Ask HTM – Sinking Funds for BIG Purchases, PTO Advances, & Investing for Early Retirement #1054

Summary

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.

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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.

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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.

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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]

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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?

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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.

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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.

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

Transcript

[Podcast Host/Announcer]

This is an iHeart podcast.

[Joel]

If you've been listening to the show for a while, you know we care a lot about being intentional with our money and that includes how we give it away.

[Matt]

That is why we are big fans of Daffy, which is a modern donation platform and app for charitable giving that is also a donor advised fund which means you can contribute cash, stock, ETFs, or even crypto. You take the tax deduction right away and then send the money to over one and a half million charities, schools and other faith based organizations whenever you want with the funds that you've already set aside.

[Joel]

I've personally been using it to send recurring donations for causes I really care about like my church and a local nonprofit called Blueprint 58.

[Matt]

Same here. Yeah, I've got recurring donations going to my kids school. DAFY also keeps your receipts organized for tax season, but the best part is DAFI itself is a nonprofit with a mission to help people to be more generous more often. So if you want a better system for your giving, head to Daffy.org howtomoney and for a limited time you'll even get $25 to give to the charity of your choice. Visit Daffy.org howtomone today.

[Joel]

Where do you see your career in 10 years? What are you doing now to help you get there? The sooner you start enhancing your skills, the sooner you'll be ready. That's why AARP has reskilling courses in a variety of categories like marketing and Management to help your income live as long as you do. That's right.

[Matt]

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 FedEx office understands that running a small business can feel like navigating uncharted waters. Each decision a bear of a task. And finding the best way to build your business is a tough nut to crack.

[Joel]

So let their in store team members make packing and shipping a piece of cake with on site pack and ship and roll with the punches with custom printing. Because helping you achieve your business goals is just another day at the office. Get started at office.fedex.com welcome to how to Money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're answering your listener.

[Matt]

Happy Fall everybody. Did you know it's officially Fall Joel?

[Joel]

Is it?

[Matt]

It is my book. Actually I don't technically know when the first day of fall is.

[Joel]

We had many false falls where we live, Matt. That's a constant in our neck of the woods. Everyone's like, ooh, I felt a bit of chill in the air. Then shoots back up to 80 degrees. Yeah. Yeah.

[Matt]

Generally speaking, this is, like, the best time of year, man. I love this time of year. Late in October. Like, it is cooler. The mornings are cr. Man, I really like Kate, and I've been working out in the garage. I really like opening the garage door. And when we get out there in the mornings, it's. It's chilly. You kind of wear a little light jacket while you warm up, that kind of thing. But it feels nice.

[Joel]

Like, it's the best. I love.

[Matt]

It's refreshing.

[Joel]

Although I will say in. During, like, the summer months, you just know your wardrobe. For me, at least, it's like, shorts and a T shirt every day, all day.

[Matt]

Oh, I'm still rocking shorts and a T shirt. Yeah. Even when it gets cold.

[Joel]

Oh, are you? Okay? Like, but, like, when I'm on the bike with the kids in the morning, it gets, like. It gets kind of cold, like when the air's whipping. And so I'm like, all right, I guess are my shorts and a jacket this morning, or.

[Matt]

See, I'm still. I'm still wearing. I just like having the airflow on the legs.

[Joel]

Yeah.

[Matt]

If you know what I'm saying. Like, just something about the freedom there. And it's. It takes a really cold morning. It takes a cold morning for me to want to switch to some of the biking commuter pants, which also, in some of the nicer biking pants, have, like, little vents.

[Joel]

Oh, yeah.

[Matt]

Especially for folks who are on the bike all the time. When you're riding, you want to have a. You want to be dry. You want to have that airflow. I highly recommend for folks to check out. You know, which ones I'm thinking about. The chrome.

[Joel]

Oh, yeah.

[Matt]

They're pants that have the vents on the gusset man down there in the seat of the commuter pants.

[Joel]

I'm sure.

[Matt]

So nice.

[Joel]

I'm sure all the listeners are like, can we move on to listener questions now?

[Matt]

They want to hear Joel talking about his crotch. No, we are. We are going to get to listener questions. A listener is talking about how she can calculate fixed payments into her savings rate. Another listener is wanting to make the smartest moves with $300,000 that he got his hands on, specifically how that can fund his retirement. We're going to take a question about sinking funds, especially for quite a large Purchase how to approach that and more during today's episode. Buddy.

[Joel]

All right, first, can I quickly mention a new fintech app I came across? And I don't even know if I want to name it Matt. Cause I don't. It's not a good one. Like, it's not something I like.

[Matt]

You've got PTO written down in our notes here.

[Joel]

So PTO paid time off, right?

[Matt]

I thought there's a chance you're gonna deny me my PTO request.

[Joel]

Oh, yeah, yeah. No, you're not allowed to go formally.

[Matt]

Here on the air.

[Joel]

I like to do it publicly. So it shames you for even asking.

[Matt]

Aren't you glad we listeners who've been listening to the show, they know that that's not how we handle things. We do things much more casually. We try to overlap casually. Around here, we're trying to overlap, which typically we do.

[Joel]

That means when our kids are on break, right? But I think that overlapping helps because if both of us are going at different times, then it's like, really be really hard to coordinate. So we coordinate, but we don't.

[Matt]

But also what I'm. What I'm thinking about is the fact that when you own your own business, you don't have to have a policy handbook that dictates.

[Joel]

Although your harassment lately does worthy of a new policy, I think.

[Matt]

Well, we'll talk about that in our 4:30 meeting.

[Joel]

Joel.

[Matt]

Just kidding. We don't have a 4:30 meeting either. No, we don't.

[Joel]

All right, so let's talk about PTO for a second, which is wonderful paid time off. If you have a traditional job, you do have to get a allocated a certain amount of time. Although there are, I guess, more. They call them generous, but I don't know how generous they are. Like unlimited PTO policies. Because I think sometimes people are like, can I really? Is it true? Like, I don't think so. I think I'm going to be shamed if I take too much time off. But there is a fintech company out there who says, hey, instead, if you're not going to use that pto, you might as well get paid for it. And we will. Instead of waiting for your employer to pay you for your pto, your unused PTO down the road, we'll pay you now and then you can pay us back. Of course, there's fees assessed for. This is terrible. The luxury of tapping the value of your PTO early. So I think there's like, man, the early days of fintechs, there were so many good fintechs trying to solve real, actual problems that people faced in the personal finance space. And even something.

[Matt]

This does not feel like a real problem, does it? Yeah, it just seems like the last frontier of like, how else can we get our fingers into your money? How can we get you to leverage something that maybe you shouldn't be leveraging or.

[Joel]

Exactly.

[Matt]

That's exactly what they're getting an advance on.

[Joel]

And so I guess like the best thing to do would be to just wait to get paid for your PTO until you're at the point where you haven't used it. And your employer like end of the year, beginning of next year, when your employer's like, okay, cool, you had eight days off. Or I don't know, like my father in law worked in a public school. He basically got a full year of extra retirement because he took so little time off. He had so many PTO unused PTO days. The other option, Matt, is to take all your pto, which is something we're fans of. Like take your time off, enjoy that. Whether it's staycation, whether it's traveling. I think this can be enticing people, like, let me gamify this even more. But I think there is something to be said for taking the time off that you're out.

