fascinating.

[Joel]

I think. I think as far as rad power bikes, one maybe good or thing worth telling people is to think twice before you buy a bike from a manufacturer that might go out of business. Because I think the only way I would buy a bike from them at this point is if they had a massive kind of going out of business sale. And let's say the model that you're looking at, that's $1,200 is on sale for like six or seven hundred dollars, then I might be, I might be willing to do that. But especially some of the bikes that have proprietary gear, you might not be able to get that gear in the future. And so you have to think about.

[Matt]

That special add ons where it's just like oh no, this is a system that's going to be around. Right. Not to mention any sort of manufacturer's warranty that obviously they won't be able to uphold.

[Joel]

That's right. And I'm thinking about even if I needed something for my rad wagon, which I don't think anything right now, but it might not be a bad idea to buy a tire because they're specialty tires. Are they? Yeah. So like the tires or wheels? Well, I think the tire size is specific.

[Matt]

I bet you can find it from another manufacturer.

[Joel]

Yeah, maybe, maybe. But either way I'll do that ahead of time.

[Matt]

Yeah, either way. I would kind of look over it with a fine tooth comb and say what looks like it's about to break.

[Joel]

Yep, yep, exactly.

[Matt]

Maybe stock up on some. Yeah. Because if it's serving you well, man, with a few good parts, you know, they're stored away in the garage, I could continue to serve you for like another five, ten years.

[Joel]

Yeah.

[Matt]

Although at that point you're probably not going to be hauling kids.

[Joel]

No, probably not. So I enjoy it. I'll probably keep it around for another year or two and then sell it like you did with yours.

[Matt]

In your case, you're even taking the little dude to school, which is awesome. I told I so miss the ability to do that because our school's further. It's further out. But the glory days of piling like two or three kids on there at our old house and then right into the neighborhood biking to the local school. Great memories.

[Joel]

Best memories.

[Matt]

So good for sure.

[Joel]

I would pour out a beer, but we're gonna drink this one instead so.

[Matt]

But we don't waste good beer.

[Joel]

Sorry. This one is Automatic IPA by Creature Comforts. We'll give our thoughts on this one at the end of the episode. Let's get to listener questions. And by the way, if you have a question, go to howtomoney.com ask or just record your money question on the voice memo app of your phone. Email it over to us. Howtomoneypodmail.com is that email address. Matt let's take a weird question about like unique way of thinking about debt payoff.

[Brock]

Hi Matt and Joel Brock from Western Illinois, longtime listener, first time caller. I've always wanted to say that on your October 13 episode you said you wanted some weird questions. I think I have one. I'm just over two years into a new mortgage and I'm looking for ways to trim debt. I ran across something called velocity banking, which seems to be a way to leverage low interest debt to pay ahead against the amortization schedule and cut much of the front end interest. This seems very risky with high interest debt, but it seems like it could work with something like a low interest heloc. Is this a legitimate strategy or is it wishful thinking? Thanks for the hours upon hours of informational entertainment.

[Matt]

Informational entertainment. Joel, I don't think there could be any higher compliment paid to what we do here on the podcast.

[Joel]

Infotainment. That's what I was going to say.

[Matt]

Infotainment. That's like exactly what we're seeking after here. We want you to be able to go home with some practical knowledge and advice. Perhaps. But also we kind of want to make you smile, so. Right. Like we want to be able to provide value on both fronts.

[Joel]

Yeah. If we don't make you laugh or smile, then we're also not doing our job. Yeah. Gotta be both.

[Matt]

It's a high standard that we hold here. How to Money Headquarters.

[Joel]

That's right. Well, and I love weird questions. I will say, Brock, you can go even weirder next time if you want to, but this is weird. This is weird on the, on the weird side of finance. And so love that you're asking a question. I Think we've taken this one on the show a time or two, but it's been quite a while. And this is one of those strategies that draws a lot of eyeballs, especially on certain corners of the Internet. I think it's because the promises are lofty. You can pay off your mortgage in five to seven years instead of 30 years. For a lot of people, they see that and they are smitten. That's enough to catch anyone's attention. But the truth is, if mortgage payoff is by far your most important financial goal, yeah, it is possible for this to mathematically help. But should that be your most important financial goal? It's also just not nearly as helpful as a lot of influencers make it sound. The pitfalls of the velocity banking, I believe it goes by other names as well. But the pitfalls of that strategy can be many and they can actually, I think, push you in a direction of trying to win in one aspect of your personal finances while losing in others.

[Matt]

I do love that Brock, that you want to trim some debts. And our answer since the beginning of time basically is to not pay down your mortgage more quickly than you need to.

[Joel]

Were you around at the beginning of time, Matt?

[Matt]

Yes, since the beginning of mortgages I was there and I certainly still feel that way. For listeners who have a locked in mortgage, let's say in like the 2 to 4, 4 and a half percent range, why would you pay it off early when there are so many better things that you could do with that money? But you said you bought your home two years ago, meaning that you don't have one of those cozy all time low rates. But still, I think I would ask you to think about whether there are more productive things that you could do with your funds, right? Like do you have any other debts that you might want to prioritize first? And refer to the Money Gears as well because I would love to know where you are on the Money Gear spectrum. Like what gear are you? Is it one we were just talking about rad bikes. Like maybe you are on easist. Oh, what if we should. We should build in an E assist into the Money Gear is a genie.

[Joel]

For your Money Gears.

[Matt]

What would that look like?

[Joel]

An inheritance, right? Or you're like oh, you just bumped up two Money Gears.

[Matt]

Yeah, exactly. Maybe that could be it. But for instance, if you are in the final Money Gear Money year seven, I think taking some extra income that you have to pay down this mortgage, it's, it's a more reasonable decision and more of a step that we could get behind as opposed to maybe let's say you were in a scenario where, where you weren't fully funding your retirement accounts, where you were carrying some additional higher rate debt. We would want you to certainly prioritize that first.

