How To Money – Episode #1054: Ask HTM – Sinking Funds for BIG Purchases, PTO Advances, & Investing for Early Retirement

Release Date: October 27, 2025
Hosts: Joel & Matt
Podcast Description: Best friends and co-hosts Joel and Matt provide jargon-free personal finance guidance, answering listener questions with practical, honest money advice.

Episode Overview

In this interactive Q&A episode, Joel and Matt tackle a series of nuanced, real-life listener questions about personal finance—covering topics like how to calculate your savings rate with special income, how to handle large windfalls for retirement, what to do if you over-contribute to a 401(k), saving up for your next car, and what to do when a loan servicing transfer tanks your credit score. The hosts bring their usual blend of humor, clear explanations, and actionable advice, aiming to help listeners thrive in their financial lives.

Key Discussion Points & Insights

1. Calculating Savings Rate with VA Disability Income

[09:12–20:20] Listener Question from Katie
Should disability income be included when calculating your savings rate for retirement?

• VA Disability Income:
  Katie receives a significant monthly VA disability payment and wonders whether to count this when calculating her "savings rate."

• Nuance of Savings Rates:
  Joel and Matt break down different ways to measure savings rate—by gross/net income, including/excluding investment gains, debt repayment, etc.

  • Joel: “Savings rate and net worth are just two different things, and they should be measured differently.” [11:05]

• VA Income Inclusion:
  Both hosts recommend including VA disability as part of your income denominator because it’s a permanent, reliable stream. This sets a higher bar for your savings rate, which is appropriate if your income is higher.

• Consistency is Key:
  Matt and Joel stress using the same method every time for tracking progress.

• Long-Term Perspective:
  The minimum recommended savings rate is about 15% of gross income, but more is better, especially if starting late.

• Lifestyle Focus:
  They urge listeners to set savings goals based on the lifestyle they want—a certain “percentage” isn’t as important as knowing what it will fund.

  “Money isn’t necessarily a goal. Your goals should be the goal. Your lifestyle, the life you want to live, those are the goals.” — Matt [20:20]

2. PTO Advance Fintechs: Temptation and Pitfalls

[04:39–08:12] Host Discussion

• Fintech Innovation or Money Grab?
  Joel calls out fintech companies offering "PTO advances" as a predatory product that lets you borrow against your unused paid time off—for a fee.
  • Matt: “How else can we get our fingers into your money?”
• Advice:
  Avoid these schemes. Either keep your PTO for future payout by your employer, or—Ideally—use your PTO and truly take a break.

3. Investing a $300,000 Settlement for Retirement at 56

[24:02–35:50] Listener Question from Lance
Received a $300k windfall at age 56, with minimal bills, renting. What’s the best way to invest for retirement?

• No Homeownership Guilt:
  Joel: “Renting is not for dummies... renters can do better saving and investing for their future than a lot of homeowners.” [25:20]
• First Things First:
  • Ensure a cash emergency fund (3–6 months expenses).
  • If income allows, max out a Roth IRA each year.
  • Don’t forget about workplace retirement options.
• Investment Vehicles:
  • For Short Timelines (≤2 years to retirement): Keep funds more liquid; consider high-yield savings or laddered CDs for the near-term portion.
  • For Long-Term (in retirement): Invest in a diversified brokerage (Fidelity, Vanguard, Schwab), possibly using a target-date fund. Money will need to grow over decades, even after retirement.
• Consider a Pro:
  Given the stakes, consult a fiduciary financial advisor for tailored planning:
  • “If you want to just hire someone for a couple hours of their time, that could be...to bounce some proposals, scenarios off of them...” — Joel [35:07]
• Balance:
  Don’t go too risky or too conservative; have both liquid cash reserves and long-term growth investments.

4. Over-Contributing to a 401(k): What to Do

[36:00–46:21] Listener Question from Morgan
Over-contributed $12 to her 401(k) in a job change, missed the correction deadline. Should she withdraw and pay a penalty?