[Matt]

Heck yeah, man. Well, we need to do it like the Europeans are doing it. Actually, we don't need to do it like the Europeans because in a lot of other countries they mandate it as opposed to like it's like a national, a nationally recognized mandated thing. As opposed to like, don't you love the fact that people out there have the option to take their pto? Or if they're really trying to hustle and they're really trying to get after it, man, I think the option that they have to not take it is also pretty great.

[Joel]

Yeah, I mean, I like that people have the choice, right?

[Matt]

So it's all about having the choice.

[Joel]

What I don't love is the, the reach of the long arm of the fintechs to say, let's find a way that we get our grubby hands on some of your PTO money. Like, no, that's. That's your money. Like, you've worked hard for that. Don't let somebody else take a. Take a chunk of it just because you want to access it early.

[Matt]

Totally agree, man. The beer that you and I are going to enjoy during this episode is called Presence of Another World, which is. This is a big old beer, a rye barrel aged stout by Bissell Brothers, which is actually A rare thing. I don't know if I've ever had a stout by Bissell Brothers.

[Joel]

I was thinking the exact same thing. They only had IPAs.

[Matt]

They're known for their pales. I mean, on the light end, but yeah, typically IPAs, double IPAs, all the hazies. So yeah, looking forward to enjoying this one. Sharing with you. We'll talk about it at the end.

[Joel]

They do hazy's so well. But can they pull off a stout? We will let you know at the end of the episode.

[Matt]

Yeah.

[Joel]

And if you have a question you'd like to ask us on the show, we would love to hear it. Just go to howtomoney.com ask for directions or just literally record the question that you got on the voice memo app of your phone. Send it our way howtomoneypodmail.com and make it a good one. Make it fun, make it entertaining. We'd love to take it soon. Let's get to what I would say is an entertaining question, Matt, about the nuance of savings rates.

[Podcast Host/Announcer]

Hi fellas, this is Katie, 39, from Maryland. And I had a twist on how to calculate saving percentages. So everywhere you look, everybody kind of has a different idea on how much you should be saving for retirement compared to your income. But I receive a non insignificant amount each month from my VA disability and I was just wondering how I would take that into account. Should I add that amount in with my annual income when I do my percentage or since that will that entire amount will continue through my retirement until I die, do I completely exclude that amount? What would you guys do? All right, thanks.

[Matt]

All right, Katie, great question. And first off, you mentioned your VA disability. So that means you were somehow injured or had a condition, maybe that was made worse during your service. So thank you for your service to our country. Thank you, Katie. But let's dive back into the old savings rate discussion.

[Joel]

Joel, I do love these discussions. I know sometimes they get a little wonky or nerdy.

[Matt]

Sometimes I like, sometimes I like them. But I don't know if you are a personal finance nerd. It's fun to crunch the numbers, calculate your percentages, which sounds like something you.

[Joel]

Would do, the spreadsheet guy, you know?

[Matt]

Yeah.

[Joel]

Okay.

[Matt]

I don't want to get off track too soon. Let's, let's specifically answer Katie's question because like what she is doing here by like she's asking, should I include that, she's highlighting how slippery this argument around savings rate can be because you can calculate it in so many different ways. You can Base it on. You can base your savings rate on just your gross income. You will let's narrow it down even to your net income after taxes. You can even incorporate your net worth growth into your savings rate. Basically the fact that your money is now working for you.

[Joel]

So.

[Matt]

Oh, that should count now too, shouldn't it? Right. Some folks do that. I wouldn't recommend for you to do that one personally because that's not really.

[Joel]

What savings rate is getting after. And I get that there are a few different ways that you can think about your savings rate. For instance, that last one you mentioned is reflective of your wealth building efforts. But savings rate and net worth are just two different things and they should be measured differently. I think they're both worth tracking and growing. But you don't want to necessarily blur the lines and include your net worth information into your savings rate. Like they're just different things. There are also perpetual arguments about whether to include investment dollars and savings dollars in your savings rate. I say yes because you know you're putting money into a high interest savings account. You're also putting money into Roth IRA or a 401k. Yeah, I like the idea of all the above going into the amount of money you're actually putting towards savings because you're, you're not. Yeah. Using that money to spend. Same with paying down principal on debt. I also think that should be included in your savings rate. Not everyone agrees with that, but you're not spending those dollars and then once that debt's paid off, hopefully you continue to allocate the money that you are using towards savings, towards investments moving forward. This just goes to show there's a lot of nuance inside of it and teach to each their own really a.

[Matt]

Lot of different options as long as.

[Joel]

You'Re sticking to the same metric and you're not maneuvering it to make it seem like you're doing more than you are and you're holding yourself to the standard that you've set for what you want to accomplish with financial goals.

[Matt]

Generally speaking I think it's about consistency because to the paying off debt argument it's like well you're not spending that money. Yeah, well you had spent that money so old you previous, you had spent that money.

[Joel]

But what if you're continually racking up debt so that you can pay off the debt and then you could get into this circular reasoning logic where then it doesn't really count as savings rates.

[Matt]

Yeah, yeah, we're talking about her disability payment in a similar way. You could even think of an employer match as being part of your savings rate. But we don't include that because it is subject to change, whereas your disability payment is not. This is sticking with you for forever. And were you to start considering your employer match as well, it takes the onus off you to be ramping up your savings efforts. That's where looking at your savings rate is just a good measure of your behavior as opposed to like a specific dollar amount. But generally speaking, we believe that the minimum savings rate goal should be around 15% of your gross income. But it is really hard to make meaningful progress if you are saving like let's say your fellow American, which is less than 5% of your overall income.

[Joel]

You're just trudging along in making financial progress. It's like one step forward, one step back. It feels like if your savings rate is that low, right, like 5% is just kind of insignificant. Is not gonna move the needle. You're not gonna get peace out money. You're not gonna reach much financial independence or it's gonna take so long, you're gonna be working until you die.

[Matt]

But again, it also depends on how soon you start saving, right? Like if this is something you started doing as a 16 year old, you started not only socking away money for that first car and for that phone and for college, but if you also had a designated. No, this is my retirement dollars. I literally have a friend, she started doing that when she was 15 years old. She started contributing. Her dad's a CPA, and so it's not surprising that they knew about the Roth ira. They knew about the glories of the Roth ira. But literally at that young of an age, she started contributing to her Roth. And you know, she's doing pretty well because of compounding. I think it does go to show so many factors.

[Joel]

So many factors. If you front load the sacrifice and you have a higher savings rate in those early years, you can maybe a 5% savings rate in your 40s and 50s. It's totally fine. Like your friend who started at 15, hey, I've been doing this for 25 years and I've been saving a big chunk of my money. Well, do I need to always have a 30% savings rate? No, there's. That's what like Coast Fire is all about, right? It's like, hey, no, I've put in a lot of the effort. I don't need to be saving at the same rate because I put all that effort in early on. And I just think too that the reason savings rate is so powerful is because there are other things you can try to focus on in your finances. Like, I'm going to try to get higher returns than the average person. Well, you don't have as much control over that. Right. And you actually might fall flat on your face in an attempt to pull that off. So much of your success really hinges upon your savings rate. So I do think that is one of those key personal finance metrics you want to be considerate of and to continue to look at. And then. So, yeah, when you're talking about the VA disability payment and including in your savings rate, I think yes, like, we would, of course, include this in the income section in the numerator and of your calculation. If you make, let's say, 75,000 bucks a year, but your VA disability check is something like $25,000 a year for an overall amount of 100k, and you save $25,000 a year, your effective savings rate is 25%. And so while you have more money at your disposal because of this VA disability benefit, you've got more money to save. This also, though, raises the stakes on how much you should be setting aside to hit the metric that you want to hit to hit the savings rate that you're going after. And it's not like a more money, more problems thing, but it is just the fact that more money coming in, the greater necessity to save. Which is why, Matt, every single year, as we're getting raises, right, as we're seeing our income go up, we have to be thoughtful about how much we're contributing to savings and investments. Because if we keep it the same, then we're not actually hitting that same savings rate. And over the course of a decade, let's say if we're still saving the same amount but not the same percentage, we're making less progress.