[Joel]

Let's also just briefly mentioned that refinancing debt as rates go down could be a smarter move. Maybe not like today, but maybe if you're looking around at your credit union and you're seeing I'm in the upper 6s or low 7s or something like that, because when I took my mortgage out two years ago, my credit union is offering something in the low 5% which we have seen on certain mortgage products. Maybe that is a better way to save on interest that you're paying towards your mortgage debt than to just try this, this velocity banking route in order to pay it off as quickly as possible. Let's maybe talk specifically about this strategy. It's touted as this way to pay off your mortgage more quickly through the use of a home equity line of credit. The strategy. It might make a little sense if your HELOC rate was lower than your mortgage rate. But HELOC rates aren't great right now. Matt.

[Matt]

It's been quite a while since that's been the case.

[Joel]

Yeah. And so I'm seeing. And that's why I think this has actually lost a lot of popularity. And I'm actually surprised Brock saw something about this because it's lost some luster as HELOC rates have risen. I'm guessing if you're looking around at a HELOC right now, you're probably going to be quoted a rate in the upper 7s, low 8s probably. I'd imagine your mortgage rate is lower than that. If you somehow had a HELOC with a much lower rate, it would potentially tilt things in favor of attempting this strategy. But even still, we'd probably avoid it. While rates have been slowly declining, it could make the strategy more appealing as HELOC rates decline even more. But they're just not guaranteed to keep going down, especially with inflation remaining a problem. Matt, I think it's been assumed that mortgage rates are going to go back down, back into that 3%, 4% range on mortgages and potentially those HELOCs as well. I'm just waiting it out. Then I'll take advantage of that low interest debt again. But people who are like banking on that, assuming that that's coming to pass, I think you're looking more to recent history than you are to kind of a broader timeline.

[Matt]

Yeah. Counting your chickens before they hatch. Yeah. Ultimately velocity banking, it adds that complexity. It does not offer superior results. And I mean, honestly, many folks just don't have the time or the interest to really make the velocity banking strategy pay off. And then not committing all the way.

[Joel]

Right.

[Matt]

Like say you try it out, you kind of fall off the wagon. It could then end up causing you more harm just down the road as your debt than balloons. And truly the secret sauce to velocity banking is making regular extra payments. And that is something that you could do if you're so inclined. And that would be a better approach just to leave out the velocity part of it altogether. But either way you've got to be disciplined. I mean you could, you could automate those extra payments so you don't forget. But even just paying two extra payments a year could knock off something. I think it's like five to six years from your overall loan length on a 30 year mortgage. But oftentimes when you see these pitches or you're watching these videos online, it's not a fair comparison. It's not apples to apples. And oftentimes what they compare is a mortgage where you're making regular payments as scheduled on time and then you're doing the velocity banking which oh, happens to include these additional payments and they're like, oh yeah, you're going to completely eliminate this 30 year mortgage in seven years it's going to be gone. But that's not, that's not at all fair. There should be a, yeah, there should be an intermediate mediary example there too where it's just like, oh, and here's somebody who makes three extra payments every single year to their mortgage. And I don't know what that would put you around, but you can knock out a 30 year maybe in like 21 years.

[Joel]

Probably, yeah, probably 20, 21 years would be my guess, something like that if you're making three additional payments. And so that would be more of like an apples to apples comparison with what velocity banking is trying to accomplish. And velocity banking, it makes it seem like the paid off mortgage is the most important financial goal to strive for. And it is a solid goal and it's one that's worth working steadily towards, depending again on your rate and your other financial goals. But going all in in that pursuit would be what we would say is an over prioritization of what for many people is a lower ranking financial goal. There's just a bunch of other things they want to accomplish before they go hog wild to try to pay off their mortg in as little time as possible. And so I just think it's trying to over optimize. It's trying to solve a problem that doesn't really exist. And it's just, it's an overly complicated way to potentially save a few bucks on interest. It just doesn't fit into our framework of prioritizing financial goals correctly. And if you are again, like you're alluded to, Matt, if you're far along on Money Gear 7 and you're like, I got nothing else to do with this money, I'm maxing out all the accounts.

[Matt]

Guys, if you have tons of cash, go for it.

[Joel]

I'm close fire and I just need to get rid of this mortgage. And then, guys, I'm debt free and I'm fully stocked for retirement. Kudos, go for it. But even then, like, do you need to go the velocity banking route and jump through the HELOC hoops, or can you just start making extra payments towards principal every single month or making full extra payments however many times a year you want to do that in order to eradicate that debt in short order?

[Matt]

Totally, yeah. For the most part. This is why we think mortgages are pretty solid products because they allow you to strive after multiple goals at the same time. And that's one of the downsides. That's why, like if you were to try to save up for a home in cash, guess what that's going to say? It's going to take you like 20, 30 years probably to save up enough money. All the while you're missing out on all the other things that you want to be able to do with your money. So the same is true in reverse as well. If you already have the mortgage, why would you eliminate this more sooner than you needed to, assuming you've got other goals that you want to want to achieve?

[Joel]

I think some people might say, oh, it makes it sound like we love debt. And it's like, keep your mortgage debt around as long as possible. It's not because we love mortgage debt in and of itself. It's because we highly value other goals. And when you're talking about optimizing your finances, being able to take advantage of Roth IRA contributions and maxing out that account, being able to take full advantage of your employer match in your retirement account there, and saving and investing for other goals you might have, if your mortgage is reasonable, then you can do both at the same time.

[Matt]

Yeah, future goals too. Because right now, Brock, you're probably thinking, well, no, there's not anything else I want to do. With my money. But just wait a year or two. Like, there's always different things that come up, different goals that you might like, different places you want to go, different organizations you want to give to, different businesses you might want to start. There are goals that you don't have right now that I guarantee you're going to have in like four or five years. And you're going to think, man, I kind of wish I had the money on hand to be able to do that without taking out a business loan or something that maybe you would feel a little more inclined to take on. Or it might even be an opportunity that passes you by because you don't have the wiggle room within your budget to be able to pull something like that off. So it gives you options.