• Not the End of the World:
  While it’s technically not allowed, the error is minor ($12 over). In reality, the IRS is unlikely to penalize over such a small infraction.
  • “It just sounds like bringing a bazooka to a knife fight. It just sounds ridiculous. But that is the proper way to handle things.” — Joel [43:21]
• Proper Procedure:
  After April 15, you can’t withdraw the excess. You may owe tax twice on the amount: once when contributed, and again as income.
  • Advice: File an amended tax return, keep notes for future reference, but rest easy—it’s not likely to cause an issue for $12.
• General Lesson:
  • Be careful to coordinate contributions when switching jobs.
  • Don’t let the fear of minor mistakes stop you from maximizing savings.

5. Sinking Fund Strategies for a Future Car

[50:01–54:50] Facebook Q from David
Best way to save for a car purchase 5+ years away: high-yield savings or invest in the market?

• Hats Off for Planning:
  Joel: “You are thinking about this, right? And your cars, they're both babies... you should have many more years with these cars.” [51:19]
• The Math:
  • Saving $500/month ($6,000/yr) for eight years yields $48,000 cash (more with interest).
  • Investing can yield $70,000+, but adds risk.
  • Conclusion: Use a high-yield savings account for guaranteed growth and liquidity, unless your time frame is over 7–8 years and you’re comfortable with the risk.
• Lower Expectations = No Loan:
  “It's worth saving more. It's worth lowering your expectations to never have a car loan. It's just a highly underrated personal finance move.” — Matt [53:12]
• Lifestyle Reminder:
  Don’t let new car wants sabotage freedom; cars are a luxury, not a necessity for wealth.

6. Credit Score Tanked by Student Loan Servicer Switch

[54:50–57:34] Anonymous Question
Credit score fell after a student loan auto-payment glitch post-servicer switch. Can credit repair companies help?

• You Did It Right:
  You disputed the error, complained to the Consumer Financial Protection Bureau, and paid the overdue balance.
• No to ‘Credit Repair’ Companies:
  These companies often charge high fees for actions you can do yourself. Their removals are frequently temporary.
  • “There are so many for-profit companies...that charge a lot to do things you can do on your own.” — Matt [56:36]
• Stay Patient:
  Keep up good credit habits—weighs more in your favor as time goes on.
• Non-Profit Help:
  If needed, reach out to Money Management International or the National Foundation for Credit Counseling.

Notable Quotes & Memorable Moments

• “Money isn’t necessarily a goal. Your goals should be the goal. Your lifestyle, the life you want to live, those are the goals.” — Matt [20:20]
• “Renters especially now can do better saving and investing for their future than a lot of homeowners.” — Joel [25:20]
• “If you want to just hire someone for a couple hours of their time, that could be... to bounce some proposals, scenarios off of them...” — Joel [35:07]
• “Don't let the fear of minor mistakes stop you from maximizing savings.” — Paraphrased sentiment from Morgan’s 401(k) answer
• “It's just a highly underrated personal finance move to not have a car payment.” — Matt [53:12]
• “There are so many for-profit companies out there in that space… that charge a lot to do things that you can do on your own.” — Matt [56:36]

Timestamps for Key Segments

• [04:39–08:12] PTO Advance Fintech Discussion
• [09:12–20:20] Calculating Savings Rates with Non-Traditional Income
• [24:02–35:50] Investing a Windfall for Late-Career Retirement
• [36:00–46:21] 401(k) Over-Contribution Error—How to Handle It
• [50:01–54:50] Sinking Funds for Car Purchases: Save or Invest?
• [54:50–57:34] Student Loan Servicer Switch Hurts Credit—What Now?

Tone & Style

Joel and Matt’s banter keeps things light, humorous, and honest—never shaming, always practical. They admit their own experiences ("I'm taking my own medicine... I drive an '06!"), use cultural references (“Isn’t that a Cher song? If I could turn back time…”), and approach every question, big or small, with genuine care for their listeners’ well-being.

Summary

This episode delivers actionable advice on complex, nuanced money issues—always advocating for thoughtful, intentional financial choices that align with your goals and lifestyle. Joel and Matt urge listeners to know their own numbers, plan ahead, ignore shaming around renting and car choices, and to never hesitate to ask for help or clarification—even on the smallest details.

For further resources, visit:
howtomoney.com
howtomoney.com/ask (Submit listener questions)
howtomoney.com/advisor (Find a vetted financial advisor)