[Matt]

Yeah, and I kind of touched on this a second ago, but the reason we would count your VA disability check is because of the permanent nature of that disability payment, Right? So unlike a match, this is going to be recurring. This is going to be a reliable stream of income in perpetuity. And like, as opposed to a match, I keep going back to a match because I feel like it's just a great counterexample. Because, like, we've seen many employers not offer a match, or we've seen them reduce a match that they offer. If you change jobs, the match, it might not be the same. But with, in your case here, you've got this payment coming in from the federal government every month. And so because of that I think including it in this calculations, it just gives you an accurate reflection of what you're doing with the total amount of money that you have coming in. And I think if you only included earned income doesn't seem quite as thorough because it doesn't paint the whole just like a full, robust picture of what's going on with your.

[Joel]

Right.

[Matt]

With your finances.

[Joel]

Yeah.

[Matt]

Okay, so I feel like we've answered her specific question and now like we can maybe go on my, my tangent.

[Joel]

Which is I'm ready, like the, even.

[Matt]

Just the question of asking is like what a savings rate should be. Sometimes I think like just the different percentages can just get in the way of the overall picture of what it is that we're trying to achieve. Because sort of like you were saying, if you were just to focus on a specific rate, well, let's say like 20%, setting aside 20% of $100,000 is a lot less than setting aside 20% of $500,000. And so you're focusing on the income side of things as opposed to the whole purpose of why it is that you're socking and setting money aside for retirement, which is to fund your lifestyle, which is why I think it's so important to think about, well, what kind of lifestyle do you want to live? Like, what are your expenses going to be? Because for somebody who has a very specific vision of what those years might look like, it gives you something very precise, I guess, to work towards as opposed to this open ended savings goal of like, oh, I've always got to do 20%. Well, you start asking why and you're like, well, that's what I need to be able to do. Like you ask yourself why like five or six times and eventually you'll get.

[Joel]

Down to the point of it.

[Matt]

Eventually you'll get to the point of, to where you're saying, well, it's because I want to be able to do this, this and this and this. You're like, okay, well maybe sort of like you said, after 25 years or so of doing this, you've found that you're there and then that then you're going to be able to direct your funds in a more value driven way as opposed to sort of being this sort of percentage goal. So that's the only thing that I think, Katie, that I want to encourage you to think through. And for other listeners out there too, I do think the vast majority of Americans are not setting aside enough and we need to encourage them to save more. But for folks who have been at it for a while. I think it's worth worth thinking through less of the open ended saving and investing goals and more to the very pinpoint specific goals that you might have for yourself.

[Joel]

Yeah. And I think what you're getting at too is you and I are talking to kind of some rare birds like who, who are not the average American, who are not saving 4.6% of their income, who are not in recurring credit card debt for the most part. Right. There are certainly some listeners, especially new ones, who are like, I know, I really am. Like, that's where I'm at. And that's great. We want to help you out too. We want to speak to you as well.

[Matt]

And they need to buckle down, do all the saving as they can. But yeah, for folks who have been.

[Joel]

With, we're talking to people like, who have been investing since they were 15 and they've been allocating a ridiculous sum of money to like they have a really high savings rate for a really long period of time. Yeah, it's. And you live incredibly frugally. Well, yeah. Is your goal to die with $8 million in your 401k in your IRA? If not, then you should think long and hard about what your savings rate is, what you're trying to accomplish. And yeah, dialing it back could make sense for some people. Sounds crazy coming out of the mouth of a personal finance podcast host, but I think you're right.

[Matt]

That's where money isn't necessarily a goal. Your goals should be the goal. Your lifestyle, the life you want to live, those are the goals.

[Joel]

I guess I'm just like so brainwashed into seeing how poorly the average American handles money. And we do have to broaden that out though, especially for our audience who is just more thoughtful and they smarter.

[Matt]

Than the original average American out there for sure. But dude, we got more to get to. We got more questions, including a listener. She's got a 401k faux pas. We'll get to that one and more right after this.

[Joel]

As a small business owner, you don't have the luxury of clocking out early. Your business is on your mind 24 7. So when you're hiring, you need a partner that works just as hard as you do. That hiring partner is LinkedIn Jobs. When you clock out, LinkedIn clocks in. LinkedIn makes it easy to post your job for free, share it with your network and get qualified candidates that you can manage all in one place.

[Matt]

Yeah. Let me tell you how it works. First, you post your job. LinkedIn's new feature can help you write job descriptions and then quickly get your job in front of the right people with deep candidate insights. You either post your job for free or you pay to promote, which by the way gets you three times more qualified applicants. And then just sit back and rest easy knowing that you are getting the highest quality candidates. Based on LinkedIn data, 72% of small business owners using LinkedIn said that LinkedIn helps them define the best candidates. Find out why more than two and a half million small businesses use LinkedIn for hiring today. Find your next great hire on LinkedIn.

[Joel]

Post your job for free at LinkedIn.com howtomoney that's LinkedIn.com howtomoney to post your job for free. Terms and conditions apply.

[Matt]

We care a lot about being intentional with our money. That is why we use Daffy, a giving app that makes it easy to organize donations like the ones I send.

[Joel]

To my kids school or the recurring ones I have to give to my church and to a local mentoring organization called Blueprint 58. And because Daffy Daffy is also a donor advised fund, you can set aside cash, stock, ETFs or crypto. You can take the tax deduction right away and support charities anytime with every receipt already organized. So visit dafi.org howtomoney today and for a limited time get $25 to give to the charity of your choice. That's dafy.org howtomoney as you make financial progress, you might be tempted to abandon habits that helped you make that progress in the first place. But guesstimating and a lack of awareness that can lead to leaving money on the table. That's where Monarch comes in. I dig Monarch because it helps me keep my finger on the pulse of every facet of my money. Spending, saving goals, net worth. It's all in one place and it helps keep me motivated to keep going. That's right.

[Matt]

Feel organized and confident in your finances with Monarch, an all in one personal finance tool that brings your entire financial life together in one clean interface on your laptop or on your phone. And right now, just for our listeners, Monarch is offering 50% off your first year with code howtomoneyonarch.com I love that Monarch is built for people with busy lives. You know, if you've been putting off organizing your finances, Monarch is for you and piggybacking off what you're saying Joel about the habits Monarch. It does all the heavy lifting. You're able to link your accounts in minutes. You get smart categorization of your spending and real control over your money.

[Joel]

Do not let financial opportunity slip through the Cracks. Use code howtomoneyarch.com in your browser for half off your first year. That's 50% off your first [e-mail] with code how to Money. All right, Matt, we're back. It's time we got more listener questions to get to. Let's take a question. Yeah, we do. Let's take a question from listener Lance, who did not say his name. So I'm saying his name. Lance, who wants to know what he should be doing with a big chunk of money.

[Matt]

Hello, how to Money team.