[Joel]

Liquidity is just an underrated thing in personal finance. And if that liquidity isn't costing you a lot of money because you're getting paid pretty well in your high yield savings accounts and you're investing for your future and your mortgage rates not all that bad. I value liquidity. I think it's important. That's right. All right, Matt, we got more questions to get to, including order of operations for retirement accounts. We'll talk about charitable giving as well. We'll get to that and more right after.

[Matt]

You probably think it's too soon to join aarp, right? Well, let's take a minute to talk about it. Where do you see yourself in 15 years? More specifically your career, your health, your social life? What are you doing now to help you to get there? Well, there are tons of ways for you to start preparing today for your future with aarp.

[Joel]

What about that dream job you've dreamt about? Sign up for AARP reskilling courses to help make it a reality. How about that active lifestyle you've only spoken about from the couch? AARP has health tips and wellness tools to keep you moving for years to come. But none of these experiences are without making friends along the way. Connect with your community through AARP volunteer events.

[Matt]

So it's safe to say it's never too soon to join aarp. They're here to help your money, your health and happiness live as long as you do. That's why the younger you are, the more you need AARP. Learn more at aarp.org wisefriend the only.

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[Joel]

All.

[Matt]

Right buddy, we are back from the break. We're going to hear from a listener who has one of those rare pensions out there, but it's not enough he wants to invest more. We'll get to that one here in a second, but first let's hear from a listener who's looking to be a bit more charitable with his dollars.

[Austin]

Hey guys, this is Austin from Alabama. I'm not sure if you've done a deep dive episode on donor advised funds, but I have a couple of questions about them if you can point me in the right direction. I've looked at both DAFI and Fidelity Charitable and both seem to offer good investment options. It seems like you don't lose any value of your tax deduction if the investments within the fund lose value, but do you gain extra tax deduction benefits if the value of the investments grow past what they were when you initially made the donation to the account. I know the charity you donate to gets the benefit of growth with a hopefully lesser initial donation to the account. Just not sure if you, the customer also get extra tax deduction benefits from the gains of the investments. Hope you have a good day. Thanks.

[Joel]

Austin wants all the tax deductions, Matt. Give them all to me.

[Matt]

Yeah, he's like deduct my income more. This thing's gone up.

[Joel]

Well, and yeah, we'll get all into your specific question, Austin, but also just kind of we'll talk generically about donor advised Funds as well, because we are, I think over the past few years, you and I have come around more and more and more on these donor advised funds for many reasons that we'll get into in the answer to this question. And I don't remember actually if we've done a full episode on it. I know we've done ones about charitable giving. And so Donor Advised Fund certainly made a big contribution to those episodes.

[Matt]

And when we talked to Adam Nash, we spent a good amount of time. We'll link to that episode in the show Notes for this episode as well. But we talked about donor advice funds as well.

[Joel]

The CEO of our favorite one.

[Matt]

Well, so speaking of Daffy.org voicesforgood tomorrow. Okay, so. Oh, I should specifically say December 2nd is the last day to donate to the how to money charities. We're going head to head with a bunch of other.

[Joel]

And we're also matching pockets, your donations if you like to give, but you also like it.

[Matt]

We're putting our money where our mouth is.

[Joel]

Force us to give simultaneously.

[Matt]

And our mouths are in your ears.

[Joel]

That's right. That's right.

[Matt]

Which means. Does that mean we're putting our money in your ears now?

[Joel]

Yeah, something like that.

[Matt]

Is that a literal translation?

[Joel]

I think it works like that. But yeah, we'd love it if you would partner with us in giving to some of our favorite nonprofits and kind of doubling the effect while also out.

[Matt]

Giving some of the other iHeart podcasts out there who are perfectly fine, some decent shows, but I would love for us to be able to whip them.

[Joel]

Agreed. Me too. So, okay, he mentioned two great options, right? Was it Daffy and Fidelity that he mentioned specifically in the question? Vanguard's also good. Some of the best low cost choices for donor advised funds. If you're like, where do I go to open one? We'll tell you why we would consider a donor advised fund too in a second. We think of all those three. You typically hear us when we're talking about investing. Fidelity and Vanguard are the ones we talk about all the time. They're the best of the bunch. They're incredibly low cost. But when it comes to donor advised funds, actually somebody has beaten them and that is Daffy.

[Matt]

So Cha Ching.

[Joel]

Kind of crazy to think that, like Vanguard and Fidelity are not the best in this space at least. So Daffy has Fees. And we actually wrote an article on our website about Daffy then. And when we're looking at the data.

[Matt]

We will link to that as well.

[Joel]

Yeah, something like 13 times lower fees depending on your account balance. Like it could be more or less if you go with Daffy versus Vanguard and Fidelity. Vanguard and Fidelity, while they're awesome for low cost investment choices, their fees on donor advised funds are still higher. They're less than most of the rest of the donor advised fund space.

[Matt]

But these, it's a different. It's a completely different fee structure though as well. Right. Because I mean, as far as the last time I checked, they charge like a more of an assets under management sort of approach.

[Joel]

So it's like 0.6% or something.

[Matt]

Yeah, 0.5.6% which, that's what's so great about Daffy is just like a flat fee. Oh, I love the simplicity of a flat fee, dude.

[Joel]

Three bucks a month. And the underlying investments are incredibly low cost as well. Oh, and by the way, they're saying.

[Matt]

Zero structure, 3% expense ratio on the total stock. I actually checked that recently.

[Joel]

And if you care about site infrastructure, an app that makes it easy to donate and like gamifies the whole process. Daffy does a great job at that too. And donor advised funds, Matt, they really used to be for rich folks. And Vanguard and Fidelity, they lowered the cost some, but they're just, they're not anymore. That was one of the biggest hurdles to using donor advised funds was like, well, the fee's probably not going to outweigh it. For small time donors like normal average people who listen to how to money, it's like, yeah, I want to donate maybe hundreds, thousands of dollars in a year, but I'm not donating like six figures. That was typically what made sense back in the way donor advised funds used to be structured. But Daffy has really changed that. Now it's widely accessible to everyone listening.