[Joel]

I recently came into some money, a settlement. It's about 300,000 and I am 56 years old, so I'm trying to look forward to retirement.

[Matt]

I do have a couple retirement accounts.

[Joel]

With my prior jobs. I am a renter and always have been. And I have no bills or anything. So I'm clear on that side. Except a car insurance and regular notes like that. But if you can lead me down the path on where I probably should invest this to help me with retirement in the next couple years.

[Matt]

Thanks, Joe. The first thing I want to point out is the fact that Lance said he's a proud. I don't think he said he was a proud renter, but he said it like, I'm a renter. I always have been. Get up off me. Yeah, dude, don't criticize me.

[Joel]

I'm all for that. That's. Oh, yeah, that's one of those personal finance myths that just won't die. And I don't know if it's just the national association of Realtors putting something in the water in every municipality, like water source or anything like that. I'm not accusing them of super nefarious.

[Matt]

Tactics like that, but like, I didn't know you've gotten into the.

[Joel]

It's like fluoride, Matt.

[Matt]

The conspiracy theories, Joel.

[Joel]

And. But I really do think.

[Matt]

Where are you getting your health advice, bro?

[Joel]

There's like all. There's like this cultural mythology around home ownership and how that's like the best personal finance move you can make. You and I both know when you look further into the data, yeah, it can make sense. And so much of it depends on when you're buying, what rates are, how much housing prices cost, how long you're going to stay in the house. Like, renting is not for dummies. And in fact, renters especially now can do better saving and investing for their future than a lot of homeowners. Absolutely.

[Matt]

Yeah.

[Joel]

And homeownership, the cost of homeownership we also often under, under discuss how bad those can be, how expensive it can.

[Matt]

Be, the additional costs. Yeah, but it does. Well, first of all, too, he mentioned a settlement. So Lance, hope you are doing okay and that whatever happened isn't keeping you from being able to live your best life. But it also sounds like you've been investing along the way, which is great. You mentioned it sounded like multiple retirement accounts with employers, with jobs you've had over the years, but maybe you don't have as much set aside over there as you wish it did, or that you, maybe you're just not quite as comfortable as you perhaps envisioned you being at this point in life.

[Joel]

And this is the kind of realization that often happens when you're in your mid-50s. You're like, wait a second, how much have I been doing? Do I need to ramp it up?

[Matt]

Kind of like nose to the grindstone and you look up and realize, oh man, actually, you know, I want to retire soon. And for him specifically, I think the settlement can be just a nice breeze to the sails as he's cruising along here towards the end of his working career.

[Joel]

Kind of maybe something you didn't plan on, but it could be a way to make up for lost time, financially speaking. I also love that you don't have any debt, right? Which means you don't need to use this money to pay off like student loans or credit card debt or anything like that. Personal loans that are hanging out in your past. That's nice, right? The fact that you've been debt averse, you can funnel all this money into positive action for your medium term future, for your retirement needs.

[Matt]

Yeah, that's awesome. Yeah, that's awesome. It's great to not have to worry about using some like some of this or most of it or a lot of it towards like kind of cleaning up previous mistakes that you've made, you know, like you're not, you're not sitting there kicking yourself and wishing that old Lance would have done something smarter with his money.

[Joel]

And if you have like tons of debt, you're like, man, I wish I could get 300k in one fell swoop to get rid of that and do positive stuff. But still it's nice to be like, I can do only positive stuff with this. Which rocks. I love it. So let's talk about where this money should go, Matt. I mean, I think first make sure you keep enough cash for short and medium term needs. That is just the, you know, three to six months emergency fund expenses. Next, I would say a Roth ira if you're income eligible, if you're making bank, then you need to reconsider that. But I think you should be maxing that out every year moving forward. It's just one of the best and most flexible retirement accounts in existence. And if you can max that out for a decade, you could have six figures in a Roth IRA that you wouldn't have had otherwise. And that's, you know, tax free money essentially that you can tap in retirement, which is, it's a nice thing to have. And I'm not sure where you're working or if you have a workplace retirement account anymore. You didn't mention that in the question, but don't sleep on that either. And that's just a way, of course, especially your age with catch up contributions, to be able to toss a ton of money in every single year to really max out your retirement savings efforts.

[Matt]

Yeah, there are closing windows of time where you only have the option to put money in those retirement accounts. Now you can't go back in time. But beyond that, taxable brokerage accounts that'll often make the most sense.

[Joel]

Was that a Cher song though? If I could turn back time, Pretty sure.

[Matt]

Or Fleetwood Mac, maybe. I don't know. All those folks that I never listened.

[Joel]

To, I couldn't tell you any of.

[Matt]

They all kind of blend together.

[Joel]

Yeah.

[Matt]

But make sure you've got your brokerage with one of our low cost favorite providers like Fidelity Vanguard or Chuck Charles Schwab. But if you invest most of this money, you will likely see it double by the time you reach age 65, which is pretty cool, right? Like you're turning that $300,000 into $600,000.

[Joel]

It's kind of like alchemy, but it's not.

[Matt]

It's compounding. But that in addition to what you have in those other retirement accounts, it's going to make a big difference in you being able to live the life once you're able to or once you're ready to stop working completely. You also said in the next couple of years, like literally you said that. And I think it might be like if you literally mean that you are planning to retire in a couple years.

[Joel]

Couple is such an ethereal term. You're like, does that mean two or eight? I don't know. No. Couple is two. Two is usually what people mean by couple. Few is three, few is three.

[Matt]

But I think many is beyond. What's many?

[Joel]

That's the thing.

[Matt]

Four plus.

[Joel]

But I think sometimes people use couple and they mean it in a more generic Sense. And so it's, I'm trying to read the, read into this here.

[Matt]

I'm going to take him at his word because like, so, like, literally, what if he's saying I'm retiring in two years? If that's the case, I would say that it might be worth taking some of that cash and not investing it. He's, he directed us, right. He said, where can I invest this money as I prepare for retirement in a couple of years? So I think maybe we latch onto the first part. Oh, okay. We're talking about investing here. But if literally you're talking about maybe, you know, kicking work to the curb in a couple years, like a little bit earlier than when most folks are looking to retire, like you actually don't want to invest those dollars.

[Joel]

Then again, then again, you're talking about needing access and needing to grow this money not just for, boom, that retirement age, but for many, many years in retirement.

[Matt]

So maybe like a, he's got to do the math.

[Joel]

Maybe like your target date fund could make sense for him that is kind of honed into his specific retirement date.

[Matt]

And, but again, I'm not, I'm personally not sticking money. If I want money that I want to touch, that's like in a couple of years, I'm not investing that money.

[Joel]

No, but that's the thing. He's not going to touch all this money. Like a lot of this money, even though he's retiring, is still going to be invested for many decades from now.

[Matt]

Yeah. I think just something to consider because.

[Joel]

Like, you're not, once you hit 65 and you're retired, you're not cashing everything out of.

[Matt]

No, not all at once, but also 300,000. I mean, I don't know what is what his annual living expenses are, but if you want to have. We've already, I mean, you already, you touched on like the, a fully funded emergency emergency fund. And so that's going to take up a big chunk of that. But then you've got some like your, so boom, you are siphoning a, like, I don't know, maybe a third of that could.

[Joel]

Maybe a third. Exactly.

[Matt]

Just to an emergency fund. But then beyond that, you're looking at maybe, I don't know, a year's worth of actual living expenses to have liquid to be able to deploy. So you might be looking at sticking what I'm Saying is all 300 eventually.

[Joel]

Yeah.

[Matt]

In a, say a high yield savings account where you're pretty much guaranteed by pretty dang close to 4%. Like if it was me. I'm not sure if I would take any risk knowing that I would be want that I would want to tap that money early. Maybe actually with rates declining, maybe do CDs to guarantee like a higher rate for, for a longer period of time. But I guess it comes down to how dependent you are going to be on that money.

[Joel]

Yeah, I think what you're getting in.

[Matt]

Retirement and but if he's willing to work a little bit and supplement his income, there's, there's a whole lot more options available and then I would totally be willing to invest.

[Joel]

What you're getting at is like how crucial timeline is. Right. And that's why for most listeners we talk about wealth building, talk about wealth preservation and Lance is just getting much closer to wealth preservation. But I will say this too. Wealth preservation doesn't mean cash, like only cash. There's still a need to watch your portfolio grow over the many decades that hopefully you're going to live in retirement. So you have to be thoughtful about that balance of not being too risky. I don't want to be 100% s and P500 fund or total stock market fund. That would be insane if you're retiring in two years. But you also want to be thoughtful about not allowing, not outliving your money and giving it a chance to grow for your future as well. Like I know some people who have retired and they're like, they think oh great, my retirement money, cash out, use it. And it's like, no, no, no. This money that he built up is supposed to last you for decades. That's the goal of it. Sure.

[Matt]

Yeah. Yeah. So you said that it would be insane if you were fully invested in the S and P. So going back to I want to touch on retirement and what that actually because there's a whole lot of options and definitions of what retirement could mean. Because for him, maybe that means stepping away from his current work. But that's why I think the ability to produce any sort of income to cover some of his expenses, I think that is so important because if he knows, well no, no, no, I'm still going to work, I'm still going to generate some income. I'm just going to step down from my stressful, yes, high paying job, but stressful. I don't want to deal with it anymore. And with that in mind, I'm going to move to this other work that's going to provide a whole lot of life fulfillment. It's going to cover my living, annual living expenses. Oh well, dude, if that's the case you're not touching this money like you're calling it retirement money, but this is money you can just straight up invest. You're not going to need it anytime soon. I think the flexibility that comes with being able to generate some additional income, if that's something that you want to do, that also completely changes the game as to what it is that you're invested in and what that potential timeline, time horizon might be.

[Joel]

And I think also there's just a lot of unknowns here. So we're trying to offer like a wide range of potential answers because we're not 100% sure exactly what your timeline, your flexibility look like. And I think given this large sum of money and the financial phase of life you're in, you really might gain some insight and peace of mind by talking to a financial advisor. And so the stakes are just really high. Makes me think of an interview I did not too long ago with the couple from the Price of Avocado Toast podcast, Matt. And they had a, I think a $600,000 settlement in their past and they told the story of blowing it over a series of years. And yeah, they put some money into the Roth ira, but they bought new vehicles and they did, they did some ill advised things too.

[Matt]

And I think nice vacations, stayed out at some nice restaurants.

[Joel]

I just don't want that to be the case for Lance. And so I don't want you to fritter away this sum of money. And so if you want to just hire someone for a couple of hours of their time, that could be just to bounce some proposals, some scenarios off of them or maybe even if you want an ongoing relationship, I think that could be worth the money. And so if you think that maybe talking to a pro would, would help you out, well, we actually have a new page up on the website, howtomoney.com advisor. If you want to find somebody who fits the metrics that we care about as far as what an advisor values being a fiduciary and fee only and highly scrutinized, you can go to howtomoney.com advisor to find someone that fits the bill. That's right.

[Matt]

So Lance, we hope that helps. Man. Joel, let's now hear from a listener who, yes, she may have committed a 401k faux pas, but she's also killing it when it comes to saving for her retirement.

[Podcast Host/Announcer]

Hi man. Joel, this is Morgan from Minneapolis, Minnesota. I have a question regarding my 401k. Last year I changed jobs around September. I had been consistently contributing to my 401k at my first employer and continued to do so at my second employer. I calculated my bi weekly contributions so that the total for the year was the IRS Max. However, I was $12 off. I had contributed $23,012 for the year. I looked into this a little and all the advice I found states that the issue needs to be Fixed by future. April 15th of the following year. I missed this date. So I'm wondering what I should do. Since it's such a small amount, should I withdraw the $12 and pay an early withdrawal penalty? If so, do I need to take out an extra couple of dollars to account for any growth that occurred in 2025? I know it's such a small amount, but I don't want any documentation headache to follow me down the road. Thanks so much. I really appreciate all of the advice and knowledge you've shared throughout the years, Matt.

[Joel]

This kind of stuff frustrates me. I. I realize that contribution limits I guess have to exist and that we have to pay attention to the details. But sometimes the mechanisms, I think for correcting basic super small mistakes can be frustrating. It can feel like you got to spend hours to correct a $12 mistake which just feels like a punch in the face.

[Matt]

It's the pain. Yeah. Pain in the butt.

[Joel]

Yeah. And you know, we've already got the Alphabet super retirement account things going on. We got contribution limits we have to pay attention to. And then yeah, like just if you over contribute by 12 bucks, it can be, it can be a little complicated to fix. But Morgan, we'll do our best to help you out here.

[Matt]

Yeah, yeah. Not so great on the fact that you over contributed. But before we get to that, like let's just focus on the good, which is the fact that you've maxed out your 401k. $23,500 is so much money for this year. Actually in next year it goes up 1000 bucks to $24,500. But kudos to you for getting to the point where you are just so excited and you are able to save big for your future like that. You are certainly given future Morgan incredible options at her disposal. When you look at stats from Vanguard Joel, they found that almost 15% of folks are maxing out their workplace retirement accounts, which was actually more than I would have thought. Yeah.

[Joel]

And is it just Vanguard customers? Because that maybe makes more sense like that the Vanguard ilk are contributing more to their retirement accounts. But I gotta imagine the that's not 15% of the average American.

[Matt]

Well, Overall, at least. See that's, that's the. I think that's what's so difficult with a snapshot of individuals finances when they say that like, oh, you know, like people aren't growing their incomes and like the fact that everyone is dynamic and you move from different savings rates. And are you currently setting, maxing, setting aside the maximum amount for your 401k? I don't know. It depends on what actually happened that year.

[Joel]

Right.

[Matt]

Like there might be plenty of years where you are, but then some years where you aren't, there's just a whole lot of variability as opposed to when you take a snapshot, it freezes it in time. And that's, I think some of the problem behind some of the research and some of the stats that get put out there because it's like, well, actually, yeah, I'm not maxing out my 401k, but I will be soon or one year I will be.

[Joel]

I think it's exactly right. I think there's a variable thing, a lot more dynamism than some of those, like static pictures tend to incorporate. And I agree. I think there's just a ton of movement from different income brackets, different savings rates, different contribution amounts from person to person, year over year that just, it's hard to digest in the way we like process information or the way it gets presented. I'm curious what you would think though, if we were to do a poll of how to money listeners. What percentage of how to money listeners do you think given this stat about Vanguard from Vanguard, what percentage of how to money listeners do you think are maxing out their workplace retirement account? I.

[Matt]

If the general public is at 15%, I would say we're at like 25 to 40%.

[Joel]

Okay. Yeah, I was going to say third.

[Matt]

So I would, yeah, I would say that at least 40 to 80% want to be fully maximized, you know, maxing out their 401ks. But yeah, there's a difference between what you want to have happen and what you are actually doing.