[Matt]

Totally. Basically, what Robinhood did to investing is what Daffy did to charitable giving with donor advised funds. He's asking though whether or not he gets an extra tax benefit. Now if your investment grows inside of your donor advised fund and then you donate from that increased amount, that doesn't matter when it comes to the deduction that you get in the year that you donate to that donor advised fund, you only get that tax donation based on what you initially put in. So let's say you put in $10,000 and it grows to $12,000 and then you give away that full $12,000. You're still only getting a $10,000 tax deduction. So that's just, that's basically how that works. Essentially. This, maybe this is helpful, a helpful way to think about it. A donor advised fund is managed by 501c3 itself. And so you are making a contribution to that organization. That's why you get the tax deduction in that year. It's just that they then get to hang on to your funds and they, you advise as to where those dollars go. They're sort of like a middleman.

[Joel]

Yeah.

[Matt]

The money is sitting there. You get to decide where it is. You want to send that at a later date.

[Joel]

That's right. Yeah. The interesting thing is, Matt, like you mentioned, the growth of the fund and people slice this up all sorts of different ways. You can give 10,000 in the year 2025 and not donate a dime from your donor advised fund until 2035. You might have $25,000 in that account at that point. You still, you got the deduction in the year that you put the $10,000 in though, and there is no additional tax deduction based on the growth of that fund, based on the growth or.

[Matt]

The later giving as to where it.

[Joel]

Is you allot those funds. That is one of the really cool things about donor advised funds. But it also is one of the potential downsides that people have discussed as well that it can lead to people taking that, oh, I want to grow this nest egg for future giving, but not actually giving those dollars for many years or potentially decades. Some people see that as a downside. I tend to agree. I have a both and approach. I like the idea of putting money in my donor advised fund to give it this year and next year and then also growing some of that for future bigger contributions I want to make down the road.

[Matt]

Yeah, it is, it is something that I'm personally wrestling with as well. The fact that there's a part of me that knows that any dollar I hang on to now is not going to an organization that then allows them to do good with that money.

[Joel]

Yeah.

[Matt]

And I think it's something like $250 billion that is currently sitting in donor advised funds that there are a lot of nonprofits who are saying, oh my gosh, it'd be nice if we could get our hands on just a little portion of some of those dollars. I think that's in the US and so while yes, it's a good thing that it gets some of those dollars, those taxable dollars out of your tax return essentially as an individual. And while it's I guess good that you don't have to decide right then and there where all that money's going to go. The deferral of that decision making process can lead to that money just sitting there and amassing into this like giant 501 nest egg. You know, like it still kinda almost feels like a retirement account. Like I think it would be easy for a lot of how money listeners to enter into that. Oh, I need to grow this as large as possible while not looking at the immediate need in the world today.

[Joel]

100%.

[Matt]

Yeah.

[Joel]

And that's why I really like the idea of doing both. I think of both mostly as a way to streamline my giving, which I think it's an underrated perk of the donor advice fund is that you minimize your paperwork. Right? It's.

[Matt]

Oh, it's so easy.

[Joel]

Yes.

[Matt]

I mean I love that.

[Joel]

And that is like truly one of the coolest is instead of getting a tax receipt from every single nonprofit that you donate directly to, all your giving is funneled through one specific channel, through your donor advised fund. And so you don't have to keep up with all those year end receipts, everything is in one place. If you have a donor advised fund and you use it as your central giving hub and it just makes tax time so much easier. That was one of those things where I was like, yeah, maybe that'll be a nice perk. But it's been one of my favorite things.

[Matt]

It's so nice if you are itemizing your deductions to not have to wait on all of those charitable receipts to come in when you're getting all your documents together. It puts a smile on my face to know that like here it is, right? This one PDF has all that information, not having to hunt and peck for all of it. In addition to that though, let's mention too the fact that you can donate appreciated assets in order to avoid taxation as well. So for instance, let's say some of your investments have soared in value. Well, you could make donations of those inflated assets from your taxable brokerage account. That way you don't have to sell those securities and you don't have to pay tax on that gain. You don't have to pay capital gains. And then you're getting a bigger tax break for the donation because of that increased value as well. So I think for a lot of folks it's a better idea to donate appreciated assets that are outside of any retirement accounts than to just donate money from your bank account. Because then if you want to say Replenish the balance that you had there within that taxable brokerage. Well then invest those dollars. But you are certainly going to come out ahead from a tax standpoint by donating appreciated assets.

[Joel]

Yeah. So not. You're not paying the capital gains tax and you're also getting the tax deduction for the donation you made, which is kind of beautiful tax planning on two fronts. And I've done that, Matt. I did donated some bitcoins that I had in my Robinhood account. Yeah.

[Matt]

And so bitcoin did a little bit of Ethereum earlier this year.

[Joel]

Back when, back when like big crypto was essentially at ridiculous all time highs. I was like, well, I have more exposure than I want in this. And so the perfect way to get rid of some is to donate it, put it into my donor advised fund. And that was, that's a great way to kind of avoid some taxation. I didn't want to like sell it to rebalance, but giving it away to my donor advised fund and avoiding tax in that way and putting more money towards giving it was like, that's a win, win.

[Matt]

That's how you do it.

[Joel]

It's really cool. And Robinhood and Daffy also work really well together. They make it pretty seamless, especially on the crypto. Yeah. On the crypto front I'm hoping, I'm hoping they get better at the single stock donation front.

[Matt]

I agree.

[Joel]

From Robinhood or Daffy. That would be like, that's on my Christmas wish list. All right, let's get to another question. This one is specifically about order of operations for retirement accounts.

[Matt from Scranton]

Hi, Matt and Joel. My name is also Matt. I am from Scranton, Pennsylvania. I had a question about retirement accounts. Right now I contribute to a pension. I contribute about 6.25% of my pay to the pension. I also have been contributing to $50, $150 a month to a Roth IRA to Fidelity. My employer does offer a deferred compensation plan or 457. It's both the Traditional and the Roth 457. I can never understand the difference between a Roth IRA and the 457. Am I better off contributing to the Roth IRA through fidelity or either the Traditional or Roth 457 which my employer offers? If this information does matter. I just turned 40 years old. I work through state government. I've been working for the state for approximately 10 years. Right now, I don't currently have the funds to contribute more than $150 a month. But I do plan on contributing more in the future as I do realize I am a little bit behind in retirement savings. Thank you for everything you do and I really enjoy the show. Thanks a lot.

[Joel]

All right, Joel.

[Matt]

So Matt from Scranton. Is that what he said? He's from Scranton.

[Joel]

He said his name was also Matt.

[Matt]

He said he's also Matt and he also said he's 40 years old, which makes total sense because that's when we were all born in the 80s. Man.

[Joel]

So many 40 year old Matt's.

[Matt]

That was peak Matt.

[Joel]

I know way too many matts in.

[Matt]

The 80s and it's. I'm pretty sure it's been downhill ever since then. Yeah. But still a great name.

[Joel]

Have you thought about changing your name just because it's so widely used?

[Matt]

Matthew is great.

[Joel]

Matty.

[Matt]

Matty. There's a lot of alt mix. That's why I went by alt mix so often as a kid growing up.

[Joel]

People call you by your last name.

[Matt]

Yeah.

[Joel]

It sounds like Matt's making a lot of progress on investing for retirement. He's got the pension that he's funding. He wants to do more. On top of that, pensions are great, but most of our listeners are probably like what's a pension? Or I remember those things existed, but I never had one offered to me. I actually did have one offered briefly for a few years and was able to.

[Matt]

When you're working for the state penitentiary.

[Joel]

That's right.

[Matt]

That's right. No, I'm kidding.

[Joel]

I wish. What an interesting job. But yeah.

[Matt]

Did you see the article a couple weeks ago about the rise in some of those.

[Joel]

Oh yes.

[Matt]

Like state pen. Maybe that's why that's on my mind.

[Joel]

So cubicle jobs are declining. More people are going to just trying.

[Matt]

To find something to do. So jobs that were normally less prestigious, less glamorous are getting a ton of applications. Like applications for those gigs are way up.

[Joel]

I even saw recycling centers being one of them. And I met a guy the other day who runs a recycling center. No way. He. His son's on my son's basketball team and that dude has some stories. Let me tell you that. Some stories. I was like, you should start a podcast. I will listen to everything.

[Matt]

Okay, Small, I'll continue the tangent before we get on with answering the question, but I was talking to again. Yeah. Similarly, a fellow dad from school and he is an insurance claim investigator for. And he's looking out for false or fake fraudulent claims. Whether it's home. Like his big thing was are fires. He's like a fire investigator. And so whether it's like vehicle fires, he's like, those are really pretty sketchy because you don't want to, like, touch anything while you're in there and try to figure it out. But he's like, at homes there, it's the most fascinating. I'm like, oh, how. How can you always tell? He's just like. One of the big giveaways is that you can see where the family photos were, but then they've pulled them because that's not something that a lot of times families can replace. And so that's oftentimes a sign that it was an intentional fire that was started and they're trying to take the claim, the insurance claim isn't that fascinating. But yeah, he was relaying a bunch.

[Joel]

Of stories to you.

[Matt]

I'm just like, man, there is so much that you've learned over the years.

[Joel]

Makes me think that Mike Rowe, instead of like dirty jobs, he should just do like an interesting jobs podcast. Right?

[Matt]

Because there's fascinating jobs.

[Joel]

So many people have interesting jobs and I would love to hear more about what they do because, yeah, they're probably more interesting than our job. People think podcasting is like this really interesting job.

[Matt]

Yeah, it is interesting.

[Joel]

It's fun, but I wouldn't super fun. I don't know how interesting it is.

[Matt]

I guess the interest comes from. This is why we take listener questions. The interest comes from hearing from listeners in their unique situations. Honestly like that, to me, that's where all the fascination lives.

[Joel]

But, Matt, can I say one more thing real quick about the pension?

[Matt]

Go for it.

[Joel]

I just want everybody out there listening who has a pension to know that.

[Matt]

That's right.

[Joel]

Yeah, that's typically not. Well, that's also just typically not enough. Like, even when I was working at the job where I had the pension, I knew it wasn't going to be enough to fund whatever lifestyle I wanted in the future. And so investing in addition to the pension, teachers often fall prey to this. We talked about this with Dan from 403. B wise teachers have the ability to retire in style if they're taking the both and approach. I just want to put that out there to everybody who has a pension. It's great. It's an awesome first step. And not everyone has that. But you need to do more than just the pension.

[Matt]

Yes, one of the legs of that retirement stool. But I'm glad that mat Matt from Scranton that he is looking to the Roth ira, that's almost always going to be the best next account to prioritize. And part of the reason is that you get to choose the brokerage that you're going to do business with. We always talk about Fidelity. They keep costs incredibly, incredibly low. But let's say like you're kind of comparing and contrasting 457s and Roth IRAs. Well, that 457 through your work. Who is that with? Well, I'm not sure. Like you might have access to some of those super low cost ETFs. But on the other hand, maybe those expense ratios, they could be a good bit higher.

[Odoo Advertiser]

Right.

[Matt]

Like you could be paying instead of zero. Like some Fidelity funds, you could pay zero. Like, yeah, literally zero. Not. This isn't hyperbole. You could be paying anything higher than that is infinitely more. Right. So given the Roth IRA's greater level of flexibility, given the greater levels of control that you have, that's totally what we would be opting for here.

[Joel]

And that's also because Matt that didn't mention having a match in his 457. Right.