[Joel]

Right, right. When it is really, let's just be completely honest, that's a ton of money.

[Matt]

It's.

[Joel]

And it is a ton of money for a lot of individuals. Like that's a third of their income. So it's really hard to have a savings rate that high dedicated just towards investing and not towards other financial goals that you have as well. So we get that. It's not like this is the goal everybody should have because we realize it's essentially impossible for a lot of people too and by the way, Morgan, you're not alone on this. Right. Where you over contributed. This is. This is a scenario that people find themselves in when they contribute too much. Often it is because they change jobs, which maybe they're getting paid more now they're trying to like rerun the numbers and it's more difficult to hit the nail exactly on the head.

[Matt]

Well, in a lot of talking about.

[Joel]

Percentages of pay, which is like hard to zero in on. Precisely.

[Matt]

And it's not like these amounts or these retirement fund providers, like they're not talking to each other on the back end. Right. As opposed to when you are in your, your employer's portal and you log into Vanguard or Fidelity or wherever you are, a lot of times there's safeguards built in. Like you can't increase it to an amount where you are going to set aside more from your paycheck that is going to exceed the maximum contribution limit for that year. So yeah, bouncing between jobs in particular is such a. It's really tricky actually.

[Joel]

Yeah.

[Matt]

For me personally, not having ever been more traditionally employed.

[Joel]

I got that one time for a little while. Yeah.

[Matt]

But I sure as heck didn't have a 401k match. I guarantee that, man. But I've always taken just a more kind of like cavalier approach to saving for retirement where it's just like, yeah, I just toss a bunch of money in there because I've been self employed, not because I've got a ton of money, but because I've got full control over it as the employer and as the employee being self employed. And so you can kind of look at it towards the end of the year and say, all right, how much more do I have left? Or if it's just. If you're just setting aside money in an ira again, you're looking at in Vanguard or Fidelity or something like that. And you can only put so much into whatever year it happens to be.

[Joel]

Yeah. They're like, hey, actually, no, yeah, exactly. Lower the number.

[Matt]

What year would you like to apply this to? And you've only got two options until April 15th. And then they're like, oh no, you only have one option. And actually you can only add this much additional dollars. Yes. That's not the case that Morgan found herself in because she's got two different employers here.

[Joel]

Right. Exact.

[Matt]

A tricky spot.

[Joel]

Which is why this happens particularly to people who switch jobs more often than not.

[Matt]

Yeah.

[Joel]

And if you didn't fix it in time. Right. That's also not really a huge deal because the stakes are Low. Like if you had contributed thousands of dollars over the limit, you feel more financial pain. That stakes will be raised. You might be a little freaking out a little bit more. We're talking about 12 bucks, right? The cost of a Chipotle meal. And yes, you should have paid tax on the cost of that Chipotle meal.

[Matt]

Is that what a burrito cost?

[Joel]

I think so.

[Matt]

Okay.

[Joel]

I don't typically eat at Chipotle, but I hear it's good.

[Matt]

There's nothing I've been like once. There's not anyone. There's not one anywhere near us.

[Joel]

You're right.

[Matt]

Is there?

[Joel]

If there was, I'd check it out. Yeah, probably would. But the problem is it becomes a manual process. You have to file an amended return and you have to count for that $12 of additional income. That's really the right way to proceed here. Yeah. Which just sounds like bringing a bazooka to a knife fight. It just sounds ridiculous. But that is the proper way to handle things.

[Matt]

Yeah. I think what might be helpful in this case as we talk about it, is to kind of think through the different scenarios where it would have been more ideal, which is obviously in the first place, it would have been the most ideal if she had hadn't over contributed. But that's not the scenario she finds herself in. The second most ideal scenario is if.

[Joel]

She got into a DeLorean at the speed of, what is it, six, eight miles an hour? I don't know.

[Matt]

I thought it was 80. That's probably 80.

[Joel]

I think it was 88.

[Matt]

But in her case, she did over contribute. And so ideally, then you would make that correction before April 15th. You have the ability to do that. And she was talking about, well, like, well, what do I do with that money? Like, what would happen is you would take an excessive contribution disbursement, and by doing that, you would pay income tax on that $12 from the previous year, the year that you're filing your taxes. And then you would pay tax on.

[Joel]

Uncle Sam wants his $2, Matt.

[Matt]

And then you would pay tax on any of the earnings from that $12 in the year that you made the correction.

[Joel]

So Uncle Sam wants is $2.08, Matt.

[Matt]

But again, you didn't make this correction by April 15th. And so in your case, what's going to happen effectively here is that you're going to be taxed twice on that $12 because you didn't get it corrected in time and you can't withdraw it as well. By the way, you talked about taking past that point that Money out of that account, it stays in there. And again, sort of like you were saying, Joel, this is not an awful consequence, but if you never remedy this, and were you to get audited, you could owe back taxes, you could owe interest. And so, yeah, filing that amended return, keeping notes on this moving forward, I think would be prudent. That being said, this is a very small amount of money, and I cannot imagine a world that we would live in, Joel, where the IRS is coming after little Morgan. Morgan, because of the fact that she misplaced $12 from one year to the next when it came to her for 1k.

[Joel]

I say put her behind bars, Matt. But that's just my personal political philosophy, so. Just kidding, Morgan. But, yeah, rest easy. Not a big deal. And I just don't think, Matt, either, this should. People don't want to run afoul of the irs. They don't want to mess up. And even if it's in a small incremental way, they don't want to make a mistake, which I get. But I also don't want this to prevent people from trying to seeking to maximize their retirement account contribution because they might accidentally go slightly over. I just think that is the reverse problem is worse. Like being reticent to contribute as much as you want to.

[Matt]

Yeah. Although I will say, I think a good lesson learned here is if you're in between employers, or if you have two employees in one year, maybe take a look at all your contributions for the year. Because in case, if you're like, all right, shoot. Last few paychecks actually need to end that completely so as to completely avoid this for that year. And then starting the new year, it'll all be there under a single investing.

[Joel]

Roof, so to speak. And you don't have to be perfect. Like, you don't have to hit 23, 500 right on the dot, but you can. Good enough is good. Like, oh, I got 23,200 in there. It's like, that's awesome. Good job.

[Matt]

So I would still call that maxing out.

[Joel]

Yeah, yeah, exactly.

[Matt]

You still get the.

[Joel]

You still get the award, still get the gold star. Yeah. All right, we've got more money questions to get to, including, like, sinking funds for vehicles. We'll talk about that. And credit repair right after this. As a small business owner, you don't have the luxury of clocking out early. Your business is on your mind 24, 7. So when you're hiring, you need a partner that works just as hard as you do. That hiring partner is LinkedIn jobs when you clock out, LinkedIn clocks in. LinkedIn makes it easy to post your job for free, share it with your network and get qualified candidates that you can manage all in one place.

[Matt]

Now let me tell you how it works. First, you post your job. LinkedIn's new feature can help you write job descriptions and then quickly get your job in front of the right people with deep candidate insights. You either post your job for free or you pay to promote, which by the way gets you three times more qualified applicants. And then just sit back and rest easy knowing that you are getting the highest quality candidates. Based on LinkedIn data, 72% of small business owners using LinkedIn said that LinkedIn helps them to find the best candidates. Find out why more than two and a half million small businesses use LinkedIn for hiring today. Find your next great hire on LinkedIn.