[Matt]

So yet another reason we'd probably change.

[Joel]

Our minds if your employer were to offer a match in addition to the pension, but a match for the 457 contributions. Because even if the expenses were high, the match would overcome that downside. Yeah, the 457, it's akin to a 401. Right? It is made available to you as an employee. The Roth ira though, is available to anyone under the income threshold. So once you start making too much money, then you can't contribute to a Roth IRA anymore. And then if that were the case, you'd go straight to the 457. But it also has higher contribution limits, similar to a 401 where you can sock in, was it $23,500 this year, I believe. But yeah, they also have similar to those traditional retirement accounts, workplace retirement accounts, slightly tighter rules around withdrawals. Although the 457 is typically better than a 401. And so if you were to separate from your employer, the funds are much more easily accessible than a 401k. But still, the Roth is the most flexible, the easiest. But yeah, you might want to get to eventually filling up both would be great.

[Matt]

That's right. Yeah. And he did mention that his 457 comes in the Roth flavor as well. You get your traditional, but then you got the Roth. And depending on the specifics, they can make a whole lot of sense. But again, given the fact that we are not sure some of the particulars, given your 457. With that in mind, I think it's a good idea to stick with your Roth IRA there at Fidelity. And I do think the 457 makes sense after you've maxed out your Roth IRA first. So you're looking at $7,000 for 2025. That increases bumps up to $7,500 next year. So the goal would be to fill that Roth IRA bucket up first and then move back to contributing to the 457,000. I think it'd be a great goal if you hit something like 15% of your overall savings rate in the future, but just slowly but steadily increasing that amount. And my guess is, honestly, I think you will be contributing to the pension you'll be fully funding. I'm sure the pension that's required. Right. Like he's saying. He said 6.5% that comes directly out of the paycheck. But fully funding your Roth IRA voluntarily, but then also voluntarily sticking even more money into, into the 457 as well. I think that's going to set Matt in the Matt from Scranton is going to put him in the catbird seat when it comes to retirement.

[Joel]

It's nice to have those next goals. Like I still remember when I was starting out investing and it was like, oh, I was told, oh, maxing out the Roth IRA is the next goal. And I was like, that's going to take me a while. Like I don't know when I'm going to get there. And finally hitting that point just feels like this momentous occasion. And then you're like, oh, now, now there's another bucket to fill beyond the 401k match for me. Then it was like, let me put more of that. Maybe I can get up to 10% of my income in the 401k. Can I even keep bumping that up? And so it feels like this game where you're just kind of continually challenging yourself to do more. And so I look back on those days with fondness. It's a fun money challenge to go after. And I think Matt's going to, I don't know, I think he's going to make a lot of rapid progress on that.

[Matt]

Totally agree, but we've got more to get to a couple additional listeners, including we're going to hear from a long time friend of the show. We'll get to him. And one more right after this. You probably think it's too soon to join aarp, right? Well, let's take a minute to talk about it. Where do you see yourself in 15 years? More specifically your career, your health, your social life? What are you doing now to help you to get there. Well, there are tons of ways for you to start preparing today for your future with aarp.

[Joel]

What about that dream job you've dreamt about? Sign up for AARP reskilling courses to help make it a reality. How about that active lifestyle you've only spoken about from the couch? AARP has health tips and wellness tools to keep you moving for years to come, but none of these experiences are without making friends along the way. Connect with your community through AARP volunteer.

[Matt]

Events, so it's safe to say it's never too soon to join aarp. They're here to help your money, your health and happiness live as long as you do. That's why the younger you are, the more you need AARP. Learn more at aarp.org wisefriend the only.

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[Odoo Advertiser]

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[Matt]

All.

[Joel]

Right Matt, we're back. Got more money questions to get to. Let's take a question now specifically about paying off the medical bill.

[Drew]

Hey Joel and Matt, this is Drew from Richmond, Virginia and move to improve. Hope you guys are doing well. So I have a medical debt question. I, after negotiating, trying to get the price down for a while, still ended up with a medical bill this year of about 1500 bucks. And they put me on a payment plan with zero interest. So that's good. You know, best case scenario, it's about 150 bucks a month. And I've been paying that for a few months now. But then this month I got a letter in the mail that said to call them, and if I pay by the end of the year in one lump sum, they'll give me a 30% discount on the remaining balance. So there's about 1,037 bucks left on it, which means it would be around $725 if I paid it in a lump sum this month. I don't really have the cash at the moment to cover that unless I pull from my emergency fund or maybe take on a little credit card debt to pay that. And I know that's not ideal, but I was asking if you guys could help me figure out if it would be worth it. I had some emergencies the past year or two, so my emergency fund is only about a month or two. So, yeah, I wanted to hear you guys thoughts. Is it worth it to just try and pay it all off this month and then be done with it? Get a 30% discount? Or should I just keep paying 150 bucks a month for the next several months until it's paid off? Thanks, guys.

[Matt]

That's right. So this is Drew, and he mentioned move to improve his. His newsletter. And I think in his last newsletter he actually mentioned the fact that he'd gotten laid off. So I'm not sure. I think he might be focusing his efforts elsewhere.

[Joel]

Yeah.

[Matt]

As he's trying to maybe.

[Joel]

Or at least he's on hiatus, which his news are so good like.

[Matt]

So I really, I really enjoyed it.

[Joel]

We will put a link to it.

[Matt]

In the show notes even. Yeah, let's. Let's get a bunch of subscribers because that'll give him more options down the road. And maybe he'll be like, oh, I do want to fire it back.