[Joel]

Post your job for free at LinkedIn.com howtomoney that's LinkedIn.com howtomoney to post your job for free. Terms and conditions apply. If you've been listening to the show for a while, you know we care a lot about being intentional with our money and that includes how we give it away.

[Matt]

That is why we are big fans of Daffy, which is a modern donation platform and app for charitable giving that is also a donor advised fund which means you can contribute cash, stock, ETFs or even crypto. You take the tax deduction right away and then send the money to over one and a half million charities, schools and other faith based organizations. Whatever you want with the funds that you've already set aside.

[Joel]

I've personally been using it to send recurring donations for causes I really care about like my church and a local nonprofit called Blueprint 58.

[Matt]

Same here. Yeah, I've got recurring donations going to my kids school. DAFY also keeps your receipts organized for tax season. But the best part is DAFY itself is a nonprofit with a mission to help people to be more generous more often. So if you want a better system for your giving, head to daffy.org howtomoney and for a limited time you'll even get $25 to give to the charity of your choice. Visit daffy.org how how to money Today.

[Joel]

As you make financial progress, you might be tempted to abandon habits that helped you make that progress in the first place. But guesstimating and a lack of awareness that can lead to leaving money on the table. That's where Monarch comes in. I dig Monarch because it helps me keep my finger on the pulse of every facet of my Money spending, saving goals, net worth, it's all in one place and it helps keep me motivated to keep going.

[Matt]

That's right. Feel organized and confident in your finances with Monarch, an all in one personal finance tool that brings your entire financial life together in one clean interface on your laptop or on your phone. And right now, just for our listeners, Monarch is offering 50% off your first year with code how to [e-mail] I love that Monarch is built for people with busy lives. You know, if you've been putting off organizing your finances, Monarch is for you and piggybacking off what you're saying, Joel, about the habits Monarch, it does all the heavy lifting. You're able to link your accounts in minutes. You get smart categorization of your spending and real control over your money.

[Joel]

Do not let financial opportunity slip through the cracks. Use code howtomoneyonarch.com in your browser for half off your first year. That's 50% off your first year at monarch.com with code howtomoney.

[Matt]

All right, buddy, we are back from the break. It is now time for the Facebook question of the week. And this one is from David who writes how does everyone save for their next car purchase? I currently shouldn't need another car for a while. Got a 2017 with 92,000 miles, 2018 with 92,500. But I would like to either pay cash or put down a very large down payment. Basically, if you had five plus years, do you just put your payment into a high yield account or do you actually invest the money and then take it out and pay some gains on it later? Joel, what would you do?

[Joel]

I got to say, love this goal of paying cash for your next car because like, and this is the kind of planning that it takes to get there, Matt, that most people don't do. They're like, yeah, it would be nice. But even while they're driving something new, new ish and their payment has subsided, they don't do anything about it. They just incorporate right that the money they would have spent on that car payment back into their spending. They funnel it somewhere else. They're not putting into savings specifically for the next vehicle they will need at some point in the future. Most people are just a little too short sighted for that. And so David, you're a champ. Like you are thinking about this, right? And your cars, they're both babies. I would say maybe they're like, they're not even preteens, Matt. They're very young. They're very young. And so you should have many More years with these cars.

[Matt]

They're about to be preteens. He's close to 100,000 mark. You know, that's when that's preteen status. I don't know, it feels like when the acne kicks in, you're like, oh man, now I gotta let go, replace the timing belt.

[Joel]

That's true.

[Matt]

There's some more headaches, there's more, there's more drama involved in owning a hundred thousand plus mile vehicle. That's all I'm saying, as you and.

[Joel]

I well know at this point. But you know, if you start saving for your next car purchase with, hey, hey, maybe if you're lucky you can wait till like 2035. Let's say you wait a decade. You will easily be able to pay cash without really having to do it and stress yourself out by saving too much. I'm not sure what your other goals are and what savings you have on hand, but you could start setting aside, I don't know, like 500 bucks a month, 6,000 bucks a year, which, let's say you make it eight years, not even 10, before you have to replace those cars. That's $48,000 in cash alone that you saved. Depending on your taste in cars, I think I could buy two pretty nice ones.

[Matt]

That is actually before what you would earn on that cash. If you would save it straight into savings, you'd have more than $54,000 at today's savings rate. But let's run the numbers here. Let's say you invested those dollars, you're looking at like closer to $70,000 depending on the specific rate of return, which is far more than the cost of your average used car these days. Granted, this is off in the future, everything's gonna be more expensive, most likely. But that being said, I think these numbers will help you to aim properly. And maybe you wanna upgrade to a nicer car when the time comes, or if you feel like you need to replace it sooner, like let's say like in five years instead of eight. Well, just run the numbers with those parameters in mind and essentially kind of like back into it. And you might need to make some adjustments. Maybe you double your monthly savings to a thousand in order to avoid taking on car debt in the future. But either way, I think it's worth, man, it's worth saving more. It's worth lowering your expectations to never have a car loan. I think that is just, it's just a highly underrated personal finance move to not have a car payment.

[Joel]

I, I love the suggestion of Lowering your expectations, Matt? I think so many times people like Buck when they hear that though, they're like, what do you mean? No, I want what I want, man. And the truth is cool. You can want what you want. It just comes with. There's an impact of that. Right. So if the thing you want is a brand new car and you can't afford it, well, then that comes with debt and that comes with a lack of independence and choice in your life. So what do you value more? And so, yeah, what kind of car will make you happy? What can you get by with? I think is a good question. The medium household income is something like $70,000, Matt. And the average car payment is something like $650 a month. That's not sustainable. Like that's more than 10% of your income on one car in your driveway, which is crazy. It's a lot. Yeah. And it often just prevents people from being able to reach the freedom they want to reach. The car in their driveway, I think is a big, big part of it. If you're doing all the other stuff right, go ahead, buy a nice car with the cash you've saved, but not until then. And at the risk of sounding harsh, I just think a car is not a fixed necessity. I do think cars are more of an optional luxury. And I am, oh yeah. Taking my own medicine over here, Matt. I have. The last two cars that I have personally owned are both from 2006. The car I drive right now, it's an 06 and I love it. It's. It's not vintage, it's not cool, but it gets me where I need to go and I enjoy driving in it. So I just think that, like, could I justify spending more money on a fancier car? Yeah, I could, but I don't want to because I value other things in life a whole lot more than the car that's in my driveway.

[Matt]

That's right, buddy. Let's hear now from Anonymous, who writes. Anyone have experience with credit repair? I've been paying my student loans religiously since 2019, but it was recently transferred to a new loan servicer. My loan amount is not too high and I did not notice that the auto payment was not transferred. They emailed me once during this time, but I didn't see it. Three months later, my bank notified me that my credit score had changed. When I realized what had happened, I became current and I set up the auto payment again. I called the new loan servicer, no help there. And submitted credit disputes to the credit bureaus. I also submitted a CFPB complaint. I've probably done everything that can be done, but I wanted to check if someone else had a different experience. To make matters worse, I am in the middle of a loan application and this came completely out of the blue.

[Joel]

Yeah.

[Matt]

Felt like he just got kicked while he was down.

[Joel]

That's the wrong time. Wrong time to have a credit score glitch. Right? Is, is when you actually need to use it. Because like, I think Matt, most of the time we're kind of. The credit score doesn't really have that much impact on our lives until we need it to have a ton of impact, whether we're renting an apartment or, or a house or, or trying to buy a house or trying to buy a car and get a loan, that kind of stuff. That's when like the credit score matters a ton. And it just sucks to have this glitch happen and not notice it and then watch your credit score plummet. It is a good reminder to check your accounts and your credit card statements on a monthly basis. It's hard to say. I think if the Consumer Financial Protection Bureau or the credit bureaus are going to be able to help you out on this front. I think it's worth asking, it's worth barking up the tree. But you might have to claw your score back up on your own after this mistake. And the truth is, if this is like your sole credit mistake and you handle things properly moving forward, I don't think it's. It might be severe, but it shouldn't be long lasting.

[Matt]

That's right. But they asked about credit repair, which is not something we would recommend. There are so many for profit companies out there in that space, in the credit repair space that charge a lot to do things that you can do on your own. Sort of like what you've already done, basically like you've disputed the items on your credit report. They sometimes they can get something temporarily removed which boosts your score for a bit and hopefully you're like, oh, it worked. Hopefully you don't see that as like, I guess, a selling point. But these companies are never worth the time of day or the money that you would fork over to them. This is definitely something we would recommend to DIY and honestly continue to pay close attention to what makes up your credit score, the basics here, the fundamentals, and then do everything you can to right the ship, continue to make all your payments on time, minimize your credit utilization. But above all, I think you're just going to have to take your time with it. Like, you need to be patient. It takes time, but it is better than you forking out the money and not getting the results, which is the alternative here.

[Joel]

Yeah, it's like good money after bad, but it's like good money after credit score plummet and you don't want to do that. And if you really feel like you need the help of a pro, you can contact like a non profit like Money Management International or the national foundation for Credit Counseling. I hate that you're currently trying to take out a loan. I know this is making it harder to get the terms that you want and that truly you deserve based on the way that you've handled credit over a long period of time. If this is for a house, it really is a big deal and you're. I don't know, maybe that's something that you can talk with the loan officer at your credit union about. But if it's, you know, and if it's for a car, this could be a good thing. It could prevent you from taking on more debt than you probably should, that you probably should be avoiding. So I really do sympathize with this poster. Max, I know it's frustrating to feel like one mistake sets you back on the credit score front, but I think this is just a good warning for all of us because the credit score, it's important when we need it and we have to be paying attention to where our score is at and. And monitoring to make sure that we're not making small mistakes that lead to drops in that score. Yeah. All right, Matt, let's mention. Let's get back to the beer that we had on this episode. This was called Presence of Another World from one of our favorite all time breweries, Bissell Brothers. You and I have both now been to the Source, the Mecca in Portland, Maine.

[Matt]

Hey, you'll be happy to hear this was the last bottle I have from Bissell Brothers.

[Joel]

Oh, and you shared it with me.

[Matt]

I drink all the rest because it's so good and because the others are IPAs and you want to drink those.

[Joel]

I'm so glad you shared this one.

[Matt]

When they are fresher. But this is one that I thought, you know what, I can hang onto this one for a while and we can share this one.

[Joel]

Well, I'm glad you shared this one for multiple reasons. One, because I never had a stout from them and this was. It was really fun to see them try a different style. It's legit. They did a great job. And second, you know, this is my favorite style of stouts. Because this one has chilies in it. The cinnamon vanilla chili, the Mexican stout.

[Matt]

Takes it to the next level. Man.

[Joel]

It's aged in rye whiskey barrels. Sorry. This is hitting all the notes for me. I'm in heaven.

[Matt]

Yeah, the, the, the chilies are the first thing I notice for sure. Like you take a sip and you feel the tingliness. Like it almost, it almost felt, felt like, like Szechuan peppers on your tongue a little bit.

[Joel]

It's crazy. The back of your throat just a little.

[Matt]

So good. And then it's got like the, the toasty, roasty body like you get with like a rich cup of mocha, you know, or it's just. And honestly, like as it warmed up, that's when I started to pick up on more of the cinnamon notes. Initially I think it was more about the peppers, but as it like physically warmed up, I guess maybe my mouth warmed up too from the heat. I don't know. I feel like I, I noticed a little bit more of the spices, the cinnamon, but man, it was so good. You can taste the boozy notes from the barrels as well. Actually, there's a note on here. It said it was aged 12 months in dad's hat. Rye barrels. I don't know who dad's hat is, but I'm assuming they make some good rye.

[Joel]

Well, it makes me think a lot of the marketing around beer is how you should drink it super cold. And the truth is, for great beers, IPA is included. But especially for great stouts, let it warm up for a little while. I set this out at least 30 minutes before we started recording because I knew that if you drank this super duper cold, you're not going to get some of the flavor profiles. Some of those notes that you, that.

[Matt]

You want to enjoy, it kind of flattens it out. You want to let it blossom. That's right. Yeah. Glad you and I got to share this one on the show today.

[Joel]

Same here.

[Matt]

We'll make sure to link to any resources we may have mentioned during our conversation and you can find this up on the [e-mail] buddy, that's going to be it.

[Joel]

So until next time, Best friends out.

[Matt]

Best friends out.

[Joel]

If you've been listening to the show for a while, you know we care a lot about being intentional with our money and that includes how we give it away.

[Matt]

That is why we are big fans of Daffy, which is a modern donation platform and app for charitable giving that is also a donor advised fund, which means you can contribute cash, stock, ETFs, or even crypto. You take the tax deduction right away and then send the money to over one and a half million charities, schools and other faith based organizations whenever you want with the funds that you've already set aside.

[Joel]

I've personally been using it to send recurring donations for causes I really care about, like my church and a local nonprofit called Blueprint 58.

[Matt]

Same here. Yeah, I've got recurring donations going to my kids school. DAFY also keeps your receipts organized for tax season. But the best part is DAFY itself is a nonprofit with a mission to help people to be more generous more often. So if you want a better system for your giving, head to daffy.org howtomoney and for a limited time, you'll even get $25 to give to the charity of your choice. Visit daffy.org how how to money today Hello, America's sweetheart. Johnny Knoxville here. I want to tell you about my new true crime podcast, Crimeless Hillbilly Heist from Smartless Media, Campside Media and big money Players. It's a wild tale about a gang of high functioning nitwits who somehow pulled off America's third largest cash heist.

[Joel]

Kind of like Robin Hood, except for.

[Matt]

The part where he steals from the rich and gives to the poor.

[Joel]

I'm not that generous.

[Matt]

It's a damn near inspiring true story for anyone out there who's ever shot for the moon, then just totally muffed up the landing. They stole $17 million and had not bought a ticket to help him escape.

[Joel]

So we're sitting like, oh God, what do we do?

[Podcast Host/Announcer]

What do we do?

[Matt]

That was dumb.

[Joel]

People. Do not follow my example.

[Matt]

Listen to Crimeless Hillbilly Heist on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts. What's up everybody? It's snacks from the trap Nerds All October long, we're bringing you the Horror. Boogity boogity boogity.

[Joel]

We kicking off this month with some of my best horror games to keep you terrified. Then we'll be talking about our favorite horror and Halloween movies and figuring out why black people always die first. And it's the return of Tony's Horror show side Quest, written and narrated by yours truly.

[Matt]

We'll also be doing a full episode.

[Joel]

Reading with commentary and we'll cap it.

[Matt]

Off with a horror movie Battle Royale.

[Joel]

Open your free iHeartRadio app and search.

[Matt]

Trap Nerds Podcast and listen now.

[Podcast Host/Announcer]

This is an iHeart podcast.