[Joel]

It's one of those really like, accessible fitness newsletters. So Because I don't think of myself as like a fitness freak or anything like that, but it's helpful information that I don't want to go full Andrew Huberman, But a nice newsletter that breaks down some of those concepts, I appreciate totally. All right, well, let's get to the heart of this question. I mean, the answer partially hinges on whether or not, you might be able to get forgiveness for this debt. He didn't mention anything about that, but I think it's worth noting and checking into, because, yeah, you've been granted a zero percent payment plan, which is nice, but I would look up the financial aid eligibility rules because, Drew, you might find that depending on your income, you qualify for more than just a helpful payment plan. But you might qualify for full forgiveness. And your provider, they're not always going to tell you, hey, what do you make? Oh, guess what? You actually qualify for full forgiveness on that debt because you don't make enough. You make. So What? It's usually four times the poverty line is off 200%. Yeah, that's. That's what the hospitals use. So that would be a game changer, right? Allowing you to get this debt off your back without disturbing your E fund at all. You often can find the financial aid section on your provider's website that outlines the details, because, yeah, depending on your income, they might be nice. Forgive it in one fell swoop. And then it's like, who cares about the payment plan? Who cares about the discount?

[Matt]

It's like, unnecessary.

[Joel]

It's gonna be gone all the way.

[Matt]

Yeah. Win, win. Get rid of this thing altogether. The hospital will likely require proof, so, for instance, a copy of your tax return. But of course, if you meet the income requirements, take advantage of that policy. If you don't qualify for full or partial forgiveness, the other thing to consider is how quickly you would be able to restock to beef that emergency fund back up. Because if you can do it in a reasonable amount of time, I would take that discount and dedicate your resources to getting that E fund stout again in pretty short order. It's never fun to deplete and to have to tap your emergency fund. But, man, the discount makes it pretty appetizing though, right? Like, a 30% reduction in your bill is awesome. And he was even asking about, like, potentially putting it on a credit card as well. And I think that could even make sense as well, because most credit cards are sitting around 20%.

[Joel]

Yeah.

[Matt]

And so that essentially buys him. And that's 20%. That's an APY.

[Joel]

Right.

[Matt]

So you're looking at closer to a year's worth of time to be able to pay that off while off your.

[Joel]

Credit card still getting a discount while.

[Matt]

Still coming out ahead. From a financial standpoint, I'm not saying that that's a slam dunk decision, but when you are looking at the numbers, that should help to inform you whether or not this Is like, oh, no, I'm not supposed to do that. But financially speaking, looking at the numbers, it could make sense for you.

[Joel]

And you could even opt for a new credit card with a 0% introductory rate of 12, 18 months, something like that. And say, you know what, I'm going to pay this off in four to five months because I don't even want to flirt with that deadline and having to pay interest on this sum. But yeah, if you can get it fully forgiven, that's the best. But yes, definitely take advantage of this discount. If you have to put it on a credit card, just make sure you have a strategy to pay it off in no time.

[Matt]

Yeah, I would say 12 months or less. And I'm on a mission, too. Drew mentioned he came across like multiple or several emergencies this year. And for him, and honestly, for. For other folks out there, this is the time of year to reevaluate your budget to look at some of the bigger expenses that came from out of the blue. And granted, in this case, it was a medical expense. So there are certain medical things that you can't plan for, obviously, but there are other things that are a bit more periodic. And honestly, even periodic physicals and different things like that are. Can be more schedulable. Right. And so creating some of these sinking funds, because the idea is that fewer and fewer expenses as you progress through, you know, on your financial journey, fewer of these expenses are coming out of the blue, providing a shock to your.

[Joel]

Overall budget, no doubt. All right, let's get to our Facebook question of the week. This one comes from Anonymous. She says, I'm a single mom with a baby. My company automatically provides $100,000 in life insurance with the option to purchase more. I need to decide if I need to buy more now, otherwise I could be denied if I try to get it later. I have rental properties and a retirement fund. How should I decide if additional life insurance coverage is needed?

[Matt]

Nice. Not something I ever had. You had a employer sponsored or employer provided life insurance plan?

[Joel]

I did. It was like one times my salary. Or it was either one or half times my salary. I don't remember what it was, but I'd take it. Yeah, it was something.

[Matt]

Not bad without having to fork over a single dollar.

[Joel]

Right.

[Matt]

Many companies offer these small amounts, but then they then. And here's the catch. They allow you to buy more life insurance during open enrollment from them. But for most healthy folks out there, it doesn't make sense to buy more through your company because it's gonna be expensive. It's best to shop for a policy on the open market. And in large part that's because you can take that life insurance with you when you leave the job. And so yeah, shop around on a site like policygenius, even Costco, even they offer life insurance as well. So that's right, I can go there.

[Joel]

I can partner with a company that offers life insurance.

[Matt]

Yeah, I can go there for my kimchi, for my Traeger pellets, and also for my life insurance.

[Joel]

You can get anything you want at Costco. Well, and I think the exception would be if you have a long history of really tough medical things, you might be uninsurable on the open market. And so you might thank the good lord above that you have access to life insurance through your employer. Because what seems like it would be more expensive is actually cheaper for you because you can't get it anywhere else. But if you're healthy, the truth is shopping on the open market is probably best. We love that you have rental properties. Right. And that you've saved for your future. Really. Well, it sounds like you might be leaning towards self insuring to a greater degree because of all the good work you've done. And you know, while having more assets, it might indeed mean you need less insurance. But so much depends, I think on the liquidity of those assets. Because Those rental properties, 401ks, they're not easily liquidated and you don't want to. The whole goal is to not liquidate those things. We don't know all your details, but we think you might want to consider something like a $500,000 or a million dollar 20 year level term insurance policy. Because yes, you're doing the right thing on the investments, but you also want to protect your baby and you want to protect those assets as well. And you might hear a million dollar policy that's probably expensive, but it's actually not. Like if you look at the numbers for a late 20s, like single female, we're talking 25 to $35 a month. So shopping around for a policy is, I think especially for someone who's handled their money incredibly well, like this should be a drop in the bucket, a protectionary mechanism that really doesn't cost very much, but provides a lot of peace of mind and a lot of financial backstop.

[Matt]

That's right. And I don't know if you did this intentionally, joel, but a 20 year plan makes a lot of sense too because that baby should be all grossed up and a fully functional adult earning their own money, own salary at that point in Time? Yeah, if you.

[Joel]

Maybe 30 year.

[Matt]

But yeah, if you're planning to have more kids. But I think, you know, paying off those rental properties over time and the rents increasing over the years, I think with that in mind, like you might find that you can kick this term life insurance policy to the curb. And yes, like you were saying, Joel, to fully self insure. But I'm thinking you're probably not there yet. One additional thing, and this is really important, but make sure that you don't name your baby as the beneficiary of this life insurance policy. If you do, the court controls where that money goes. You go into probate and within a will. Right. Like this is where you're gonna name a guardian to take care of your baby once you are no longer here. But you can also then decide where it is that all of your money, your properties go to. But when it comes to this life insurance policy, you're gonna name them that same person, I would think. Right. Typically, whoever gets your kid, you want them to have the funds to be able to really take care of that kid. But you're gonna name that guardian, that caregiver as the beneficiary of this life insurance policy. So that will go go directly to them.

[Joel]

Yep, that extra step, but a crucial one. And it's, it's one going back to that beneficiary every year or two. Do I have the right person listed? Is this still the same person that I want my kids to go to? We had to revisit that recently. Like, okay, if we die, where do we want our kids to go? And you know, so yeah, those are the kind of things that it's not even just a set it and forget it. Oftentimes those questions have to be revisited over.

[Matt]

Things change, man. Yeah.

[Joel]

Alright, you want to get back to the beer?

[Matt]

Let's do it. This is an automatic IPA by Creature Comforts Brewing Brewing. And I'll say this used to be called Automatic Pale Ale.

[Joel]

I thought so.

[Matt]

Yeah. Have we talked about this on the show before? Or maybe it was Kate and I that talked about it.

[Joel]

Why did they change it?

[Matt]

So I was actually talking to a local brewery owner friend of mine and I actually asked him the same thing because we're just kind of reminiscing over. Actually we weren't reminiscing, we're just talking about stuff that we keep in our fridge all the time. And this is actually a beer that I keep in my fridge pretty like on the reg. And he said he's pretty sure they did it. Just from a market share standpoint, people know they're looking for IPAs, whereas pale ales just. They're just not nearly as popular.

[Joel]

I believe it.

[Matt]

Yeah. So folks see the IPA and they're thinking, oh, that's something. That's something I'm gonna like, because it.

[Joel]

Was kind of a beefier pale, and.

[Matt]

It was a really. It tasted exactly the same.

[Joel]

But where. What is the line between pale ale and ipa?

[Matt]

I mean, it's hoppiness, perhaps.

[Joel]

Yeah.

[Matt]

But gravity, I don't know.

[Joel]

It's got to be like a gradual gradient, like, effect. And so, yeah, you can have a pale that tastes like an IPA and an IPA that tastes like a pale, because they're somewhere along the spectrum.

[Matt]

They're very similar.

[Joel]

Yeah. It's in the eye of the beholder, I guess.

[Matt]

I think so to a certain degree. But you like this one?

[Joel]

Yeah, it's approachable. It's hoppy. It's not over the top. It's got this light yellow straw, like, color that I really appreciate. And the description on the can, Matt, says pillowy. And I will say it is luscious on the tongue. And I do appreciate that kind of.

[Matt]

Of voluminous feeling while simultaneously being radiant. Yeah, I feel like that's the adjective that appeals to me. Just like that fresh green hoppiness going on. It's why I always loved it as a pale, and I think I love it just as much as an ipa, I guess. Like, again, I think it's one of my favorite just standard go to beers that Creature Comforts makes. This is such a good one.

[Joel]

Yeah, it really is. It's delightful. And it's just not as beastly as a lot of the other IPAs that are out there in terms of. Of in terms of alcohol content, but also in terms of taste. Sometimes those are just incredibly abrasive. And this is nice. Casual, but delicious.

[Matt]

Only 6%. And by the way, it's called Automatic because it's named after Weaver D's Automatic.

[Joel]

For the people in Athens, Georgia, which.

[Matt]

Is what the REM Album was named after. That same meet in three. Which have you been to?

[Joel]

Yeah, one time. Okay. It was delicious. Good. But it's not there anymore, is it?

[Matt]

It actually. It's so funny that you mentioned this. The text thread with me and my former roommates from uga, but Weaver Dees was in the news again, saying that they're going to close next year. And then one of my other roommates was like, this is a story that comes up every, like, six years. I think every six years maybe, and it never closes. Maybe there's a loan that comes due or something like that. Maybe. And they reach out to some press, they write a story and maybe they.

[Joel]

Get another influx of customers.

[Matt]

Influx of customers, but also maybe an infusion of cash. Who knows? I don't know.

[Joel]

We need to go.

[Matt]

That's a more cynical take, but no, it's still around. But it sounds like it may not be around for long. For too much longer.

[Joel]

Visit while you can.

[Matt]

Maybe not unlike rad power bikes where they're like, sorry, guys, this is the end of the road. But yeah, happy, happy riding.

[Joel]

Enjoy your bikes while you can. Sure. All right, that's going to do it for this episode. And if you have a money question, holler at us, Matt. Until next time, best friends out.

[Matt]

Best friends out.

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[Sports Announcer]

What a matchup we got, y'.

[Matt]

All.

[Sports Announcer]

This is that classic HBCU vibe. Non stop action. The band is rocking and the crowd lit chant. Echo drum beat. Everybody showing that school pride game.

[Matt]

Life like this.

[Sports Announcer]

Yeah, it calls for an ice cold Coca Cola. Ah, crisp and refreshing. That's a game changer right there. Yeah, that taste always hits the right note. Just like the band at halftime. And just like that, we're back at it. Passionate fans, school colors everywhere and an ice cold Coca Cola. That's a winning combo. No matter the sport, no matter the yard. Everybody knows fan work is thirsty work. So grab a Coca Cola and keep that HBCU pride going.

[Joel]

This is an iHeart podcast.

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